Real News‎ > ‎2014‎ > ‎March 2014‎ > ‎

29th March 2014

Singapore Economy

S'pore not necessarily the 'costliest city'

Appreciation in exchange rate big factor in rise in living costs for expats: ACI

Source: Business Times / Top Stories

THE steady appreciation of the Singapore dollar was a significant contributing factor to Singapore being ranked first in living costs for expatriates, according to a study by the Asia Competitiveness Institute (ACI).

The study covered 109 cities, providing cost of living, wage, and purchasing power indices for both expatriates and the average resident from 2005 to 2012. This study is the first of its kind to cover average residents.

In the study, Singapore was ranked most expensive in living costs for expatriates. However, this was partially due to a 25 per cent appreciation of the Singapore dollar against the US dollar.

-By Kara Quek

Singapore Real Estate

Completed condo prices slip in February

NUS Index shows shoebox units falling the most at 1%; analysts cite waning demand for resale homes, especially in central region

Source: Business Times / Wealth

PRICES of completed non-landed private homes continued their slide last month, going by the flash estimates of the Singapore Residential Price Index, dragged by prices of both large and small units and across regions.

The overall index, which tracks a basket of completed residential units, dipped 0.4 per cent in February. Values of these units are marked-to-market based on transacted prices over the month.

Prices for the shoebox units of 500 sq ft or less marked the biggest fall of one per cent, compared to a 0.5 per cent dip in January.

-By Lynette Khoo

Private home resale prices keep sliding

Source: Straits Times

Private home resale prices continued to slide last month as home hunters gunned for newer units and investors kept away.The decline was led by shoebox units, which consultants said were facing increased supply.

Resale private home prices fall by 0.4%

Source: Today Online / Business

SINGAPORE — Resale prices of completed non-landed private homes continued to fall last month, showed Singapore Residential Price Index (SRPI) flash estimates released yesterday, dragged down by an acceleration in the decline in prices of shoebox apartments.

The SRPI, compiled by the National University of Singapore’s (NUS) Institute of Real Estate Studies, showed overall prices falling by 0.4 per cent last month from the month earlier, the same pace as in January, with declines registered across the board.

Prices of shoebox homes — those with a floor area of 506 sq ft and below — fell 1 per cent last month, accelerating from the 0.5 per cent drop a month earlier, the SRPI data showed.

Mr Ku Swee Yong, Chief Executive of property agency Century 21, said: “Shoeboxes may be tough to resell because prospective buyers may not be comfortable with the actual space and layout they see in the unit, as compared to a new sale when they buy purely on what they see in the show flat.”

Excluding shoeboxes, prices of homes in the non-central region declined 0.2 per cent, reversing from the 0.2 per cent rise a month earlier, the SRPI data showed, while those of homes in the central region fell 0.6 per cent, moderating from the 1 per cent decline previously.

Mortgagee sale auctions in first quarter hit three-year high

Source: Straits Times 

The number of auctions for mortgagee sales hit a three-year high in the first quarter of the year, according to property consultancy Colliers International. It reported yesterday that 22 properties were put up for auction in the three months to March 31, up from 10 in the same period last year.

CapitaLand secures 60% stake in Chengdu sites

Source: Business Times / Companies

IN A move to deepen its presence in China, CapitaLand has secured a 60 per cent stake in two adjacent prime residential sites in the New Southern Area of Chengdu in Sichuan province.

This interest is acquired through a proposed subscription of shares in two Chinese companies which own the sites for a total of 752 million yuan (S$155.6 million) in cash.

CapitaLand said that it planned to build 4,600 residential units for first-time homebuyers and upgraders on the sites, which cover about 133,333 square metres.

-By Lynette Khoo

Seletar Mall gets BCA Green Mark Gold Award

Source: Business Times / Wealth

THE Seletar Mall, slated to open with an eclectic mix of retail, dining and lifestyle offerings at the end of this year, has been awarded a Gold in the BCA Green Mark Award by the Building and Construction Authority.

A host of systems targeted at helping the project, which is a joint-venture development by Singapore Press Holdings and United Engineers, has been introduced to help the mall reduce its energy-consumption levels.

For instance, a large skylight perched above the atrium allows natural light to enter the mall, minimising the need for artificial lighting during the day.

-By Mindy Tan

Strong interest in Jurong Gateway strata-titled project

Source: Straits Times

The Jurong Gateway District's potential as a new business hub appears to be driving strong interest in the area's first strata-titled commercial project. The 740-unit Vision Exchange has sold at least 70 per cent of the 250 units released at last weekend's launch, The Straits Times found when it visited the showflat at Venture Avenue on Wednesday.

Real Estate Companies' Brief

Ascendas Hospitality Trust

Source: Straits Times

Ascendas Hospitality Trust has entered into a conditional sale and purchase agreement to acquire Osaka Namba Washington Hotel Plaza for 8.9 billion yen (S$110 million). The hotel is located in the heart of the Namba area, one of Osaka's key city centres, and performance is expected to remain robust, supported by a lack of new competitive supply within the area.

Global Economy & Global Real Estate

Moving towards a green global economy

Source: Today Online / Commentary

Sesame Street’s Kermit the Frog once lamented that “it’s not easy bein’ green”. Today, this sentiment is surprisingly relevant to the global economy — only it is becoming green that is the problem.

Last September, the Intergovernmental Panel for Climate Change warned that if the world sticks with “business as usual”, global temperatures will rise by 4°C to 6°C — far beyond the 2°C increase that has been deemed “safe”. This prompted United Nations Secretary-General Ban Ki Moon to challenge political, economic and financial leaders in January to intensify their efforts to achieve a new global agreement on climate change by next year.


However, as important as high-level deals are, they will amount to little unless they are backed by considerable investment in areas such as smart grids, energy storage and renewable resources. Indeed, the International Energy Agency estimates that nearly US$1 trillion (S$1.27 trillion) worth of investment will be needed annually between now and 2050 to put the world economy on a more sustainable path.

While that may seem like a lot of money, it is the equivalent of only 1 per cent of global GDP and less than 0.3 per cent of global financial assets. Moreover, since 2007, major central banks have proven that they can augment their balance sheets by more than US$1 trillion annually, without triggering inflation. In other words, the world can afford the transition towards a green economy.

Nonetheless, last year, green investment amounted to only US$254 billion — implying an annual shortfall of nearly US$750 billion. To bridge the gap, governments of advanced countries are leveraging their limited public funds to catalyse private-sector investment. At the same time, developing countries are rapidly increasing their contributions to green finance, with domestic clean-energy financing in non-OECD (Organization for Economic Co-operation and Development) countries having surpassed OECD-country levels in 2008.

But the problem remains that the current structure of markets impedes their ability to adjust to climate change. What is really needed is not money, but the political will to correct market failure by bringing about fundamental shifts in the metrics, institutions and policies that govern how investors evaluate economic activities.


A green project is bankable only if it provides a clear view of its real costs and benefits. The return on private capital (profit and loss) plus the return on “social” capital must be positive. The current gross domestic product metric ignores the negative externalities of fossil-fuel-based private activities, leading to overwhelming pollution and gross wastage of non-renewable natural resources. Without full cost accounting, some of the worst activities will continue to be immensely profitable.

A successful transition to a green economy will require a new set of metrics. The good news is that some governments have already moved to establish a shadow cost for CO2 emissions. In the United States, the “social cost” of carbon was raised from US$21 to US$35 per tonne emitted. Publicising fine-particulate (so-called PM2.5) levels was critical to mobilising widespread Chinese public support for addressing air pollution. Similar metrics are now needed to measure other forms of natural capital destruction, such as deforestation, marine-reef bleaching, wastewater discharge and soil degradation.

Once these metrics are established, they must be incorporated into international accounting standards for private and public financial statements. Some companies are already releasing annual reports with full details on their activities’ social and environmental impact, and will eventually move towards fully integrated reporting.


However, bringing about real change will require more than moral suasion. Policymakers must take advantage of the full range of tools available to them, including legislation, reporting guidelines, taxes, incentives and public education about the costs of inaction.

Financial regulators in emerging economies such as Bangladesh and China have already taken a step in the right direction, introducing rules to promote financial inclusion. China’s green credit banking guidelines call upon financial institutions to consider the environmental risks in their loan portfolios.

Finally, there needs to be an honest discussion on the merits — and limits — of current monetary policy and financial regulation. Central-bank subsidies such as quantitative easing and near-zero interest rates should have increased the supply of low-cost financing for green projects.

Instead, they have boosted the profits of ever-larger financial institutions, leaving credit to small and medium-sized enterprises and long-term projects severely constrained.

The irony is that regulations aimed at strengthening financial stability tend to reward short-termism (higher liquidity), adding risk-weights and costs to long-term projects — that is, most green investments.

Regulators must recognise that if the real economy is unsustainable, no amount of bank reforms will protect people’s livelihoods, let alone the financial system.

Adding a green-investment requirement of only 0.5 percentage would be sufficient to cover the annual financing gap.

The global financial crisis occurred because we ignored externalities — shadow prices and institutions — allowing instability and inequality to proliferate. Building a more stable, sustainable future requires getting policies, prices and incentives right. It will not be easy, but — as with Kermit — green is the only option.

-By Andrew Sheng

Lifting of UK pension fund curbs seen boosting property market

Source: Business Times / Wealth 

CHRISTINE Reid punched the air when she heard that Britain plans to tear up the limits on what people can do with their pension savings. Instead of relying on a "paltry" income, she can now invest in property.

The biggest shakeup of the pensions industry in almost a century, announced by Chancellor of the Exchequer George Osborne in his Budget last week, has thrown wide open the options available to Ms Reid and millions of other Britons approaching retirement.

From April 2015, instead of having to buy an annuity, people can spend their retirement savings however they want.

-From London, UK

U.S. Mortgage Rates Rise With 30-Year at a Two-Month High

Source: Bloomberg / News

U.S. mortgage rates for 30-year loans rose to a two-month high, increasing borrowing costs for homebuyers as the market’s recovery showed signs of weakening.

The average rate for a 30-year fixed mortgage was 4.4 percent this week, up from 4.32 percent, Freddie Mac said today in a statement. The average 15-year rate climbed to 3.42 percent from 3.32 percent, according to the McLean, Virginia-based mortgage-finance company.

Housing demand has cooled as higher prices and mortgage rates cut into affordability and harsh weather in many parts of the U.S. kept would-be buyers away. New-home (NHSLTOT) purchases dropped in February to the lowest level in five months, Commerce Department data showed this week. Sales of existing houses fell last month to a 4.6 million annual rate, the fewest since July 2012, according to the National Association of Realtors.

“The housing numbers have been really disappointing,” Patrick Newport, an economist with IHS Global Insight in Lexington, Massachusetts, said in a telephone interview yesterday. “Most people were expecting stronger pickup in housing this year that would lift the economy into a stronger growth pattern, and that isn’t happening.”

Contracts (USPHTMOM) to buy previously owned homes fell for an eighth straight month in February, the Realtors group said today.

Price gains have slowed, according to the S&P/Case-Shiller index of 20 cities. In the year through January, the measure increased 13.2 percent, compared with 13.4 percent in the 12 months through December.

Mortgage rates are poised to climb as the Federal Reserve continues tapering stimulus efforts that have kept borrowing costs low. Policy makers cut monthly bond purchases to $55 billion last week, from $85 billion last year. Fed Chair Janet Yellen said the program could end this fall and that the benchmark interest rate, which has been close to zero since 2008, may rise six months after that.

The average 30-year mortgage rate was 3.57 percent a year earlier, according to Freddie Mac.

-By Prashant Gopal

Americans want big homes with green features

Source: Business Times / Property

[WASHINGTON] Is America's love affair with big houses finally over?

Yes and no. In 2013, fewer big houses were built, but the average size for new homes continued to increase.

According to US census data, the percentage of new houses built in 2013 with more than 3,000 square feet of living space declined to 31 per cent from a high of 45 per cent at the peak of the home-building boom in 2007.

At the same time, the average size for a new home built in 2013 edged towards the 3,000 sq ft benchmark figure, ballooning out to 2,679 sq ft, 160 sq ft more than the previous year, according to the National Association of Home Builders' annual survey of home trends and buyer preferences presented by Rose Quint at the International Builders Show (IBS) in Las Vegas this year.

-From Washington, US

Building sites in India idle ahead of national polls

Developers and contractors get in the thick of funding election campaigns

Source: Business Times / India

[NEW DELHI] As India's mammoth general election (GE) approaches, jackhammer drills are quietening down at construction sites and earthmovers and cranes remain parked.

Many real-estate and construction firms - their finances already squeezed by a sharp economic slowdown - are diverting funds from housing and other projects to election campaign contributions. Several projects are stalled, at least temporarily.

More than other businesses, Indian developers and contractors are particularly reliant on ties with the government to acquire land or win contracts. If they fund a winner's campaign, the payoffs can be huge.

Based on past elections, such companies could end up funding a disproportionate amount of the US$5 billion that political parties are likely to spend this time to woo the country's 815 million voters.

-From New Delhi, India