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15th November 2014

Singapore Real Estate

BCA Academy to be expanded to boost building and construction sector

Students at the new campus at Braddell Road can look forward to special features such as exposed pipes and wirings, to aid their understanding of building structures.

Source: Channel News Asia / Singapore

SINGAPORE: The Republic’s building and construction sector is set to get a boost with the expansion of the BCA Academy.

There will be new courses to groom professionals for the industry, which include a full-time Diploma in Architecture, a part-time Specialist Diploma programme in Construction Productivity and an Advanced Certificate in Construction Productivity.

Details of the new building were announced at a BCA Academy graduation ceremony on Friday (Nov 14). This year's graduating cohort consists of 569 specialist diploma and 401 diploma holders.

Students at the new campus at Braddell Road can look forward to special features such as exposed pipes and wirings, to aid their understanding of building structures.

The project costs S$62.2 million and boasts many green features that will bring about 35 per cent of energy savings.

The new building is expected to be ready by the second quarter of 2015.

- CNA/ek

Room to groom construction talent

BCA Academy's extension allows for higher intake, better materials testing

Source: Straits Times / Singapore

A NEW $62.2 million extension to the Building and Construction Authority (BCA) Academy will be opened next year with the aim of grooming more talent and improving Singapore's research capabilities in the industry.

The BCA's educational and research arm will have two buildings on its 20-year-old Braddell campus, which will allow for a higher intake of students as well as better testing of materials in the built environment sector.

Currently, the academy, which trains people for the sector, takes in about 8,000 students. But this will rise to 10,000 over the next two to three years.

Said BCA chief executive John Keung: "While we are pushing for technology to drive up productivity... we need the people in the industry to do all this. The software, the brainpower, is very important."

The extension will come with exposed pipes and fittings that students can explore first-hand, facility-maintenance technology and an urban farm.

Another key feature is a rotatable rooftop laboratory which can test building materials and systems - the first of its kind in Asia.

The lab, a collaboration between the BCA and the United States' Lawrence Berkeley National Laboratory, is open-air and can be rotated to face different directions when required.

Previously, building components were tested either in a controlled laboratory environment or in non-tropical climates abroad.

The campus extension, to be operational by the second quarter of next year, will also incorporate productive construction techniques, green features and disabled-friendly designs.

Sustainable technology such as solar panels and pumpless water tanks will save some 35 per cent in energy, while 88 per cent of the structure will be made using precast methods. "We are walking our talk and doing what we preach," said Dr Keung.

Mr Winson Ng, general manager of Soon Loong Engineering and Construction, believes that upcoming facilities will be a boost for the sector.

"The rotatable lab will provide more realistic and accurate testing. The exposed fittings can also help us better visualise current designs," said the 35-year-old, who is currently pursuing a bachelor's degree in construction management at BCA Academy.

Having completed a specialist diploma in mechanical and electrical coordination and a diploma in construction engineering there, Mr Ng was one of 970 who graduated from the academy yesterday.

The BCA's push to attract more women to the male-dominated sector is also reaping results.

Almost 40 per cent of the graduates this year were women - the highest proportion in the academy's history.

One of them was Ms Ellen Teo, 23, who earned a diploma in construction engineering.

She started working as an assistant project manager at Modern Concrete Drill Cut last month, and intends to carve out a career in the built environment sector.

"Since the time I was young, I've always liked to see things go from nothing to something," said Ms Teo, whose father is a subcontractor.

Senior Minister of State for Trade and Industry and National Development Lee Yi Shyan, who attended the ceremony, said that Singapore's workforce has to continuously update its skills in order to stay relevant in the future.

He said: "To future-proof our workforce against obsolescence, we need our workforce to regularly un-learn and re-learn. We need to develop the passion to embrace lifelong learning."

-By Yeo Sam Jo

No one home as ECs wait for occupants

Vacancy rates soar as supply spikes, upgraders take longer to sell flats

Source: Straits Times / Top of The News

VACANCY rates at executive condominiums (ECs) are at their highest level in more than five years.

This hybrid of public and private housing has proved very popular in recent years but experts blame a flood of new units for the spike in empty units.

The demand for resale Housing Board flats has also cooled and this means upgraders to ECs are taking longer to sell their old flats. 

The proportion of vacant EC units rose to 16.2 per cent in the third quarter, up from 12.2 per cent in the second quarter and just 6 per cent in the first.

The 2,375 vacant units came mostly from newer projects, The Straits Times understands.

Since the third quarter of last year, eight new ECs with nearly 4,200 units have received their temporary occupation permits (TOP) - a 40 per cent jump in EC units, said Mr Ong Teck Hui, national research director at JLL. They are: Arc at Tampines, Blossom Residences, Austville Residences, Belysa, RiverParc Residence, The Canopy, Esparina Residences and the Prive.

Experts say HDB upgraders buying ECs are now taking three to five months to sell their old flats, up from one or two months.

Transactions in the HDB resale market have been falling, from 25,094 in 2012 to 18,100 last year. This year's number is expected to be about 17,000, said Mr Chris Koh, director of Chris International. He expects HDB resale prices to bottom out in the middle of next year, after two years of price correction. "An overall price correction of about 10 per cent should tempt buyers back into the market."

In the meantime, vacancies are expected to keep piling up - not just in ECs, but in private condos as well. A total of 21,569 completed private residential units were vacant in the last quarter, up from 21,268 in the second quarter.

HDB resale prices have dropped for the past five quarters, with recent changes to valuation rules and to purchases by permanent residents making it even harder to sell at a high profit, said PropNex chief executive officer Mohd Ismail. "Sellers including upgraders are even having to accept prices below market value. Some are also holding out for better prices while postponing their key collections," he said.

Some would-be upgraders have given up plans to upgrade because of the erosion in purchasing power, he added.

He said EC upgraders accounted for 10 per cent to 15 per cent of the HDB transactions last year. He estimated that two-thirds of the 3,585 EC units sold last year were bought by upgraders, with the rest sold to first-timers.

HDB flat owners who buy an EC or another HDB flat have six months to dispose of their existing flats, after they have collected keys to their new units, a Housing Board spokesman said.

In the first three quarters of this year, it received 166 requests from HDB flat owners for an extension of time to sell their flats. Of these, 40 were from HDB flat owners who bought an EC unit, with the rest from flat owners who bought other HDB flats.

There were no extension requests from EC buyers last year, with recent ECs only completed from July last year.

As the number of EC completions is expected to be 2,845 next year, 6,371 in 2016, and 2,505 in 2017, pressure on EC buyers to sell their homes may mount, with EC vacancy rates to also increase, said Century 21 chief executive officer Ku Swee Yong.

Another source of pressure would be the higher supply of completed HDB and private residential units available for sale, said Knight Frank Singapore research head Alice Tan.

-By Rennie Whang

In lean times, malls face the problem of plenty

Retailers brace for new malls amid falling spending, e-commerce threat

Source: Straits Times / Money

RETAILERS are already feeling the heat from e-commerce and dwindling tourist spending but worse could come, with more malls set to open before the end of the year, competing for shoppers.

Seletar Mall in Sengkang and One KM in Paya Lebar will hold their grand openings at the end of the month, while Big Box in Jurong East promises to open by Christmas.

A glance at the recent financial results of real estate investment trusts (Reits) points to the problems facing the industry.

CapitaMall Trust reported a 1.5 per cent fall in shopper traffic at its 16 malls for the nine months to Sept 30 from a year earlier, while tenant sales dipped 3 per cent.

Starhill Global Reit noted that while shopper traffic was up 6.3 per cent at the five floors of Wisma Atria, which it manages, in the three months to Sept 30, tenant sales were down 8.7 per cent from a year earlier.

Mr Jonathan Kuah, a spokesman for Starhill, highlighted the importance of tourist spending, noting that it usually accounts for up to 50 per cent of sales at the reit's Orchard Road properties.

"Tourism has slowed due to the austerity drive in China, the strong Singapore dollar, weaker consumer sentiments and the diverting of Chinese tourists to other regions, including Korea and Japan," said Mr Kuah.

Reits are betting that Singapore's reputation as an attractive location for new international retailers could lift the outlook for the sector. Consultants are also noting more inquiries from overseas retailers - a healthy sign as domestic firms are unlikely to be able to absorb the upcoming new space alone.

About 5.7 million sq ft of retail space - the equivalent of almost six VivoCity malls - is expected to be created between now and 2019, said Ms Lee Lay Keng, regional research head at DTZ.

Consultants think the sizeable increase may put pressure on rents or lower occupancies, if developers refuse to budge on their asking rates.

Mr Desmond Sim, head of research for CBRE Singapore and South-east Asia, expects average mall rents to fall by 3 to 5 per cent within the next six months, as the influx of new supply will also mean weaker demand for secondary space, such as shop units on higher floors, where foot traffic is lower.

More store consolidations took place in the third quarter, he said, as retailers "closed less profitable outlets to focus on better performing ones while some looked to pre-terminate their leases".

Combined with their more cautious expansion plans, tenants seem to be putting up more resistance to higher asking rents, said consultancy Colliers.

The basket of retail space tracked by Colliers shows that the rental premium commanded by prime space in Orchard Road over similar space in regional centres such as Woodlands, Tampines and Jurong East has narrowed, from 8.4 per cent at the end of June to 7.5 per cent at the end of September.

But this trend could be reversed in the longer term as more heartland malls open their doors.

"Of the 2.5 million sq ft of retail space to be completed by the end of 2015, the largest supply will be concentrated in the suburban areas, with about 1.8 million sq ft," noted Ms Lee.

"Although Seletar Mall and One KM have reported healthy pre-commitment rates, that of other large malls such as Waterway Point are still unknown.

This could put a cap on suburban retail rents.

-By Marissa Lee

Scotts Square units leased out at $5,200 a month

Source: Straits Times / Money

THE luxury segment of the residential market is so dire that upmarket developer Wheelock Properties is leasing out units at Scotts Square, near the heart of Orchard Road.

Wheelock disclosed in its results statement yesterday that 33 units were leased at an average monthly rent above $5,200 during the third quarter. It did not disclose the rent on a per sq ft basis. An Internet check shows that $5,200 is the asking rent for a one-bedder of 626 sq ft.

Wheelock said its focus is on leasing, given the weakening buying demand in the luxury property sector.

As at Sept 30, 79 per cent or 268 units of the 338 units at Scotts Square had been sold, representing 85 per cent of the net saleable area at an average price of $4,004 psf.

Three units at Ardmore Three, a 36-storey freehold development comprising 84 three-bedroom apartments of 1,800 sq ft each, were sold in a private preview at an average price of $3,158 psf.

The Temporary Occupation Permit for the project in Ardmore Park is expected towards the end of the year.

In preparation for its launch, Wheelock is fitting out three showflats on site.

The Panorama, a 698-unit leasehold development in Ang Mo Kio, sold 282 units at an average price of $1,274 psf as of Sept 30.

Wheelock posted a 7.2 per cent drop in third-quarter net earnings to $11 million.

Revenue slumped 17.4 per cent to $22.8 million, as the contribution recognised from Ardmore Three based on the progress of construction was much lower than in the same period last year.

The group also received lower dividend income from its investments following the disposal of its stake in Hotel Properties to its associated company in the second quarter.

Earnings per share shrank to 0.92 cent from 0.99 cent previously while net asset value per share firmed to $2.66 compared to $2.51 as at Dec 31.

-By Dennis Chan, Deputy Money Editor

Companies' Brief

Higher revenue and gross margin boost United Engineers' Q3 bottom line

Source: Business Times / Companies & Markets

United engineers reported a 7 per cent increase in third-quarter revenue, thanks to progressive revenue recognition of the sale of its Eight Riversuites condominium development. Its topline rose to S$786.3 million for the three months ended Sept 30, 2014, from S$732 million the year before.

-By Michelle Quah

Oxley Q1 profit down 96% on revenue plunge

Source: Business Times / Companies & Markets

Oxley Holdings' Q1 net profit fell 96 per cent to S$10.1 million, on the back of a steep 82 per cent drop in revenue to S$120.3 million. The revenue recognition from 11 mixed-residential projects was based on the percentage of completion method which often gives rise to lumpy revenue figures.

Wheelock Properties' Q3 revenue, earnings fall

Source: Business Times / Companies & Markets

Wheelock Properties' Q3 net profit fell 7.2 per cent to S$11 million, while revenue fell 17.4 per cent to S$22.8 million, due to slower revenue recognised from Ardmore Three based on its construction progress. The group also received lower dividend income from its investments after disposing its stake in Hotel Properties to its associated company, 68 Holdings, in Q2.

Yongnam Q3 loss deepens to S$8.4m

Source: Business Times / Companies & Markets

Yongnam Holdings has deepened its Q3 net losses to S$8.4 million, from S$3.4 million a year ago. The engineering and construction firm's revenue about halved to S$47.3 million, after the completion of major projects such as the Marina Coastal Expressway contracts and the Singapore Sports Hub.

Dormitory demand drives Centurion's Q3 net profit up 47%

Source: Business Times / Companies & Markets

Centurion Corporation, which is in the dormitory business, reported on Friday a 47 per cent growth in net profit to S$7.92 million for the third quarter ended Sept 30, 2014, compared with S$5.39 million a year ago. Earnings per share improved to 1.05 Singapore cents from 0.71 cent.

-By Angela Tan

Brokers' Take

Source: Business Times / Wealth

Frasers Centrepoint achieves record revenue, but profit falls

Source: Today Online / Business

SINGAPORE — Frasers Centrepoint (FCL) yesterday reported that annual revenue rose by 33 per cent to an all-time record, driven largely by its overseas businesses, but that net profit slumped because of one-off items arising from listing and acquisition costs.

Revenue for the fiscal year ended Sept 30 jumped to S$2.73 billion from S$2.05 billion a year earlier, as the property giant completed development projects in Australia, China and the United Kingdom. During the year, the divestment of Changi City Point to Frasers Centrepoint Trust also contributed to the increase, FCL said.

However, net profit fell 31 per cent to S$500.7 million, after accounting for an exceptional loss of S$127 million, compared with the gain of S$46 million last year. The one-off expenses were due mostly to Australand acquisition costs of S$70 million as well as restructuring costs of S$42 million arising from the repayment of related company ahead of FCL’s listing early this year. Lower fair-value gains also contributed to the profit decline.

FCL — which made its debut on the Singapore Exchange in January following the split of Fraser and Neave’s drinks and property businesses — completed its A$2.6 billion (S$2.94 billion) buyout of Australian property developer Australand in September.

If the exceptional items and fair-value changes were not included, FCL’s net profit would have surged 25 per cent to S$501 million. The company announced a final dividend of 6.2 cents a share, taking its total dividend for the year to 8.6 cents.

On the domestic front, FCL said cooling measures implemented last year and the large supply entering the market continued to hurt sentiment.

However, it added: “Demand for projects with the right location, pricing and offerings remains. Land acquisition opportunities could surface given the moderation of land bidding at Government Land Sales sites.”

It said it expected its malls in Singapore to do well despite concerns persisting over a manpower shortage and slowing retail sales growth.

“Rising average household income and low unemployment will continue to underpin non-discretionary expenditure, which will benefit our well-located suburban malls,” it said.

Down Under, demand for high-quality assets remains very strong, FCL said, adding that its Australand investment portfolio would benefit from high occupancy, with a large proportion of income being subject to fixed rental increases and a long weighted average lease expiry.

Brokers' Take

Source: Business Times / Wealth

Sale of unit, forex gains lift Tat Hong's Q2 profit

Source: Business Times / Companies & Markets

Crane rental company Tat Hong Holdings reported a net profit of S$11.5 million for its second quarter ended Sept 30, 2014, up 39 per cent from S$8.2 million a year ago. However, the numbers included gains from the sale of its subsidiary Hup Hin Transport in July.

-By Cai Haoxiang

Views, Reviews & Forum

Housing price caps? Idea has limits: Experts

They cite quality control and resale market fluctuations as obstacles

Source: Straits Times / Singapore

PRICE caps on private homes might make housing more affordable in Singapore, but will not be entirely practical, say property experts, economists and an MP.

They were responding to businessman Ho Kwon Ping, who suggested in a lecture on Wednesday that the Housing Board redefine its role by introducing sales price caps on home units, and auctioning out land to private developers. This would render all housing developments private.

The S R Nathan Fellow and executive chairman of hospitality group Banyan Tree Holdings argued that this would ensure that home prices, pegged to income growth, stay within reach of Singaporeans. It would also erode the social divide between public and private housing.

But some are not convinced that his idea would work, citing quality control and resale market fluctuations as obstacles.

"Private developers have to improve their profit margins. With price caps, they might cut corners," said Mr Ku Swee Yong, chief executive of real estate agency Century 21.

Assistant Professor of Economics Walter Theseira at Nanyang Technological University agreed: "It will inevitably need strong intervention by the Government."

SLP International Property Consultants research head Nicholas Mak pointed out that such price caps might even lead to a demand and supply imbalance.

"HDB will need to look into a crystal ball to arrive at a price cap," he said, explaining that resale prices might fluctuate between a land auction and a property launch, affecting demand for the newly built homes.

"If the cap is too high, the developer may end up stuck with too many flats. If it's too low, people will be scrambling to buy underpriced flats," said Mr Mak.

Mr Liang Eng Hwa, deputy chairman of the Government Parliamentary Committee for National Development and an MP for Holland-Bukit Timah GRC, said it is debatable that price caps will guarantee affordability.

"What you do not want is for HDB to constantly second guess the price levels at which developers will come in," said Mr Liang, adding that HDB's current approach of pegging Build-To-Order (BTO) flat prices to the incomes of low- to middle-income households has its merits.

Many also felt that removing the distinction between public and private housing would be tough. Noted Prof Theseira: "We're a status-conscious society. People who want to distinguish themselves will still look for more expensive homes."

Some, however, saw potential in Mr Ho's proposal.

Said National University of Singapore economist Tilak Abeysinghe: "Price caps are workable. They could help control price bubbles that are driven by sentiments."

On the issue of quality control, Mr Donald Han, managing director of real estate consultancy Chestertons, said that it could be solved by creating a list of HDB-approved developers.

Mr Alan Cheong, senior director of research and consultancy at real estate service Savills Singapore, likened Mr Ho's idea to the tendering of public transport to private operators. Private developers could also create more interesting towns according to market demand, he added.

Agreeing with Mr Ho that the HDB's role has to evolve, Mr Liang nonetheless was quick to stress: "One part of HDB's mission must remain unchanged: to take care of the housing needs of the poor and vulnerable."

-By Yeo Sam Jo

Drawbacks of changing HDB's role

Source: Straits Times / Forum Letters

BUSINESSMAN Ho Kwon Ping raised several big ideas regarding Singapore's economic strategy ("The next 50 years of Singapore's economy"; Thursday). His analyses were insightful and his recommendations were refreshing.

One of his more radical proposals was to change the role of the HDB from that of a public housing developer to one of a national housing price regulator, to facilitate housing affordability for Singaporeans. This carries with it many consequences, not all of which are favourable.

First, while the egalitarian bent of a housing price regulator may lead to better affordability for the masses, it will stifle the free market that has driven our economy so successfully.

The property sector has been thriving, providing satisfying careers for many technical and managerial professionals and spin-off businesses for other industries. It has brought vibrancy to our residential market and raised the quality of urban living to a level envied by many countries.

We probably should dread the downside of conformity and utilitarianism in the housing market, which is a distinct possibility if free-market competition is replaced by regulation.

Second, as the HDB has been able to meet the housing needs of 85 per cent of Singaporeans, there is in effect only 15 per cent of competitive space left for private housing.

It would be an unkind and unnecessary removal of this competitive space, resulting from blurring the distinction between public and private housing, not just for developers, who have a direct stake, but also for Singaporeans who aspire to own private housing. We should not add to the list of unfulfilled ambitions, which is a recipe for driving some Singaporeans to seek fulfilment elsewhere.

Lastly, regulation is a blunt instrument to rein in prices, and should be the last resort when all other options have failed.

I appreciate the need to maintain moderate increases in home prices to ensure affordability, and most of us would want to minimise the risk of a property bubble. However, property cooling measures introduced by the Government are seen to be working - albeit at a slow pace.

These measures have been well thought out and implemented, covering the need to dampen excessive investment gains by the rich and emphasising social responsibility by individuals. We should allow the measures to run their course before considering other radical solutions.

-By Yeoh Teng Kwong

Global Economy & Global Real Estate

Tianjin Eco-city to be national testbed for green development in China

The eco-city, run by Singapore and China, has been identified as China's first national green development demonstration zone.

Source: Channel News Asia / Singapore

SINGAPORE: In a major boost for the Sino-Singapore Tianjin Eco-city, the development has been identified as China's first national green development demonstration zone.

From now until 2020, it will serve as a test-bed for new models of green development in China.

While there is no official tally, there are more than 200 eco-cities in China today by some estimates. Mr Xie Zhenhua, vice-chairman of China’s National Development and Reform Commission explained why the joint-project was chosen. "The Tianjin Eco-city's development model fits in perfectly with China's strategy for green development. The eco-city is the first in the world to be developed by two countries, and the concept of this eco-city is very advanced."

An action plan has been developed to bring the eco-city to the next level. There will be more low-carbon developments. Green transport is also on the agenda, with plans to promote the usage of electric vehicles.

The action plan also marks an attempt by China to move away from a solely GDP-focused model of development, which comes at the expense of the environment, towards one that is more eco-friendly.

Mr Liew Choon Boon, Senior Director from the Eco-city Project Office at the Singapore Ministry of National Development, said: "One of the key functionalities that we hope to achieve for the eco-city is scalability and replicability. So this is actually a very significant development and demonstrates how the Chinese views the importance, and also the success and achievements of the eco-city so far."

If successful, the Tianjin Eco-city's pilot schemes for sustainable development will be replicated in cities across China.

- CNA/dl

China property investment slows further, but slump in sales eases

Signs of improvement indicate that efforts to boost sector may be starting to have an effect

Source: Today Online / Business

BEIJING — Growth in China’s real-estate investment has continued to slow in the first 10 months to its lowest in more than five years, but property sales are showing signs of improvement, indicating that Beijing’s efforts to boost the sector may be starting to have an effect.

Property investment, which affects more than 40 other sectors from cement to furniture, grew 12.4 per cent in the January-to-October period from the corresponding period a year earlier, the National Bureau of Statistics (NBS) said yesterday. That compared with a rise of 12.5 per cent in the first nine months and was the slowest pace since July 2009.

“Slowing property investment growth has continued to drag on China’s broad economy. We expect the trend will continue in coming months even though sales picked up,” said China Development Bank Securities economist Du Zhengzheng in Beijing.

Property sales fell 1.6 per cent last month in terms of floor space, improving substantially from September’s 10.3 per cent drop, after the Chinese authorities announced steps in September to support the sluggish housing market, including lower mortgage rates and down payments for certain categories of home buyers.

“Those are early signs that there may not be a collapse of the property market and that the recent measures may have stabilised the momentum of property investment,” said Citigroup economist Ding Shuang in Hong Kong.

The NBS data also showed that mortgage loans to home buyers dropped 4.3 per cent in the first 10 months, easing from the drop of 4.9 per cent in the January-to-September period, as banks quickened their mortgage approvals and started to provide preferential rates to some home buyers.

Home loans were significantly cheaper last month than in September, The Financial Times’ China Confidential report said. About 16 per cent of real-estate companies surveyed said first-time home buyers were able to secure a mortgage below the benchmark lending rate, up from only 2 per cent in September.

Financing costs were also lower for existing home owners wanting to move to a new property, with 15 per cent of developers surveyed saying second-time buyers did not have to pay above the benchmark rate, up from 3 per cent in September, the report added.

Still, analysts doubted whether the government moves in September would be enough to stem the weakness in the property market as a glut of unsold homes continues to hang over the market.

As the property sector accounts for more than 15 per cent of China’s annual economic output, the prolonged cooling of the housing market poses the biggest risk to growth in the world’s second-largest economy, with the spillover effect expected to hit its trading partners across the region.

“The No 1 exposed economy is Hong Kong, but Australia is right after that. Australia is the most geared into the China investment story,” Mr Paul Gruenwald, Standard & Poor’s chief economist for the Asia-Pacific said yesterday, the Sydney Morning Herald reported. AGENCIES

Norway oil fund to enter Asian real estate market

And it says it's targeting an investment horizon of 'forever'

Source: Business Times / Real Estate

State-backed developers moving into Guangzhou

Source: Business Times / Real Estate

Malaysia's economy grows 5.6% in Q3

Source: Business Times / Government & Economy

PRIVATE consumption and investment activities continued to drive Malaysia's economy, which in the third quarter grew 5.6 per cent, putting it on track to chart full-year growth of 5.5-6 per cent. The country's gross domestic product (GDP) had grown 6.5 per cent in the second quarter, and in the nine months to September averaged 6.1 per cent.

Household debt - a sizeable 87 per cent of GDP - continued to inch up, albeit at a moderated pace of 10.4 per cent. The risk of loan delinquency remained low, however, as households showed a sustained capacity to service their debts; impaired loans made up 1.2 per cent of total household borrowings.

The quality of loans has improved since Bank Negara issued guidelines requiring banks and other credit institutions to abide by more stringent lending criteria. Bank Negara governor Zeti Akhtar Aziz, presenting the third-quarter report card on Friday, noted, for instance, that the debt service ratio of half the new borrowers since July had fallen to a more prudent level of 40 per cent or less. Comparative figures are unavailable as the central bank began compiling more comprehensive data only in July.

What is evident is that the screws have been tightened, especially on non-bank financial intermediaries, or the so-called "shadow banking sector".

Between 2010 and 2012, before the introduction of macro prudential measures, personal financing loans rose by more than 20 per cent a year as borrowers lapped up the easy credit; this has now moderated to 4.2 per cent a year, Ms Zeti said.

Meanwhile, the banks have remained accessible to businesses, with domestic borrowing by the sector having risen 7.6 per cent in Q3.

During the quarter, home loans accounted for some 40 per cent of total loans, but the more stringent vetting of borrowers meant that three to four in 10 loan applications were rejected, to the dismay of builders.

But these changes have cooled the double-digit rise in home prices of recent years, as well as the purchase of multiple homes. In the past two quarters, home prices inched up 9.6 per cent, while the number of multiple-loan borrowers comprised about 3 per cent of total home loan borrowers.

Asked about the rising contingent liabilities of the federal government - which stand at between 12 and 15 per cent of GDP - Ms Zeti maintained that this would not pose a risk to the economy; she added that Putrajaya was aware of this and was looking at ways to raise economic growth.

"As part of the management of the fiscal debt, there is a need to remain prudent in the debt position of the government and its contingent liabilities," she said, adding that many projects guaranteed by Putrajaya were considered viable and were regularly assessed.

In recent months, public anxiety over the ever-ballooning off-balance sheet amounts has mounted, given that a default could affect the country's sovereign ratings.

For huge infrastructure projects such as the Klang Valley MRT, the possible liabilities are viewed as acceptable. But the government has come under fire for contingent liabilities assumed for less transparent projects and agencies, including state investment agency/sovereign fund 1MDB, which posted a RM665 million (S$257 million) loss last year amid ballooning debts of RM42 billion.

-By Pauline Ng

U.K. October House Prices Rise 0.7% as Sales Hit Seven-Year High

Source: Bloomberg / Luxury

U.K. house-price growth accelerated in October as the number of properties changing hands rose to match a seven-year high, according to Acadata and LSL Property Services.

The average value of a home in England and Wales rose 0.7 percent to 277,390 pounds ($436,500), compared with a 0.3 percent gain in September, the groups said in an e-mailed report today. Prices increased 10.5 percent from a year earlier. Transactions climbed 9 percent on the month to 90,500, driven by demand outside London.

While demonstrating national strength, the report chimes with growing evidence that London’s priciest districts are losing momentum as record prices and speculation a so-called mansion tax might be introduced curb demand. In September, the most recent month with detailed data for the capital, prices dropped in six of the seven most expensive boroughs including Westminster, Richmond and Camden. Average prices in the capital rose 0.4 percent, the least in 15 months.

“Recent hiccups in the market have not shaken the overall underlying stability” of the U.K. market as a whole, said David Newnes, a director of an LSL unit. “At the very top end of the housing market in prime central areas of London, growth is subsiding.”

-By Scott Hamilton

LSL Property Considers Cutting 60 Jobs at E.Surv Unit

Source: Bloomberg / Luxury

LSL Property Services Plc (LSL) may cut about 60 jobs at its e.surv Ltd. unit, the largest provider of residential property valuations in the U.K.

The employees “are at risk of redundancy as the Hinckley office of e.surv is expected to close,” the property broker said in an e-mail today. “E.surv needs to ensure maximum efficiency to be able to deliver additional service benefits to clients and therefore the operational function will be centralized into Kettering.”

Tighter lending criteria and new rules restricting mortgages has reduced transaction levels and hurt sentiment in the housing market, LSL said Nov. 13. LSL, whose share price has fallen more than 30 percent this year, said revenue from its surveying and valuations business rose 2 percent from July 1 to Nov. 12 compared with the same period a year earlier.

The company will try to move workers to other positions to minimize job losses, LSL said. The broker has about 4,800 full-time staff and “regrets that a small number of employees have been affected by this office closure,” LSL said.

-By Neil Callanan

Additional Articles of Interest - Local & Overseas Real Estate