S'pore is 75th in 'city momentum' rankings

It slipped from 17th place due to short-term indicators such as rental growth and investment volume dominating JLL's index

By

Lee Meixianleemx@sph.com.sg@LeeMeixianBT

Singapore dropped from 17th place in 2015 to 75th place in 2016 on JLL's City Momentum Index (CMI). 

ST PHOTO: LIM YAOHUI FOR THE STRAITS TIMES

 Singapore lags

FEB 3, 20165:50 AM

Singapore

SINGAPORE dropped from 17th place in 2015 to 75th place in 2016 on JLL's City Momentum Index (CMI).

It has gone from being one of the top rental performers globally in 2014, to languishing in the third quartile of some 120 cities analysed by the real estate consultancy.

While JLL does not publish city names beyond the 20th place, it told The Business Times that Singapore belongs to the same cluster as Perth, Bangkok, Osaka, Shenyang and Jakarta. For comparison, Hong Kong is ranked 24th, and Taipei 26th.

The index tracks cities' short-term socio-economic and real estate momentum, in combination with measures of whether they have the longer-term foundations for success - in terms of education, innovation and environment.

By these metrics, it sounds like Singapore should rank highly. But in capturing the dynamics of a city's real estate market, JLL also considered factors such as its price movement and the attraction of a city's built environment for cross-border capital and corporations.

In fact, short-term indicators - which include rental growth and investment volume - account for about 70 per cent of the index.

These factors killed Singapore's performance. The city-state is undergoing a slowdown in its property market due to cooling measures put in place by the government - both on the supply and credit side. Additional buyer taxes have also tempered foreigners' demand for real estate here.

The year 2015 saw sharp rental corrections and lower levels of real estate investment, despite Singapore being one of the most popular investment destinations globally, JLL said.

According to its data, office rents fell by around 10 per cent in 2015, with a further 10-20 per cent decline forecast for 2016. Rents have also fallen in the retail sector.

According to data from Real Capital Analytics, the inflow of foreign capital into the Singapore property market was stable at US$3.51 billion in 2015, but it was dominated by a development site in Paya Lebar which was sold to a joint venture between Abu Dhabi's sovereign wealth fund and Australian developer Lend Lease for a whopping US$1.28 billion.

When queried on Singapore's rankings, Jeremy Kelly, director of JLL's global research, said: "While its low rank is indicative of weaker momentum, it should be stressed that differences in CMI score between cities that are ranked between 50 and 90 are relatively marginal.

"Currently, the short-term indicators are showing that that there is a short-term oversupply, but it will serve Singapore well in the future."

Looking at the long-term indicators, Singapore is actually doing better than Hong Kong in terms of providing space for real estate needs.

Singapore also has its own "transformative" infrastructure and real estate projects which it will reap benefits from in the longer run, he added.

The top-ranked cities all tend to be building such "transformative" projects that contribute to their economic growth and competitive advantage.

For example, London, which ranked first for the second straight year, is building a US$22 billion Crossrail project - the largest transport scheme in Europe. Its universities Imperial College and UCL are also expanding their campuses. Other developments include the massive regeneration of the Nine Elms zone and extension of the London Underground's Northern Line.

Bangalore, dubbed the "Silicon Valley of India" and which came in the top city in the Asia-Pacific and fourth worldwide, is seeing rapid progress in its technology sector and the presence of international IT giants drive its real estate growth. The city is in the midst of expanding its Namma Metro, and developing Chennai-Bangalore and Mumbai-Bangalore Industrial Corridors to boost commerce.

In its report, the consultancy said: "In producing this Index, JLL's intention is to alert the market to signals of change and to highlight the defining features which are enabling cities to successfully compete in a new economic landscape."

The top cities would thus be those where change is occurring most rapidly. It does not mean that they will provide the most immediately attractive real estate investment environments, as strong momentum can pose both opportunity and risk, it said.

    
 

2016 investments target lowered to S$8-10b

By

Lee U-Wenleeuwen@sph.com.sg@LeeUwenBT

The amount of investments in Singapore in 2015 may have exceeded the government's forecasts, but the uncertain global economic outlook will likely result in the numbers falling this year. 

PHOTO: BLOOMBERG

 Investment outlook

FEB 3, 20165:50 AM

Singapore

THE amount of investments in Singapore in 2015 may have exceeded the government's forecasts, but the uncertain global economic outlook will likely result in the numbers falling this year.

The Economic Development Board (EDB), the country's main economic planning agency, revealed on Tuesday that fixed-asset investments dropped to S$11.5 billion last year, down slightly from S$11.8 billion in 2014.

This latest figure, however, exceeded the higher end of the statutory board's original target of S$9-11 billion for the year. For 2016, it projects that these investments will dip to the S$8-10 billion range.

EDB's top management said at its annual year-in-review press conference that investment commitments this year are expected to be "moderate" due to continued weakness of global aggregate demand.

"It's fair to say that the global economy has had a rough start to 2016, and understandably many businesses are quite cautious about the operating environment," said EDB chairman Beh Swan Gin.

He added that the latest numbers for 2015 were proof of the resilience of Singapore's attractiveness as a global business hub for firms seeking both long-term competitiveness and growth opportunities in Asia.

Total business expenditure (TBE) per annum - a company's increase in operating expenditure, excluding depreciation - came up to S$5.6 billion last year, just making the EDB's S$5.5- 6.5 billion forecast.

Fixed-asset investments from the United States more than tripled to S$7 billion in 2015 compared to a year ago. This made up 60.6 per cent of fixed-asset investments in Singapore, a nearly four-fold increase from 15.3 per cent in 2014.

Yeoh Keat Chuan, the board's managing director, noted that while the US is typically Singapore's largest source of foreign investment, the significant jump recorded in 2015 was due to a large number of investments that were completed last year.

Europe, meanwhile, was the second-highest source of investments as it contributed 13.2 per cent, while Japan chipped in with 3.7 per cent.

The chemicals industry accounted for the bulk of the investments in 2015 with S$3.6 billion, or 31.3 per cent of the total. Electronics was a close second with S$3.3 billion, or 28.6 per cent.

On the whole, last year's investments will generate some 16,800 skilled jobs in Singapore when the projects are fully implemented, mostly in the professional services, transport, and engineering sectors.

For 2016, EDB reckons the investment commitments can create 20,000-22,000 skilled jobs and bring in S$12-14 billion in value-add to gross domestic product. The investments in 2015 contributed S$12.3 billion in value-add to GDP.

In his remarks to the media, Dr Beh said that while the outlook was far from a rosy one, it was worth noting that the Asian region is one of continuing growth.

While there are worries that China's economy - the world's second-largest at US$11 trillion - grew just 7 per cent last year, Dr Beh noted that was equivalent to an additional US$700 billion in GDP. That, he added, is more than double the size of Singapore's economy.

As for South-east Asia, he said that Asean was collectively now a US$2.5 trillion economy and would register 5 per cent GDP growth annually over the next few years.

Dr Beh said that Singapore was "fortunate" to be in a region that is still registering growth, and local companies should still be able to tap new business opportunities in the region.

While the Republic is not a low- cost economy, it should not be regarded as being less competitive than others. He shared how the country's stock of foreign direct investment (FDI) stood at S$900 billion last year, up from about S$240 billion in 2004.

"This shows that Singapore has increasingly become the preferred location for many businesses to orchestrate their activities in the region, and this region has become an important growth engine for many industries," he said.

"It may be a challenging economic situation compared to previous years, but the underlying tailwinds are in favour of Asia. Singapore remains an attractive and competitive business location."

    
 

Singapore has potential to be test-bedding base: CFE sub-committee

By

Kelly Taykellytay@sph.com.sg@KellyTayBT

The Committee on the Future Economy's (CFE) sub-committee on Future Growth Industries and Markets had its first meeting on Wednesday. 

PHOTO: MINISTRY FOR TRADE AND INDUSTRY

FEB 3, 20166:56 PM

THE Committee on the Future Economy's (CFE) sub-committee on Future Growth Industries and Markets had its first meeting on Wednesday.

Co-chaired by S Iswaran, Minister for Trade and Industry (Industry), and Jean-Luc Butel, president of K8 Global & senior adviser in McKinsey, the group aims to identify key growth clusters and markets, as well as strategies that will enable Singapore-based companies to seize opportunities in the global marketplace.

At their first meeting, the sub-committee members discussed the potential for Singapore to serve as a test-bed to develop solutions for global problems, and the need to develop an entrepreneurial mindset.

Said Mr Iswaran: "Asia's growing needs, global technological trends, and novel business models are creating new opportunities. We are also seeing closer linkages across industry sectors."

He gave the example of aerospace equipment manufacturers who, as a value-added service to their clients, are using data analytics to carry out predictive equipment maintenance.

Over the next few months, the committee will garner more views and ideas by engaging stakeholders across the business community, as well as other Singaporeans.

    
 

EU's Juncker says proposals to avoid Brexit 'fair' for all 28 members

The proposed deal to keep Britain in the European Union and avoid a "Brexit" after a referendum is "fair" for Britain and its 27 partners, European Commission Chief Jean-Claude Juncker said Wednesday.

PHOTO: EPA

FEB 3, 20166:58 PM

[STRASBOURG, FRANCE] The proposed deal to keep Britain in the European Union and avoid a "Brexit" after a referendum is "fair" for Britain and its 27 partners, European Commission Chief Jean-Claude Juncker said Wednesday.

Juncker spoke a day after EU Council President Donald Tusk unveiled a series of proposals to help persuade Britons to stay in the European Union.

The commission, the executive of the 28-nation bloc, firmly supported the proposals, Juncker told members of the European Parliament who will need to approve several of the plan's most controversial points.

"The settlement that has been proposed is fair for the United Kingdom and fair for the other 27 members states," Juncker said..

"It is also fair for the European parliament," he added.

The proposals include a four-year "emergency brake" on welfare payments for EU migrant workers, protection for countries that do not use the euro currency and a "red card" system giving national parliaments more power.

"We have addressed the prime minister's concerns while respecting the (EU) treaties," he said.

"I've always said I wanted the UK to remain a member of the European Union on the basis of the fair deal," Juncker told the MEPs including members of the UK Independence Party that back an exit by Britain from the EU.

UKIP head Nigel Farage ridiculed the proposals that were "hardly worth the wait" and said Cameron would now "parade in front" of EU leaders for more concessions at a summit in two weeks.

"I find it rather humiliating that a British prime minister has to do this. But I'm certain of one thing: he won't get another thing," Farage told MEPs.

Former Belgian premier Guy Verhofstadt urged his fellow MEPs to avoid giving too many concessions to Cameron.

"We should not add emergency brakes every time a European leader faces a problem with his public opinion," Verhofstadt said.

Manfred Weber, the head of the right-of-centre European People's Party (EPP) party also warned of conceding too much to Britain: "We don't want only a British Europe, we want a Europe for all," he said.

His party "wants the UK to stay in the EU and for the people of UK to be convinced it is better to stay," he added.

The unveiling of Tusk's plan launched two weeks of intense negotiations to reach a deal at an EU summit later this month.

British Prime Minister David Cameron on Tuesday said Tusk's plans showed "real progress" and made it likely that he would campaign to stay in the EU in a referendum expected in June.

London's bid to transform its EU membership has added to the turmoil as the bloc struggles with the biggest influx of migrants since World War II and the fallout from the eurozone debt crisis.

AFP

    
 

Further correction in Singapore property prices could come: JLL

By

Kelly Taykellytay@sph.com.sg@KellyTayBT

Recent declines in the Singapore stock market could signal a further correction in property prices in the coming quarters, said investment management firm JLL on Wednesday. 

PHOTO: REUTERS

FEB 3, 20165:16 PM

RECENT declines in the Singapore stock market could signal a further correction in property prices in the coming quarters, said investment management firm JLL on Wednesday.

Said Chua Yang Liang, JLL's head of research, South-east Asia: "Looking back into the past, the residential market for example, corrected by 4 to 6 per cent a quarter in some instances. Should the market lose footing, it is not impossible to expect a recessionary correction of this magnitude.

"If this scenario pans out and threatens the stability of the property market and wider economy, it may prompt the government to revisit its property cooling measures and other macro-economic policies including economic stimulus packages."

    
 

Macro-stability is key in assessing property cooling measures: Shanmugam

By

Lynette Khoolynkhoo@sph.com.sg@LynetteKhooBT

Macro-stability is key in assessing property cooling measures and the government will review these policies when the risks are "less or manageable", Home Affairs and Law Minister K Shanmugam said on Wednesday. 

PHOTO: SPH

FEB 3, 20168:41 PM

MACRO-STABILITY is key in assessing property cooling measures and the government will review these policies when the risks are "less or manageable", Home Affairs and Law Minister K Shanmugam said on Wednesday.

"We plan ahead, we think, we assess so, when we set on a course, we have calculated the costs and benefits to the population, to the different sectors and we keep to the course. We have a rough idea on when to change but that doesn't mean we announce it," he said.

He was fielding questions at a dialogue session with over 2,000 property agents at a conference held by ERA Realty, on when the government would lift property market cooling measures, particularly the additional buyer's stamp duty (ABSD).

The cooling measures such as ABSD and the total debt servicing ratio, which caps individuals' borrowings to 60 per cent of their gross monthly income, seek to avert a systemic risk in the banking system and protect Singaporeans.

Policies are designed to balance the needs of ensuring that the aspirations of Singaporeans wanting to "own a piece of their own country" are met while being an international city, Mr Shanmugam said.

But expressing that he was not in a position to make government announcements unilaterally, Mr Shanmugam said: "When the finance minister and the national development ministers see that those risks are less or manageable, then they will relook at the policies. Whether they will change or they will not change, it's not for me to go and say."

But he also stressed that the property market does not exist in a vacuum, but is linked to the real economy, whose trajectory will depend on the internal and external environment.

Singapore's susceptibility to the global economy is also magnified by the fact that its external trade volume is four times that of its GDP (gross domestic product).

Even though the 2008 global economic crisis was hardly felt in Singapore, thanks to the government's pump-priming activities, the world economy is different now, Mr Shanmugam observed.

    
 

Service industries in US expand at slowest pace since 2014

MORE

• ADP says companies in US added 205,000 workers in January
• Private businesses start 2016 on weak footing
• French service sector activity grows slightly in January: PMI
• German private sector growth slows at start of 2016: PMI
• Flash: Singapore private sector PMI at 52.5 in Jan, hits 11-month high
• Economists see S'pore manufacturing activity picking up by Q2

      

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NEWSLINK

FEB 3, 201611:20 PM

[WASHINGTON] Service industries expanded in January at the slowest pace in nearly two years, raising the risk that persistent weakness in manufacturing is starting to spread to the rest of the US economy.

The Institute for Supply Management's non-manufacturing index fell last month to 53.5, the lowest since February 2014, from 55.8, the Tempe, Arizona-based group's report showed on Wednesday. Readings above 50 signal expansion. The result was less than the median forecast in a Bloomberg survey.

The industries that account for about 90 per cent of the economy may be adjusting expectations after consumers tempered spending and businesses cut back on investment in the fourth quarter. While service providers can be more insulated than their factory counterparts from sluggishness overseas and a stronger dollar, the January retreat reflected a sudden shift lower in sentiment about business activity.

"We're seeing signs of a slower US economy," Jennifer Lee, a senior economist at BMO Capital Markets in Toronto, said before the report. "We had a weak hand-off to the first quarter. Consumers are still spending, but the pace has slowed." The ISM non-manufacturing survey covers an array of industries including utilities, retailing, and health care, in addition to construction and agriculture.

The group's factory survey released on Feb 1 showed manufacturing shrank for a fourth straight month. The 48.2 reading for the index in January was little changed from 48 a month earlier, which was the weakest since June 2009.

Details of the services survey showed the business activity index dropped to 53.9 from 59.5 in the prior month, marking the biggest decrease since November 2008. The measure parallels the ISM's factory production gauge.

Weaker Employment The services employment index fell to 52.1 in January, matching the lowest since April 2014, from 56.3 the prior month.

The new orders measure decreased to 56.5 from 58.9, while a measure of supplier deliveries climbed to 51.5 from 48.5.

The index of prices paid dropped to 46.4, the first contraction in three months, from 51.

The economy grew at a 0.7 per cent annualized rate in the fourth quarter, Commerce Department data showed last week. Consumer spending, which accounts for about 70 per cent of the economy, moderated to a 2.2 per cent pace, while business investment fell at a 1.8 per cent rate, the first drop since the third quarter of 2012.

Sustained job creation and lower fuel bills have the potential to spur demand. At the same time, wage growth has been sluggish and Americans have been intent on boosting savings rather than ramping up purchases.

Housing, which is included in the ISM services report, is also benefiting from strong hiring and low mortgage rates that are boosting purchases, though bigger advances in income would help accelerate sales this year.

BLOOMBERG

      

Russia open to oil meeting if there is consensus: Lavrov

Russian Foreign Minister Sergei Lavrov said if there is consensus among members of the Organisation of the Petroleum Exporting Council and non-Opec members to meet "then we will meet". 

PHOTO: REUTERS

FEB 3, 20165:27 PM

[MUSCAT] Russian Foreign Minister Sergei Lavrov said if there is consensus among members of the Organisation of the Petroleum Exporting Council and non-Opec members to meet "then we will meet".

Oman Foreign Minister Yusuf bin Alawi also said so far there was no agreement for a time for any meeting, "but it will be soon". He was speaking to reporters at a joint news conference with his Russian counterpart on Wednesday.

REUTERS

    
 

Up to 1m tonnes of sugar smuggled into China annually

FEB 3, 20164:05 PM

[DUBAI] Up to one million tonnes of sugar is trafficked into China every year, a Chinese agriculture ministry official said on Wednesday.

Countering the smuggling is a challenge for the government because of the country's long borders, Xu Xue, chief sugar industry researcher for the ministry, said.

"The cost of fully executing the law is expensive... there is a huge demand to deal with the smuggling but less power to do so," she told a sugar conference in Dubai through a translator.

She gave an estimate of roughly half to one million tonnes per year is being smuggled into China, the world's top sugar buyer.

"It is difficult to estimate the exact numbers but it is around that figure," she said.

On Monday, the president of the Indian Sugar Mills Association said that the bulk of Indian sugar exports were contracted for Myanmar but eventually ended up in China.

Smuggling of agricultural products along China's borders with Vietnam and Myanmar has long been a problem. While a crackdown in 2014 helped curb this, there are worries buyers will scramble for sugar supplies as the global market braces for its first deficit in six years.

Xu said the difference in price between foreign and domestic sugar provided a main motive for smugglers.

She forecast China's annual sugar output could reach 11 million tonnes in 10 years, when demand is expected to be around 18.5 million tonnes annually.

She said imports could reach 6 million tonnes by that time.

"There will be a consistent gap between demand and production but we hope in the coming 10 years we can reduce this gap between our supply and demand through increased storage," Ms Xu said.

REUTERS