Property market company and economic news update

The Peak Shoppes

Singapore’s 3Q18 GDP grew at a slower 2.2% pace, below economists’ expectations of 2.4%, as the manufacturing and services sectors disappointed. The growth figure was also revised downwards from advance estimates of 2.6% and was lower than the 4.1% growth in 2Q18.

Manufacturing grew 3.5% in 3Q18, moderating from 10.7% in 2Q18, while services expanded by 2.4% (2Q18: 2.8%). Construction continued its contraction, falling by 2.3% (2Q18:-4.2%).

The Ministry of Trade and Industry (MTI) is projecting that the economy will grow by 1.5 – 3.5% in 2019 (2018: 3.0 – 3.5%), with the main growth driver to shift from manufacturing to services post the peak of the electronics cycle after two years of growth.

The greatest risk would be a loss of global business and consumer confidence if the trade war between China and the US intensifies. (The Business Times)

Oxley Holdings (OHL) Deputy CEO Eric Low has bought 200,000 shares for S$0.30/sh , bringing his stake in OHL to 1.122b (27.79%) shares. (Oxley Holdings)

The Standard Hotels and Residences, a boutique hotel brand that was founded in West Hollywood could expand into Singapore as early as 2019.

The Standard is targeting to add 15 new hotels over the next 4 years, with Singapore identified as one of the key global locations in its expansion plans. (Commercialguru )

CapitaLand (CAPL) is liquidating its dormant subsidiary, CapitaLand China Development Fund II (CCDF II) . (CapitaLand)

Singha Estate allocates B85bn 5-year budget. SET-listed Singha Estate Plc will spend 85b baht in 2019-23 to develop residential and commercial projects, acquire hotels and offices, and invest in new businesses.

CEO Naris Cheyklin said about 20b baht will be spent next year, comprising 5b baht in new land purchases for development of residential projects in the luxury segment.

The rest will be for acquisition of office towers and hotels in Thailand and overseas, with a target yield of at least 8% and a minimum internal rate of return of 14%.

Mapletree Investments buys India IT Park SP Infocity in Chennai for INR 25b (S$486m) for the 2.7m sqf (S$180 psf) development. The sellers were a JV between Canada Pension Plan Investment Board (CPPIB) and Shapoorji Pallonji. Key tenants include Ford, Amazon, HSBC and BNP Paribas.

SilkRoad property partners has reached the first close of its second pan-Asia value-add fund at S$377m.

In Jun-16, the firm had achieved the final close of its oversubscribed first real estate fund, Silk Road Asia Value Partners, at S$445.5m, exceeding the target of S$350m. (Mingtiandi )

F&B group No Signboard (NSB) has warned of potential losses in 4QFY18 and full-year FY18 due to an impairment charge on its beer business. (The Business Times)

Roxy Pacific (ROXY) is incorporating a wholly-owned subsidiary in New Zealand , Roxy NZ – 280Q, for property investment purposes. (Roxy Pacific)

UOL Group (UOL) has increased the maximum aggregate amount issuable under its Multicurrency Medium Term Note (MTN) programme from S$1bn to S$2b . (UOL Group)

Indonesia plans to cut taxes on luxury properties to support the real estate industry and attract investments. The threshold for a 20% luxury tax on houses and apartments would be raised to IDR 30b (S$2.8m) from IDR 20b, while sales of luxury property will be subject to a lower 1% tax of the selling price, down from 5% now. (The Business Times)

ANZ doubles down on housing downturn: prices to fall 20pc. Housing prices could fall as much as 20% across Sydney and Melbourne before the downturn is over, according to a revised forecast from ANZ.

ANZ’s economists are the latest to downgrade their predictions amid worsening signals from the housing market and the chilling effect of credit tightening.

As recently as Sep, ANZ was tipping a 10% fall peak to trough in Sydney and Melbourne, while warning the current weakness in house prices would extend into 2020.

Bank economists Daniel Gradwell and Jo Masters, revised their peak to trough forecasts for Sydney and Melbourne to falls of between 15% to 20%.

Indoor activity playground SuperPark Singapore has opened at Suntec City Mall with 40,000 sqf of play areas such as a tube slide, indoor flying fox and a trampoline zone. (Timeout Singapore )

High-yield condos in Thong Lor. The condo market in the mid-Sukhumvit area (from Sukhumvit Soi 21 to Ekamai Road) has shown continuous growth, with a surge in selling prices per square metre over the past 5 years, according to Nexus Property Marketing.

Average selling prices in this popular residential area of Bangkok have risen by 8.2% per year on average.

One of the most attractive locations in the mid-Sukhumvit area is Thong Lor, known for an abundance of restaurants, stylish cafes and small community malls.

Local charm makes it a prime area for those who want to live in the city centre or seeking a good opportunity to invest in and rent condos to foreigners, especially Japanese.

CapitaLand’s earnings uptrend likely to remain intact throughout FY18: Phillip Following a change of analyst, Phillip Capital is maintaining CapitaLand at “accumulate” with a lower target price of S$4 compared to S$4.19 previously, translating to a FY18E P/NAV ratio of 0.72 times.

This comes after the real estate developer recently released its 3Q18 results where earnings rose 13.6% on-year to S$362.2m on lower costs and expenses, and in line with the research house’s forecasts.

The analyst continues to like CapitaLand for its healthy portfolio tenant sales growth, plans to bump up recurring income, and active capital redeployment.

The average price of resale/new luxury condos in Singapore reached a new record high of S$2,063/2,819 psf in 3Q18, according to a report from OrangeTee & Tie.

The most expensive luxury home sold during 3Q18 was a 438 sqm resale unit on the 17 th floor of the Urban Resort Condo, which was sold for S$13.9m or S$2,948 psf.

Transactions of non-landed homes costing at least S$3m remained robust at 187 units, surpassing the five-year average of 173 units from 3Q13 to 2Q18. OrangeTee said the steady demand for luxury homes above S$3m suggest that Singapore remains a top investment destination among high net-worth individuals and affluent foreigners. (Propertyguru)

Tong Eng Group and Roxy-Pacific Holdings have acquired the NSW Aboriginal Land Council’s building in Parramatta, Australia, for A$40.8m on a 5.3% yield. The 9-level Grade-B office building sits of a site of 2,046 sqm and comprises NLA of 5,247sqm.

Parramatta’s office market has continued to see strong demand for quality office space amid low vacancy.

Knight Frank said the purchaser was attracted to the near term rental uplift prospects from refurbishment, as well as the future redevelopment potential from proposed changes which could rezone the site as B3 commercial core and increase the FSR to 10. (The Urban Developer)

The private residential sector remained resilient in 3Q18, according to OrangeTee & Tie. A few new projects launches continued to see healthy interest during the quarter, after the property cooling measures were imposed on July 6.

According to URA data, overall new home sales increased 27% qoq to 3,012, which could be attributed to 1) many projects being launched in Rest of Central Region (RCR) and 2) more than 1,000 units sold on the eve of the implantation of the cooling measures.

The number of new home sales in RCR increased 91% QoQ and 106% YoY to 1,765 units, while 2,338 new units were launched in 3Q18, up 187% from 2Q18.

The resale market suffered the greatest impact from the cooling measures as overall transactions fell 43% QoQ to 2,672 units.

OrangeTee attributes the decline in resales to reduced demand from HDB upgraders as their affordability is limited by the 5% cut in Loan-To –Value ratio. A relatively weaker HDB resale market is also affecting seller’s proceeds. (EdgeProp)

Housing downturn will hurt mall landlords Scentre, Vicinity, GPT. The ongoing residential downturn will hit retail sales growth, creating a “meaningful” downside risk for major mall landlords, including Scentre, Vicinity and GPT, according to Citi.

With prices falling faster than expected HSBC this week revised its outlook with a fresh forecast that housing prices in Sydney and Melbourne could fall between 12% and 16% from peak to trough.

The immediate impact of slower retail sales growth on earnings growth for shopping centres owners is limited because lease deals are typically locked in over longer terms with fixed rent increases.

However, over the longer term, flagging sales will start to hurt the landlords.