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TWO property developers have reported a drop in second-quarter revenue, saying poor sentiment in the property market has led to lower sales - a trend that is likely to continue for the rest of the year.

Allgreen Properties yesterday posted a 39.1 per cent drop in revenue to $74.1 million for the three months to June 30. Net profit fell 36.5 per cent to $17.2 million.

It said continuing weak market sentiment was due to the US sub-prime issue, escalating oil prices and inflationary pressure. It expects this to persist in the second half, resulting in lower profits, but believes it will stay profitable for the year.

Allgreen’s earnings per share for the quarter slipped to 1.08 cents, from 1.74 cents a year earlier. Net asset value eased to $1.38 as at June 30, from $1.40 as at Dec 31.

Meanwhile, MCL Land’s revenue plunged in the second quarter to US$353,000 (S$482,000), from US$133.5 million last year. But the group’s net profit rose 45 per cent in the quarter to US$3.2 million, thanks to a write-back. Earnings per share rose 43 per cent to 0.86 US cents, while net asset value per share inched up to US$1.45 as at June 30, from US$1.42 as at Dec 31.

MCL Land expects the completion of Mera Springs and The Esta in the second half to boost its overall performance.

Source : Straits Times - 1 Aug 2008

EDB charts fresh strategies as new chief takes over at a challenging time

FOREIGN investments are rolling into Singapore strongly again this year after last year’s $16.1 billion bonanza.

But the outlook for next year is far more uncertain, says the new managing director (MD) of the Economic Development Board (EDB).

Dr Beh Swan Gin, 40, will today take over the helm of the high-profile statutory board - widely recognised as one of the chief agents behind Singapore’s economic success. The former assistant MD replaces Mr Ko Kheng Hwa, 53, who has joined Keppel Corp as chief executive of its new sustainable development business division.

The EDB is credited with pulling in many billions of dollars of investments that have led directly to the creation of many thousands of jobs.

But Dr Beh will have his hands full right from the start, as the agency embarks on fresh strategies to help the nation navigate a fast-changing economic landscape - an especially tough one at present.

‘There’s no question that in terms of large investments that will be decided this year and in 2009, those will have to take into consideration the changing economic conditions,’ said Dr Beh in an interview last week. ‘Companies are all cautious. They’ve seen the decline in consumer demand in the United States.’

Still, Dr Beh said he is confident the EDB will achieve 2008’s target for investment commitments, despite an ambitious goal and challenging conditions arising from the global credit crunch.

The board is seeking to repeat, even beat, last year’s $16.1 billion bonanza, which was well above the $8.5 billion average of the previous nine years.

It said in January that it expects to clinch between $16 billion and $18 billion of projects this year. But some analysts say this could be an uphill battle, given that at the half-way mark, projects won have generally not matched those clinched last year.

Dr Beh said: ‘On the one hand, there’s good momentum and strong interest in Singapore, driven partly by opportunities in Asia and confidence that Singapore has what it takes to be a great investment location.’

But, the outlook for next year is muddied by uncertainty over how the US slowdown will hurt regional economies, he added.

Dr Beh hopes would-be investors will keep in mind the long- term reasons for their investments, which should not change despite short-term volatility.

He believes the EDB’s greatest challenges lie in the medium and long term.

As Singapore diversifies from a manufacturing-led economy to a more services-driven one, the EDB is charting new strategies for this transformation.

‘In the past, capital was important and critical for success. Attracting foreign investments was key to this.’

But as the country moves towards more innovation- and knowledge-based activities, attracting talent is critical.

Dr Beh said Singapore is seeking to become more than a mere manufacturing base but ‘a partner for developing new solutions’. This means foreign innovators will come here to help create new products and services that are needed in Singapore, and the rest of the world.

Source : Straits Times - 1 Aug 2008

PropNex rolls out measures to win customers’ trust and confidence

IF YOU discovered that the agent you had hired to sell your flat was also quietly acting for the buyer, you’d probably be hopping mad and looking for some kind of recourse. Unfortunately, there is nothing by way of laws over real estate practices that you can turn to.

Property agencies like PropNex, however, are banking on self-regulation to win over hearts and minds. But some analysts say such internal policies may not go far enough to weed out bad practices.

Among the initiatives unveiled yesterday by PropNex, which has the biggest pool of housing agents here, are: No bankrupts allowed to be agents, compulsory professional indemnity insurance for all its agents and a panel to discipline errant ones.

The measures came after the company cut ties with some 2,800 inactive or non-performing agents last week, “to ensure the professionalism and reliability of its associates”.

By barring bankrupts from joining the firm, “consumers will be shielded from interaction with rogue agents riding on the brand to misappropriate funds due to cash flow problems,” said PropNex chief executive Mohd Ismail.

“There is no regulation in any form stating that bankrupts cannot be housing agents. PropNex imposed this rule to safeguard consumers from fraudulent attempts,” he said, warning that “customers cannot seek financial recovery from a bankrupt”.

Such measures are a “right step forward for the industry” because “the entry barrier into this occupation is not very high”, said DTZ Debenham Tie Leung executive director of consulting and research, Mrs Ong Choon Fah.

Several firms have also started mandating that their agents buy professional indemnity insurance.

Insuring PropNex’s remaining 5,000 agents is Tenet Insurance. In the event of any professional negligence leading to a financial loss, the insurance will help cover the liability to the customer seeking financial recovery.

Dennis Wee Properties also made such coverage compulsory for its 2,500 agents, said the firm’s director Chris Koh.

While giving consumers a channel to seek recovery “should help to protect the consumer”, Colliers International’s director of research Tay Huey Ying noted: “But I am not sure whether this will help agents be more vigilant in their representation as they now know they have insurance.”

But some of their employers will also not :hesitate to go to the authorities, besides simply terminating the errant agent’s service.

Mr Eugene Lim, assistant vice-president of real estate agency ERA Singapore, said the company had a disciplinary board chaired by three senior directors. “If (an agent is) guilty of misconduct, we will terminate the agent’s services and notify the Inland Revenue Authority of Singapore of the agent’s misconduct,” he said.

Similarly, Mr Koh from Dennis Wee Properties said: “We will file a police report on errant agents.”

They will also be shamed by having their names published in online newsletters, he added.

Will such self-regulation be enough?

The Institute of Estate Agents said: “They can only be good for the industry if every real estate agency takes pride by ensuring their agents are providing professional services and adhering to the code of conduct and ethics.”

Source : Today - 1 Aug 2008

Fund feels US dollar ‘still on the strong side’ for now

The International Monetary Fund (IMF) urged the United States Federal Reserve to keep interest rates unchanged “for now” and stand ready to raise them swiftly to prevent inflation expectations from becoming entrenched when the US economy recovers.

“Directors generally agreed that monetary policy should stay on hold for now, unless economic and financial conditions deteriorate further,” the Washington-based IMF said in its annual review of the world’s largest economy.

Fed policy, a benchmark short-term lending rate target of 2 per cent, “is already positioned appropriately to respond torecession risks,” said the fund.

The fund it is not forecasting a US recession. The economy has “shown impressive resilience in the face of an unprecedented confluence of shocks” and is likely to grow by 1.3 per cent this year.

“With added headwinds from oil prices, the US economy will be notably weaker but will still register positive growth in 2008, and recover only gradually in 2009,” the IMF said.

It added that h:ome prices were key to a US economicrebound.

While the fund praised the Fed’s efforts to restoreliquidity to markets by lending to Wall Street banks, “overall financial conditions have continued to tighten in the face of higher lending standards, falling asset prices and higher risk spreads.”

The US Central Bank’s policy-setting committee is scheduled to meet on Aug 5 to consider its next move. Futures markets show investors predict the interest rate will be kept at 2 per cent.

The IMF said the Fed needed to be cautious about keeping interest rates that low for too long.

“There is a risk that elevated headline inflation may seep into inflation expectations,” said the fund.”Given the high cost of reversing such expectations once they become entrenched, most directors underscored that the bias should be towards a decisive tightening once recovery is established and financial conditions ease.”

Inflation, as measured by the consumer price index, is forecast to rise 3.9 per cent this year, up from 2.9 per cent in 2007, the IMF said.

The dollar was “still on the strong side”, the report from IMF staff said, noting that it was closer to “medium-term equilibrium.”

Directors said “tensions remain” in the dollar’s adjustment against the Euro.

Source : Today - 1 Aug 2008

It falls short of 2.3 per cent forecast

WASHINGTON - The United States economy expanded at an annualised 1.9 per cent pace in the second quarter of the year, marking an improvement from the previous quarter, the Commerce Department said yesterday.

US economic momentum picked up from a revised 0.9 per cent rate for the first three months of the year, but the second-quarter growth fell short of the 2.3 per cent forecast by most economists.

Analysts said a giant economic stimulus, worth around US$168 billion ($229 billion), had helped boost growth. Helping consumers fight off high oil prices were government payments, handed out as tax rebates from late April to July. But analysts think the salutary effects of the stimulus payments will soon fade, erasing the support to the economy that had been provided during the second quarter.

The survey on the health of America’s US$14-trillion economy showed that second-quarter growth was the strongest since the third quarter of last year.

The government also revised downwards growth for the first quarter of this year and the last quarter of 2007. Fourth-quarter growth was revised significantly lower to show a drop of 0.2 per cent from a prior estimate showing a gain of 0.6 per cent.

The decline in gross domestic product during the fourth quarter marked the first time US economic growth slipped into negative territory since the recession of 2001.

Some economists and investors believe the world’s largest economy has slipped into a recession, but the second-quarter data will reassure those who think the economy will avoid a recession.

Economic growth has slowed of late amid a lengthy housing market slump and as a credit crunch grips the banking industry. Soaring world oil prices have also dented economic momentum.

Consumer spending rose 1.5 per cent during the second quarter against a 0.9 per cent gain in the previous quarter despite Americans cutting back on their purchases of big-ticket durable goods such as cars and white goods.

The Commerce Department report also showed that a surge in exports had helped fire up growth during the second quarter. Export growth accelerated sharply during the quarter, as exports boomed 9.2 per cent during the April-June period after rising 5.1 per cent in the first quarter, helped by the weak US dollar. Agencies

Source : Today - 1 Aug 2008