[][][]PROPERTY[][][] City Dev+ CapitaLand+ KepLand

Large capital inflows a risk

Rachel Kelly

rachel@mediacorp.com.sg

SINGAPORE — Too much of foreign capital is too much of a good thing. The World Bank says a risk to economies in East Asia is the return of large capital inflows, which are driving up prices and causing inflationary pressure. 

Inflation in China — Asia’s largest economy and the world’s second biggest — accelerated to the fastest pace in almost two years in September, according to data out yesterday. September’s inflation rate was 3.6 per cent over a year earlier, compared to August’s 3.5 per cent and well above the 3 per cent official target.

Helping drive overall prices higher was a 6.1 per cent jump in food costs due to shortages of vegetables and other items.

China — the world’s fastest growing major economy – is sucking foreign capital in billions of dollars at a go. And too much money — together with the domestic stimulus — is fuelling a property bubble which has prompted the Chinese authorities to take steps to prevent overheating.

World Bank’s chief economist for East Asia & the Pacific, Mr Vikram Nehru, said:

“In China the authorities have used a variety of measures to try and curb credit growth. The bulk of those measures have been through administrative means, specific targets and so forth for banks.”

“So this is part of a more concertive action by the Chinese to take some of the froth off the real estate sector and try to stabilise asset prices.”

Other countries in East Asia are also grappling with large and rapid inflows of foreign capital and are adopting different strategies to deal with the challenge.

Mr Nehru said that some of these countries were “simply allowing their currencies to appreciate and that is one way to try and absorb the inflationary pressures that might be coming through these capital inflows”.

He added that some countries had been intervening in foreign exchange markets to try and reduce the volatility of these inflows or were keeping a close eye to see what was happening in the banking systems.

It has been suggested before, as early as two years ago, that the new downtown at Marina Bay will eventually be the new Raffles Place. Now it seems the market is actually doing the talk.

The writer is head, research and Consultancy, at Chesterton Suntec International.

Almost everyone who does business in the region knows Raffles Place. It is Singapore’s premier office district.

Over the decades, the mantle of being Singapore's most-sought-after business address has shifted before — from Raffles Place to Shenton Way and then back to Raffles Place. And for a while, Raffles Place expanded to include parts of China Square.

But now, judging from office rental trends, the market is ready to bestow that title to a new aspirant, way ahead of expectations. For a market that is supposed to be replete with abundant space, it is strange to see Prime Grade A rentals rebounding so strongly.

One property consultant reported that the average gross monthly rental value for Grade A CBD office space appreciated 8.7 per cent quarter-on-quarter in Q3 this year following a 7.6 per cent escalation in the first half.

The definition of Prime Grade A space is a little tricky.

It is not the building with the highest specifications nor is it one with the best location. It is a combination of both. Besides, the market is always changing and a property market researcher needs to know when to drop some buildings even as he or she adds new ones to the basket.

The best definition I can give is that it is the most-sought-after business space. This covers not only quality and centrality of location but market perception as well.

This means only the market can determine what is Prime Grade A space, not the agent nor the researcher.

Compared to Prime Grade A space, rentals in other districts have not shown a lot of improvement.

Overall, they have been flattish. You can understand why.

Official figures show that we can expect on average about 3 million sq ft of new space to be completed each year for the next three years to the end of 2012. For the first half of this year, office demand in terms of net take-up of about 700,000 sq ft has not even come close to matching the supply figures.

You would expect this divergence of performance in the residential market, where there is wide variation in quality and personal tastes but not in the office market. Here, most of the offerings are close alternatives. It is just that travel times may be a bit longer.

Moreover, the Singapore office market is a mature one.

In a mature market, the difference in quality between new and old space may not be minimal but it is definitely not significant.

So, what is responsible for the hike in Prime Grade A rentals?

Is there a shortage of such space or has demand expanded very strongly?

 Yes, demand from banks and financial institutions has expanded strongly but as the official figures show, it does not come close to matching supply.

This leaves a shortage of such space as the only other reason. In the eyes of the market or in this case, multinational companies or regional tenants, the supply of such space has remained stagnant or has actually shrunk.

The most recognisable feature of Singapore today is not just the Merlion or the Esplanade. It now includes the Marina Bay Sands. Soon, you cannot say you have been to Singapore if you have not visited Marina Bay. As such, multinational tenants who are worth what they say they are must be at Marina Bay and they have shown that they are willing to pay a hefty premium for this must-have space.

Almost all of us will agree that the new office buildings in the Marina Bay area are truly world-class. This means, in the eyes of the market, some previously Prime Grade A space has lost its coveted status. At the same time, some quality new space simply does not have it because it is not in the right location.

The market has spoken.

Let us listen and not dismiss it as a temporary anomaly that will sort itself out later.

Marina Bay hailed as the new Raffles Place

Colin Tan

property@mediacorp.com.sg

Japan govt says economy at standstill

TOKYO

In a monthly report, the government downgraded its assessment of the economy for the first time since Feb 2009. A senior Japanese official said further pressure on the economy, which is mired in stubborn deflation, could tip it into recession.

“If the economy turns out as expected in our main scenario, we may end up describing the current situation as a soft patch,” said the official at the Cabinet Office, which compiled the report. “But if it comes under further downward pressure, it could end up slipping into recession,” he said.

The government also cut its view on exports and industrial output, saying they were weakening,

which prompted the downgrade of its overall economic assessment.

A rise in the yen to a 15-year high against the dollar added to these woes.

Faltering recoveries from the global financial crisis in developed economies have pushed global investors into emerging markets in search of higher returns, driving up their currencies.

The move has been exacerbated by widespread expectations that the United States Federal Reserve will print billions of dollars to try to lift the US economy, sparking concerns that the extra liquidity will find its way into emerging markets.

Japan’s policymakers had earlier prompted the government to draw up a supplementary budget and the central bank to offer cheap loans and to promise to buy assets.

The government said it wanted the Bank of Japan to support the economy through “appropriate and flexible” monetary policy while the two branches work closely together — phrasing it used when it announced ¥5.05 trillion ($$80 billion) in stimulus spending on Oct 8.

The currency tensions will dominate a Group of 20 finance ministers’ meeting in South Korea starting on Friday and a G20 summit in November, as officials look to tackle the economic imbalances and the threat of competitive currency devaluation.

“Currencies will be the topic that many people will be talking about ... at the G20. I hope that good ideas will be put forward there and we will explain the present situation in Japan,” Finance Minister Yoshihiko Noda said.

Japanese Prime Minister Naoto Kan said yesterday he wants to implement stimulus measures as quickly as possible to support the expansion of the economy. — Japan’s government said yesterday the economy was now at a standstill, highlighting the growing gulf between developed and emerging countries at the heart of global currency tensions.AGENCIES

China raises key rate for the first time since 2007

Bloomberg

BEIJING

The one-year lending rate will increase to 5.56 [+0.25] per cent from 5.31 per cent effective today, the People’s Bank of China said on its website. The deposit rate will increase to 2.5 [+0.25] per cent from 2.25 per cent.

“This is a bucket of cold water for the market,” said Capital Securities analyst Zhang Yuheng in Shanghai.

The tightening would hit both equities and commodities, he said.

The impact was also felt by global markets across the board after the announcement last night. Oil prices fell, stock markets turned negative in Europe and the US dollar rose as investors were caught off guard by the tightening step.

Inflation hit 3.5 per cent in August over a year earlier, above the official annual target of 3 per cent.

Data to be released in Beijing tomorrow may show that September inflation climbed to 3.6 per cent or more even as economic growth moderated, analysts said. — China has unexpectedly raised its benchmark lending and deposit rates for the first time since 2007, ahead of data that may show inflation accelerated to the fastest pace in almost two years.Agencies

SINGAPORE

The latest changes to the law, tabled yesterday in Parliament, include more stringent penalties and come at a time when residential property prices have risen significantly while some fines and jail terms have been the same since 1974.

The newest requirement is for Singaporeans who give up their citizenship and foreigners who give up their permanent residency to dispose of their landed property within two years.

Failure to do so will result in a fine of up to $20,000 and/or a three-year jail term. In addition, foreigners who inherit landed property have to sell it within five years instead of the current 10 years.

[PENALTY  should  be  either CONFISCATION  or  FORCED  SALE which are  mOst  effective  than  fines and jail]

These moves are to reinforce the benefits of citizenship and PR status, said property analysts such as Suntec Chesterton International research and consultancy director Colin Tan.

When the Act was introduced in 1973 — the penalties were revised a year later — foreigners had to be permanent residents and get approval from the government to buy landed property, including strata-landed housing and vacant residential land.

They can buy only one landed home for owner-occupation, not for rental, and must dispose of their existing restricted property before acquiring a new one.

They are not allowed to sell the property within three years from the date of purchase or from the date of the Temporary Occupation Permit.

The amendments in 2006 increased the penalty for converted foreign companies which own restricted properties without approval and citizens who hold such homes as nominees for foreigners.

If the new Bill is passed, those found breaching these rules will be fined up to $200,000, up from $5,000 previously, and a further fine of $2,000 each day they remain non-compliant.

Other penalties include a fine of up to $10,000 or three times the rental income, whichever is higher, for unauthorised rental. The Controller of Residential Property also gets powers to lodge a caveat to prevent unauthorised sales.

SLP International’s executive director of research and consultancy Nicholas Mak said the move would close a “loophole” for foreigners who buy landed property after becoming citizens or PRs and then give up their residency status after a few years.

MediaCorp understands there have been three to four offences of unauthorised property sale in the last two years. Of the 70,000 landed homes, PRs own 3 to 4 per cent.

Another change will affect foreign developers — defined as any company with foreign directors or any amount of foreign ownership, including listed companies since foreigners can buy the shares — which will include firms such as Keppel Land and CapitaLand.

The Government will charge a fee if foreign developers extend the fiveyear window to complete residential developments after acquiring the land, or take more than two years to sell all units from the date of TOP. MediaCorp understands the Government can make exceptions on a caseby-case basis, such as during a recession. Other Bills introduced in Parliament yesterday include the Maintenance of Parents (Amendment) Bill, which proposes mandatory conciliation sessions and tribunal access to necessary government records and documents, the Industrial Relations (Amendment) Bill, which proposes a new mediation scheme for some disputes involving employees who are managers and executives, and the Civil Defence (Amendment) Bill, which will provide for officers to serve outside of Singapore.— Foreign ownership of landed homes here is set to be tightened, four years after the Residential Property Act was last revised. Mustafa Shafawi Tuesday October 19, 2010 www.todayonline.com we set you thinking

Slew of changes to landed property ownership tabled in Parliament

From next month, sellers of Housing and Development Board (HDB) flats will have to observe a seven-day cooling-off period before they can grant an Option-to-Purchase (OTP) to the buyers, the HDB said yesterday.

The HDB said the measure was part of regular reviews to better protect the interests of sellers and buyers.

The cooling-off period starts after sellers complete a resale checklist, which has to be submitted via the HDB website.

Introduced two years ago, the checklist will be enhanced to require sellers to state their next housing arrangement, said the HDB.

If the sellers intend to buy another flat, they have to work out their estimated sales proceed of their current flat, and submit a financial plan for their next flat purchase.

Buyers of resale flats, acting with or without agents, will also be required to complete and submit the checklist.

Previously, sellers or buyers acting without agents were encouraged, butnot required, to go through a separate checklist — which need not be submitted to the HDB.

MICA (P) 057/10/2010 • a publication of • NEWS HOTLI NE 6822 2268 begin_of_the_skype_highlighting              6822 2268      end_of_the_skype_highlighting

HDB unable to allow exemptions for those who inherit overseas properties: Mah

HDB unable to allow exemptions for those who inherit overseas properties: Mah

 

HDB flats

SINGAPORE : The Housing and Development Board (HDB) is unable to allow subsidised flat owners from owning overseas properties, even if they are inherited.

National Development Minister Mah Bow Tan said this in Parliament on Monday in response to a question from MP Lee Bee Wah, who asked whether HDB will allow exemptions to those who inherit foreign properties out of bequests.

"HDB is unable to allow exemptions for those who inherited these overseas properties as a general policy. However, I will ask HDB to look into the circumstances of special cases on appeal," said Mr Mah.

Mr Mah said the ministry has received a few hundred appeals from Permanent Residents (PRs) on this issue.

When asked how many of the appeals have been successful, Mr Mah said HDB is in the process of assessing them.

Under the current policy, HDB flat buyers are not allowed to own local or overseas private properties concurrently, within the Minimum Occupation Period.

From end August this year, the same rule also applies to buyers of non—subsidised flats.

Mr Mah said this is to ensure that those who can afford private properties anywhere do not compete for limited public housing subsidies.

[Eliminating STRONG competition from  JB Iskandar    ? ? ? ?]

He added that HDB flat buyers are required to declare any interest or ownership in private property, local or overseas.

Mr Mah also said that HDB conducts spot—checks locally and overseas.

The penalty for false declarations is a fine of up to S$5,000 or a jail term of up to six months, or both. — CNA /ls

Singapore’s

energy ‘trilemma’

Regulations and tiered pricing won’t be enough to help

Singapore control its energy usage, says Trade Minister Lim

WHY  did  Singapore  sell  SPC  to  ChinaPetrol    ? ? ? ?

Large state-owned banks provided about 40 per cent of the loans to the financing vehicles, while smaller banks accounted for 26 per cent and government-controlled policy banks the remaining 30 per cent. — About a quarter of all loans to Chinese local government financing vehicles are at a serious risk of default, according to regulators, who estimate that 2 trillion yuan ($388.6 billion) of debt could turn sour.China Securities Journal.China Securities Journal reported.REUTERS

Retail real estate sluggish: DTZ

SINGAPORE

Average prime rental rates along Orchard Road and Scotts Road remained unchanged in the third quarter, the firm said.

For the third straight quarter, gross rents of prime first-storey space in the area stayed at $39.70 per square foot per month.

Rents in other areas in the city continued to decline. Prime first storey rents in these areas fell by 0.8 per cent to $24.10 per square foot per month.

Monthly gross rents of prime first-storey retail space in the suburban malls, meanwhile, were unchanged at $33.60 per square foot per month.

DTZ said the new supply of retail space last year led to a competitive environment, which did not support any increase in rentals.

Some 1.3 million sq ft of new retail space became available last year.

Other than the newly-completed and pipeline supply that have put a lid on rentals, the two new integrated resorts also had an impact, DTZ said.

The integrated resorts siphoned off some demand for shopping as more people spend time and money at the casinos instead of at the malls, it noted.

But with a robust economic recovery taking place, DTZ said retail rents should increase gradually next year as the new supply is eventually absorbed.— Singapore’s retail real estate continues to be dogged by supply pressure, according to property consultancy DTZ.

From Oct 01 2010, applicants with entrepreneurial experience and business track record must have a turnover of $30 million annually.

 

From Jan 01 2011, minimum investment sum will be $2.5 million

 

Money spent on residential property will no longer be considered part of the applicant's investments.

 

Parents and Parents-in-law are no longer eligible to be included in the candidate's Global Investor Program (GIP) application for PR status. ..

 

Do you see the potential in Real Estate business?

 

www.catherinepang.com

 

Like crabs in cold water

China’s property speculators are getting cooked but the smart ones still have time to escape

It’s Shanghai hairy-crab season. Bloomberg

The writer is an independent economist based in Shanghai and was formerly Morgan Stanley’s chief economist for the Asia-Pacific region. The opinions expressed are his own.

To cook them, you put them in a container with cold water.

They feel like they’re back in a lake and get comfortable. You then cover it with a heavy top and light a fire below. You can hear scratching sounds.

They start faintly, then furiously, then faintly again, then nothing. When all is quiet for a few minutes, you lift the top and see the crabs turned golden brown. Dip them in vinegar and ginger for a delicious meal.

China’s property speculators are already like crabs in cold water.

They feel good, kicking their legs once in a while. Little do they know the heavy top has been lowered over their heads and a fire has been lit below.

They will be cooked but they just don’t know it yet.

In April, I told readers I would let them know when China’s property bubble was about to burst.

The market has now peaked.

It will trend down gradually for the rest of the year.

When expectations of a yuan revaluation reverse and capital outflows ensue, probably in 2012, the market will deflate faster.

China has entered a property bear market that will last for five years. The average prices in larger cities are likely to decline by half or more. Land values will fall by much more.

In a bubble, calling the tipping point is an art. Animal spirits, always the fuel in a bubble, are the last thing to dissipate. Receding liquidity is usually the trigger for a bubble to burst.

Sometimes oversupply surpasses speculative demand, which scares off speculators.

Most bubbles burst in one big pop. Some leak air bit by bit, day by day.

In 1998, China’s little-noticed property bubble burst, too. Shanghai real-estate prices dropped by two-thirds over the ensuing three years. Unfinished buildings dotted the landscape in Guangdong and Hainan. More recently, Shanghai’s property prices fell by one-third from May 2005 to the end of 2006.

I thought the current bubble, fuelled by rapid monetary expansion and expectations of a stronger yuan since the beginning of 2007, would go the same way.

Recent developments have changed my mind.

This bubble may not end suddenly but with a slow leak.

Previously, I thought that the government would relax its credit-tightening policies in the fourth quarter, leading to another surge in property prices. The bubble would pop with a big bang in the second half of next year or in 2012.

The government isn’t relaxing the credit restrictions on second and third mortgages.

As most potential buyers fall into the restricted categories and depend on credit, the market can’t go up another level to release all the animal spirits.

In addition to credit policy, liquidity is tightening.

The yuan non-deliverable forward market isn’t expecting significant appreciation for the next year.

That is having a big impact on hot money flow into China.

The competition for deposits is heating up.

Banks are offering products that are like deposits and with much higher interest rates than the policy rates.

As Chinese real-estate prices deflate slowly now, and faster in 2012, the economy will hold up. Exports, consumption and infrastructure should sustain a 7-per-cent to 8-per-cent growth rate for the next decade.

To stop the property deflation from affecting other investments, the government must recapitalise the banks quickly.

It has the balance sheet and the wisdom to do so.

China has had a strong property market and weak consumption for the past decade. The reverse may be true for the next 10 years.

Like crabs in cold water, property speculators are getting cooked but the smart ones still have time to escape the slow hotpot treatment.

eVen  fOr 

MAS  ? ? ? ?

GIC  ? ? ?  ?

Temasek ? ? ? ?

sIngapOre  banks  are  fInancIng  aIr ? ? ? ?

sIngapOre  mOrtgage  credIt  mOre  sUb-prIme  than USD ? ? ? ?

sEll  ALL  sIngapOre  bank  shares  ? ? ? ?

sEll  ALL  sIngapOre  prOperty  shares  ? ? ? ?