Real News‎ > ‎2014‎ > ‎September 2014‎ > ‎

26th September 2014

Singapore Economy

Population grows to 5.47m, at slowest pace in 10 years

Women and older workers help mitigate demographic worries

Source: Business Times / Top Stories

[SINGAPORE] The Republic's population growth has slid to its lowest in a decade, fertility rates have fallen further, and ageing continues at a rapid pace.

While these may have negative repercussions on the economy, some economists say the situation may not be as dire as generally predicted, since more older citizens are opting to work past retirement age.

Latest government figures released by the National Population and Talent Division (NPTD) on Thursday show that the total population grew at its slowest pace in 10 years, expanding just 1.3 per cent to 5.47 million as of June this year.

The easing in total population growth was driven by slower expansion in the non-resident population, which now stands at 1.6 million - an increase of 2.9 per cent compared to 4 per cent a year ago. This was, in turn, a result of the government's tight restrictions on foreign labour inflows, which saw foreign employment growth slow to 3 per cent versus 5.9 per cent the previous year.

By granting 20,000 new citizens and 30,000 new permanent residents (PRs) annually in the past few years, the government has kept immigration numbers stable. This is even as the citizen population continues to age, and as Singaporeans have fewer than enough babies to replace themselves. With increasing life expectancy and low fertility rates, there are more citizens in the older age groups today. The proportion of citizens aged 65 years and above rose to 12.4 per cent in 2014 from 11.7 per cent a year ago, while the median age of Singaporeans increased to 40.4 years from 40 years previously. This means the old-age support ratio - which is the number of citizens in the working age band of 20 to 64 needed to 

support one older citizen - is shrinking rapidly.

It fell from 11.4 in 1980 to 8.4 in 2000, before sinking further to 5.2 in 2014. At the same time, the resident total fertility rate (TFR) fell to 1.19 in 2013 from 1.29 in 2012, which was a "dragon year" on the Chinese zodiac. While NPTD said that the dip from 2012 to 2013 was gentler compared to previous post-dragon years, the overall TFR of 1.19 is far below the replacement level of 2.1.

Taken on their own, the latest population statistics paint a rather grey picture of Singapore's future. A shrivelling old-age support ratio would mean greater pressure on the working population and more stress on fiscal policy - worrying trends which population experts have long flagged.

But some economists told The Business Times that not all is doom and gloom.

Said UOB economist Francis Tan: "The support ratio worsening is just one side of things. Other factors are also at play here: the government is incentivising older workers to stay employed; people are questioning whether their retirement savings are enough so they're continuing to work; the government's foreign worker quotas are forcing companies to provide higher wages and that has enticed more elderly people at the margins to join the job market.

"Taken together, these conditions should make us less worried about this scary 5.2 old-age support ratio. I'm not saying the downward trend is not a concern, but I think we can't look at population numbers purely on their own - we need to look at labour market trends too."

Indeed, according to figures from the Ministry of Manpower (MOM), the total labour force participation rate of residents aged 65-69 have increased dramatically from a decade ago. While this stood at 19.5 per cent in 2003, it climbed to 27.5 per cent five years later in 2008, before spiking up to 40.2 per cent in 2013.

And amid the tight labour market, MOM said in January this year that the labour force participation rate rose to a new high in 2013, driven by women and older residents.

Noted OCBC economist Selena Ling: "If the retirement age changes to 67, that will skew the ratio for sure as more elderly (persons) rejoin the workforce. Then the reality may not be as bad as what the (population) numbers suggest."

Still, Mr Tan, Ms Ling, and other economists are concerned about the nation's lacklustre fertility rate and swiftly ageing population.

Said DBS economist Irvin Seah: "This demographic shift is perhaps the biggest challenge facing Singapore... The situation isn't easy to reverse, and it will take more than conventional economic policy to resolve. Mindsets will have to change."

-By Kelly Tay

S'pore population grows at slowest pace in 10 years

Population hits 5.47 million, with fewer foreigners being hired

Source: Straits Times / Top of The News

SINGAPORE'S population grew at its slowest pace in 10 years for the 12 months ending this June, as fewer foreign workers were hired.

It crept up 1.3 per cent to 5.47 million people, including permanent residents and foreigners working here, according to a report released by the National Population and Talent Division (NPTD) yesterday.

In the previous year, the rise was 1.6 per cent.

The citizen population, however, continued to grow at the same pace as in the previous 12 months, rising almost 1 per cent to reach 3.34 million now.

But with Singaporeans living longer and having fewer babies, the population continues to age, noted the NPTD.

Those aged 65 and older form 12.4 per cent of the citizen population in June, up from 11.7 per cent a year earlier.

The new 1.3 per cent population growth is in line with the Government's projections in its White Paper on population, published in January last year, and is likely to continue, said Dr Kang Soon-Hock, head of SIM University's social science core.

Should it be maintained, economist Song Seng Wun calculates that the population will cross the six-million mark in 2022, eight years from now.

"This rate means Singapore would take 12 years to add one million people compared to the 10 years it would take previously," said Mr Song, of CIMB Research.

Experts attribute the slide to government policies aimed at reducing the inflow of foreigners.

The NPTD said as much, pointing out that the Government had taken "concrete steps... to slow the growth of our foreign workforce to a more sustainable pace".

But Bank of America Merrill Lynch economist Chua Hak Bin warned the reduced pace, coupled with Singapore's low birth rate and rising number of elderly people, could hurt the economy.

"The effects of the ageing population would be felt more keenly with the tightening of immigration policies leading to fewer younger people being allowed into Singapore on work passes," he said.

The slower foreign flow is seen mainly in the service sector, the NPTD's Population In Brief report shows.

As a result, foreign employment rose by just 3 per cent this time, compared with 5.9 per cent previously.

In turn, the non-resident population, made up mostly of foreign workers, climbed by only 2.9 per cent against 4 per cent before.

The rise in the number of elderly people has led to a further fall in the old-age support ratio, which is the number of citizens in the working-age band of 20 to 64 supporting one older citizen. It is now 5.2 versus 5.5 previously.

As for marriages, the annual numbers were 21,842 this June compared with 23,192 a year ago.

Birth figures were similarly disappointing across all ethnic groups.

The fertility rate fell to 1.19 last year from 1.29 in the Dragon Year, way below the replacement rate of 2.1 per cent.

Coupled with the fact that Singapore's productivity drive has not delivered "material gains", these could weigh on growth, said Dr Chua.

National University of Singapore sociologist Tan Ern Ser said a balance has to be struck between the need for a vibrant economy, a liveable environment, and enough resources to address problems of an ageing population.

If Singaporeans want to maintain the present standard of living, there must be enough people - whether local or foreign - to do jobs where there are not enough workers, like in eldercare, to sustain "some minimal level of economic growth", he said.

"There are trade-offs and we have to make difficult choices. We can't always have our cake and eat it, sadly," he added.

-By Tham Yuen-C

Population hits 5.47m but growth slowest in a decade

No conclusive evidence rapidly ageing citizenry will lead to falling productivity: Analyst

Source: Today Online / Singapore

SINGAPORE — Singapore society continued to age in the past year, as the Republic’s total population grew at its slowest in a decade, rising 1.3 per cent to reach 5.47 million in June.

The proportion of citizens aged 65 and above inched up to 12.4 per cent this year, up from 11.7 per cent last year. Citizens’ median age increased to 40.4 years, up from 40 last year.

The statistics were released yesterday by the National Population and Talent Division (NPTD) in its the annual Population in Brief report.

It also showed that the number of citizens rose by 0.9 per cent in the past year to 3.34 million, through births and immigration. There were 20,572 individuals granted citizenship last year, and 31,017 citizen births. The number of permanent residents held steady at 0.53 million.

The number of non-residents — largely comprised of foreigners working here and their families, as well as students — rose by 2.9 per cent, slower than the 4 per cent the previous year.

The NPTD said foreign employment growth — driven mainly by the construction sector — was 3 per cent, “a more sustainable pace” compared with the 5.9 per cent the previous year. Two-thirds of the increase in foreign labour in the past year, or about 22,000 out of about 33,000, was from construction, statistics showed.

Businesses will face a tight labour market going forward as the economy restructures, but Singapore will remain business-friendly and the Government will help businesses to grow and succeed here, said the NPTD. The slowdown in total population growth was the result of moderation in foreign employment growth, which the Government has taken concrete steps to achieve, it added.

Asked if Singapore’s economic growth projections -- 3 to 5 per cent annually until 2020 -- were sustainable in the face of slowing inflow of non-residents and a rapidly ageing citizen population, economist Shandre Thangavelu said the impact of an ageing population was felt even with a rapid increase in the foreign population. “In fact, there is no conclusive evidence that ageing will lead to slower or falling productivity growth as older workers have inherent acquired skills that will allow them to adapt and adopt to economic situations much better,” said Associate Professor Shandre, Regional Director of Southeast Asia at the University of Adelaide’s Institute of International Trade, who is based in Singapore. Slower diffusion of technology is possible, but the workforce is getting more educated. Singapore is reaching a stage of growth that requires effective use of all available resources including older workers, to maintain competitiveness and sustainable growth, he said.

Whether economic growth projections can be sustained depends a lot on achieving higher productivity, said DBS economist Irvin Seah. But instead of measuring productivity by output per worker, Singapore could use real median income instead. “In a small country where the economy is largely driven by external demand, (using a) GDP-per-worker measurement is totally off,” he said. “If you believe a person should be paid based on his productivity, his work rate, then wages is a measurement of his productivity.”

Immigration helps to balance the shrinking and ageing of the citizen population, said the NPTD. Four in 10 of new permanent residents last year were aged 21 to 30, while just over four in 10 new citizens last year were aged 20 and below. The number of overseas Singaporeans, meanwhile, increased to 212,200 this year, up from 207,000 last year.

On the population trends, National University of Singapore sociologist Tan Ern Ser said: “There are obvious benefits to having smaller population growth, but there are costs as well. We cannot always have our cake and eat it, sadly.”

-By Neo Chai Chin

Singapore Real Estate

2 sites released for sale to yield 1,000 homes

Source: Business Times / Singapore

THE Urban Redevelopment Authority (URA) and the Housing & Development Board (HDB) are releasing two sites under the H2 2014 Government Land Sales Programme.

Jointly, they are expected to yield about 1,000 units.

The first is a residential site, with its first storey allocated for commercial activity, located along Upper Serangoon Road. It is for sale under the Confirmed List and is expected to yield about 340 housing units.

The 99-year leasehold plot has a site area of 10,097 square metres (108,685 square feet), and a permissible gross floor area (GFA) of 30,292 sq m (326,060 sq ft). The maximum permissible commercial GFA is 2,500 sq m (26,910 sq ft).

-By Mindy Tan

Govt offers 2 more sites

Mixed Upper Serangoon plot can offer 340 homes, Queenstown site, 645

Source: Straits Times / Money

TWO large development sites in Upper Serangoon and Queenstown - able to yield 1,000 homes in all - were released by the Government yesterday.

A mixed residential-commercial plot in Upper Serangoon has been put up for tender as part of the confirmed list of the Government Land Sales (GLS) programme for the second half of this year.

The Queenstown residential plot in Dundee Road has been made available on the reserve list, which means it will not go to tender unless a developer submits a bid acceptable to the Government.

Experts expect stronger response from developers for the Upper Serangoon site. The roughly 10,000 sq m, 99-year leasehold site can be developed into a 340-unit project, with commercial units on the first storey.

It is in an area with "abundant amenities" - with Kovan City and Heartland Mall, as well as Serangoon Junior College and Kovan MRT station, nearby, said Mr Ong Teck Hui, national director of research and consultancy at Jones Lang LaSalle.

"The ability to have commercial units on the first storey will be an added attraction, although the strata retail market has also been slowing."

The Upper Serangoon site is smaller than the commercial and residential zoned site in Meyappa Chettair Road, also in the Serangoon area, which was the subject of a 15-bid tender that concluded last month.

"The quantum size may therefore be more digestible to developers," said Mr Steven Tan, managing director of OrangeTee.

But potential bidders will have to be mindful that the development at the Meyappa Chettair site could be launched about the same time as this one, competing for the same group of buyers, said Mr Nicholas Mak, executive director of research and consultancy at SLP International Property Consultants.

Mr Mak added that the triangular shape of the 99-year leasehold site could make it challenging to develop, as is the fact that it fronts two busy roads, Upper Serangoon Road and Tampines Road.

Experts expect about 10 bidders for the site, with a winning bid of between $650 and $750 per sq ft per plot ratio.

But they are uncertain if interest in the 10,500 sq m Queenstown site, able to yield 645 units, will be strong enough to trigger a tender.

Mr Tan said sufficient short-term supply from new launches in the vicinity - including Alexandra and Tiong Bahru - means that it is unlikely developers will be immediately interested.

Apart from the challenging residential market, nearby Commonwealth Towers has more than 500 units unsold, experts noted.

"The demand in the mid-tier property market has softened, compared with a year ago. This may deter developers from triggering the tender of this site," said Mr Mak.

-By Rennie Whang

Two govt land sites for sale

Source: Today Online / Business

SINGAPORE — Two land sites, which will be able to yield an estimated 1,000 homes when completed, will be released this month by the Urban Redevelopment Authority (URA) and Housing and Development Board (HDB).

The sites — a mixed-use land parcel at Upper Serangoon Road and another purely residential plot in Dundee Road — will be launched under the second half of the Government Land Sales (GLS) programme for this year.

The site at Upper Serangoon Road, which is for residential with first-storey commercial use, is for sale under the Confirmed List by the URA.

The 108,685 sqf site, located near Kovan MRT Station, has a maximum gross floor area of 326,060 sqf and can yield an estimated 340 housing units.

The tender for this site closes on Nov 13.

Mr Nicholas Mak, executive director of research and consultancy at SLP International Property Consultants said he expects the site to attract a high level of interest from developers.

“Mixed residential-commercial developments ... near MRT stations are one of the few types of properties that could still enjoy healthy demand from buyers in the current market. Since this mixed development site is mid-sized, we expect this subject site to attract smaller developers that want to have a share in the mixed development market. Therefore, this tender could attract about 10 to 15 bids,” he said.

He added that the winning bid for this site could range between S$670 and S$721 psf ppr, or S$218.5 million to S$235 million.

The Dundee Road site, launched by the HDB under the Reserve List, is next to Queenstown MRT Station. The 113,194 sqf residential-only site has a maximum gross floor area of 554,654 sqf and is expected to yield 645 homes.

Reserve List sites are triggered for a public tender only if a developer makes an acceptable opening offer.

Mr Mak expects the top bid for this site to range between S$700 and S$770 psf ppr, or S$388 million to S$427 million.

Waterfront@Faber to be relaunched

Some 77 units were sold at the 210-unit project up to Aug 25

Source: Business Times / Property

[SINGAPORE] With sales at Waterfront@Faber tapering off since its launch in May, the developer World Class Land is drumming up interest again through a relaunch to mark its release of prime-facing units.

Its showflat will be re-opened this weekend ahead of the re-launch two weeks from now.

But there will be no major slashing of prices for the already released units. The relaunch will focus mainly on the unreleased units, according to the marketing agents who are starting to collect expressions of interest.

According to one of the marketing agencies, new indicative price quantums translate to about 7 per cent discount from the original price list, on top of the earlier discounts dangled during the preview.

-By Lynette Khoo

Auction market rebounds this quarter

Year to date total of S$57.6m is shy of the S$87.7m done in same time last year

Source: Business Times / Property

[SINGAPORE] Of the 44 properties sold at auction last year and so far this year, 80 per cent were successfully hammered upon their first appearance, property consulting group JLL said on Thursday.

These include the two largest auction transactions so far this year: four strata office units at Orchard Shopping Centre that fetched S$8.55 million in March, and a freehold residential development site in Brighton Crescent that sold for S$9.1 million on Wednesday at an auction conducted by Colliers International.

In March this year, too, a condo unit at Draycott 8 - in a prestigious residential locale - changed hands for S$5 million at its first auction.

Mok Sze Sze, head of auction and sales at JLL, said that the 44 properties comprised a good mix of owner sales and mortgagee sales. "Sellers have become more realistic while buyers are more willing to bite at reasonable prices. As evidenced by the spontaneous bids and immediate sale of the successfully hammered auction properties, buyers are seeking quality buys and tend to be more decisive when price expectations are matched," she added.

-By Kalpana Rashiwala

Prime office rents set to rise by 25% in five years: Knight Frank

Source: Straits Times / Money

PRIME office rents here are expected to soar by 25 per cent over the next five years, global property consultancy Knight Frank Asia Pacific said in a report yesterday.

In terms of rental forecasts, Singapore took the lead with the highest level of growth in office rents among six Asia-Pacific cities, beating Tokyo and Hong Kong, ranked ninth and 12th respectively.

The Republic also climbed 10 places to take fourth spot among 15 leading cities globally, despite sitting at the bottom of the list from 2008 to the end of last year.

According to the inaugural Global Cities Report 2015, which assesses the impact on the office markets of these 15 cities, the world's top cities will see prime office rents reach "record highs" by the end of the decade.

Its Global Cities Index, which tracks the prime office rents of the 15 cities, is forecast to grow by 19.9 per cent over the next five years, rising even above its pre-global financial crisis level in 2008 around mid-2015.

"Looking ahead, prospects for the office market (in Singapore) are positive, in light of anticipated healthy demand from companies looking to set up business or expand in Singapore," said Ms Alice Tan, the head of consultancy and research at Knight Frank Singapore.

"Singapore is increasingly viewed as a strategic launch pad for more global companies to expand into South-east Asian markets, with our robust business, legal framework and physical infrastructure."

Ms Tan noted that the "fairly modest" supply of new prime-grade office space over the next few years would sustain prime office rental growth.

"This would fuel interest in Singapore office space investments with stable capital values."

By 2019, office vacancy rates will drop in the top 10 cities globally, including Singapore, reaching an average vacancy rate of 6.3 per cent. This is down from the 7.8 per cent average vacancy rate logged this year.

This is being caused by the "restricted supply of new office stock in conjunction with (a) heightened demand for commercial space", said the report.

Mr Nicholas Holt, head of research at Knight Frank Pacific Asia, said the technology sector has become a key driver of office space demand in Asia, while the financial services and banking sectors have stepped back.

-By Jacqueline Woo

Property prices lower, ‘but still out of reach’

Nearly a quarter of respondents surveyed say they have no plans to buy right now, and are waiting for prices to drop further.

Source: Channel News Asia / Singapore

SINGAPORE: Prices of residential properties may have fallen over the past few months, but they are still too expensive and buyers are increasingly waiting on the sidelines for prices to drop further, a survey has showed.

Nearly a quarter, or 22 per cent, of respondents do not plan to purchase property at the moment, up from 10 per cent six months ago, showed a half-yearly Asia Property Market Sentiment Report by real estate portal Some of the reasons cited include high prices and the challenge of the down payment.

“Buyers are biding their time, with affordability and financing as top concerns. While the number of respondents who intend to purchase within the next 24 months remains the same at 51 per cent, buyers may wait for new and resale private condo prices to fall … The market is now correcting after the rapid rise over the last few years, and demand is there at the right price point,” said Mr Sean Tan, general manager of Singapore.

Several rounds of cooling measures have seen the value of both private and public properties fall. In the second quarter of this year, private home prices were about 3 per cent off the peak in the third quarter of 2013, while public resale home prices were down 5 per cent from its peak in the second quarter of last year, data by the Urban Redevelopment Authority and Housing and Development Board showed.

A majority of the survey respondents, or 53 per cent, think that both new and resale private condominiums will see further price declines this year. Against that backdrop, the survey saw a 15 percentage point increase in the number of home owners who want to sell their properties, compared with six months ago.

“The report shows that both property sellers and buyers are nervous a year after the start of the Total Debt Servicing Ratio (TDSR). In the second half of 2013 report, just after the TDSR was announced, 59 per cent of owners were confident their properties would retain its value; now only 38 per cent think so, a decline of 21 percentage points. Another 25 per cent are unsure if the value will be retained,” said Mr Tan.

The survey, which polled 2,805 respondents in Singapore, also found that a majority of them, or 56 per cent, are in favour of the Government’s decision to keep cooling measures in place despite repeated calls by industry practitioners to tweak some of the curbs.


Property prices lower, ‘but still out of reach’

Nearly a quarter surveyed have no plans to buy right now due to high prices, down payment

Source: Today Online / Business

SINGAPORE — Prices of residential properties may have fallen over the past few months, but they are still too expensive and buyers are increasingly waiting on the sidelines for prices to drop further, a survey has showed.

Nearly a quarter, or 22 per cent, of respondents do not plan to purchase property at the moment, up from 10 per cent six months ago, showed a half-yearly Asia Property Market Sentiment Report by real estate portal Some of the reasons cited include high prices and the challenge of the down payment.

“Buyers are biding their time, with affordability and financing as top concerns. While the number of respondents who intend to purchase within the next 24 months remains the same at 51 per cent, buyers may wait for new and resale private condo prices to fall … The market is now correcting after the rapid rise over the last few years, and demand is there at the right price point,” said Mr Sean Tan, general manager of Singapore.

Several rounds of cooling measure have seen the value of both private and public properties fall. In the second quarter of this year, private home prices were about 3 per cent off the peak in the third quarter of 2013, while public resale home prices were down 5 per cent from its peak in the second quarter of last year, data by the Urban Redevelopment Authority and Housing and Development Board showed.

A majority of the survey respondents, or 53 per cent, think that both new and resale private condominiums will see further price declines this year. Against that backdrop, the survey saw a 15 percentage point increase in the number of home owners who want to sell their properties, compared with six months ago.

“The report shows that both property sellers and buyers are nervous a year after the start of the Total Debt Servicing Ratio (TDSR). In the second half of 2013 report, just after the TDSR was announced, 59 per cent of owners were confident their properties would retain its value; now only 38 per cent think so, a decline of 21 percentage points. Another 25 per cent are unsure if the value will be retained,” said Mr Tan.

The survey, which polled 2,805 respondents in Singapore, also found that a majority of them, or 56 per cent, are in favour of the Government’s decision to keep cooling measures in place despite repeated calls by industry practitioners to tweak some of the curbs.

-By Lee Yen Nee

SGX seeks to grow retail investor pool

Currently, only 8 per cent of Singaporeans aged 18 and above actively invest in stocks. That figure is about half the rate in Australia and one-third of that in Hong Kong.

Source: Channel News Asia / Business

SINGAPORE: The Singapore Exchange (SGX) is looking to grow the number of active retail investors in Singapore, it announced at its Annual General Meeting (AGM) on Thursday (Sep 25).

Shareholders were briefed on efforts taken to boost market participation among retail investors and were told there are signs that retail interest in Singapore's market is growing. The number of accounts opened with The Central Depository grew by 22 per cent over the past year ending in June, to 1.6 million accounts.

While all Singaporeans aged 18 and above are eligible to open a CDP account and invest in shares - SGX says only 8 per cent of them are actively doing so. "We have seen more CDP accounts being opened, we have seen 100,000 more active investors this year than in the past years. And what we are trying to do is to make sure you have a range of investment products," said SGX President M Ramaswami.

These new products include Renminbi futures contracts which will be launched next month. SGX said it could also add futures contracts on the Japanese yen and Thai baht, as well as electricity futures.

As part of its efforts to spur retail participation, the board lot size will be reduced from 1,000 shares to 100 come January. SGX said this may eventually pave the way to unit share trading.

"The journey there is a first step towards moving to a unit share market but that is a longer term journey, in a sense that the minimum stock price needs to get much higher to get to a unit share. So we will go with 100 shares for a while and then over course of time get to unit share," Mr Ramaswami said.

"What it does, the unit share is it allows widespread ownership and it allows you to buy one share as opposed to buying a thousand," he added.

Analysts say the cut in board lot size to 100 shares will likely attract retail participation in more expensive blue chip counters. 

"The next move is to further reduce exchange fees as well as brokerage fees, especially on the retail side, which is more cost sensitive. I happen to recall certain exchanges in US and Europe, they do give rebates back to traders," said Mr Liu Jinshu, Lead Analyst at Voyage Research. 

"For instance, if you make a minimum of a certain number of trades per month, they will give you some rebates, so you get to enjoy lower clearing fees. That is another area where SGX can help to reduce the cost for investors," he suggested. 

During the AGM, the impact of the Shanghai-Hong Kong Stock Connect on investors and listing prospects was also discussed. The scheme was announced earlier this year and could kick off as early as next month.

The Shanghai-Hong Kong Stock Connect will enable investors to trade Shanghai A-shares through the Hong Kong stock exchange, and Chinese mainland investors can trade Hong Kong H-shares through the Shanghai Stock Exchange.

SGX said it expects the Shanghai-Hong Kong Stock Connect to have a positive effect on the market and greater opportunity on listings. If successful, it could push other exchanges in Asia to be more open-minded about such linkages. 

- CNA/dl

The property cost of being a shopaholic

Source: Today Online / Business

As the old adage goes, there are three things that matter in real estate: Location, location and location.

This saying is spot on, as any real estate agent, developer, property investor or urban planner will tell you.

Location, not the physical home, is the most important factor in determining the value of a home. A dilapidated home in a desirable neighbourhood is worth more than a pristine one of comparable size in a run-down or tired neighbourhood.

When it comes to Singapore property, there is a proven formula that makes a location desirable: One good primary school plus one convenient MRT station as well as a park (or other recreation area).

For good measure, throw in a shopping centre and other commercial retail outlets that provide one-stop shopping and dining.

Presto! We now have a sustainable neighbourhood where property prices should appreciate at a reasonable rate and create wealth as well as nest eggs for its residents, as long as they maintain it well.

Shopping is a national pastime in Singapore. As such, it should come as no surprise that developers, real estate agents and urban planners are quick to highlight a nearby shopping mall when promoting a property or an area.

A well-managed shopping mall brings people from all over to its shops and restaurants. This creates a virtuous circle for the neighbourhood. The more people come to shop and eat, the more retailers want to be there. The more prosperous the area becomes, the more people want to live there, and the more commercial and home prices appreciate.

If you are a shopaholic, you may find that you have to pay a premium to live near your favourite shopping mall. The table lists some of these premiums for private homes and Housing and Development Board flats within 1km of shopping malls.

Homes near The Shoppes at Marina Bay Sands are the highest priced. The median price per square foot (psf) is S$2,249, which translates to about S$2.25 million for a 1,000 sqf unit. To rent that same unit would cost about S$5.75 psf, or S$5,750 per month.

Eighteen shopping malls, such as Far East Plaza and Wisma Atria, have nearby homes with prices above S$2 million for 1,000 sqf. You would have to shell out at least S$1 million to live in a 1,000 sqf unit near another 50 shopping malls.

For HDB flats, those near Marina Square are the most expensive, at a median price of about S$819 psf.

Since shopping malls are major drivers of value for an area and they seem to be sprouting up all over the island, we have to pay more to live near one.

So for those who are allergic to shopping, the next time your spouse drags you to the mall, think of it is as an addition to your home and enjoy it — because you are definitely paying for your shopping experience, in more ways than one.

To find the median price for private homes and HDB flats within 1km of 113 shopping malls, visit

-By Sam Baker, Co-Founder, SRX

Lease Buyback Scheme: Keep it simple

Source: Today Online / Business

While the majority of Singaporeans own their homes, quite a number of them, especially among the retirees, are asset-rich but cash-poor. And their numbers are growing with our rapidly ageing population.

Unless these retirees have other sources of income or can count on the financial support provided by their children, they will have to find ways to monetise the value of their homes.

Downgrading is not preferred as most people want to grow old in the homes and neighbourhoods they have lived in for a long time. Renting out rooms in the unit is an option, but besides concerns over the loss of privacy and security, the move may also be a gamble because one never knows what kind of tenants one gets. The trouble may not be worth the rental income.

Reverse mortgages had been proposed as one option, but the plans offered by OCBC Bank and NTUC Income in 2006 were discontinued because of a lack of demand. There are emotional and psychological barriers to reverse mortgages but beyond these, I suspect they failed simply because they weren’t attractive enough.

As it was a new market, those offering such mortgages had to build a large enough financial buffer so that they can be protected from losses, but this meant a smaller payout that made the scheme less attractive.

New markets such as reverse mortgages are usually best handled by the Government, at least in their early years. Thus, it comes as no surprise that the Government is having another go at its Lease Buyback Scheme — where HDB flat owners sell part of the lease balance back to the Government — by extending it to four-room units and raising the income ceiling for participation.

However, I fear the Lease Buyback Scheme may go the way of the reverse mortgages. Already, some are questioning why the unsold lease is worth more than the portion sold.

Assuming a stable market, the property’s value does not fall at a steady rate. First, there is the time value of money: A dollar today is worth more than a dollar in the future. Second, a property with a very short lease left tends to depreciate faster than one with a very long lease remaining. These are well-established principles.

The counter argument is that property appreciates over the long term — and the current evidence supports this. That is why most of us are so obsessed with property in Singapore. Some older HDB flats are worth many times what they were bought for decades ago even though the remaining number of years of lease has declined significantly.

With Singapore being such an attractive place to work and live in, it may be only in the last five years that the value of the flat depreciates rapidly. So whether the front portion is worth more than the back portion is debatable depending on the economic outlook.

Unlike the private sector, the Government is not a profit-maximiser and does not have to work in targeted profit margins into the scheme it is offering. In that sense, it can give flat owners the best deal. I see the Lease Buyback Scheme as a social good that needs to be provided to prepare Singapore as the population ages.

So let’s try and keep it simple. If straight-line depreciation of the flat’s value is what the population understands and perceives as fair, why not do that? I feel it is a small price to pay to gain wide acceptance for a scheme I see as necessary for the good of Singapore.

-By Colin Tan, Director of Research & Consultancy, Suntec Real Estate

Real Estate Companies' Brief

GIC buys stake in UK roadside rescue business from Carlyle

They'll co-own majority stake in RAC, Britain's No 2 rescue firm

Source: Business Times / Top Stories

[SINGAPORE] Singapore's sovereign wealth fund GIC is buying a stake in the UK's second largest roadside rescue business RAC from Washington-based private equity firm Carlyle Group, which will result in both co-owning a majority stake in the firm.

The deal, expected to be done by year-end, also means that Carlyle's plan to float RAC in London in a transaction which reportedly valued the firm at £2 billion (S$4.15 billion), is no longer on the cards for now.

In a joint statement, Carlyle said it entered a pact with GIC to jointly own a majority stake in the British roadside recovery group which has some eight million roadside members, with RAC Management holding the remaining shares.

It is understood that both Carlyle and GIC will own an equal share in the firm.

-By Anita Gabriel

KPMG: Family businesses, HNWIs make good partners

Source: Business Times / Top Stories

[SINGAPORE] A KPMG report on family businesses and high net worth individuals (HNWIs) around the world argues that the two groups could make compatible business partners.

This is despite family firms ranking HNWIs low on their list of preferred investors, compared to private equity, corporate investors and hedge funds.

Nevertheless, the 42 per cent of family businesses who have tapped financing from HNWIs - likely to be close friends or relatives - were overwhelmingly positive about their experience. Only 8 per cent said that their experience was negative.

"Family businesses should be more open about networking with HNWIs," said Owi Kek Hean, head of KPMG's enterprise market segment.

-By Cai Haoxiang

Lee Kim Tah founding family seeks delisting

Offer of S$1.08 a share works out to a 6.4% premium to last traded price

Source: Business Times / Companies

THE family behind homegrown developer and construction firm Lee Kim Tah Holdings is taking the company private by offering S$1.08 per share in cash, valuing it at S$546 million.

Through investment vehicle Lee Kim Tah Investments, the founding Lee family already owns 71.34 per cent of the company, whose key asset is a half-stake in Jurong Point.

The privatisation offer for the usually thinly traded stock was not surprising to market watchers, given how the Lee family had been shoring up its stake in the last few years.

Representing the offeror, OCBC Bank said that the Lee family intends to delist the company from the Singapore Exchange and exercise its rights of compulsory acquisition.

Lee Kim Tah has not carried out any equity fund-raising in the last 10 years, OCBC pointed out. "The offeror is of the view that since the company is unlikely to require access to such equity fundraising in the foreseeable future, it is therefore not necessary for the company to maintain its listing on SGX."

Irrevocable undertakings by parties acting in concert with the offeror to accept the offer represent about 11.24 per cent interest in Lee Kim Tah.

The offer price of S$1.08 per share works out to a 6.4 per cent premium to the last traded price on Sept 24, and a 12.34 per cent premium to the three-month volume weighted average price of shares traded prior to the announcement date.

A spike in trading activity since mid-August drove the stock to an all-time high of S$1.015 or 8.96 times of earnings per share on Wednesday, before a trading halt was imposed after market close.

OSK-DMG analyst Goh Han Peng said that he had arrived at a fair value estimate of S$1.40 for the stock based on sum-of-the-parts valuation of the company's investment portfolio.

"Some assets are modestly undervalued," he said, adding that the controlling shareholder probably "saw some value and wanted to capture the value as a private entity".

Founded by its late chairman, Lee Kim Tah, the company was the first few construction firms to be listed on the Singapore Exchange when it went public in 1984.

Lee Kim Tah had its roots in supplying materials and labour to the British army that was then stationed in Singapore in the 1920s before becoming a major construction player. It further diversified into investment and property development in the 1970s.

Its overseas assets now include several investment properties in Australia's Sydney and Gold Coast, a 48 per cent stake in Marco Polo Xiamen Hotel in China, and a 75 per cent stake in an integrated township in Chennai, India. It has also undertaken development projects in the UK.

Lee Kim Tah was pivotal to the birth of the Real Estate Developers' Association of Singapore, when it led a small group of developers in 1958 to start what was then known as the Singapore Land and Housing Developers' Association.

Property firms closely held by founding family members have been touted as privatisation candidates. A spate of delistings last year also included one of Singapore's oldest companies, Guthrie GTS, which owns the other 50 per cent of Jurong Point.

Companies related to veteran banker Wee Cho Yaw have also come into focus, with UOL Group's takeover offer for Pan Pacific Hotels Group in May last year, and United Industrial Corporation's offer for Singapore Land in February.

-By Lynette Khoo

Hot stock: Lee Kim Tah up on privatisation offer

Source: Business Times / Singapore

SHARES of Lee Kim Tah surged 7.4 per cent on Friday morning, after it announced that the family behind the property developer is taking the company private.

The stock was up seven and a half Singapore cents, at S$1.09.

The founding Lee family has offered S$1.08 per share in cash, valuing the firm at S$546 million. The family already owns 71.34 per cent of the company, which has a stake in heartland mall Jurong Point, and plans to the delist the firm.

-By Jamie Lee

Teho to buy ECG Property for S$17m

Source: Business Times / Companies

TEHO International on Thursday signed a non-binding letter of intent with Eric Cheng and three other vendors to acquire a full stake in ECG Property Services for S$17 million.

If this goes through, it will be the marine and offshore oil and gas firm's second property-related acquisition, following its purchase of boutique property developer TIEC Holdings for S$12.3 million in May. TIEC was also majority-owned by Mr Cheng.

Teho's acquisition of ECG comes at a time when property agencies are struggling to survive a sluggish real estate market. Several have since teamed up to combine their salesforce.

Both sides view the potential acquisition as a win-win. For Teho, it wants to ready itself to counter the next cyclical downturn in the marine industry, and sees property as a good diversification.

-By Lee Meixian

Teho buying local property firm ECG for $17m

Source: Straits Times / Money

OFFSHORE and marine company Teho International is buying local property firm ECG Property Services in a $17 million deal, giving the latter a listed vehicle for expansion.

Teho executives told a briefing yesterday that it will fork out $5 million in cash for the acquisition, while the rest will be satisfied with 42.9 million shares at 28 cents apiece.

This will effectively translate into an 18 per cent stake in Teho for ECG chief executive Eric Cheng, making him the second-largest shareholder in the firm, after Teho chief executive Lim See Hoe.

Earlier this year, Teho made the "baby step" of acquiring another of Mr Cheng's firms, Tiec Holdings, for $12.3 million in a bid to diversify its revenue streams into property development.

Mr Lim said: "When we decided to diversify into property, we did not want to take a huge step."

Since taking over Tiec Holdings, the firm said last month that it will also be developing a mixed-use project in Cambodia.

"The overseas market was at the back of our minds at the time we acquired Tiec Holdings, but it was not cast in stone. Now that we have something more concrete, we decided to go a step further to acquire ECG," Mr Lim said.

Under the new structure, Mr Cheng remains chief executive of ECG and will continue to run the business as before. This includes its agency services, valuations unit and property management services. But property development, such as the project in Cambodia, will be undertaken by Teho.

Mr Lim acknowledged that the property market here is in the doldrums and that marketing local properties would take a back seat for now.

But as it is, 60 per cent of ECG's sales are from overseas - with Malaysia and Taiwan as its biggest markets - while local deals make up 40 per cent, said Mr Cheng.

"If the market is not doing well, for sure, instead of selling 100, we will sell 15 units. But you don't make a loss because you don't invest in the development," said Mr Cheng. "For myself and my partner, See Hoe, we feel that there's a lot of growth out of Singapore."

Mr Cheng said not only will Teho's resources help ECG to reach its target of expanding from nine to 35 cities, he hopes a listed platform will give future partners the confidence for collaborations or even more acquisitions.

ECG, with 660 property agents and 109 employees, is marketing projects by 16 developers from countries such as Thailand, Japan and Britian.

Overseas, it has 37 projects in the pipeline, while 13 developments are being marketed now.

Teho's shares closed at 21.5 cents on Tuesday, before trading was halted on Wednesday. Trading will resume today.

-By Cheryl Ong

TEHO plans to acquire ECG Group for S$17m

The proposed acquisition will allow Teho to expand its operations in the local and overseas property market.

Source: Channel News Asia / Business

SINGAPORE: Teho International is moving deeper into the property sector. It announced on Thursday (Sep 25) that it had signed a non-binding letter of intent, to buy over ECG Group, a property development company, for S$17 million.

Teho is a holding company mainly specialising in marine, offshore oil and gas. The proposed acquisition will allow Teho to expand its operations in the local and overseas property market. It is part of the company's diversification plans, as it seeks to grow its business amid the flagging nature marine and shipping industry.

Earlier this year, Teho acquired TIEC Holdings, a property subsidiary of ECG Group. Said Teho CEO Mr Lim See Hoe: "We have seen the marine sector been in bad shape for almost the longest time since 2009 and it has still not recovered. For us, we have done well to weather this for the past number of years and we have worked extremely hard to get over it." 

"However, we could be in bad shape come the next downturn so I think that it is important that we spread our eggs and properties is something that we can take some baby steps in investing in."

- CNA/do

Sino Construction to bid to take over Australia's GUF

Source: Business Times / Companies

MAINBOARD-LISTED Sino Construction Ltd intends to make an off-market takeover bid to acquire Australian-listed Guildford Coal (GUF).

The takeover bid will be made at a bid price of A$0.0613 (S$0.0689) per GUF share. The consideration will be satisfied via an allotment and issue of one new ordinary share in Sino Construction for every 4.5 GUF shares.

Based on the issued and paid-up share capital of GUF, up to 229,639,650 new shares may be issued as the consideration for the takeover bid, said Sino Construction on Thursday.

This takeover bid follows the group entering non-binding terms with GUF to acquire all of the latter's coal assets in Australia for a total consideration of US$25 million and a payment of ongoing royalty.

-By Mindy Tan

Sino Construction plans takeover of Aussie miner

Source: Straits Times / Money

CHINA-BASED construction and civil engineering firm Sino Construction is planning an all-share takeover bid for an Australia-listed mineral resources firm.

Singapore-listed Sino yesterday announced plans to buy Guildford Coal, which has coal-mining projects in Queensland, Australia, as well as in Mongolia.

In July, Sino unveiled plans to buy Guildford's Australian coal assets but, now, it is proposing to buy the whole company.

Guildford's Mongolian assets include the Baruun Noyon mine in South Gobi, which started production last month with a first shipment of 8,000 tonnes of coking coal.

The Australian projects have an exploration target of up to 7.17 billion tonnes of coal, said Sino.

The takeover bid will be made at 6.13 Australian cents per Guildford share through an allotment and the issue of one new Sino share for every 4.5 Guildford shares.

Sino originally entered an agreement in July to acquire Guildford's entire portfolio of coal assets in Australia for US$25 million (S$31.7 million) and ongoing royalty payments.

"The management of Sino Construction is now of the view that it is more advantageous to acquire all of Guildford Coal's assets, including its coal-producing assets in Mongolia," Sino said.

Sino noted that the size of Guildford's resources could see it become one of Australia's largest independent miners. Sino plans to retain the management and operational team following the takeover.

The proposed takeover is subject to various conditions, including shareholder approval at an extraordinary general meeting at a date to be announced. The bid would be made within two months, in line with Australian laws.

Sino also announced plans to enter the mineral and energy resources business, and proposed to change its name to Magnum Strategic Resources.

-By Rachel Boon

Never overlook Temasek's influence

Source: Business Times / Companies

PRESIDENT Tony Tan Keng Yam remarked in a speech this week that many Temasek-linked companies became industry champions "in their own right", and without undue help from Temasek or the Singapore government.

While the President correctly attributed those companies' successes chiefly to their own people, it may also be useful to bear in mind that Temasek's presence today is not without weight.

The fact is that having Temasek as a shareholder confers some cachet in the marketplace that can, in some instances, help to strike deals or to access capital. The strength of Temasek's influence today must be recognised, if only to ensure vigilance over whether that power is carefully and correctly used.

Speaking at Temasek's 40th anniversary dinner, Dr Tan noted the meritocratic sensibilities that guided the Singapore government-owned investment company's actions. Temasek was created partly to keep political influence from the government's commercial interests, and continues to observe values of commercial discipline and accountability, he explained. As a result, many Temasek portfolio companies became regional and global leaders.

-By Kenneth Lim

Views, Reviews & Forum

Community facilities at Westgate mall

Source: Straits Times / Forum Letters

MR TOH Cheng Seong cited Westgate mall as an ideal site for innovative pre-schools ("Malls ideal sites for kindergartens"; Sunday).

Westgate has a dedicated Family Zone on Level 4, where the centrepiece is the 11,000-sq-ft Westgate Wonderland, Singapore's largest thematic outdoor playground in a shopping mall that is free for public use.

Alongside this inspired space for playing and learning, shoppers can find a wide range of children-focused retailers on this floor, including education and enrichment centres. 

Located one floor above is Westgate Kids Club, a supervised play area for children aged four to 12. Kids Club offers programmed activities amid a 4,600-sq-ft thematic outdoor playground and an indoor clubhouse.

My First Skool, a not-for-profit pre-school run by NTUC First Campus, operates a branch right next to Kids Club.

As the largest mall owner and manager in Singapore, CapitaMalls Asia works closely with different organisations in integrating community facilities in our malls, as doing so enables us to better serve the communities our malls are in and make these services easily accessible to the public.

Apart from My First Skool at Westgate, six other CapitaMalls in Singapore house community facilities within their premises, as part of the Urban Redevelopment Authority's Community and Sports Facilities Scheme. These include The Rink, Singapore's only Olympic-size ice rink, at JCube; Choa Chu Kang Public Library at Lot One Shoppers' Mall; and the Singapore Dance Theatre at Bugis+.

In addition, Bukit Panjang Plaza, which is undergoing an asset enhancement initiative, will be expanding the current size of the public library on its premises, with plans to add a childcare centre.

We look forward to working further with interested organisations in integrating community facilities in our malls, which will enable us to serve our shoppers better.

We thank Mr Toh for his interest.

-By Teresa Teow (Ms)

Head of Retail Management, Singapore

CapitaMalls Asia

Excess proceeds of lease buyback will be disbursed to owners in cash

Source: Today Online / Voices

We thank Mr Arthur Lim for his letter “What happens to excess proceeds from lease buyback plan?” (Sept 10).

The Lease Buyback Scheme (LBS), one of various monetisation options for elderly flat owners to supplement their retirement income, will be enhanced from April 1 to benefit more elderly households and offer greater flexibility to meet different needs.

The four enhancements are: Extension of the LBS to four-room flats; higher monthly household income ceiling of S$10,000; relaxed requirement for households with two or more owners to top up their Central Provident Fund Retirement Accounts (CPF RAs) with the LBS proceeds; and flexibility for households to choose the length of lease to retain.

The proceeds will first be used to top up the owners’ CPF RAs. The rest — up to S$100,000 — will be disbursed to them in a cash lump sum.

Sole owners must use the proceeds to top up to the age-adjusted prevailing Minimum Sum (MS).

For households with two or more owners, from April 1, each owner will only need to use his share of the proceeds to top up his RA to half the age-adjusted prevailing MS.

If the household’s remaining proceeds are not more than S$100,000, the owners will receive this all in cash.

If the remaining proceeds are more than S$100,000, each owner will use his share to further top up his RA to the prevailing MS. They will receive proceeds of S$100,000 (or more, if they have met the prevailing MS) in cash.

If an owner dies, any remaining lease will be passed to his beneficiary, who can either continue living in the flat for the remaining lease or return it to the Housing and Development Board (HDB) for the residual value of the lease.

The owner’s remaining CPF monies will be distributed to his nominees. If no CPF nomination was made, the monies will be distributed to his family members according to intestacy law or Muslim inheritance laws.

The HDB has financial counsellors to provide personalised advice to interested seniors.

Those who wish to learn more about the LBS or other monetisation options may visit any HDB branch or call the HDB branch service line (1800 225 5432) (8am to 5pm on weekdays). More information on the LBS can be found at

-By Lily Chan-Wong Jee Choo

Director (Policy & Property)

Housing & Development Board

Global Economy & Global Real Estate

Iskandar launches hit by delays

Waiting for regulatory approval among reasons cited by S'pore developers

Source: Straits Times / Money

LAUNCHES by Singapore property players in the Iskandar Malaysia development zone appear to have stalled amid a subdued market.

For instance, CapitaLand said on Tuesday it is "waiting for the relevant regulatory approval for (its) Danga Bay project's masterplan". CapitaLand has yet to launch the first phase of its $3.2 billion development there, a high-rise 900-unit condominium being undertaken with joint venture partners.

In its annual report, it said the project would be "launch ready" this year. A spokesman said the developer has not sought an extension, contrary to a news report on Tuesday. The Straits Times understands CapitaLand's local partner, Iskandar Waterfront Holdings (IWH), on Tuesday called for a meeting with the Singapore firm to explore how best to expedite the approval. Temasek Holdings is a third partner in the joint venture.


Another Singapore developer to face delays is Rowsley, which is building the $2.2 billion Vantage Bay integrated project, including the 75-storey residential development Skies. Vantage Bay chief executive and Rowsley executive director Ho Kiam Kheong said in a report last year it would launch its residential units by this year's first quarter. But he said on Tuesday the firm is in the process of obtaining the advertising permit and developer's licence.

A third developer, Link (THM) Holdings, which is developing the $1 billion Media Village integrated project, seems to have held back as well.

Link founder and group chief executive Kenny Tan said in a report last year it expected to launch apartments and business suites for sale by the end of last year. Link had not responded by press time.

Sin-Hao Yuan Land, linked to Singapore developer Hao Yuan Investment, has also been fairly quiet since details of a $3 billion integrated development at Danga Bay with IWH were announced late last year. Its land is next to the CapitaLand site.

"The project is still in its planning stage (and) we do foresee some delay, not uncommon for a project of this nature and magnitude," a spokesman said.

What is going on? "Recent feedback on the ground is that the approval authorities are much slower in issuing the advertising permit and development licence," said Mr Johnny Chng, head of international projects at consultancy OrangeTee.

But he added it is possible developers are reviewing their launch strategy after the status of the first launch of Guangzhou R&F's Princess Cove, which has apparently suffered weak sales.

"The huge number of units launched would have significant impact on the investment environment in the vicinity. The growing presence of developers from China may have also raised concerns of a possible supply overhang in Iskandar," said Mr Chng.

Mr V. Sivadas of PA International Property Consultants said: "Nobody expected the large number of high-rise residences on the waterfront."

Other than Princess Cove, CapitaLand's project and Skies are also set to be on the waterfront.

"Waterfront units, which tend to be priced at a premium due to higher land costs, are having difficulty sustaining sales... Until developers of such properties have their target market right, it would make sense to hold back," said Mr Sivadas.

-By Rennie Whang

Why cities tap underground space

Source: Business Times / Property

[NEW YORK] Cities from arctic Helsinki to equatorial Singapore are exploring the benefits of expanding towards the centre of the earth.

Crowds, weather, expensive real estate and vulnerability to climate change are prompting urban planners to turn their eye to the potential of usable spaces below street level.

From an underground park in a forgotten century- old trolley terminal in Manhattan to Mexico City's inverted 300-metre underground pyramid - called the Earthscraper - architects are reimagining spaces for people and not just infrastructure in cities of the future.

"There are real opportunities to develop underground to accommodate density for cities that are already overcrowded or growing," said Clara Irazábal, assistant professor at the Graduate School of Architecture, Planning and Preservation at Columbia University, New York. "It can expand efficiency, reduce commuting times and improve quality of life."

-From New York, US

Smooth sailing for Asia developing economies

ADB: China growth will slow slightly while India will speed up further

Source: Business Times / Top Stories

FROM now through to 2015, Asia's developing countries can be reassured by a stable economic outlook, according to the Asian Development Bank's latest Asian Development Outlook (ADO) published on Thursday.

Underpinning this forecast is ADB's view that China will slow down only fractionally while India will continue to pick up speed.

Addressing what is possibly the biggest potential short-term threat to emerging economies, the ADO said: "Asian financial markets have taken the winding down of unconventional US monetary policy in their stride" and that, barring any monetary surprises in the US, should continue to adjust smoothly.

Meanwhile, inflation poses little threat to Asia "as regional economies continue to produce somewhat below capacity".

-By Anthony Rowley in Tokyo

Berlin gets a new 270-store 100,000 sq m mall

Source: Business Times / Property

[BERLIN] Berlin, Europe's fastest-growing tourist destination, is taking a page from Dubai as it expands retail for the hordes of visitors.

The Mall of Berlin, a 270-store complex opening in the city centre on Thursday, gives the growing numbers of tourists who visit the German capital a new place to spend their money. Within a year, it's set to become the country's largest shopping centre as 30 per cent more space is added.

"It's not really a mall, but a whole new city quarter," said Andreas Kogge at Jones Lang LaSalle. "The malls on the edge of the city will certainly suffer."

Berlin is expanding its retail offering after opening dozens of hotels to keep pace with the influx of visitors. Like Dubai, Berlin's growing reputation as a shopping destination is bolstering its economy.

-From Berlin, Germany

London Home Prices Post First Fall Since 2012 as Demand Declines

Source: Bloomberg / Luxury

London house prices fell for the first time in almost two years this month as declining demand led to a weakening of the property market across Britain, Hometrack Ltd. said.

The survey of real-estate agents showed values in the capital dropped 0.1 percent, the first decrease since November 2012, and further “modest” declines are likely in the coming months, the property-research company said in a report today. National prices stagnated, bringing to an end 19 months of increases.

The survey chimes with other reports showing the London housing market is slowing sharply after values surged by about a quarter over the past year. Hometrack cited a tightening of loan criteria and the prospect of a Bank of England rate increase.

“Buyer uncertainty is growing in the face of a possible interest-rate rise, a general election on the horizon and recent warnings of a house-price bubble,” said Richard Donnell, director of research at Hometrack. “Played out against a backdrop of tougher mortgage affordability checks and limits on high loan-to-income lending, higher-value postcodes of inner London are clearly being impacted.”

While momentum cooled across Britain, London is “experiencing a pronounced slowdown” and was the only region to post a fall in values this month, Hometrack said. Fewer sellers in London and southeast England are achieving their asking prices, it said.

‘Upper Hand’

Government data today showed house prices in England and Wales rose 1 percent in August, and by 8.4 percent from a year earlier. London’s 21.6 percent annual gain took the average price of home in the capital to 467,070 pounds ($762,000), more than 2 1/2 times the national average, according to the Land Registry.

Pent-up demand for housing following the recession has now receded, though there is also little evidence of supply opening up, Donnell said.

“Although the lead indicators suggest buyers will start to gain the upper hand, there are many home owners who don’t need to sell and won’t bother unless it’s financially beneficial to do so,” he said. “The net result is a likely drop-off in activity in the coming months.”

U.K. government bonds rose, sending the yield on the 10-year gilt one basis point lower to 2.43 percent at 10:37 a.m. London time. The pound was little changed at $1.6317.

In a separate report today, jobs website Adzuna said advertised wages grew faster than inflation in August for the first time since the financial crisis. Salaries increased 1.9 percent from a year earlier, compared with an 1.5 percent gain in consumer prices, the company said.

Wages are at the center of the debate over when BOE officials should raise borrowing costs, with most saying this month that the lack of inflationary pressure in the labor market justified keeping the benchmark rate at a record-low 0.5 percent.

-By Scott Hamilton

Perella Weinberg Buys Former Squatters’ Site in Berlin

Source: Bloomberg / Luxury

Perella Weinberg Partners LP agreed to buy the site of Berlin’s Tacheles building, a former department store that was occupied by squatters for two decades.

Perella Weinberg, a New York-based asset-management and advisory firm, plans to use the 25,000 square-meter (270,000 square-foot) site to construct apartments, shops and hotel rooms, Leon Bressler, Perella’s head of real estate, said today by phone. Perella bought the site for about 150 million euros ($190 million) from German real estate investor Anno August Jagdfeld, according to a person with knowledge of the deal who asked not to be identified because the information is private.

“This is is the most attractive area in Berlin,” Bressler said. “We believe in Berlin and we will produce something that is very positive for the city.” He declined to comment on the price.

Christian Ploeger, a spokesman for Jagdfeld, declined to comment.

The Tacheles building, situated in what used to be communist East Berlin, was taken over by artists in 1990 following German reunification. At the time it was slated for demolition, and it’s now covered in graffiti and posters. Perella plans to renovate the building and make it a cultural space. The property includes wasteland and a parking lot.

During the squat, Tacheles had become an attraction for tourists who came to see sculptures made of scrap metal and other art works. The last remaining squatters were evicted in 2012.

Asking Price

A rebuilding of the site would add to the gentrification of Berlin’s central Mitte district, where luxury boutiques and modern condominiums have replaced rundown squats and abandoned land. A mall that’s set to become Germany’s biggest opened in Mitte today, on the site of a former department store that was seized by the Nazis from its Jewish owners. Investors including private-equity firms, insurance companies and pension funds are buying commercial property to benefit from the city’s growing economy.

Developing the Tacheles site would help connect the commercial hubs in the area, including Hackescher Markt, Friedrichstrasse and Oranienburger Strasse, Bressler said.

“It’s important to build a mixed-use project which will create life in that part of Berlin,” he said. “It was an extremely active area in the early part of the 20th century.”

Landmark Hotel

Jagdfeld will use the proceeds to pay off debt to HSH Nordbank AG, which financed his 1998 acquisition of the property and put it into administration in 2008, two people with knowledge of the matter said in November, when Jagdfeld’s plan to sell first became public.

Rune Hoffmann, a spokesman for HSH Nordbank, declined to comment.

Jagdfeld, whose fund-management company also owns the landmark Adlon Kempinski Hotel at the Brandenburg Gate, was seeking 200 million euros for the property, according to a prospectus obtained by Bloomberg in November.

Jagdfeld has invested in other German landmarks. He owned the Grand Hotel Heiligendamm on the Baltic Sea that was used for a Group of Eight summit in 2007 before it became insolvent in 2012. Jagdfeld owns the Quartier 206 shopping mall on Friedrichstrasse that’s been put into administration by Credit Suisse Group AG. (CSGN)

-By Dalia Fahmy

Harper Touts Strong Canada Economy During New York Visit

Source: Bloomberg / News

Canadian Prime Minister Stephen Harper has a message for investors concerned that the country’s economy is fragile: don’t worry.

Canada’s fiscal outlook is improving more quickly than the government projected and its housing market remains robust, while the nation’s imminent budget surplus will allow it to keep business taxes low and attract companies like Burger King Worldwide Inc. (BKW), Harper said in New York yesterday.

“In relative terms, the Canadian economy has been in a pretty strong position coming out of the last recession,” Harper told Wall Street Journal editor-in-chief Gerard Baker in in a wide-ranging interview at Goldman Sachs Group Inc.’s headquarters. “Canada is a very good place in which to do business.”

Harper is facing criticism from opposition parties over his economic management as he prepares for an election in 2015. Data show job growth in Canada has slowed while the country’s rate of expansion has been surpassed by that of other countries such as the U.S.

While Canada recovered more quickly from recession than the U.S., growth in gross domestic product has averaged 1.9 percent since the beginning of 2012, less than the 2.1 percent U.S. average.

American Growth

The country’s slowing employment gains reflect weak global demand, after the world’s 11th largest economy relied on household spending to spur a recovery, according to Harper. The narrowing gap between U.S. and Canadian labor-market performance is a very “positive thing because we obviously need to see growth in the American market,” he said.

The nation’s deficit for the fiscal year that ended March 31 was “significantly” lower than the C$16.6 billion ($15 billion) forecast earlier this year, said Harper, adding the federal government is also “very close” to eliminating its budget deficit in the current fiscal year.

With public opinion polls showing his Conservative Party trailing Justin Trudeau’s Liberal Party ahead of an election scheduled no later than October 2015, Harper downplayed worries about rising debt levels. While there’s a small percentage of households vulnerable to higher interest rates, the vast majority of Canadians have sustainable finances, he said.

“Any suggestion this mirrors the U.S. housing situation prior to the crisis are just simply unfounded,” Harper said, citing strong mortgage insurance rules and a conservative banking culture. “While there has been a spike in debt levels, it’s mainly explained by low interest rates.”

Currency Suppressed

“Don’t anticipate a housing crisis in Canada, it’s not going to happen,” he said, adding rising interest rates will be accompanied by stronger global economic growth.

The country has seen its manufacturing sector shrink, prompting opposition parties to claim Harper’s government has put too much emphasis on growing the nation’s energy sector at the expense of factories.

Harper said the nation’s resource sector is a significant asset, and the transformation to more competitive manufacturing was delayed for years by policies that kept the dollar weak.

“Low-wage, low-skill mass manufacturing has been on a long-term decline,” he said. “That decline was delayed in Canada by policies that frankly suppressed the value of the dollar at a very low level for a very long time.”

Harper also dismissed concerns Canada’s relationship with the U.S. has deteriorated over the Keystone XL (TRP) pipeline. Calgary-based TransCanada Corp., the second-largest Canadian pipeline operator, applied six years ago to build Keystone XL to carry rising supplies of oil-sands crude to U.S. Gulf Coast refineries. The Obama administration has yet to decide on it.

Closest Relationship

“This is the closest single bilateral relationship in the world,” he said. “For Canada, this will always be by a country mile the most important bilateral relationship in the world.”

Given Keystone’s benefits, the pipeline will inevitably be built, Harper said, even in the face of rising U.S. oil output. The proposed pipeline is in its sixth year of review by President Barack Obama, prompting criticism from Harper.

“American self-sufficiency is a long way off,” Harper said. “It’s in everybody’s interest in the U.S. and Canada to have that kind of oil ultimately come from Canada than from just about all the other places the oil is presently coming from.”

Harper touted the country’s low business tax rates and waded into the controversial decision by Burger King to buy Tim Hortons Inc. and move its headquarters to Canada.

Tax Inversions

The U.S. Treasury Department announced plans this week to crack down on corporate inversions like Burger King’s to make it harder for companies to reduce taxes by moving their address outside the U.S.

“I think there is a legitimate concern if people believe through accounting methodology income streams are being shifted to different accounts for the purpose of avoiding taxes,” Harper said. “But business activity moving to where tax rates and where economic environments are more competitive is just the law of economics.”

-By Theophilos Argitis

Vietnam's growth expected to be worst since 1980s

Govt's modest target of 5.8% full-year growth reflects credit crunch

Source: Business Times / World

[HANOI] Do Thi Hien points to about two dozen sewing machines lined up on one side of her apparel workshop near Hanoi's Red River. They have been gathering dust as she tried to get a loan to increase output for exports.

"I've knocked on the doors of four banks already this year and I still can't get a loan," Ms Hien, 42, said. "They're only prepared to lend at high interest rates."

Ms Hien's factory is among thousands in the country that have cut production or shut down as one of the highest levels of bad debt among South-east Asia's biggest economies damps lending.

Government efforts to clean up banks have failed to reinvigorate the credit growth local companies rely on, threatening their ability to supply the Japanese and Chinese manufacturers who are turning to Vietnam as a production centre.

-From Hanoi, Vietnam