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Banks, property to lead recovery

noreply@blogger.com (Vic Chua J.S.) — Thu, 7 Jan 2010 08:46:00 +0800

If Singapore’s economy recovers as the pundits are forecasting, like Morgan Stanley which has raised its GDP growth to 5% y-o-y for 2010 and 2011, up from 4% and 4.5% respectively, then the best proxies to this recovery are the banks. In a report dated Jan 4, Thilan Wickramasinghe says banks will benefit from continued net interest margin growth and upside to fee income as macro-economic conditions improve. “The latest loan growth figures also point to positive momentum and this will strengthen as mortgage and SME credit demand flows through,” he adds.

Along with a stock market hitting new highs, demand for property should remain resilient. November loans expanded 2% y-o-y after a 0.2% contraction last October. “The key here were mortgages, which saw a 15.2% y-o-y increase; the highest pace of growth since March 2008,” notes Wickramasinghe. New property units sold rose 241% y-o-y in FY09 which translates to a rise of 127% in value terms. And as new developments are completed, he expects mortgage demand to continue to strengthen.
Separately, corporate credit saw a turnaround expanding 1% month-on-month after nearly a year of contraction. “With a 8.9% y-o-y GDP growth forecasted in FY10, we expect this momentum to strengthen as corporates and SMEs gear up for rising end-demand,” says CLSA. In past cycles, corporate credit has expanded on average by about 15% annually during periods of strong economic growth. This could translate into an 8% rise in loans according to Wickramasinghe. “Hence, our 7% y-o-y loan growth target is unchallenging,” he says.

A rising stock market could also be the driver for a steeper yield curve and hence gapping opportunities for banks as net interest margins are a function of gapping. “We forecast a 6 bps yoy increase here,” Wickramasinghe says. Clearly, loan- and trade-related fees will be key beneficiaries from rising loan growth and higher trade financing demand, especially from SMEs. Furthermore, as the market rises, there could be a revival in wealth management and fund management income.

In terms of capital, local banks are at a clear advantage. The Bank of International Settlements in Basle, which sets the standard for capital ratios, has put forward proposals to formalise global liquidity and gearing standards. As analysts see it, the banks here have the strongest ratios in Asia, with the highest loss absorption ratios in the region.

“With the sector already ahead vis-a-vis regional and global peers, we believe risks of incremental capital raisings will be minimal,” Wickramasinghe writes in his report.

Over at Nomura Research, Anand Pathmakanthan, Asean banks head, says Singapore banks are well positioned to meet the increased global regulatory standards. He says local banks are unlikely to need to raise additional capital and expects strong earnings growth from them this year.

United Overseas Bank (UOB), which has a total CAR (Capital Adequacy Ratio) of 18.5%, will see its core tier-one capital gain 40 bps from the sale of wholly-owned UOB Life Assurance to Prudential for $428 million, says CFO Lee Wai Fai. According to UOB, the unaudited net tangible asset value of UOB Life as at Sept 30, 2009 was $244 million and the book value of UOB’s investment was $343 million.

However, increased capital requirements for the trading positions of banks may see DBS Group Holdings having to set aside more capital, says Pathmakanthan.

Nomura has a “neutral” rating for DBS and “buy” recommendations for Oversea-Chinese Banking Corporation (OCBC) and UOB. CLSA’s top pick is DBS followed by UOB but has an “underperform” rating for OCBC.

Chart Watch
The STI broke out of the several-times tested 2,800 on Dec 22 (coincidentally on the winter solstice). It has been creeping up ever since, gaining 0.4% to 2,930.49 at the close today with stocks trading at 15.9 times estimated earnings, compared with about 10 times at the start of 2009, according to Bloomberg data.

Technically, the rising 50-day and 100-day moving averages are drawing apart after drawing together in December. This is a positive signal and suggests that the STI has further upside.

Analysts and strategists are forecasting levels of 3,200, which looks possible. Trader and chartist Daryl Guppy says that beyond 3,000, the next resistance area is 3,330 to 3,350, established by a trading band projection target.

Immediate support is at the breakout level of 2,800 and the best support line is the 50-day moving average, currently at 2,770.

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The coming China decade

noreply@blogger.com (Vic Chua J.S.) — Thu, 24 Dec 2009 08:47:00 +0800

“China needs the world and the world needs China,” Chinese Premier Wen Jiabao announced on the eve of the celebration the 60th anniversary of the founding of the People’s Republic of China on Sept 30 this year. From the guessing game on the revaluation of the Yuan to the “carry trade” antics of the US Dollar, the timely or late unrolling of fiscal stimulus worldwide, climate change policies, to whether jobs and loan growth will return strongly, about the only certainty next year is that China will overtake Japan as the second economic power.

The first decade is already a lost decade for developed equity markets. As the comparative chart by Bloomberg on asset class performances from 1999 to 2009 shows, it was a golden decade for, what else, but gold. From record lows of US$252 ($355) per ounce in 1999, it is now being pushed to US$1,500 for next year, if you follow the gold pundits. As someone said, “it is fear of inflation, and not inflation” that is giving it a safe haven credential beyond its demand.

Next came commodities that despite the 80% retreat from its high are still the second best performing asset class from 10 years ago. Worst off is the investor who puts a dollar in the S&P 10 years ago. He would get back about 78 cents.

The STI has fared better, but not as hot as BRIC (Brazil, Russia, India, China) markets because the world recession hit western export-oriented economies like Singapore, Korea, Taiwan and Japan hard as well.
The STI closed at 2,841.56 today, recovering a sizzling 61% for the
year. But the record is mediocre over 10 years, up only 12.7% from
its Dec 30, 1999 high of 2,479.58. It barely beat the decade’s
inflation rate. By comparison, investors who bought Singapore property
fared much better. Over the decade, the URA residential property index
adjusted for inflation is still up more than 50% as of Oct 2009,
even after correcting from its 80% high set in 2007 before the market
fell.

So where do you put your money next year? Which sectors will take off? What will be the impact of the opening of the Integrated Resorts? Which Singapore companies should you watch out for next year?

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HDB offers more flats under the BTO scheme

noreply@blogger.com (Vic Chua J.S.) — Thu, 17 Dec 2009 08:11:00 +0800

The Housing Development Board (HDB) on Tuesday launched four Build-to-Order projects with 2,670 new flats, bringing a total flat supply of 13,500 units for this year.

HDB said two BTO projects, the SkyTerrace @ Dawson and SkyVille @ Dawson, provide new flats for homebuyers who are prepared to pay for a prime location with better finishes.

HDB expects a good response to these projects. Prices start from $532,000 for five-room units, $373,000 for four-room units, $280,000 for three-room units and $112,000 for studio type units.

The 40-storey Dawson projects will offer new features such as the ‘paired flats’ – for those who want to live close to their parents – which is under the Multi-Generation Living Scheme.

HDB’s deputy CEO for Estates and Corporate, Yap Chin Beng, said "Altogether, we have 65 paired studio apartment with four-room flats, or studio apartment with five-room flats so that the married children and parents can apply under a single application.”

"The flats are connected through connecting doors, but each unit have their own main entrances."

Buyers of SkyVille can choose the layout of their flat under the Flexi-Layout Scheme. For instance, buyers can opt for a bigger living room area but with fewer bedrooms.

The other two BTO projects are Segar Grove in Bukit Panjang and Montreal Dale in Sembawang. The price for a four-room flat starts at $210,000; $125,000 for a three-room flat; and $72,000 for a two-room flat.

About 95 percent of the two- to five-room units offered under the BTO scheme are reserved for first-time homebuyers.

Market watchers noted that the latest BTO projects will give homebuyers a wider range of options to suit their preferences and budgets.

"Some of the new flat buyers have expressed that there is not many locations to choose from. But actually now, it is pretty much spread out. You have your central location and also what you call the suburban locations. So it sort of caters to the needs of flat buyers,” said Eugene Lim, associate director of ERA Real Estate.

HDB said homebuyers can expect more BTO projects next year. It is prepared to launch one BTO project a month if demand for new flats remains high.
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Sales of uncompleted private homes remain down in November

noreply@blogger.com (Vic Chua J.S.) — Thu, 17 Dec 2009 08:10:00 +0800

Singapore’s sales of uncompleted private homes in November dropped 26 percent, making it the 4th successive month of decline.

About 600 units were sold in November, the second lowest level since January 2009 when private home sales dropped below 1,000 units.

But several experts said that 600 home transactions in November was not a bad figure.

The director and head of research services (Asia-Pacific) of Cushman & Wakefield, Ang Choon Beng, said "600 is still higher than the sales in November 2007, and is about three times higher than the sales in November 2008. So all in all, I don't think the number is bad, or anything to be alarmed about."

Real estate lecturer at Ngee Ann Polytechnic, Nicholas Mak, also said "This (November) is towards the end of the year, and coupled with the government's measures, we do expect some slowdown in the home sales."

The year-end result is traditionally slow for the real estate market. In September, the government implemented anti-speculative measures to cool off the market, and announced it would release more land for homes by the second half of next year.

"This situation (cooling of property sales) is likely to persist for the next few months. The sale volume is likely to remain less than 1,000 units per month,” said Mr. Mak.

"But what is interesting in the November figures is that there is a slight increase in the number of units launched and sold in the prime districts. We suggest that developers are trying to start up the sale momentum, the sale interest, in this area," he added.

More than half of the home transactions in November had median prices beyond S$1,500 per square foot (psf).

The top seller in November was the Parvis at Holland Hill, with 103 units sold for about S$1,507 psf. The Boulevard Vue at Cuscaden Walk had the most expensive price tag last month, with three units sold at a median price of $2,850 psf.

Market watchers said they expect mass-market property prices to remain steady for the next few months, but high-end properties may increase, especially with additional attractions such as the upcoming integrated resorts.

Looking forward, experts said the prices and units sold in March to April next year will give good indication of the real estate market boom
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Singapore office market turns resilient

noreply@blogger.com (Vic Chua J.S.) — Thu, 17 Dec 2009 08:07:00 +0800

The Singapore office market in 2009 was marked by falling rentals, on the expectations that some 2.2 million sq ft of space was to come on-stream island-wide in this recessionary year. In 4Q09, the positive outlook of an economic recovery in US and Asia lifted business sentiments and led to a retardation of the rental declines seen in the previous quarters. Based on Jones Lang LaSalle preliminary estimates, average gross effective rent of Prime Grade A properties in CBD Core has slowed to only 4.9% q-o-q to $7.80 per sq ft per month in 4Q09.

The return of market activity has given office demand some much needed lift. Consolidation and ‘flight-to-quality’ remain the key trends as occupiers continue to consolidate into a single location and/or upgrade into the new and better quality buildings. In CBD Core where around 1.2 million sq ft of good quality space came on-stream this year, absorption of the new supply has been encouraging with around 46% of these new spaces being taken up.

Some expansions have also taken place on the back of occupiers’ improved business outlook. Norton Rose recently expanded in One Raffles Quay North Tower to occupy a whole floor while BHP Billiton increased its take-up from 150,000 sq ft to 230,000 sq ft in the upcoming Marina Bay Financial Centre Tower 2. Many financial institutions are now planning for moderate growth and have already withdrawn some of the shadow space that they were previously marketing from the market. This led to island-wide shadow space shrinking to circa 600,000 sq ft in 4Q09 from 800,000 sq ft at its peak in 2Q09.

Landlords have also turned more positive with the return of market activity and the recovery of the office market seemingly in sight. Most landlords who have secured their buildings’ occupancy are maintaining their rentals. However, those that are competing for tenants to fill up their buildings continue to lower rentals and roll out incentives including rent-free periods and capital expenditure subsidies, albeit at a more moderated pace.

If the global and regional economies remain on their recovery track, leasing activity is expected to become increasingly stronger over 2010 as firms become more confident about business outlook. “Many large MNCs see business opportunity ahead and are planning for moderate growth but are having difficulty establishing headcounts due to the uncertainty ahead,” Mr Chris Archibold, Head of Commercial Leasing at Jones Lang LaSalle, noted.

Given the recent developments in the office market, the end of this down cycle may be near. For the new Prime Grade A properties which have been well-received by the market thus far, the bottom of rentals for such properties may be as early as 2H10. However, the rentals of existing office buildings may continue to fall till the end of 2010 as vacancies are expected to rise on the back of ‘flight-to-quality’. Dr Chua Yang Liang, Head of Research of South East Asia at Jones Lang LaSalle, noted that the new supply amounting to almost 2 million sq ft per annum in the CBD Core over the next three years is likely to put a dampener on rental growth. “The rate at which the market is able to absorb the available space, which is dependent on new demand, is crucial when the new supply comes onto the market next year. A growing gap between newly completed Prime Grade A and other existing Prime Grade A buildings will emerge, similar to what was seen in 2006 with a premium gap of around 28% or $2 per sq ft per month.”

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Tiger burning bright

noreply@blogger.com (Vic Chua J.S.) — Thu, 17 Dec 2009 07:59:00 +0800

Investors who have been smiling at CapitaMalls Asia’s sparkling debut (up 8.5% first day) and continued rise of more than 25% since its Nov 25 listing, now see another possibility with the reportedly soon-to-be-lodged IPO of budget carrier Tiger Airways.

Full-service airlines remain mired in losses and are flying below average premium passenger loads but budget carriers in Asia have fared better, with their low-cost operating structure and ability to pass on fuel and other service surcharges to passengers.

Tiger Airways Holdings, 49% owned by Singapore Airlines, is said to be aiming to raise $200 million. Bloomberg newswire says Tiger may lodge the offer as early as Dec 21 next week. Citigroup Inc., Morgan Stanley and DBS Group Holdings are mandated to manage the sale.

The carrier aims to price the shares in mid-January and plans for a listing in February, the news agency quoted a source. The initial share sale will value Tiger, which began flying in September 2004, at between $725 million and $910 million, according to the document.

By comparison, Air Asia Bhd, the only discount carrier in Southeast Asia that is listed (and which is also said to be considering listing its separate JV air carrier subsidiaries in Thailand and Indonesia) is valued at RM3.64 billion ($1.5 billion).

The market this week has been listless, awaiting signals from the US Federal Reserve Open Market Committee’s two-day meeting that starts today, while digesting uncertain news from Dubai, continued sovereign debt downgrades (Mexico was the latest) and China’s curbs on its property boom.

Meanwhile, news that The Abu Dhabi Investment Authority (ADIA) is trying to abort an agreement to buy US$7.5 billion ($10.5 billion) of Citigroup Inc. stock at eight times today’s price, saying the bank misled it about the investment, shows the tussle between shareholders and the management of bailed-out banks who are diluting the company’s worth as they issue shares to get out of state control (and better control their compensation packages, critics say) earlier.

Sovereign Wealth Funds like Singapore’s GIC and ADIA had helped saved Citigroup earlier when they needed funds during the credit crunch. They will now suffer dilution in their investments unless they top up since Citigroup announced on Dec 14 it would sell stock to repay US$20 billion in bailout funds to the US government. Abu Dhabi is also said to be trying to avoid further investment losses after this week agreeing to provide US$10 billion to help Dubai World avoid a bond default.

The news that Singapore’s jobless rate continued to slow confirmed recovery expectations but did not have much impact compared to regional concerns. What is interesting to note is that Singapore’s manufacturing continued to shrink, losing 6,400 jobs in the three months ended September, the fourth straight quarter of decline. It was offset by 12,700 new jobs in the services sector where the hospitality and Integrated Resorts are adding on more people.

Chartwatch: High-end developers still on a roll
The Straits Times Index closed up 0.5% to 2,813.93, led by Singapore Airlines, which said it would suspend some destinations but added more flights on others as it adjusted its services to suit different growing markets, and Singapore Telecommunications.

Singapore property developers sold 600 units in November, down 26% from 811 units in October. “While the mass market suffered from a lack of new launches, the upper-mid and high end volume started to pick up with Ho Bee Group’s Parvis being the top-selling project. Our property analyst expects 8,000–10,000 units sales next year (compared to 14,400 YTD) with the high-end enjoying a percentage improvement,” notes DBS Vickers. Their top buys areSC Global Developments (Buy, TP: $1.92), Ho Bee (Buy, TP: $1.99) and Wing Tai Holdings (Buy, $2.05 maintained). UOB KayHian also says similar, that the “high-end segment maintains strong sales momentum despite overall slowdown.” They have buys on Ho Bee, Wheelock Properties and Wing Tai.

For the rest of the week, the outcome of the US Fed’s FOMC (Federal Open Market Committee) meeting will be the decider. Most economists expect the Fed will leave rates unchanged as job and credit growth remains weak. “The FED is expected to raise rates only in 2H10. The USD strengthened with the USD Index up 0.78% to 76.96,” says DBS Vickers. “Oil price should trade from USD70–90pbl, averaging at USD80pbl in 2010.”
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Singapore leasing activity shows signs of recovery

noreply@blogger.com (Vic Chua J.S.) — Wed, 16 Dec 2009 07:38:00 +0800

The Singapore office market has experienced some recovery since its dull start this year.

Although office rents are still expected to fall further in 2010, but at a much slower pace compared to the past 15 months, a recent unexpected rise of leasing activity has created speculation about office rents bottoming-out as early as mid-2010.

“We are currently witnessing a strong recovery in leasing activity. Some tenants are even starting to look at expansion,” says Moray Armstrong, executive director for office services at CB Richard Ellis.

Property consultants predict a return of positive demand in the Singapore office market to more than one million square feet in 2010, on the back of economic growth. However, with more than 2.7 million square feet of new space intended for completion next year, rents will continue to dip and vacancies will rise.

Older buildings with tenants transferring to new projects still face a challenging year ahead. Nevertheless, some anticipate the authorities to closely watch on the competitiveness of the Republic in office rents. Mr. Armstrong believes, “it is not unrealistic to foresee that the government may release a couple of prime office sites in the Marina Bay area in the second half next year.”

“A lot will hinge on how the office market performs in the next three months. The government wants to ensure the supply pipeline is healthy so that businesses feel confident about Singapore's ability to meet long-term demand for growth from headquarters and corporates.”

Chris Archibold, the head of markets and regional director of Jones Lang LaSalle, acknowledges “some talk in the market that office supply may become limited in 2013 and 2014 in the CBD Core.”

“The Singapore government is likely to continue monitoring the office market and inject supply into the market through the reserve list in anticipation of an upturn to avoid the supply crunch we saw in 2007,” he added.

The gross average monthly rental value of grade A office space has plummeted 7.95 percent quarter on quarter to $8.10 per sq ft in Q4 2009, as shown in the CBRE data. This is the lowest quarter-on-quarter dip since office rents started falling in the last quarter of 2008. The latest figure in the fourth quarter of 2009 reflects 46 percent decline for the whole of 2009 and 57 percent from the peak of $18.80 psf in the second and third quarter of 2008.CBRE estimates a further 13.6 percent contraction next year to hit $7 psf by end-2010.

The average grade A rental data of Colliers International for various CBD micromarkets shows a 1.9 percent quarter-on-quarter drop in Raffles Place/New Downtown and one percent in Bugis/ Beach Road in the fourth quarter of 2009, with rents unchanged in the Orchard Road, Shenton Way/Tanjong Pagar, City Hall/Marina Centre. For the whole of 2009, the declines ranged from 42 percent to 53 percent, but Colliers foretells rental declines to moderate 'within 5 percent' from January to June next year from current levels.

DTZ estimates a drop of 15 to 20 percent in the average monthly rental value for prime office space along the Raffles Place by 2010, which it says has dropped this year from $16 psf in Q4 2008 to $7.90 psf.

Mr. Armstrong expects rentals to stabilize by mid-2010 especially for better-quality buildings. According to Angela Tan, DTZ's SE Asia head of development and occupational markets, rents will likely bottom in 2011. “If the economy grows more strongly than expected, rents could bottom earlier in end-2010.”

The completion of recent projects creates a two-tier market. “Given the pick-up in leasing activity, we expect the bottom in rentals for new prime Grade A office buildings to be as close as H2 2010. However, there's likely to be longer downward pressure on rentals in existing prime Grade A office buildings as landlords seek to backfill vacancy caused by tenants relocating to new developments,” says Mr. Archibold of JLL.

On a brighter note, Mr. Armstrong of CBRE says he has already seen some of the resurgence in leasing activity fuelled by expansion and not just replacement needs. This will serve as the foundation for a more positive take-up.

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Industrial rents may fall further in 2010

noreply@blogger.com (Vic Chua J.S.) — Wed, 16 Dec 2009 07:34:00 +0800

Production lines may have continued its operations but market watchers are not expecting the industrial property sector to recover in 2010.

The uncertainty of the economy, greater supply of industrial spaces and relocation of offices could cause rents to fall even further, although at a more moderate pace than this year.

“As the economy recovers and performance in the manufacturing sector improves, demand for industrial space may improve in 2010 although it is expected to remain weak,” says Chua Chor Hoon, the research head for DTZ Southeast Asia.

Conventional industrial space is expected to have a greater take-up as manufacturers bolster production, but doubts still remain over the sustainability of such growth. For the large part of 2009, warehouse and factory rents suffered as external demand for goods declined. The average monthly rent for multiple-user warehouses slipped 12.4 percent to $1.38 per sq ft (psf) between Q1 and Q3, according to the Urban Redevelopment Authority (URA). The industrial space rental index also incurred an 8.5 points loss over the same period.

However, “as the manufacturing sector returns to growth”, conventional industrial rental space could “hold firm” in 2010, says Tay Huey Ying, the research and advisory director at Colliers International.

Chua Yang Liang, head of Southeast Asia research at Jones Lang LaSalle (JLL), believes that these rents could either maintain its steady pace or slip at a more modest pace by up to 5 percent.

Sentiments have seen a slight improvement as the economy climbs out of the recession. The GDP could even expand by 5.5 percent in 2010, going by the average forecast from 20 economists polled in the latest survey by the Monetary Authority of Singapore.

2010 could also be tough for business parks and high-tech spaces, which saw immense demand from companies in 2007 and early 2008 due to soaring office rents. In fact, Ms Chua of DTZ expects these properties “to fare worst” in terms of rents and occupancies compared with other types of industrial space.

Meanwhile, CIMB analyst Janice Ding stated, “Sharply lower office rents in the central business district has reduced the attractiveness of pseudo-office space in business parks."

Dr Chua of JLL also noted, “Given the large high-tech industrial supply that is expected to come onstream, rentals are likely to continue sliding.”

Based on the JLL data, monthly high-tech space and business park rents dipped 28 percent to $2.70 psf from January to September. Dr. Chua anticipates seeing 4 to 9 percent declines in these rents in 2010.

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You Better Watch Out

noreply@blogger.com (Vic Chua J.S.) — Fri, 11 Dec 2009 09:55:00 +0800

Santa Claus’ sleigh may have started its rounds in the North Pole but markets are watching out for other red signs as short-term uncertainties spur more profit taking and a rush to safe havens as the year winds down to an end. Strong economic headwinds (US Fed Chairman Ben Bernanke’s caution on Tuesday that “We still have some way to go before we can be assured that the recovery will be self-sustaining” set the Dow back a 100 points), continued sovereign debt downgrades and worries about Dubai’s problems spreading dominated Wednesday.

Dubai World’s property unit Nakheel PJSC’s US$3.52 billion ($4.9 billion) of Islamic bonds due Dec 14 dropped more than 10% yesterday to 46.5 cents on the dollar, according to Citigroup Inc., reported Bloomberg, and bonds sold by DIFC Investments and Dubai Holdings Commercial sank as low as 44.5 cents on the dollar after Moody’s Investors Service cut the credit ratings of six state-run companies.

Then Greece’s Finance Minister George Papaconstantinou came out to say there’s “absolutely” no risk that the country will default on its debt. “We’re moving swiftly to reassure citizens and markets that we’re moving in the right direction.” The minister also said that Greece would not seek a European Union aid package. Standard & Poor’s had placed the nation’s debt on watch for a downgrade two days ago, and Fitch Ratings followed yesterday by cutting Greece’s credit rating one level to BBB+ from A–.

Asian markets across the board followed the Dow down today, although it was more muted.

Locally, the FTSTI lost 0.3% to 2,797.21 at the close. The oil and gas sector dominated attention, with services provider KS Energy’s announcement that it is consolidating its distribution businesses into one new $320-million entity called KS Distribution, by taking private its subsidiary, Aqua-Terra Supply (ATS), and its associated company, SSH Corporation. For every ATS share, an ATS shareholder will stand to receive a combination of $0.23 in cash and 0.125 KS Energy shares, a 28.9% premium over last traded price. SSH shareholders will stand to receive $0.16 in cash and 0.1 KS

Energy shares. This represents a 14.6% premium over last traded price.

The developments are in line with DBS Vickers’ 2010 strategy theme released yesterday that said “our key investment thesis is for builders to outperform asset owners/operators, due to the resurgence in orders”.
“The key difference from the bull market in 2004 is that this order flow resurgence will be led by production-related contracts in 1H 2010, which are the bottlenecks for oil companies’ cash flows after a pause in capex in 2009.”
The broker picked Sembcorp Marine (+20% to Target Price: $4.26), PEC (+26% to TP: $0.88) and Swiber Holdings (+40% to TP: $1.24).

Another growth area is by acquisition of offshore assets. DBS says, “We believe that companies that raised equity early in 2009 should benefit as the industry recovers. They are well positioned to purchase in 1H 2010: 1) Distressed offshore vessels, and 2) Smaller-sized companies with the required skill sets, but weakened financials.”

It picked Ezra Holdings (+26% to TP: $2.77) and Mermaid Maritime (+40% to TP: $1.11). The report said the key “inflexion points” to watch for in 2010 are a W-shaped economic recession that may push oil back to US$50/bbl, weaker-than-expected margins for new orders due to stiff competition and slower than expected easing of tight credit.

Chartwatch: Sideways STI

Phillip Securities’ technical analyst said a day ago, “The odds in the equity market now are stacked in favour of the bears.”

“Right now, the odds are pointing towards a weaker equity market in the short term. The STI & S&P 500 have both been trading around rather key levels, (2,800 and 1,100 to 1,110 respective) and formed momentum divergences off those key levels. In addition, we have the Dollar appreciating very sharply from tagging strong support in the 74.50 to 74.00 region. We might see a continuation of Dollar strength, with the possibility of a push past 76.00 within the next week,” the analyst noted.

“At this point in time, we see a lot more down side risk present than upside potential and advise investors to stay out of longs for the time being.”

DBS Vickers says, technically, the Dow has been resisted at the 10,500 level in the short-term. A pullback to 10,000 is seen over the next 1–2 weeks. The 10,350 level however caps immediate bounces.

The focus is on this coming Friday’s data on November US retail sales and a deluge of Chinese economic data that will indicate how consistent and strong the global recovery really is.

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$38.5m bid for HDB’s Westwood Ave residential site

noreply@blogger.com (Vic Chua J.S.) — Thu, 10 Dec 2009 07:37:00 +0800

Chappelis Pte Ltd submitted a top bid of $38.5 million for the Westwood Avenue residential site.

HDB said it received 32 bids, with the lowest one from Boon Keng Development, worth $16.8 million.

The second highest bid was $38 million, which came from a joint venture between Sunway Developments and Hoi Hup Realty.

Act-Nobel Homes completed the top three bids with its $35.1 million offer. Other bidders include Sim Lian Land, Sing Holdings, Soilbuild Group and Frasers Centrepoint.

The land parcel, which is located in Jurong West, has a total area of 14,098.9 sqm and is proposed to have a 99-year lease of landed housing development.

With its $38.5 million top bid, the selling price works out to around $254 psf. CB Richard Ellis (CBRE) said terrace houses built on the site are expected to have a selling price at around $1.25–S$1.30 million each.

"The alternative is cluster housing that can appeal to home buyers who are attracted by the facilities offered," said CBRE Research executive director, Li Hiaw Ho.

"Currently, houses in Westville and Westwood landed estates are sold in the resale market at $850,000 to $1.1 million each. Potential buyers could comprise locals working in the manufacturing firms in Jurong and Tuas, as well as academics at the nearby Nanyang Technological University," he added.

HDB will award the site after two weeks, when all the bids have been evaluated.
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Q3 private residential property transactions rise 20%

noreply@blogger.com (Vic Chua J.S.) — Thu, 10 Dec 2009 07:35:00 +0800

Singapore's private residential market experienced a strong surge in the third quarter, as the volume of transactions increased 20 percent over the second quarter.

According to property consultancy firm Savills, around 11,000 units were sold between July and September, mostly in the mid-tier and mass market sectors.

Projects like the Optima at Tanah Merah, Hundred Trees at West Coast, and The Gale at Flora Road benefited from this buying interest.

However, the high-end sector observed that the government’s implementation of the cooling-off measures and the limited number of launches eased off transaction volumes in the third quarter.

Behind the buoyant sales, prices of private properties increased 15.8 percent in Q3 - the sharpest quarterly rise in 28 years.

Even in the high-end sector, prices recorded two consecutive increases, despite being around 22 percent under the previous peak in the last quarter of 2007.

Savills said that it expects to have slow transaction volumes in the private residential sales market in the next few months, as purchasing activity tends to ease during the year-end holiday season and there will be fewer major launches.

However, island-wide prices of homes are expected to stay firm, with a modest increase from Q3 to Q4.

Meanwhile, office vacancy rates surged 12.5 percent in Q3. The figure was up by 2.5 percentage points from Q2, as 1.25 million sqft of new office space was completed.

According to Savills, net supply now exceeds net demand by around 1.2 million sqft. Companies stayed cost conscious in Q3 despite a more positive outlook for the economy.

Consequently, tenants relocating to seize the chance of transferring to new office buildings that give them a more competitive rental package largely led the leasing activity.

Looking forward, Savills said that the slow pick up of business confidence will prompt more companies to revisit or to expand their space planning needs that will result in an increase in the demand for leasing.
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Property investment sales recover after slow start

noreply@blogger.com (Vic Chua J.S.) — Wed, 9 Dec 2009 07:29:00 +0800

Investment sales of Singapore property recovered with a $9.4 billion year-to-date tally, after a slow start in the first quarter. CB Richard Ellis (CBRE) projects that the full-year figure will reach more than $10 billion after all transacted caveats in November and December have been lodged. However, the figure would only be around half of $17.9 billion in 2008.

Hitting investment sales deals of about $15 to $20 billion, property consultants anticipate 2010 to be a better year. Such transactions are the basis for the medium to long-term view of developers and investors to the property market.

Investment sales are defined by CBRE as transactions with a value of no less than $5 million, including landed residential property and apartments, private and government sales of buildings and land, both en bloc and strata. It likewise includes change of ownership of property through share sales.

“With 2010 expected to be a recovery year for the Singapore economy, investment sales could be in the region of $15 billion, similar to that of 2005. Economic fundamentals should start to catch up with the positive sentiments in the stock market and the residential market, with more stability in the financial and business sectors,” said Jeremy Lake, executive director for investment properties at CB Richard Ellis.

Chris Fossick, managing director of Jones Lang LaSalle (South East Asia and Singapore) said, “Investors are starting to focus on the recovery, and whilst still cautious about the short term, they are optimistic about the mid and long-term outlook of the Singapore real estate market.”

Most market watchers are expecting that the residential segment will lead the way for next year’s investment sales deals, with the Government scheduled to resume the sale of residential sites through its confirmed list from January. The collective sales market is also expected to be more active next year, after just one major deal this year (the $100.8m sale of Dragon Mansion).

According to Mr. Lake, investors' interest for retail malls in suburban areas continues to be strong.

“So the appetite for office space, which has been somewhat weak in the past 12 months or so, will pick up again. However, deal flow may be limited as many of the sellers who were keener to sell have probably already sold,” he said.

Shaun Poh, senior director for investment advisory services at DTZ, says there are reserved funds for office properties in 2010 but deal sizes will be limited to $200 to $300 million for each building. “Office investors are also more stringent, demanding initial property yields of at least 4-5 per cent, compared with 2-3 per cent during the 2007 boom. And they'll only look at buildings that are substantially leased, given supply overhang issues,” he added.

“The office market would likely see more investment activity next year as the rental slide eases or rents even begin to recover. And with credit loosening further, major institutions like real estate investment trusts could be priming themselves for further acquisitions, having addressed refinancing concerns,” said Karamjit Singh, Credo Real Estate managing director.
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HDB rents remain stable

noreply@blogger.com (Vic Chua J.S.) — Tue, 8 Dec 2009 07:49:00 +0800

Take note all HDB owners near Sentosa who have room to spare.

Foreigners who are working at the upcoming integrated resort (IR) in Sentosa are looking for rental units.

But several property agencies said that with the large supply of HDB flats up for rent in the country, overall rental rates remained steady. This would most likely remain up until the first quarter of next year.

In fact, HDB wasn't affected much by earlier expectations.

Experts said that foreign workers recruited to work at Resorts World Sentosa (RWS) will contribute to the demand, but have yet to cause HDB rents to increase.

Two property agencies noted an increase in HDB rental rates in Q4, which is mainly attributed to foreigners working at RWS.

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Las Vegas Sands plans phased opening for resort

noreply@blogger.com (Vic Chua J.S.) — Tue, 8 Dec 2009 07:48:00 +0800

Las Vegas Sands Corporation is expecting to launch its $5.5 billon casino resort with 2,700 rooms in phases starting in Q1 2010, a company spokesman said.

He refused to provide the exact schedule for the opening, which will include 800 to 1000 hotel rooms. However, one source said it would probably be “towards the end of March."

According to spokesman Ron Reese, the project’s first phase will include some of the convention and meeting spaces, retail operations and the casino.

In July, Sands said it was making every effort to launch the triple-tower Marina Bay Sands on the 15th of February next year.

The company is now in the process of constructing parts of the resort’s "sky park", the 1,200-foot-long span running across the top of the three hotel towers. About half of the 14 total segments have been completed.

According to Reese, Sands aims to launch the remaining hotel rooms, the sky park and several other retail spaces about 60 days after the first phase of opening.

The company expects to open the remaining attractions, including museums and theatres by the end of 2010.
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Singapore property prices increasing

noreply@blogger.com (Vic Chua J.S.) — Tue, 8 Dec 2009 07:46:00 +0800

The dramatic rebound of the real estate sector in Singapore, including the renewed interest of foreign buyers, has become a big concern to government officials. This resulted in new measures being created to stop property speculations. The government’s earlier measures to boost the housing market were successful, and its effort to slow it down is working as well.

After the prices of residential property in Singapore increased 15.75 percent in the third quarter this year, the government warned against property speculations, as well as the formation of property bubbles. From 953 housing units sold in the fourth quarter of last year, home sales surged to 10,120 units in the second quarter and 11,518 units in Q3 2009 this year.

After strengthening from 2005 to 2007, home prices in Singapore declined in 2008 due to the global recession. As global demand plummeted, Singapore’s economic condition shrank 9.5 percent in 2008 to the first quarter of 2009, and there was a 24.9 percent fall in home prices during the year to the second quarter of 2009.

In Q3 this year, Singapore’s economic cycle reversed and GDP increased by 0.8 percent year-on-year. Prospects of an economic stability, combined with low borrowing costs, triggered the massive increase in home prices.

With this, the government warned that it will manage the housing cycle.

In September, the government implemented measures to cool down the housing market, including policies, making it difficult for all households to defer mortgage payments.

“We do want to manage the property cycle as best we can, prevent boom and bust,” said Finance Minister Tharman Shanmugaratnam, admitting that it’s uneasy to foresee the property needs of the country. The government is reviewing the use of other measures to manage the home price cycle, such as modifying rules on credit, adjusting land supply and in extreme cases, amending the tax policies of the country.

The MAS also noted in its Financial Stability Review released in November: "As Singapore emerges from recession and with the market expecting low interest rates to persist for some time, the risk of a renewed escalation of speculative momentum cannot be discounted."
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Sentosa Cove draws more transactions

noreply@blogger.com (Vic Chua J.S.) — Tue, 8 Dec 2009 07:45:00 +0800

Homes in Sentosa Cove drew strong interest in the first 10 months of 2009 from high-net-worth investors. More properties costing over $10 million were transacted over this period compared to the last four years.

According to property consultancy firm Savills Singapore, its analysis of URA Realis data as of Dec 1 showed that September and October 2009 were noticeably active months. In fact, Sentosa Cove’s three largest residential transactions to date – at $20.18 million, $22 million and $30 million respectively – happened during this time. The biggest transaction involved a completed bungalow at Ocean Drive, which changed hands in October this year in the secondary market. The selling price of $30 million works out to $1,753 per sq ft, based on the 17,115 sq ft land area.

Two Chinese citizens, who are also permanent residents of Singapore, were the buyers of the bungalow, and the seller is a locally incorporated firm.

The second and third biggest deals were transacted in September, involving the subsales of two villas at Paradise Island for $22 million and $20.18 million.

In general, the analysis of Savills showed that the number of lodged caveats for homes in Sentosa Cove costing more than $10 million jumped to 24 in the first 10 months of the year – from just 17 between the last quarters of 2004 and 2008.

More than half or 14 of the 24 transactions were sealed in September and October. According to the firm, a more optimistic outlook for the global economy at the time, before the recent debt problems of Dubai World, enhanced investor’s confidence in making big-ticket purchases like super-luxury homes.

Savills said that the stable recovery of Singapore’s economy in the past few months and the renewed prominence of the Republic on the global financial map have boosted optimism among investors to invest monies here.

Steven Ming, Savills director of investment sales & prestige homes, offered another reason for the flow of transactions in October. He related the anecdotal evidence that some high-net-worth mainland Chinese were in Singapore to shop for properties during their National Day Golden Week holiday.

Overall, the total number of caveats lodged for private homes in Sentosa Cove increased to 133 in the first 10 months of 2009 from 72 in the whole of 2008. Nevertheless, the latest figure is just 26 percent of the peak in 2006, having a record of 516 transactions.

Savills also confirmed that the bulk of transactions in 2009 were in the resale and subsale markets. Deals in the primary market, which involved developer sales accounted for just 9 percent of caveats. This reflected the limited release of new projects in 2009.

Ong Choon Fah, DTZ executive director (consulting), believes that prices of homes at Sentosa Cove will continue to appreciate in 2010, although a lot will depend on the wider property market. “Prices in Sentosa Cove could be more volatile than in the prime districts on the mainland because Sentosa Cove buyers are relatively more investment driven than motivated by owner occupation, compared to the prime districts. When markets go up or down markedly, investors may be more inclined to sell than owner-occupiers, whether it is to cut loss or realize a gain,” she said.
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Singapore is the 9th most expensive Asian city

noreply@blogger.com (Vic Chua J.S.) — Fri, 4 Dec 2009 07:24:00 +0800

Singapore now belongs to the list of top 10 most expensive Asian cities for expats, due to the strengthening Singapore dollar.

A survey by ECA International, a human resource consultancy firm, showed that Singapore is now the ninth most expensive city in the region.

Last year, the city-state claimed the twelfth spot.

ECA International said the cost of living for tourists in Singapore is also increasing with that of its neighbouring countries.

Singapore’s cost of living last year was 15 percent lower compared to Hong Kong. But now, the difference is only 7 percent.

Lee Quane, regional director of ECA International, said the rise in the cost of living is unlikely to prevent several firms from relocating their staff in the country.

Tokyo remains in top spot as the most expensive location for expatriates, as Japan’s stronger currency has outweighed the impact of its deflation rates.

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Six whole floors purchased at Marina Bay Suites preview

noreply@blogger.com (Vic Chua J.S.) — Fri, 4 Dec 2009 07:23:00 +0800

About half a dozen floors at Marina Bay Suites were sold during last week’s preview. Its buyers are believed to be Singaporeans, Indonesians and other Asians.

The biggest transaction recorded in the preview was about $45 million, including at least two whole floors that were purchased by an Indonesian party.

Some market watchers believe it could cost buyers between $17million and $18 million to buy a whole floor at the 99-year leasehold condo based on last week’s selling price.

Each floor has four apartments, two three-room units and two four-room units. The total area per floor is about 8,000 square feet.

Thomas Tan, head of marketing (residential) for Raffles Quay Asset Management (RQAM), said 87 out of 90 units released for preview were purchased. The total amount made from the sales is approximately $400 million.

Two-thirds of the total units were purchased by Singapore residents, including PRs. The remaining units were bought by non-PR foreigners, including Malaysians, Indonesians, Americans, Australians and mainland Chinese.

“We do have multiple-unit buyers, but due to client confidentiality and privacy reasons, we are unable to reveal such information,” said Mr. Tan when asked about the buyers.

RQAM is the asset manager for Marina Bay Suites, which is being developed through a joint venture between Cheung Kong Holdings, Hongkong Land and Keppel Land.

Mr. Tan declined to share the details but reiterated that “the average price range was between $2,200 psf and $2,500 psf.” It was understood that the selling price of the 90 units were close to $2,300 per square foot (psf).

However, the range of the apartments that were sold could be about $1,800 psf to over $2,600 psf.

Mr. Tan said the apartments that were released at last week’s preview were located at the 7th to 40th plus floors of the 66-storey project.

Marina Bay Suites consists of 218 three- to four-room units and three penthouses. The construction of the project is set to begin in the first-half of next year.

“We have no immediate plans to release more units for the rest of this year but we'll continue to register interested buyers. We'll monitor the market and determine the price at the time of launch,” said Mr. Tan.

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Dragon Mansion sold for $100.8 million

noreply@blogger.com (Vic Chua J.S.) — Thu, 3 Dec 2009 08:08:00 +0800

A unit of Roxy-Pacific Holdings bought the Dragon Mansion located at 18 Spottiswoode Park Road for $100.8 million, including the development charge (DC). This works out to around $863 per sq ft per plot ratio (psf ppr).

The property has become the first successful collective sale in Singapore for 2009.

In July, CKS Property launched a tender for the site, after 80 percent of the owners consented to proceed with the en bloc sale.

This collective sale is still subject to approval from the Strata Titles Board. Each owner of the 72-unit apartment with three bedrooms is expected to receive $1.4m from the proceeds of the sale.

The entire 42,000 sq ft land area of the freehold site is designated for residential use with a 2.8 plot ratio. The new development could possibly accommodate around 120 units of apartments with a size area of 1,000 sq ft, said CKS Property Consultants.

According to property brokers, the sale price reflects the limited availability of freehold residential land close to the Central Business District, and introduces a new benchmark for the Spottiswoode Park area.

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Singapore plunges to 32nd spot in the global office rental price list

noreply@blogger.com (Vic Chua J.S.) — Thu, 3 Dec 2009 08:06:00 +0800

In Singapore, office rental prices declined significantly, causing the country to fall to the 32nd spot in a list of the most expensive office rental markets around the world.

Previously, Singapore was in 9th place on the list a year ago and took the 15th spot in June 2009.

Singapore saw a 53.4 percent year-on-year decline in rents, said property consultant CB Richard Ellis (CBRE).

The office occupancy cost in Singapore now stands at US$63.89 per sq ft per annum. In 2008, rents in the country stood at US$135.13 per sq ft per annum. Singapore experienced the second steepest year-on-year decline in rentals – only behind Kiev, which dropped by 64.4 percent.

London's West End is once again the most expensive office market in the world, with rents at US$184.85 per sq ft per annum.

The Inner Central district in Tokyo came in second, with its Outer Central district in the number three spot.

Rounding up the top five are the central business district in Hong Kong in the number four spot and Moscow finishing at number five on the list.

Office markets around the world are going through declines in prime office occupancy prices, said CBRE.

In general, prices of prime office occupancy saw an average of 7.7 percent year-on-year drop worldwide.

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MAS closely monitoring Dubai World and UAE Developments

noreply@blogger.com (Vic Chua J.S.) — Wed, 2 Dec 2009 07:03:00 +0800

The Monetary Authority of Singapore (MAS) said on Monday that it has been closely monitoring the developments in the United Arab Emirates and Dubai World, and their impact on Singapore's financial sector.

The total gross exposure of Singapore's banking sector to the UAE is way under one percent of the total banking assets, MAS said.

It also added that developments in Dubai are not expected to adversely affect the financial stability of Singapore.

The Singapore market performed better than expected in Monday's trade, sliding 1.09 percent compared to analysts’ forecasts of a 2 to 3 percent decline.

According to MAS, it will continue to be in close contact with central banks and regulators in key jurisdictions as well as with the financial institutions in the country.

“The international financial markets are linked, this may change some of the sentiments and it may knock some of the air out of the stock markets which had risen very rapidly,” said Prime Minister Lee Hsien Loong.

The government of Dubai announced last Wednesday that it would seek a six month payment freeze on debts of Dubai World, one of its largest conglomerates, which owns real estate developer Nakheel. It has an estimated liability of about US$60 billion.

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CDL open to increase shares in South Beach

noreply@blogger.com (Vic Chua J.S.) — Wed, 2 Dec 2009 07:01:00 +0800

City Developments Ltd (CDL) said it is open to explore possibilities in raising its stakes in the South Beach project, wherein Dubai World also has a share.

“South Beach is an iconic development and one which has excellent potential,” said a CDL spokesperson.

She noted that the joint venture company that owns the project site may also issue notes if more funds are required. It is also open to any shareholder or note holder to subscribe for the notes.

CDL purchased the South Beach site for $1.69 billion in 2007 through a joint venture with El-Ad Group and Dubai World. In June 2009, JV Company refinanced a $1.2 billion land loan through a $400 million five-year secured convertible notes and an $800 million two-year secured bank loan. HK’s Nan Fung group subscribed for $205 million while CDL got the remaining $195 million.

Dubai World is now asking all the providers to finance itself and Nakheel to 'standstill' and extend the debt maturities until 30 May 2010.

The South Beach project will be comprised of residences, retail space, hotels and offices. Several market watchers suggest that aside from the options given by CDL yesterday, another way for the JV Company to finance the site’s development is to sell part of or the entire project. If the residences are launched and sold, its sales would help in funding some parts of the developments’ construction. The hotels could also be divested to CDL’s Hospitality Trusts, to its Millennium & Copthorne Hotels or even to a third-party buyer.

Alternatively, the said project, when completed, could become a real estate investment trust. A rough calculation showed that El-Ad and Dubai World would have pumped in around $200 million each of equity in the project.

CDL had cash equivalents of about $979.5 million as of 30 September 2009. Market watchers think the project consortium partners may have received proposals for their shares from potential buyers.

CDL said the South Beach's construction is more likely to start in the third quarter of next year, with Nan Fung and CDL to invest more money for the project.

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Affordability remains a key factor in purchasing property

noreply@blogger.com (Vic Chua J.S.) — Wed, 2 Dec 2009 07:00:00 +0800

The rising housing prices and upturn in the economy makes 34-year-old communications manager Lisa Low worried.

She fears that when she finally finds her dream home, she may not have enough money for the cash-over-valuation (COV) that resale unit buyers must pay.

"Is there such a thing as affordable property in Singapore today? With skyrocketing COV, I wonder if I'm able to fork out the $10,000 to $20,000 upfront," said Ms. Low, who resides in Bedok.

According to Mark Teo, senior group division director of ERA Realty Network, potential home owners like Ms. Low are considering several factors prior to buying a property.

Affordability is still a key factor.

First-time buyers who qualify for the HDB criteria can make "the most economic sense" by passing their application for a flat directly from the HDB, since they may spend up to three times more for private properties than for public housing.

Home buyers can benefit from the housing-loan interest rates and subsidized prices that remain the same for an extended period, Mr. Teo said.

At present, there is an annual interest rate of 2.6 percent.

According to Nicholas Mak, a real- estate lecturer at Ngee Ann Polytechnic, the 99-year condos and second-hand executive condominiums are also attractive.

“Executive condos that are five to 10 years old are slightly cheaper and come with all the amenities of full-fledged condos, like carparks, swimming pools and tennis courts,” Mr. Mak noted.

“Ninety-nine-year condos are also cheaper but they may not be as conveniently located.”

Ultimately, selecting a property depends on the buyer’s personal savings from the time of purchase to their earnings in the future.

"As a rule of thumb, it is not prudent for anyone to use more than 40 per cent of their income to service their monthly home installment,” said Mr. Teo.

However, Mr. Mak said that primary residences do not usually make good investments, as they are only chosen for their proximity to certain amenities or schools.

Mr. Teo suggested that investors who can spare $1 million should consider condos in the Tiong Bahru area, which has 3 to 4 percent rental returns, a relatively high figure.

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Singapore prime rents rank as 18th most expensive in the world

noreply@blogger.com (Vic Chua J.S.) — Wed, 2 Dec 2009 06:59:00 +0800

Singapore jumped a notch in the latest survey of the most expensive retail markets conducted by the property firm CB Richard Ellis (CBRE). Prime retail rents in Singapore ranked as the 18th most expensive around the world in Q3 2009, up from the 19th spot in the previous quarter.

Sydney surpassed London as the fourth priciest place to rent prime shop space. This was attributed mainly to the strengthened Australian dollar relative to the US dollar.

These tougher trading conditions cause gaps in shopping centers and high streets, as retailers cease trading and consolidate networks altogether, says CBRE in its latest Global MarketView on the retail industry. “There is increasing differentiation between 'the best and the rest’.”

Due to strong economic growth in some markets, as well as the designed programs of the government, which restored consumer confidence, the retail sector in the Asia-Pacific region is recovering quicker and better than anticipated.

Hong Kong still takes the second spot as the most expensive retail rental market around the world, with an annual value of US$976 per sq ft.

“Prime retail rents vary significantly across the different Asian markets, but in Q3, retail rents in most cities either declined at a slower rate, stabilized or showed a slight up-tick,“ said CBRE.

“However, the threat of supply-side risk remains significant in certain cities in mainland China, Singapore and India, where large amounts of shopping mall construction are expected to be delivered in the coming years.”

Danny Yeo, managing director at Knight Frank and a veteran of Singapore retail property, noted that for the last six months, the average rents for retail space inside suburban malls have been more flexible. It still manages to post low percentage of increases as supplies remain tight. However, along the Orchard Road, the launching of four new malls in 2009 has placed pressure on rentals.

“There's a window of opportunity, which is still open, for retailers to secure space at good rentals in the Orchard Road vicinity,” Mr. Yeo said.

The stock of shop space along the Orchard Road area grew around 17 percent in the first nine months of 2009 compared to the figures in end-2008, according to Knight Frank data.

According to CBRE, New York's reign as the most expensive retail market around the world continued in the third quarter despite a drop of 25 percent in rental rates over the past 12 months.

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Two Singapore casinos will have Las Vegas flavour

noreply@blogger.com (Vic Chua J.S.) — Tue, 1 Dec 2009 07:54:00 +0800

The world’s newest casino will be opening in Singapore but a Las Vegas gaming company will be the centre of the competition.

Experts said that Marina Bay Sands will likely be the more visible and enduring property of the two that will open by Q1 2010.

Singapore has reversed a 40-year ban on gambling passed in 2005 and invited developers from around the world to bid and develop integrated resorts on two sites.

The $5.4-billion Marina Bay Sands will consist of three 55-story towers with 2,500 suites, capped with a rooftop terrace. Just like Las Vegas Sands, the Marina Bay Sands will feature two theatres, a casino, museum, retail centre and a major convention centre.

Its competitor will be the $4.2-billion Resorts World at Sentosa, developed by Malaysia-based Genting Group. Resorts World includes six hotels with different themes around the centrepiece of the development, making it the first Universal Studios theme park in Asia. The resort on the island of Sentosa will have a maritime museum, a water park, a retail district, a casino and a conference centre, as well as a theatre that will feature Asian cultural shows.

Resorts World, which is accessible by a ferry or a transport system on a covered boardwalk, is expected to become very popular. Analysts said that Marina Bay Sands should feature more attractions in the long run.

“Theme parks quickly wear out, so a casino-theme park marriage should lose its appeal over time,” said Grant Chum, the head of UBS Investment Bank’s China research.

“The Sands’ casino-convention centre development is an easier marriage, and I think that has been validated by the company’s success in Las Vegas.”

He added that the developer had established connections with UNLV and that relationship should be improved through its Singapore campus. The country has high hopes for another integrated resort aside from the two.

Singapore draws over nine million visitors, mostly from Australia, China and Indonesia, adding more the $12 billion Singapore dollars (US$7.2 billion) to its earnings.

Singapore Tourism Board’s assistant CEO of development, Margaret Teo, said that upon the completion of the two integrated resorts next year, it will attract two to three million visitors and will generate up to US $1.9 billion by 2015.

The gaming rules for the new resorts will be closely monitored.

Fredric Gushin, the managing director of Linwood, an industry consultant specializing in gaming research, said the country will implement a hybrid of gaming regulatory strategies from Australia, New Jersey and Nevada to monitor the casinos.

Among the strategies to discourage local residents from playing at the casino, residents will have to pay $100 (US$72) daily or $2,000 (US$1,443) annually to gamble in either casino.

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