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Thread: How Investors Might Get in on Singapore's Real-Estate Boom

  1. #1
    joe
    Guest

    Default How Investors Might Get in on Singapore's Real-Estate Boom

    How Investors Might Get in on Singapore's Real-Estate Boom
    By YAROSLAV TROFIMOV
    May 2, 2007

    The real-estate sector has gone sour in the U.S., and the outlook for property-related securities isn't too bright in most other developed markets, either. But, bucking this trend, Singapore continues to power ahead -- and smart investors still might be able to cash in on the city-state's property fever.

    As it aims to become a playground for Asia's rich, Singapore is shifting its economy from manufacturing to tourism and financial services, building yacht marinas and casino resorts next to the gleaming skyscrapers that house its private banks. On the ground, this translates into a growing influx of prosperous foreigners -- and fast-rising demand for luxury homes and prime office space.

    Prices for Singapore's private residential properties rose 4.8% in the first quarter of this year from the previous quarter, after gaining 10% in 2006. Prices for the island's top-end and midrange residential real estate could be up as much as 35% for the full year, predicts UBS Securities. Rents in the sector should surge 30% to 40%, Citigroup forecasts.

    Office properties are just as attractive, in part because more buildings are being demolished for redevelopment rather than completed this year, resulting in a shortage of supply. Singapore's prime office rents, which climbed 20% to 11.80 Singapore dollars (US$7.78) a square foot last year, could reach S$14.50 by the end of 2007 and S$18.50 in 2008, Citigroup estimated in a recent research note. Although the government has released new land for construction projects, "the prime office-space shortage will persist for at least three more years," a Goldman Sachs report predicted.

    "The rate of [property] appreciation in Singapore looks extremely compelling," agrees Arjuna Mahendran, chief investment strategist at Credit Suisse Private Banking in Singapore. "Places like Tokyo, London, Hong Kong and cities in the U.S. are already up on the curve and quite mature. In Singapore, it looks like the beginning of a multiyear boom."

    The question for investors, of course, is how to benefit from this upswing short of buying actual bricks and mortar.

    The obvious solution for those who would rather keep their money in liquid securities would be buying the stock of flagship local property-development companies such as CapitaLand and Keppel Land. But this may no longer be a good idea, given that these shares have tripled in price during the past 24 months.

    "Most of the [Singapore] property stocks already factor in future growth, especially those involved in high-end areas," cautions Peter Wong, a fund manager at Phillip Capital Management in Singapore.

    Instead, he recommends the shares of building-materials companies whose prices haven't fully factored in the real-estate fever, such as Hong Leong Asia; and of media conglomerate Singapore Press Holdings, which profits from the many full-page advertisements for new luxury condominiums in its newspapers. Other money managers point to smaller property developers whose shares still have attractive valuations, such as UOL Group, Singapore Land and Bukit Sembawang.

    They also flag the island's banking sector, dominated by three homegrown financial groups -- DBS Group Holdings, United Overseas Bank and OCBC Group.

    "All the Singapore banks will benefit [from the real-estate boom] because Singapore still has a very protected banking sector," says Mr. Mahendran of Credit Suisse. "When the property sector is booming, a lot more people will apply for mortgages, which have higher spreads and lower delinquency rates than other loans."

    Another way of riding the boom, he says, is by investing in Singapore real-estate investment trusts, which directly benefit from the spike in rents, and whose valuations are less lofty than those of pure-play property developers. Singapore "REITs are in a sweet spot as organic and inorganic growth prospects are good," concurs a Goldman Sachs report issued earlier this year, adding that such a favorable environment should last at least until the end of 2008.

    Nearly two dozen REITs are traded in Singapore, which offers tax advantages and strict regulation and has become a regional hub for this class of assets. Although yields on Singapore REITs have been shrinking, they are still by and large higher than those on Singapore government bonds.

    There are, of course, risks that the property boom will come to a premature halt, especially if the Singapore government intervenes to keep rent inflation in check. "Singapore wants to attract people here, so it is not in Singapore's interest to have a huge expansion in office costs," says Hugh Young, managing director of Aberdeen Asset Management Asia in Singapore.

    There are also political concerns as local Singaporeans find themselves priced out of the island's most desirable areas, he adds.

    Yet, despite these caveats, Mr. Young still holds on to Singapore property stocks such as City Developments and Bukit Sembawang. "Logically, I would say this market is slightly overshot," he says. "But this might be just the beginning of the overshooting."

    Write to Yaroslav Trofimov at [email protected]

  2. #2
    Investor.
    Guest

    Default London Property Is The World's Most Expensive

    London is followed by Monaco, New York and Hong Kong.
    Reuters
    London
    8 May 2007

    London is home to the most expensive property in the world, followed by Monaco, New York and Hong Kong, a new report shows.

    Prime property in the British capital costs 2,300 psf, just above Monaco, playground of the rich and famous, at 2,190 psf, according to estate agent Knight Frank and Citi Private Bank's "Wealth Report 2007".

    It points to the growing influence of high net worth individuals -- defined as those with more than 5 million in investable assets -- on the property market across the globe.

    Its index charting the value of similar property at the top end of the market in more than 70 locations ranks New York in third place, with prime property fetching an average price of 1,600 psf, and Hong Kong in fourth, commanding 1,230 psf.

    Tokyo, Cannes, St Tropez, Sydney, Paris and Rome make up the top 10.

    Elsewhere in Great Britain and Ireland, Dublin, Birmingham, Edinburgh and Manchester are identified as prime locations.

    They ranked 17, 19, 21 and 22 respectively, with values ranging from 320 psf to 470 psf.

    Knight Frank said central London prime property prices had outperformed the mainstream regional and national markets in recent years -- a pattern repeated in the rest of the world.

    Prices for the most expensive properties rose on average by more than 14% in 2006 compared to a 9% rise in the mainstream market.

    But although London has seen prime market growth of more than 30% in the past year alone, this has been dwarfed by growth seen in the main Russian, Chinese and Indian city markets -- where prices have soared by 40 or 50%.

    Rapid economic development, together with the creation of new wealthy sections of society, had led to intense competition for the best apartments and villas in secure prime neighbourhoods -- and boosted prices, according to the report.

    Looking ahead, Liam Bailey, head of residential research at Knight Frank, said prime property would continue to outperform mainstream markets.

    "Over the next five years, we believe the trend of growing wealth and greater wealth concentration will continue," he said.

    "There will be a significant demand and supply imbalance in the best prime market locations.

    "Price growth this year will be lower than in 2006, although we predict prime markets will outperform mainstream markets by quite a margin."

    He said up-and-coming key prime property locations included St Petersburg and Moscow in Russia, Delhi and Mumbai in India, as well as Guangzhou and Beijing in China.

  3. #3
    Seng
    Guest

    Default Re: London Property Is The World's Most Expensive

    Quote Originally Posted by Investor.
    London is followed by Monaco, New York and Hong Kong.
    Reuters
    London
    8 May 2007

    London is home to the most expensive property in the world, followed by Monaco, New York and Hong Kong, a new report shows.

    ....................

    He said up-and-coming key prime property locations included St Petersburg and Moscow in Russia, Delhi and Mumbai in India, as well as Guangzhou and Beijing in China.

    Always hear complains in forum say Singapore this high that high?
    So Singapore leh? Why disappeared?

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