Kf Research 3rd Quarter 2008

Research

JUl-sep 2008/3rd quarter

real estate highlights Highlights

• Singapore’s private residential market continued to show signs of cooling. Prices and rentals of private residential properties fell in 3Q 2008 after nearly four years of consecutive quarterly growth. However, average HDB resale flat prices still grew 4.2% qoq in 3Q 2008. • Prime retail rentals generally fell for the first time since 3Q 2005, as retailers are increasingly cautious about committing to lease at high rentals. • Office rentals showed signs of softening. Rentals of office space islandwide dropped in 3Q 2008 after growth was noticed to have eased for some areas in previous quarters. • The industrial property market moderated in performance during 3Q 2008, with rents and capital values for most industrial properties remaining similar to 2Q 2008.

jul-sep 2008/3rd quarter

real estate highlights

Residential Property Market Singapore’s private residential market continued to show signs of cooling as prices and rentals of private residential properties fell in 3Q 2008 after nearly four years of consecutive quarterly growth. However, average HDB resale flat prices still grew 4.2% qoq in 3Q 2008.

marginally, this improvement was short lived. The following month of August 2008 witnessed a trifling 194 units launched in the private residential market, the smallest number since monthly data was made available in June 2007.

Private Residential Sector Muted Launch Market Singapore’s private residential market continued to show signs of cooling as launch market activity waned amid elevated fears of the possible crumbling of global financial markets. While the month of July saw the number of units launched increase

In the month of September however, the total number of new launches increased to 767 units islandwide, up from the meagre number of homes launched in the preceding month. The expansion in September was due to a sharp decline in August, as some projects were withheld from launching during the Seventh Lunar Month where people generally refrain from making home purchases. Though an improvement on a monthly basis, the number of units launched in September was still 42% lower than the 1,323 units launched in July, the period when the most number of units was launched in 2008. Nonetheless, the 767 units launched in September was heartening as it surpassed the nine-month average of 611 units launched per quarter in 2008.

Chart 1

Private Home Launch and Sales Volume Islandwide 16,000 14,000

No. of Units

12,000 10,000 8,000 6,000 4,000 2,000 0

3Q07 New Sales

4Q07

1Q08 Secondary Sales

Source: Urban Redevelopment Authority, Knight Frank Research

2

2Q08 New Launches

3Q08

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Monthly statistics indicate that despite abatement in the total number of new launches this quarter, the launch market still experienced encouraging growth. The number of units released by developers in 3Q 2008 was the highest among the first three quarters this year, totaling about 2,244 units, reflecting a 24% quarter-on-quarter (qoq) increase. Mirroring the previous quarter, most units were launched in the mid-tier market, while the prime private residential market comprised 20.6% of all new launches in 3Q 2008.

until there is some stability in the financial markets.

Languish Sales in Primary Market Based on the Urban Redevelopment Authority (URA)’s monthly statistics, a total of 1,597 units were sold by developers in 3Q 2008. Although this was the largest number of new units sold per quarter in 2008 to date, it was a mere 3.6% more than the number of private residential units sold in 2Q 2008 and approximately 70% of the five-year quarterly average sale figures. The 1,820 private residential units sold in 2Q 2008 reflected

With the financial health of global markets uncertain and overall growth fundamentals expected to thwart the dynamics of the residential market, it is anticipated that the launch market will remain moderate, at least

moderate take-up as well, as the increase was a surge compared to 1Q 2008’s 1,395 units, which was the second lowest quarterly figure over the past 12 years. With the takeup of developer sale mellowing significantly, this reflects heightened caution from homebuyers will be acting prudently amid severe global economic conditions. Of the three regions, the bulk of new sales (45.5%) in 3Q 2008 were in the mass market while the prime Core Central Region (CCR) saw a further decline in both the number and proportion of sales. It is expected that while overall new sale volume has shown signs of moderation, the coming months would see figures for 2008 rest at around 60% of the total new sales in 2007.

Some Possible Major Launches in the Next 6 Months Projects

Tenure

District

Developer

Location

Marina Bay Suites

99-year

01

Cheung Kong / Hongkong Land / Keppel Land

Central Boulevard

Units 221

Residential Development

99-year

04

City Developments Ltd

Sentosa Cove

228

Seascape

99-year

04

Ho Bee Group / IOI Land

Sentosa Cove

151

The Peak @ Balmeg*

FH

05

MCL Land

Balmeg Hill

180

Urban Resort*

FH

09

Capital Land Residential Limited

Cairnhill Road

64

Residential Development

FH

09

Heeton Holdings

Grange Road

Paterson Suites*

FH

09

Bukit Sembawang Estates Ltd

Paterson Road / Lengkok Angsa

28 102

The Oliv*

FH

10

TG Development Pte Ltd

Balmoral Road

Madison Residences*

FH

10

Keppel Land

Bukit Timah Road

56

23

Verdure

FH

10

Bukit Sembawang Estates Ltd

Holland Road

75

Latitude*

FH

10

CapitaLand Ltd

Jalan Mutiara

127

The Trizon

FH

10

Singapore Land Ltd

Ridgewood Close

247

Nathan Residences*

FH

10

Tat Aik Property Pte Ltd

Nathan Road

91

VIVA

FH

11

Allgreen Properties Ltd

Suffolk Road

235

Trilight

FH

11

Ho Bee Investment

Newton Road

152

L’VIV*

FH

11

Wing Tai Asia

Newton Road

100

The Arte

FH

12

City Developments Ltd

Jalan Raja Udang / Jalan Datoh

336

The Mezzo

FH

12

Soilbuild Group

Balestier Road

Silversea*

99-year

15

Far East Organization

Amber Road

383

Residential Development

99-year

18

Kheng Leong / UOL

Simei St 4

645

The Cascadia

FH

21

Allgreen Properties Ltd

Bukit Timah Road

536

Residential Development

99-year

22

Frasers Centrepoint Homes

Lakeside Drive

712

82

Note: *Projects on preview

3

jul-sep 2008/3rd quarter

real estate highlights Subdued Secondary Market The secondary market continued to experience deflated demand as resale activity began to diminish at the onset of the second half of 2007. Secondary market transactions have substantially decreased in the beginning of 2008. While the number of secondary market transactions started to fall when financial market woes began as early as 3Q 2007, it was only at the start of this year when the sales were registered less than the five-year quarterly average of about 3,020 units. This was partly due to the reduction in collective sales and partly due to the uncertain market sentiments. As at 2Q 2008, secondary market sales stood at about 2,800 units and early estimates indicate that this figure stood at approximately 2,400 units for 3Q 2008. Of note, the Outside Central Region saw the largest proportion of secondary sales in the second quarter of the year, reflecting a better interest for mid- and mass market homes for well-located and affordably-priced suburban projects which were launched. In 2Q 2008, the proportion of resale transactions islandwide was registered at

50.8%, a 14.6 percentage point reduction from 1Q 2008. Though still declining, the dip in the number of resale transactions was a smaller -7.4% qoq this quarter and the highest concentration of such sales was still in areas Outside of the Central Region. Speculative property sales, as measured by the subsale activity persisted to decline when the proportion of subsales islandwide was recorded at 11.0% in 2Q 2008 (still 6 percentage points higher than the fiveyear quarterly average). As repercussions from tumultuous global markets remain ambiguous, it was the mass Outside Central Region that saw the strongest number of subsales, when this proportion climbed to 8.1% in 2Q 2008, the highest proportion in the last five years. It was the sub-markets that have risen to risky heights, which saw a smaller proportion of subsales. Specifically, both the prime Core Central Region and mid-tier Rest of Central Region experienced a smaller proportion of subsales in the last quarter, however, it was the mid-tier private residential market that was more pronounced in its decline when it registered at 10.5% in 2Q 2008. This could be because those property players who wanted to exit the market had already done so earlier.

Chart 2

Private Home Sales Volume Islandwide 16,000 14,000

No. of Units

12,000 10,000 8,000 6,000 4,000 2,000 0

3Q07

4Q07 New Sales

1Q08 Sub-Sales

Source: Urban Redevelopment Authority, Knight Frank Research

4

2Q08 Resale

3Q08

Sentiments Fail to Undermine Foreign Interest Preliminary figures indicate that there may be a slowdown in the percentage of foreigners that have purchased private residential properties in Singapore. The figures for 3Q 2008 hinted that this proportion has taken a further decline, as 21.6% of all transactions islandwide were home-purchases by foreigners. This was 0.9 percentage point lesser than the five-year quarterly average proportion. The onset of 2008 had already seen a dip in the number of foreign transactions when numbers fell below the five-year quarterly average figures. The decline in 2008 was magnified by the substantial growth in foreign buying interest from 2005 to 1H 2007. 1H 2008 figures showed that Malaysians and Indonesians continued to be major foreign homebuyers in Singapore, making up 17.6% each of all foreign transactions. However, the share of foreign home purchases by Indonesians and Malaysians have declined and are lower than five-year quarterly average values. On the other hand, foreigners that hail from China and India have shown greater interest in Singapore’s private residential market in recent times when they made up 10.5% and 12.8% of all foreign transactions respectively. The profile of homebuyers are also increasingly international, as developers attempt to market some projects in less traditional countries, such as Korea. Although both Indonesians and Malaysians were the biggest group of foreign buyers, the types of properties preferred by each differ. Indonesians have transacted much pricier homes than buyers from Malaysia since 2003. Generally, the bulk of properties bought by Indonesians fell into the S$1.5 million – S$5 million price range compared to Malaysians who purchased homes that were within the S$500,000 – S$1 million

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range. Additionally, Indonesians also formed the group that was most active in Singapore’s high-end residential market. They made the most number of purchases for homes that cost S$5 million and above.

Chart 3

Proportion of Foreign Homebuyers Islandwide as at 1H 2008

In terms of location, foreign homebuyers have their penchant. Foreign homebuyers in Singapore’s residential property market has, in the past 13 years favoured purchasing property in certain districts over others. Districts 9, 10 and 15, in ascending order, have traditionally attracted strongest foreign interest. This remained similar in 1H2008 although there were more foreigners who purchased homes in districts 10, followed by districts 9 and 15.

As Singapore rose to become the 13th most expensive city in the world for expatriates to live based on Mercer’s Worldwide Cost of Living Survey 2008, these rising costs of living as well as worrying market sentiments seemed to have affected foreign demand for property in Singapore, as suggested by abatement in both the proportion and number of foreign transactions based on preliminary numbers for 3Q 2008. Nevertheless, while market sentiments have inevitably impaired demand from foreigners, the appeal of a city that is becoming increasingly enchanting and cosmopolitan is likely to continue to entice foreigners.

4.9% 10.5% 0.8% 12.8% 17.6% 17.6% 2.0% 2.3% 8.7% 22.7%

Source: Urban Redevelopment Authority, Knight Frank Research

Chart 4

Transactions by Foreigners Islandwide Percentage of Transaction by Foreigners

Districts 9 and 10 have been the choice home-buying location for foreigners over the past 13 years. However, as at the first half of 2008, District 15, which generally covers the Katong, Joo Chiat and Amber Road planning areas seemed to have grown in favour with foreigners. This is due to the increasing appeal of the eastern districts, including for some who have been priced out of the Central Region as prices of homes soared in 2006-2007.

Australia China Hong Kong India Indonesia Malaysia Taiwan USA United Kingdom Others

30% 25% 20%

22.4%

25.9%

26.6%

2007

1H 2008 (Prelim)

23.5%

18.4%

15% 10% 5% 0%

2004

2005

2006

Source: Urban Redevelopment Authority, Knight Frank Research

5

jul-sep 2008/3rd quarter

real estate highlights Slump in Prices

Softening in Rentals

Since mid-2007, the rate of private home price growth has been decelerating. In 3Q 2008, prices fell for the first time after about four years of expansion, according to official figures. URA’s flash estimates indicated that home prices contracted by 1.8% qoq growth the third quarter. The price decline came not so much as a surprise as it was expected that the unyielding subdued transaction volume would have eventually led to a drop in prices.

Leasing activity of non-landed homes remained active in 3Q 2008. Approximately 9,500 units were leased in 3Q 2008, about 19.6% more than 2Q 2008. The first nine months of 2008 saw a total of about 22,900 leasing deals concluded while the same corresponding period in 2007 saw a marginally smaller 20,200 leasing deals of non-landed homes.

Specifically, all non-landed market segments, except for the mass-market segment (Outside Central Region), saw prices easing in the third quarter. For the prime market segment (Core Central Region), the tapering of prices since the previous quarter saw growth decline by 2% qoq in 3Q 2008. In addition, there was no residential unit sold or launched at above the S$4,000 psf in 3Q 2008, reflecting the more subdued mood in the high-end luxury housing segment. Private home prices in the mid-tier (Rest of Central Region) recorded a slightly faster fall of 2.1% qoq, after achieving 0.7% qoq expansion the preceding quarter. The larger price fall in the high-end and mid-tier segments are partly due to the robust price growth that these two segments had enjoyed in the past three years, where prices of some properties reached record highs. By comparison, average prices in the mass-market private home segment had a slower start and increased by a marginal 0.1% in 3Q 2008. Likewise, the private residential landed market also saw minimal growth in 2Q 2008. This was the first time in six quarters when prices of landed homes were below the five-year average quarterly growth. Prices of landed homes grew at only 0.6% qoq, with median prices of the three sub-categories of landed homes registering expansion rates of between 0.5% and 1.0% in 2Q 2008. Notwithstanding the limited increase, the landed housing segment is still considered stable.

6

However, the leasing activities seemed to have taken place across a backdrop of softening rents. Islandwide rentals for private residential properties showed the first decline over four years in 3Q 2008. According to URA, islandwide rentals fell 0.9% qoq in 3Q 2008, with rentals of private non-landed properties dropping by 1.1% qoq. However, rents of private residential properties are still experiencing double-digit yoy percentage growth, of 15.1%. Of note, tenants are increasingly cautious amid the economic uncertainty and becoming realistic in their accommodation needs. In the current market, tenants generally prefer dwellings which offer attractive rents, at the expense of homes with luxury features. The drop in overall rents was also due to costcutting measures by companies, such as by reducing generous expatriate packages that include housing allowances. Based on Knight Frank’s research of non-landed property, rents of luxury condominiums eased further by 6.6% qoq. With the fall, it brings rents of luxury condominiums to below that of end 2007. Rents of luxury condos are some 2.6% lower than that of 4Q 2007. There was a fall in the rents of non-landed residential properties in all micro regions, according to Knight Frank’s research. The greatest fall in rentals for this quarter was in the East region, which reflected an 8.7% qoq decline. This was partly because rents for homes in the East have been staging one of the fastest escalations in 2007. As the number of homes in the prime districts were collectively sold for redevelopment

increased in 2007, some tenants were attracted to the eastern districts, such as the East Coast. The current rental decline of non-landed private homes in the East is a reflection of tenants who are more cautious in their accommodation requirements and are resisting significant rental hikes. Similarly, rents of non-landed private residential properties in the West dropped 3.3% qoq, the first fall in the past three years. The relatively milder rental decline in the suburban areas is due to the smaller rental increase in 2006 and 2007.

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Public Housing Sector

resale HDB flats as a result of increasing number of new immigrants in Singapore and demand from newly- formed families. In addition, the more cautious mood among these newly formed families could have caused some of them to purchase HDB flats instead of private properties. This latest flash estimate also indicates that the current average resale price has exceeded the alltime high in 4Q 1996 by 0.4%.

Unruffled Sentiments The public housing sector still appears to hold steady in terms of its performance, notwithstanding frail financial markets. The Housing Development Board (HDB)’s flash estimates for the third quarter of 2008 showed that the market is still experiencing healthy growth. Average HDB resale home prices still achieved a relatively impressive qoq growth of 4.2% in 3Q 2008, which could be attributed to the healthy demand for

The strong home-buying sentiment in the public residential market is partly due to a more conservative buyers’ behaviour during the global economic crisis. Although rare, there were flats concluded at above the

Chart 5

9,000

140

8,000

135

7,000

130

6,000

125

5,000

120

4,000

115

3,000

110

2,000

With this strong demand, the unsold stock of HDB flats has shrunk. It is believed that there are presently 1,500 unsold completed units, around 40% of the previous number in 2007. The 4.5% qoq increase in resale applications to 8,112 units in 3Q 2008 also echoes brimming demand for public flats. However the amount of the cash-overvaluation (COV) of the transacted prices of larger HDB flats has been decreasing in the past three quarters. In this quarter the average COV of 5-room flats and Executive flats are S$17,000 and S$18,000 respectively. In 4Q 2007, the average COV of 5-room flats and Executive flats were S$26,000 and S$33,500 respectively.

105

1,000 0

HDB Resale Price Index

No. of Transactions

HDB Resale Transaction Volume and Price Index

S$700,000 level, particularly in areas such as Marine Parade, Queenstown and Bukit Merah. Prices of new and resale flats were generally positive and reflect optimism going ahead. Additionally, the 50-storey Pinnacle@ Duxton, due to be completed this year, have prices starting at S$545,000 and going up to S$645,800, much higher than the record held by a S$531,500 five-room unit in Toa Payoh. (Note that the record excludes flats under the Design, Build and Sell Scheme).

3Q07 3-room Flat

4Q07 4-room Flat

1Q08 5-room Flat

2Q08

Executive Flat

3Q08

100

HDB Resale Price Index

Source: Housing Development Board, Knight Frank Research

Chart 6

Median Resale Prices of 4-room flat $350,000

30.0%

$300,000

25.0%

$250,000

20.0%

$150,000

15.0%

$100,000

10.0%

$50,000

5.0%

$0

3Q07

4Q07

1Q08

4-room Flat Valuation

2Q08

3Q08

0.0%

Price Change (qoq)

Source: Housing Development Board, Knight Frank Research

7

jul-sep 2008/3rd quarter

real estate highlights Outlook for Private Residential Property Sector In recent months, the embattled financial markets have created a ruckus globally, leaving the Singapore private residential market unsettled. The third quarter of this year has seen prices take a dip and going forward, it is anticipated that the price decline is likely to persist. Essentially, whatever price gain achieved in the first half of this year would be given up in 2H 2008, resulting in overall price movement of 0% to a drop of 3% for the whole of 2008. The mass-market segment’s weak price growth of 0.1% in 3Q 2008 could be the prelude to a decline in the following quarter. Prices are expected to continue to fall in 2009 and this could result in a challenging year for Singapore’s private residential property market.

Table 1

Rentals of Selected Non-Landed Private Residential Units as at 3Q 2008 Locality

Monthly Rent (psf)

Districts 9, 10 and 11 (Luxury)

S$ 5.00 – S$ 5.50

Districts 9, 10 and 11 (Others)

S$ 4.30 – S$ 5.10

East Coast

S$ 2.90 – S$ 3.90

West

S$ 2.60 – S$ 3.30

Upper Bukit Timah

S$ 2.20 – S$ 2.60

Thomson, Toa Payoh, Bishan

S$ 2.40 – S$ 3.00

Yio Chu Kang, Yishun

S$ 2.00 – S$ 2.30

Source: Knight Frank Research

Table 2

Capital Values of Selected Non-Landed Private Residential Units as at 3Q 2008 Locality

Capital Value (psf) Freehold

99-year Leasehold

Districts 9, 10 and 11 (Luxury)

S$ 2,220 – S$ 2,260

-

Districts 9, 10 and 11 (Others)

S$ 1,750 – S$ 1,810

S$ 1,260 – S$ 1,350

East Coast

S$ 1,070 – S$ 1,210

S$ 810 – S$ 1,120

Outlook for Public Housing Sector

West

S$ 790 – S$ 840

S$ 660 – S$ 740

Upper Bukit Timah

S$ 610 – S$ 710

S$ 550 – S$ 790

Thomson, Toa Payoh, Bishan

S$ 650 – S$ 770

S$ 610 – S$ 690

While the star seems to be fading for the private residential sector, the outlook for the public sector in the short term looks set to dwarf that of the private market this year. The strength in the HDB resale flat market is expected to continue for at least another six months, which could result in a 12% to 17% increase in the average HDB resale home price for the whole of 2008. However the gradual decline in the amount of cash-overvaluation of the transacted prices of larger HDB flats indicates that the period of robust price expansion may be drawing to a close.

Yio Chu Kang, Yishun

S$ 490 – S$ 610

-

8

Source: Knight Frank Research

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Retail Property Market Prime retail rentals generally fell for the first time since 3Q 2005 and are expected to have mild corrections going ahead, as retailers are increasingly cautious about committing to lease at high rentals.

Consumer sentiments were still considered optimistic for the Great Singapore Sale (GSS), which was held from 23 May to 20 July. While figures by Mastercard showed that local cardholders spending in the GSS went up by close to 25% over last year, this rise fares poorly against last year’s when spending grew at 45% over the year before. Visitor expenditure in the GSS grew by 11% to reach S$349 million.

Bumpy Road Ahead Retail sales index, excluding motor vehicles, for June decreased 1.3% year-on-year (yoy) after 16 consecutive months of increase. Consumers were generally more cautious, especially in buying bigger-ticket items. As such, sales of big-ticket items such as jewellery and telecommunication apparatus & computers fell by 20.0% and 21.8% yoy in June 2008. The index, however, recovered strongly in July 2008, reflecting a 9.3% yoy expansion. Stripping price effect, real retail sales improved 6.4% yoy in July.

Retailers may also experience a slight fall in visitors’ spending, due to fewer visitor arrivals. For example, an immediate concern is that the Singapore Tourism Board (STB) may fall short of its targeted 10.8 million visitor arrivals set out earlier this year, as visitor arrivals contracted for the third consecutive month. Latest figures indicate that visitor arrivals in August declined 7.7% yoy, the largest fall since the SARs period in 2003.

Chart 1

Retail Sales Index at Current Price 140

16.0%

130

12.0%

120

8.0%

110

4.0%

100

0.0%

90

Mar 08

Apr 08

May 08

Reatail Sales Index (Excluding Motor Vehicle)

Jun 08

Jul 08

Yoy Change

Reatail Sales Index (Excluding Motor Vehicle)

(Excluding Motor Vehicle)

-4.0%

Yoy change in Retail Sales Index

Source: Singapore Department of Statistics

9

jul-sep 2008/3rd quarter

real estate highlights Healthy Demand and Limited Supply Occupancy of retail space in 2Q 2008 remained positive, improving for the fourth consecutive quarter to reach a high of 93.7%. This was led by retail space in Orchard Road, which was 96.7% occupied. Of note, occupancy for retail space in the Fringe Area, as defined by URA, increased 1.2 %-points to achieve 91.8%. Leasing activities in 2Q 2008 were still relatively strong with retailers committed to about 70% of City Square Mall’s tenancy. The first phase of the retail space in Fusionopolis (183,000 sq ft) was also more than 50% taken up with Cold Storage and Fitness First as two of their largest tenants. With the absence of any significant new supply, total existing retail stock (excluding F&B space) decreased further in 2Q 2008 to reach 34.5 million sq ft. There will however be some notable suburban new malls that will be completed in 2008. These include the redevelopment of West Coast Plaza

(158,000 sq ft) which is scheduled to be completed in early October and is likely to open officially later this year. This was the former Ginza Plaza which is repositioned as “An Oasis in the West”. This may attract residents and students from more than 27 educational institutions within 3km of the mall and will add variety to the West. Gross rentals are expected to range between S$8 to S$25 per square foot (psf) for the mall.

The Great Singapore Grand Prix Besides enhancing Singapore’s attraction, retailers were much excited about the inaugural F1 night race, as it was expected to radically increase retail sales. There were however drastic drops in sales taking for retail shops in Suntec City Mall and Marina Square, due to massive road closures. This was akin to the International Monetary Fund (IMF) 2006 when sales of Suntec City Mall

Chart 2

Islandwide Demand and Supply 94.0%

20

10 93.0% 0 92.0% -10

-20

2Q07

3Q07 New Demand

4Q07 New Supply

Source: Urban Redevelopment Authority, Knight Frank Research

10

1Q08 Occupancy Rate

2Q08

91.0%

nosedived due to road closures and visitors for the F1 race who were too focused in the race than shopping in the area. This benefited Orchard Road, the prime shopping belt, as shoppers find it more convenient to visit the area. Tangs department store thus enjoyed an additional 40% sales takings over the F1 race weekends compared to that in the first week of September. Notwithstanding, the F1 race was a major boost to retailers in shopping areas not affected by the race. A total of 50,000 tourists turned up for the F1 race and were estimated to have spent about S$100 million in Singapore. The F1 race has placed Singapore in a positive light and this may be beneficial for STB’s long-term target of attracting 17 million visitor arrivals by 2015.

Slight Dip in Overall Prime Retail Rentals Overall prime retail rentals, for the first time since 3Q 2005, fell by a marginal 0.7% qoq to S$30.96 psf pm islandwide. Prime retail rentals for central Orchard Road, including Wisma Atria and Centrepoint, remained stable at S$48.60 per sq ft (psf) per month (pm) for 3Q 2008. However, malls along the fringe of Orchard Road registered a slight fall of 4.1% quarter-on-quarter (qoq) to S$23.00 psf pm. Similarly, rents of malls in the city fringe, such as Novena Square, slid 2.5% qoq. The decline in prime retail rents is in line with general expectations as the current economic situation has forced retailers to reevaluate their business plans. Many retailers are currently reluctant to commit or renew their leases at high rentals as they anticipate poorer sales due to lower consumer confidence.

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Outlook

Chart 3

Prime Retail Rentals in the Orchard Road (Central) Locality 16.0%

Prime Retail Rentals (psf pm)

$55 $50

12.0%

$45 8.0% $40 4.0%

$35 $30

3Q07

4Q07

1Q08

Prime Retail Rentals in the Orchard Road (Central) Locality

2Q08

3Q08

0.0%

Qoq Change in Prime Retail Rental

Source: Knight Frank Research

Table 2

Current Rentals of Prime Shopping Centre Space Locality

Average Prime Monthly Gross Rental1 (psf)

Orchard (Central)

S$ 48.60

Orchard (Fringe)

S$ 23.00

Marina Centre, City Hall, Bugis

S$ 30.70

City Fringe

S$ 23.50

Suburban

S$ 29.10

Based on pre-defined portfolio of properties; refers to prime shop space of between 400 and 800 sf typically located on ground level with good frontage; any yields implied refer only to such prime space and may not be reflective of the entire shopping centre

1

As the financial crisis in the US and Europe developed into a global recession, consumer sentiments would continue to be deflated in the coming year. Singapore, being heavily exposed to the global economy, is unlikely to remain unscathed as the confidence of retailers and consumers are starting to be affected. Despite the negative repercussions, Singapore’s strong fiscal position and low unemployment rate is expected to tide the country through the economic slowdown. In the next few quarters, with the economy likely to contract, the retail sector will experience a softening of demand from both local and foreign retailers. Retailers will be more cautious in expanding their businesses and retail rents are likely to undergo corrections to reflect the gloomy outlook. Retail sales may also suffer as consumers become more prudent and discerning in their expenditure with uncertainties in the job market brewing. Islandwide prime retail rentals however, are still expected to have grown between 1% to 4% for the entire 2008. In 2009, if the recession in Singapore were to worsen, the demand for retail space would be aversely affected, which in turn could result in a projected 8% to 13% yoy contraction in prime retail rents.

Source: Knight Frank Research

11

jul-sep 2008/3rd quarter

real estate highlights

Office Property Market Office rentals showed signs of softening going into the third quarter of 2008. Rents of office space generally dropped in 3Q 2008 after growth was already noticed to have eased for some areas in previous quarters.

5% year-on-year (yoy). If such a scenario were to come about, this growth for 2008 would have fallen below the 4% mark for the first time since 2003.

Market Review

While the effects of the US sub-prime crisis sent ripples across the globe, its effect is starting to be felt in Singapore. Local economists predicted that the more salient impact would be a less hiring in the job market, asset prices dropping as well as corporate bottom lines dwindling.

With the world economy faltering, there is a growing worry of beleaguered markets across the globe that may now be faced with a spate of new problems. In Singapore, this has developed into a more softened economic outlook. Economists at the Economic Growth Centre have predicted that it now looks increasingly likely that Singapore’s economic growth may fall below 4% in 2008, below the Ministry of Trade and Industry (MTI)’s range of between 4% and

The unraveling of global events is expected to plague the Singapore office market with less than cheery sentiments. In 2Q 2008, the financial and business services sector continued to ease with expansion rates at 10.2% quarter-on-quarter (qoq) and 7.5% qoq respectively. Despite the slowdown, figures still represented better than average growth rate numbers, especially for the business services sector. In terms of fiveyear quarterly average growth figures, this

Chart 1

Prices and Rentals 16.0% Price and Rental Changes

14.0% 200

12.0% 10.0%

150

8.0% 100

6.0% 4.0%

50

2.0% 0.0%

2Q07

3Q07

4Q07

1Q08

Price Index Change (%qoq)

Rental Index Change (%qoq)

URA Price Index

URA Rental Index

Source: Urban Redevelopment Authority, Knight Frank Research

12

2Q08

0

Office Price and Rental Index

250

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sector performed above the average rate of 4.8%. However, the financial services sector performed below the quarterly average rate of 10.8%. Since financial institutions are one of the main source of demand for office space, especially in the Central Region, the turmoil in financial markets would impact the take-up of new office space in the coming months.

up about 40% of the total office stock in Singapore, it made up 60% of the increase in demand for office space between 2Q 2004 and end-2007, when rental growth was accelerating. Nevertheless, since 1Q 2008, there appears to be a crack in the growth momentum as office demand in the Downtown Core area started to shrink, while overall islandwide demand expanded.

Notwithstanding, currently Singapore is expected to be relatively less affected by the external jolts in the global market owing to its diversified economy, steady investment opportunities as well as steady job creation. According to a recent study by the World Trade Organisation, Singapore’s economy was cited as one of the most open and competitive in the world. In addition, a survey commissioned by the City of London ranked Singapore as the third financial centre in the world (survey). These global recognitions can help provide opportunities for the Singapore office market.

The tapering of rentals this quarter as well as the slowdown in demand in the Downtown Core does not come as a surprise. The tenants here are primarily financial institutions, many of which had already completed their expansion or consolidation plans over the last 24 months. In addition, some are putting any further expansion plans on hold. As at 2Q 2008, the new demand for office space in Downtown Core was about 65,000 sq ft.

Although the growth in demand for office space islandwide appeared to be strong in the past three years with an average absorption of about 500,000 sq ft every quarter, growth momentum may not necessarily be so rosy in reality, especially for offices in the Downtown Core. Although the prime Downtown Core area makes

Islandwide occupancy remained healthy. At 92.2%, islandwide occupancy levels dipped by a marginal 0.1 percentage point in 2Q 2008, based on official figures from the Urban Redevelopment Authority (URA). Based on Knight Frank’s basket of office properties, occupancy of average Grade A office space also witnessed a decline by 0.2 percentage point to register at 98.8% in 2Q 2008. The third quarter of 2008 saw occupancy levels remain at 98.8%, 0.3 percentage point less than a year ago. Despite shrinking new demand for offices in the Downtown Core, demand for prime office space still looks healthy for Marina Bay towers office space. Although Phase 1 of the Marina Bay Financial Centre is due for completion only in 2010, Tower One is already fully let, Tower 2 is 45% preleased and Tower 3 is 55% pre-committed, suggesting that positive sentiments still prevail for the prime office property market. The strong take up for office space in the Marina Bay towers highlights interest for new prime office space, and the interest for offices in Downtown Core should still be supported by Singapore’s move to establishing as a leading financial hub.

Chart 2

New Supply, New Demand and Occupancy Levels Islandwide (Private and Public Sectors) 100

93.00%

80

92.50%

60

92.00%

40

91.50%

20

91.00%

0

90.50%

-20

90.00%

-40

2Q07

3Q07 New Demand

4Q07 New Supply

1Q08

2Q08

Occupancy Rate (%)

Islandwide demand for office space was relatively strong in the past three years (2005 – 2007), but new demand started to slow in the last quarter of 2007 when this value stood at about 130,000 square feet (sq ft). Going into 2008, the opening months saw a slight renewal in new demand figures. However, in 2Q 2008, new demand for office space islandwide dipped again to register at approximately 108,000 sq ft, the lowest quarterly figure since the start of 2004.

Office Space (‘000 sqm)

Possible Crack in Growth Momentum of Demand

On the other hand, new demand for office space Outside of the Central Region, which has been lower over the past five years (2Q 2003 – 1Q 2008), saw stronger growth from the second quarter of 2007. In 1Q 2008, this value was a high of about 97,000 sq ft, the largest since 3Q 2002. The steady growth in demand in these four quarters (2Q 2007 – 1Q 2008) did not continue in 2Q 2008 though, when new demand for office space

in this region was recorded at about 10,800 sq ft.

89.50%

Occupancy Rate

Source: Urban Redevelopment Authority, Knight Frank Research

13

jul-sep 2008/3rd quarter

real estate highlights Subdued Demand for Transitional Offices Scheduled to be completed in about a year, the transitional office site at Scotts Road/ Anthony Road, which was awarded via tender earlier in May 2008 with 130,000 sq ft of office space, is set to house various businesses under WPP, which is one of the world’s largest communications services groups. This development is situated next to another transitional office site sold to UOB Kay Hian and also opposite the pioneer transitional office development, Scotts Spazio. While response for such transitional office space is strong, especially for those in better locations, future demand for transitional office space remains questionable, especially considering the ease in the supply crunch. Two new commercial sites at Mohamed Sultan Road and Mountbatten Road, which have a corresponding site area of 0.6 hectares (ha) and 1.2 ha, were launched for tender on 19 August 2008 and 23 September 2008 respectively. While the

development period for such transitional office sites could take between 1.5 and 2 years, approximate completion, in 2010 would mean that these sites would have to compete with a large supply of about 4 million sq ft of office space that would also be completed that year. As such, it is anticipated that the site at Mohamed Sultan Road might receive cautious bids or a few opportunistic bids. Subsequently, if the site is sold and the development is completed, it could still attract potential tenants such as architects, designers and marketing firms, who do not require office space in the CBD. The tender closing date for this site is scheduled to be 14 October 2008. The more recent site released at Mountbatten Road paints a bleak picture for the future of transitional offices. Situated a distance away from the future Mountbatten MRT Station, the site was already expected to fetch bids between 15% and 40% lower than an earlier site in the vicinity that was sold in January 2008. The less than optimal location, coupled with present market sentiments, do not bode well for demand for

Table 1

Transitional Office Sites Launched S/N

Location

Nearest MRT Station

1

Site at Scotts Road

2

Site at Tampines Ave 5 / Tampines Concourse

3

Site at Mountbatten Road

Mountbatten

215,300

10 January 2008

4

Site at Aljunied Road / Geylang East Ave 1

Aljunied

203,300

Not Awarded

5

Site A at Scotts Road / Anthony Road

Newton

140,200

25 April 2008

6

Site B at Scotts Road / Anthony Road

Newton

145,900

6 May 2008

7

Site at Mohamed Sultan Road

Clarke Quay

99,700

Not Awarded

8

Site at Mountbatten Road

Aljunied

Source: Knight Frank Research

14

Maximum GFA (square feet)

Date of Award

Newton

168,600

27 August 2007

Tampines

124,000

19 November 2007

126,400

Tender stopped. Moved to Reserve List

this particular site in the current market. Other than the Marina Bay Financial Centre, office space in the CBD that is expected to enter the market could also pose as competition to the transitional offices. In 2011, a 38-storey development, known as One Raffles Place, will provide 350,000 sq ft of prime office space. This development is to be built next to the existing OUB Centre Tower and retail mall. Such new prime office space could be completed in time for the expected economic recovery.

Softening of Rentals Office rentals showed signs of softening going into the third quarter of 2008. Although rents were observed to be sliding, lease renewals was noted to still be healthy. Across the board, rents of office space witnessed a drop in 3Q 2008 after growth was already noticed to have eased for some areas in previous quarters. Specifically, the decline in rental growth of Grade A offices was the steepest in the Suntec/Marina/City Hall area, where the rate of growth was registered at -6.2% quarter-on-quarter (qoq). The slowdown in rentals was followed by the Shenton Way/Robinson Road/Tanjong Pagar area, which also saw negative growth of -2.8% qoq. On the other hand, office rentals in the Raffles Place area dropped the least by 1.4% qoq. Grade B offices in Singapore’s office property market reflected the general weakening of rental growth in 3Q 2008. Grade B offices in Orchard Road saw a reduction in rental growth by 7.8% qoq, the greatest fall for all Grade B offices islandwide. Raffles Place and Shenton Way/ Robinson Road/Tanjong Pagar Grade B offices, however, were less impacted with office rentals dipping by 1.8% qoq and 2.0% qoq respectively. As a whole, offices in non-CBD locations also mirrored the general slowdown in rental growth this quarter. Rentals continued to weaken for the Beach Road/Middle Road area when growth lessened by 0.9% qoq

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After about four years of rental growth, the decline in office rentals in the Raffles Place area can also be partly attributed to an increase in potential supply in the area. This is due to a significant amount of commercial land sold through the Government Land Sales Programme. In addition, some landlords are becoming more realistic in their rental expectations and are more flexible in their rental negotiations. Some landlords are also putting more effort to retain tenants to maintain their buildings’ occupancy rates, leading to softening of office rents in some cases.

Outlook In the short term, the volatility in financial markets are expected to lead to many firms either postponing their expansion plans or consolidating their space usage. Possible financial mergers and acquisitions as a result of the financial turmoil could also contribute to the consolidation of office space usage and the reduction in demand for office space. Following which, we could also start to see the restructuring and freeing up of additional space and the offer of ‘sublease space’ due to the potential cash flow problems faced by some companies. This may lead to an increase in available office space in the market. As a result, it is anticipated that average office rentals would persist to wane by 14% to 19% in the next twelve months.

Chart 3

Average Office Rentals $20.00 $18.00 $16.00 $14.00 Rental ($psf)

in the second quarter and 3.4% qoq this quarter. Rents of office spaces in all the suburban areas also fell, ranging from 1% to 8% qoq.

$12.00 $10.00 $8.00 $6.00 $4.00 $2.00 $0.00

3Q07

4Q07

1Q08

2Q08

3Q08

Raffles Place Grade A

Shenton Way/Robinson Road/Tanjong Pagar Grade A

Orchard Road Grade A

Suburban Areas

Suntec/Marina/City Hall Grade A

Source: Source: Urban Redevelopment Authority, Knight Frank Research

Table 2

Average Effective Monthly Rentals in 3Q 2008 Location

Average Effective Monthly Gross Rental (psf)

CBD (Grade A) Raffles Place

S$ 17.10 – S$ 18.20

Marina Centre / City Hall

S$ 14.40 – S$ 15.90

Shenton Way / Robinson Road

S$ 11.30 – S$ 12.30

Orchard Road

S$ 13.30 – S$ 14.30

Non-CBD Beach Road / Middle Road

S$ 9.70 – S$ 10.60

Suburban (North)

S$ 8.40 – S$ 9.30

Suburban (East)

S$ 6.60 – S$ 7.40

Suburban (West)

S$ 7.00 – S$ 7.80

Source: Knight Frank Research

15

jul-sep 2008/3rd quarter

real estate highlights

Industrial Property Market The industrial property market moderated in performance during 3Q 2008, with rents and capital values for most industrial properties remaining similar to 2Q 2008. However, this could be the turning point for industrial properties, following which rents and prices are expected to decline. Performance of Manufacturing Sector The manufacturing sector in Singapore further contracted in 3Q 2008. This was reflected in total manufacturing output, which fell a drastic 21.9% year-on-year (yoy) in July 2008 and declined 12.2% yoy in August. In the previous quarter, the manufacturing output contracted by 4.7% yoy in May and 13.0% yoy in June. If the decline persists, this may reflect a lowered global demand for numerous industrial outputs. This will be discouraging for the industrial property market, which was enjoying a notable recovery in 2007. Hence, there are possibilities that industrialists will re-look at spatial requirements, including consolidating manufacturing functions and relocating to cost-competitive countries. The contractions in manufacturing output were driven by a decline in biomedical production, which shrank 67.3% in July and continued to fall 33.8% in August 2008. The drastic fall in July was due to a 69.7% contraction in the pharmaceuticals segment. The fall in biomedical output was part of the volatility of the biomedical industry, where manufacturing facilities were periodically

16

shutdown for maintenance as production switches from one to another. While this could be due to the volatility of the biomedical industry, there seemed to be prolonged weakening in biomedical output. In particular, pharmaceutical production has been weak for an extended period, bringing biomedical output to contract for almost five consecutive months and total less than 13.8% yoy for the first eight months. The prolonged decline in biomedical output may pose some challenges for Singapore’s competitiveness, as the sector has been identified as a bedrock for Singapore to move up the value-chain in industrial production. Similarly, the chemicals cluster fell 6.0% yoy and electronics cluster contracted 7.1% yoy in August. Considering the first eight months, consumer electronics grew only 2.6% yoy, due in part to the closure or relocation of mobile device production. Of note, the Purchasing Manager Index (PMI), which gives an outlook about forthcoming factory output, fell from 50.6 in August to 49.5 in September. A reading above 50 would be an expansion and this indicates a contraction in upcoming factory output. The 1.1-points fall was also the first contraction in three months and the largest monthly decline since January 2008, attributable to both a weakened local and overseas demand. Meanwhile, new orders index dropped to 49.8 in August 2008 while exports orders index increased to 48.9. Notwithstanding, at below 50 points, the exports orders index was considered a contraction. These were in sync with worldwide falls in manufacturing and exports, especially the G-3 economies comprising United States, Europe and Japan. For example, the United States’ manufacturing index dropped to 43.5

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for September, the lowest since October 2001, while Bank of Japan surveyed manufacturers who expressed sentiments to be lowest compared to the past five years.

amid rising inflation in emerging economies. Moreover, as the economy is expected to worsen and consumers will be increasingly cautious, manufacturers will have limited opportunities to pass these increased business costs to buyers, leading to a lower profit margin. Nonetheless, the effect can still be partially mitigated by an appreciation of the Singapore currency and at best, a gradual recovery of the US currency.

Besides a global drop in demand for manufacturing outputs, the manufacturing sector has to grapple with the effect of higher production costs. The higher production costs were exacerbated by increasing import costs for raw materials Chart 1

Industrial Production Index 12.0%

120

4.0% 0.0%

100

-4.0%

Yoy Change

Industrial Production Index

8.0% 110

-8.0%

90

-12.0% 80

3Q07

4Q07

1Q08

2Q08

3Q08

-16.0%

Yoy Change in Index

Industrial Production Index Source: Singapore Department of Statistics Chart 2

Demand and Supply of Factory Space (Private and Public Sector) 4,200

95.0% 94.0%

3,200 93.0%

2,700 2,200

92.0%

1,700 91.0%

1,200 700

2Q07

3Q07 New Demand

4Q07 New Supply

1Q08

2Q08

90.0%

Occupancy Rate

Floor Space (‘000 sq ft)

3,700

Demand and Supply Islandwide occupancy of factory space increased 0.7 percentage-point in 2Q 2008, to 93.1%. This was the highest occupancy of industrial space since 1998. Together with limited factory space completed in 2Q 2008, total new demand for factory space remained healthy in 2Q 2008, at 2.69 million sq ft. While this was lower by 13% qoq, the industrial property market is growing as there was no contraction in demand and this new demand far exceeded the new supply of 818,060 sq ft in 2Q 2008. Total new demand for warehouse space increased from 1.04 million sq ft in 1Q 2008 to 1.16 million sq ft in 2Q 2008. The 1.16 million sq ft of total new demand was more than 947,200 sq ft of new warehouse supply. This led to a 0.4 percentage-point increase in occupancy, to 92% in 2Q 2008. With Singapore striving to develop into a global logistics hub, the prospects for warehouses remain bright in the long term. In addition, the current office space crunch and expensive office rentals have caused the users of prime offices to rationalize space for storing files, records and archives, and increasingly, warehouses are needed for storage of such materials. The new take-up of industrial space is partly influenced by the completion of new supple. As there was no new completion of business park space in the second quarter of the year, the new demand for such space fell from 484,400 sq ft in 1Q 2008 to 183,000 sq ft in 2Q 2008. However, the overall occupancy increased by 1.7 percentage-points qoq to 89.7%. Although the office space crunch is easing, the rental gap between office and business parks space is still significant enough to attract users to business parks. As a result, the occupancy of business parks is likely to continue to increase in the short term.

Occupancy Rate

Source: Urban Redevelopment Authority, Knight Frank Research

17

jul-sep 2008/3rd quarter

real estate highlights Government Land Sales Programme

Industrial Rents and Capital Values

Only one industrial site was sold through the Government Land Sales Programme in 3Q 2008. The first was a 60-year leasehold site at Woodland Avenue 4, which was awarded to Soilbuild for S$13.61 million, or S$30.11 psf per plot ratio (ppr). This site could yield a total of 180,833 sq ft of industrial space. This marks the tenth industrial site acquired by Soilbuild since the company move into industrial property development in 2005, of which six, including this site, are currently in the development stage. Scheduled to complete constructions by 2010, the factory caters to Small-Medium-Enterprises (SMEs) engaging in clean/light industry, general industry and warehousing.

The industrial property market remained stable amid industrialists who are increasingly cautious during the economic uncertainty. Rents of conventional industrial space was generally unchanged in 3Q 2008, with only conventional industrial space in Kaki Bukit sliding by 2% qoq to average $1.47 psf per month.

Industrial REIT Acquisitions Similarly, the industrial investment market was quiet, with only two industrial buildings bought by REITs. The first was Natural Cool Building, acquired by Cambridge Industrial Trust (CIT), for S$55.2 million, averaging $260 psf. First REIT, on the other hand, purchased a warehouse in Tua View Lane, which is under development. The warehouse was sold for S$42 million, averaging S$180 psf. In the months ahead, the number of industrial buildings that will be purchased by REITs is likely to remain subdued as S-REITs are looking across the border in India, Malaysia and Vietnam for diversification and buildings with higher yields

Rents of conventional industrial space in the rest of the micro-regions, such as at Macpherson/ Paya Lebar, Admiralty and Ang Mo Kio were flat. This was the first quarter that conventional industrial space showed an almost flat growth in rentals, after consecutive quarterly increases for the past two years. Similarly, the capital values of conventional industrial space were flat in 3Q 2008. Capital values in the Admiralty area ranged from S$125 psf to S$285 psf and capital values

For high-tech industrial space, rents declined very marginally, by four cents to average $4.10 psf per month. This was due to a slight dip in the rents of older high-tech industrial space, such as New Tech Park, while rents for the rest remained at 2Q 2008’s level. With the completion of newer higher-specifications buildings, pioneer hightech industrial buildings may be gradually phased out as high-tech space. Conversely, rents of business park space were stable in 3Q 2008, backed by demand from some office space users. Many businesses have found business parks as an attractive alternative to house approved back-end operations. This brings monthly rents of business park buildings, such as The Synergy, The Strategy and The Signature in International Business Park, to average $4.54 psf per month.

Table 1

Rentals and Capital Values of Sample Factory/Warehouse (Upper Floors) and Business Park Space in 3Q 2008 Locality

Average Monthly Gross Rental (psf)

Average Capital Value (psf)

Conventional Industrial Space MacPherson / Paya Lebar

S$ 1.85 – S$ 2.20

S$ 195 – S$ 340

Kaki Bukit

S$ 1.35 – S$ 1.60

S$ 130 – S$ 350 (60-year leasehold)

Admiralty

S$ 1.10 – S$ 1.35

S$ 120 – S$ 280 (60-year leasehold)

S$ 3.90 – S$ 4.30

N.A.

S$ 4.25 – S$ 4.85

N.A.

High-tech Factory Space Islandwide Business Park Space Islandwide Source: Knight Frank Research

18

in Kaki Bukit vicinity ranged from $130 psf to $350 psf.

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Chart 3

Factory Space Rentals 12.0%

$1.60

10.0% 8.0%

$1.40

Qoq Change

Rentals psf

$1.50

6.0% $1.30

4.0%

$1.20

2.0%

$1.10 $1.00

-0.0% 3Q07

4Q07 Rentals (psf)

1Q08

2Q08

3Q08

-2.0%

Qoq Change in Rentals

Source: Knight Frank Research

Outlook After enjoying about four years of gradual price and rental increases, the growth in the industrial property market is starting to display strains of slowing down. The slowdown in the manufacturing sector would be one of the strongest factors causing the fall in demand for industrial space. The manufacturers in Singapore may become increasingly pessimistic about business outlook, as operating costs rise and global demand for products such as consumer electronics and semi-conductor products continue to contract. Output from the two key manufacturing clusters, biomedical and semiconductor industries are also anticipated to slow, limiting the demand for such industrial space. Industrial landlords, including managers of REIT industrial buildings, are expected to be

more sensitive in lease renewals and rental negotiations to ensure occupancy and lease sustainability. The fourth quarter could be the turning point where average prices and rents of industrial space could start to decline. But for the whole of 2008, rents and prices of industrial properties are still projected to increase by about 5% to 9%, while rents and prices of industrial properties may fall by 7%-12% and 10%-15% respectively in 2009. However, the individual performance of different types of industrial space may be mixed. The rents and prices of conventional factory space may suffer a higher rate of decline, whereas rents of modern industrial space and business parks would experience a smaller fall. In the coming months, industrial landlords could be more flexible in order to maintain the occupancy levels of their industrial portfolio.

19

Research

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Research enquiries Nicholas Mak Director, Consultancy & Research 65 6228 6821 [email protected] Singapore contacts Tan Tiong Cheng Managing Director 65 6228 6888 [email protected] Danny Yeo Deputy Managing Director 65 6226 6808 [email protected] Lydia Sng Executive Director, Valuation 65 6228 6868 [email protected] Peter Ow Executive Director, Residential 65 6228 6828 [email protected]

Nicholas Wong Executive Director, Investment Sales 65 6228 6800 [email protected] Mary Sai Executive Director, Auctions 65 6228 6886 [email protected] Agnes Tay Director, Office 65 6228 6887 [email protected] Lim Kien Kim Director, Industrial 65 6228 6894 [email protected] Sherene Sng Director, Retail 65 6228 6878 [email protected]

Knight Frank Consultancy & Research provides strategic advice, consultancy services and forecasting to a wide range of clients worldwide including developers, investors, funding organisations, corporate institutions and the public sector. All our clients recognise the need for expert independent advice customised to their specific needs. Knight Frank Research Reports are also available at www.knightfrank.com. © Knight Frank 2008 This report is published for general information only. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no legal responsibility can be accepted by Knight Frank Research or Knight Frank for any loss or damage resultant from the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank in relation to particular properties or projects. Reproduction of this report in whole or in part is allowed with proper reference to Knight Frank Research.