NEWS HIGHLIGHTS - 31 DEC 2001 TO 6 JAN 2002

Economy/Finance

More service-sector employees retrenched

The number of service-sector workers in unionised companies who were retrenched in the first six months was below 10% of all retrenched workers. However, the percentage increased to 15% in the third quarter and 33% in the fourth quarter of 2001, and may rise further in the first half of 2002.
(6 Jan 2002)

Economy shrinks 2.2% in 2001

Prime Minister Goh Chok Tong said in his new year message that Singapore's GDP contracted 2.2% in 2001 year-on-year (y-o-y), better than the official forecast of minus 3%. The GDP plummeted 7% y-o-y in the final quarter of 2001, slightly better than the average 8.7% contraction expected by the 31 economists polled by the MAS earlier, but still, it was worse than third quarter's 5.6%. Total retrenchments in 2001 were estimated to be around 25,000 and unemployment rate in December 2001 could have risen to 4.5%. MTI's advance estimates show that goods-producing industries contracted 9.3% in 2001 and 16.2% in the fourth quarter, largely due to a decline in the electronics-led manufacturing sector and a sluggish construction sector. However, services industries (finance and business services, transport, communications and trade) grew 1.5% in 2001, despite a 1.6% contraction in the fourth quarter in line with weaker economic conditions.

In another report, MAS stated that a pick-up in the electronics sector could begin as early as mid-2002, with a steady rebound in global IT demand. However, MAS remained cautious if this is the start of a sustainable improvement or only a year-end seasonal pick-up in demand. Mr Goh said that for 2002, the Singapore economy depended on developments outside Singapore, especially those in the US economy, the global electronics industry and the war against terrorism.
(1 & 3 Jan)

Bank loans increase in November 2001

According to MAS' preliminary data, total bank loans in November 2001 amounted to S$163.4 billion, 7% or S$10.7 billion higher than November 2000 and 1.2% more than in October 2001. Housing loans, the largest component of total lending, grew 0.7% or S$299 million to S$41.68 billion in November 2001 from the previous month and expanded 9% compared to the same period in 2000.
(1 Jan)

Investment

GRA buys Tiong Bahru Plaza for S$195 million

GRA Singapore has bought Tiong Bahru Plaza shopping mall from United Overseas Land (UOL) for S$195 million, or S$1,010 psf of net lettable area. The price includes S$3 million for upgrading works. The mall is located above the Tiong Bahru MRT station and has 89 years remaining out of the original lease of 99 years. Completed in 1994, the mall is part of a bigger project which includes a 20-storey office tower. Anchor tenants in the mall are Golden Village, Cold Storage and Harvey Norman. UOL said the sale is in line with the group's objective of reducing its level of borrowings and it will book a pre-tax profit of S$84 million. The two parties had re-entered negotiations in December after suspending negotiations in October 2001 when UOL was reported then to be considering other options for the mall, including injecting it into a property trust.
(5 Jan 2002)

Quiet collective sales market in 2002

Property consultants noted that collective sales are unlikely to provide a major source of freehold landbank replenishment for developers in 2002, due to the low land values, which will not attract home owners to sell their homes collectively. The recent pick-up in the low-end 99-year leasehold residential segment, coupled with the continued clearing of unsold stocks in this category, will likely lead developers to turn to the government's reserve list to replenish their landbank. As for the collective sales market, CBRE executive director Chan Fook Kheong cited that very few collective sales owners were interested in a collective sale at today's low land prices. The proceeds are inadequate to replace their apartments with newer properties meeting their expectations in the same district. One possible exception is a development that is old and dilapidated; if owners have to incur large sums for repairs, they may be willing to let the apartments go in a collective sale at little or even no premium.
(3 Jan)

Office

45 employees retrenched by Tokai Bank and Sanwa Bank

Tokai Bank and Sanwa Bank retrenched 45 employees in Singapore, or just under 15% of their combined staff of 300 here. The retrenchment is due to the merger of Tokai Bank, Sanwa Bank and Toyo Trust & Banking in Japan into UFJ Holdings.
(5 Jan 2002)

Residential

Project sales update

Developer MCL land reported that the remaining 229 units of The Warren were sold over the 29/30 December weekend. Over the previous three weeks, 470 units were sold. In total, all 699 units of the project have been sold at the average price of S$450 psf. Over at 38 Draycott Drive, the first luxury project in the area since 1999, 11 units were reported sold. The developer announced that they have raised the project's average price to between S$1,330 and S$1,350 psf for the remaining units. Sanctuary Green's relaunch has moved 35 units so far.
(1 & 3 Jan)

Private home prices fall by 2.9% in 4Q

URA's flash estimates, based on caveats lodged in the first ten weeks of the fourth quarter, show that private home prices fell by 2.9%, just slightly lower than third quarter's decline of 3%. This reflects a total fall of 10.5% for the whole of 2001. However, URA indicated that the actual fall in the price index might be greater once the more recently lodged caveats were also taken into account. Most analysts agreed that the price slide in the last quarter could range between 5% and 7%, based on the deeper price cuts made by developers for the launches in late-November and December.
(3 Jan)

New launches to be competitively priced

United Industrial Corporation (UIC) is launching its 74-unit apartment project, Belleforte, at the average price of S$620 psf in the weekend of 5/6 January. Other recently marketed projects in the area include Parc Haven (S$640 psf), Mandale Heights (S$670 psf) and The Ansley (S$750 psf). At the same time, the 40 apartments at Balmoral 8 are expected to be released. It follows close after the launch of 38 Draycott Drive a week ago and is priced at S$1,100-S$1,300 psf. The average price of 38 Draycott Drive has been raised from S$1,310 psf to the current S$1,350 psf. Hoi Hup and Jihe Development will launch their 99-year leasehold condominium, Legenda, while Keppel Land will relaunch freehold condominium Butterworth 8.
(3 Jan)

HDB

HDB resale prices levelling off

Preliminary estimates from HDB show that prices of HDB resale flats fell by 1.3% in the fourth quarter vs 1.2% in the preceding quarter, which brought the total decline for the year to 7.7%. Property agents felt that the smaller and more gradual decline in this sector indicated that prices are nearing the bottom.
(3 Jan)

More HDB owners sell their own flats

More HDB resale flat transactions were handled by the flat-owners themselves - about 154 each month from January to October 2001, 10% higher than in 2000. Reasons cited were to save on commission and avoid unprofessional agents. The administrative part is felt to be easy now with the simplification of resale procedures by HDB and online submission of resale applications.
(2 Jan)

Industrial

Electronics production up for first time in 11 months

For December 2001, the index for electronics production rose for the first time in 11 months with a 3.4 points gain to 52.4. New electronics export orders rose for the third consecutive month. The rest of the manufacturing economy also saw stronger export orders - the overall new export orders index increased by 1.7 points to 51. On the back of more new orders and production, the overall PMI increased 2.4 points to 48.3, while the electronics PMI rose 2.9 points to 49.4.
(4 Jan)

UMC postpones production plans at wafer fab plant

Taiwan's United Microelectronics Corporation (UMC) is delaying plans to start work at its US$3.6 billion wafer-fabrication plant in Pasir Ris, UMCi. Originally scheduled to start production by the end of this year or early next year, this will not take place till mid-2003 according to sources. The postponement was because of the weak global semiconductor demand and UMCi will review market conditions on a quarterly basis.
(4 Jan)

JTC puts up eight sites for open application

For the second half of its financial year 2001, JTC has released eight industrial land sites under its Open Land Application Scheme, mostly on 30-year leases in areas like Tuas and Loyang. Six are zoned for general industries, one for food industries and one for warehousing. Their total area of 9 ha brought the total land launched under the scheme to 32.4 ha (includes short-tenure land) for the year, less than the 35 to 40 ha set aside at the start of the year.
(3 Jan)

Hynix raises chip prices by 30%

South Korea's Hynix, the world's third largest memory chipmaker, announced a 30% hike in contract chip prices while the world's largest maker Samsung Electronics said that it was also considering raising its contract chip prices. Both Samsung and Hynix raised the prices for dynamic random access memory chips twice late last year. Stronger demand from PC makers have been reported while global sales of semiconductors rose 1.6% to US$10.6 billion in November from US$10.44 billion in October.
(3 Jan)

Positive fourth quarter flash estimates from JTC

According to flash estimates released by the JTC, the net allocation of ready-built industrial space expanded by 59,579 sq ft in the fourth quarter of 2001, reversing three consecutive quarters of decline, and compares favourably to the decline of 93,421 sq ft in net allocation for the third quarter. The improvement was mainly due to higher gross allocation in the flatted factory segment, which had a net allocation of 132,247 sq ft - attributable to a strong take-up of units at the newly completed 205,668 sq ft The Strategy in the International Business Park - as compared to a contraction of 1,206 sq ft in the third quarter.

The industrial land segment also had a positive net allocation of 13.1 ha, up from the plunge of 10.9 ha in the third quarter. For the whole year, net allocation was 45.8 ha, about five times more than 8.9 ha in 2000.
(2 Jan)

JTC cuts rents and prices by up to 17%

In order to help its customers in the current economic downturn, JTC cut its posted rents and prices by as much as 17% for most of its ready-built facilities with effect from 1 January 2002. For stack-up units in Woodlands Spectrum, rents were slashed by 12-16% to between S$0.74 and S$1.22 psf per month while prices were cut by 17% to about S$102 to S$119 psf. At the same time, most flatted factory prices will be cut by as much as 16% while rental will vary according to location. The rental of flatted units in Loyang will be cut by 3-10% to S$1.00 to S$1.53 psf per month. For more centrally located units in Ayer Rajah, rents will either remain unchanged or be reduced by 1-7%. For Phase Z.Ro Technopreneur Park which is targeted at the infocomm technology industry, rents will be cut by 15% to S$3.31 psf per month.

JTC said that posted rents for industrial land will be maintained as they are generally competitive. However, the rates for Jurong Island will be cut by 5% to make them in line with market rates.
(2 Jan)

Merlin Biosciences looks to Singapore as a regional hub

Biotechnology entrepreneur, Christopher Evans, also known as Britain's 'Biotech King', is looking to use Singapore as a launch pad into Asia. Singapore could act as the regional hub for his venture capital company, Merlin Biosciences, and be supported by its latest fund, Merlin Biosciences Fund III. Founded in 1996, the London-based Merlin Biosciences deals with only human medicine and supports biotechnology firms from start-up to pre-IPO and post flotation. Presently, Temasek Holdings, the Singapore government's investment holding arm, is an investor in a Merlin fund - the 247 million euro (S$403.4 million) Merlin Biosciences Fund II that invests mainly in pre-IPO European bioscience companies.
(2 Jan)

Retail

Vivamusic.com wound up

Vivamusic.com Pte Ltd, a 51%-owned subsidiary of Popular Holdings, was officially wound up by the Singapore High Court on 28 December 2001. The company's store at Cathay Cineleisure, Vivamusic Hub (4,402 sq ft) has been closed for a month.
(4 & 5 Jan)

Indochine opens new eatery

Indochine opened a new outlet Indochine Waterfront in the flagship building of the Asian Civilisations Museum (the former Empress Place Museum). The S$2.5 million, 12,000 sq ft restaurant-café-bar comprises two sections, Bar Opiume and Siem Riep II.
(4 Jan)

MAS forecasts inflation for 2002 at between -1% to 0%

The MAS projected inflation for 2002 to range between -1% and 0%. Its monetary policy statement said that "weak demand conditions are expected to exert more downward pressure on prices of cyclical-sensitive items such as clothing, cars and miscellaneous items, while services inflation should be subdued as wage growth moderates further in the months ahead". The MAS said that any turnaround in economic activity in the second half of 2002 is not likely to lead to an immediate uptick in inflation, as inflation normally lags gross domestic product growth. The MAS's forecast "takes into account the cost-cutting measures announced by the government to cushion the effects of the recession, which will directly reduce the prices of various consumer goods and services".
(3 Jan)

Retail space in World Trade Centre to undergo refurbishment

HarbourFront, an 80-20 joint venture between Temasek Holdings and PSA Corp, will be renovating the three levels of retail space at World Trade Centre for more than S$30 million. The facelift will be carried out over two phases to be completed by October 2002 and April 2003 respectively, to coincide with the completion of the initial construction of the neighbouring HarbourFront MRT Station. The renovation is aimed at creating a shopping environment targeted at younger shoppers and will yield some 200,000 sq ft of retail space. Of this, approximately 52% has already been leased. Half of those who signed up are existing tenants, including Cold Storage and McDonald's. HarbourFront expects the pre-commitment rate to reach up to 80% by February 2002. Average rents at the refurbished mall will more than double existing rates, with space for fashion retailers at S$19 to S$25 psf (compared to the existing S$8 to S$10 psf) and space for restaurants at about S$35 psf (vs existing S$12 to S$17 psf.
(3 Jan)

Actus' petition for judicial management confirmed

On 28 December 2001, the High Court confirmed furniture retailer Actus' petition to be placed under judicial management. As at 31 October 2001, Actus owed some S$2 million in debt, which includes approximately S$200,000 in rental arrears owed to City Developments, its landlord of its 25,000 sq ft retail outlet at Grand Copthorne Waterfront Plaza, which closed in November. It is now operating from its warehouse in Tanjong Pagar Distripark.
(31 Dec)

Hotel/Tourism

Visitor arrivals in November 2001 decline 14.7%

Visitor arrivals for November 2001 registered a year-on-year drop by 14.7%. The STB attributes this second straight month of double-digit decline to the global economic slowdown and the aftermath of the 11 September terrorist attacks in the US. November's figure of 533,500 visitors brings the total number of visitor arrivals for the January to November period to 6.85 million, a 2.1% decline from the same period in 2000. For the month, the standard average occupancy rate was 72.7%, a year-on-year decline of 16 percentage points, while the standard average room rate was S$129.30, a drop by 3.5%.
(4 Jan)

New names for Westin hotels at Raffles City take effect

From 1 January 2002, the Westin Stamford and Westin Plaza hotels at Raffles City were renamed Swissotel The Stamford and Raffles The Plaza respectively. The name-change signals the return of the two hotels to the management of owner Raffles International group after being managed by Westin Hotels and Resorts for the past 15 years. Approximately S$100 million was invested in renovating the hotels over the past two years to prepare for the management transfer. Of this, S$20 million went into converting Compass Rose to Equinox, S$45 million into renovating the South Tower of the Raffles Plaza, and S$35 million into the redesign of the lobbies of both hotels, renovations to the public areas and all the restaurants.
(2 Jan)

Corporate News

CapitaLand expects more than 15% sales growth

CapitaLand said in a statement that it expects sales to grow more than 15% in its financial year ended December 2001 - higher than its earlier forecast of 10-15%; while its expected loss will comparable to that of 2000. However, both its subsidiaries Raffles Holdings and The Ascott Group will post a full-year profit despite making more provisions. Raffles Holdings expects overall profit for 2001 to be higher than 2000 because of the gain from divesting 55% equity interest in Raffles City (Private) Limited.
(5 Jan 2002)

Provided by CB Richard Ellis