Complete Property Market Updates of Singapore

February 28, 2008

Aussie property still looking up?

Filed under: Australia,Developer News,Financing,Singapore Economy,USA,World Property — Propertymarketupdates @ 3:16 pm

THE US sub-prime mortgage problem may have put a dampener on property stocks worldwide, including Singapore. But there appears to be at least one bright spot on the planet, if ANZ Bank is to be believed.

Said the bank in a recent report on its outlook for the Australian property market: ‘Property returns have accelerated, underpinned by buoyant economic growth and tightening market fundamentals. Despite a meltdown in US sub-prime mortgages and a crisis in global credit markets, the economic outlook remains supportive.’

While it warns that rising interest rates and a ‘marked jump in risk aversion’ have raised the risks facing the property sector, it still thinks that by 2010 there will be a serious housing shortage.

‘A dramatic tightening of the housing market will force already soaring house prices and rents sharply higher. By 2010, we project a record housing shortage of nearly 200,000 homes which risks becoming an intractable imbalance as renters and first-home buyers become collateral damage in the Reserve Bank’s ongoing war on inflation,’ it said.

It also noted that in risk-adjusted terms, residential property has delivered ‘vastly superior’ returns in comparison to all other broad asset classes.

These will be sweet words to Singapore-linked Australian developers like AV Jennings, which is 42 per cent owned by SC Global, and Australand Property Group, the Australian property arm of local property giant CapitaLand. Others who will be heartened by such talk include smaller players like shipping tycoon CK Ow’s Stamford Land and Chua Thian Poh’s Ho Bee Investments, which is now trying to make inroads Down Under.

The ANZ report also pointed out that total returns over the year to last September were 20 per cent in offices, 15.5 per cent in retail, 13 per cent in industrial and 14.3 per cent in residential property.

‘Yields have continued to firm and tightening availability is forcing both rents and capital values higher. Solid investment returns have underpinned a rebound in construction activity which has jumped to record levels, bolstered by a remarkable 24 per cent increase in engineering construction, a 7.8 per cent lift in non-residential building and a surprise 4.8 per cent rise in residential activity,’ said its analyst Paul Braddick.

He thinks that the property sector will be underpinned by Australia’s buoyant economy, which in turn now depends more on Asia’s growth than America’s. ‘Asian growth has effectively decoupled from the US and the outlook for China in particular remains very strong,’ Mr Braddick says.

While some households are being adversely impacted by rising interest rates, Mr Braddick claims that rising debt servicing costs have been more than offset by solid income gains.

He said houses were no different from bananas in that when there is a shortage, prices are likely to rise. ‘However, unlike bananas, the necessary rebound in housing supply will be far more difficult to achieve and house prices are therefore unlikely to fall.’

According to ANZ, the tightness is being felt in all sectors of the property market and across the country.

Despite some recent developments, including a contract to build 600 homes in Auckland worth some NZ$300 million (S$337 million), AV Jennings shares have been near a 52-week low at around A$0.90 apiece. Australand’s shares have been thinly traded and languish at around A$2.30. Perhaps the ANZ report should bring some cheer to their shareholders.

Source : Business Times – 5 Feb 2008


November 30, 2007

Tap Singapore Reit market, Aussie investors urged

Filed under: Australia,REIT — Propertymarketupdates @ 9:10 pm

AUSTRALIAN fund managers have been encouraged to tap the opportunities in Singapore’s real estate investment trust (Reit) market.

A recent seminar at the Sydney Opera House highlighted to Australian investors the burgeoning Singapore Reit market and the opportunities available.

The seminar was co-hosted by Australian companies Freehills, nabCapital and Trust. These companies said they are leveraging on the strong working relationship between Australia and Singapore to help Australian fund managers understand the legal and regulatory requirements and to take advantage of the opportunities provided by the Reits market in the Republic.

Keynote speakers included Singapore High Commissioner to Australia Eddie Teo, Monetary Authority of Singapore financial markets strategy executive director Kola Luu and Singapore Exchange senior director Kevin Gin.

According to Trust, the Singapore Reit market has grown around 90 per cent per year since commencing in 2002.

‘While Australia has extensive expertise in this asset class, Australian fund managers are few on the ground in Singapore.

‘As a result of this seminar, I am aware of approximately 20 companies looking to leverage their local strengths and expertise in the Australian listed property trust market to take advantage of the phenomenal growth and future potential in Singapore,’ said Trust’s executive general manager for institutional services Vicki Allen.

Source : Business Times – 27 Nov 2007

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