More public sector projects put on hold to ease squeeze
The government will postpone construction of another $1.7 billion worth of public sector projects as it looks to manage rising construction costs. A total of $4.7 billion worth of public sector construction projects will be deferred to 2010 and beyond. BCA said the additional deferment will allow the existing construction capacity and resources to be channelled towards the timely delivery of some big projects such as the integrated resorts, Marina Business Financial Centre and the downtown MRT line. Most of these projects are expected to be completed around end-2009. The construction resources freed up at that time would then be available for the deferred public sector projects, therefore achieving a better spread of construction resources and activities beyond 2009. Projects postponed in this round include the main building of the proposed Jurong General Hospital and upgrading works at schools. Developers and analysts were hopeful that the government's response could help to slow down the increase in construction costs. Construction costs shot up some 20 to 30 % in 2007. And in the first quarter of this year, building costs rose by another 3-5%. The building boom also means that contractors were in short supply, with some private developers here reporting difficulties in hiring contractors and sub-contractors. However, there were some concerns that the reduction in government spending was coming at a time when the sector, and the overall economy, is seeing a slowdown. Deutsche Bank Private Wealth Management pointed out that the outlook for the construction sector is 'not as rosy as it was a year ago'. Growth in the construction sector is tapering off. Growth slowed to 16.9% in Q1 2008 and then to 15.2% in Q2 2008. By contrast, in Q4 2007, the sector grew by 24.3%. However, the new deferments could help reduce current supply bottlenecks. BCA said for the whole of this year, construction demand is likely to come in within current estimates of $23-$27 billion.
-The Business Times, P4 – also see The Straits Times, P1 "Govt defers projects worth $1.7b"
Property rates here leave US execs grumpy
Amercian executives' grouses about the cost of housing and office leases here hit a new high this year, according to the latest Asean Business Outlook Survey by the American Chamber of Commerce (AmCham) in Singapore. 74% of American senior executives surveyed indicated that they were either 'dissatisfied' or 'extremely dissatisfied' with both the cost of housing and office leases. This year's figures are a significant jump from 2007's numbers, 61% (housing) and 45%(office leasing costs). Knight Frank said that over the six-month period in 2008, housing rental prices have gone up close to 10% and expect the increase in rental rates to slow down over the rest of 2008, to 10-15% by the end of the year. Office lease rates, which have gone up by 12% over the six-month period of 2008, are also expected to grow at a slower pace this year. Knight Frank attributes this to the number of arriving expatriates slowing down and a job market that is growing at a slower rate. The survey, carried out in Singapore, Malaysia, Vietnam, the Philippines and Thailand, included 535 respondents overall, with 130 of them from Singapore. It also surveyed the outlook on the effects of US recession on business in Asia, expansion plans in Asean and world economic outlook. Respondents in Singapore are the least cheerful among the countries.
- The Business Times, P12 – also see The Straits Times, H24 "Rising cost of living worries US firms based here"
Prime space for art at the heart of Orchard
The gallery on the 4th floor of Ion Orchard will feature contemporary art and design by established and emerging artists from Singapore and the region. Mall developer Orchard Turn Developments dismissed the revenue loss from giving up 5,600 sq ft of retail space that could command up to $80 per sq ft and said the move would allow the mall to contribute to the local and international art scene. Ion Art, as the gallery will be called, will also be a venue partner for art festivals, such as the Singapore Biennale. The upmarket Palais Renaissance has begun a $16 million upgrade to install a double-skin glass facade - also with dancing LED lights. The facade will be completed by November. CDL is also giving the dated mall's interiors a facelift, to be completed 'in phases' next year.
- The Straits Times, H24
Soilbuild is top bidder for Woodlands site
Soilbuild Group Holdings yesterday emerged as top bidder in a state tender for a 60-year leasehold industrial site at Woodlands, offering $13.61 million or $30.10 psf of potential gross floor area. This was almost 60% above the next highest bid from Zap Piling. Soilbuild may be looking at various permutations, including developing two or three-storey landed factories, a multi-storey flatted-factory/ramp-up factory development or a combination, depending on what best suits the market's needs. Colliers International estimated that Soilbuild should be able to sell a new 60-year leasehold development - landed factories or high-rise - for about $250 psf of saleable area. BT understands that Soilbuild's breakeven cost could be about $150-170 psf of saleable area for landed factories and $180-190 psf for a high-rise project.
- The Business Times, P10
Growth, healthy job market ward off stagflation
The government is confident that Singapore is not facing the dreaded 1970s curse of stagflation. Unholy combination of sluggish growth, high inflation and rising unemployment inflicted huge damage 30 years ago on developed countries. Even though inflation is likely to stay high, the economy expanded 4.3% in the first half of this year. Singapore’s job market remains healthy with more than 73,000 jobs created in 1st quarter of the year and unemployment remains low. In Singapore, the strong pipeline of foreign investments and tourism projects will also provide a certain amount of support to the economy for the rest of this year and beyond. But inflation hit 7.5 per cent in May. Deutsche Bank's private banking arm has cited the risks from pricier oil, while CIMB cautioned about stagflation with inflation at 7.5% and GDP growth in the low single digits for the second quarter this year. The modest GDP figures should dampen wage expectations and, once energy and commodity prices stabilise, inflation would ease next year, ending the stagflation risk. The Ministry of Trade and Industry will review next month its forecast of 4 % to 6 % GDP growth this year.
- The Straits Time, H7
Gardenia leads pack, but SMEs sizzle
This year's Fastest Growing 50 awards saw four of the top ten positions claimed by listed companies or their subsidiaries but more SMEs than ever before made it into the top 50. DP Info said that 84 SME met the criteria to qualify for the award this year. That is almost double last year's count of 43. And 16 SMEs made it to the top 50 qualifiers, compared to 13 in 2007. IE Singapore said small companies were now becoming more adventurous in expanding overseas. 1st place this year is Gardenia (compounded annual growth rate of 514.1% over the past three years, 2nd place, LVMH Fragrances and Cosmetics (469.5%). Other companies that ranked highly were shipping giant Cosco; Wearnes International (1994), the luxury car distribution unit of WBL Corp; Keppel Corp's venture fund unit k1 ventures; and Salzgitter Mannesmann International (Asia).
- The Business Times, P4 – More reports on P21-26, also see The Straits Times, H22 "Singapore firms reaping rich prickings overseas"
Buzz on Orchard Rd as Ion rents hit $80 psf
A new benchmark for retail rents on Orchard Road has been set at Ion Orchard with tenants paying a base rent of up to $80 psf per month. This is 60-80% higher than the current average prime, first-storey Orchard Road rents. 50 % has been leased, with more than 30% of the retailers setting up flagship stores. While luxury retailers at Ion Orchard like Louis Vuitton and Prada are going to have to sell a lot of handbags and shoes to cover the luxury rents, sources say that $80 psf appears to be the new asking rent for prime space at other new malls including Orchard Central. DTZ believes that while it appears that a new benchmark has been set, 'the $80 psf rental rate is likely to apply only for very prime shop units on the ground floor with good frontage'. According to DTZ, the current average for prime, first-storey retail space in Orchard Road/Scotts Road area is $42.40 psf per month and $23.80 psf per month for prime upper storey retail space. Rents at Ion Orchard do start at $20 psf per month and this is likely to be for units at the basement levels, which will include F&B outlets and bridge brands.
- The Business Times, P1