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Inflation is expected to moderate to an average of 4 per cent in the second half of this year after averaging above 6 per cent in the first half, the Monetary Authority of Singapore (MAS) said yesterday.

In its semi-annual Macroeconomic Review released yesterday, the MAS maintained its full-year inflation forecast “at the upper half” of 4.5 to 5.5 per cent but warned of further “upside risks to global oil and food prices.”

“Even if these prices were to level off, upward pressure on wages and rentals, reflecting domestic capacity constraints, are likely to remain,” said the MAS.

Wage growth is also likely to “persist” at 5 to 6 per cent in 2008, “only slightly lower than 6.2 per cent last year”.

According to a chart in the MAS’ report, inflation is forecast to peak at close to 7 per cent in the second quarter of this year before tapering off to an average of 4 per cent in the second half “partly due to the dissipation of the Goods and Services Tax-hike effect”.

The Government raised the GST by 2 percentage points to 7 per cent last July.

Combating inflation, which rose to a 26-year-high of 6.7 per cent in March, is clearly on the mind of the MAS.

The de facto central bank, which manages the Singapore dollar within an undisclosed currency band, earlier this month said it would allow the local currency to rise at a faster pace.

A stronger Singapore dollar can provide consumers some respite from spiralling global commodity prices, although exporters will become less cost-competitive.

Some economists had expected a higher inflation forecast from the MAS.

HSBC economist Robert Prior-Wandesforde called the unchanged forecast range “the main surprise in the review”.

“With the central bank itself pointing to a underlying cost/price pressure from salaries and rentals, it would seem to us only a question of time before the range is adjusted up,” said Mr Wandesforde, who has an inflation forecast of 6 per cent.

Despite a tighter monetary policy and “weakening external outlook” since its last review, the MAS also left unchanged its economic forecast for the year.

“Full year gross domestic product growth of 4 to 6 per cent is still achievable, barring a deep recession in the US economy,” it said.

Singapore’s economy grew by 7.7 per cent last year, when the inflation rate was 2.1 per cent.

The MAS expects regional demand to hold up in the near term, while certain sectors such as construction and financial intermediation services that are “fairly insulated” from the US will prevent the Singapore economy from sliding into a sharp downturn this year.

But if the US credit crisis worsens drastically, all bets are off.

“In particular, a more severe global downturn cannot be ruled out if there is a further escalation of the financial crisis in the US. If this occurs, Singapore’s growth will be adversely affected,” the MAS warned.

Source : Today - 30 Apr 2008

The Housing and Development Board (HDB) will launch on Wednesday a land parcel at Sengkang East Avenue for executive condominium development under the Reserve List System.

HDB said the 17,000 square metre plot will have a permissible gross floor area of over 51,000 square metres.

Property consultants estimate that the 99-year lease site could fetch about 450 to 500 units, with a land price of S$110 to S$130 per square foot per plot ratio.

As developers are still fairly confident of the mass market property segment, market watchers said the land parcel will attract moderate interest from developers, with up to six bids for the site. - CNA/ms

Source : Channel NewsAsia - 29 Apr 2008

The Monetary Authority of Singapore (MAS) has said it expects inflation, now at a 26-year high of 6.7 percent, to cool to an average 4 percent in the second half of this year.

Singapore’s central bank also said on Tuesday that economic growth will slow in 2008, but the expansion will likely remain at a healthy level even under a tighter monetary policy.

“Full-year gross domestic growth of between 4%-6% is still achievable, barring a sharp downturn in the US economy,” the MAS said in its semi-annual macroeconomic review, available on its Website www.mas.gov.sg. “The slower rate of expansion will bring the economy closer to its potential output path.”

Earlier in April, the MAS unexpectedly tightened its monetary policy by allowing the Singapore currency to rise at a faster pace to keep a lid on import costs.

The central bank manages the local dollar within an undisclosed currency band, which it shifted higher at its meeting on April 10.

“The re-centering of the policy band… will help to alleviate inflation pressures and provide support to the economy as it eases to a more sustainable growth rate,” the MAS said.

First-quarter GDP growth came in unexpectedly strong, running at an annualised seasonally adjusted rate of 16.9%, and economists said the data had calmed fears that the weakness of the US economy would drag on Singapore, giving the MAS room to tighten policy.

Singapore’s economy grew by 7.7% in 2007, when consumer prices rose 2.1%.

A recent jump in food costs has been a key driver of inflation across Asia, and a further acceleration in commodity prices could not be ruled out, the MAS said.

“Even if (food and oil) prices were to level off, upward pressure on wages and rentals, reflecting domestic capacity constraints, is likely to remain,” it said.

The MAS predicted inflation will peak at around 7% in the middle of the year before averaging in the upper half of a 4.5%-5.5% range for all of 2008.

Different sectors of Singapore’s economy will feel varying impacts from a global downturn, the MAS said.

“In contrast to last year’s broad-based growth story, the outlook for the Singapore economy in 2008 will vary significantly from industry to industry, depending on their exposure to the U.S.,” the authority said.

The construction sector will be relatively protected, with a steady pipeline of contracts, including S$24.5 billion in work awarded in 2007.

“This suggests a possible surge in construction activity over the next two to three quarters, as work on projects progresses into the phase where the bulk of payment streams occurs,” the central bank said. “Future demand should also remain firm, with contracts for major projects such as the integrated resorts yet to be fully awarded.”

Las Vegas Sands is expected to open the Marina Bay Sands resort in 2009, and a unit of Genting International will open Resorts World at Sentosa in 2010.

The MAS said the economy should also be supported by most of the services sector and selected manufacturers such as pharmaceuticals firms and offshore oil rig makers.

However, the electronics industry will be highly exposed to an external economic slowdown, likely preventing the sector from posting a meaningful expansion.

The financial sector is also expected to weaken if markets remain in a slump, leading to lower revenues from wealth management and brokerage services.

The MAS expects the job market to remain tight, with the unemployment rate holding beneath 2 percent. - CNA/ir

Source : Channel NewsAsia - 29 Apr 2008

The Urban Redevelopment Authority (URA) has launched a residential site at Woodleigh Close for sale by public tender.

At 1.08 hectare, market watchers said about 260-290 apartment units can be built on the plot of land, which is located near to the Potong Pasir MRT station.

A new 99-year leasehold project in the location is expected to fetch prices of around S$800 psf. This will translate to a possible land price of around S$300-350 psf per plot ratio for the site.

The tender will close at noon on June 24 and selection will be based on the tendered land price only.

Separately, the URA also released the detailed sales conditions for the residential parcel at Upper Thomson Road, which is estimated to offer 380 to 420 new homes.

The site is on URA’s reserve list and developers who are interested in buying it can apply for the plot to be put up for tender.

Under the reserve list system, the site will only be put up for sale if a developer’s minimum bid price is acceptable to the government.

Analysts expect this site at Upper Thomson Road to fetch S$200 to S$240 psf per plot ratio, which will translate into a possible selling price of S$650 to S$700 psf. - CNA /ls

Source : Channel NewsAsia - 29 Apr 2008

JTC has achieved a record occupancy level for its ready-built facilities in the first quarter of 2008.

Net allocation was 38,400 square metres, six-fold higher than the same period last year.

In its quarterly report, JTC said this helped to boost the occupancy level for ready-built facilities by 1.3 percentage points to 93.9 percent.

Termination level, however, has gone up as well - to 51,100 square metres in the first quarter of this year, compared to 45,300 square metres in the first quarter of 2007.

However, the net allocation for prepared industrial land remained strong - at 114.9 hectares - due partly to the general expansion across the manufacturing sector for 2007.

Looking ahead, more ready-built spaces are expected to come on stream with Phase 2 construction of Fusionopolis, which is set to be completed by the third quarter of 2010. - CNA/ms

Source : Channel NewsAsia - 29 Apr 2008