Retail rents in Singapore stabilizing

Retail rents in Singapore stabilizing

 

SINGAPORE : Positive consumer sentiment and the Great Singapore Sale have provided some support for the retail property market in Singapore.

 

But given the general uncertain global outlook, tenants have resisted committing to higher rents.

 

And according to property consultants DTZ, that has kept the retail sector stable during the second quarter.

 

Going forward, analysts said they see at most a marginal increase of 2 to 3 per cent in rents for the rest of this year.

 

313@Somerset is part of the new wave of malls making a splash in Orchard Road.

 

Altogether, some 5.4 million square feet of new retail space will be available by 2012.

 

Analysts said these new malls will lead the retail property rental market, while older ones see rents stabilise at the current level, with little upside.

 

Donald Han, Managing Director, Cushman & Wakefield, said, “The new malls are looking at rentals higher than existing malls at Orchard Road. They’re looking at anything from 20-30 per cent higher. Prime retail space is always in demand.”

 

Cushman & Wakefield notes that there is little risk of oversupply as international retailers clamour for a piece of the Singapore market.

 

And although inflation may dampen domestic consumer spending, analysts said external demand from strong tourist arrivals is likely to offset that.

 

Mr Han said, “Into the next six months with the F1 arriving in September, we’ll only see a higher number of tourists on shore which will effectively see higher tourism receipts, (a) positive spillover in spite of high inflation numbers over next six months or so.”

 

And with more malls fighting over the same tourism dollar, analysts note that malls are starting to work harder to attract customers.

 

Turner Canning, Associate Director, Retail Consulting, Cushman & Wakefield, said, “(There is) a lot of criticism (that)…a lot of malls are cookie cutter. (There are) similar shops, just in different configurations. You’re going to see that changing. It’s a global trend that malls are becoming more themed.”

 

Bringing in new retail choices is also another trend.

 

Chua Chor Hoon, Senior Director, Research, DTZ, said, “We notice that there are more new second-line brands coming, like Just Cavalli, which is a second line to Robert Cavalli. Emporio Armani is also coming. There are also more luxury brands from Europe coming here.”

 

This is in line with efforts by the Singapore Tourism Board to rejuvenate Orchard Road, turning it into one of the world’s premier shopping belts.

 

Analysts also said there is no fear that the Orchard belt will cannibalise suburban malls, as they serve different markets.

 

Ms Chua said, “The suburban malls…are in the heartlands, near residents. (They are) easily accessible. They serve residents’ daily needs like groceries, daily wear necessities, personal services. These are complementary. In fact, the rentals in suburban malls can be as high as those in Orchard.” – CNA/ms

 

 

 

Source: Channel NewsAsia

CDL opens Livia condo at Pasir Ris for preview

CDL opens Livia condo at Pasir Ris for preview

Initial units are priced at $650 psf on average; Kovan Residences launched

 

 

CITY Developments Ltd (CDL) has begun to preview its much-awaited Livia condo at Pasir Ris at an average price of about $650 psf for the initial batch of units, BT understands.

 

 

And next to Kovan MRT Station, the 512-unit Kovan Residences is being soft launched today and the average price is said to be $870 psf. Both projects are 99-year leasehold.

 

Market watchers reckon that the $650 psf average pricing for the initial phase of Livia’s marketing effort is about 10 per cent lower than what the developer could have fetched 12 months ago. ‘It might have been priced at $730-750 psf last year,’ an industry observer suggested. The 724-unit condo is being developed at Pasir Ris Drive 1 on a plot that is part of the group’s historical Pasir Ris landbank acquired decades ago.

 

CDL is developing Livia jointly with Hong Leong Holdings and Hong Realty. All three companies are part of Singapore’s Hong Leong Group. Livia will have a total of 10 blocks, either 15 or 16 storeys high with units ranging from two-bedroom apartments to four bedders. There are also 12 penthouses.

 

Next to Kovan MRT Station, Centurion Kovan, controlled by UOB-Kay Hian stockbroker pair Han Seng Juan and David Loh Kim Kang, has been testing the waters for its 512-unit Kovan Residences. The average price is believed to be around $870 psf and industry talk is that some 20 cheques were offered to the developer after a well-attended dinner preview for Messrs Han’s and Loh’s stockbroking community contacts last Saturday. It is not known if options have been issued.

 

‘Perhaps some of the potential buyers may have found the developer’s proposed price a little challenging and made their counter offers with cheques,’ a market watcher suggested.

 

Kovan Residences’ soft launch begins today, BT understands. Officials from Centurion Kovan, part of the Duchess Development group, have not been returning BT’s calls over the past few days.

 

Meanwhile, the project that started the current home buying wave, Ho Bee’s 99-year leasehold Dakota Residences, is said to have sold 150 units since sales began a fortnight ago.

 

Source: Straits Times

US inflation rate ‘still relatively contained’: Paulson

US inflation rate ‘still relatively contained’: Paulson

 

(LONDON) Treasury Secretary Henry Paulson said inflation that strips out food and fuel costs in the US remains in check and he praised the job Federal Reserve chairman Ben S Bernanke is doing conducting monetary policy.

 

‘Core inflation is still relatively contained,’ Mr Paulson said in an interview that aired yesterday on the British Broadcasting Corp’s Newsnight programme.

 

‘We’re dealing with some other challenges and excesses in our capital markets, no doubt about that.’

 

The US central bank’s Federal Open Market Committee last week said it expects price gains will ‘moderate’ this year and next, cautioning that ‘uncertainty about the inflation outlook remains high’.

 

In the interview, Mr Paulson aligned himself with Mr Bernanke’s decisions, which include seven reductions since September in the benchmark interest rate to 2 per cent.

 

‘I’ve been very supportive of what I’ve seen the Fed do and Ben Bernanke do since I’ve been working with him and I’m very supportive of his posture,’ Mr Paulson said, declining to say whether rates should be raised.

 

‘You’re not going to get me commenting on that,’ he said. ‘I just have great reverence and respect for the independence of our central banks – your Bank of England and our Fed – and they’ve got tough jobs to do.’

 

Mr Paulson is in London to discuss financial regulation with his UK counterparts. He said in the interview that rising energy and food prices are affecting developing nations such as China and India as well as the industrial world.

 

Inflation ‘is getting the No 1 focus’, Mr Paulson said, citing his recent travels to discuss economic conditions with his counterparts.

 

Mr Paulson visited Moscow, Berlin and Frankfurt earlier this week; he has also been to Mexico, Japan and the Middle East this year.

 

A June 27 Commerce Department report showed lower-than-expected rises in an inflation measure preferred by Federal Reserve policymakers.

 

The central bankers’ preferred gauge of prices, which excludes food and fuel, increased 0.1 per cent in May, compared with a 0.2 per cent median estimate in the Bloomberg survey.

 

The price measure was up 2.1 per cent from May 2007, also less than anticipated. Wages and salaries grew just 0.3 per cent in May, the Commerce Department figures showed.

 

Mr Paulson said that overall, the global economic slowdown has ‘further to go’. He repeated his view that the US economy will improve by year end, even as the housing market correction has not yet run its course.

 

‘I expect us to be growing, with stronger growth by year end,’ Mr Paulson said. ‘In terms of other places in the world, I think they may be in different parts of the cycle.’ – Bloomberg

 

Source: Straits Times

Frasers’ serviced apartments goal: Grow to 8,500 by 2010

Frasers’ serviced apartments goal: Grow to 8,500 by 2010

 

DRIVEN by rising corporate demand, Frasers Hospitality (Frasers) expects to grow its brand of serviced apartments to 8,500 by 2010. This will involve adding 5,000 apartments under the Frasers brand in the next two years.

 

 

China, India and Vietnam are three key areas of expansion for the hospitality arm of Frasers Centrepoint, a wholly owned subsidiary of Fraser & Neave. At least 80 per cent of the 5,000 serviced apartments will come under fee-based management, said its CEO Choe Peng Sum. Frasers will acquire the remainder with balance sheet funding.

 

‘We have been very careful about over-leveraging and over-borrowing,’ said Mr Choe. Frasers currently has a 50:50 debt-equity structure, but hopes to reduce the debt component to reach 40:60 or lower going forward.

 

Frasers is also looking at more collaborations with private equity funds to acquire serviced apartments.

 

‘For serviced residences, we’ve seen a lot of pent-up demand,’ said Mr Choe. According to him, multinational corporations have been sending teams overseas to set up new operations, and serviced apartments are aptly positioned to meet expatriates’ extended-accommodation needs.

 

Yet, the number of serviced residences in major cities such as London and Tokyo add up to barely 10 per cent of total hotel inventory, he noted. On room rates, Mr Choe said: ‘Singapore itself, we have seen year-on-year growth rates of about 26 per cent.’

 

Occupancy rates are also crossing 90 per cent.

 

With the large growth potential, Mr Choe shared that Frasers is looking at creating a separate brand of serviced residences to cater to a more dynamic group of corporate guests, or ‘road warriors’.

 

Hiccups in some economies may create more chances for expansion.

 

The property market in North America has softened, said Mr Choe, and Frasers is sourcing for deals in New York. In Vietnam, falling property prices also generate investment opportunities. As to whether Frasers will set up a Reit for its properties, Mr Choe said that ‘we are waiting for the right time’.

 

The US$135 million Fraser Suites CBD in Beijing has opened for operations.

 

Source: Straits Times

 

Asian gateway S’pore not top draw for FDI: survey

Asian gateway S’pore not top draw for FDI: survey

209 senior execs polled see S’pore behind Japan, China, HK for HQ, logistics

 

 

(SINGAPORE) Singapore is seen as a less attractive investment destination than Japan, China and India, according to a survey by the Japan External Trade Organisation and Ernst & Young.

 

 

In the survey, which studied the perceptions of 209 senior executives across various sectors and continents, only 10 per cent voted for Singapore, which shared third position with Hong Kong.

 

Japan and China are seen as the most attractive locations in Asia for foreign direct investment (FDI), each with 27 per cent of the votes, followed by India with 11 per cent.

 

But there is a gap between perception and reality. In terms of actual FDI projects last year, Japan ranked fifth in Asia with 166.

 

China was first with 1,171, India second and Vietnam third. Singapore ranked fourth with 239 projects.

 

Singapore trails Japan, China and Hong Kong in attractiveness as an Asian destination for headquarters and logistics centres, according to the survey.

 

And as a potential destination for research and development centres, Singapore’s attractiveness falls behind Japan, China and India.

 

‘Despite its world-renowned gateway position, our survey indicates that Singapore has been unable to attain the highest attractiveness score for headquarters and logistics activities,’ the survey says.

 

It also reveals that Asia has become more attractive as an investment destination, with 59 per cent of investors noting an improvement.

 

Only 6 per cent observed a deterioration of the region’s attractiveness. This compares favourably with investor perceptions of Europe’s attractiveness – only 44 per cent of potential investors see an improvement there.

 

Satisfaction with Asia is particularly high among investors in the chemical, pharmaceutical and medical equipment manufacturing and life science sectors, with 72 per cent citing satisfaction.

 

Reflecting a high level of confidence in Asia, 71 per cent of investors expect an improvement in the region’s attractiveness over the next three years, compared with 56 per cent for Europe.

 

On future investment, 43 per cent of investors say that they are actively considering establishing or developing activities in Asia, with China most cited at 57 per cent, followed by India at 35 per cent and Japan at 18 per cent.

 

Source: Straits Times

Paulson: US downturn is biggest focus, not inflation

Paulson: US downturn is biggest focus, not inflation

 

LONDON – THE downturn in the United States economy is a greater worry than inflation at the moment, Treasury Secretary Henry Paulson said yesterday.

In a radio interview with the BBC, Mr Paulson, on a visit to London, was asked whether his main focus was growth or prices.

 

‘Particularly in the US, our biggest concern is the downturn,’ he said.

 

‘There is no doubt that high headline inflation numbers as they relate to oil and food prices are a real concern to Americans. But core inflation is relatively contained, and my biggest focus today is the downside risk – housing, oil prices and obviously what is going on in the capital markets.’

 

The US central bank’s Federal Open Market Committee last week said it expects price gains to ‘moderate’ this year and next, cautioning that ‘uncertainty about the inflation outlook remains high’.

 

In the interview, Mr Paulson aligned himself with Federal Reserve chairman Ben Bernanke’s decisions, which include seven cuts since September that have sent the benchmark interest rate to 2 per cent.

 

‘I’ve been very supportive of what I’ve seen the Fed do and Mr Ben Bernanke do since I’ve been working with him, and I’m very supportive of his posture,’ Mr Paulson said, declining to say whether rates should be raised.

 

Mr Paulson, in London to discuss financial regulation with his British counterparts, said that rising energy and food prices are affecting developing nations such as China and India as well as the industrial world.

 

REUTERS, BLOOMBERG NEWS

 

Source: Straits Times

Dow in bear territory

Dow in bear territory

 

NEW YORK – THE Dow Jones Industrial Average on Wednesday entered a bear market for the first time since 2002, with United States companies poised for the worst profit slump in six years.

The index slipped to 11,215.51 points on Wednesday from a high of 14,164.53 on Oct 9, causing firms to shed a collective US$1.1 trillion (S$1.5 trillion) in value.

 

The Dow became the second major US index to enter a bear market, crossing the critical threshold of a 20 per cent decline from its peak; the Nasdaq crossed that line in February.

 

‘I think we’re seeing a capitulation of sorts and a sign that the market is really on its knees,’ said Mr Marc Pado, the chief equity market strategist at Cantor Fitzgerald.

 

However, the Dow recovered slightly, up 1 per cent to 11,326.40 after two hours of trading yesterday. Investors snapped up shares of energy companies after oil prices hit a record US$145.85 a barrel.

 

REUTERS

 

Source: Straits Times

Singapore one of Asia’s most attractive investment destinations

Singapore one of Asia’s most attractive investment destinations

 

SINGAPORE is one of Asia’s best investment destinations for foreign firms, according to a study released yesterday.

The study covered over 200 international company executives – from chief executive officers to the heads of strategy.

 

The executives were asked in a survey conducted by financial advisory firm Ernst & Young and the Japan External Trade Organisation how they felt about investing in various Asian markets.

 

Seven out of 10 of the executives polled were in companies that were already operating in Asia.

 

About 27 per cent of the respondents voted for Japan and China, putting the two countries in joint-first position.

 

The runner-up was India, with 11 per cent.

 

Singapore and Hong Kong were tied in third place, with 10 per cent apiece.

 

In terms of actual investments, Singapore was fourth, with 239 projects last year, according to the survey.

 

China attracted 1,171 projects, a mammoth 38 per cent of all investments that went into Asia, followed by India, with 676, and Vietnam, with 260.

 

Singapore‘s strengths were its high quality of life, attractive corporate tax rates and stability, according to the survey.

 

Its weaknesses were its high labour costs, quality of research and development, and the lack of a domestic market.

 

China‘s advantages were – no surprise here – its low labour cost and huge domestic market, although its results were pulled down by its poorer quality of life.

 

Japan ranked well for its high-quality labour workforce and infrastructure, but this was, in turn, weighed down by high labour costs and an uncompetitive corporate tax structure.

 

A total of 19 markets were ranked in the survey.

——————————————————————————–

STRENGTHS AND WEAKNESSES

 

Singapore‘s strengths were its high quality of life, attractive corporate tax rates and stability, a survey of 200 company executives showed. Its weaknesses were its high labour costs, quality of research and development, and the lack of a domestic market.

 

Source: Straits Times

Frasers looking to expand in China, India and Vietnam

Frasers looking to expand in China, India and Vietnam 

Hospitality arm of F&N aims to add 5,000 serviced units over next two years

 

FRASERS Hospitality, undaunted by the uncertain global economic outlook, is pursuing an aggressive expansion strategy in China, India, Vietnam and other markets.

The hospitality arm of Singapore-listed conglomerate Fraser & Neave is a ‘contrarian’ that aims to add about 5,000 serviced apartments over the next two years, despite fears of a global economic slowdown, said its chief executive Choe Peng Sum.

 

He sees ‘a lot of pent-up demand’ in cities such as Singapore, London and Sydney – where its residences have enjoyed occupancy rates of more than 90 per cent.

 

It is also the ‘right time now to get into China’ while growth opportunities are still bright in Vietnam and India, Mr Choe told a media conference yesterday to mark Frasers’ 10th anniversary, as well as to share its expansion plans.

 

In Singapore, where Frasers already operates two high-end serviced residences, it is planning a third property, but details will be released later, he said.

 

He added that Frasers has seen a robust 26 per cent rise in average room rates to about $400 per night for certain units in Singapore.

 

Farther afield, Frasers is also planning to plant its brand in places such as Edinburgh, Bahrain and Perth.

 

Noting that ‘growth in Asia and Europe (for extended-stay accommodation) is just starting to take off’, Mr Choe said Frasers expects to expand its portfolio to 8,478 units by 2010.

 

It will focus on China, India and Vietnam, which have strong long-term growth momentum.

 

Frasers is targeting new property launches in cities where demand for serviced apartments has been driven up by expatriates working for multinational companies that set up shop in these countries.

 

In China, where Frasers already has 12 properties in key cities such as Beijing and Shanghai under its brand, the company is looking to grow in other cities such as Chengdu, Nanjing and Tianjin.

 

As for Vietnam, while skyrocketing inflation poses challenges for the hospitality industry, land prices are now becoming ‘more reasonable’ as land owners are more realistic in pricing. This offers opportunities for Frasers to expand there, Mr Choe added.

 

India is another key growth market for Frasers, which has seven properties scheduled to be launched there over the next three years.

 

Frasers is also in talks to set up private equity funds to invest in China, India and South-east Asia.

 

Mr Choe added that plans to inject some of Frasers’ properties into a real estate investment trust are still in the pipeline, but it depends on the ‘right timing’.

GROWING THE BUSINESS

 

Frasers Hospitality chief executive Choe Peng Sum says the company expects to expand its portfolio to 8,478 units by 2010. Besides China, India and Vietnam, it is also planning to plant its brand in places such as Edinburgh, Bahrain and Perth.

 

REIT PLANS

 

Mr Choe says plans to inject some of Frasers’ properties into a real estate investment trust are still in the pipeline, but it depends on the ‘right timing’.

 

Source: Straits Times

GUOCOLEISURE CHAIRMAN BUYS MORE SHARES

GUOCOLEISURE CHAIRMAN BUYS MORE SHARES

 

THE appetite of insiders for GuocoLeisure shares is growing even as bearish market conditions deter other investors.

 

Executive chairman Quek Leng Chan snapped up another 170,000 shares in the firm at 78 cents apiece on Wednesday, according to a company statement yesterday.

 

This is on top of the numerous purchases the Malaysian tycoon has made since April, at prices ranging from 75 to 82 cents.

 

In all, the deals have lifted Mr Quek’s GuocoLeisure stake from 59.04 per cent to 61.39 per cent.

 

Apart from GuocoLeisure, Mr Quek has also been raising his stakes in GuocoLand.

 

He has snapped up 1.8 million shares at between $2.197 and $2.202 apiece over the past two weeks, according to website ShareInvestor.

 

Dealers feel his purchases might simply mean share prices of both firms have fallen to attractive levels.

 

The stocks of GuocoLeisure, which owns hotels and resorts, have fallen by more than half since hitting a high of $1.67 last July, just before the sub-prime mortgage crisis flared.

 

The counter ended 2.5 cents down at 75.5 cents yesterday, with 399,000 shares traded.

 

GuocoLand, a property developer with projects in Singapore, Malaysia and China, has fared even worse.

 

The stock has lost more than two-thirds of its value, after hitting a 15-year high of $5.85 last October.

 

Yesterday, it closed unchanged at $2.20 with 235,000 shares traded.

 

Source: Straits Times