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No major property launches expected in the next 3 months

Posted by luxuryasiahome on March 13, 2008

Kuwaiti pullout from $818m deal, low top bid for Jurong West site unnerve market

MAJOR residential property launches are unlikely for at least three months after the already nervous market was spooked by two sobering events this week, market analysts said.

The first was the pullout of a Kuwaiti investor, Kuwait Finance House, from an option to buy $818 million worth of 97 units at Goodwood Residence.

The second was when the top bid by a property developer for a Jurong West landed housing site came in at less than half what had been expected.

Market sentiment was already jumpy given general market uncertainty, in the wake of the United States sub-prime crisis.

Developers were already saying they are prepared to delay their launches. Property consultants now do not expect any major condominium launches in the next three months. Some developers could even postpone their launches indefinitely, they said.

Still, prices are generally holding steady for now and smaller players will still launch small projects in the months ahead.

Industry sources speculated that Kuwait Finance House had pulled out as it had bought the units at a very high price that could not be supported by the current market.

As for the Jurong West site, sources said the low bid of $78 per sq ft of land area reflected rising building costs and current sentiment. If the Government awards the tender, sale prices of below $1 million per unit will fit in well with upgraders’ expectations and needs, they say.

An industry source said: ‘The Kuwaiti pullout is bad news but it’s not as if things have suddenly changed drastically.’ The fundamentals in Singapore are intact but sentiment has deteriorated, he said.

‘There are people who have money to buy but they just want to wait and see.’ With buyers and sellers largely waiting on the sidelines, there is little action.

Developers prefer to err on the side of caution and even if they offer homes for sale, they are doing it quietly, sources said.

Indeed, so far this year, the 405-unit Waterfront Waves in Bedok Reservoir has been the only new major condo launch. A few blocks have been launched and 110 units have been sold.

Small, quiet releases include the 47-unit Cosmo in Guillemard Crescent and some projects in Telok Kurau. Despite the sluggish market, some of these small projects such as Cosmo and Suites@Owen in Owen Road have sold well.

A consultant said: ‘There are foreign funds and investors still in the market that are on the lookout for bulk condo purchases.’

Among high-end properties, a fund recently agreed to buy – at a discount – the remaining units at Grange Infinite, sources said. The 68-unit freehold condo in Grange Road has more than 40 units left.

There is no lack of high-end condo projects – with quite a few ready or nearly set for launch.

These include Far East Organization’s Silversea in Amber Road, UOL Group’s Breeze by the East in Upper East Coast Road, and City Development’s condo project in Thomson Road.

But financially strong developers are likely to delay launches to the second half, said a consultant.

While the bigger players may not act soon, Evan Lim & Co’s EL Development is preparing to launch its 51-unit Parc Centennial in Kampong Java Road soon.

‘Not everyone can hold back their launches for a long time,’ said another consultant. ‘But nobody is ready to lower their prices yet.’

He added: ‘There’s the possibility of prices falling but I haven’t seen people panicking.’

In the short term, prices are likely to remain flat.

‘It is good for the property market to have a sustainable and affordable price level for the mass market,’ said a property developer. He added that demand as well as unprecedentedly high construction costs were problems

STILL STRONG

‘The Kuwaiti pullout is bad news but it’s not as if things have suddenly changed drastically.’ – AN INDUSTRY SOURCE, who adds that the fundamentals are intact

STILL WAITING

‘Not everyone can hold back their launches for a long time. But nobody is ready to lower their prices yet.’ – A CONSULTANT

Source : Straits Times – 13 Mar 2008

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Singapore: costliest industrial spot in Asia ex-Japan

Posted by luxuryasiahome on March 13, 2008

It rises 2 notches to take 12th place in the world

SINGAPORE has risen two notches to become the 12th most expensive industrial location in the world.

And excluding Japan, which is ranked third in the world, Singapore is the most expensive location in Asia, surpassing Hong Kong (23rd), Mumbai (26th) and Taipei (36th).

Average net rents are now at $1.70 per square foot a month after rising 26 per cent year-on-year (y-o-y) last year. Total occupancy cost was US$14.64 psf a year at end-December 2007.

Singapore was also the eighth highest in terms of y-o-y rental increase as reflected in Cushman & Wakefield’s (C&W) report, Industrial Space Across the World, which covers 138 global locations.

On industrial rents here, C&W (Singapore) managing director Donald Han said that demand rose across all segments including manufacturing, warehouses and business parks. The latter, in particular, gained from the spillover effects of the office space crunch in the CBD.

As a result, Singapore moved up two places to become the 12th most expensive industrial location in the world.

Mr Han believes the outlook for rental increases for industrial space here remains bullish.

He said: ‘In the past 12 months, we saw the opening of the KPE and Terminal 3 besides other initiatives that are under construction such as the Circle Line MRT. All these will help to raise the attractiveness of industrial parks located in the peripheral areas and along with it, the rentals.’

London (near Heathrow) remained the most expensive industrial location with a total occupancy cost of US$28.91 psf a year followed by Dublin at US$21.81 psf. Oslo, with a total occupancy cost of US$18.32 psf took fourth place.

Despite European cities accounting for seven out of the top 10 locations in the global ranking, regional growth in Europe was slowest of all the global regions at just 2.5 per cent last year.

However, while Western Europe saw average rental growth of 1.3 per cent, Central and Eastern Europe increased by 7 per cent with the key locations being Poland, the Czech Republic and Romania.

In Asia, Mumbai moved up 11 places to 26th position. It also saw the highest rental increase of 94.44 per cent y-o-y followed by Istanbul (60 per cent) and Bogota (54.2 per cent).

Source : Business Times – 13 March 2008

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Swiss Bank takes up bulk of new block

Posted by luxuryasiahome on March 13, 2008

EFG Bank leases 52,000 sq ft for the next 6 years, with naming rights

SWISS private banking group EFG Bank has leased 52,000 square feet or two-thirds of a nine-storey office block coming up opposite Parliament House.

Prestigious address: EFG Bank Building will come up opposite Parliament House. EFG Bank is taking space that’s three times the size of its existing premises

EFG has naming rights for the freehold building, which is expected to be ready in the first quarter next year. It is being developed on the former Satnam House and Amar-raj House sites by a unit of RB Capital, which is headed by 25-year-old Kishin Hiranandani, son of Raj Kumar of the Royal Brothers Group.

EFG Bank’s lease is said to be for an initial term of six years, with an option to renew for a further three years.

Chris Archibold, head of markets at Jones Lang LaSalle, the property’s marketing agent, said that EFG would pay a ‘low double-digit’ gross monthly rental.

RB Capital, which is a separate and distinct company from the Royal Brothers Group, is negotiating with several interested parties to lease out the remaining space in EFG Bank Building, which will have a total of 78,000 sq ft net lettable area, including retail space in the basement and ground level.

Mr Hiranandani, director of RB Capital, said that his company would be moving into the property to make it its Singapore headquarters. RB Capital owns and develops commercial and residential properties in Singapore and Malaysia. The new EFG Bank Building marks the company’s first foray into property development in Singapore.

JLL’s Mr Archibold said that the leasing deal with EFG Bank reflects that ‘demand for office space among players in the financial industry is still going strong’.

EFG Bank Building, designed by RSP Architects, will have a North Bridge Road address and an entrance that will be opposite Parliament House.

The bank is leasing seven floors in the building.

EFG Bank Singapore managing director Kees Stoute said: ‘The new premises will meet the expansion needs of the bank. We are also very happy with the location, panoramic views of the city skyline as well as the prestigious address, since it’s just opposite Parliament House.

‘The 52,000 sq ft we’re taking in the new building developed by RB Capital is more than three times the size of our existing premises.’

The bank currently leases a total of about 15,000 sq ft at two locations – the entire 42nd level of OUB Centre at Raffles Place and the 10th floor of 55 Market Street. These leases expire in June 2009 and April 2010 respectively.

Mr Stoute said that the bank had not decided whether it would give up its existing premises when the leases run out. EFG Bank has a headcount of 105 in Singapore, of which 56 are client relationship officers (CROs). ‘Across Asia, the business maintained the strong progress of recent years in 2007, with income growing by over 50 per cent and CROs increasing by more than a third.’

RB Capital bought Satnam House and Amar-raj House next door for a total sum of about $50 million last year.

The new development could be worth around $215 million, assuming a price of about $2,750 psf of net lettable area, according to JLL regional director and head of investments Lui Seng Fatt.

Source : Business Times – 13 March 2008

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Swiss Bank takes up bulk of new block

Posted by luxuryasiahome on March 13, 2008

EFG Bank leases 52,000 sq ft for the next 6 years, with naming rights

SWISS private banking group EFG Bank has leased 52,000 square feet or two-thirds of a nine-storey office block coming up opposite Parliament House.

Prestigious address: EFG Bank Building will come up opposite Parliament House. EFG Bank is taking space that’s three times the size of its existing premises

EFG has naming rights for the freehold building, which is expected to be ready in the first quarter next year. It is being developed on the former Satnam House and Amar-raj House sites by a unit of RB Capital, which is headed by 25-year-old Kishin Hiranandani, son of Raj Kumar of the Royal Brothers Group.

EFG Bank’s lease is said to be for an initial term of six years, with an option to renew for a further three years.

Chris Archibold, head of markets at Jones Lang LaSalle, the property’s marketing agent, said that EFG would pay a ‘low double-digit’ gross monthly rental.

RB Capital, which is a separate and distinct company from the Royal Brothers Group, is negotiating with several interested parties to lease out the remaining space in EFG Bank Building, which will have a total of 78,000 sq ft net lettable area, including retail space in the basement and ground level.

Mr Hiranandani, director of RB Capital, said that his company would be moving into the property to make it its Singapore headquarters. RB Capital owns and develops commercial and residential properties in Singapore and Malaysia. The new EFG Bank Building marks the company’s first foray into property development in Singapore.

JLL’s Mr Archibold said that the leasing deal with EFG Bank reflects that ‘demand for office space among players in the financial industry is still going strong’.

EFG Bank Building, designed by RSP Architects, will have a North Bridge Road address and an entrance that will be opposite Parliament House.

The bank is leasing seven floors in the building.

EFG Bank Singapore managing director Kees Stoute said: ‘The new premises will meet the expansion needs of the bank. We are also very happy with the location, panoramic views of the city skyline as well as the prestigious address, since it’s just opposite Parliament House.

‘The 52,000 sq ft we’re taking in the new building developed by RB Capital is more than three times the size of our existing premises.’

The bank currently leases a total of about 15,000 sq ft at two locations – the entire 42nd level of OUB Centre at Raffles Place and the 10th floor of 55 Market Street. These leases expire in June 2009 and April 2010 respectively.

Mr Stoute said that the bank had not decided whether it would give up its existing premises when the leases run out. EFG Bank has a headcount of 105 in Singapore, of which 56 are client relationship officers (CROs). ‘Across Asia, the business maintained the strong progress of recent years in 2007, with income growing by over 50 per cent and CROs increasing by more than a third.’

RB Capital bought Satnam House and Amar-raj House next door for a total sum of about $50 million last year.

The new development could be worth around $215 million, assuming a price of about $2,750 psf of net lettable area, according to JLL regional director and head of investments Lui Seng Fatt.

Source : Business Times – 13 March 2008

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Faced with crisis, the Fed innovates

Posted by luxuryasiahome on March 13, 2008

Latest move different in scale and ambition from what it has attempted so far

THE US Federal Reserve’s new Term Securities Lending Facility is arguably the boldest and most innovative step taken so far to clear the logjam in the credit markets since the US sub-prime crisis blew up last August.

Let’s look closely at what the Fed has essentially done. It has agreed to lend US$200 billion in the form of Treasury securities to primary dealers (and through them, to other financial institutions) for 28 days against collateral that includes not only US federal government agency debt (including mortgage-backed securities, or MBS), but also private AAA-rated MBS.

There are three key points to note here about how the Fed’s actions are different from what it has done before.

First, the amount the Fed is willing to lend has increased significantly. When it first announced its Term Auction Facility in December (aimed at easing liquidity in the credit markets), it capped its lending at only US$20 billion – although this was progressively increased to US$100 billion last week. That has now been doubled, and the Fed has indicated that it could be increased even further.

Second, the loans the Fed makes will now will be for 28 days rather than overnight, as before. This gives banks more time, and flexibility, to act.

Third, and perhaps most significantly, the Fed is now willing to accept as collateral not just US government-backed mortgage securities, but even private sub-prime-mortgage securities (some of which are rated AAA even if they don’t deserve that rating). Or as some commentators bluntly put it, the Fed is willing to swap Treasuries for junk.

Whether this proves wise in the long run, we shall see. But in the short run, what the Fed has effectively done is to create a market for a vast pool of illiquid and unwanted securities. The banks which have been stuck with these securities, have been forced to mark them to market – meaning mark them lower and lower as US housing prices have kept falling.

As a result, banks’ recapitalisation requirements have kept rising. This, in turn, has not only badly dented confidence in financial markets generally, but has also made banks afraid to lend – which has accelerated the housing downturn (thus jeopardising even non-sub-prime mortgages) and weakened the corporate sector (even healthy companies) and the economy as a whole.

The Fed’s latest move will, of course, not solve all these problems at a stroke, and the Fed itself is modest about what it hopes to achieve, saying merely that the new facility ‘is intended to promote liquidity in the financing markets for Treasury and other collateral and thus to foster the functioning of financial markets more generally’.

But with the new facililty, banks will be able to get at least some dubious mortgage assets off their books. In return, they will get high-quality liquid assets in the form of Treasury securities, which can easily be converted into cash. This will help unfreeze credit markets and, to some extent, also insulate banks from falling housing prices.

No surprise, therefore, that at least the initial reaction from Wall Street to the Fed’s new facility was positive: the Dow Jones index jumped 3.55 per cent on Tuesday and banking stocks recovered sharply.

However, whether this bounce will turn into a rally remains to be seen. There are reasons to be cautious; a lot of unanswered questions remain. First, just how big can the new facility become? While the Fed has indicated that it will consider increasing it from US$200 billion, mortgage assets on the books of US banks run into the trillions – not to mention other potentially bad loans, notably those provided to leveraged institutions such as hedge funds and private equity funds.

Second, will the Fed roll over the loans after 28 days? How long will it keep doing this? And how, and when, will it dispose of the dubious mortgage assets – the ‘junk’ – it collects as collateral?

Bargaining chip

Perhaps most importantly, will the Fed (which now has enormous leverage vis-a-vis the banks) require banks using this facility to change their practices? Fed chairman Ben Bernanke has recently been exhorting these institutions to forgive some of the principal (not just interest) on some of their outstanding loans. The harder the bargain the Fed is able to drive on this critical issue – and it would have a lot of popular support – the more likely that it would succeed in staving off the much-dreaded wave of housing foreclosures (which could send the US housing market into free-fall), as with lower principal payments, homeowners would be less ‘underwater’ on their mortgages.

How this latest Fed move goes down politically in the US in this election year cannot be ignored either. If the move is viewed as a bailout of bankers at taxpayers’ expense – and there are already rumblings to that effect – the Fed would be pressured to think again. But for now, Bernanke & Co deserve credit – and the benefit of the doubt – for daring to innovate in the face of a crisis.

Source : Business Times – 13 March 2008

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Fed trying to buy time, say economists

Posted by luxuryasiahome on March 13, 2008

Debenture spreads narrow in positive market response

A central bank plan to infuse the financial system with new cash is a temporary fix for the debilitated US mortgage bond and housing markets, but not a cure.

The programme announced by the Federal Reserve on Tuesday frees up money for mortgage loans and dealer bond buying in the two markets paralysed by limited funding and fears of bank failures, economists and analysts say.

‘This is a tourniquet, it will staunch the bleeding, but it may not turn us around and bring the patient to health,’ said Susan Wachter, real estate and finance professor at The Wharton School, University of Pennsylvania.

‘This is designed to stop in its tracks what might otherwise be an old fashioned credit crunch where the banks simply themselves seize up,’ Ms Wachter said. ‘It’s not a sure fire end of the crisis by any means.’

The Fed will let dealers use US agency debentures and agency mortgage bonds, as well as top-rated private label mortgage securities as collateral in the new lending facility.

This will be the first time the Fed takes non-agency residential mortgage bonds as auction collateral in its latest effort to add market liquidity. It already accepts this kind of paper as collateral from banks that borrow directly from the US central bank at the discount window.

The initial US$200 billion funding for the plan might be raised, according to the Fed. The size of the plan pales in comparison with the mortgage bond markets totalling more than US$7 trillion.

Historically high defaults and foreclosures froze mortgage lending to all but the highest quality borrowers, and closed many companies who relied on higher risk home loans. Trouble that shut down the sub-prime mortgage sector has now started cascading to higher quality loans, leading to a growing number of private and federal plans to restore order in the mortgage bond and housing markets.

The Fed said that the private-label MBS (mortgage backed securities) it would accept must be AAA-rated and could not be on watch-list for rating cuts. Possibly US$1 trillion of those securities were eligible, according to senior Fed staff members.

The market for private label bonds, or those backed by mortgages too large for Fannie Mae and Freddie Mac to buy, was stung too as lenders and investors grew more risk averse. A recent government plan to sharply, but temporarily, raise the size of loans those top two US home funding companies purchase should also provide short-term relief.

The Fed is ‘buying time’ by unfreezing markets for some highly illiquid assets, said Robert Eisenbeis, chief monetary economist at Cumberland Advisors and former Atlanta Fed executive vice-president. ‘But liquifying those assets does not mean the funds will flow back into mortgage markets.’

There was an immediate and positive initial response in the MBS and agency debenture markets on Tuesday. Debenture spreads narrowed as much as 12 basis points versus Treasuries from some of the widest spreads in the decade-long history of Fannie Mae’s benchmark and Freddie Mac’s reference note programmes.

Agency mortgage bonds also outperformed Treasuries by a far margin after hitting the widest spreads in over 20 years before the Fed plan. Prices of 30-year bonds rose slightly while 10-year Treasury notes sank 1 1/4 point. An index of AAA-rate non-agency MBS that lost 43 per cent since September also gained slightly.

‘Liquidity constrained financial institutions have been unable as well as unwilling to lend, so if you can free up that capability it’s going to help,’ said Margaret Kerins at RBS Greenwich Capital in Chicago. — Reuters

Source : Business Times – 13 March 2008

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Move will help ease strains in financial markets: IMF

Posted by luxuryasiahome on March 13, 2008

FED’S US$200b LIQUIDITY BOOST

But it won’t cure what ails the economy, says the bank’s first deputy MD

The US Federal Reserve’s decision to pump more cash into a stressed banking system will not solve US economic problems, a senior International Monetary Fund (IMF) official said on Tuesday. But the move will help ease strains in financial and credit markets.

John Lipsky, the IMF’s first deputy managing director, told Reuters that coordinated moves by the Fed and four other central banks to prop up global credit markets showed they were aware of what’s going on and willing to take innovative actions.

‘Is this going to cure what ails the economy? I would guess everyone realises the answer to that is ‘no’. Is this going to be helpful in addressing the strains in financial markets? For sure, the answer is ‘yes’,’ Mr Lipsky said.

In the past few days the Fed has pumped a total of US$400 billion into the US banking system. Separately, the European Central Bank, Bank of Canada, Bank of England and Swiss National Bank announced measures to boost liquidity.

On Tuesday alone, the Fed expanded its lending plan offering up to US$200 billion of highly liquid US Treasuries to primary dealers. The move won applause on Wall Street, calming US markets as US stocks rallied more than 3 per cent giving the Dow and Nasdaq its biggest daily percentage gains since March 2003.

‘Is this the definitive solution? Who knows? It’s certainly not clear,’ Mr Lipsky said, ‘but the bigger message is that the Fed, like other central banks, has recognised the seriousness of the situation . . . and have been willing to react in a forthright way and have been willing to be innovative in that reaction’.

‘If this action is insufficient you would expect that there will be a willingness to take new action when appropriate,’ he added.

Mr Lipsky said central banks had worked closely for some time to deal with the credit turmoil, which began with an increase in defaults in the US sub-prime housing mortgage market and spilled into European markets.

He said their actions were ‘clearly intended to be seen as coordinated’.

‘It reflects their recognition that issues, especially financial issues today, are inevitably global issues . . . and can’t be viewed effectively as a piecemeal issue facing one or another economy or market, and that is a clear message and not a coincidence,’ he added.

Mr Lipsky said the Fed was ‘appropriately’ paying close attention to links between financial market strains and the broader US economy.

Asked whether there was a risk that central banks were not getting traction with efforts to bolster credit markets, Mr Lipsky replied: ‘Of course, but remember they are responding to some fundamental signals in the economy and mostly acutely to the weakness in the housing sector.’

‘It is not going to be solved until there is, on the one hand, greater certainty about the economic outlook and, secondly, that the economy seems healthier,’ he said. — Reuters

Source : Business Times – 13 March 2008

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Order book swells for KSH and Lian Beng

Posted by luxuryasiahome on March 13, 2008

KSH bags $121m Sentosa condo job; Lian Beng nets two deals worth $90m

RIDING the continuing boom, two construction firms announced big contracts yesterday.

KSH Holdings said it has won a contract worth more than $121 million for the construction of a luxury condominium, Seascape at Sentosa Cove, which is jointly owned by Ho Bee Investment and IOI Land.

And Lian Beng Group said it has been awarded two contracts worth $90.2 million in total – one from Voda Land for the construction of a condominium, Amber Residences, and the other for an industrial building at Paya Lebar iPark, awarded by Scorpio East Properties.

KSH said the Sentosa contract brings its construction order book to more than $614 million. Work on the 151-unit Seascape is scheduled to start next month and is expected to be completed in 28 months.

‘This is our fourth high-end residential project at Sentosa Cove since The Berth By The Cove and The Berthside, which were awarded in June 2004 and completed in October 2006, and the fifth for us here including One°15 Marina Club,’ said KSH executive chairman and managing director Choo Chee Onn.

KSH’s order book has grown more than 162 per cent in less than 16 months, Mr Choo said.

Lian Beng said its two contracts bring its order book to about $700 million.

The Amber Residences contract is worth $73.5 million while the design-and-build contract for the building at Paya Lebar iPark is worth $16.7 million. Work on Amber Residences is expected to start in May 2008 and will be completed over 30 months, while the other contract is expected to be completed by early 2009.

Both companies are gunning for more contracts. ‘The demand for construction services is still very strong, and there are many more projects out there for tender,’ said Lian Beng’s managing director Ong Pang Aik.

Analysts agree, saying that even as the property market takes a breather, the construction sector continues to recover, driven by a new phase of nationwide projects.

‘We are still sanguine about the sector’s prospects, given the development plans in place for the island, and the visibility it offers against the backdrop of uncertainty tainting the global economy,’ Phillip Securities analyst Stella Tan said in a recent note.

KSH shares gained 1.5 cents to close at 41.5 cents yesterday, while Lian Beng’s stock rose half a cent to close at 40.5 cents.

Source : Business Times – 13 March 2008

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Order book swells for KSH and Lian Beng

Posted by luxuryasiahome on March 13, 2008

KSH bags $121m Sentosa condo job; Lian Beng nets two deals worth $90m

RIDING the continuing boom, two construction firms announced big contracts yesterday.

KSH Holdings said it has won a contract worth more than $121 million for the construction of a luxury condominium, Seascape at Sentosa Cove, which is jointly owned by Ho Bee Investment and IOI Land.

And Lian Beng Group said it has been awarded two contracts worth $90.2 million in total – one from Voda Land for the construction of a condominium, Amber Residences, and the other for an industrial building at Paya Lebar iPark, awarded by Scorpio East Properties.

KSH said the Sentosa contract brings its construction order book to more than $614 million. Work on the 151-unit Seascape is scheduled to start next month and is expected to be completed in 28 months.

‘This is our fourth high-end residential project at Sentosa Cove since The Berth By The Cove and The Berthside, which were awarded in June 2004 and completed in October 2006, and the fifth for us here including One°15 Marina Club,’ said KSH executive chairman and managing director Choo Chee Onn.

KSH’s order book has grown more than 162 per cent in less than 16 months, Mr Choo said.

Lian Beng said its two contracts bring its order book to about $700 million.

The Amber Residences contract is worth $73.5 million while the design-and-build contract for the building at Paya Lebar iPark is worth $16.7 million. Work on Amber Residences is expected to start in May 2008 and will be completed over 30 months, while the other contract is expected to be completed by early 2009.

Both companies are gunning for more contracts. ‘The demand for construction services is still very strong, and there are many more projects out there for tender,’ said Lian Beng’s managing director Ong Pang Aik.

Analysts agree, saying that even as the property market takes a breather, the construction sector continues to recover, driven by a new phase of nationwide projects.

‘We are still sanguine about the sector’s prospects, given the development plans in place for the island, and the visibility it offers against the backdrop of uncertainty tainting the global economy,’ Phillip Securities analyst Stella Tan said in a recent note.

KSH shares gained 1.5 cents to close at 41.5 cents yesterday, while Lian Beng’s stock rose half a cent to close at 40.5 cents.

Source : Business Times – 13 March 2008

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UBS is largest private bank in Singapore, HK: study

Posted by luxuryasiahome on March 13, 2008

DBS is No.6 with 5% of private banking assets in Asia ex-Japan

SWISS banking giant UBS has been crowned the biggest private banking player in Singapore and Hong Kong.

It manages one-sixth of the US$600 billion (S$833.7 billion) of private banking assets in Asia, excluding Japan, which are mostly parked in the two Asian wealth management hubs.

The finding comes from the first-ever private banking league table compiled by an independent party – consultancy Calamander Group – in Hong Kong and Singapore.

The rankings confirmed conventional wisdom that the big guns of Citigroup, HSBC, Credit Suisse and Merrill Lynch would be in the top five.

But it may surprise some that home-grown DBS Group Holdings has come in at No.6 with a 5 per cent market share, trumping major global players such as JPMorgan.

Local rivals United Overseas Bank and OCBC Bank trail behind, each managing US$5 billion of assets compared with DBS’ US$30 billion. DBS has ‘done well’, quadrupling its assets under management between 2001 and 2006, said Mr Roman Scott, the managing director of Singapore-based Calamander.

Its growth is driven partly by its high profile in the fast-growing Singapore market, which Mr Scott estimated comprises private banking assets of more than US$250 billion.

The ranking lists ballpark figures about private banking players in Asia, which have tripled the assets they manage from US$200 billion five years ago.

Mr Scott said the table is ‘conservative’, with an accuracy of plus or minus 10 per cent, and excludes some newer entrants, such as Switzerland-based EFG and Standard Chartered.

Unlike five years ago when the Singapore and Hong Kong markets were so fragmented that the top five players barely held 10 per cent of the pie, five mega banks now dominate 55 per cent.

UBS is still the ’standout team, tripling its size from five years ago’, said Mr Scott.

DBS has climbed to the top of the mid-tier group with its strategy to be an Asia-focused private bank and attracting many newly rich Singaporeans, non-resident Indians and Indonesians, he added.

But mid-tier rivals such as Deutsche Bank and Morgan Stanley have been growing at an even faster pace, so DBS may not maintain its lead for long, he said.

While Hong Kong’s pool of wealth is larger at about US$350 billion, Singapore has been attracting more new private banking accounts in recent years. The country has about 40 private banks. Their rapid expansion has ignited a battle for talent and caused office rental rates to skyrocket.

Singapore’s efforts to transform itself into a wealth management hub for the region by offering lower corporate and personal taxes, and maintaining strict banking secrecy laws, have earned it the title of ‘Switzerland of the East’.

But it can now also be called ‘Monaco in the tropics’, as its high-end residen-

ces, upcoming Formula One race and casinos will offer a lifestyle that suits the mega-rich, said Mr Scott.

Of the US$250 billion booked in Singapore, about 15 per cent is held by local wealthy clients, he added.

The number of millionaires in Singapore shot up by 11,000 people, or 21.2 per cent, last year – the fastest growth rate in the Asia-Pacific and one of the fastest in the world, said a 2007 Merrill Lynch-Capgemini report.

The remaining 85 per cent of private banking assets in Singapore are held by Asians, as well as people of other nationalities, said Mr Scott.

Indonesians hold more than US$105 billion in Singapore. Only about US$17 billion, or 7 per cent of the total pool, is held by Europeans and Russians, Mr Scott added.

A more controversial issue in Singapore’s private banking sector is the inflow of European money. Last year, the European Commission put pressure on Singapore to ease its banking secrecy laws.

It also raised concerns that the country has become a shelter for funds exiting the European Union after its member nations slapped a withholding tax on offshore savings of EU citizens.

MAIN DRIVER

DBS’ growth is driven partly by its high profile in the fast-growing Singapore market that comprises private banking assets of more than US$250 billion (S$347 billion), says Mr Scott.

Source : Straits Times – 12 March 2008

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