Latest report from UBS:
Government suspends confirmed land sales with immediate effect
The government announced the suspension of confirmed land sales for the rest of 2008 and H109, in view of the global economic uncertainties which have affected the property market outlook. Sites on the confirmed list will be moved to the reserve list, where they will be put up for sale if developers apply for them.
Office supply in 2013-2014 will be lower, but rental weakness till 2012 likely
We expect office rents and prices to fall 40% in 2009-2012, given supply of 10msf versus expected demand of 5msf. The suspension of land sales will reduce supply in 2013-2014 and help the market recover quicker post 2012. It also signals the government's pro-active concern for the property market. In 2001-2002, in anticipation of a downturn, the government suspended land sales and reduced property taxes. We believe more of such measures may be seen in early 2009.
Lower 2009E GDP forecast for Singapore
In Q308, office demand remained weak and the vacancy rate rose to 8.2% (from 7.8% in Q208). On 30th October 2008, UBS economists downgraded Singapore's 2009E GDP growth forecast to -1.8% (from +1.5%). With this change, we need to review our forecasts for office rentals.
Remain cautious on office landlords
We remain cautious on office landlords such as Keppel Land, City Developments, CapitaCommercial Trust and KREIT.
Government suspends confirmed land sales with immediate effect
The government announced the suspension of confirmed land sales for the rest of 2008 and H109, in view of the global economic uncertainties which have affected the property market outlook. Sites on the confirmed list will be moved to the reserve list, where they will be put up for sale if developers apply for them.
Office supply in 2013-2014 will be lower, but rental weakness till 2012 likely
We expect office rents and prices to fall 40% in 2009-2012, given supply of 10msf versus expected demand of 5msf. The suspension of land sales will reduce supply in 2013-2014 and help the market recover quicker post 2012. It also signals the government's pro-active concern for the property market. In 2001-2002, in anticipation of a downturn, the government suspended land sales and reduced property taxes. We believe more of such measures may be seen in early 2009.
Lower 2009E GDP forecast for Singapore
In Q308, office demand remained weak and the vacancy rate rose to 8.2% (from 7.8% in Q208). On 30th October 2008, UBS economists downgraded Singapore's 2009E GDP growth forecast to -1.8% (from +1.5%). With this change, we need to review our forecasts for office rentals.
Remain cautious on office landlords
We remain cautious on office landlords such as Keppel Land, City Developments, CapitaCommercial Trust and KREIT.
