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2nd May 2014

Singapore Economy

Tight labour market keeps wage costs up

Source: Business Times / Top Stories

[SINGAPORE] In its latest Macroeconomic Review, the Monetary Authority of Singapore (MAS) has said that the labour market remained tight in the second half of last year. This web chart illustrates the continued crunch by comparing the values of five labour market indicators: overall unemployment, long-term unemployment, redundancy, overall vacancy rates, and resident wage growth.

Despite strong hiring intentions, the overall vacancy rate in the second half of last year was markedly higher than its five and 10-year historical averages.

Indeed, job vacancy rates rose in every sector in the latter half of last year, reflecting the difficulties that companies experienced when attempting to fill positions.

This helped to drive strong resident wage growth, which was also higher in the second half of 2013 than its historical averages.

-By Kelly Tay

Singapore Real Estate

Fewer new resale flats put up for sale

Source: Straits Times

Fewer flat owners are jumping at the chance to sell their Housing Board unit once they can, as weak resale prices make it more worthwhile to hold on. Two years ago, almost one in five of those who turned eligible to sell their flat - having stayed for the minimum five years - promptly did so within the year.

Some demand for new private homes

Source: Straits Times

Sales were brisk at the launch of a 99-year leasehold condominium near Queenstown MRT station yesterday, while another project near Clementi which opened for preview also drew a crowd, signalling that there may still be some demand for new private homes.

Rents in affluent areas suffer from outward migration

Source: Today Online / Business

As the housing market moves into the peak rental season, the Core Central Region (CCR) continues to struggle to regain the rents it commanded before the global financial crisis.

According to the Singapore Real Estate Exchange’s (SRX) Rental Price Index for non-landed private homes, rents in the CCR are now down 1.9 per cent from their pre-crisis peak. The CCR consists of the city centre including high-end areas such as Orchard, River Valley, Bukit Timah, Holland Road, Harbourfront and Sentosa Cove. In contrast, rents in the Rest of Central Region (RCR), or city fringes, and the Outside Core Region (OCR), or suburbs, have exceeded their pre-crisis price peaks by more than 8 per cent.

While demand during the peak rental months of May, July and August will place upward pressure on rentals, data from the SRX suggests that the CCR’s underperformance is part of a rebalancing of rental prices among the three regions. Tenants are clearly moving away from the CCR in search of more affordable housing, dampening rental prices in the region while driving them up in the other regions.

Two primary factors have conspired to weaken rental prices in the CCR. First, the expansion of MRT lines has allowed condominiums in the RCR and the OCR to capture those renters who were reluctantly paying more for the convenience of living in the CCR. Now, renters can choose from more condominiums with easy MRT access to downtown and other points of interest. Yes, their commute might increase by a few MRT stations, but the savings in rent more than offset that small inconvenience.

Second, the global financial crisis has shrunk the rental budget of tenants, causing them to seek more affordable homes further away from the CCR. As a result of the crisis, families tightened their budgets and corporations reduced or eliminated rich housing packages. Many families decided it made more financial sense to live outside the CCR, closer to schools, and let the breadwinner do the long commute.

How long will this trend of migration out of the CCR continue? It will continue as long as people believe they are getting more value for money. For example, prior to the global financial crisis, a family saved 27.8 per cent in rent by living in the RCR instead of the CCR. Today, that family saves 17 per cent. The rental savings of the OCR over the CCR was 43.2 per cent in 2008, while it is 37.9 per cent today.

As expected, the savings are coming down as demand from migration drives RCR and OCR prices up and those in CCR down. At some point, if supply were to remain constant, the migration will slow as savings become less attractive for the renter to move out of the CCR.

However, it is difficult to imagine that this reshuffling of the real estate market will not last for some time. Today’s significant rent savings and the expanded infrastructure of the MRT make it much easier and faster to migrate out of the CCR.

-By Sam Baker

Brisk sales at Commonwealth Towers on Day 1

Source: Business Times / Property

[SINGAPORE] Commonwealth Towers, Hong Leong Holdings' high-rise condominium project, took off on its first day of sales yesterday. As at 8pm yesterday, out of the 300 units initially launched, 175 units had been snapped up, with more than 100 buyers in the process of having options issued.

In view of the demand, developers extended yesterday's sales hours and added another 100 units to the launch, said Betsy Chng, head of sales and marketing at Hong Leong Holdings. 

The units are priced between $1,635 per square foot (psf) for a one-bedroom apartment to $1,690 psf for a four-bedroom unit. The strong sales followed the keen initial interest the project drew on its first-day preview on April 13. More than 1,500 people visited the showflat, prompting Hong Leong to extend the preview time by two hours.

The sales of Commonwealth Towers may help boost market sales figures for this quarter as the first quarter of the year saw a slide in the number of launches and sales.

According to the Urban Redevelopment Authority, developers launched 1,964 uncompleted private residential units for sale and sold 1,744 in the first three months this year, fewer than the 2,631 units launched and 2,568 sold in the previous quarter.

Jointly developed by members of the Hong Leong Group - Hong Leong Holdings, City Developments Limited and Hong Realty - Commonwealth Towers sits on 130,101 square feet of land and is linked to Queenstown MRT Station by an overhead pedestrian linkway.

The lure of Commonwealth Towers, located on Commonwealth Avenue, is city-edge living as it is a short drive away from the Ayer Rajah Expressway and Pan Island Expressway, and is within easy access of amenities such as shopping malls like Anchorpoint, Ikea and the upcoming Alexandra Central.

"Commonwealth Towers is located in a well-established residential estate. It is close to the upscale Tanglin precinct and a short drive to Singapore's premier shopping district, Orchard Road. It is ideal for buyers who are discerning of location," said Ms Chng.

The 99-year-leasehold condominium development comprises 845 units in two blocks of 43-storey buildings. With full condominium facilities, this latest Hong Leong development has one to four-bedroom apartments with unit sizes ranging from 441 sq ft for a one-bedroom unit, priced at $721,000, to a 1,302-sq-ft four-bedroom apartment, costing $2.2 million.

Commonwealth Towers features four sky terraces centred on lifestyle themes - wellness, relaxation and dining - and a clubhouse with a 50-metre lap pool, a lifestyle free-form pool, a hydrotherapy pool with an aqua gym, as well as an outdoor fitness area. The Temporary Occupation Permit for the development is expected in December 2017.

-By Malminderjit Singh

Commonwealth Towers condo sees strong demand at launch

Source: Channel News Asia / Singapore

SINGAPORE: The Commonwealth Towers condominium near the Queenstown MRT station saw strong demand at its launch on Thursday.

Developers said that as at 8pm, 175 of the 400 units launched were sold, with at least another 100 buyers waiting in line.

One property analyst said the lack of recent launches in the area may have driven up sales for the project.

Many people took advantage of the May Day holiday to check out the latest property launch in the Queenstown area.

Franky Lim, a potential buyer, said: "This is quite a good location. The psf (per square foot) is slightly over what we thought it would be. The quantum is also not small, so we are still considering."

The most popular are the two-bedroom units, which are going from S$965,000. More than 50 per cent of those units have since been sold.

The launch saw 300 units on offer initially, but developers decided to add another 100 in view of the strong demand.

The development has a total of 845 units consisting of one- to four-bedroom units ranging from 441 to 1,302 square feet.

Prices start from S$721,000 for the one-bedroom units to S$2.2 million for a four-bedroom unit.

An analyst said the lack of recent launches in the area may have boosted sales for the Commonwealth Towers project.

The last condominium in the area was launched some four years ago.

Ku Swee Yong, CEO of Century 21 Singapore, said: "Today's showing is evidence that there are a lot of investors who, firstly they qualify under the TDSR (Total Debt Servicing Ratio) and ABSD (Additional Buyer’s Stamp Duty) rules, and they are also happy to put their investment money to work in a product that is well-located as well as with good interior furnishings."

Attractive prices are also important in drawing buyers, especially for two upcoming projects at Kim Tian Road and Prince Charles Crescent.

Prices have not been released yet but analysts expect developers to take the cue from the market reaction for Commonwealth Towers.

Channel NewsAsia understands that the Kim Tian Road site has the highest land cost at S$1,163 psf per plot ratio, followed by the Prince Charles Crescent plot at S$960 psf ppr.

Another project which opened for preview on Thursday is the Waterfront @ Faber. The 199-unit development at Clementi saw some 400 visitors at its showflat.  

- CNA/ms

Surbana looks to splash $120m on acquisitions

Source: Business Times / Top Stories

[SINGAPORE] Surbana International Consultants is on an acquisition path to bulk up and fight off intensifying competition from rivals in the region and globally.

The urban solutions consultancy firm is preparing to splash $120 million on buying two or three companies in China and South-east Asia in the next 24 months to boost its business.

The goal is to increase its current annual revenue of $200 million to $400 million-$500 million by 2018 - "really peanuts" still - as chief executive Pang Yee Ean put it, compared to the likes of American giants Aecom and Jacobs Consultancy which boast annual revenues of US$8 billion and US$12 billion, respectively.

"Even among the Europeans, in a relatively smaller country like The Netherlands, Accadis earns in the range of two billion euros (S$3.48 billion) in revenue. The Chinese, too, are growing without us noticing. They have at least 200 design institutes doing the same business as us that are bigger than us," Mr Pang said.

-By Lee Meixian

Pearl Bank still special after all these years

Source: Straits Times 

American architect Ed Poole was so set against a proposal to put Pearl Bank Apartments up for a collective sale in 2007 that he hired a lawyer and rallied his neighbours. The attempt failed. "Pearl Bank is irreplaceable," said Mr Poole, 54, who lives in a penthouse unit in the landmark building along Outram Road. "There is no way you can find another apartment like Pearl Bank in Singapore."

Global Economy & Global Real Estate

'Hotel with a view' coming up at 19th-century NY skyscraper

US$350m Beekman Hotel will have 287 rooms and a condo tower next door

Source: Business Times / Property

[NEW YORK] For years, development plans came and went at 5 Beekman St like City Hall workers filing in and out of their nearby offices in lower Manhattan. Expectations for the property were high.

The nine-storey brick-and-terra-cotta building at Nassau Street was one of New York's first skyscrapers when completed in the late 1800s, even if others quickly eclipsed it.

For fans of antique architecture, 5 Beekman has also been a source of fascination because few have seen its distinctive interior feature - a tall atrium topped by a large pyramid-shaped skylight that was sealed up for much of the 20th century.

Soon, though, admirers may be able to share the view. A developer is converting the office building to a 287-room hotel with restaurants and bars, and adding a condo tower next door.

-From New York, US

Credit Suisse Completes Rare Home-Loan Bond Deal, DBRS Says

Source: Bloomberg / Luxury

Credit Suisse Group AG (CSGN) completed the fifth bond deal this year tied to new U.S. home loans without government backing amid a renewed slowdown in the market, according to ratings firm DBRS.

The securities are backed by 364 loans with $271.7 million of balances, the credit grader said today in an e-mailed statement. Most of the notes in the transaction, named CSMC Trust 2014-IVR2, were granted AAA rankings. Invesco Mortgage Capital Inc. (IVR), a real-estate investment trust, has purchased the junior-ranked notes in previous non-agency deals with names containing IVR, its stock ticker symbol.

Drew Benson, a Credit Suisse spokesman in New York, and Bill Hensel, a spokesman for Atlanta-based Invesco, declined to immediately comment.

The non-agency market has contracted as banks seek jumbo mortgages to hold as investments and bond buyers demand higher relative yields, after showing signs of reviving from its paralysis following the 2008 financial crisis. Issuance has also been restrained by investor distrust of the debt and competition from government-backed programs.

While total issuance of non-agency securities tied to new loans jumped to $13.4 billion last year from $3.5 billion in 2012, the sales collapsed after September, according to data compiled by Bloomberg. Less than $1 billion of the deals were completed from October through December, and issuance now totals about $1.6 billion this year.

Sales peaked at $1.2 trillion in both 2005 and 2006.

BMI Residential Mortgage Loan Trust, an entity managed by BlackRock Inc. (BLK), sold 26 percent of the loans to the Credit Suisse unit that created the latest securities, according to DBRS.Tara McDonnell, a spokeswoman for New York-based BlackRock, declined to comment.

Jumbo mortgages are those larger than allowed in government-supported programs, currently as much as $729,750 for single-family properties in high-cost areas. Limits range from $417,000 to $625,500 for Fannie Mae and Freddie Mac loans with the lowest costs for borrowers using 20 percent down payments.

-By Jody Shenn