Real News‎ > ‎2014‎ > ‎May 2014‎ > ‎

10th May 2014

Singapore Economy

Small countries must strive to remain competitive: Tony Tan

Source: Channel News Asia / Singapore

SINGAPORE: Small countries like Portugal, Switzerland and Singapore must strive to remain globally competitive. President Tony Tan Keng Yam said this as he wrapped up his week-long visit of Portugal and Switzerland on Saturday.

He said Singapore must improve its productivity, much like the Swiss and Portuguese have done.

The lack of natural resources is a common denominator for Singapore, Portugal and Switzerland. Thus, the countries have adopted the same philosophy -- be globally open economies.

On his last day in Switzerland, President Tan emphasised the importance of small nations to maintain contact and share experiences with each other.

During his two-day State Visit to Portugal, he noted the progress made on the EU-Singapore Free Trade Agreement. He said a quick ratification of the agreement will be a clear signal of Portugal's commitment to step up its engagement in Southeast Asia.

During his meetings with Portuguese President Cavaco Silva and Prime Minister Pedro Passos Coelho, President Tan discussed ways to enhance economic cooperation.

He said both sides agreed that there was great potential for Singaporean companies to work with Portugal as a gateway not just to Europe, but also to Brazil and Africa.
Similarly, Portuguese companies could use Singapore as a gateway to ASEAN and Asia.

Noting how the Portuguese economy returned to growth following three years of economic challenges, President Tan said one lesson for Singapore is the importance of maintaining fiscal sustainability.

He said: "If there is one lesson in which we can learn from Portugal during this period is the importance of maintaining our fiscal sustainability, make sure we don't overspend, we don't over subsidise and always subject ourselves to the discipline of the market because the market is unforgiving.

"They introduced measures which they know are politically unpopular, but they know which is good for the country and good for the people in the long run. And I think that is very commendable of the government to take this view, which is the same as our philosophy in Singapore -- always look at the long-term interest of the nation, be prepared to take short-term measures which may be painful."

President Tan said he is confident relations between Singapore and Portugal will continue to strengthen.

As for Switzerland, he said Singapore has always bench-marked itself against the country for its development, and that bilateral relations are strong in many sectors -- including trade, investment, education and research.

But while Switzerland's economy is doing well, it faces challenges in handling its immigration -- an issue that is affecting many countries, including Singapore.

President Tan said: "We have to find our own way, our own circumstances are quite different, but this is the reality of life. This world of movable labour, flexibility, each country wanting its own companies to be more competitive. There's no easy solution.

"I know the government is working very hard towards the right balance, but we have to take steps which do not erode our competitiveness, doesn't erode our openness, our attraction as an investment destination, and the ability of companies who want to expand their businesses."

In order to make themselves relevant to the world, President Tan said small countries like Portugal, Switzerland and Singapore have to build up its workforce capabilities, continue to emphasise research and development and upgrade their education.

Overall, he said these countries must continuously improve their productivity to maintain economic growth, as there is no other way out.

- CNA/ac

S'pore banks have much to offer Myanmar: PM Lee

Touching on new areas of economic cooperation between Myanmar and Singapore in their bilateral talks, Mr Lee expressed hopes that Myanmar would give serious consideration to Singapore banks to set up shop in the country when it opens its financial sector to foreigners.

Tourism falters in Q4 last year

Source: Business Times / Top Stories

FOR the whole of last year, Singapore's tourism receipts grew and more visitors came, but the performance in Q4 was lacklustre.

Receipts from foreign visitors' consumption expenditures or payments for goods and services in the last three months of 2013 amounted to $5.7 billion, 5 per cent less than for the last quarter of 2012.

The latest performance report by the Singapore Tourism Board (STB) indicates that visitors shopped less, and did less sightseeing in Q4; receipts from these two components fell by the most - 9 per cent.

-By Lisabelle Tan

Key areas to tackle in protecting workers' rights

Source: Straits Times 

Their cause for cheer are two back-to-back announcements by the Manpower Ministry (MOM) which, when implemented, will be to their benefit. The first is a proposal to set up a labour tribunal to help those caught in pay disputes with their employers. The tribunal will open its doors to all local employees, regardless of how much they earn.

Singapore Real Estate

Lower prices at Panorama relaunch tomorrow

Source: Straits Times

The Panorama condominium in Ang Mo Kio goes back on sale tomorrow at a discount, the latest in a recent string of relaunches. The new prices could be up to 14 per cent lower than at the initial launch in January, according to marketing agents.

New condo could set Faber Hills abuzz

Source: Straits Times

Interest in the tranquil Faber Hills estate in West Coast could pick up soon with the launch of a new condo. The area is mostly occupied by pricey landed housing and has only had two new launches in the past year, making it one of Singapore's sleepier property spots but this could soon change.

SMU signs lease for former MPH Building

Source: Business Times / Top Stories

SINGAPORE Management University has signed a lease for the former MPH Building, at the junction of Stamford Road and Armenian Street. SMU is leasing the building as an interim solution to cater to its expanding programmes until the new School of Law building is ready in 2017.

The lease for the ex-MPH Building, inked recently, will begin in the fourth quarter of this year and the university is expected to start occupying the premises at the end of this year, an SMU spokeswoman told BT.

The four-storey conserved landmark building - now known as Vanguard Building and owned by Vanguard Interiors - has a net lettable area of about 26,000 square feet.

-By Kalpana Rashiwala

ERA to focus on selling new property launches

Source: Straits Times 

Real estate agency ERA is shifting its focus to selling new launches as weak property market sentiment eats away at the resale segment, its traditional mainstay. "We're trying to get more new projects for the agents to sell," said Mr Jack Chua, chief executive of ERA.

1 in 3 home buyers still not familiar with TDSR: UOB survey

Source: Business Times / Top Stories

ONE in three home buyers are unaware of or do not understand the new total debt servicing ratio (TDSR) framework, a recent survey has revealed.

The survey by UOB found that home buyers' top two uncertainties over the new TDSR framework are how the existing cooling measures affect their loan application and how the framework applies to their personal situations.

The TDSR was introduced last June by the Monetary Authority of Singapore (MAS) to ensure that all debt obligations of borrowers do not exceed 60 per cent of their gross monthly income, in a bid to encourage prudent borrowing by households and to strengthen credit underwriting standards by financial institutions.

"Ten months on, our survey shows there is still a significant group of potential home buyers who are not familiar with the rules," said Chia Siew Cheng, head of secured loans at UOB Group.

"Most of the time, home buyers bring inadequate or incorrect documents to support their application or are not aware that loans are granted based on an assessment of their total outstanding debt including credit cards," she said.

Some 210 people were surveyed by UOB between March 20 and 27. They include Singaporeans and permanent residents aged 21 to 65 years who have bought a property in the past nine months or are looking to purchase a property within the next two years.

About 30 per cent were looking to buy a private condo.

There also seems to be a gap between what borrowers think they know and what they truly know.

While some 64 per cent of the respondents claimed that they are aware of how debt is calculated in the new framework, UOB observed that potential borrowers often do not bring along all the relevant documents such as their credit card statements, vehicle loans and guarantor notes.

To deal with the situation, UOB said that it came up with a home loan application checklist for its customers.

To simplify the home loan application process, UOB is also working with several industry bodies to access more comprehensive credit bureau information.

The survey also showed that first-time home buyers tend to do their own research online while experienced home buyers prefer to engage a mortgage specialist to find out more about the application process and suitable loan options.

-By Lynette Khoo

Industrial properties getting fancier

New developments appeal to a more sophisticated clientele, even rivalling residential properties in facilities offered

Source: Business Times / Wealth

WITH their tennis courts, swimming pools and barbecue pits, the new wave of industrial developments opening their doors in 2015 and 2017 almost resemble residential properties in terms of the facilities they offer.

One example is Tagore Lane's Business 1-zoned Tag.A. Instead of projecting the utilitarian image associated with industrial properties, Tag.A has a glossy facade and houses a rooftop pavilion, swimming pool, basketball court, gym and barbecue pits, among various facilities.

New strata-titled industrial developments touting amenities such as those offered by Tag.A have been selling well and target ambitious young businesses, noted Oxley Holdings chief executive officer Ching Chiat Kwong.

Oxley is behind four such properties, three of which have sold all their units, said Mr Ching. He added that 65 per cent of units have been sold at Oxley's most recently launched development with similar features, Eco-Tech @ Sunview, which comes equipped with a basketball court.

-By Jaira Koh

Real Estate Companies' Brief

Reits display holding power with strong results

Source: Straits Times 

Singapore real estate investment trusts (Reits) have been surprisingly resilient this earnings season, despite taking a hit last year as tapering fears and a series of property cooling measures set in. Analysts say a number of Reits, particularly those with growing exposure in China and Australia, have delivered strong results in recent weeks. Acquisitions, asset enhancement initiatives, improved portfolio occupancy rates and positive rental reversions, or increased rents upon lease renewal, have also helped boost several Reits.

Terms for CMA delisting offer 'fair'

Factors in favour 'outweigh in number', says independent adviser Deutsche Bank

Source: Business Times / Top Stories

THE terms in CapitaLand's delisting offer for CapitaMalls Asia (CMA) "are fair and reasonable from a financial point of view in the context of a non-change of control transaction", said the independent financial adviser for CMA.

Having considered factors for and against the offer in such context, Deutsche Bank said that factors in favour "outweigh in number".

In a circular sent out to shareholders yesterday, independent directors (IDs) of CMA advise shareholders who wish to realise their investments now and who believe that the share price may fall and no better offer may be tabled to either accept the offer or sell a portion or all of their shares in the open market.

-By Lynette Khoo

Centurion gears up for expansion after strong Q1

Source: Business Times / Companies

CONSTRUCTION and property group Chip Eng Seng's first-quarter net profit more than quadrupled year-on-year, mainly from higher revenue in its property development division.

Net profit for the period ended March 31, 2014, was $21.6 million or 3.35 cents per share, up from $4.67 million or 0.72 cent per share a year ago.

The group's net profit margin was 10.9 per cent for the quarter, higher than the 3.6 per cent in Q1, 2013.

First-quarter revenue rose 51.7 per cent year-on-year to $197.8 million, due mainly to higher revenue from the property development segment.

-By Raphael Lim

Sun Hung Kai sells $320m in 7-year fixed rate bonds

Source: Business Times / Companies

SUN Hung Kai Properties has sold $320 million in seven-year fixed rate bonds, with investors shrugging off the trial in Hong Kong of its owners for alleged corruption.

The $320 million sale done on Thursday - a privately placed deal to institutional investors - closed in 2.5 hours and was priced at 3.25 per cent, said sources yesterday.

United Overseas Bank was the sole bookrunner.

-By Siow Li Sen

Koh Brothers Group Q1 profit climbs 45%

Source: Business Times / Companies

STRONGER performance in its real estate division has boosted the first-quarter net profit and revenue of mainboard-listed construction and property firm Koh Brothers Group.

Yesterday, the group reported a 45 per cent rise in net profit attributable to shareholders to $4.7 million for the quarter ended March 31, 2014, up from $3.3 million a year ago.

This translated to earnings per share of 1.06 cents for the first quarter, up from the previous year's 0.71 cents.

-By Jacquelyn Cheok

One-off item drags down Frasers Centrepoint's profit

Source: Business Times / Companies

FRASERS Centrepoint posted a 19.9 per cent fall in second-quarter net profit, dragged down by a large one-time write-off.

The property firm said net profit for the three months ended March 31, 2014, stood at $70 million, down from $87.4 million booked in the same period a year ago. This translated to earnings of 3.49 cents per share, compared with 18.37 cents per share booked a year ago.

These results came as Frasers Centrepoint booked an exceptional loss of $41.8 million from the redemption of related company loans before its listing.

-By Jamie Lee

Hotel disposal adds almost $1b to OUE gain

Group makes $105m provision for Twin Peaks project based on latest valuation

Source: Business Times / Companies

INTEGRATED property developer OUE Limited's net profit for the fiscal first quarter ballooned to $945.6 million from $1.8 million a year ago.

This was due to the recognition of net fair value gain on the Lippo Plaza property which amounted to $114.8 million and a gain of $986.4 million from the disposal of Mandarin Orchard Singapore and Mandarin Gallery to OUE Hospitality Trust. This was offset by an allowance for forseeable loss of $105 million provided on Twin Peaks based on the latest valuation obtained.

Revenue for the three months ended March 31 inched up 1.5 per cent, from $105.4 million to $106.9 million.

-By Mindy Tan

Wheelock Q1 profit dives in absence of disposal gain

Revenue slips 6.5% to $25.3m while bottom line is down 86.5%

Source: Business Times / Companies

WHEELOCK Properties (Singapore)'s first-quarter net profit has slumped 86.5 per cent to $14.3 million, from $105.3 million a year ago. This was due mainly to the previous first quarter being boosted by a $93.8 million accounting gain on disposal of SC Global Developments shares.

Revenue for the three months ended March 31 slipped 6.5 per cent to $25.3 million. Earnings per share plunged to 1.19 cents from 8.8 cents previously. Net asset value per share dipped to $2.49 as at end-March from $2.51 as at end-December.

In its results statement yesterday, Wheelock said that at its completed Scotts Square development, 79 per cent or 268 of the 338 residential units were sold as at March 31 this year - at an average price of $4,004 per square foot. "For the same period, 23 units were leased out of our stock of 26 units. Average rental achieved was close to $5,600 per month." Marketing and leasing of the remaining units is ongoing, it added.

-By Kalpana Rashiwala

Ezion Holdings

Source: Straits Times

Ezion showed no surprises in its first-quarter results. It performed in line with expectations, delivering a core US$46.2 million (S$58 million) profit, which is up 70 per cent year-on-year. Four of Ezion's rigs meant to begin operations in the first half of 2014 have been delayed by an average of three months each, through no fault of Ezion.

Views, Reviews & Forum

Reining in the runaway housing market

Source: Straits Times 

In 2011, the economy was hot - and so was the seat of the National Development Minister. "Inflation has also hit my ministry," Mr Mah Bow Tan quipped in that year's Budget debate.

Global Economy & Global Real Estate

China property slump seen hitting growth this year

Source: Business Times / Wealth

CHINA'S efforts to cool its property sector look to have been more effective than intended, as a sharp drop in construction activity and falling prices threaten what had been one of the few firing engines of the world's second-largest economy.

Developers know the market is struggling - their inventory is rising and prices are falling - but expect that authorities will relax their tight grip on the sector in coming months. The government has long made it clear that economic growth would moderate as it tries to reform the economy. But by keeping the pressure on property too long, analysts fear the fallout will be more severe than anyone had expected. "To us, it is no longer a question of 'if' but rather 'how severe' the property market correction will be," Nomura analysts said in a report.

New housing starts in the first quarter fell 25.2 per cent compared to a year ago, Nomura calculated, as tighter credit conditions, oversupply and falling prices undermined the market. They estimated the property slump could take a full percentage point off China's economic growth this year, knocking it below 7 per cent for the first time since 1990. The government is targeting growth of about 7.5 per cent.

-From Shanghai, China

NorthStar, Chatham to Buy 47 Hotels in $959 Million Deal

Source: Bloomberg / News

NorthStar Realty Finance Corp. (NRF), a property investor and lender, agreed to buy a majority stake in 47 U.S. hotels as part of a $958.5 million deal with Chatham Lodging Trust (CLDT) and Cerberus Capital Management LP.

NorthStar will acquire Cerberus’s 89.7 percent interest in a joint venture for the hotels, known as Innkeepers, while Chatham will retain its 10.3 percent stake, Palm Beach, Florida-based Chatham said today in a statement. The hotel real estate investment trust will take sole ownership of another four properties in the portfolio.

Chatham and Cerberus, a New York-based private-equity firm, bought the hotels that operated under the Innkeepers brand more than two years ago. The lodging industry has since benefited from rising demand in the economic recovery. Revenue per available room in the U.S. rose 7.2 percent in March from a year earlier, according to STR. The occupancy rate was 65.3 percent, compared with 63.5 percent a year earlier.

The 47 hotels, with about 6,100 rooms, are in top metropolitan markets, with the largest concentration of net operating income from properties in California. Eighty-three percent of the hotels are associated with Marriott or Hilton brands, New York-based NorthStar said in a statement.

The $958.9 million represents the venture’s gross purchase price of the 47 hotels. NorthStar is contributing about $213 million of equity for its stake.

Chatham and Cerberus paid $1.02 billion in October 2011 for 64 Innkeepers hotels. The price was less than the $1.12 billion the companies had previously offered after a dispute over whether the deal could be called off because of signs of a slowing economy at the time.

The Bloomberg hotel index rose 17 percent in the 12 months through yesterday, the best-performing REIT group.

-By Brian Louis

D.R. Horton Acquires Atlanta Homebuilder for $210 Million

Source: Bloomberg / Personal Finance

D.R. Horton Inc. said it paid $210 million for the homebuilding operations of Crown Communities, the largest residential developer in the Atlanta area, where new-home demand is still recovering from the recession.

Crown Communities, ranked the 28th-largest U.S. homebuilder by Builder Magazine, sells in Georgia, South Carolina and Alabama, a region where D.R. Horton, the largest U.S. homebuilder by volume, is expanding and introducing a line of lower-cost residences for first-time buyers.

“We are excited about combining the two largest builders in the Atlanta area to establish double-digit market share for D.R. Horton,” Donald R. Horton, chairman of the Fort Worth, Texas-based company, said in a statement today.

U.S. new-home sales fell 14.5 percent in March from February to an annual pace of 384,000, as rising prices and mortgage rates and inclement weather slowed shoppers, the Commerce Department reported last month. The pace was about 58 percent of the average for new-home sales dating back to 1963. Building permits in Atlanta last year were 55 percent of the local average from 1990 to 2012, according to a report yesterday by property-data firm Trulia Inc. (TRLA)

D.R. Horton bought Breland Homes, the 38th-largest U.S. builder, with operations in Alabama and Mississippi, in 2012. Last month, D.R. Horton announced its Express Homes brand, which sell for as little as $120,000, a price point easier to reach in the Southeast than in costlier parts of the country.

The developer sold 25,712 homes in the 12 months through March. Its homes sold for an average $250,400 in the Southeast, compared with $278,900 nationally and $444,500 in the West, in the most recent quarter, the company said in an April 24 regulatory filing.

Crown Communities last year sold 1,540 homes for $375 million, with an average price of $244,000, D.R. Horton said. Closely held Crown, based in Conyers, Georgia, has a backlog of 420 homes in production, 640 homes in inventory and 2,350 lots under ownership, along with 3,400 lots under option contracts.

-By John Gittelsohn