Delivering results for unitholders

Source : Business Time - 13 Oct 2008

A-Reit’s focus on investors makes corporate governance a natural priority

BELIEVING that a culture of corporate governance is critical to its performance, and acting on that belief, has led Ascendas Real Estate Investment Trust (A-Reit) to emerge joint winner of SIAS’ Most Transparent Company Award in the Reits category this year.

This is no novelty to A-Reit which, including this year’s win, has picked up the award four times in the last five years - thrice as runner-up and once as joint winner.

The mainboard-listed business space and industrial Reit owns a diversified portfolio of properties in Singapore, including business and science parks, high-tech industrial spaces, light industrial factories, logistics and distributions centres and warehouse retail facilities. These properties house over 790 international and local tenants from a wide range of industries.

According to its annual report for 2007/2008, since its listing in 2002, A-Reit has grown its portfolio from eight properties to 84 and from $636 million to $4.2 billion.

It also posted strong results for the first quarter ended June 30, 2008, with a net distributable income of $51.8 million, 15.9 per cent up from the previous year.

That translated into a distribution per unit (DPU) of 3.89 cents, 15.4 per cent up from the corresponding quarter a year back, an annualised yield of 7 per cent based on its closing price per unit on June 30.

The strong performance delivered to unitholders is reflective of what A-Reit says of its focus. ‘We believe in focusing on our unitholders. All decisions are made in their best interests,’ says Tan Ser Ping, chief executive of Ascendas Funds Management Limited, which is the manager of A-Reit.

This focus on unitholders makes corporate governance a natural priority and translates into several management practices at A-Reit.

Its initiatives to promote a culture of corporate governance can be painted in two broad strokes.

First, measures are taken to address the potential for conflicts of interest between the Reit and the shareholders of the Reit manager.

Says Mr Tan: ‘A-Reit is one of the very few Reits in Singapore that link performance fees for its manager to the growth in DPU for unitholders.’

The composition of its board of directors also ensures an element of checks and balances. Its board of directors is independent and separate from parent company Ascendas, and the majority of board members are non-executive and independent.

Of his own role, Mr Tan says: ‘As CEO, my role is to manage the Reit effectively and I do not ‘double hat’ with the business of the Ascendas Group.’

The second broad stroke of measures highlights what Mr Tan terms the ‘hallmark of good corporate governance at A-Reit’ - transparency and timely information disclosure to the market.

This means ensuring that key information gets out to its shareholders clearly, in sufficient detail, and in a way that anticipates and addresses their potential queries.

Effort is also made to ensure equal dissemination of information to all unitholders.

Mr Tan adds: ‘We go an extra step beyond usual corporate governance practices by holding annual general meetings with unitholders, even though it is not mandatory for Reits to do so.’

This is done so that unitholders have an additional avenue to interact with the management and make their voices heard.

Indeed, A-Reit reaches out beyond its current investors to potential ones in the general public and the financial community too. Roadshow materials and presentations to institutional investors are posted on A-Reit’s website and e-mail blasts are sent to all subscribers to keep them updated.

With these structures and management practices in place, A-Reit’s daily operations adhere to clearly articulated growth strategies for the long haul.

Over the past couple of years this has meant, in practical terms, resisting market pressure to pursue acquisitions for the sake of ramping up its assets.

‘It also meant resisting overseas expansion where we could not find justifiable risk-adjusted returns on investment to venture beyond Singapore,’ says Mr Tan.

Such an emphasis on long-term growth, rather than short-term gain, should resonate with many given the current financial climate.

The bleak global economic outlook changes nothing corporate governance-wise, however. In fact, Mr Tan stresses the increased saliency of corporate governance in tumultuous times such as these.

‘In these times of uncertainty, the investing community seeks reassurance that companies are in control of their operations and maintaining investor confidence should be a focus for all management teams,’ he says.

S’pore is 4th cheapest place to raise expat kids

Source : Straits Times - 11 Oct 2008

40% of foreigners polled say it is cheaper here than in their countries

A GLOBAL survey has found Singapore to be among the countries where it is cheapest for expatriates to raise their children.

Singapore emerged fourth cheapest, after Spain, India and China, in a survey by HSBC Bank International of 870 expatriate parents across 14 places. In the poll, the cost of raising a child included - but was not restricted to - the cost of education.

Almost four in 10 of those in Singapore who were polled said it was cheaper raising junior here than in their home countries.

Another 25 per cent said the cost was ‘about the same’.

At the other end of the spectrum, Britain, the United Arab Emirates and Hong Kong are the most expensive places to raise children.

The survey also asked these expatriate parents to rate the countries they are living in, in areas such as the amount of time their children spend studying and being outdoors, and whether they think their children will remain in their adopted country upon growing up.

Using these criteria, Singapore came out tops in Asia and fifth on the list of 14 places for expatriates to raise children. It lost out to Spain, France, Germany and Canada in the ranking of the 14 places. Within Asia, India was second but eighth on the list of 14; China was third in Asia and ninth on the list.

Australian publisher Katrina Bingham-Hall, 43, who arrived in Singapore five years ago, is bringing up five children aged between four and 14.

With the older four attending government schools here, she spends less than $1,000 a year on their school fees, and is all praise for how little the ‘brilliant’ education system here costs.

Back home, it would cost her about $700 a year to put just one child through public school.

She added: ‘Singapore’s education system is streets ahead of Australia’s. The teachers here are far more dedicated and the education standards are far better.’

As for American Tracy Waychoff, 46, she chose Singapore when her husband was offered a choice of postings here and in Brazil, China and Mexico.

The mother of two teenagers said: ‘I know my children will be safe in Singapore and drugs are not a concern.’

Bet on S-Reits in uncertain times

Source : Business Times - 11 Oct 2008

As prices fall and yields climb, Singapore Reits are gaining favour with analysts. By Uma Shankari

SINGAPORE-LISTED real estate investment trusts, or S-Reits, are back in favour with analysts. Just a year ago, they were urging investors to turn their backs on Reits as concerns emerged about their ability to refinance debt amid the looming credit crunch. There were also fears that with funding hard to come by, acquisition growth had pretty much dried up.

But now these same S-Reits are being hailed as a source of stable, visible and recurrent income in uncertain times - and definitely seem to be better bets than developer stocks.

UOB Kay Hian analyst Jonathan Koh, for example, upgraded S-Reits from market weight to overweight this month due to their ‘overwhelmingly attractive’ yield spread. According to him: ‘Reits provide recurrent dividend income, an attraction when opportunities for capital gain are scarce.’

S-Reits have borne the brunt of the stockmarket correction this year. UOB Kay Hian’s index of 14 Reits slid 16.9 per cent in H1 2008 and 27.2 per cent in Q3 - under-performing the Straits Times Index, which shed 14.9 per cent in H1 08 and 19.9 per cent in Q3.

Reits here have been affected by tightening credit markets and higher interest rates, which have resulted in higher borrowing costs. But JPMorgan analysts Joy Wang and Christopher Gee say the Reit model is not broken.

The S-Reit sector enjoyed exceptional growth from 2003-2007, fuelled largely by cheap funding. As a result, S-Reits became too focused on inorganic growth. In particular, those with sponsor pipelines - such as CapitaLand’s many Reits - aggressively snapped up assets on the back of the cheap capital readily available to them.

But the global credit crunch put the brakes on the S-Reit growth cycle. Many acquisitions are no longer accretive, and the market seems to have become concerned that Reits will no longer be able to acquire assets, even from sponsor pipelines.

Smaller and less liquid vehicles such as CapitaRetail China Trust (CRCT) seem to have lost their attraction with investors and become less relevant to the market.

But JPMorgan’s Ms Wang and Mr Gee reckon this view is too pessimistic. ‘When capital was cheap and easy to obtain, less focus was on the fundamentals of real estate and management skill sets,’ the analysts said in an Oct 7 report. ‘Going forward, we expect the market to differentiate and focus on Reits with quality underlying assets, resilient cash flow and capable management teams.’

JPMorgan has ‘buy’ calls on seven S-Reits, including CRCT.

Analysts also feel S-Reits look attractive given their current yields and the steep discounts to book they are trading at.

UOB Kay Hian’s Mr Koh notes that the weighted average yield for Singapore Reits has shot up to 8.8 per cent in the current market correction, moving to almost two standard deviations above the mean of 6 per cent. The correction in the share prices of S-Reits has brought yield spread against 10-year government bonds up to a historic high of 5.5 per cent.

S-Reits are also trading at vast discounts to their net asset value (NAV). UOB Kay Hian’s analysis shows S-Reits are trading at a massive 39 per cent discount to book NAV - more than two standard deviations below the mean discount of 3 per cent. The average discount to NAV is steepest for office Reits at 60.5 per cent, versus 35.1 per cent for retail Reits and 30.3 per cent for industrial Reits.

UOB Kay Hian’s top S-Reit picks are Ascendas Reit, CapitaCommercial Trust, Frasers Centrepoint Trust and Suntec Reit.

But there are still areas of concern in the S-Reit sector. Debt refinancing will remain a key issue in 2009, when a chunky $4 billion worth of S-Reit debt is slated to expire, analysts say. ‘While there is no evidence that Reits have severe trouble mobilising funds from the debt market for refinancing purposes, we believe subsequent refinancing will certainly come at higher cost,’ says Jonathan Ng of BNP Paribas.

Refinancing for three-year debt, which most Reits will likely undertake, will likely vary between 4.0 and 4.5 per cent under current conditions - up by 50-100 basis points, says Mr Ng.

After imputing higher cost-of-debt assumptions and moderating underlying assumptions for occupancy and revenue per available room for FY09-10, Mr Ng has cut the target price for all seven S-Reits BNP Paribas tracks by 14 to 35 per cent.

He maintains his ‘neutral’ weighting on the sector as ‘valuations are undemanding’. The sector now trades at an average 40 per cent discount to NAV and FY09 estimated yield of 9.3 per cent, implying a generous 600 basis point spread over the 10-year government bond, he says.

Singapore in ‘better shape’ to face crisis

Source : Sunday Times - 12 Oct 2008

Measures put in place after 1997 Asian financial crisis will help S’pore fare better now: Iswaran

SINGAPORE is in a better shape to weather the current downturn, thanks to lessons learnt during the Asian financial crisis.

This is the view of Senior Minister of State for Trade and Industry, Mr S. Iswaran, who spoke to reporters on the sidelines of the Global Indian Diaspora Conference at Suntec City yesterday.

Last Friday, figures from the Ministry of Trade and Industry (MTI) indicated that the economy shrank in the third quarter, declining by 0.5 per cent from a year ago.

The local economy has contracted quarter-on-quarter in three of the last four quarters, making this the first technical recession in Singapore since 2002.

MTI also lowered its forecast for full-year growth to ‘around 3 per cent’, down from 4 to 5 per cent.

But Mr Iswaran reckons that Singapore is prepared to deal with the downturn.

‘If you look at our economic numbers, there are particular sectors that have been affected by the general economic malaise in developed economies, particularly in manufacturing,’ he said.

‘But at the same time, other sectors are holding up. The services sector is doing reasonably well; there are also business services, transport…and so on.’

He cited measures that were put in place to tighten Asia’s financial systems after the Asian financial crisis in 1997, as a critical catalyst that has helped reinforce Asia.

‘And it’s not just the financial systems but also our corporate sector in terms of the level of debt it took on and how it structured its balance sheets. So from that point of view, (we are) more robust,’ he added.

But he also cautioned that Singapore will not be immune and moderation of growth is expected.

‘When there is a downturn in developed markets like the US, Europe and Japan…we cannot be immune,’ he added.

‘The real economic effect will affect us in Singapore, but yes, I think we are in a better position to withstand it, compared to the period of 1997.’

He said MTI will continue to work with other agencies to monitor the situation.

‘We want to keep our hand on the pulse, and make sure that appropriate steps are in place, or taken in good time to facilitate and help the industries where it is needed.’

Financial slowdown may ease construction costs

Source : Sunday Times - 12 Oct 2008

THE financial slowdown may actually spell good news for the construction industry.

Mr Simon Lee, executive director of the Singapore Contractors Association, said the downturn will most likely stabilise the cost of construction materials.

He noted how prices of materials had escalated tremendously in recent times and far exceeded their estimated cost during the tender stage of projects.

A spokesman for the Building and Construction Authority (BCA) also said the increase in construction costs will be moderated if prices of construction materials soften.

Ms Chua Chor Hoon, research senior director for DTZ Debenham Tie Leung (South-east Asia), said the slowdown in the property market will ease the bottlenecks and rising costs in the sector.

‘This is good as the frenetic pace experienced over the last two years is not sustainable.’

She added that it is likely that costs in the public construction industry will ease as projects get deferred or are aborted.

Rising construction costs can be traced back to early last year after Indonesia banned the export of construction sand and granite to Singapore.

The worldwide economic boom resulted in an increase in demand for other construction materials.

Manpower costs shot up as well due to the high number of projects but limited number of skilled workers.

As a result, many construction projects have been delayed.

The United World College said last month that its upcoming campus in Tampines would not be ready by 2010.

Last year, the Government announced the delay of $4.7 billion worth of public sector projects to ease pressure on construction demand. The delayed projects include a new hospital in Jurong and a complex that will house the Communicable Disease Centre.

But other projects, like Resorts World in Sentosa, are still going ahead as scheduled.

Ms Krist Boo, its vice-president for communications, said the integrated resort is on track for its soft opening in early 2010. ‘We are fortunate to have already awarded most of the major construction contracts for our resort,’ she said.

The majority of public construction projects are also expected to go ahead.

The BCA spokesman said it expects total public construction demand to reach between $10.5 billion and $13.5 billion this year as the Government is proceeding with essential infrastructure projects such as the Marina Coastal Expressway, MRT Downtown Line and Gardens by the Bay.

Finding best home loan as rates see-saw

Source : Sunday Times - 12 Oct 2008

Home owners may want to lock in longer-term interest rate to avoid any volatility ahead, say experts

FOR the few home buyers out there looking at taking up a new loan or those who want to consider refinancing their home loans, the outlook is more uncertain than before.

The key question that they have is this: How will interest rates move?

It’s a crucial question because of two reasons.

First, many home loans these days are pegged to interbank rates, which are ‘wholesale’ lending rates that banks charge one another and move with the market.

In a market like London, the short-term interbank rate (known as ‘Libor’) has shot up because a lack of confidence is making banks wary of parting with their money.

In Singapore, the Singapore Interbank Offered Rate (Sibor) spiked at the onset of the current financial crisis. It has fallen back since, but how will it behave from here on?

When Sibor goes down, consumers will benefit from a loan offering a rate pegged to Sibor as they will be paying a lower interest rate. But if it heads up, their mortgage instalments go up.

The second reason for new borrowers or refinancers wanting to know how rates will change is that they are typically faced with a choice of three main strategies.

They can opt for:

~ a variable-rate loan that uses a short-term interest rate like the three-month Sibor;

~ a variable-rate loan based on a longer-term rate like the 12-month Sibor (which is higher); or

~ a fixed-rate loan that locks in the interest rate for the first few years, which is the most expensive option.

In general, home loans pegged to publicly available rates like Sibor offer transparency, but home owners are at the mercy of market conditions. This is why fixed-rate packages are priced at a premium.

To figure out what borrowers should best do, we asked the experts.

Unsurprisingly, they say that home owners may generally want to think about locking in a longer-term interest rate now if they want to avoid any volatility ahead.

And we could be in for a very bumpy ride. Last Friday, fresh data showed that Singapore entered into a technical recession in the third quarter, and the Monetary Authority of Singapore eased its monetary policy, switching to a neutral exchange rate policy.

As the financial crisis deepens, global markets have been falling and credit has seized up, resulting in sky-high borrowing rates in many countries.

Central banks in the United States, Europe and Asia are pumping money into the system to cool rates and recently even cut rates outright in a coordinated show of strength. The result has been a yo-yoing of rates.

In Singapore, the benchmark three-month Sibor was moving largely in a tight band this year. It sank to a low of 1 per cent in early August, but spiked to 2.23 per cent late last month. It is now at 1.5521 per cent.

With a home loan pegged to the three-month Sibor, the interest rate gets revised every three months.

With opinions still divided on where Sibor is headed next, home owners who prefer minimum risk may want to commit to a still-low interest rate for at least a year, experts say.

‘While many consumers are waiting for a clearer direction before they commit, it is a good time for risk-adverse customers to fix their rates given market volatility,’ said Mr Goh Eck Hong, spokesman for the firm, my housing loan.

Indeed, after the Sibor spike and given the volatility ahead, the three-month Sibor loan package, which used to be popular with home owners because it was the cheapest, has become less popular.

‘Three months back, the three-month Sibor rate was a sure approach,’ said Mr Geoffrey Ying, head of the mortgage division at financial advisory firm New Independent.

‘But now, more are gravitating towards the 12-month Sibor…It’s not as clear cut as before. Most people now want to be more cautious.’

Those who opt for loans pegged to the 12-month Sibor, currently at 1.7708 per cent, will not have to worry about extreme rate fluctuations in the short term, said Mr Ying. The rates are revised every 12 months.

‘As long as the (financial) stress doesn’t abate, you can expect to see interbank rates fluctuate - you’re going to see a period of volatility,’ he added.

At Standard Chartered Bank, the three-month Sibor package remains one of the top choices for customers. But the bank says there has been strong interest of late in the one-year fixed-rate package.

‘This package provides customers with peace of mind in today’s volatile interest-rate environment and they will benefit from Sibor pricing one year later,’ said its general manager of lending, Mr Dennis Khoo.

But say you are willing to take the risk of rate fluctuations altering your mortgage instalments. Or you have the flexibility to determine when to take out a new loan or refinance.

Should you opt for a three-month Sibor loan, or wait a little longer to refinance, in case Sibor goes further down?

Mr Leong Sze Hian, president of the Society of Financial Service Professionals, is among those who believe that interest rates tend to fall in a recession.

But, in a Friday report, Morgan Stanley Research said that due partly to a lack of confidence, the Sibor is ‘very likely’ to stay around 2 per cent for the rest of the year and reach 3 per cent by the end of next year.

Standard Chartered economist Alvin Liew is also of the view that Sibor will rise. This would affect those with Sibor-linked home loans and, more broadly, strain borrowing activity in Singapore, which is already expected to slow for the next six to 12 months at least, he said in a Friday report.

For those who are confused or prefer to just avoid the Sibor guessing game altogether, other options are available.

For those looking for fixed cashflow and protection against interest rate hikes, fixed-rate packages are more appropriate, said OCBC Bank’s head of consumer secured lending, Mr Gregory Chan.

Fixed-rate packages come with higher premiums, compared with so called transparent Sibor packages, but there is security and peace of mind, he said.

There are also in-betweens, like loan packages pegged to fairly stable rates like the CPF Ordinary Account (OA) rate.

These may be a good bet for the next year at least, said New Independent’s Mr Ying.

A CPF-rate package would cost the borrower a total interest rate of slightly below 3 per cent currently.

While the CPF OA rate can change, it has remained at 2.5 per cent since July 1999.

Frightened investors ‘pile into property’

By Rebecca O’Connor and Grainne Gilmore - 10 Oct 2008

Investors who have lost faith in the banking system are turning to property as a safe haven for their cash.

Estate agents have identified a growth in interest from cash buyers, who want something tangible for their money rather than depositing it with banks they no longer trust.

The trend is emerging in all corners of the property market, according to one nationwide agent, from high-end mews houses in Knightsbridge to dilapidated two-up two-downs in the East Midlands.

Lindsay Cuthill, head of the southwest London office of Savills estate agents, said: “Ten days ago a wealthy, well-known businessman seeking to buy a mews in Chelsea told me, ‘I feel my money is safer here than in the banks’.”

Robert Billson, head of Savills in Nottingham, said: “There are people with £50,000 who would rather buy a derelict house and board it up for a while than put their money in an Icelandic bank right now.”

Buyers with cash are in a stronger position to negotiate price reductions than those who need mortgages.

Liam Bailey, head of residential research at Knight Frank, another agent, said: “We are seeing a huge amount of interest from investors, partly because they believe that bricks and mortar are safer than banks and stocks and shares in the current climate.” Financial advisers highlighted the dangers of buying as an investment in a falling market, but acknowledged that there was “some logic” for long-term investors with cash to buy now, provided that they are able to secure a bargain.

Buyers are able to negotiate reductions of as much as 20 per cent on nervous sellers’ asking prices if they have the cash ready, agents said.

Mark Dampier, head of research at Hargreaves Lansdown, an independent financial adviser, said: “With property, you can feel it, touch it, see it and live in it – you know it cannot be taken, so there is some degree of logic to buying now as opposed to depositing in banks if you have the money, although it might all end in tears.”

Halifax yesterday announced that house prices had fallen by 13.4 per cent in the past year, the largest annual decline since the bank began compiling such figures in 1987. Prices fell for the eighth month in a row in September, it said, reducing the average value of a home by more than £2,000, to £172,000.

Meanwhile lenders continued to dent the confidence of homeowners with rate increases yesterday, despite the Bank of England’s half-a-point base rate cut on Wednesday.

Abbey has raised rates on its tracker deals for new borrowers. Britain’s second biggest lender increased rates by 0.5 of a percentage point, blaming the cost of wholesale borrowing.

Experts said, however, that the market downturn made the case for investment in residential property “more compelling”.

Mr Bailey said: “Now that capital prices are down 15 to 20 per cent on last year’s values, and even more for new-build property, the investment case is more compelling for residential property.

“Income yields have moved up to 8 per cent, which suddenly makes sense.

“Now that the investment case for residential property has been underpinned investors are comparing it to paper investments – money in the bank or equities – property suddenly seems a safer investment.

“This trend,” he said, “is being led by existing investors who have the experience to cope with the current market conditions.”

Efforts to engage investors pay off

Source : Business Time - 13 Oct 2008

Property giant CapitaLand believes that in volatile times, firms should improve communication levels to keep investors in the loop

CORPORATE governance is a lot easier to put into practice when the economy is doing well and companies are making fat profits. But when financial markets are shaky, the economy is slowing and the bottom line is shrinking, it’s no surprise that corporate governance slips down the priority list.

On the flip side, sound corporate governance practices take on greater significance for investors, given the current economic climate, says property giant CapitaLand.

‘As the environment becomes more volatile, companies with robust risk management policies will ride the volatility better and provide greater safety to investors,’ says CapitaLand’s senior vice-president for legal affairs, Low Sai Choy. Also, a company with strong corporate governance has a lower cost of capital, which is a competitive edge should it turn to capital markets to raise funds.

CapitaLand is no stranger to bad times. Weathering the Asian financial crisis in 1997 and the economic slowdown from 2001 and 2003 proved to be a valuable learning experience that led it to bolster its corporate governance practices and risk management policies.

‘For CapitaLand, good corporate governance means having sound and transparent policies and practices to meet specific business needs and provide a solid foundation for trust and respect,’ says Mr Low.

‘The application of good governance in CapitaLand is underpinned by sound internal controls and accountability that help promote and drive long-term sustainable growth and shareholder value.’

For instance, CapitaLand has a board committee that reviews its risk portfolio and risk levels, as well as a department that assesses the risk of major projects.

Other initiatives include linking part of executive remuneration to company and individual performance by way of shares and EVA- based compensation, and having a board on which the majority of directors are independent and non-executive.

‘We believe it’s important to go beyond the letter of the regulations and embrace the substance and the spirit of corporate governance,’ says Mr Low. ‘For instance, CapitaLand embarked on quarterly reporting before it became compulsory.’

Efforts to engage investors have not been restricted to Singapore. In the past year, top management has conducted over 680 meetings with institutional investors and taken part in investor conferences in New York, London, Hong Kong, Beijing, Shanghai and Abu Dhabi.

An investor relations team, aided by the corporate communications and secretariat departments, has worked to engage all investors.

‘In such volatile times, companies should increase their levels of communication and keep investors abreast of developments,’ Mr Low notes.

CapitaLand is also conscious of the need to release timely and comprehensive information to stakeholders. Early on, the company established a board committee that reviews the promptness and clarity of corporate disclosures, as well as announcements released to the Singapore Exchange.

These policies and practices also extend to overseas operations and other entities of the group.

Such efforts to maintain strong corporate governance have paid off. CapitaLand received a merit award for corporate governance at this year’s SIAS Investors’ Choice Awards and came away tops in the property category for most transparent company.

For corporate governance, companies were assessed against a checklist developed from the Singapore Code of Corporate Governance, and they scored extra points if they took the initiative to implement best international practices.

The most transparent company award has different industry categories and looks at criteria such as timeliness, substantiality and clarity of news release, as well as degree of media access, frequency of corporate results and availability of segmental information and communication channels.

Parkway Reit ups hospital rents by 6.25%

Source : Business Times - 9 Oct 2008

Parkway Life Real Estate Investment Trust (P-Reit) said on Thursday that it is increasing the minimum rent from its Singapore hospital properties by 6.25 per cent.

The rent hike is effective for the period from August 23, 2008 to August 22, 2009, the trust said.

R-Reit’s minimum rent is linked to the consumer price index (CPI) and the rent hike is based on its ‘CPI+one per cent’ formula, the trust said in a filing to the Singapore Exchange.

Based on the information obtained from the Singapore Department of Statistics, the CPI for the first year of the term has been agreed at 5.25 per cent, which translates to a rent increase for the second year of the term of 6.25 per cent above the total actual rent payable for the first year.

The Reit’s Singapore hospital properties comprise Mount Elizabeth Hospital, Gleneagles Hospital, East Shore Hospital and 40 medical suites in Mount Elizabeth Medical Centre and Gleneagles Medical Centre.

P-Reit’s shares lost two cents to close at 90 Singapore cents today.

Parkway Reit ups hospital rents by 6.25%

Source : Business Times - 9 Oct 2008

Parkway Life Real Estate Investment Trust (P-Reit) said on Thursday that it is increasing the minimum rent from its Singapore hospital properties by 6.25 per cent.

The rent hike is effective for the period from August 23, 2008 to August 22, 2009, the trust said.

R-Reit’s minimum rent is linked to the consumer price index (CPI) and the rent hike is based on its ‘CPI+one per cent’ formula, the trust said in a filing to the Singapore Exchange.

Based on the information obtained from the Singapore Department of Statistics, the CPI for the first year of the term has been agreed at 5.25 per cent, which translates to a rent increase for the second year of the term of 6.25 per cent above the total actual rent payable for the first year.

The Reit’s Singapore hospital properties comprise Mount Elizabeth Hospital, Gleneagles Hospital, East Shore Hospital and 40 medical suites in Mount Elizabeth Medical Centre and Gleneagles Medical Centre.

P-Reit’s shares lost two cents to close at 90 Singapore cents today.

Investment, retail properties see a slowdown in Q3: DTZ

Source : Business Times - 9 Oct 2008

Investor sentiment in the property market weakened further in Q3 2008 - exacerbated in the last two weeks of the quarter from the spate of bailing out and bankruptcies of financial institutions in the US, which spread to Europe - said a report by property firm DTZ released on Thursday.

Investment sales in Q3 2008 slowed down significantly, compounded by the increase in margin spread. Transaction value totalled about $1.1 billion (US$0.7 billion), a sharp decline of 79 per cent over last quarter.

Total investment in the first three quarters of 2008 was $14.5 billion, one-third of 2007’s total sales and 57 per cent of 2006’s total sales.

Most of the deals in the third quarter were small (below $100 million) due to credit tightening.

The office and industrial sectors were no longer the two main drivers like in the first half of 2008. The residential sector was the main contributor, due mainly to two residential sites sold by the government and the sale of 36 apartments at Goodwood Residences to Kuwait Finance House at about $2,800 per square foot. There was one collective sale of Ruby Apartments at $11 million.

The retail market also slowed down in Q3 2008 due to consumer budget tightening under inflation pressures and a weaker economy. Visitor arrivals, which is one of the drivers of the retail sector, had fallen for three consecutive months from June to August.

Although retail sales for July 2008, after removing price effect and excluding motor vehicles, increased by 3.9 per cent (year-on-year), this could be due to the 2 per cent hike in GST last July which dampened sales then. Total sales for July 2008 fell 1.7 per cent to $2.88 billion, compared to the $2.93 billion in June 2008.

Singapore is in recession

Source : Straits Times - 10 Oct 2008

~ MTI lowers 2008 forecast to 3%, from earlier 4-5%
~ MAS moves to ease monetary policy
~ Inflation has peaked

SINGAPORE’S economy has slid into its first technical recession since 2002, as a slump in exports pushed quarterly growth into negative territory for the second quarter in a row.

It added that Singapore’s export-oriented sectors, such as manufacturing, will be affected, noting that Europe is also facing severe strains in the banking sector, tighter credit conditions, and adjustments in housing prices. — ST PHOTO: TERENCE TAN

The economy shrank by a worse-than-expected 0.5 per cent in the third quarter compared to the same period last year, according to estimates from the Ministry of Trade and Industry (MTI) released on Friday morning.

MTI has also revised its full-year growth forecast for the second time this year, lowering it to ‘around 3 per cent’ from 4 to 5 per cent previously. This would make it the weakest pace in seven years.

Recognising growth concerns, the Monetary Authority of Singapore also changed its policy stance to zero appreciation of the Singapore dollar, reversing the gradual appreciation policy it has adopted since 2003.

On a quarterly basis, third-quarter GDP contracted 6.3 per cent from the second quarter, on top of a 5.7 per cent decline in the previous three months. A technical recession is generally defined as two consecutive quarters of decline.

Manufacturing led the slowdown again this time around, weighed down by a poor performance in the biomedical sciences segment. It was also hit by weakened global demand for exports as the United States-triggered financial crisis spreads around the world.

The sector shrank by 11.5 per cent in the third quarter, after declining 4.9 per cent in the previous quarter.

Growth in construction and services also slowed. Construction, in particular, saw its pace of expansion halved to single-digit growth, as projects were delayed by the construction squeeze, said MTI.

Services, touted as a key driver of growth this year, is likely to take a hit as well as financial services falters in the wake of the global credit crunch.

Most economists expect the economy to grow even more slowly next year, with the chance of a technical recession turning into a ‘real’ one.

‘With external conditions deteriorating and the lack of domestic demand support, we expect Singapore to register no growth next year… with a muted recovery, if at all, expected only in the second half of next year at the earliest,’ said Morgan Stanley economists in a report.

Inflation peaks

Inflation, which reached a 26-year high earlier this year, has peaked, said MAS. Consumer prices will rise between 6 per cent and 7 per cent this year, and gains will ease to between 2.5 per cent and 3.5 per cent in 2009, it predicted.

‘Against the backdrop of a weakening external economic environment and continuing stresses in global financial markets, the growth of the Singapore economy is expected to remain below potential in the period ahead,’ said MAS.

‘Inflation is expected to trend down in 2009 as the global and domestic economies slow.’

Exports slump

Singapore’s US$161 billion (S$239 billion) economy declined 0.5 per cent last quarter from a year earlier, compared with a revised 2.3 per cent gain between April and June.

Growth has deteriorated as a slump in export demand forced factories to cut production, tourist arrivals faltered and a real-estate boom ended, reported Bloomberg news.

The island’s manufacturing industry, which accounts for a quarter of the economy, contracted 11.5 per cent last quarter from a year earlier, compared with a revised 4.9 per cent drop in the previous three months, according to today’s report.

Singapore’s government expects exports to decline as much as 4 per cent this year, and the island’s shipments of electronics goods have fallen for 19 consecutive months.

Financial services

Services climbed 6.1 per cent in the third quarter from a year earlier, slowing from a 7 per cent pace in the previous three months. The city-state will probably miss a government target of 10.8 million visitors in 2008, the tourism board said on Sept 23, after visitor arrivals dropped 7.7 per cent in August.

‘The financial services sector is likely to see slower growth in the coming months as the ongoing global financial crisis has heightened uncertainties for sentiment-sensitive segments such as stocks trading and fund management activities,’ said MIT.

The construction industry grew 7.8 per cent, easing from a revised rate of 19.8 per cent in the previous quarter.

Singapore’s benchmark Straits Times Index slumped 7.3 per cent to its lowest level since November 2004 on Friday in opening trade after the economic data and policy statement.

The Singapore dollar rose to $1.4724 per US dollar after the central bank’s announcement compared with $1.4780 as traders adjusted positions after the widely expected move.

Hotel site draws just one bidder

Source : Straits Times - 10 Oct 2008

A TENDER for a hotel site on Kallang Road has attracted just one bidder, who has lodged the minimum price allowed under the process.

Tenders typically attract prices above the minimum bid but on this occasion Citywide Land’s $51 million offer was right at the limit for the plot next to Lavender MRT station.

‘It’s a reflection of the highly uncertain market environment,’ said Knight Frank’s director of research and consultancy, Mr Nicholas Mak. ‘And some developers may find it challenging to get funding for land purchases.’

The 99-year leasehold site is on the reserve list and was launched after an unnamed firm applied on Aug 1 for it to be put up for sale.

In the application, it had to commit to bid at a minimum price acceptable to the State, which was $51 million.

The bid from Citywide Land was right on the money at $249.6 per square foot per plot ratio for the 4,219 sq m site.

The Urban Redevelopment Authority said it will decide on the awarding of the tender after evaluating the bid.

When the application was made in August, Mr Mak had expected bids of between $400 to $450 psf, although he added that poor market sentiment or lower-than-expected visitor arrival numbers could bring bids down to $330 psf.

An unnamed consultant had reportedly expressed surprise that the site was even triggered given global economic concerns and soaring construction costs. Since then, the economic climate has worsened further.

The site has a maximum allowed gross floor area of 18,986 sq m, which could accommodate a hotel of up to 25 storeys. This means some of the rooms will have views of Kallang River, said Mr Mak. ‘This is a good hotel site. When the situation improves, the bidder will be seen as very lucky,’ he added.

Fellow consultant Ku Swee Yong, director of marketing and business development at Savills Singapore, said the low bid is not surprising as construction costs are still high.

‘To build a 3 1/2-star hotel, they have to bid low,’ he said.

Citywide Land is an unfamiliar name in the property market here.

Q3 property investment sales plunge 79% to $1.1b

Source : Business Times - 10 Oct 2008

Activity set to stay low for rest of ‘08; asset pricing now more ‘realistic’: DTZ

INVESTMENT sales in the third quarter totalled just $1.1 billion, a dizzy 79 per cent slide from the second quarter, according to DTZ. And most deals in Q3 were small, at less than $100 million each, due to ‘credit tightening’.

Investment activity is expected to stay low for at least the rest of this year. But DTZ senior director (investment advisory services and auction) Shaun Poh said: ‘Assets are now priced more realistically and there are funds looking for opportunistic purchases, in particular distress sales.’

Still, he said that deals are likely to be small, at less than $200 million, and mostly from private equity.

In Q3, Kuwait Finance House acquired 36 apartments at Goodwood Residences for about $2,800 per square foot.

The retail property market also slowed in Q3. ‘Gross fixed rents remained unchanged for three consecutive quarters, a sign of a peaking market,’ DTZ said.

Average prime first-storey monthly rents came to $42.40 psf in Orchard/ Scotts Road, $27.10 psf in other city areas and $33.70 psf in suburban areas.

DTZ associate director Anna Lee said that retail property prices and rents would come under pressure in 2009 when there is a spike in potential supply. ‘For the rest of 2008, rents are expected to hold firm with little new supply and Christmas around the corner.’

Separately, CB Richard Ellis (CBRE) said that rents for factories and warehouses edged up or stayed flat in Q3.

‘The bright spot was the high-tech sector, which showed a strong 9.5 per cent quarter-on-quarter increase in monthly rent,’ it said.

Monthly rent for high-tech space increased 9.5 per cent from Q2 to $3.45 psf in Q3, driven by rising numbers of qualifying office tenants.

‘An active pre-letting market for business park space was observed, especially among financial institutions,’ said CBRE.

The average monthly rent for factory space rose 3.2 per cent from Q2 to $1.60 psf for ground-floor units and 3.8 per cent to $1.35 psf for upper-floor units. The average monthly rent for warehouses stayed flat at $1.55 psf and $1.25 psf respectively for ground and upper-floor units.

The average capital value of 60-year leasehold strata-title factory units edged up about 2.3 per cent from Q2 to $309 psf and $225 psf respectively for ground and upper-floor units. The average capital value of freehold warehouses held firm during at $458 psf for ground-floor units and $401 psf for upper-floor units.

CBRE director for industrial and logistics services Bernard Goh said: ‘While rents for factories and warehouses are not expected to show significant movements, high-tech and business park space is expected to continue on a moderate upward trend.’

Sale of 683 HDB flats

Source : Straits Times - 10 Oct 2008

THE Housing Board on Friday put up some 683 flats in 21 towns under its half-yearly sale scheme.

These include 491 four-room flats, which make the bulk of this launch. The bigger flats are mainly five-room flats and Executive flats, of which 156 units are available.

The remaining 33 units are three-room premium flats.

Applicants with a gross monthly household income of up to $8,000 are eligible to buy these units located in estates such as Sengkang, Punggol, Jurong West, Tampines, Bedok, and Bukit Merah.

A computer ballot will be conducted to determine the queue positions of all submitted applications after Friday.

Housing recession hits New York as prices drop

Source : Business Times - 9 Oct 2008

Biggest drop in Queens, with median property price sliding 17%

New York City apartment and house prices fell in every borough except Manhattan in the third quarter, according to the Real Estate Board of New York, as the national housing recession came to Brooklyn, Queens, the Bronx and Staten Island.

Queens had the biggest drop, with the median price of apartments and one to three-room family homes falling 17 per cent to US$400,000 in the three months ended Sept 30. In the Bronx, prices declined almost 12 per cent to US$389,000; in Brooklyn, they dropped 11 per cent to US$500,000; and on Staten Island they fell 8.2 per cent to US$390,000.

‘The storm is going to engulf Manhattan,’ said Mark Zandi, chief economist for Moody’s Economy.com. ‘It has held up well to this point for two reasons: one, global investor demand for everything New York; and second, the problems on Wall Street have only now really begun to impact jobs.’

Prices in Manhattan have continued to rise even as sales have dropped and inventory has climbed for the past three quarters. City real estate brokers are bracing for a possible drop in property values after the collapse of three of New York’s five largest investment banks since March.

‘New York City’s residential market is feeling the effects of the national real estate slowdown,’ REBNY president Steven Spinola said in a statement distributed by e-mail. REBNY is a real estate trade group.

New York and six surrounding counties are projected to lose 64,000 financial services jobs by the second quarter of 2010, according to Moody’s Economy.com. In Manhattan, third-quarter apartment transactions fell 24 per cent to 2,654 from a year earlier and the number of apartments on the market increased to 7,003, New York-based real estate appraiser Miller Samuel Inc and broker Prudential Douglas Elliman Real Estate said in an Oct 3 report. The median price of a condominium and co-op jumped 7.4 per cent to US$928,263, the second highest on record, they said.

Falling sales and rising inventory preceded price declines across the US in 2005 through 2007, according to data from the Chicago-based National Association of Realtors.

Two other price gauges of New York real estate show declines for the greater New York City area. The S&P/Case-Shiller home-price index for New York dropped 9.1 per cent and Radar Logic Inc reported that prices per square foot fell 7.8 per cent in July from a year earlier. Both measures include New York’s outer boroughs as well as surrounding suburban counties and exclude data on co-operative apartments, which account for about two-thirds of owner-occupied units in Manhattan.

Merrill reduces Singapore to underweight

Source : Business Times - 9 Oct 2008

Move follows downgrades in property and banking sectors

US bank Merrill Lynch has reduced Singapore to underweight following downgrades in the property and banking sectors here.

Based on forecast valuations next year, its favourite stocks are SingTel, Sembcorp Marine and Singapore Petroleum Company.

In a report, the investment house said it has cut the portfolio weighting for Singapore to 4.27 per cent - below the benchmark weighting of 5.14 per cent.

‘Although Singapore initially scores well in our model, our Singapore property and banking analysts have downgraded their respective sectors. As these two sectors account for around half of market cap, we are overriding the model to bring Singapore to a heavy underweight.’

For example, its banking analyst Andrew Maule believes a protracted slowdown in the property market will impact profits in 2009.

Specifically, loan growth is expected to slow to mid-single digits from the current 26 per cent year-on-year, while weaker capital markets and reduced appetite for wealth management products will likely hurt market-sensitive revenues.

As for real estate, the research house thinks any chance for a recovery in the second half of this year has disappeared with the deterioration in the economy. For example, it expects residential prices to fall by 10 per cent this year and 25 per cent in 2009.

With demand weak and high inventories, it does not see property stabilising before 2010. Meanwhile, office capital values have peaked due to rising debt cost and lower rentals ahead.

Furthermore, Singapore is exposed to the global slowdown more than other countries, as its exports-to- GDP ratio is the highest in the region, the report adds.

In August, non-oil domestic exports from the city state worsened - sinking 14 per cent from a year ago - the fourth straight monthly drop and the biggest decline since December 2006.

Similarly, factory output shrank 12.2 per cent year-on-year in August on a 35.7 per cent contraction in the pharmaceuticals segment.

The analysts felt that Singapore stocks are not backed by earnings, where 12-month forward earnings from June are up just 4 per cent year-on-year and valuations are not especially cheap either. Least preferred stocks are Singapore Exchange, CapitaLand and Keppel Land.

Elsewhere in the region, Merrill issued mild underweights on India, Taiwan and the Philippines, but has a heavy overweight on China, Hong Kong and Australia.

New building, new problems

Source : Today - 9 Oct 2008

Plan for hotel draws ire of some members

A TOWN club set amid the lush landscape of Fort Canning Park will be turned into a luxury boutique hotel as part of a multi-million dollar revamp - but some club members are unhappy about the change.

Mr John Nguyen, a member of The Legends Fort Canning Park, said: “We will lose the feeling of being in a spacious, colonial setting. We will lose the ambience and charm of the place.”

The building was built by the British in 1926 and housed the British Far East Command Centre during World War II.

Under the $70-million renovation plan, the club building will be converted into a boutique hotel, while the club itself will be housed in a three-storey glass building constructed on the space that the present tennis court currently occupies.

Mr Nguyen added: “If the hotel is built here, we (club members) will become second-class citizens.”

The 37-year-old was “quite upset” - enough to set up a blog about the renovations after attending a members’ briefing session on Monday.

“I set up the blog after the meeting because I wanted to get members of the club together and use it as a forum of discussion to see how other people felt and for the management to see it,” said Mr Nguyen.

Some members were also unhappy about the suddenness of the announcement. Mr Ken Low, director of a trading company, said: “We are not happy to be rushed into a deal that they planned - a lot of things are hanging in the air and we want to know more about our rights as members.”

Ms Amy Cheong, director of marketing of The Legends Fort Canning Park, said the club knows about Mr Nguyen’s blog and is replying to its members’ queries and is considering their comments.

Ms Cheong said the club had to revamp its business model because it is making losses. “The club was built for 10,000 members but right now we only have 1,200. There is not enough economic use of the space.”

When asked about the short notice given to club members, she said: “Since January, we have informed members in our bi-monthly newsletter that there will be renovations to the club, although no details were given.”

For now, Mr Nguyen hopes to get enough support from the club members to have a conference “to decide what we want, like maybe a petition and have a dialogue with the management”.

S’pore is ‘fifth most competitive economy’

Source : Straits Times - 9 Oct 2008

It moves up 2 places in WEF survey; Hong Kong up one place to 11th

SINGAPORE has climbed two notches to fifth place in the World Economic Forum’s (WEF) latest global competitiveness index, distancing itself from the other Asian economies.

The annual survey, released last night, showed that the next most competitive Asian economy - Japan - had dropped to ninth from eighth spot.

It was only last year that Singapore overtook Japan in the annual ranking, which polled a record 12,297 business leaders in 134 economies this year.

Perennial business rival Hong Kong improved one place to 11th.

In the survey, economies were assessed according to 12 ‘pillars’ of competitiveness, ranging from infrastructure and macroeconomic stability, to business sophistication and innovation. These are weighted for each economy to reflect their stage of development.

Singapore’s improved ranking was reflected by its strong institutional environment that came about as a result of a strengthening across all aspects of the institutional framework.

It has the best ranking of all economies in terms of public trust of politicians, wastefulness of government spending, burden of government regulation and transparency of government policymaking.

It was also ranked among the top two countries for the efficiency of all of its markets - goods, labour and financial - ensuring proper allocation of these factors to their best use, the survey said.

‘Singapore also has world-class infrastructure, leading the world in the quality of its port and transport facilities.’

It scored high in other indicators as well, such as higher education and training, and technological readiness.

On the flipside, its overall ranking is constrained by its small domestic market and mixed performance in the macroeconomic stability pillar, where it ranks 59th and 121st respectively for its interest rate spread and government debt.

Respondents also cited inflation as their biggest bugbear for doing business in Singapore.

Notwithstanding the current financial crisis, the US retained its position as the world’s most competitive economy.

The survey was conducted between January and May this year, which means that the index does not reflect the worsening global crisis.

But Ms Jennifer Blanke, senior economist of the forum, said the index aimed to take a longer-term view, and on that basis, the US ranking was fully justified, Reuters reported.

The US scored highly as it is endowed with many structural features that make its economy extremely productive. This places it on a strong footing to ride out business cycle shifts and economic shocks.

Despite rising concerns about the soundness of the banking sector and macroeconomic weaknesses, the country’s many other strengths continue to make it a very productive environment, the survey noted.

On the other hand, the business costs of terrorism, crime and violence are points of concern.

But the country’s greatest weakness is its macroeconomic stability, where it ranks a lowly 67th overall.

Its burgeoning levels of public indebtedness - at more than 60per cent of gross domestic product -suggest that the US is not preparing financially for its future liabilities. Interest payments will increasingly restrict its fiscal policy freedom going into the future, the survey warned.

In second, third and fourth places were the Northern European countries of Switzerland, Denmark and Sweden, rounding off an unchanged top four.

China continued to climb up the charts - up four places to 30 - helped by its large market and strong economic performance.

Ninth-ranked Japan has a major competitive edge in the areas of business sophistication and innovation.

Its overall performance, however, is dragged down by its macroeconomic weaknesses, with an extremely high budget deficit (ranked 110th), which have led to the build-up of one of the highest public debt levels in the world (ranked 129th).

As for Hong Kong, it is ranked first for its legal rights, capital flows and access to financing via the local equity market.

But its small domestic market size and mixed performance in the areas of health and primary education, as well as higher education and training, were a drag on its overall ranking.

IRs to be buttressed against attacks

Source : Straits Times - 9 Oct 2008

Resorts will have state-of-the-art security to ward off terror threats

THE upcoming integrated resorts (IRs) at Marina Bay and Sentosa will have shatterproof glass and structural reinforcements to help them withstand terrorist attacks, a top-ranking police official revealed yesterday.

The resorts, slated to open between next year and 2010, will also have security fences and state-of-the-art surveillance systems to ward off any threats, said Assistant Commissioner of Police and director of operations Wong Hong Kuan yesterday.

Officials believe the multibillion-dollar complexes, which will include a theme park and swanky casinos, could be a target for extremists.

‘We expect integrated resorts to be perceived as a high threat because of their iconic nature,’ said Assistant Commissioner Wong. ‘VIPs will grace such premises, so a strike at such a target will have high symbolic value.’

The companies behind the resorts are looking to ‘harden’ the complexes to dissuade a potential attack.

Along with perimeter fences, the resorts are expected to be ringed by metal and concrete posts to prevent vehicles from barging into sensitive areas.

Each post can cost up to $5,000.

Tightly controlled access points, closed-circuit television cameras and guard posts will also dot the resorts, which are expected to attract millions of visitors annually.

The complexes will have a separate, covered drop-off point for heads of state and other dignitaries to prevent open-air attacks.

Both resorts declined to reveal how much the security measures will cost, citing security concerns.

Despite the plans, independent experts said the resorts will likely not be brimming with armed guards and checkpoints.

‘The integrated resorts are like a theme park,’ said Mr Ignatius Kang, general manager of Apro Asian Protection.

‘The last thing people will want to experience is being stopped all over the place and questioned.

‘I can’t imagine seeing too many armed guards around. It will dampen the spirit of the place.’

Suggestions for the security features were broached during meetings between resort officials and the Ministry of Home Affairs.

While the decision to fortify the buildings was made before construction began, the plans were revealed for the first time yesterday at the World Security Forum 2008.

The event brings together players in the security industry to identify emerging threats, highlight the use of modern security technology and share expertise.

Spokesmen for both complexes said buttressing the resorts against attacks is a top priority.

No effort has been spared to ensure the security of Resorts World at Sentosa, said assistant vice-president of communications Robin Goh.

The complex will have an advanced surveillance system to monitor attractions, including its casino and Universal Studios Singapore theme park.

Marina Bay Sands’ general manager George Tanasijevich said the company has been collaborating with state officials to develop its security regimen.

‘We have been working closely with the Government to bring the latest technology and the best expertise to ensure the highest level of security at the integrated resort,’ he said.

Business parks here show healthy demand

Source : Today - 9 Oct 2008

EVEN with the manufacturing part of the economy facing difficulties, demand for industrial space - particularly in business parks - is apparently still healthy, according to experts from the property firm DTZ.

By contrast, the market for office space is softening, the firm says.

Executive director Ms Chua Wei Lin said: “Demand for private industrial properties - in particular, hi-tech and business park space - is expected to be firm for the rest of 2008, supported by a spill-over of users from the office sector.”

But, in view of an increasing supply of space and a softer economic outlook, industrial space rentals are generally expected to experience a decline next year, she said.

For offices, the downturn is coming earlier, said Ms Chua’s fellow executive director,Ms Cheng Siow Ying. She said: “Office occupiers have become more cautious, with many adopting a wait-and-see approach. While negotiations for space are still ongoing, they are taking longer to conclude.

“Many occupiers have shelved expansion plans for the moment amid economic uncertainties, and (are instead) choosing to renew leases at existing premises to avoid relocation costs. Many also continued to relocate to more cost-effective, decentralised offices and converted state properties, while those that qualify for hi-tech industrial and business parks are relocating there.”

Average office rents peaked in the third quarter of the year, with no rental growth during the quarter. Although most landlords are maintaining their asking gross rents, they are now more flexible in their lease packaging, resulting in lower effective rental rates, DTZ research shows.

The pace of office users relocating to business parks accelerated, as more companies - deterred by high office rentals - sought premises with lower occupation costs. Occupancy of business parks averaged 92.5 per cent.

Most of the planned new space is built-to-suit buildings already committed to financial institutions, such as DBS and Citibank. Other multiple-tenanted business parks developments are also attracting strong interest; for example, Mapletree Business City in Pasir Panjang, which has one of its three business parks towers already pre-committed.

Banyan Tree’s villa sale still on

Source : Straits Times - 9 Oct 2008

BANYAN Tree Holdings is going ahead with the second sale exhibition of its hotel-based properties despite some of the worst economic news in years.

It will sell the residences - mostly villas in its hotel operations - in Phuket, Bangkok, Bintan, Lijiang (China) and the Seychelles under a leaseback scheme.

The listed resort operator is proceeding with the exhibition at the Fullerton Hotel as a delay might not make much difference, said group managing director Ariel Vera. ‘Our buyers have to be high net worth individuals so the credit crunch will not be a problem for (them).’

Still, buying sentiment has been hit.

‘The crisis is still unfolding. Even those with money are waiting for prices to drop before they buy,’ said Mr Nicholas Mak, Knight Frank’s director of research and consultancy.

‘There’s a great amount of uncertainty and caution in the market, even in the luxury property sector.’

Sales of Banyan Tree Residences, as the hotel properties are known, have defied the mood and risen this year.

In the first half, Banyan Tree sold 44 residences - mostly in Phuket. This was up from seven in the first half of last year, when the Banyan Tree Residences concept was launched.

Prices start from US$600,000 (S$880,000), with those in Phuket costing between US$1.75 million and US$4 million each.

Buyers can either get a fixed return of 6 per cent of their purchase price for six years - this works out to about 5.1 per cent net for a property in Bintan or Phuket - or one-third of the net room revenue for six years.

Mr Michael Ng, managing director of Savills Singapore, which is helping to market the residences, said there are keen investors around. ‘A lot of people are getting out of equities and looking for alternative investments,’ he said.

To entice buyers, Banyan Tree is offering a 3 per cent discount, up from 2 per cent last year.

Those who buy a higher-priced property will also receive free lifetime membership to the Banyan Tree private collection of hotels around the world.

Those looking to exit their investment will have to find their own buyers. There is no buyback guarantee, but Mr Vera said they have acquired some back from those who have upgraded to bigger residences.

Banyan Tree’s villa sale still on

Source : Straits Times - 9 Oct 2008

BANYAN Tree Holdings is going ahead with the second sale exhibition of its hotel-based properties despite some of the worst economic news in years.

It will sell the residences - mostly villas in its hotel operations - in Phuket, Bangkok, Bintan, Lijiang (China) and the Seychelles under a leaseback scheme.

The listed resort operator is proceeding with the exhibition at the Fullerton Hotel as a delay might not make much difference, said group managing director Ariel Vera. ‘Our buyers have to be high net worth individuals so the credit crunch will not be a problem for (them).’

Still, buying sentiment has been hit.

‘The crisis is still unfolding. Even those with money are waiting for prices to drop before they buy,’ said Mr Nicholas Mak, Knight Frank’s director of research and consultancy.

‘There’s a great amount of uncertainty and caution in the market, even in the luxury property sector.’

Sales of Banyan Tree Residences, as the hotel properties are known, have defied the mood and risen this year.

In the first half, Banyan Tree sold 44 residences - mostly in Phuket. This was up from seven in the first half of last year, when the Banyan Tree Residences concept was launched.

Prices start from US$600,000 (S$880,000), with those in Phuket costing between US$1.75 million and US$4 million each.

Buyers can either get a fixed return of 6 per cent of their purchase price for six years - this works out to about 5.1 per cent net for a property in Bintan or Phuket - or one-third of the net room revenue for six years.

Mr Michael Ng, managing director of Savills Singapore, which is helping to market the residences, said there are keen investors around. ‘A lot of people are getting out of equities and looking for alternative investments,’ he said.

To entice buyers, Banyan Tree is offering a 3 per cent discount, up from 2 per cent last year.

Those who buy a higher-priced property will also receive free lifetime membership to the Banyan Tree private collection of hotels around the world.

Those looking to exit their investment will have to find their own buyers. There is no buyback guarantee, but Mr Vera said they have acquired some back from those who have upgraded to bigger residences.

Keppel Land, CBRE win Euromoney awards

Source : Business Times - 9 Oct 2008

KEPPEL Land and CB Richard Ellis Singapore have emerged as big winners in the latest Euromoney Liquid Real Estate Awards.

Euromoney, a publication of international finance, polled its readers - in more than 160 countries - on the leading real estate advisers, developers and investors on a global, regional and individual country basis. In the 2008 review, it received 817 responses, a 43 per cent increase over the previous year.

Keppel Land won Best Office/Business Developer and Best Mixed-Use Developer in Singapore and Vietnam. It also won Best Retail/Shopping Developer in Vietnam.

CB Richard Ellis Singapore won Best Overall Adviser of the Year, Best Agency and Letting, Best Corporate Real Estate Services, Best Property Management, Best Research, Best Transaction Execution and Best Valuation in Singapore.

Keppel Land said that it was nominated by those who participated in the poll under the initiative of the publisher. Choo Chin Teck, director of corporate services at Keppel Land, added: ‘By topping such international awards from office, commercial to residential categories, Keppel Land continues to win endorsement from the real estate community for its commitment and delivery of premium quality, innovation and distinctive lifestyles with its developments, whether in Singapore or overseas.’

On its win, CBRE Singapore managing director Pauline Goh said: ‘It is a reflection of the trust that clients place in us as their choice of real estate partner throughout the years. It is also a testament to our continued commitment to achieve the best possible results for our clients.’

CBRE was also named the top global real estate adviser in the 2008 Euromoney Liquid Real Estate Awards. This is the third time in four years that it has won this award.

Worldwide, it won a total of 109 Euromoney Liquid Real Estate awards, including the top firm worldwide for Corporate Real Estate Services, Property Management, Valuation, Transaction Execution, and Agency/Leasing as well as numerous country-specific awards.

Office capital values down 2-3% in Q3

Source : Business Times - 9 Oct 2008

Easing of potential supply expected as 30% of projects have yet to start

OFFICE capital values fell 2-3 per cent quarter on quarter in the third quarter of this year in areas such as Marina Centre and Anson Road/Tanjong Pagar as demand softened, according to a report released yesterday.

The report by DTZ also points out that some redevelopment projects in the pipeline, such as International Factors Building, Robinson Tower and Marina House, have been deferred and the space put back in the market for leasing.

‘There could be more delays in completion, or easing of potential supply, as construction on about 30 per cent of projects in potential supply has not commenced,’ it says.

As the government’s ban on redeveloping office buildings in the central area for different uses will be lifted by end-2009, DTZ believes some planned office projects could be redeveloped for other purposes.

The cutback in potential supply comes as the financial sector, which has been largely responsible for the spike in demand for office space in the past two years, scales back expansion plans.

Many occupiers have shelved expansion plans amid economic uncertainty and are renewing leases at existing premises to avoid relocation costs, said DTZ executive director Cheng Siow Ying.

‘Office occupiers have become more cautious, with many adopting a wait-and-see approach,’ she said. ‘While negotiations for space are still going on, they are taking longer to conclude.’

Average office rents peaked in Q3, with no rental growth during the quarter. Although most landlords are maintaining their asking prices, they are now more flexible with lease packaging, resulting in lower effective rents.

Many tenants continue to relocate to cheaper decentralised offices and converted state properties, while those that qualify for hi-tech industrial and business parks are relocating there, Ms Cheng said. As a result, the island-wide average office occupancy rate eased 0.6 of a percentage point quarter on quarter to 96.3 per cent in Q3.

On the other hand, demand for industrial space, particularly in business parks, remained healthy. Business park occupancy averaged 92.5 per cent in Q3, up 2 percentage points from Q2.

DTZ says how far the office market will fall depends largely on how the global financial crisis plays out. There could be an increase in office sub-letting if companies start consolidating their operations and rationalising their use of space, it says.

$1b sales from Mid-East projects: CapitaLand

Source : Business Times - 17 Oct 2008

CAPITALAND has made about $1 billion worth of sales in two projects in the Middle East.

In a statement yesterday, the company said that it had sold 849 units out of a total of 1,559 units in the two developments since June.

The developments are the 691-unit Raffles City Bahrain and the 868-unit Rihan Heights in Abu Dhabi.

Raffles City Bahrain is owned and developed by the Syariah-compliant Raffles City Bahrain Fund, which is managed by CapitaLand, while Rihan Heights is the first phase of CapitaLand’s 49 per cent-owned associate company Capitala’s US$5-6 billion flagship integrated development Arzanah.

Liew Mun Leong, president and CEO of CapitaLand Group, said: ‘Besides our core markets of Singapore, China and Australia, CapitaLand is now seeing contributions from its fourth engine of growth, namely the new markets of the Gulf Cooperation Council (GCC) countries, as well as Asian countries like Vietnam, Thailand and India.’

CapitaLand said that it had launched 750 residential units of its 80 per cent-owned The Vista, Vietnam and 590 residential units of its 49 per cent-owned The Orchard Residency, India.

While The Vista units have been fully booked, 309 units at The Orchard Residency have been sold. In Thailand, TCC Capital Land, CapitaLand’s 40 per cent-owned joint venture with TCC Land, has sold or booked over 2,400 residential units to date.

Raffles City Bahrain, in the country’s capital city of Manama, will be an integrated project comprising residential, retail and serviced residence components.

The average sale price of the residential units achieved was about $615.67 psf. CapitaLand said that this was higher than the average price of $474.92 psf for similar residential apartments in Bahrain.

Rihan Heights is part of the Arzanah integrated development which is located on a prime 1.4 million square metre waterfront site surrounding Zayed Stadium on Abu Dhabi main island.

The average sale price achieved ranged from about $902.74 psf to $976.78 psf, depending on the size, level and orientation of the unit.

Serviced office centre opens at One Fullerton

Source : Straits Times - 17 Oct 2008

THE Regus Group, the world’s largest provider of serviced offices, officially opened a centre in One Fullerton yesterday, confident that demand will stay high despite the financial crisis.

Regus has been on an aggressive expansion drive in the Asia-Pacific and aims to open more facilities in the region, said the group’s chief executive for Asia-Pacific, Mr Filippo Sarti.

Demand for serviced offices in the region has risen as firms keep up with a changing business world amid globalisation and more travel.

‘It is a growing industry in Singapore, Hong Kong, India and in the other markets where rents are high and there is a lack of supply or premium- grade office buildings,’ said Mr Stephen Chatham, director of operations of another serviced office operator here called The Executive Centre.

Regus One Fullerton, which occupies 20,623 sq ft, has 327 fully furnished workstations, some overlooking the Marina Bay area. The London-listed provider of outsourced workplaces, as it calls itself, also has two other larger facilities here - at Centennial Tower and UOB Plaza 1 Centre.

Regus was operating a centre at Ngee Ann City for two years but the relentless rent increases at the prime Orchard Road building proved too much.

It took over the Ngee Ann City centre when it bought the Singapore business of serviced office operator MRCentre. Occupancy was full but clients there were also feeling the pinch of higher rentals.

Office rents at Ngee Ann City were renewed at an average of $14.20 per square foot (psf) in June when official data was last made available, although asking levels were at $16 psf. This compares with average rents of $7 to $8 psf in the first half of last year.

Recent CB Richard Ellis data shows that office rents have stabilised, with Grade A levels unchanged in the third quarter at $18.80 psf per month while prime rents were stable at $16.10.

While office supply remains tight, more space is expected from 2010. Property consultants expect rents, which rose dramatically last year, to trend lower.

At the Regus Group, business is expected to remain strong despite the financial crisis.

‘We’ll have to be more creative and flexible but I don’t see that as a constraint for the business,’ said Mr William Willems, Regus’ country general manager for South-east Asia. He said it is already seeing more retentions as firms, wary of the uncertainties ahead, decide to stay on instead of committing to a permanent space.

‘We foresee an increase in demand for our services during these tough times,’ said Mr Chatham. ‘For example, our serviced office options are ideal to companies that are looking to downsize but need to be in the CBD area.’

Rates at the One Fullerton centre start from $9,000 a month for a 16 sq m office, which can fit three workstations. There is an opening promotion rate of just over $6,000 a month for the same space.

Regus, which has 950 centres in 400 cities worldwide, counts companies like Google, IBM and Nokia among its clients; however, a large proportion of its clients are small companies.

For such firms, the service office offers a ready set-up - workstations, meeting room, lounges and a receptionist in a professional environment - that they can tap without needing a large investment, said the Regus officials.

PM Lee opens Fusionopolis, second major R&D hub

Source : Channel NewsAsia - 17 Oct 2008

Singapore’s second major research and development (R&D) hub - Fusionopolis - was opened by Prime Minister Lee Hsien Loong on Friday, with the announcement that the Republic recorded the highest gross domestic expenditure in R&D last year.

Fusionopolis stands side by side with Biopolis, the biomedical sciences hub.

Mr Lee told the gathering of top international researchers that the current global financial turmoil has clouded Singapore’s economic outlook, and the economy has gone into recession.

But Singapore’s R&D programme takes a long-term perspective, and will proceed despite the immediate ups and downs.

Mr Lee said funding will not be affected as the government is fully committed to investing in R&D to develop a key capability that will keep the economy competitive.

Mr Lee said: “We can’t go up and spend more when times are good and cut back and send researchers back home when times are bad. Sometimes, other countries have to do that and their budgets have year-to-year exigencies and it causes great instability. Our aim is to have a buffered, stable long-term trend.

“Our steady commitment will continue to draw researchers to set up and root their research activities in Singapore, and give investors the confidence to establish high-tech industries and corporate R&D centres here. While the scale of our R&D effort is new, R&D itself is something which we have pursued for some time. It has played an important role in Singapore’s industrial development.

“Our public research institutions (RIs) are the bridge that translates public R&D into useful outcomes for the economy and society. Many RIs have grown alongside the industrial sectors they support. By intertwining their research programmes with the needs of industry, our RIs provide companies access to new knowledge and innovative technologies that help to sustain their competitive edge.”

Mr Lee said Singapore spent S$6.3 billion in R&D last year, with the private sector accounting for two-thirds of the expenditure.

The 2007 amount was also an unprecedented increase of 26 per cent from 2006, and double the S$3 billion recorded in 2000. The results are based on a National R&D survey conducted by A*STAR.

Meanwhile, Singapore’s Interactive Digital Media industry is also getting a boost. The Media Development Authority - also housed at Fusionopolis - announced that 15 new projects will get S$12 million in funding.

Collectively, these projects will result in an increase of some S$37 million in total business spending for Singapore. They will also create 240 new jobs and provide hands-on training for some 5,600 students and professionals.

A*STAR said the futuristic 30-hectare Fusionopolis, which will be developed over six phases, is Singapore’s icon for R&D in interactive media, physical sciences, engineering and technology.

There are currently some 800 scientists, engineers and game developers housed at Fusionopolis. And that is set to increase to 2,400 by 2012, when the second phase is ready.

Sands may spin Macau retail into property fund

Source : Business Times - 16 Oct 2008

But it says it’s under no pressure for a fire sale despite funding problems

Las Vegas Sands Corp might spin off billions of dollars of Macau retail assets into a property fund, but is under no pressure for a quick sale despite problems funding ambitious casino expansion, an executive said.

The company, which runs the giant Venetian Macao casino and is building more hotels and casinos in the territory, floated the idea of selling its shops into a listed property trust a couple of years ago.

But with stock markets tanking in the last year, hitting real estate investment trusts (Reits) hard, Las Vegas Sands is now considering packaging the property into a fund for institutional investors.

‘It’s something we’ll look at, whether it’s a wholesale fund or a Reit,’ David Sylvester, the company’s head of retail in Asia, told Reuters in an interview.

Las Vegas Sands has 1.3 million square feet of leased retail space at its Grand Canal Shoppes, attached to the Venetian casino, and at the newly opened Four Seasons Hotel next door.

The firm is also building another 850,000-sq-ft shopping centre, scheduled to open by the end of 2009 on the Cotai Strip - reclaimed land that Las Vegas Sands chairman Sheldon Adelson has vowed to turn into a ‘neon alley’ of hotels, casinos and entertainment venues.

‘We’re talking multiples of billions of dollars,’ Mr Sylvester said, declining to give an exact value of what he thought the retail assets were worth. He added that Las Vegas Sands would retain a controlling stake in any fund.

‘We don’t want to sell them off because we want involvement,’ he said. ‘Obviously we’d like to have a majority share so we can manage it.’

Mr Adelson, the son of a cab driver who built a casino empire in Las Vegas before turning to the Chinese gambling enclave of Macau, injected his own capital into Las Vegas Sands last month through the purchase of US$475 million of convertible senior notes.

He told Reuters at the time that Las Vegas Sands was reconsidering efforts to obtain US$5.25 billion in financing for the Cotai Strip and was likely to instead seek smaller-scale financing for individual projects.

Analysts say the firm needs about US$1.5 billion to complete projects on two plots of land on the Cotai Strip, and is likely to find refinancing of its Macau debt difficult, or at least expensive.

‘I know that funding is an issue, and we’re sorting it out as a group,’ Mr Sylvester said. ‘But it’s not creating a fire sale.’

However, investors would be eager to buy into the retail assets, Mr Sylvester added.

‘All the way through we’ve had property investors interested,’ he said. ‘It’s blue-chip retail in Asia, which is hard to get your hands on because it’s closely held.’

With the likes of De Beers, Chanel and Louis Vuitton as tenants, the Four Seasons is raking in US$160 per sq ft in retail rent each year, while the Venetian Macao is taking US$130.

Retail makes up about a fifth of total revenue at the Venetian Macao. For the full year the Venetian Macao’s revenue is forecast to reach US$1.97 billion, according to JPMorgan analysts.

Macau’s casino revenue had been growing at break-neck speed since 2002, when it allowed foreign operators to compete with a former monopoly owner Stanley Ho.

But revenue fell 3.5 per cent in September from a year earlier because the Chinese authorities restricted visa approvals for people travelling to the former Portuguese enclave, the only place in China where casinos are legal.

Beijing has become increasingly nervous about Macau because of its impact on society and its use by corrupt officials to launder money, analysts say.

Mr Sylvester said the Venetian was better placed than most casinos, because only 27 per cent of its visitors were from mainland China. ‘With the integrated resort model, based on a three-night stay, we’re deliberately going for the broad Asian market.’

The average stay now for those who book a hotel room at the Venetian Macao is just under two nights, Mr Sylvester added.

CapitaLand residential projects in Mideast attract S$1b in sales

Source : Channel NewsAsia - 16 Oct 2008

CapitaLand residential projects in Bahrain and Abu Dhabi have attracted S$1 billion in sales since June 2008.

The projects were taken up by a mix of individual and corporate parties.

CapitaLand has two major projects in the Gulf Cooperation Council region – Rihan Heights, which is part of the landmark Arzanah integrated development in Abu Dhabi, and its first Raffles City integrated development in Bahrain Bay.

The Rihan Heights project in Abu Dhabi sold for about S$9,717 to S$10,514 per square metre and is 85 per cent sold.

The Raffles City Bahrain development sold for around S$6,627 per square metre – a 30 per cent premium on similar high-end developments in the city.

The projects are expected to be completed between 2010 and 2011.

OCBC: S’pore economy least risky

Source : Straits Times - 17 Oct 2008

SINGAPORE has been rated the best-equipped of more than 50 economies worldwide to overcome a serious economic crisis in an OCBC report prompted by the current global financial meltdown.

Released on Wednesday, the report, which may help Singaporeans sleep easier at night, looked at risk levels and awarded Singapore full marks for its long-term economic fundamentals.

Assessed according to seven indicators of economic health, the Republic received a point in every category to top the list as the least risky of 50 economies and the Euro-zone.

The rankings placed the United States and Britain ominously low. OCBC economist Selena Ling said as both governments take on more debt for bailout packages to save financial institutions, the long-term economic health of both countries would be under severe stress.

The seven indicators fall under three broad categories that the economists believe to be the most important gauges of a country’s ability to survive what they call ’severe economic adversity’.

Ms Ling said that the prospect of this occurring is highly likely, given the global credit crunch and a potential global recession.

The broad categories used to track a country’s economic health are the ability of a country to cushion itself in a downturn, its level of leverage or debt, and its debt to income level.

Countries with large savings rather than debt, access to usable reserves and which run a fiscal surplus generally fared better on the list.

This report, the first of its kind released by the bank, was initiated in view of the global financial meltdown, said Ms Ling.

With countries taking on so much debt to bail out their banks, attention was now being turned to sovereign risk rather than just corporate risk.

Most notably, Iceland is on the verge of bankruptcy because it cannot fund the bailout of its troubled banks.

The traditional sovereign credit ratings may therefore not accurately reflect the stresses the economies are going under, Ms Ling said.

OCBC economists said that Singapore passed all the indicators that are deemed important in determining the medium- to long-term economic fundamentals.

Joining Singapore as being certified low-risk were Scandinavian countries Denmark, Norway and Sweden and also Switzerland.

The surprising results were that South Korea, Russia, Thailand and Venezuela were also considered low-risk, mainly due to passing the cushioning indicator with ‘flying colours’, OCBC’s economists said in the report. This means that these economies have a relatively higher savings to gross domestic product ratio and usable reserves.

South Korea has a single A credit rating from rating agency Standard & Poor’s while Russia and Thailand have a triple B plus rating, and Venezuela, a double B minus rating. The highest rating is triple A.

Iceland was unsurprisingly deemed high-risk, but developed economies like the United States, Britain and the Euro-zone also fell under this category.

STALLED: Property sales in China

Source : Straits Times - 17 Oct 2008

BEIJING: For the past year, Ms Chang Feng, an English lecturer at a Beijing university, has been looking to buy a new apartment - an upgrade from her current flat and one near a good school for her son starting primary school in 2010.

She had shortlisted some flats but with property prices here sliding in the wake of the global credit crunch, she is now just going to sit and wait for a better buy.

‘I’ll hold off. I think the market is going to fall some more,’ said the 37-year old.

The ‘wait and see’ behaviour of would-be buyers like her has stalled China’s property market, raising fears of collapsing prices and a real estate meltdown similar to the one that put the United States in recession.

While China has escaped the worst of the global financial crisis so far, there is creeping worry here and a chorus of calls from industry players for Beijing to step in to ’save’ the housing market.

Housing sales in major Chinese cities last month were down 64 per cent year on year, with prices falling by 4 per cent from August, according to Goldman Sachs. The fall comes just one year after the nation saw the highest price rises in the world in that category.

By the middle of this year it was evident that the slowdown was for real: The house price index for 70 major cities rose 7 per cent in July from a year earlier, the lowest increase yet this year, according to government statistics.

When adjusted for inflation, house prices rose by a mere 0.7 per cent over the same period. Some developers had begun to offer rebates of up to 10 per cent.

Unwilling to wait until Beijing moves, many jittery local governments have jumped in to resuscitate property sales.

The Guangzhou-based Nanfang Daily newspaper yesterday reported that some 17 municipal governments had tried to boost sales by introducing measures like lower transaction levies, direct subsidies and tax incentives.

In Shanghai, the authorities raised the ceiling on mortgage lending to households by 20 per cent to as much as 600,000 yuan (S$130,000) from 500,000 yuan on Tuesday. That’s typically enough to buy only a small two-bedroom flat in the more remote parts of the suburbs.

The Nanjing city government is offering a subsidy of 0.5 to 1 per cent of the purchase price to house buyers.

In Hangzhou, the municipal government rolled out a package of 24 measures on Monday, including subsidies for property transaction taxes. To ease the cash-flow pressure weighing on developers, the authorities are giving them more time to pay for land they use and to complete their projects.

Any slump in the property market hits local governments before it bites Beijing, noted economist Zhang Bin, of the Chinese Academy of Social Sciences.

‘Municipal governments take the state of the property market very seriously because it’s a very important part of the local economy - involving land, banking and providing jobs,’ he said.

Those governments get a large part of their revenue from selling land to developers and through collecting taxes from real estate transactions, he explained.

But recent sales in cities already offering incentives remained slow, suggesting that the stimulus packages had failed to change consumers’ wait and see stance, Goldman Sachs said in a research note.

The central government should jump in with more drastic measures like a further interest rate cut before the real estate market woes spread to other key industries, said Ms Wang Xin Xin, sales manager at a West Beijing condominium project built by the listed Gemdale Corporation, one of China’s largest developers.

‘If this situation continues, prices will collapse because buyers are so influenced by the bad news in the press and will hold out for lower prices. Already, the few who are still buying ask us upfront for big discounts,’ said Ms Wang, whose sales volume dipped by 40 per cent last month.

Not all agree with Ms Wang. Indeed, some think that too many measures in rapid succession may signal panic, which could only damp sentiment further.

Says Mr Kevin Tu, a senior manager with DTZ Beijing: ‘These interventionist measures just disrupt the normal behaviour of the market, which I think will just readjust and be okay over the longer term.’

JITTERS ABOUT MARKET

‘If this situation continues, prices will collapse because buyers are so influenced by the bad news in the press and will hold out for lower prices.’ - Ms Wang Xin Xin, sales manager at a West Beijing condominium project