Published December 20, 2008
Property stocks rally on China's fiscal boost
But measures might have limited impact on reviving sales amid tough economic conditions, analysts say
By JAMIE LEE
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leePROPERTY stocks savoured a sweet respite over the last two days from the market gloom after China announced plans to boost the real estate market.
LIGHTER TAX BURDEN
The Chinese government will abolish urban real estate tax and cut the transaction tax for properties with ownership of two years or less
But the rally is likely to be short-lived, some analysts argued, noting that the measures might have a limited impact on propping up sales amid a difficult economic climate.
The Chinese government said on Wednesday that it would abolish urban real estate tax, as well as cut the transaction tax for properties with ownership of two years or less.
It added that it would encourage banks to extend credit lines to developments in the mass-market housing segment.
Bigwigs in the property market - CapitaLand and Keppel Land - saw the biggest jump among sector peers with their exposure to the mid-tier Chinese market.
Shares of property bigwig CapitaLand surged 16.6 per cent over the last two days to end at $3.30 yesterday while shares of Keppel Land jumped 20.9 per cent to finish at $1.79.
Yanlord Land Group - which targets the Chinese luxury segment - rose on the dovetails of the rally in property stocks on Thursday, rising 17.4 per cent to $1.01.
But the stock fell back 2 per cent to 99 cents yesterday, with analysts noting that these measures are not targeted at luxury players.
'As the overall policy still focuses on supporting the housing needs of the low to middle income homebuyers, high-end developers might not benefit substantially from these changes,' wrote DBS Vickers Securities analyst Carol Wu.
'While the policy environment has continued to improve, full recovery of the sector remains uncertain amid the deteriorating economic outlook,' she said, adding that excessive inventory would prompt developers to cut prices and that the property downcycle trend in China could drag on for as long as two years.
Reuters reported yesterday that an analyst from Morgan Stanley saw the sharp increases in shares of Keppel Land as 'premature and unjustifiable' as solvency and refinancing risks were non-issues for the firm.
It would take time before such fiscal measures filter down to the provinces, said Brandon Lee, an analyst from DMG & Securities.
These steps are also aimed at cushioning a fall in demand rather than to engineer sales given the expected rise in unemployment in China, said Barclays Capital economist Leong Wai Ho.
Saturday, 20 December 2008
Published December 20, 2008
Bank staff fretting over jobs, not bonuses
Uncertainty said to be particularly bad at banks in the midst of being bought over or undergoing integration
By SIOW LI SEN
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IN a departure from their Christmas tradition, workers in Singapore's financial industry are not obsessed with their bonus - if any - this year, as they feel that job security is more important.
For those employed by US and European banks, the anxiety is especially acute because the perception is that critical decisions are taken at head office, regardless of the profitability of the Asian units.
The uncertainty is said to be particularly bad for those with banks in the midst of being bought over - such as Fortis - or undergoing integration such as Bank of America and Merrill Lynch.
'The bosses (the expats) are gone and I feel quite sorry for the staff,' said one BNP Paribas banker.
But a Fortis insider said that the anxiety is 'generic' and it's business as usual.
BNP Paribas said on Thursday that it was suspending its proposed purchase of Fortis but was still interested in a deal and was examining its legal options.
The fate of local Bank of America staff remains unclear after the financial giant said that it would slash 30,000 to 35,000 jobs worldwide over the next three years.
The bank employs more than 2,300 staff across the Asia-Pacific region, but it is not known how many work at its Republic Plaza office here. It also owns investment bank Merrill Lynch - acquired in a fire-sale deal during September's financial meltdown - which has a sizeable unit here. Merrill employs about 1,500 staff, providing both front and back-end services, in Singapore.
For the past decade, senior managers of international banks on trips to Asia would laud the rapid growth of operations here and often seek to increase headcount.
But now, with bank losses running into the billions, many of these banks are cutting staff by the thousands.
While the bulk of the layoffs are in New York or London, what tends to happen in Asia is that entire departments, previously profitable but considered 'non-core', are closed, or sold off to raise cash.
Layoffs in Europe so far have been relatively low, mainly because of stronger unions there.
But given such a backdrop, job security has become the No 1 concern.
'No one's talking about bonus. You're lucky if you still have a job,' said one gloomy ING director.
Dutch-owned ING, which received 10 billion euros (S$20.4 billion) of government money in October, has closed down its aviation finance business and sold its Taiwan insurance unit. Last week, it was reported that ING would close its commodities unit in London.
Credit Suisse early this month said that it would slash 5,300 jobs or 11 per cent of its global workforce by the middle of next year as it warned of the worst quarterly performance since it started quarterly reporting in 2001.
In Asia, more jobs will be lost in Singapore than Hong Kong, said Kai Nargolwala, Credit Suisse Asia-Pacific chief executive.
'That's not surprising when you consider that we have a Hong Kong headcount of about 2,000 people and we have a Singapore headcount of about 5,000,' he said.
As for bonus payments, staff may still get some, though, not surprisingly, the amounts would be lower than in 2007.
Citi Singapore spokesman Adam Rahman said that bonuses, if any, would reflect the tough environment. 'While Citi Singapore has seen stable growth across its businesses in 2008, we will be exercising extra prudence in awarding bonus packages given the unprecedentedly challenging year for the financial industry,' he said.
Serge Forti, chief executive of BNP Paribas Wealth Management, Asia Pacific, said that bonuses will still be paid though, obviously, they would be less than before.
A UBS spokeswoman told BT that 'compensation levels this year will, in part, be dictated by the profitability of the firm as well as the competitive environment'.
RBS, which expanded its operations in Asia following its ABN Amro Bank acquisition, said that final decisions on bonuses would be taken following the year-end results, once the performance of individual businesses is known.
'We are also mindful that we have 170,000 staff, very many of whom have done an outstanding job for us and need to be properly incentivised to keep doing that, and so it's making sure that that balance is responsibly taken,' said RBS group chief executive Steven Hester.
Bonuses were good at Maybank whose financial year-end is June. A Maybank spokeswoman said that bonuses for the financial year ended June 2008 was better than a year ago.
Among local banks, United Overseas Bank said that it would pay bonuses, taking into account the full year's performance. 'These are typically paid at the end of March the following year after the accounts are finalised.'
OCBC Bank spokeswoman Koh Ching Ching said that the bank would 'take into consideration the current economic conditions, the bank's overall performance and the individual employee's performance in our decision for bonus payout'.
DBS Group Holdings last month said that top managers and other staff would take home less pay this year due to lower bonuses, but their basic pay has not been cut.
Bank staff fretting over jobs, not bonuses
Uncertainty said to be particularly bad at banks in the midst of being bought over or undergoing integration
By SIOW LI SEN
Email this article
Print article
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IN a departure from their Christmas tradition, workers in Singapore's financial industry are not obsessed with their bonus - if any - this year, as they feel that job security is more important.
For those employed by US and European banks, the anxiety is especially acute because the perception is that critical decisions are taken at head office, regardless of the profitability of the Asian units.
The uncertainty is said to be particularly bad for those with banks in the midst of being bought over - such as Fortis - or undergoing integration such as Bank of America and Merrill Lynch.
'The bosses (the expats) are gone and I feel quite sorry for the staff,' said one BNP Paribas banker.
But a Fortis insider said that the anxiety is 'generic' and it's business as usual.
BNP Paribas said on Thursday that it was suspending its proposed purchase of Fortis but was still interested in a deal and was examining its legal options.
The fate of local Bank of America staff remains unclear after the financial giant said that it would slash 30,000 to 35,000 jobs worldwide over the next three years.
The bank employs more than 2,300 staff across the Asia-Pacific region, but it is not known how many work at its Republic Plaza office here. It also owns investment bank Merrill Lynch - acquired in a fire-sale deal during September's financial meltdown - which has a sizeable unit here. Merrill employs about 1,500 staff, providing both front and back-end services, in Singapore.
For the past decade, senior managers of international banks on trips to Asia would laud the rapid growth of operations here and often seek to increase headcount.
But now, with bank losses running into the billions, many of these banks are cutting staff by the thousands.
While the bulk of the layoffs are in New York or London, what tends to happen in Asia is that entire departments, previously profitable but considered 'non-core', are closed, or sold off to raise cash.
Layoffs in Europe so far have been relatively low, mainly because of stronger unions there.
But given such a backdrop, job security has become the No 1 concern.
'No one's talking about bonus. You're lucky if you still have a job,' said one gloomy ING director.
Dutch-owned ING, which received 10 billion euros (S$20.4 billion) of government money in October, has closed down its aviation finance business and sold its Taiwan insurance unit. Last week, it was reported that ING would close its commodities unit in London.
Credit Suisse early this month said that it would slash 5,300 jobs or 11 per cent of its global workforce by the middle of next year as it warned of the worst quarterly performance since it started quarterly reporting in 2001.
In Asia, more jobs will be lost in Singapore than Hong Kong, said Kai Nargolwala, Credit Suisse Asia-Pacific chief executive.
'That's not surprising when you consider that we have a Hong Kong headcount of about 2,000 people and we have a Singapore headcount of about 5,000,' he said.
As for bonus payments, staff may still get some, though, not surprisingly, the amounts would be lower than in 2007.
Citi Singapore spokesman Adam Rahman said that bonuses, if any, would reflect the tough environment. 'While Citi Singapore has seen stable growth across its businesses in 2008, we will be exercising extra prudence in awarding bonus packages given the unprecedentedly challenging year for the financial industry,' he said.
Serge Forti, chief executive of BNP Paribas Wealth Management, Asia Pacific, said that bonuses will still be paid though, obviously, they would be less than before.
A UBS spokeswoman told BT that 'compensation levels this year will, in part, be dictated by the profitability of the firm as well as the competitive environment'.
RBS, which expanded its operations in Asia following its ABN Amro Bank acquisition, said that final decisions on bonuses would be taken following the year-end results, once the performance of individual businesses is known.
'We are also mindful that we have 170,000 staff, very many of whom have done an outstanding job for us and need to be properly incentivised to keep doing that, and so it's making sure that that balance is responsibly taken,' said RBS group chief executive Steven Hester.
Bonuses were good at Maybank whose financial year-end is June. A Maybank spokeswoman said that bonuses for the financial year ended June 2008 was better than a year ago.
Among local banks, United Overseas Bank said that it would pay bonuses, taking into account the full year's performance. 'These are typically paid at the end of March the following year after the accounts are finalised.'
OCBC Bank spokeswoman Koh Ching Ching said that the bank would 'take into consideration the current economic conditions, the bank's overall performance and the individual employee's performance in our decision for bonus payout'.
DBS Group Holdings last month said that top managers and other staff would take home less pay this year due to lower bonuses, but their basic pay has not been cut.
Published December 20, 2008
Size of the DPS behemoth
10,450 sold & uncompleted private homes under the DPS now; analysts worried about those getting TOP in 2010-11
By UMA SHANKARI
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SOME 10,450 sold and uncompleted private homes are now under the deferred payment scheme (DPS), according to official data released yesterday.
Of the amount, close to half - 4,560 units - will be completed in 2009, while another 2,540 homes will be completed in 2010, the Urban Redevelopment Authority (URA) said. Under the DPS, which was introduced by the government in October 1997 and withdrawn in October 2007, the bulk of the purchase price of a property is due only after a project obtains its temporary occupation permit (TOP).
The data was welcomed by both analysts and the Real Estate Developers' Association of Singapore (Redas). Over the past several months, many market watchers and analysts have been estimating how big an impact the DPS will have on developers' cashflow and earnings if buyers default on their homes as TOP approaches.
'I think it provides a clearer picture as to the extent of the problem,' said Citigroup's head of Singapore equity research, Chua Hak Bin. 'And it is good that the government acted to stop the system when it did. If not, things would have got a lot worse.'
Said Redas: 'URA data, together with data compiled by Redas, helps to allay concerns that speculators may repudiate their DPS purchases at below-market prices as the completion date nears.' In its statement, Redas highlighted 10 projects - including City Developments' The Sail and Keppel Land's Park Infinia - where the DPS was offered but full payment was still made to the developers once TOP was obtained.
For now, the real area of concern is thought to be the 2,540 units under the DPS that will obtain TOP in 2010.
Redas also said that while units may be affected by market sentiments, sales contracts cannot be repudiated easily.
URA's data proves that the DPS scheme was 'very popular', Citigroup's Dr Chua said. To arrive at its numbers, URA did a survey among property developers of uncompleted DPS-approved projects. In total, developers of 605 projects, comprising 72,384 units, were granted approval to offer the DPS. Of this amount, there were 18,208 sold but uncompleted units as at end-November this year. And of this figure, 10,450 (57 per cent) were still under the DPS.
The fact that the bulk of DPS units will be completed in 2009 is cause for some concern, analysts said. '2009 is going to be a tough year for the economy, and there are 4,650 units under the DPS that will be completed,' said Ku Swee Yong, director of marketing and business development at Savills Singapore.
But assuming a three-year construction period, a large proportion of the units that will obtain TOP in 2009 were probably launched and sold in 2006 and early 2007, at prices that are relatively lower than today's level or the expected level in 2009. So even if the property market continues to weaken in 2009, the owners of these 4,560 units could still lease out the homes or sell them, analysts said. However, if developers had offered the DPS to many sub-purchasers when the original purchasers sub-sell the units, then defaults could be expected.
But for now, the real area of concern is thought to be the 2,540 units under the DPS that will obtain TOP in 2010. Of this number, 1,270 of the units are located in the core central region (CCR), which includes Sentosa and Marina Bay.
'Generally, I'm more concerned over the units which will receive TOP in 2010-2011, which could have been purchased in 2007 at the peak of the property market,' said DMG & Partners Securities analyst Brandon Lee.
And while developers have the legal right to pursue buyers who walk away from their deals, it could be harder to do this when it comes to foreigners, said Knight Frank managing director Tan Tiong Cheng.
Normally, about 75-90 per cent of uncompleted private residential units will be bought by Singaporeans, said DMG's Mr Lee. But in 2007, the proportion fell to 63-68 per cent, with the remaining purchases made by PRs, foreigners and companies. 'We see this segment as the most likely to return their units,' he said. His back-of-the-envelope figure puts the amount expected to be returned as possibly somewhere between 20-30 per cent.
URA said that it provided the data to enable the public to make a better assessment of the private housing market. 'This information was provided by developers in confidence and with the understanding that data for individual projects would not be released to the public. Hence URA is only releasing aggregated data and not data for individual projects,' the government agency said.
'Conducting a survey of developers of all uncompleted DPS-approved projects requires a lot of time and resources from the developers as well as the government. Given that the number of uncompleted units sold under DPS is likely to decline as projects are completed over time, we will monitor the situation and consider whether there is a need to conduct further surveys in future,' URA said in response to a query from BT.
Size of the DPS behemoth
10,450 sold & uncompleted private homes under the DPS now; analysts worried about those getting TOP in 2010-11
By UMA SHANKARI
Email this article
Print article
Feedback
SOME 10,450 sold and uncompleted private homes are now under the deferred payment scheme (DPS), according to official data released yesterday.
Of the amount, close to half - 4,560 units - will be completed in 2009, while another 2,540 homes will be completed in 2010, the Urban Redevelopment Authority (URA) said. Under the DPS, which was introduced by the government in October 1997 and withdrawn in October 2007, the bulk of the purchase price of a property is due only after a project obtains its temporary occupation permit (TOP).
The data was welcomed by both analysts and the Real Estate Developers' Association of Singapore (Redas). Over the past several months, many market watchers and analysts have been estimating how big an impact the DPS will have on developers' cashflow and earnings if buyers default on their homes as TOP approaches.
'I think it provides a clearer picture as to the extent of the problem,' said Citigroup's head of Singapore equity research, Chua Hak Bin. 'And it is good that the government acted to stop the system when it did. If not, things would have got a lot worse.'
Said Redas: 'URA data, together with data compiled by Redas, helps to allay concerns that speculators may repudiate their DPS purchases at below-market prices as the completion date nears.' In its statement, Redas highlighted 10 projects - including City Developments' The Sail and Keppel Land's Park Infinia - where the DPS was offered but full payment was still made to the developers once TOP was obtained.
For now, the real area of concern is thought to be the 2,540 units under the DPS that will obtain TOP in 2010.
Redas also said that while units may be affected by market sentiments, sales contracts cannot be repudiated easily.
URA's data proves that the DPS scheme was 'very popular', Citigroup's Dr Chua said. To arrive at its numbers, URA did a survey among property developers of uncompleted DPS-approved projects. In total, developers of 605 projects, comprising 72,384 units, were granted approval to offer the DPS. Of this amount, there were 18,208 sold but uncompleted units as at end-November this year. And of this figure, 10,450 (57 per cent) were still under the DPS.
The fact that the bulk of DPS units will be completed in 2009 is cause for some concern, analysts said. '2009 is going to be a tough year for the economy, and there are 4,650 units under the DPS that will be completed,' said Ku Swee Yong, director of marketing and business development at Savills Singapore.
But assuming a three-year construction period, a large proportion of the units that will obtain TOP in 2009 were probably launched and sold in 2006 and early 2007, at prices that are relatively lower than today's level or the expected level in 2009. So even if the property market continues to weaken in 2009, the owners of these 4,560 units could still lease out the homes or sell them, analysts said. However, if developers had offered the DPS to many sub-purchasers when the original purchasers sub-sell the units, then defaults could be expected.
But for now, the real area of concern is thought to be the 2,540 units under the DPS that will obtain TOP in 2010. Of this number, 1,270 of the units are located in the core central region (CCR), which includes Sentosa and Marina Bay.
'Generally, I'm more concerned over the units which will receive TOP in 2010-2011, which could have been purchased in 2007 at the peak of the property market,' said DMG & Partners Securities analyst Brandon Lee.
And while developers have the legal right to pursue buyers who walk away from their deals, it could be harder to do this when it comes to foreigners, said Knight Frank managing director Tan Tiong Cheng.
Normally, about 75-90 per cent of uncompleted private residential units will be bought by Singaporeans, said DMG's Mr Lee. But in 2007, the proportion fell to 63-68 per cent, with the remaining purchases made by PRs, foreigners and companies. 'We see this segment as the most likely to return their units,' he said. His back-of-the-envelope figure puts the amount expected to be returned as possibly somewhere between 20-30 per cent.
URA said that it provided the data to enable the public to make a better assessment of the private housing market. 'This information was provided by developers in confidence and with the understanding that data for individual projects would not be released to the public. Hence URA is only releasing aggregated data and not data for individual projects,' the government agency said.
'Conducting a survey of developers of all uncompleted DPS-approved projects requires a lot of time and resources from the developers as well as the government. Given that the number of uncompleted units sold under DPS is likely to decline as projects are completed over time, we will monitor the situation and consider whether there is a need to conduct further surveys in future,' URA said in response to a query from BT.
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