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Friday, October 2, 2009

Surging Singapore home prices lead to bubble fears

SINGAPORE: Singapore pri-vate home prices surged 15.9 per cent in the third quarter from the previous quarter, the biggest jump this decade, government data showed yesterday, highlighting fears about a property market bubble.

Worries about dangerously inflated house prices in Asia being fanned by record low interest rates have led to speculation that countries including South Korea and Australia could move to tighten monetary policy.

Singapore last month acted to cool the property market by releasing more land and making it harder for home buyers to defer payments, but analysts said policymakers were likely to hold off on further steps for fear of derailing a still patchy economic recovery.

Singapore home prices started rising in Q2, analysts say, contrary to a 4.7 per cent decline for that quarter shown in the Urban Redevelopment Authority's index, which is not seasonally adjusted.
Huge crowds have been snapping up units at new residential launches in Singapore, with reports of buyers queuing for hours and leaving blank cheques with agents to secure properties.

"The numbers are backing up the anecdotal evidence we've seen - if anything they are understating it," said Vishnu Varathan, an economist at 4CAST in Singapore. "Policymakers will be acutely aware of the risks of tightening too fast... At this point I think they will wait and see."

Varathan and most economists expect the Monetary Authority of Singapore to keep policy neutral when it releases its half-year policy statement later this month. Singapore forecasts its economy will contract 4-6 per cent this year and sees a subdued recovery likely continuing in 2010.

Prices of government-built apartments, which house about 85 per cent of Singaporeans, rose 3.2 per cent in the third quarter from April-June, faster than the 1.4 per cent gain in the second quarter, raising the floor for private home prices.

Some analysts think rising house prices in Singapore, Hong Kong and China are yet to peak, given a preference for property among investors and a faster-than-expected economic recovery.

By Reuters

UM Land gets nod for land acquisition

Seri Austin, a residential development of UM Land in Johor.

KUALA LUMPUR: Shareholders of United Malayan Land Bhd (UM Land), at its EGM, have approved the purchase of 629.25 acres in Bandar Pulai Jaya, Johor, for RM233mil cash.

As per earlier reports, the company said in a statement yesterday that the land would be for a proposed mixed development.

It will comprise industrial and technology parks, commercial, logistics and transportation hubs as well as supporting residential components.

Shareholders also approved UM Land’s proposal to jointly develop the land with Tradewinds Johor Sdn Bhd (via a 51:41 joint-venture company, Extreme Consolidated Sdn Bhd, held by UM Land and Tradewinds respectively).

The proposed development is estimated to take five years from completion of the proposed acquisition with a gross development value of RM718mil.

A local property analyst contacted by StarBiz said the venture was a good move, despite the sluggish residential property market in Johor.

“The project will take a few years to be developed and the residential property market would have bounced back by then,” he said, adding that he expected a turnaround by the middle of next year.

“Furthermore, UM Land has the holding power to not launch any projects at the moment,” the analyst said.

Payment for the land acquisition would be made under a deferred arrangement over a two-year period.

By The Star (by Eugene Mahalingam)

UMLand andTradewinds Johor team up

Property developer United Malayan Land Bhd (UMLand) has teamed up with Tradewinds Johor Sdn Bhd to jointly develop a RM718 million mix-used development in Bandar Pulai Jaya, Johor.

Under the deal, UMLand will hold a 51 per cent stake in the joint-venture company called Extreme Consolidated Sdn Bhd, while Tradewinds Johor will take the rest.

UMLand yesterday received shareholders' nod to buy the 254.5ha land for RM233 million cash.

The proposed mix development will feature industrial and technology parks, commercial, logistics and transportation hubs and supporting residential components. It is estimated to take five years to complete.
This planned development is expected to generate profits of about RM262 million over a period of five years.

By Business Times