Most businesses along the Singapore River are backing plans to revitalise the area.

The Urban Redevelopment Authority (URA) will appoint a business consultancy to kick-start a five-year plan to market the riverfront attractions.

Harry’s Holdings has nine bars and restaurants along the Singapore River, including stores at Esplanade, Marina Bay, Robertson Quay, Boat Quay and Clarke Quay.

The firm said that revenues have dipped over the years, as customers flocked to other lifestyle spots such as Dempsey Hill.

Hence, it said it is timely to look at rejuvenating the area.

Said Mohan Mulani, chief executive officer of Harry’s Holdings: “Maybe one large owner can put his or her effort together, a couple of owners can try to amalgamate the real estate and create a very beautiful boutique hotel… maybe you need a mix of tenants, maybe you need some retail.”

Observers say vibrant hotspots like Times Square in New York may provide inspiration.

However, getting things going may be an “up-hill task”.

“There would have to be an element of a leap of faith, there would be some initial seed funding spent on the branding, on putting in place the communication structure. I think we are talking about in the hundreds of thousands of dollars.”

Industry watchers said that working together will help businesses along the river attract more visitors.

However, getting buy-in from stakeholders and landlords like City Developments and CapitaMalls Asia will not be easy.

Said Colin Tan, head of Research & Consultancy at Chesterton Suntec International: “You are trying to get competitors to work together and sometimes with this type of place management you may have to contribute to a common pool, what’s the contribution and how will it benefit, will it benefit everyone equally?”

CapitaMalls Asia (CMA) told MediaCorp that it supports the new initiative and will play its part in the continued rejuvenation of the Singapore River.

CMA, which manages Clarke Quay, said it has undertaken major asset enhancement works to the attraction between 2004 and 2006.

Going forward, it plans to restore its two tongkangs docked at the river, which can be used as venues for various events.

Analysts said that if successful, the business plan could help to drive up rentals at Boat Quay. On average, rentals range between S$10 and S$12 per square foot per month, about 20 per cent off the peak in the mid-90s.

Separately, the URA is spending S$10 million to make Waterloo and Queen Street more pedestrain-friendly to spur street events and performances.

The Orchard Road precinct could be improved as well.

The Singapore Tourism Board (STB) said that a business consultancy could also come onboard to coordinate marketing efforts by year end.

Source: Channel News Asia, 30 Apr 2010

The buzz of excitement at the Marina Bay area with the opening of the US$5.5 billion ($7.5 billion) Marina Bay Sands integrated resort (IR) on April 27 is resulting in a pick-up in sales activity at the neighbouring Marina Bay Residences. The 55-storey, 428-unit upscale condominium tower is expected to be completed soon.

Prices at the 99-year leasehold high-end condo are fast approaching 2007 peak levels. Most recently, a 2,368 sq ft apartment on the 30th floor changed hands for $8.288 million, or $3,500 sq ft. The last time it hit such levels was in mid-June 2007, when a 4,489 sq ft unit on the 51st floor was sold in a sub-sale for $16.16 million, or $3,600 psf.

From March 30 to April 6, there were four transactions in the $2,531 to $3,049 psf range — the first time prices have breached $3,000 psf since December 2007, when a unit on the 25th floor changed hands for $3,080 psf.

Marina Bay Residences, next to The Sail @ Marina Bay, is one of the most actively traded properties in Singapore. The high of $3,049 psf was achieved for a 1,969 sq ft unit on the 30th floor. It was sold for $6 million, according to a March 30 caveat lodged with URA. The previous owner had purchased the unit in a sub-sale for $5.3 million, or $2,700 psf, in June 2007.

The most recent transaction at Marina Bay Residences was for a 1,055 sq ft unit on the 41st floor, which changed hands in a subsale for $2.986 million, or $2,830 psf, according to an April 5 caveat with URA. The apartment was sold in July 2007 for $2.405 million ($2,280 psf), hence the owner saw a gain of 24%.

Meanwhile, another unit, a 1,216 sq ft apartment on the 22nd floor, was sold for $3.49 million, or $2,869 psf, in a sub-sale, according to an April 5 caveat. The unit last changed hands in July 2007 for $2.86 million ($2,349 psf), hence there was a capital appreciation of 22%.

On the 14th floor, a 1,065 sq ft unit was sold for $2.7 million, or $2,531 psf, translating into a 47% gain for the previous owner, who acquired it for $1.83 million, or $1,720 psf, in January 2007. The unit was sold for $1.558 million, or $1,462 psf, in 2006, representing a 17.4% gain.

Beyond the opening of the IR, Marina Bay Residences is also seeing renewed investor interest as the second condo tower, Marina Bay Suites, is likely to release its second phase of units for sale over the next one to two weeks.

Last November, the developers had released around 90 units at Marina Bay Suites in a private preview at prices ranging from $2,200 to $2,500 psf. Another 130 units could be released in the upcoming second phase preview of the 66-storey, 221- unit Marina Bay Suites, which is said to be a more upscale version of Marina Bay Residences.

The pricing this time around will be guided by the transactions of properties in the vicinity, notes Joseph Tan, CBRE executive director for residential services. The remaining units are mostly on the higher floors and likely to fetch a higher price than those released in November, he adds. The project is expected to be completed in 2014.

At the 1,111-unit The Sail @ Marina Bay, two units changed hands for prices above $3,000 psf this year. The units were on the 58th floor of Tower 2. One was an 883 sqft apartment that sold for $2.69 million ($3,048 psf) on Feb 1, according to a caveat lodged with URA. The other was a 936 sq ft apartment that changed hands for $3 million, or $3,204 psf, in late January. From March 30 to April 6, there were three transactions, with prices ranging from $1,870 to $2,646 psf. The Sail @ Marina Bay, which was developed jointly by City Developments Ltd and AIG Real Estate and completed in 4Q2008, hit a high of $3,387 psf in 2008, when a 1,033 sqft unit was sold for $3.5 million.

Several properties sold at Marina Bay Residences are said to have hit prices above $3,000 psf, although the caveats have yet to be lodged. As the opening of the IR draws near, attention is returning to properties in the Marina Bay area like Marina Bay Residences, and it looks like prices are on an upward trend.

Source: The Edge, 29 Apr 2010

It has no plans to enter markets of Vietnam and China

(KUALA LUMPUR) Malaysian property developer Sunrise may consider injecting some of its property assets into a real estate investment trust (Reit) as they begin to deliver stable income, its executive chairman said.

‘We have invested considerably in a pool of investment assets over the last few years, which are now starting to bear fruit,’ said Tong Kooi Ong.

Sunrise, ranked ninth by market value among listed Malaysian developers, may consider a Reit ‘at a later stage’, Mr Tong said in an e-mail interview.

This month, larger rival Sunway City said that it will inject eight retail properties into a Reit in a deal that bankers said may raise up to RM1 billion (S$429 million) for the company.

Reits mainly invest in commercial property and pay most of the rent to shareholders as dividends, which are usually higher than yields of government bonds and offer capital gains if property prices rise.

Mr Tong, a former banker and stockbroker, said that Sunrise has not yet planned to enter the fast-growing markets of Vietnam and China.

‘For the medium term, our overseas focus will be on Canada. We do not have plans for the moment to venture into Vietnam or China,’ he said.

Later this year, Sunrise plans to launch two projects – an office tower project in the Malaysian capital, as well as a residential project in Vancouver, Canada, Mr Tong said.

Malaysian property developers, such as SP Setia and Gamuda, have embarked on multi-billion ringgit developments in Vietnam to tap rapid growth. Sunway City has formed property joint ventures in fast-growing China and India.

Malaysian developers expect higher sales from home this year as the economy rebounds from last year’s downturn. The stock market rally in 2009, which saw the benchmark share index jump nearly 40 per cent, is expected to further boost house buyers.

Malaysia is one of the first in Asia to withdraw crisis measures when the central bank raised its key policy rate by 25 basis points to 2.25 per cent in March. Most economists expect more hikes later this year.

Sunrise shares trade at 6.57 times 2010 earnings, compared with Sunway City’s 10.61 times, IJM Land’s 24.98 times and Gamuda’s 20.31 times, according to Thomson Reuters I/B/E/S.

Sunrise shares have risen 6.8 per cent so far this year, outpacing the 5.6 per cent gain in the property sector index . — Reuters

Source: Business times, 29 Apr 2010

Managing director says S’pore business in good position for the year ahead

The improving Jones Lang LaSalle Singapore has reported a 27 per cent year on year increase in revenue for the first three months of this year.

Chris Fossick, managing director Singapore and South East Asia, said: ‘The Singapore business is in a good position for the year ahead due to the strong performance of our residential project sales, office leasing, investment sales and property and asset management divisions.

‘Our newly-formed Singapore residential project sales team is capitalising on the increased demand for luxury residential real estate in Singapore, and during Q1, secured marketing appointments for high-end projects including The Holland Collection, The Marina Collection and Centennia Suites,’ he added.

JLL has also been able to ride on the strong recovery in the Singapore office market, retaining marketing agency appointments on the majority of the choicest office developments under construction.

The firm’s investment sales unit too has clinched a number of appointments for collectives sales this year. ‘Considering that government efforts to streamline this process are under discussion, we expect to see further en-bloc activity this year,’ he added.

‘Following on from a remarkable performance in 2009, the property and asset management team added more than one million sq ft of space to their portfolio in a fiercely competitive market, a testament to the teams’ trusted service delivery model,’ Mr Fossick notes.

JLL’s revenue in the Asia-Pacific region was US$136 million in Q1 2010, a 29 per cent rise from US$105 million for the same period last year. The region’s earnings before interest, taxes, depreciation and amortisation for Q1 2010 was US$9 million, against a loss of US$1 million in the same year-ago period.

‘Economic forecasts in the Asia-Pacific region are upbeat and recovery in the business environment is filtering through to real estate . . . however, there are concerns about inflationary pressures, particularly in the residential market, which has prompted anti-speculative measures like the introduction of a stamp duty for sellers in Singapore,’ said Mr Fossick.

On Tuesday, NYSE-listed Jones Lang LaSalle Incorporated reported net income (on US GAAP basis) of US$246,000, or one US cent per share in Q1 2010. In Q1 2009, it had chalked up a net loss of US$61.5 million, or US$1.78 per share.

‘Net income in the first quarter (of 2010) benefited from continued momentum from the fourth quarter of 2009 and the transition to a more variable compensation structure in a number of the firm’s transactional businesses,’ JLL said in its news release issued on Tuesday out of Chicago.

The firm’s adjusted ebitda was US$37 million for Q1 2010, up from US$11 million in the same year-ago period. Revenue rose 18 per cent year on year to US$581 million.

Source: Business Times, 29 Apr 2010

An auction of land in Beijing was cancelled after bidding exceeded a price ceiling set for the lot as the Chinese government expands efforts to rein in the nation’s property market.

The highest price bid for the Beijing lot, zoned for residential development, at the auction on Monday was 4,718 yuan (S$945) per square metre, exceeding the 4,700 yuan per square metre limit set by the government, the Ministry of Land and Resources said on its website yesterday.

The ministry’s Beijing branch said it began setting limits on the price of land this month on a trial basis.

‘Imagine a seller refuses your business because he thinks you are paying too much for his products?’ Bank of America-Merrill Lynch analysts led by David Cui wrote in a report distributed yesterday. ‘It demonstrates the type of pressure the central government is putting on local officials to get the property market right this time; this increases the risk of potential overshooting in the property market crackdown.’

China began requiring developers pay higher deposits for land purchases last month and banned banks from lending to developers found to be hoarding land as Premier Wen Jiabao pledged to crack down on real-estate speculation and keep housing affordable. Property prices in 70 Chinese cities gained a record 11.7 per cent in March from a year earlier.

The Beijing branch of the land ministry this month began limiting how much land developers may buy, according to a statement posted to its website on April 21. Video will also be taken of land auctions, notary personnel will observe the bidding, and contracts between Beijing’s land bureau and developers for purchases of lots will be made public, according to the statement.

Separately, the land ministry’s Shanghai bureau said on Tuesday it had postponed the auctioning of four land plots previously scheduled for yesterday to May 7, citing a ‘technical hitch.’ The average price of land in 105 Chinese cities rose 8.1 per cent in the first quarter from a year earlier to 2,700 yuan per square metre, Minister of Land and Resources Xu Shaoshi said last week.

China’s property stocks have plunged 20 per cent this year, making them the worst performers among major industry groups. China Vanke, the nation’s biggest publicly traded developer, has fallen 28 per cent this year compared with a 12 per cent drop in the benchmark Shanghai Composite Index.

Regulators have halted share sales by property developers to give the Ministry of Land and Resources the chance to investigate if companies manipulated market prices, the China Daily reported yesterday, citing an unidentified source close to the China Securities Regulatory Commission.

Beijing will be issuing policies limiting how many homes residents of the city are allowed to buy, the Shanghai Securities News reported yesterday. The city will also ‘basically’ stop loans for the purchase of third homes. – Bloomberg

Source: Business Times, 29 Apr 2010

Moratorium may block 110b yuan in share issues planned by 45 companies

China will place a moratorium on capital raising by real estate firms as part of a broader campaign to rein in property price rises, state media reported yesterday.

The move could stand in the way of about 110 billion yuan (S$22 billion) in share issues planned by 45 companies, unnamed sources close to the China Securities Regulatory Commission told the China Daily.

The suspension will allow the authorities to examine whether companies have used illegal methods to manipulate market prices, the newspaper said.

Beijing, wary about the risks of an asset bubble, has been trying to cool the real estate market, raising mortgage rates and down payment requirements for second homes and pushing local governments to control speculative buying.

Those steps complement general efforts to prevent the economy from overheating as it fully regained its momentum with the help of booming credit and grew nearly 11.9 per cent in the first quarter from a year earlier, the fastest since 2007.

China’s banking regulator has also issued new guidelines to make it harder for property developers to obtain funding from trust companies, the 21st Century Business Herald quoted an unnamed executive at a trust company as saying.

Real estate firms seeking loans from trust firms must meet the minimum capital requirement and provide proof of their qualifications for developing a project, the newspaper said.

This would represent a clarification and tightening of rules governing the financing relationship between trust firms and property developers. Real estate firms have been turning to trust companies because they have looser capital requirements than banks.

Share prices of Chinese property firms have tumbled over the past week, dragging down the main stock index in Shanghai to its lowest level in more than half a year.

But the formation of a property bubble in China has become one of the major risks to sustainable economic growth, the Development Research Centre, a think-tank under the State Council, said yesterday.

In its report, published in the China Economic Times, it said that steps taken in recent months by the government had not yet succeeded in tamping down on surging property prices.

‘If the controls are not forceful, with our country’s growth and development clearly outstripping that of other countries, hot money inflows will quicken and excessive domestic liquidity will increase, progressively inflating asset bubbles,’ it said. — Reuters

Source: Business Times, 29 Apr 2010

CEO raises Marina Bay Sands forecast, investment to be recouped in 5 years

Las Vegas Sands Corp chairman Sheldon Adelson said that the planned sale of the casino operator’s Macau malls and apartments may raise as much as US$12 billion and recoup their construction costs.

‘It will be like US$12 billion if we add up all the apartments and all the retail in Macau,’ including those in buildings still under construction, Mr Adelson, the founder and chief executive officer of Las Vegas Sands, said in an interview in Singapore on Tuesday. The company may start selling the Macau assets within 21/2 years, he said.

Sands, which Adelson describes as ‘an Asian company with a presence in Las Vegas and the US’, gets 73 per cent of its revenue from Macau, the world’s largest gambling market. He was in Singapore on Tuesday to open the first phase of Marina Bay Sands, and raised his earnings forecast for the resort, saying that the US$5.5 billion invested in it will be recouped in five years.

Sands’ casino resort on Tuesday opened 963 of its 2,560 hotel rooms, the casino, the meeting and convention facilities, parts of its shopping mall and some restaurants. A grand opening party will be held on June 23 when the second phase is unveiled, including a sky park, additional shops and more restaurants.

Asia will contribute 85 per cent of revenue once the Singapore casino ‘ramps up’, said Mr Adelson. Last year’s sales totalled US$4.56 billion, with 27 per cent coming from Las Vegas, where the company is based.

Macau assets that Sands may sell include the Four Seasons apartments and shopping areas in the Venetian Macau casino resort and in the Four Seasons hotel, Mr Adelson said. The plan also includes selling condominiums at the St Regis, where construction is resuming.

‘That is our fundamental business model – we get our money back from the sale of non-core business assets,’ he said.

Still, Jonathan Galaviz, an independent strategist who follows travel and leisure in Asia, said that apartments and malls in Macau may be a tough sell to investors, given that the city isn’t a proven place for housing investment, and that a huge asset bubble may be developing in Asian real estate.

‘Second-home buyers in Asia tend to have an affinity for beach and costal destinations, so Macau’s proposition will need to be unique in order to compete,’ Mr Galaviz said in an e-mail. As for malls, ‘the average length of stay for Macau’s average tourist – around one night – doesn’t yet lend itself to a strong and dynamic retail opportunity’.

Sands fell US$1.51, or 5.8 per cent, to close at US$24.69 on the New York Stock Exchange composite trading on Tuesday. The stock has gained 65 per cent this year.

Mr Adelson, who is Sands’ controlling shareholder, said in December that selling the retail areas at the Four Seasons and the Venetian would raise enough money to pay Sands’ debt. The company has US$12.2 billion of bonds and loans due from next year to 2015, according to data compiled by Bloomberg.

The billionaire, who previously said that the Singapore project would add more than US$1 billion in annual earnings before interest, tax, depreciation and amortisation, didn’t provide a new figure apart from saying that he was raising his forecast. The return period compares with four years for the Macau project, which cost about half as much to build, Mr Adelson said.

The Marina Bay Sands in Singapore will be a ‘grand slam home run’, Mr Adelson said. ‘Asian people just love to gamble.’

Singapore aims to lure 17 million visitors and triple annual tourism revenue to S$30 billion (US$22 billion) by 2015, helped by two casino resorts, Marina Bay Sands and Genting Bhd’s Resorts World Sentosa.

The Marina Bay Sands casino, which makes up about 3 per cent of the 15,000 sq m resort, has about 600 table games and more than 1,500 slot machines.

Asia has room for five to 10 cities like Las Vegas, Mr Adelson said. The most likely countries to approve casinos in the region are Japan and Taiwan, he said. — Bloomberg

Source: Business Times, 29 Apr 2010

(NEW YORK) US mortgage applications fell last week as a drop in home refinancing volume outweighed the highest demand for home purchase loans in six months, data from an industry group showed yesterday.

A modest rise in mortgage rates weighed on demand for home refinancing loans, while the imminent expiration of federal home buyer tax credits likely drove consumers to lock in rates, which remain historically low and are widely expected to move higher as the economy recovers.

The Mortgage Bankers Association said that its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, decreased 2.9 per cent for the week ended April 23.

The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was down 3.1 per cent.

The MBA’s seasonally adjusted purchase index, a tentative early indicator of home sales, increased 7.4 per cent, reaching its highest level since the week ended Oct 16.

‘Purchase activity continues to increase as we approach the end of the homebuyer tax credit programme,’ Michael Fratantoni, MBA’s vice-president of research and economics, said in a statement.

‘Purchase applications were up almost 9 per cent from a month ago, with a disproportionate share of the increase due to government purchase applications. Government applications for purchasing a home accounted for almost 49 per cent of all purchase applications last week,’ he said.

To qualify for tax credits of US$8,000 for first-time home buyers and US$6,500 for home owners buying a new residence, eligible borrowers must sign contracts by April 30 and close loans by June 30.

Recent data on sales of new and existing home sales indicate a strong benefit from the tax credits. Government data showed sales of newly built US single-family homes touched their highest level in eight months in March, while industry data showed sales of previously owned homes also gained in March.

James Mallozzi, chairman and chief executive officer of Prudential Real Estate and Relocation Services, said that while home buyer tax credits have helped both first-time home buyers and the US housing market overall, their expiration should not deter home purchasing activity.

‘When it comes to home sales, the absolute level of home prices ranks first in importance, the level of mortgage rates ranks second, while the home buyer tax credits ranks a distant third,’ he said.

The MBA said that borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.08 per cent, up 0.04 percentage point from the previous week. Interest rates were also above the year-ago level of 4.62 per cent. An all-time low of 4.61 per cent was set in the week ended March 27, 2009, based on a survey that dates to 1990.

Mortgage rates could head towards 5.50 per cent or 6 per cent later this year, Mr Mallozzi said.

‘This could dampen demand and I foresee a slow housing recovery,’ he said.

The MBA said that fixed 15-year mortgage rates averaged 4.38 per cent, up from 4.34 per cent the previous week. Rates on one-year adjustable-rate mortgages, or ARMs, increased to 7.03 per cent from 6.95 per cent. — Reuters

Source: Business Times, 29 Apr 2010

NUS index shows they climbed 1.2% in March while central region home prices dipped

(SINGAPORE) Prices of non-landed private homes outside Singapore’s prime districts are now growing at a faster rate than prices in the prime districts, according to a new index compiled by the National University of Singapore (NUS).

Flash estimates for March released yesterday show that ‘non-central’ home prices climbed 1.2 per cent last month, taking the first-quarter rise to 4.4 per cent.

In contrast, prices in the central region – postal districts 1-4 and 9-11 – dipped 0.07 per cent in March. For Q1, they rose 1.7 per cent.

NUS’s Singapore Residential Price Index also shows that overall home prices rose 0.3 per cent last month and 2.8 per cent in Q1.

This puts the overall current value of the index just 0.1 per cent below the peak in November 2007. Prices in the central region are now 9.3 per cent below that peak, while prices in non-central areas are 6.4 per cent above the previous peak in January 2008.

‘The rate of price growth in the central area has slowed, but for the non-central region, we have not seen an obvious decline in the rate of growth yet,’ said Associate Professor Lum Sau Kim, who leads the group that compiles the index.

In 2009, price growth in the central region outpaced that in non-central areas. Home prices grew 27.3 per cent in the central region and 19.5 per cent in non-central areas. The overall index rose 22.2 per cent.

Analysts say that the moderation in the growth of prices – seen in both the NUS index and official Urban Redevelopment Authority index – is a sign that government measures to cool the market, implemented in September 2009 and February 2010, have reined in runaway price increases.

Official data released by URA last week showed that prices of non-landed properties increased 4.9 per cent in Q1, down from 7.2 per cent in the preceding quarter.

URA’s index also showed that prices in the ‘core central region’, which roughly correlates to the central region classification used by the NUS index, rose 4.4 per cent in Q1 – faster than home prices in the ‘outside central region’, which rose 4.3 per cent.

URA’s index showed that prices in the mid-level ‘rest of central region’ rose 7.9 per cent in Q1.

The numbers from URA and NUS differ because the two indices use different methods to track prices.

NUS’s index, which is compiled by the Institute of Real Estate Studies, was launched in March to serve as a resource for developing property derivatives in Singapore.

It is computed using the market values of a basket of completed properties. Uncompleted projects are not included in the basket as price movements for such projects can be different from those in the rest of the market.

But the impact of new launches on the prices of completed properties in the vicinity is factored in.

The URA index, on the other hand, includes transactions at new launches and sub-sales. The differences mean that the two indices can throw up different numbers, market watchers have said.

Source: Business Times, 29 Apr 2010

But CPI could hit 4% by Q4 this year, says MAS in nod to new pressures rising

Singapore’s economy has more than regained ground lost in the downturn, with gross domestic product (GDP) now close to 3 per cent above its last peak in Q1 2008.

And the Monetary Authority of Singapore (MAS) says ‘underlying drivers of growth are likely to remain intact’, sustaining a high level of activity in the next few quarters, though growth momentum could slow.

However, a tightening labour market may add wage pressures to mounting inflationary ones. Consumer price index (CPI) inflation could thus hit 4 per cent by Q4 this year, MAS said in its Macroeconomic Review yesterday.

Two weeks back, MAS rolled out an unprecedented double tightening of monetary policy, citing firm recovery and emerging inflation risks. That same day, Singapore’s official 2010 GDP growth forecast was raised to a range of 7-9 per cent.

A few private sector economists have already raised forecasts above this, on the back of unexpectedly strong Q1 data and soaring factory output.

Double-digit growth is quite possible, several economists told BT, since a forecast of 9 per cent assumes zero quarter-on-quarter GDP growth for the rest of the year. As long as Greece and Portugal’s unfolding debt woes do not spread to the larger EU economies, financial or trade impact on Singapore’s growth should be negligible too, they said.

MAS’s report did note ‘sovereign risk in some of the industrial economies’ as a risk, but without much ado. ‘Confounding initial expectations’, global conditions have improved significantly, MAS said, presenting an outlook far more optimistic than its last review had.

Recent rapid expansion of the domestic economy also meant that the 9.5 per cent in output lost from peak to trough (Q1 2009) has been recovered. Q1 GDP is likely to come in at around $63 billion, some 2.8 per cent above what it was at the peak in Q1 2008.

And this year Singapore’s growth will be driven by trade-related activity, which comprises manufacturing, wholesale trade, and transport and storage, the latest twice-yearly report said.

Recovery of the global IT industry, which has now moved from inventory restocking and the release of pent-up demand to a ‘healthy balance of firm demand and well-managed supply’, is crucial. Rising consumer demand for laptop PCs, notebooks and smartphones (especially in China and the US), and corporate demand, as companies upgrade ageing systems and servers, will support Singapore’s electronic and precision engineering clusters, the report said.

And fresh capacity – such as that from four new biologics facilities by Roche, Lonza and GlaxoSmithKline (GSK); Shell and ExxonMobil’s ethylene crackers; Applied Materials’ semiconductor equipment plant; and REC’s solar manufacturing complex – is also expected to offset the closure of Seagate’s HDD plant and boost local manufacturing.

Asian demand, meanwhile, is expected to spur trade-related services like container activity in the shipping industry, and lift tourism receipts – all of which will offset residual ‘pockets of weakness’ in the chemicals, transport and construction sectors, the report said.

Though growth has been relatively subdued in the financial sector this year, gradual recovery will continue. Driving 70 per cent of its gains thus far were the core domestic lending and insurance segments, but recovery in the sentiment-driven cluster of stockmarket, brokerage and treasury, investment banking and fund management activity is now gathering pace too.

Also expected to quicken this year is the pace of job creation, although hiring demand will vary across industries, MAS said.

Labour supply constraints, seen in a resident unemployment rate now back down to pre-crisis levels, are likely to push wages up. This means ‘industries that are unable to step up productivity quickly will face higher wage costs’, which businesses might then pass on to consumers.

But about four-fifths of CPI inflation this year will likely stem from higher global oil and food commodity prices, and car prices, MAS said. These price pressures could build up to CPI inflation of 4 per cent by year- end. The official inflation forecast for this year is 2.5 to 3.5 per cent, and the projected MAS underlying rate (excluding private road transport costs), 2 per cent.

Source: Business Times, 29 Apr 2010