Dark skies ahead: Soros
Markets likely to fall more this year after brief rebound
Friday • April 4, 2008
— Bloomberg
NEW YORK — Billionaire George Soros (picture) has called the current financial crisis the worst since the Great Depression and said markets would fall more this year after a brief rebound.
"We had a good bottom," Mr Soros said in New York, referring to the rally in stocks and the US dollar after JPMorgan Chase agreed to buy Bear Stearns on March 17. "This will probably not prove to be the final bottom," he said, adding the rebound might last six weeks to three months as the US moves closer to a recession.
Last summer, worried about market disruptions that started with rising sub-prime mortgage defaults, Mr Soros, 77, returned to a more active role in managing the US$17 billion ($24 billion) Quantum Endowment Fund.
He also decided to write his 10th book, "The New Paradigm for Financial Markets" in which he explains the causes of the current meltdown, a crisis he says has been in the making since 1980.
Mr Soros has bet on declines in the US dollar, 10-year Treasuries and US and European stocks. He expected foreign currencies to rise, as well as Chinese and Indian equities.
The latter bet helped Quantum with returns of 32 per cent last year.
The euro has climbed 7.5 per cent against the US dollar this year and the Japanese yen has gained 9.1 per cent. These and other currencies may continue to strengthen, he said.
"There is an increasing unwillingness to hold dollars, though there's a lack of suitable alternatives," he said.
Federal Reserve officials dropped their benchmark interest rate 2 percentage points this year to 2.25 per cent, and Mr Soros doesn't see that they can lower the rate much further, given the weak dollar.
"We are close to the limit," he said.
Credit default swaps may be the next crisis area because the market is unregulated, and it's impossible to know whether counterparties can meet their obligations in the event of a bond default.
The market has a notional value of about US$45 trillion, or about half the total wealth of US households.
Mr Soros recommends the creation of an exchange with a sound capital structure and strict margin requirements, where current and future contracts could be traded.
He believes the cause of the current troubles dates back to 1980. It was during this time that borrowing ballooned and regulation of banks and financial markets became less stringent.
The leaders then, Mr Soros said, believed that markets are self-correcting — if prices get out of control, they will eventually revert to historical norms. But this attitude created the current housing bubble, which in turn led to the seizing up of credit markets, Mr Soros said.
To avoid a super-bubble in the future, Mr Soros said banks must control their own borrowing. They must also curtail lending to clients, such as hedge funds, by demanding greater collateral and margin requirements on loans.
Copyright MediaCorp Press Ltd. All rights reserved.
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Friday, April 4, 2008
HDB, private apartment rentals set to rise
HDB, private apartment rentals set to rise
By Wong Siew Ying, Channel NewsAsia | Posted: 03 April 2008 0050 hrs
SINGAPORE : Rentals for HDB and mass market private apartments are set to rise in the coming years, with more foreign workers heading for Singapore.
Property agents expect rents to climb by about 10 percent this year. They say HDB flat-owners could gain from the spike in demand.
Singapore's two integrated resorts will be ready in the next two years. Besides attracting more tourists, they are also expected to draw thousands of foreign workers to the city state.
Resorts World at Sentosa says it will be hiring 10,000 people directly. And 40 percent of these jobs will go to foreigners, in view of the manpower crunch in Singapore.
Property agents say some of the foreign workers, especially higher-ranking staff, will have the means to purchase private residential properties.
But they expect the bulk of the workers to tap into the rental market for their housing needs. And this will push prices up in the short-term as supply plays catch up.
On average, monthly rentals for private apartments range between S$2,500 and S$3,500. This may be too much for some workers.
Mohamed Ismail, CEO of PropNex, said: "The public housing becomes next best alternative where today people are still able to rent at S$1,500 to S$2,000. I expect this trend to continue, as far as estates that will have a greater demand ... such as those in Telok Blangah, Bukit Merah, Bishan, Toa Payoh - anything that is not too far away from town or to the integrated resorts - will definitely have greater take-up rates."
Industry players say private residential properties currently enjoy a rental yield of some 5 percent, while that of HDB flats is between 8 and 10 percent - among the highest ever in Singapore for public housing.
All in, agents expects rentals to climb by some 10 percent in the next two years. - CNA/de
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By Wong Siew Ying, Channel NewsAsia | Posted: 03 April 2008 0050 hrs
SINGAPORE : Rentals for HDB and mass market private apartments are set to rise in the coming years, with more foreign workers heading for Singapore.
Property agents expect rents to climb by about 10 percent this year. They say HDB flat-owners could gain from the spike in demand.
Singapore's two integrated resorts will be ready in the next two years. Besides attracting more tourists, they are also expected to draw thousands of foreign workers to the city state.
Resorts World at Sentosa says it will be hiring 10,000 people directly. And 40 percent of these jobs will go to foreigners, in view of the manpower crunch in Singapore.
Property agents say some of the foreign workers, especially higher-ranking staff, will have the means to purchase private residential properties.
But they expect the bulk of the workers to tap into the rental market for their housing needs. And this will push prices up in the short-term as supply plays catch up.
On average, monthly rentals for private apartments range between S$2,500 and S$3,500. This may be too much for some workers.
Mohamed Ismail, CEO of PropNex, said: "The public housing becomes next best alternative where today people are still able to rent at S$1,500 to S$2,000. I expect this trend to continue, as far as estates that will have a greater demand ... such as those in Telok Blangah, Bukit Merah, Bishan, Toa Payoh - anything that is not too far away from town or to the integrated resorts - will definitely have greater take-up rates."
Industry players say private residential properties currently enjoy a rental yield of some 5 percent, while that of HDB flats is between 8 and 10 percent - among the highest ever in Singapore for public housing.
All in, agents expects rentals to climb by some 10 percent in the next two years. - CNA/de
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Futura minority owners withdraw appeal against en bloc sale
Futura minority owners withdraw appeal against en bloc sale
By Woon Siew Leng, 938LIVE | Posted: 03 April 2008 1747 hrs
SINGAPORE: Minority owners of the Futura condominium on Leonie Hill Road have withdrawn their appeal against the en bloc sale of the property.
The reasons for the decision have not been disclosed.
Futura was sold to City Developments' subsidiary City Sunshine in October 2006 for S$287 million. This means each unit owner will get between S$3.7 million and S$9.4 million.
However, some minority owners complained that the deal was not done in good faith, with no land survey done.
They also contended that a meeting of owners was not called before the price was accepted.
Now that the appeal has been withdrawn, the sale must be completed within a month. - 938LIVE/ac
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By Woon Siew Leng, 938LIVE | Posted: 03 April 2008 1747 hrs
SINGAPORE: Minority owners of the Futura condominium on Leonie Hill Road have withdrawn their appeal against the en bloc sale of the property.
The reasons for the decision have not been disclosed.
Futura was sold to City Developments' subsidiary City Sunshine in October 2006 for S$287 million. This means each unit owner will get between S$3.7 million and S$9.4 million.
However, some minority owners complained that the deal was not done in good faith, with no land survey done.
They also contended that a meeting of owners was not called before the price was accepted.
Now that the appeal has been withdrawn, the sale must be completed within a month. - 938LIVE/ac
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Thursday, April 3, 2008
Capitol Theatre slated for redevelopment
April 3, 2008
Capitol Theatre slated for redevelopment
URA plans makeover for theatre and adjoining Capitol Building and Stamford House
By Hong Xinyi
CAPITOL Theatre, the 79-year-old building which screened its last movie in 1998, will be redeveloped along with its adjoining buildings - Stamford House, Capitol Building and Capitol Centre - next year.
Close to 90 per cent of tenants will be moving out by May next year. 'We will inform the tenants of the need to move and work with them once the timing and details for the development of the site are finalised,' said a spokesman for the Singapore Land Authority (SLA), which oversees the current tenants of these buildings.
The buildings will be tendered out as a single integrated site, encompassing an area of about 1.45ha, an Urban Redevelopment Authority (URA) spokesman told The Straits Times.
The timing and details of the tender are being studied but heritage buffs need not fear that a piece of Singapore history will be erased from the landscape.
Three of these buildings have been gazetted for conservation, which means, among other things, that their facades must be maintained.
Stamford House, built in 1904, is the oldest of the three buildings. Capitol Theatre was built in 1929, and Capitol Building, previously known as Shaw Building, in 1933.
Asked why it was being redeveloped, the URA spokesman said that the area, between Hill Street and North Bridge Road along Stamford Road, has not 'fully maximised its development potential'.
The four buildings have a total of 250 tenants, including offices and retail outlets.
The area has also drawn a cluster of boutiques run by home-grown designers such as Ms Celia Loe and Ms Baylene Li in recent years.
Most are loath to move from their spacious premises set in a piquant environment, especially given the relatively low rents set by the SLA.
Fashion designer Kevin Seah, 33, whose eponymous boutique has been in Stamford House for the past year, said: 'It's my dream place for a boutique since I decided to become a fashion designer at age 15. I love the classic architecture.'
He is paying about $5 per sq ft for his store now, and expects to pay up to 10 times more if he relocates to a mall.
Another boutique owner, Mr Nicholas Wong, 35, said the area attracts a good mix of locals and tourists, who are drawn by the cluster of local labels.
'I think shopping here is quite a different experience from going to a typical mall. I hope Singapore's shopping scene won't be just all malls.'
Property analysts reckon that the bigger developers would be keen to bid for the site. Likely bid prices are difficult to gauge as this would depend on the duration of the lease and conditions of development imposed by the authorities.
Mr Nicholas Mak, director of research and consultancy at Knight Frank, liked the idea of having one developer to give the area a special feel, 'instead of many different entities doing a more rojak kind of development with no coherent theme'.
'But it also means that the whole development will either succeed or fail together. It's putting all your eggs into one basket.'
But it may well be easier for a single developer to make the long-vacant Capitol Theatre a lively place again, he added.
Once owned by a Persian family and later Shaw Cinema, it was acquired by the URA in 1987. In 2000, the Singapore Tourism Board took over the building to explore alternative uses for it, but plans to turn it into a home for an arts group did not bear fruit.
'Capitol Theatre wasn't built as a cineplex, so it may need surrounding restaurants and retail outlets to draw crowds and generate revenue,' said Mr Mak.
Singapore Real Estate and Property updates
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EastLiving - Singapore Property and Real Estate DB
Capitol Theatre slated for redevelopment
URA plans makeover for theatre and adjoining Capitol Building and Stamford House
By Hong Xinyi
CAPITOL Theatre, the 79-year-old building which screened its last movie in 1998, will be redeveloped along with its adjoining buildings - Stamford House, Capitol Building and Capitol Centre - next year.
Close to 90 per cent of tenants will be moving out by May next year. 'We will inform the tenants of the need to move and work with them once the timing and details for the development of the site are finalised,' said a spokesman for the Singapore Land Authority (SLA), which oversees the current tenants of these buildings.
The buildings will be tendered out as a single integrated site, encompassing an area of about 1.45ha, an Urban Redevelopment Authority (URA) spokesman told The Straits Times.
The timing and details of the tender are being studied but heritage buffs need not fear that a piece of Singapore history will be erased from the landscape.
Three of these buildings have been gazetted for conservation, which means, among other things, that their facades must be maintained.
Stamford House, built in 1904, is the oldest of the three buildings. Capitol Theatre was built in 1929, and Capitol Building, previously known as Shaw Building, in 1933.
Asked why it was being redeveloped, the URA spokesman said that the area, between Hill Street and North Bridge Road along Stamford Road, has not 'fully maximised its development potential'.
The four buildings have a total of 250 tenants, including offices and retail outlets.
The area has also drawn a cluster of boutiques run by home-grown designers such as Ms Celia Loe and Ms Baylene Li in recent years.
Most are loath to move from their spacious premises set in a piquant environment, especially given the relatively low rents set by the SLA.
Fashion designer Kevin Seah, 33, whose eponymous boutique has been in Stamford House for the past year, said: 'It's my dream place for a boutique since I decided to become a fashion designer at age 15. I love the classic architecture.'
He is paying about $5 per sq ft for his store now, and expects to pay up to 10 times more if he relocates to a mall.
Another boutique owner, Mr Nicholas Wong, 35, said the area attracts a good mix of locals and tourists, who are drawn by the cluster of local labels.
'I think shopping here is quite a different experience from going to a typical mall. I hope Singapore's shopping scene won't be just all malls.'
Property analysts reckon that the bigger developers would be keen to bid for the site. Likely bid prices are difficult to gauge as this would depend on the duration of the lease and conditions of development imposed by the authorities.
Mr Nicholas Mak, director of research and consultancy at Knight Frank, liked the idea of having one developer to give the area a special feel, 'instead of many different entities doing a more rojak kind of development with no coherent theme'.
'But it also means that the whole development will either succeed or fail together. It's putting all your eggs into one basket.'
But it may well be easier for a single developer to make the long-vacant Capitol Theatre a lively place again, he added.
Once owned by a Persian family and later Shaw Cinema, it was acquired by the URA in 1987. In 2000, the Singapore Tourism Board took over the building to explore alternative uses for it, but plans to turn it into a home for an arts group did not bear fruit.
'Capitol Theatre wasn't built as a cineplex, so it may need surrounding restaurants and retail outlets to draw crowds and generate revenue,' said Mr Mak.
Singapore Real Estate and Property updates
EastLiving.com.sg
Contact
Stuart Chng: (65) 9691 9907
stuart.chng@eastliving.com.sg
EastLiving - Singapore Property and Real Estate DB
Key trends in China property sector
Business Times - 03 Apr 2008
Key trends in China property sector
Despite slower economic growth and uncertainty over Beijing's austerity measures, China's residential, retail and office markets still offer attractive investments, says KENNY HO
THIS is the year of the Beijing Olympics and all eyes will be on China as it celebrates its arrival as a major global power.
Politically, this is the first full year of President Hu Jintao's second five-year term. Having consolidated his power following the 17th Party Congress, Mr Hu will likely push forward with reforms over the next five years as he builds his political legacy. And with the US economy moving closer to a recession, we expect China to enlarge its prominence as a growth engine for the world economy.
This article provides an overview of the key trends affecting residential, retail and office property markets across China and our advice to the individual and institutional property investors.
Office supply and demand
By mid-2008, the completion of the Shanghai World Financial Centre, one of the world's tallest buildings, will mark the official beginning of the second office supply boom in Shanghai (the first one was from 1996 to 2001). In fact, all across China, we are in or will soon be entering a five-year supply cycle. Cities across China are trying to copy the Pudong model in creating new central business districts (CBD), though we are alarmed to see various Tier III cities, such as Yantai, trying to promote themselves as international financial centres.
The obvious question is: 'Will there be enough demand?' Our answer is yes and no.
Yes, there will be demand, but it will not be enough to fill all of the new space. In the medium term, office demand should continue on an upward trend in major Tier II commercial hubs as companies eagerly try to tap into China's growing domestic market. But while cities such as Shanghai will be able to absorb most of the 800,000 square metres of new supply this year, we expect office supply in most Tier II cities to outpace demand over the next 12 months, and in some cases by a wide margin.
The good news for investors is that good quality buildings will still achieve a significant rental premium over the market average while attracting the most prestigious tenants.
Therefore, as an office property investor, it is crucial that a) the quality of your building can withstand a rapidly evolving market, and b) you have a solid grasp of the competition in your particular market segment.
Hot retail locations
As revealed in our recently published 2007 Retailer Sentiment Survey Asia, retailers will continue to expand their China presence in 2008, and are optimistic on both revenue and profit margins.
Nevertheless, it is important to keep in mind that while the retail scene in Tier I cities such as Shanghai and Beijing is rapidly diversifying and maturing, most Tier II and III markets remain much less sophisticated.
The reality of these markets is that the majority of consumers in China still prefer to save a significant portion of their income and spend it on necessities, child education and quality of life items such as homes and cars.
When Chinese consumers do spend on luxury items, their choices are often guided by their need for identity, social status and bragging rights. It is no wonder that well-established brands such as Louis Vuitton and Gucci are hugely popular in Tier II markets while lesser known brands trail them by a wide margin.
We expect retailers to invest heavily in marketing their brands to the Chinese consumers. This means that highly visible retail space in prime locations will continue to be the hottest commodity, whether in Beijing, Chongqing or Foshan.
Outside of the best locations, mall owners must work hard to attract and maintain a winning roster of retail tenants, and by doing so create an irreplaceable retail destination for shoppers.
Affordable housing
Over the last few months, we have often been asked: 'Will further policy tightening lead to a major correction in residential prices?'
In short, the answer is no. Contrary to popular belief, the government's policy goal is not to lower prices in the existing market. Instead, it is working hard to ensure the future availability of affordable housing in three ways:
Increase effective land supply, either by releasing new land plots or repossessing dormant land plots from the hands of developers;
Lower land prices, by introducing more land supply and limiting the ability of developers to bring capital from offshore sources (such as foreign funds or the Hong Kong stock market) and use it to capitalise their onshore project companies.
Discourage investment demand in the residential market, by increasing the downpayment requirement (from 30 to 40 per cent) and raising the mortgage rate (from 6.6 to 8.6 per cent) for second-home buyers.
On the demand side, owner-occupier demand remains strong as the population's standard of living continues to improve. However, markets such as Shenzhen, where prices have been driven largely by speculative buyers from Hong Kong, are experiencing a slowdown, and in some cases, significant price drops.
It is best to confine purchases to areas where demand is visible and easily understandable - CBDs, traditional high-end residential clusters or areas near mass transit stations.
For residential investors, it is important to keep in mind that with current taxes and mortgage rates, your total transaction cost adds up to over 20 per cent of your purchase price. While we are comfortable with a steady 10 per cent annual growth in residential prices given that urban income rises at around the same rate, a 20 per cent transaction cost will eat up most of your profit if you hold the property for less than two years.
In conclusion, while we expect slower economic growth, a large amount of new office supply and continued uncertainty around government austerity measures in 2008, the long-term demand outlook remains positive for all three property sectors in China. For patient investors, 2008 may turn out to be a good year to look for bargains and to start building long-term positions in your China portfolio.
The writer is head of research - China, Jones Lang LaSalle
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
Singapore Real Estate and Property updates
EastLiving.com.sg
Contact
Stuart Chng: (65) 9691 9907
stuart.chng@eastliving.com.sg
EastLiving - Singapore Property and Real Estate DB
Key trends in China property sector
Despite slower economic growth and uncertainty over Beijing's austerity measures, China's residential, retail and office markets still offer attractive investments, says KENNY HO
THIS is the year of the Beijing Olympics and all eyes will be on China as it celebrates its arrival as a major global power.
Politically, this is the first full year of President Hu Jintao's second five-year term. Having consolidated his power following the 17th Party Congress, Mr Hu will likely push forward with reforms over the next five years as he builds his political legacy. And with the US economy moving closer to a recession, we expect China to enlarge its prominence as a growth engine for the world economy.
This article provides an overview of the key trends affecting residential, retail and office property markets across China and our advice to the individual and institutional property investors.
Office supply and demand
By mid-2008, the completion of the Shanghai World Financial Centre, one of the world's tallest buildings, will mark the official beginning of the second office supply boom in Shanghai (the first one was from 1996 to 2001). In fact, all across China, we are in or will soon be entering a five-year supply cycle. Cities across China are trying to copy the Pudong model in creating new central business districts (CBD), though we are alarmed to see various Tier III cities, such as Yantai, trying to promote themselves as international financial centres.
The obvious question is: 'Will there be enough demand?' Our answer is yes and no.
Yes, there will be demand, but it will not be enough to fill all of the new space. In the medium term, office demand should continue on an upward trend in major Tier II commercial hubs as companies eagerly try to tap into China's growing domestic market. But while cities such as Shanghai will be able to absorb most of the 800,000 square metres of new supply this year, we expect office supply in most Tier II cities to outpace demand over the next 12 months, and in some cases by a wide margin.
The good news for investors is that good quality buildings will still achieve a significant rental premium over the market average while attracting the most prestigious tenants.
Therefore, as an office property investor, it is crucial that a) the quality of your building can withstand a rapidly evolving market, and b) you have a solid grasp of the competition in your particular market segment.
Hot retail locations
As revealed in our recently published 2007 Retailer Sentiment Survey Asia, retailers will continue to expand their China presence in 2008, and are optimistic on both revenue and profit margins.
Nevertheless, it is important to keep in mind that while the retail scene in Tier I cities such as Shanghai and Beijing is rapidly diversifying and maturing, most Tier II and III markets remain much less sophisticated.
The reality of these markets is that the majority of consumers in China still prefer to save a significant portion of their income and spend it on necessities, child education and quality of life items such as homes and cars.
When Chinese consumers do spend on luxury items, their choices are often guided by their need for identity, social status and bragging rights. It is no wonder that well-established brands such as Louis Vuitton and Gucci are hugely popular in Tier II markets while lesser known brands trail them by a wide margin.
We expect retailers to invest heavily in marketing their brands to the Chinese consumers. This means that highly visible retail space in prime locations will continue to be the hottest commodity, whether in Beijing, Chongqing or Foshan.
Outside of the best locations, mall owners must work hard to attract and maintain a winning roster of retail tenants, and by doing so create an irreplaceable retail destination for shoppers.
Affordable housing
Over the last few months, we have often been asked: 'Will further policy tightening lead to a major correction in residential prices?'
In short, the answer is no. Contrary to popular belief, the government's policy goal is not to lower prices in the existing market. Instead, it is working hard to ensure the future availability of affordable housing in three ways:
Increase effective land supply, either by releasing new land plots or repossessing dormant land plots from the hands of developers;
Lower land prices, by introducing more land supply and limiting the ability of developers to bring capital from offshore sources (such as foreign funds or the Hong Kong stock market) and use it to capitalise their onshore project companies.
Discourage investment demand in the residential market, by increasing the downpayment requirement (from 30 to 40 per cent) and raising the mortgage rate (from 6.6 to 8.6 per cent) for second-home buyers.
On the demand side, owner-occupier demand remains strong as the population's standard of living continues to improve. However, markets such as Shenzhen, where prices have been driven largely by speculative buyers from Hong Kong, are experiencing a slowdown, and in some cases, significant price drops.
It is best to confine purchases to areas where demand is visible and easily understandable - CBDs, traditional high-end residential clusters or areas near mass transit stations.
For residential investors, it is important to keep in mind that with current taxes and mortgage rates, your total transaction cost adds up to over 20 per cent of your purchase price. While we are comfortable with a steady 10 per cent annual growth in residential prices given that urban income rises at around the same rate, a 20 per cent transaction cost will eat up most of your profit if you hold the property for less than two years.
In conclusion, while we expect slower economic growth, a large amount of new office supply and continued uncertainty around government austerity measures in 2008, the long-term demand outlook remains positive for all three property sectors in China. For patient investors, 2008 may turn out to be a good year to look for bargains and to start building long-term positions in your China portfolio.
The writer is head of research - China, Jones Lang LaSalle
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
Singapore Real Estate and Property updates
EastLiving.com.sg
Contact
Stuart Chng: (65) 9691 9907
stuart.chng@eastliving.com.sg
EastLiving - Singapore Property and Real Estate DB
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