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Macquarie Prime REIT renamed as Starhill Global REIT

Posted by luxuryasiahome on December 31, 2008

Singapore-listed Macquarie Prime Real Estate Investment Trust (REIT) has been renamed the Starhill Global REIT.

This came after Starhill Global REIT Investments bought a 26 per cent stake in the REIT, as well as a 50 per cent stake in Macquarie Prime REIT’s manager, Macquarie Pacific Star Prime REIT Management.

Starhill Global is an indirect wholly-owned subsidiary of Malaysia-based conglomerate YTL Corporation.

Tan Sri Dato Francis Yeoh has been appointed executive chairman of Macquarie Pacific Star Prime REIT Management, which will be renamed YTL Pacific Star REIT Management.

Starhill Global REIT’s current portfolio consists of retail and office properties in Japan, China and Singapore, which includes properties such as Wisma Atria and Ngee Ann City.

Source : Channel NewsAsia – 31 Dec 2008

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Time to lower home prices

Posted by luxuryasiahome on December 31, 2008

Property developers should consider this step to lure back buyers

WHEN a property boom here ends, the first casualty is usually home supply.

Sure enough, the Government put a stop to new land sales early this month, as it did in the last two downturns, making it as good an indicator as any that a property slump had arrived.

Developers have also been cutting supply throughout the year, pushing back en bloc redevelopments and putting some launches on hold indefinitely.

But though reducing supply is necessary to prevent the market from collapsing, it is clearly inadequate as a cure at this point. No land plots have changed hands for months, new launches have slowed to a trickle – and yet buyers are still not biting. Property ads have dried up and showflats are starting to resemble ghost towns.

When sales came to a standstill this year, developers blamed the financial crisis and government policy actions, such as the removal of the deferred payment scheme. But house hunters pointed to just one reason: Home prices are still too high.

The economy has shrunk for the first time since 2001, mass retrenchments are on the cards, and monthly sales of new homes have plummeted so much that experts warn total sales this year could reach an 18-year low. Yet private home prices – at least according to the Urban Redevelopment Authority’s (URA) price index – have not dropped by much.

In the third quarter, the URA’s price data registered a fall of 2.3 per cent from the second quarter, after rising about 4 per cent in the first half of the year. This means prices in September were still higher than in January.

Anecdotally, analysts estimate that prices in the fourth quarter fell by up to 20 per cent in some developments. But prices jumped so much in the recent upturn – 31 per cent last year alone – that even if the URA’s index does log an unlikely 20 per cent drop this quarter, prices at year-end would still be higher than at the start of last year, and far above the pre-boom levels in 2005.

Not all developers can cut prices for their projects without incurring big losses, especially those who bought plots at the peak of the boom last year. But developers who were canny enough to pick up land at the trough of the market have plenty of room to manoeuvre.

One example is CapitaLand’s Latitude condominium at Jalan Mutiara. The developer bought the site for about $500 per sq ft (psf) in 2005 and sold units up to last month at $2,400 to $2,500 psf.

But down the road, Mutiara View is going for under $1,200 psf, while across the street, the new boutique condo RV Suites has been sold for $1,300 to $1,400 psf. According to agents, CapitaLand has quietly lowered prices recently to $2,000 to $2,100 psf.

Hong Leong’s Aalto along Meyer Road is another example. The site was bought for about $410 psf in 2005, but units were sold for well over $2,000 psf last year and this year. No new units have been sold since May, according to URA data.

To be sure, there are valid reasons for developers not to cut prices.

For one thing, selling homes at lower prices could result in a fall in the valuations of their properties, which could in turn hurt their balance sheets and make it more difficult for them to raise funds in an already tight credit market. And some argue that slashing prices could also set off a price war.

But there are also compelling reasons to start lowering prices. Key among them is that the see-who-blinks-first game is clearly turning in favour of buyers. Prices are already falling, pushed down by smaller developers squeezed for cash and individual home sellers anxious to offload their units.

A boutique condominium in the Novena area reportedly gave significant discounts – from over $1,300 psf down to just under $1,000 psf – after the financial crisis hit hard in October. At soon-to-be-completed developments such as City Square Residences in Kitchener Road, prices have fallen from a high of over $1,000 psf last year to less than $800 psf for some units in recent months.

Developers have said for months that they will maintain prices and ride out the storm. But the situation is set to worsen sharply for sellers as the economy contracts sharply. Even developers who can hold out are likely to find their property valuations hit anyway as prices come down throughout the market.

Lowering prices will bring buyers back into the market. Many have been waiting on the sidelines since early last year, when prices starting shooting up beyond their means.

Evania, a 35-unit condo in Upper Paya Lebar, moved 15 units last month after dropping prices from nearly $900 psf in March to just above $600 psf.

More positive news like this is exactly what is needed to restore sentiment in the market.

As for the threat of price wars, there is little basis in the argument. Prices are going to fall in any case, with or without a price war. The suggestion here is not for steep price cuts, just ‘realistic’ prices that will tempt buyers back into the market.

City Developments took some flak from its rivals after it priced its mass market condo Livia in Pasir Ris at an attractive $650 psf on average. But the launch was a huge success – and it has not caused a downward spiral.

Industry players have suggested that the Government step in with demand-boosting measures such as waiving, discounting or deferring stamp duty; resurrecting a fine-tuned version of the deferred payment scheme; and tweaking CPF rules to allow buyers more financing leeway.

Developers themselves have already started absorbing stamp duty and interest for selected projects, and rolled out gimmicks such as renovation allowances and vouchers for electrical appliances.

These measures might help make the buying environment more conducive, but nothing would speak more persuasively to potential buyers than a discount.

In a year when everything is going to go on sale, property developers should consider joining the crowd.

Source : Straits Times – 31 Dec 2008

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Developer wins right to Newton land

Posted by luxuryasiahome on December 31, 2008

Judge gives his ruling based on concept of ‘adverse possession’, abolished 14 years ago

AN AGE-OLD legal concept which was abolished 14 years ago has crept its way back to influence a court case involving a multi-million dollar dispute over a plot of land in Newton.

Before 1994, in a legal concept known as ‘adverse possession’, a party which had used a plot of land for over 12 years without the owner’s permission could lay claim to the land.

But the Land Titles Act, which came into effect in 1994, was enacted to remove such claims unless the plot of land was held for a continuous 12 years before then.

The current court dispute centres on a 234 sq m strip of sloped land on the fringe of Buckley Mansions. The plot is said to be worth at least $2 million.

Property developers City Developments (CDL), which bought over Buckley Mansions in September 1999, wanted to re-develop the estate and the land around it.

But CDL then learnt that the plot was not part of the property they had bought over.

Their initial checks showed that the late Mr Syed Allowee Ally Aljunied was the last known owner but a study they commissioned also showed four others had bought an interest in the property.

The company applied to the High Court to declare that the plot belonged to them and advertised in the press for any claimants to come forward.

Two people, businessman Harun Aljunied and housewife Sharifah Fatimah Aljunied, declared their interests, claiming they were trustees of the land which belonged to the late Mr Syed Allowee.

A third person, Mr Syed Noah Aljunied, also came forward, as the great-grandson of Mr Syed Allowee, to stake his claim on the land.

However, CDL’s lawyers, Mr Kenneth Pereira and Mr Rajaram Muralli Rajan, argued that their clients could still benefit from the old legal concept of ‘adverse possession’.

They said that CDL had bought Buckley Mansions from Kerr Leong Heng, a firm which had developed the site and had fenced in the disputed strip as part of the private estate for more than 12 years before 1994 when the change in law was made.

The lawyers also argued that the claimants were neither direct descendants of Mr Syed Allowee nor had any links with his estate.

This plot of land in Newton had apparently belonged to the Aljunied family since the 1900s.

Justice Tay Yong Kwang noted that a long-standing neighbour Lee Jit Seam had testified that since 1971, there had been a fence enclosing the plot as if it was part of the property.

The judge said that in any case, the personal representatives of the rightful owners which historical records show were four persons to whom the plot was sold, never came forward to stake their claim.

Justice Tay said that any claims by the rightful owners did not matter as CDL had a right to the land as a result of ‘adverse possession’.

Lawyers The Straits Times spoke to said the argument of ‘adverse possession’ had not been raised in such disputes for a long time since the law was changed 14 years ago.

Mr Harun and Madam Sharifah Fatimah, who were defended by lawyers Leslie Netto and Bevin Netto, are appealing against Justice Tay’s decision.

Source : Straits Times – 31 Dec 2008

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Punggol, Choa Chu Kang BTO projects launched

Posted by luxuryasiahome on December 31, 2008

THE Housing & Development Board (HDB) yesterday launched two new housing projects – one in Choa Chu Kang and the other in Punggol – under the build-to-order (BTO) system.

A total of 1,181 studio, three-room, four-room and five-room apartments are on offer.

With these two new projects, HDB has launched some 7,793 units under the BTO system in 2008, in towns such as Punggol, Choa Chu Kang, Sengkang, Yishun, Woodlands and Bukit Panjang.

Sunshine Court, located along Choa Chu Kang Avenue 3, comprises 164 studio apartments, 117 three-roomers and 171 four-room flats. This is the first time that studio apartments are being offered for sale in Choa Chu Kang and they will come equipped with elderly-friendly features such as grab bars and non-slip flooring.

The studios will sell for between $58,000 and $80,000. Three-room flats in Sunshine Court are priced at $121,000-$148,000, while four-room flats are going for $202,000-$236,000.

The other development, Punggol Regalia, comprises 546 four-room and 183 five-room flats. The four-room apartments are going for $252,000-$316,000, while the five-room units will be sold for $342,000-$428,000.

HDB reiterated that new flats are priced below their equivalent market prices to ensure that public housing is affordable for first-time home buyers.

For example, comparable four-room resale flats in Choa Chu Kang cost $260,000-$300,000 – although they are slightly bigger – according to data provided by HDB.

Analysts said that the Choa Chu Kang property is expected to see more demand.

‘I think the take-up rate will be very good,’ said Jack Chua, president of property firm ERA Realty. ‘The units are small, which makes them more affordable. In today’s market, most people are looking for smaller units.’

This is the first BTO project in Choa Chu Kang, a mature estate, which should boost its popularity, he said.

And as for Punggol Regalia, analysts said that the good location should encourage take-up. The project is located near the future Punggol Town Centre.

Source : Business Times – 31 Dec 2008

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For sale: 1,181 new HDB flats of all sizes

Posted by luxuryasiahome on December 31, 2008

Flats in Choa Chu Kang, Punggol will be offered under built-to-order plan

THE Housing Board is bringing down the curtains on a busy year with one more sales exercise – this time for 1,181 flats in Choa Chu Kang and Punggol.

It is offering everything from studio apartments to five-room flats, with prices ranging from $58,000 to $428,000.

The flats are being offered under the build-to-order scheme where construction begins once a certain number of sales has been achieved.

A total of 7,793 flats has now been offered under the scheme this year, with demand generally robust despite flat sales in the broader property market.

One of the latest projects is Sunshine Court on Choa Chu Kang Avenue 3, opposite the Sunshine Place neighbourhood centre, which houses a supermarket, foodcourt and shops.

It offers standard flats of 164 studios, 117 three-room and 171 four-room units, costing between $58,000 and $236,000 each.

This is the first time 30-year lease studio apartments – meant for Singaporeans over 55 – have been offered for sale in Choa Chu Kang, said the HDB.

The studios will have elderly-friendly features such as grab bars and non-slip flooring, as well as built-in wardrobes, kitchen cabinets and cooking facilities.

PropNex chief executive Mohamed Ismail said the flats are attractively priced at less than $250 per sq ft, for three-roomers of roughly 700 sq ft, and 970 sq ft four-room homes.

Prices provided by HDB indicate that the flats are $60,000 to $80,000 cheaper than comparable resale flats in the area.

The second project – Punggol Regalia – is at the junction of Punggol Field and Punggol Place and near the future Punggol Town Centre.

It offers premium flats with 546 four-room and 183 five-room units, priced from $252,000 to $428,000 each.

They are around $33,000 to $86,000 cheaper than similar resale flats nearby of about six years old, said the HDB.

It added that the prices mean the average household would not need to fork out more than 25 per cent of their monthly income to service their loans.

Mr Ismail anticipates strong demand for three- and four-roomers at Choa Chu Kang, as the project is in a mature estate.

At the HDB’s last sales launch – Dew Spring @ Yishun – earlier this month, such flats proved very popular, attracting many more applicants than the number of available units.

So far, 487 applications have been lodged for the project’s 216 three-room units and 1,452 for the 504 four-room flats; only 152 bids have been received for the 144 two-room flats.

Smaller flats are now making a comeback, as the HDB is providing a steady supply of such homes for lower-income families and those homeowners who need to downgrade during the economic slowdown.

The HDB has said it will ramp up supply to around 4,000 units over the next two years to meet surging demand.

It will also continue to build up critical mass of new homes in Punggol.

Applications can be made on the HDB website www.hdb.gov.sg until Jan 12.

Source : Straits Times – 31 Dec 2008

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Bank lending turns cold in November

Posted by luxuryasiahome on December 31, 2008

Loans to businesses slide, economists warn of more trouble ahead

Bank lending fell over the month in November, for the first time in nearly two years, as loans to businesses declined and more companies went bust, an early sign of the damage that the financial crisis is inflicting on the economy here.

Total Singapore-dollar bank loans at the end of November stood at $273.2 billion, down one per cent from the end of October – the first monthly slide in bank lending since December 2006, the latest figures from the Monetary Authority of Singapore show.

Over the year, overall bank lending was still up by 20.7 per cent, but that’s the slowest pace of growth since January.

‘It is a reflection that the global economic crisis has hit domestic shores,’ said OCBC economist Selena Ling.

Loans to businesses slid 2.2 per cent over the month to $159.6 billion at the end of November, the first monthly drop since April last year. The biggest decline was in loans to the transport, storage and communications sector, which fell 19.8 per cent over the month to $9.1 billion at end-November.

But the slowdown in lending growth was evident across most business and consumer loan segments.

Housing and bridging loans – the biggest category of consumer lending – grew just 0.5 per cent over the month. Compared to a year earlier, the growth was 8.5 per cent – the slowest since July 2007. Car loans and credit-card borrowing also grew over the month to end-November, but loans for share financing plummeted to their lowest level since June 2006.

Economists here expect bank lending growth to slow sharply in 2009, as the property sector cools, banks tighten credit standards and businesses and people cut back on borrowing.

Analysts at Standard Chartered Bank warned earlier this month that overall bank lending here could even contract slightly in 2009 compared to this year as business and consumer sentiment worsens, though others suggested that slow, but still positive year-on-year growth is more likely.

Song Seng Wun, senior economist and head of research at CIMB, said that while lending to some sectors could shrink, overall loans growth will likely be supported by continued drawdowns of existing property-related loans – by far the biggest chunk of bank lending here.

‘We’ll probably see mid to high single-digit growth,’ he said.

OCBC’s Ms Ling said that the slowdown in bank lending has been visible ‘for a couple of months’.

‘We are expecting loans growth to continue to decelerate. Although loans growth tends to be a lagging indicator, the whole Singapore economy is in a technical recession.’

The advance estimate of fourth-quarter economic growth to be released this Friday ‘will probably reflect a contraction in growth again, both in year-on-year and quarter-on-quarter terms’, she added.

Already, more businesses have folded in the first 11 months of this year than in the whole of 2007, data from the Insolvency and Public Trustee’s Office (IPTO) show. From January to November, 123 firms were forcibly wound up, compared to 106 for the whole of 2007 and 130 in 2006. But the numbers are still far below those seen in the wake of the Asian financial crisis, when the number of companies in compulsory liquidation soared to 370 in 1999.

‘I think the crunch will come probably in January, whether it’s personal or corporate bankruptcies,’ Ms Ling said. ‘These things take a couple of months to reach IPTO and if you count back to September, which was when Lehman Brothers blew up . . . you will probably see the numbers start to spike from January onwards.’

CIMB’s Mr Song said that more company failures are ‘inevitable’ in the months ahead, given the pressures faced by local businesses. ‘External demand has fallen off so much.’

Goh Chong Theng, Rabobank International’s Singapore general manager, told BT earlier this month that the bank had become ‘much more cautious and conservative in approving new loans’.

‘There will be many corporate failures – SMEs and large companies – due to the global recession and credit tightening,’ he said, when asked about the likely impact of the financial crisis in Singapore.

Source : Business Times – 31 Dec 2008

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Bank unfair to existing home loan clients

Posted by luxuryasiahome on December 31, 2008

WHEN I signed up for a home loan from DBS Bank in May 2005, my rate was pegged to the Special Mortgage Rate.

The Special Mortgage Rate has increased from 4.25 per cent in May 2006 to the current 5.5 per cent. The increase was due to the hike in interest rates during those periods.

Since last year, although the Singapore Inter-Bank Offered Rate (Sibor) and fixed deposit rates have decreased significantly, the Special Mortgage Rate has yet to decrease. The fixed deposit rates and Sibor are now lower than when I first took the loan.

DBS is not being fair to existing customers who took the loan earlier. As my loan has not been drawn down due to the deferred payment scheme and is locked in, I am not entitled to the low interest rate currently available in the market.

When queried, the explanation was that DBS no longer uses the board rate and its new loan packages now follow the Sibor, so it will not revise the Special Mortgage Rate. DBS said my package has a cash rebate component, which warrants the higher interest rate. That I understand, as when I signed for the package with DBS, the rate was actually higher than in other packages available. However, after careful calculation, I decided to sign with DBS because the package was still more attractive. The difference of interest rate was not more than 2 per cent from the market rate which it is currently.

I must add that DBS did offer me a repriced package based on the Sibor, in which the terms and conditions are worse than in my original package. In addition, I will lose the cash rebate.

The fair practice would be for DBS to decrease the Special Mortgage Rate to a reasonable range of between 4 and 4.5 per cent. This would benefit all customers and not only those who contacted the bank.

I have sent DBS an e-mail message, asking if it plans to revise its Special Mortgage Rate upwards in future, once interest rates start to increase but I have yet to receive a reply. If it does revise the Special Mortgage Rate upwards, there is indeed a major flaw in its argument against revising the Special Mortgage Rate downwards.

It would be even worse if DBS revises the Special Mortgage Rate upwards, even before current interest rates reach the high of more than 3 per cent for fixed deposit rates.

Last but not least, I hope the Consumers Association of Singapore or the relevant authorities will comment and look at whether banks in Singapore have been fair to their customers.

Khor Eng Hao

Source : Straits Times – 31 Dec 2008

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Size does matter

Posted by luxuryasiahome on December 31, 2008

While the focus has been shifted to 2-room flats, the 4-room is still most popular

AS the Housing Board launched its last Build-To-Order (BTO) exercise for the year, offering 1,181 units in Punggol and Choa Chu Kang, applications for its Dew Spring @ Yishun, which draw to a close today, reflect an interesting trend.

While just 864 flats are up for grabs at Dew Spring, 2,091 applications had been received as of 5pm yesterday not surprising, given the trend of oversubscription for BTO projects, and the robust public housing market despite the downturn.

But the 2-room flats have not proved as popular as bigger units. Just last month, National Development Minister Mah Bow Tan said the HDB would focus on building more smaller flats, so more low-income families can own their homes.

For the 144 2-room units up for grabs at Dew Spring, there were 152 applications. This compares to 487 applications for 216 3-room and 1,452 applications for 504 4-room flats.

Are Singaporeans just not ready for a smaller living space, as some analysts contend?

A HDB spokesperson revealed that the response to the 2-room units at Dew Spring was, in fact, “good compared to past BTO exercises, where the subscription rate was generally less than 50 per cent”.

“From our experience, 2-room flat buyers are usually applicants wishing to monetise their existing bigger flats and move to smaller flats,” she said. “They generally prefer flats which are ready for immediate occupation. Hence, the demand for 2-room flats usually improves when the flats are nearing completion.”

PropNex CEO Mohamed Ismail pointed to a general mentality that “a basic home for any young family is ideally 3- or 4-rooms”, to cater to children. Two-room flats would appeal mainly to retirees or those on a tight budget.

Chesterton Suntec International research director Colin Tan suggested that Singaporeans are not yet ready to live in a tight space like Hong Kongers, and the depressed demand for small flats could indicate a threshold: The 2-room units at Dew Spring are about 48 sqm, compared to 67-sqm for a 3-room and 93-sqm for a 4-room flat.

In addition, Mr Mohamed Ismail noted that those buying direct from the HDB a second time, like downgraders, would have to fork out a resale levy. Given the difference in prices at Dew Spring -$76,000 to $90,000 for a 2-room and $120,000 to $146,000 for a 3-room buyers would likely opt for the bigger unit.

Nevertheless, the HDB will continue to forge ahead with building more small flats, which present an option for older Singaporeans wanting to monetise their assets for their retirement needs.

“We expect that smaller flats will be in greater demand given the increasing ageing population, and demographic changes that Singapore is undergoing,” said the spokesperson.

More studio, bigger flats on offer

By contrast, 4-room flats have always been hugely popular in BTO exercises this year, the average subscription rate was 300 per cent, said HDB.

And more will come online with the launch of the Punggol Regalia and Sunshine Court projects yesterday.

As of 5pm yesterday, already, there were 117 applications put in for 546 4-room units (priced between $250,000 – $312,000) at Punggol Regalia, and 46 applications for 183 5-room units ($342,000 – $428,000). The project, located near the future Punggol Town Centre, offers premium flats with better finishes.

As for Sunshine Court along Choa Chu Kang Avenue 3, studio apartments on offer will be fitted with elderly-friendly features like grab bars and non-slip flooring. There were 29 applications for 164 such units ($58,000 – $66,000 for 35-sqm, and $72,000 – $80,000 for 45-sqm) as of last night.

But again, it was the 4-room units that proved hottest: 158 applications for 171 units ($202,000 – $236,000).

In light of the recent debate on new flat prices, the housing board said the units are priced affordably, with average households forking out about 20 per cent of their monthly income to service their mortgage, which can be fully paid using CPF funds.

Source : Today – 31 Dec 2008

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US home prices fall a record 18% as recession continues

Posted by luxuryasiahome on December 31, 2008

Prices of single-family homes in October plunged a record 18 per cent from a year earlier, according to the Standard & Poor’s/ Case-Shiller Home Price Indices released yesterday that indicated a US housing market in the throes of a deep recession.

The battered housing market is critical to the economy, with a wide-ranging impact from the construction industry to the sale of appliances and furniture.

After hurting economic growth for multiple quarters, a continued deterioration could delay a turnaround for the world’s largest economy, which has been in a recession since late last year.

The composite index of 20 metropolitan areas fell 2.2 per cent in October from September. The price drops, both on a year-over-year and month-over- month basis, came in worse than expectations based on a Reuters survey of economists.

‘The bear market continues; home prices are back to their March 2004 levels,’ Mr David M. Blitzer, chairman of the Index Committee at Standard & Poor’s, said in a statement.

As of October, the 10-City Composite Home Price Index is down 25 per cent from its mid-2006 peak, and the 20-City Composite Home Price Index is down 23.4 per cent, he said.

The United States housing market is in the worst downturn since the Great Depression, as a huge supply of unsold homes, tighter lending standards and record foreclosures push down home prices.

Economists believe the US housing market will not begin to recover until home prices fall far enough to stimulate demand, which has dropped off precipitously as potential buyers stay sidelined.

Separately, consumer confidence fell to a record low this month as the worst job market in 16 years hammered sentiment, the Conference Board said yesterday.

The business research company said its Consumer Confidence Index fell to 38 this month from a slightly downwardly revised 44.7 last month.

The median forecast of economists polled by Reuters was for a reading of 45. Their 62 forecasts ranged from 40 to 51.1.

At the same time, business activity in the Midwest continued to shrink this month but at a less severe rate than expected, and input prices fell sharply, a report showed yesterday.

‘The further erosion of the Consumer Confidence Index reflects the rapid and steep deterioration of economic conditions that occurred in the fourth quarter of 2008,’ said Ms Lynn Franco, director of the Conference Board’s Consumer Research Centre.

‘The overall economic outlook remains quite dismal for the first half of 2009, and only a modest recovery is expected in the second half.’

Chief among consumers’ woes has been spiralling job losses in recent months.

US employers axed 533,000 jobs from payrolls last month alone, the most in 34 years, according to Labour Department data released earlier this month.

Meanwhile, the Institute for Supply Management-Chicago business barometer rose to 34.1 from 33.8 last month. Economists had forecast the index at 33. A reading above 50 indicates expansion while a reading below 50 indicates contraction.

Source : Straits Times – 31 Dec 2008

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Medium- to long-term prospects for S’pore property sector still strong

Posted by luxuryasiahome on December 30, 2008

Singapore’s commercial and residential property sectors will remain attractive to investors in the medium to long term.

Property watchers told Channel NewsAsia that is because of Singapore’s status as an international financial hub.

2009 looks set to be a difficult year by all accounts, but market watchers said property investment fundamentals here remain strong.

As global financial institutions cut costs, they are likely to move operations out of expensive cities in the US and Europe to Asian countries such as Singapore, where the cost of doing business is cheaper.

For example, Singapore’s corporate tax rate is 18 per cent, compared to 29 per cent in the UK and 40 per cent in the US.

And this could spur demand for office space in financial centres like Singapore, presenting investment opportunities for the commercial property sector.

Christopher Fossick, managing director, Southeast Asia, Jones Lang LaSalle, said: “Financial institutions are growing, in many cases from hundreds to thousands of jobs here in Singapore. The bigger these institutions become, the more real estate they need.”

But there are opportunities in the residential market as well. The closing gap between debt servicing and rentals, as well as falling valuations in 2009, could see many investors looking for a good deal.

Eugene Lim, associate director, ERA Asia Pacific, said: “For example, those in district 9, 10, and 11, they tend to be more elastic, the prices. So when the economy is not doing too well, the prices come down quite a lot, especially amongst those who have, for example, bought from the developer and then now need to sell to raise cash flow. They are prepared to cut losses.”

Observers said Singapore’s property market will offer rich pickings to investors who have their eyes on long-term returns.

Source : Channel NewsAsia – 30 Dec 2008

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