Issue 253

Copyright 2011-2016 www.propwise.sg. All Rights Reserved.

CONTENTS
p2

FROM THE

EDITOR

Regional Currency Outlook and Property

Investments Which Overseas Markets

Hope you like it!

Look Attractive?

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Singapore Property News This Week

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Resale Property Transactions

Welcome to the 253th edition of the

Singapore Property Weekly.

Mr. Propwise

(March 12 March 15)

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SINGAPORE PROPERTY WEEKLY Issue 253

Regional Currency Outlook and Property Investments

Which Overseas Markets Look Attractive?
By Paul Ho (guest contributor)
An overseas property investment consists of
two components the property investment
and the currency investment. If you invest in
a property that increases in value by 20%
over a period of three years, but the currency
depreciates by 30% over the same period,
you will be realizing a loss if you liquidate.
Usually, Singapore-based investors will
compare the local currency in the country of
investment against either the Singapore
Dollar (SGD) or the US Dollar (USD).Most
often the base currency is SGD, simply
because that is the currency that the

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SINGAPORE PROPERTY WEEKLY Issue 253

Singapore-based investor earns, and is most
familiar with.
Interest rate trends in major economies
The US economy is recovering, with
unemployment at five percent (as of Nov
2015) and an Interest Rate (IR) of 0.25%. On
16 Dec 2015, the Federal Reserve increased
the overnight target rate from 0.25 percent to
0.5 percent. Inflation in the US is currently still
under one percent, below the Federal
Reserves target of 1.5 to 2 percent.

than two percent, China is struggling to

maintain seven percent growth, and Japans
growth hovers around one to two percent.
The EUs interest rate is close to zero
percent, Japans is at zero, while China
dropped its benchmark yearly interest rate to
4.35 percent.
Just to put things into perspective, the worlds
major economies are:

The European Union at around 18

trillion USD

Although the US recovery seems tentative, it

is nonetheless an economic recovery. It is
possible there will be a few rate hikes in 2016
as the target overnight Federal Reserve funds
rate at 0.5% is still low.

USA Number 2 at around 17 trillion

USD

China Number 3 at around 10 trillion

USD

However, other major economies such as the

European Union, China and Japan are
slowing down. The EUs growth rate is less

Japan Number 4 at around 4.6 trillion

USD

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SINGAPORE PROPERTY WEEKLY Issue 253

The world economy is around US$77 trillion
dollars. The top 4 economies make up
roughly US$49.6 trillion dollars or about 65
percent of the worlds economy and would be
a good enough representative.

and a need to stimulate the economy.

Malaysia raised its Interest rate to 3.25% to
stabilize its currency. Philippines maintained
its interest rate at 4% as it forecasts core
inflation to increase in 2016-2017 coupled
with El-Nino weather effects.
Outlook for the SGD (Singapore Dollar)

Chart 1: Interest Rates of selected countries

(ieconomics, iCompareLoan.com)
Reducing interest rates in China, Thailand
and Vietnam all indicated a slowing economy
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Singapore maintains an exchange rate based

on a trade-weighted basket of its top 15
trading partners via a Nominal Effective
Exchange Rate (S$NEER). This means that
Singapore watches the exchange rate of its
major trading partners and appreciates the
SGD against them on an aggregate basis.
Currently, Singapore has set a rate of slower
currency appreciation.
Given that China is reducing interest rates,
and Japans and the EUs are both around
zero percent. Funds seek both higher returns
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SINGAPORE PROPERTY WEEKLY Issue 253

as well as an appreciating currency such as
the USD. And an appreciating currency
typically coincides with improving economic
outlook
or
fundamentals.
Singapores
economy is slowing down the Dec 2015
Purchasing Manager Index (PMI) at 49.5%,
indicating forecasted economic contraction.
Hence, the SGD may find itself having to
appreciate.

Japan

Thailand

Singapores top 10 trading partners are:

China

Malaysia

EU

USA

Indonesia

HK

Taiwan

Republic of Korea

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Table 1: Singapores Major Trading

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SINGAPORE PROPERTY WEEKLY Issue 253

Partners (IE Singapore, Singstats Nov 2015,
iCompareLoan.com, in SGD)
Malaysias Ringgit is under pressurefrom
political events, while the national currencies
of the Philippines, Indonesia and Thailand are
also under threat of funds outflow. This has
contributed to a weakening SGD vs USD as
Malaysia and Thailand are part of Singapores
Nominal Effective Exchange Rate (S$NEER)
basket of currencies.

SGD/USD (Source:Oanda)
If most of Singapores top 15 trading partners
currencies are depreciating against the USD,
based on a trade-weight S$NEER, theSGD
will likely strengthen against some of these
currencies, but will weaken versus the USD.
Singapore is also entering a period of slower
growth as inflation has dropped and GDP
growth has slowed with Purchasing Manager
Index in Dec 2015 coming in at 49.5%.
The challenge for our policymakers hence, is
to find a balance between import-led inflation
and export competitiveness and economic
growth. To do so, they will need to normalize
interest rates upwards to maintain an orderly
depreciation of the SGD against the USD.
Will interest rates go up?
Some countries are susceptible to capital
outflows.

Chart 2: SGD/MYR and

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SINGAPORE PROPERTY WEEKLY Issue 253

They will hence need to raise interest rates to
slow the depreciation of their currency despite
a slowing economy. This could lead to
prolonged economic problems and corporate
bankruptcies, which could in turn affect
property prices.
Therefore, any property investor in the region
will need to take a 5 to 10 years view of this
investment, as the US economic recovery
usually runs for 3 to 4 years.

High sovereign debt denominated in

foreign currencies
High household debt to GDP ratio
High corporate debt

High Budget Deficit

Trade Deficit

Slowing GDP growth

Inflated Asset prices

Why do currencies come under threat?

Stock markets

Currencies usually come under threat when a

number of factors become present. Generally,
they are: -

Property prices

Low Foreign Reserves

Pegged exchange rate

High Debt

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Low Interest rates

Unstable political situation and social

tension

Countries with low foreign reserves, high

foreign debt and a high budget deficit are
most at risk of a weak currency.
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SINGAPORE PROPERTY WEEKLY Issue 253

A weakening economy with many of the
above attributes will suffer an extra blow from
capital outflows when it needs it most.
An untimely exodus of funds from the country
will weaken the currency causing interest
rates to rise at a time when the economy can
ill afford it and cause a rapid deterioration of
its financial position.
High asset prices, such as an inflated stock
market or property market would be
susceptible to speculative attacks and
magnify the crisis.
Where are the bright spots?
Under-developed
countries
such
as
Cambodia, Laos and Myanmar did not
receive a lot of capital inflow and hence are
not susceptible to capital outflow.
Cambodia, Laos and Myanmar are potential
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high risk and high returns areas to put your

money. Nonetheless, their fiscal positions are
poor. The opening up of the economies of
Cambodia
and
Myanmar
are
good
developments.
Philippines is fast growing with a young
population, but debt levels are high and
exports are weak, although this is mitigated
by stable and strong remittances from
Overseas Foreign workers. Id rate this
market as Neutral to Positive.

Thailands economy is slowing down and may

enter a period of recession, but it has one of
the best infrastructure for tourism, far ahead
of the Philippines, Vietnam, Cambodia, Laos
and Myanmar. Thailand has about US$100
billion in reserves and a floating currency,
hence it is unlikely to suffer from massive
currency depreciation unless riots occur. Id
rate this market as Neutral.
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SINGAPORE PROPERTY WEEKLY Issue 253

Malaysia does have good infrastructure, but
its currency has already taken a beating and
its political stability is in question. Malaysia
nonetheless is still competitive and runs a
trade surplus. Despite its huge debt, Malaysia
also has ample reserves and has raised its
interest
rates
to
mitigate
currency
depreciation. Id rate this market as Neutral
with selective buy potential due to its weak
currency.
Vietnam is highly trade dependent and it has
low foreign reserves. It runs a huge budget
deficit, has huge debt coupled with rising
corporate Non-Performing Loans. Id rate this
market as Negative, i.e.stay away for a while.

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SINGAPORE PROPERTY WEEKLY Issue 253

Singapore Property This Week

Residential
Global House Price Index up by 3% in
2015
According to Knight Franks Global House
Price Index, prices have increased by 3% in
2015. Market experts believe that the low
interest rate had influenced buyers
sentiments. Of the 55 countries accounted for
in the price index, 43 markets saw prices rise.
This is up from the 10 countries recorded in
the aftermath of the Lehmans collapse in
2008. Based on the price index, Ukraine and
Greece were the weakest housing markets
last year with price falls of 12% and 5%
respectively. While the rate of quarterly price
declines of non-landed private homes have
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moderated in Q4 2015 after 9 consecutive

quarters of decline, Singapore is still one of
the weakest performers, said Knight Franks
Alice Tan. According to Knight Frank, prices
of Singapores non-landed private homes are
likely to decrease by 0.2% to 0.5% for Q1 this
year.
(Source: Business Times)

Authorities believe it is premature to lift

cooling measures
In his Budget Speech, Heng Swee Keat,
Minister for Finance, said that it is too early to
lift cooling measures given current market
conditions and price levels. Since the peak in
2013, private home prices have fallen by
8.4%.
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SINGAPORE PROPERTY WEEKLY Issue 253

Tay Huey Ying from JLL echoed the
governments stance and said that any
interference at this juncture would be
premature. Cushman & Wakefields Christine
Li added that if cooling measures are lifted
prematurely, buyers may rush into the market
and property prices which are led by demand
will surge. Li also added that tweaking the
additional buyers stamp duty (ABSD) would
not serve the interest of the masses as the
ABSD helps to keep property prices low.
Instead, changes to the ABSD will benefit
property developers, Singaporeans who can
afford a second property, permanent
residents and foreigners.
(Source: Business Times)
Developers optimistic about selling out
before ABSD deadlines
Despite the looming deadlines, developers
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are optimistic that they will be able to sell out

before the respective additional buyers
stamp duty (ABSD) deadlines. Not only so,
developers have said that they would not
need to resort to massive price cuts in order
to meet the deadline. SingLands boutique
project, Mon Jervois and Pollen & Bleu, as
well as Alex Residences will be liable for the
ABSD of 10% with interest if there are any
unsold units by February, June and
December 2017 respectively. As of February
this year, there are 61 unsold units at Mon
Jervois, 94 units at Pollen & Bleu and 13 units
at Alex Residences. Another developer, City
Development is also confident of clearing all
its units at Jewel@Buangkok, Bartley Ridge
and The Venue Residences before their
deadlines due to their prime location.
According to the Business Times, developers
may set up a subsidiary or fund to buy the
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SINGAPORE PROPERTY WEEKLY Issue 253

unsold units if the loss in a stack sale to an
institutional fund is more than developers
cost of paying an ABSD of 15% on the
purchase of unsold units. Thus, developers
need not resort to massive price cuts. Not
only so, the location and design of the
development may also affect developers
ability to sell of the project.
(Source: Business Times)
Commercial
Q1 property investment sales set to fall to
near 7-year low
Investment sales of property or big ticket
transactions of at least $10 million are
expected to fall to about $2 billion in Q1, said
Savills Singapore. This would be less than
half the $5 billion for Q4 last year and the
lowest quarterly level since Q2 2009.
According to Savills, it is expected that there
will also be a fall in Q1s investments this year
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from the $3.6 billion invested in Q1 2015.

Steven Ming from Savills said that the sharp
quarter-on-quarter fall will likely to be due to a
lack of big deals in the commercial property
segment. Galven Tan from CBRE said that
investors are cautious in completing office
transactions as they anticipate that there will
be an increase in demand for office rental.
Nonetheless Ming said that due to the decline
in global interest rates, interest in commercial
property deals may still pick up. On the
residential front, investment of sales have
increased 12.9% to $1.5 billion in 1 Jan to 22
March this year over Q4 2015. Not only so,
the top bids by developers for three
residential sites at state tenders in Q1 were
above market expectations. This reflects
developers optimism for 2017 when the
projects are expected to be marketed, added
Savills.
(Source: Business Times)
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SINGAPORE PROPERTY WEEKLY Issue 253

CaptiaLand
arena

enters

co-working

space

In partnership with Collective Works,

CapitaLand will turn the entire 12th floor at
Capital Tower into co-working space that
spans about 22,000 sq ft. The space is
expected to house up to 250 companies.
Collective Works, which is a co-working
space operator, will manage the space.
Grade-A office rents in Tanjong Pagar are
estimated to range from $8 to $8.50 psf per
month. The average rent of remaining leases
expiring at Capital Tower disclosed by the

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CapitaLand Commercial Trust was $9.15 psf

per month in Q4 last year. Wen Khai Meng
from CapitaLand said that the co-working
space is likely to appeal to fast-growing
businesses, entrepreneurs and freelancers
who are seeking to rent fully functional, fittedout office spaces under flexible lease terms.

(Source: Business Times)

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SINGAPORE PROPERTY WEEKLY Issue 253

Non-Landed Residential Resale Property Transactions for the Week of Mar 12 Mar 15

Postal
District
1
3
5
5
5
9
10
10
11
19
19
19
20
22
23

Project Name
PEOPLE'S PARK COMPLEX
ALEXIS
HERITAGE VIEW
MONTEREY PARK CONDOMINIUM
THE PARC CONDOMINIUM
HELIOS RESIDENCES
CYAN
THE LADYHILL
MANDALAY TOWERS
CARDIFF RESIDENCE
KENSINGTON PARK CONDOMINIUM
THE QUARTZ
SEASONS VIEW
LAKEHOLMZ
HILLINGTON GREEN

Area
(sqft)
1,119
872
1,313
1,421
2,239
1,701
1,528
3,843
2,508
420
1,249
1,066
1,141
1,507
990

Transacted Price
Tenure
Price ($) ($ psf)
790,000
706
99
1,060,000 1,216 FH
1,500,000 1,142
99
1,600,000 1,126 999
1,800,000
804
FH
3,680,000 2,164 FH
3,000,000 1,963 FH
6,900,000 1,796 FH
2,330,000
929
FH
660,000
1,572
99
1,322,800 1,059 999
970,000
910
99
1,180,000 1,034
99
1,308,000
868
99
1,008,000 1,018 999

NOTE: This data only covers non-landed residential resale property

transactions with caveats lodged with the Singapore Land Authority.
Typically, caveats are lodged at least 2-3 weeks after a purchaser
signs an OTP, hence the lagged nature of the data.

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