Singapore achieved 3.5 per cent growth in the fourth quarter of 2009 – after negative growth in the first and second quarters, and 0.6 per cent growth in the third quarter.

But for the whole year, growth is still negative at minus 2.1 per cent.

The Trade and Industry Ministry had forecast GDP growth for 2009 at minus 2.5 per cent to minus 2.0 per cent.

Charting out the goals for 2010 in his New Year Message, Prime Minister Lee Hsien Loong said the country must shift gears to grow by a qualitative improvement. And that would involve transforming the economy, developing skills, and growing talent – both locally and from abroad.

Prime Minister Lee said it has been a volatile year for the Singapore economy.

In the first quarter of 2009, trade plunged by a third and GDP fell 10 per cent.

But the country responded vigorously by focusing on keeping people in jobs, and helping those who lost their jobs to find new ones.

Today, the situation is brighter. The economy is growing again, and has recovered much of the ground since the recession began in 2008.

Mr Lee said that while the government continues to track short-term economic trends closely, it must also secure Singapore’s long-term position.

For this, companies must add value – by doing things more efficiently, restructuring businesses as conditions change, and venturing into new, promising areas.

Workers must up-skill, re-skill and multi-skill.

And now that job prospects have improved, Mr Lee cautioned that workers must not think this was no longer urgent.

The Economic Strategies Committee, set up in the middle of 2009, is reviewing the longer term strategies for growth, and will propose policies to achieve the country’s full potential.

It will publish its main recommendations soon, which the government will respond to in the coming Budget.

Mr Lee said Singapore must grow the economy and sustain good jobs, so that all citizens can share in the benefits.

However, he cautioned that in terms of total GDP, the economy is likely to expand more slowly than before.

Singapore must make up for this by expanding its external wing and focusing on raising per capita income, through up-skilling and economic upgrading.

In that way, Singa­pore can continue to prosper and every Singa­porean can look forward to a better life.

So Mr Lee urged Singaporeans to give of their best, and stay united – for a brighter future in the post-crisis world.

Mr Lee added that as Singapore transforms its economy, it must also deal with new long-term issues, and one of them is climate change.

He said: “Our lifestyles must change, for example by driving less and relying more on public transport. Buildings must become more energy efficient, for example through improved insulation and more efficient air conditioning.

“Industries, especially those with energy-intensive operations, must find ways to produce more output with less energy. Over time, our economic structure must evolve to require less energy inputs.”

Mr Lee wishes all Singaporeans a Very Happy New Year.

Source: Channel News Asia, 31 Dec 2009

Singapore’s gross domestic product climbed by 3.5 per cent in the fourth quarter of 2009, but growth for the full year is still negative at minus 2.1 per cent.

In his New Year message, Singapore Prime Minister Lee Hsien Loong said that next year could see 3 to 5 per cent growth.

And observers believe this could result in a move away from manufacturing as the key driver of Singapore’s economy.

After a difficult start to 2009, Singapore’s economy has ended the year on a more cheerful note.

In his New Year message, Mr Lee said that the fourth quarter of 2009 saw GDP climb 3.5 per cent.

However, GDP growth for the full year still stands at minus 2.1 percent.

Current estimates put 2010’s GDP growth at between 3 and 5 per cent, and observers expect manufacturing to play an increasingly smaller role in the economy next year.

Alvin Liew, economist, Standard Chartered Bank, said: “If we look at current trends themselves, and what happens in developed economies in the West, this is clearly not a sustainable picture. To keep a manufacturing base that high… But at the same time, as we move towards a more developed stage in economic development, we are expecting services to play a bigger and bigger role as the economy develops.”

Financial services are among those expected to see the most growth next year, while tourism-linked industries are also likely to improve once Singapore’s two integrated resorts open.

But observers are waiting to see how the global economy unwinds current support packages as this could pose a risk to growth.

Selena Ling, head, Treasury Research & Strategy, OCBC Bank, said: “A lot of the private demand in key economies like the US, and certain parts of the eurozone, and in Japan in particular, it is really relying on government stimulus to keep consumption spending going.

“So once that tails off, you may also see final demand tailing also. That will have implications for manufacturing, especially exports for Asia, including Singapore.”

The private sector has welcomed the return the growth. But business leaders said companies would need to work hard to maintain that growth next year. That is because manpower issues could become a concern as the fast-growing services sector seeks to fill its ranks.

Source: Channel News Asia, 31 Dec 2009

The Housing and Development Board’s (HDB’s) latest Build-To-Order (BTO) exercise saw lukewarm demand for smaller units in non-central areas.

Housing analysts said this may be due to a shrinking target segment for smaller flats.

Singaporeans like to think big, especially when it comes to housing. But Singaporeans wanting a bigger house may not be the only reason for the low demand for smaller flats.

Applications for two-room units were only 44 per cent filled in Bukit Panjang and 63 per cent filled in Sembawang, while demand for three-room units was only one to two times the number of flats offered.

This contrasted sharply with four-room flats, which were six to seven times over-subscribed.

Analysts said the smaller flats sold through BTO exercises target a select group – low-income families. But this segment is facing the squeeze, with supply appearing to outstrip demand.

Nicholas Mak, lecturer, Real Estate, Ngee Ann Polytechnic said: “One possible reason could be the low-income ceiling that is imposed by HDB, which is only about S$2,000 for a two-room flat.

“Over time, Singaporeans’ income level has actually risen. So I think it is time that HDB might have to review this income ceiling level.”

Smaller flats are priced lower for greater affordability, with two-room units in Bukit Panjang and Sembawang selling below S$100,000.

But low-income families hit by the economic downturn may still be unable or reluctant to commit to a property.

Chris Koh, director, Dennis Wee Group said: “Because of the economic situation, many people started to become a bit more conservative and reserve, and possibly not everyone had the confidence that the market has completely turned to go in and buy a property.

“So for the low-income group, I will admit the timing could not have been right for them.”

Mr Koh added HDB may have overestimated the demand for smaller flats, and suggested that fewer of such units be built.

HDB said since it resumed the building of two-room flats in 2006, 76 per cent have been taken up.

Mr Koh said: “To be fair, there will always be a small group of low-income families who require small flats. What I propose is that we don’t build that many small flats. We cater to the group that needs small flats and not build that many.”

3,700 smaller flats were offered this year, compared to 1,164 in 2008.

HDB said that although the demand for two-room flats may be lower initially at launch, take-up rates improve when the flats are nearer completion.

For instance, when Punggol Vista was first launched in August 2007, the take-up rate was 20 per cent for two-room flats. As the project neared completion, the take-up rate improved to 95 per cent.

HDB is monitoring the situation and will adjust the supply to meet the needs of Singaporeans.

Source: Channel News Asia, 31 Dec 2009

There is much to attract shoppers to Orchard Road this year-end shopping season. With three new malls open this year in the prime shopping district, retailers have pulled out all the stops to attract customers.

And while the new malls enjoy the novelty factor, the more established ones appear to be holding their own.

For instance, Palais Renaissance said it saw an initial drop in traffic of between 10 per cent and 20 per cent, after the new malls came up. However, it noted that shoppers are returning, thanks to its strong niche positioning.

Corinne Yap, deputy general manager, Leasing, City Developments (for Palais Renaissance) said: “Initially we had a fall in traffic, but we hear from the tenants that business is coming back because our customers are very different.

“They don’t really like shopping in a mass market situation. They like the hassle-free environment of a more quiet mall, more exclusive mall, which is more hassle free. You can get better level of services – more one to one.”

Going forward, Palais Renaissance is reducing its joint marketing activities with neighbouring malls. It is seeking to focus on its own promotions to target high-end customers.

The mall rewarded shoppers with vouchers and gifts to draw them in over Christmas. Over the next year, it plans to continue developing partnerships with credit cards, like the UOB Lady’s Card, and upmarket lifestyle magazines.

Meanwhile, other malls are targeting the families, especially the kids. Shopping centres like Centrepoint brought in popular children’s shows over the festive season.

Centrepoint is also enjoying a spillover effect from the two new malls across the road – 313@Somerset and Orchard Central. The mall believes it has a unique place along the prime shopping belt, which will help it attract new brands.

Wendy Low, general manager, Frasers Centrepoint Malls said: “Centrepoint has been around for the last 26 years and we are quite an icon.

“In terms of positioning, we have been attracting a lot of locals, especially those who grew up with us, as well as tourists. It is a must-visit destination for many tourists.”

With the new malls bringing new life into Orchard Road, industry watchers said the older malls can stay competitive by renovating to improve traffic flow, and to enhance the shopping experience for customers. And they can also capitalise on the familiarity they enjoy with shoppers.

Going into 2010, industry watchers said the competition will only get more intense, not just along Orchard Road. Shoppers will be spoilt for choice, with the new malls coming up at the integrated resorts.

Source: Channel News Asia, 31 Dec 2009

Biomedical slump expected to dampen growth in Q4

(SINGAPORE) Economists expect stronger year-on- year (yoy) growth for the final quarter of 2009, although a slump in biomedical output could trigger a quarterly contraction.

The government will announce the Q4 GDP advance estimate next Monday. But Prime Minister Lee Hsien Loong is expected to give an indication of Singapore’s 2009 economic performance and the outlook for 2010 in his annual New Year’s Eve address today.

The median forecast of private sector economists polled by Reuters is for a Q4 seasonally adjusted, annualised 0.8 per cent contraction compared with Q3. Compared with Q4 last year, the median forecast is for 4.7 per cent growth.

For the full year, the economists’ median forecast is a 2 per cent GDP contraction – the first since 2001. But this is at the upper end of the official government forecast, revised several times to the current 2-2.5 per cent contraction.

In Q3, GDP grew 14.2 per cent quarter-on-quarter (qoq) and 0.6 per cent yoy. ‘After two surging quarters, the sequential pace of GDP expansion is unlikely to be sustained in Q4,’ said Standard Chartered economist Alvin Liew. His estimate of a 15.1 per cent qoq contraction in Q4 GDP is the most bearish among those surveyed.

A key dampener is the blow biomedical output dealt to industrial production in October and November. Q4 forecasts from those polled range widely from minus 15.1 per cent to positive 2 per cent qoq, and 1.2 to 5.2 per cent yoy, possibly because some revised their numbers after news of the fall in November’s factory output, while others had not.

But a recovery in manufacturing activity is still under way. Excluding biomedical output, manufacturing in October and November grew 5.7 per cent yoy, led by double-digit growth in electronics output.

‘This reverses the pattern from previous quarters, where outsize jumps in biomedicals exaggerated the extent of the manufacturing or GDP jump,’ said Citi economist Kit Wei Zheng. He expects Q4 GDP to contract 11.5 per cent qoq and grow 2.4 per cent yoy.

Other sectors of the economy are also expected to cushion Q4′s decline in manufacturing.

Mr Kit expects ‘decent though more modest construction growth’ in Q4, supported by infrastructure projects like the Marina Coastal Expressway and the Circle Line. ‘Final- stage construction of the two IRs (integrated resorts) also likely helped to sustain construction activity, alongside activity in the private residential market.’

David Cohen, director of Action Economics, reckons growth in services will balance out a fall in manufacturing. He expects Q4 GDP to remain unchanged from that in Q3, after seasonal adjustments.

Indicators of growth in the services sector include an 8.4 per cent spike in visitor arrivals in November and rising hotel occupancy rates. Trade-related services are also gaining momentum, going by the increased number of flights through Changi Airport, the volume of sea cargo handled and container throughput, Mr Kit noted.

Source: Business Times, 31 Dec 2009

Spanish house prices fell 7 per cent in the third quarter compared to a year earlier after a record drop of 7.7 per cent in the April to June period, National Statistics Institute data showed yesterday.

Third quarter house prices fell 0.9 per cent on a quarter-on-quarter basis compared with a 0.4 per cent drop in the second quarter, official data showed. The price of new homes fell 5.6 per cent year-on-year, while existing house prices fell 8.3 per cent, the INE reported.

Real estate values have been hit by sliding mortgage lending and house sales and prices are expected to have fallen by close to double digits in 2009, according to a poll conducted by Reuters in October.

Source: Business Times, 31 Dec 2009

Midtown Manhattan office rents fell 33 per cent in 2009 as New York’s financial industry cut staff and relinquished space, commercial property broker FirstService Williams said in a report.

Rents in the nation’s most expensive office district dropped to US$59.31 a square foot in the fourth quarter and are down almost 50 per cent when concessions including temporary free rent are included, the New York-based broker said on Tuesday. Financial companies occupy more New York office space than any other non-governmental employer. They cut 25,200 local jobs in the 12 months through November, helping push the city’s unemployment rate to 10 per cent, according to the New York State Department of Labor.

‘Employment is not going to trend up with any alacrity,’ FirstService Williams executive chairman Robert Freedman said in an interview. ‘We’re going to see a very, very modest uptick in demand’ for offices. The percentage of available space in Midtown climbed to 14.9 per cent from 11.9 per cent a year ago, FirstService Williams said. The rate applies to office space between 34th Street and Central Park in Manhattan.

The decline in neighbourhood rents showed signs of levelling off as more than one million square feet along Park Avenue, Fifth Avenue and Avenue of the Americas were leased in the fourth quarter, FirstService said. Landlords stopped increasing incentives to lure tenants, the broker said.

Downtown rents declined 22 per cent in 2009 to US$38.60 a square foot and availability jumped to 13 per cent from 10.5 per cent at the end of 2008. Most of the available space downtown was added in the fourth quarter.

Between 8 per cent and 10 per cent of downtown leases signed in 2009 were for financial tenants, according to FirstService’s preliminary numbers. About 30 per cent of the New York City office market is already occupied by the industry.

‘With the financial sector still a major driving force in the downtown market, recovery in lower Manhattan may be slower than expected,’ Mr Freedman said.

In Manhattan’s Midtown South area, roughly located between 34th and Canal streets, office availability climb to 11.7 per cent from 8.5 per cent at the end of last year. Asking rents averaged US$39.73 a square foot, down 28 per cent from a year ago.

Source: Business Times, 31 Dec 2009

Malaysian property players seen to ride on the sector’s buoyant recovery

Property developers will continue to emerge as key winners in 2010, driven by rising demand and improving economic outlook, according to an analyst at MIDF Research.

Moving into 2010, players would continue to ride on the sector’s buoyant recovery based on the improving number of property sales coupled with declining number of overhang units since the first quarter of 2009, the analyst, who declined to be named, told Bernama recently.

For 2009, it was an unanticipated recovery story as the sector had outperformed expectations in becoming one of the leading segments in the stock market.

Share price of property companies, which is measured by the KL Property Index, in fact outpaced the benchmark FBM KLCI.

However, the analyst pegged a ‘neutral’ outlook for the property sector in 2010.

‘Despite encouraging sales demand and improving economic sentiment, the fear of demand sustainability, upon the withdrawal of cheap credit, absence of attractive promotions and favourable regulations, may take its toll on the property sector,’ he said.

However, the growth driver in 2010 will be, among others, the favourable regulations, continuous governmental support, a thriving property market taking its cue from an improved economy and the ability to attract foreign direct investment flow.

‘Sales demand for residential properties are expected to remain buoyant as investors continue to deem it as one of the more liquid hedging asset.

‘Speculators are also taking advantage of the current market sentiment to lock in on gains,’ he said.

A survey across key property players revealed that none was slowing down their pace of project development.

Many were, in fact, taking advantage of the current discounted valuations to replenish land banks and were not holding back new launches.

The analyst said that key players have signalled that take-up rates of residential properties have remained strong between 80 per cent and 90 per cent in the last quarter.

‘Hence, we are confident residential property sales will remain buoyant, at least within the first half of 2010. We are estimating at least 25,000 new units to be launched over the next quarter,’ he said.

On the retail/shopping complex and office front, he expected continued oversupply of units, notably in the Klang Valley, as many have been under construction over the past two to three years.

Many corporations and businesses are also holding back relocation plans until the financial crisis is over.

Meanwhile, issues that may dampen the sector’s recovery include the re-introduction of the Real Property Gains Tax (RPGT), possible pullback in sales demand due to withdrawal of cheap credit, unanticipated rise in raw material prices thus raising average selling prices and delaying launches and approvals.

‘We do not expect any immediate impact from the reintroduction of the RPGT, and it was mainly to control the secondary sales market. On the flip side, it may discourage foreign investments in commercial properties,’ he said.

He said that the tax was introduced too soon as the economy was still on the verge of recovery but understood the need for it to curb another asset bubble.

He did not expect real estate investment trusts (Reits) to be a star performer in 2010 but expected some interest in this segment.

He said that the average rental yield for offices and commercial properties was on a downtrend in 2009, with rental for offices falling 1.9 per cent, year-on-year, and 1.35 per cent, year-to-date, within the Klang Valley.

However, the recovery in the property market coupled with an exemption from RPGT and stamp duty will see rising interest in Reits which currently yield an average return of between 8 and 9 per cent in Malaysia.

On the status of Malaysia’s property market, the analyst said that he did not expect any property bubble in the immediate term.

‘Appreciation of property prices have been modest so far as demand recovered slowly as investors’ confidence returns,’ he added.

Prices of properties nationwide declined 9.8 per cent year-to-date, due to the economic crisis, but gained 1.40 per cent year-on-year, due to renewed interest emerging in the second quarter of 2009.

‘Nevertheless, assuming the presence of cheap financing, attractive promotions and favourable regulations continue into 2010, coupled with new launches and delivery in 2010, property prices may face an upsurge,’ he said.

And, despite the Dubai’s debt crisis, he said that Malaysia would still be able to attract Middle Eastern investors who still reaped positive yields from investing in the country’s property market.

The main challenges in the property market will be demand fundamentals, whether it can be sustained, and from another point of view, what else can be offered by both property players and financial institutions to support the growing demand.

‘One would be cheap cost of fund (credit). Assuming overnight policy rates are raised back to pre-2006 days of 3.50 per cent, can demand be sustained? Secondly, assuming a second dip does occur, can the property segment take it in its stride?’ he said.

The analyst said that residential properties will continue to be favourites among investors who still demanded mid-to-high-end properties.

‘We noted in the second quarter that properties priced between RM250,000 (S$102,450) and RM500,000, and between RM500,000 and RM1 million were favourites and registered sustained growth,’ he said.

Residential properties have historically proven to be good hedge instruments with attractive capital appreciation, while commercial and office properties may see a dip in demand, against a backdrop of new launches, except for those Grade A offices located in suburban areas.

Demand for properties around Kuala Lumpur City Centre is recovering as prices within the vicinity improved in the third quarter with stable rental yields.

As for industrial properties, he said that the segment would move in line with the nation’s economy.

The analyst was also of the opinion that the property market needed a boost in the form of incentives, that included tax reduction for suburban developments, cheap credit, continuous efforts to draw foreign direct investments and for local small players to have joint-venture opportunities with state governments.

Source: Business Times, 31 Dec 2009

PROPERTY group CapitaLand has come up with a unique way to spread the festive cheer: it is donating $2 to a children’s charity in Singapore for every electronic greeting card (e- card) sent from its website.

The ‘SEND For Hope’ campaign will benefit the Muhammadiyah Welfare Home.

‘In line with our efforts to be environment-friendly, CapitaLand has gone green this festive season with the use of electronic greeting cards specially designed by CapitaLand Hope Foundation (CHF),’ said Tan Bee Leng, GM of CapitaLand’s philanthropic arm CHF.

The e-card campaign has been an ‘overwhelming’ success so far, with about 19,000 cards sent by yesterday morning, raising some $38,000 for the charity.

The campaign reflects CHF’s focus on supporting the shelter, education and healthcare needs of underprivileged children in Singapore and overseas. ‘We hope the campaign will help raise awareness among the public about the need for the care and support of underprivileged children,’ said Ms Tan.

The Muhammadiyah Welfare Home is relocating to the former Min Xin Primary School in Bedok, as many of the facilities at its current premises are beyond repair. CHF’s donations will help cover costs of renovation, fixtures and fittings at the new place.

In view of the strong support and to encourage more donations, CapitaLand has decided to extend the e-card campaign over the weekend. The last day to send cards will be Monday, Jan 4. BT readers can send e-cards from www.capitaland.com/greetingcards

Source: Business Times, 31 Dec 2009

MANY Asian real estate companies expect to pay higher year-end bonuses and wage increases, according to a survey sponsored by the Asian Public Real Estate Association.

Thirty-four real estate companies and funds took part in the survey, which showed that the expected increase in base salary is 1.7 per cent on average.

Companies that expect to have done better this year reported a higher expected base salary increase of 4.3 per cent on average.

Last year, the average year-end salary increase provided among all survey participants was 1.2 per cent.

The trend is similar for bonuses. Across all survey participants, the average projected bonus increase is 8 per cent – a significant increase given the average projected bonus change last year was minus 17 per cent.

Companies that expect to have done better this year are projecting a bonus increase of 21 per cent, while those that expect to have done worse are projecting a 2 per cent cut in bonuses.

Looking at individual markets, on average across all survey respondents, employees in China and Singapore are expected to receive larger salary increases (2.7 and 3.1 per cent respectively) than those in Australia (0.5 per cent), Hong Kong (1.6 per cent), and Japan (1.5 per cent).

In terms of expected bonus increases, across all survey respondents, China again stands out with an average expected increase of 13 per cent, compared with Australia (4 per cent), Hong Kong (8 per cent), Japan (5 per cent) and Singapore (8 per cent).

The survey, carried out in early November, covered trends in cash compensation – including timing, compensation mix and year-on-year changes in cash compensation, as well as base salary changes and annual incentive or bonus payouts by financial performance, organisation level and geographic location.

Source: Business Times, 31 Dec 2009