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Different loans in market are meant to help unique needs of businesses

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Author: Ravi Philemon

If you are a business owner or possibly even looking to be one, it is important to understand that there are different loans out there that are meant to help you fund your company.

By: Hitesh Khan/

Besides banks, there are other financial institutions that are more than willing to offer different loans for small or medium business owners.

different loansThese different loans for businesses are very similar to personal loans because of the fact they must be repaid in full by a certain amount of time, whether this be some sort of a repayment plan or a large lump sum payment.

The money being borrowed can be used for a number different reasons. For example, you can use this money to purchase new equipment that is needed, purchasing additional inventory or materials, hiring employees, covering for operational expenses, or even to pay staff salaries.

But as with all loans, it is very important that the borrower takes this money very seriously and plans out first how the funds will be used. Many new company owners make the mistake of borrowing a lot more money than they need because they did not plan ahead of time.

This will make it very difficult to make the payments, especially when such different loans come with a high interest rate.

For example, think about how you are going to use the funds borrowed:

  • Are you looking to start your business and get things going?
  • Do you have a business but are now looking to expand?
  • Do you just need a little help with this months payroll?
  • Have you considered other financing to cover the funds you need?

These are just some of the questions you should ask yourself before taking on this type of different loans. Remember you do not want to forget about certain risks that come along with owning your own business.

Once you have decided you want to take on this loan you must come up with a business plan to present to the lender. You must come with a business plan and data sheets that are easy enough for the loan officer to understand your field of work.

The loan officer will need to be convinced that you will be able to take on this loan and pay it back with ease. If you can achieve this, then there should be no problem getting this type of loan to help your business. But be mindful that over half of entrepreneurs are expecting to increase their revenues by 50 per cent in 2019, yet many are facing an uphill battle when it comes to funding their business expansion.

Singapore SMEs starting to be affected by trade tensions

An SME Development Survey by DP Info in November 2017 said a major sticking point for entrepreneurs in Singapore is cashflow management, It said that an increasing number of firms struggling with delays in client payments.

The survey found about 35 per cent of SMEs saying they had finance-related issues – 13 percentage points more than a year earlier and the highest since the survey began tracking the issue in 2011. And among these 35 per cent, the proportion experiencing delays in payments from customers skyrocketed from 14 per cent in 2016 to 81 per cent last year.

A separate Spring Singapore poll conducted in Dec 2017 showed that 64 per cent of SMEs said they were facing some form of delay in receiving payments from customers.

Mr Paul Ho, chief mortgage consultant at iCompareLoan said, “businesses need to borrow when they do not need money.”

He added: “When your business is struggling and you need additional funding to tide over a tough patch, then you will find that your access to funding is completely cut off and end up with very expensive funding.”

SME loans – with low success rate, it is important to work with trusted hands

It may be wise to plan 6 to 12 months ahead for any potential funding needs. Even if you do not need funding now, you may want to quickly refinance your home loans for any potential equity and stand-by cash even if you do not need it now.

Remember, banks assess your credit and affordability at the point of application, so you should apply when your status is good, not when you have further deteriorated. At that time, no banks will lend you. You should also read about more about the different loan types. If your business is profitable and you only need short term funding, but your access to bank’s working capital is temporarily cut off, then you should consider personal loans as a source.

As you know, a loan is based on a simple idea: someone gives you money and you promise to pay it back, usually with interest. Loans are so common that you probably are familiar with the mechanics, but nevertheless it makes sense to review the basics. The success or failure of your business can hinge on the question of if you did borrow funds when you were in the black. You may want to borrow funds which are just enough that your company can reach its potential, but not so much that you have severe difficulty paying it back.

It can be a mistake to pour too much money into your business at the beginning. A fair number of small businesses fail in the first year, so raising and spending a pile of money for an untested business idea can lead to much grief – especially if you’re personally on the hook for borrowed funds. Consider starting as small and cheaply as possible.

You have many options when looking a loan for your business. For small ventures, responsible borrowing means considering if friends and family members are willing to help. For sophisticated or mid-sized businesses, banks, cooperatives, and savings and loans may be willing to lend you money.

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Singapore real estate company listed on global gender-equality index for 3rd consecutive year

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Author: Ravi Philemon

CDL IS ONLY SINGAPORE REAL ESTATE COMPANY LISTED ON BLOOMBERG GENDER-EQUALITY INDEX 2020 FOR THIRD CONSECUTIVE YEAR

  • Only Singapore real estate company listed on global index
  • Women employees form 67% of CDL’s workforce and 50% of its department heads
  • 25% women representation on CDL’s Board, above the Council for Board Diversity’s recommended target of 20% for Singapore-listed companies by 2020

SINGAPORE REAL ESTATE COMPANYCity Developments Limited (CDL) has once again been selected for the 2020 Bloomberg Gender-Equality Index (GEI) which distinguishes companies committed to transparency in gender reporting and advancing gender diversity in the workplace. In a traditionally male dominated industry, CDL is the only Singapore real estate company to be listed this year, and to be listed for three consecutive years since the inauguration of the global index in 2018. CDL is part of 325 companies selected for the 2020 GEI from nearly 6,000 companies across 84 countries and regions.

The GEI tracks the financial performance of public companies committed to supporting gender equality through policy development, representation, and transparency. The reference index measures gender equality across five pillars: female leadership and talent pipeline, equal pay and gender pay parity, inclusive culture, sexual harassment policies, and pro-women brand.

Mr Sherman Kwek, CDL Group Chief Executive Officer, said, “CDL values diversity as a strategic advantage that enhances decision-making in the workplace. The insights harvested from people of different skills, experiences, gender, age groups and cultures have been invaluable in helping CDL stay relevant, cultivate a more engaged workforce, and furthering the organisation’s endeavours. We are deeply honoured by this recognition and strive to continue championing corporate diversity and promoting a culture of inclusiveness in the workplace.”

To promote the awareness and adoption of diversity and inclusion within the company and wider community, CDL established an internal Diversity and Inclusion Task Force in 2017. This Task Force complements CDL’s Women4Green network, a first in Singapore, which inspires and empowers women to create a financially, environmentally and socially sustainable future.

Currently, women employees form 67% of CDL’s workforce and 50% of its department heads. Over the past 5 years, CDL has consistently had over 65% of its workforce comprising female employees and the number of women department heads in CDL has steadily increased over the past few years.

In 2017, CDL also adopted a formal Board Diversity Policy, which sets a clear framework for promoting diversity on its Board. Currently, two (or 25%) out of eight directors on CDL’s Board are women. This exceeds the Council for Board Diversity (CBD)’s recommended target of having a 20% women representation on the boards of Singapore-listed companies by 2020, as well as the 15.7% women representation on the boards of Singapore’s top 100 primary-listed companies. Mr Kwek is a member of the CBD, established by the Ministry of Social and Family Services, which seeks to promote an increase in women participation on the boards of listed companies, statutory boards and non-profit organisations.

Mr Peter T. Grauer, Chairman of Bloomberg, said, “The 325 companies included in the 2020 GEI have shown their commitment to transparency and demonstrated leadership in genderrelated data reporting. Disclosure of company statistics and practices is an important first step in supporting gender equality globally.”

The GEI expanded in 2020 to represent 42 countries and regions, including firms headquartered in the Czech Republic, New Zealand, Norway, Philippines, Poland, and Russia for the first time. Companies range from a variety of industries, including automotive, banking, consumer services, engineering and construction, and retail.

On Jan 21, CDL was ranked the world’s top real estate company on the 2020 Global 100 Most Sustainable Corporations by Corporate Knights. CDL is the first and only Singapore real estate company to be listed on Global 100 for 11 consecutive years.

Announced on Jan 21 at the World Economic Forum in Davos, Switzerland, City Developments Limited (CDL) has been ranked the world’s top real estate company on the 2020 Global 100 Most Sustainable Corporations in the World, taking 36th place.

Since 2010, CDL is the first and only Singapore real estate company to be included for 11 consecutive years in Global 100, one of the world’s leading sustainability indices. This year, CDL has once again emerged as Singapore’s top-ranked sustainable company, a position held since last year.

Analysed by Corporate Knights, a Toronto-based international media and investment research firm, the Global 100 ranking is recognised as the world’s preeminent sustainability equity index and gold standard in corporate sustainability analysis. Companies listed on the 2020 Global 100 ranking were selected after a rigorous assessment of 7,395 companies with more than US$1 billion in revenues – each evaluated on a set of up to 21 Environmental, Social and Governance (ESG) indicators relative to their industry peers using publicly available information.

CDL’s Future Value 2030 Sustainability Blueprint Since CDL launched its Future Value 2030 sustainability blueprint in 2017, which sets ambitious ESG targets that contribute towards the UN SDGs, CDL increased its carbon emissions reduction target from 38% to 59% (from baseline year of 2007) and aims to reduce embodied carbon in building materials by 24% compared to their conventional equivalents.

Over the years, the Singapore real estate company has consistently demonstrated that a company that inculcates sustainability within its business goes hand-in-hand with good financial performance.

Rising the ranks to become the world’s top real estate company on the Global 100 is a remarkable achievement CDL also recently emerged as the only company in Southeast Asia and Hong Kong to be placed in the 2019 CDP A List, for its steadfast action on climate change and robust carbon strategy.

In addition, CDL is listed on 11 other leading sustainability benchmarks, rankings and indices such as CDP (since 2008); Dow Jones Sustainability Indices (since 2011); FTSE4Good Index Series (since 2002); and MSCI ESG Leaders Indexes (since 2009) and ‘AAA’ rating by MSCI ESG Research (since 2010).

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Singapore company listed on Global 100 most sustainable corporations in the world

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Author: Ravi Philemon

CDL RANKED TOP REAL ESTATE & TOP SINGAPORE COMPANY IN GLOBAL 100 MOST SUSTAINABLE CORPORATIONS IN THE WORLD

  • First and only Singapore company listed on Global 100 for 11 consecutive years
  • CDL’s Future Value 2030 sustainability blueprint continues to drive ESG performance, with targets aligned with the United Nations Sustainable Development Goals (UN SDGs)

SINGAPORE COMPANYAnnounced on Jan 21 at the World Economic Forum in Davos, Switzerland, City Developments Limited (CDL) has been ranked the world’s top real estate company on the 2020 Global 100 Most Sustainable Corporations in the World, taking 36th place. Since 2010, CDL is the first and only Singapore company to be included for 11 consecutive years in Global 100, one of the world’s leading sustainability indices. This year, CDL has once again emerged as Singapore’s top-ranked sustainable company, a position held since last year.

Analysed by Corporate Knights, a Toronto-based international media and investment research firm, the Global 100 ranking is recognised as the world’s preeminent sustainability equity index and gold standard in corporate sustainability analysis. Companies listed on the 2020 Global 100 ranking were selected after a rigorous assessment of 7,395 companies with more than US$1 billion in revenues – each evaluated on a set of up to 21 Environmental, Social and Governance (ESG) indicators relative to their industry peers using publicly available information.

Mr Sherman Kwek, CDL Group Chief Executive Officer, said, “Climate change affects all of us and concerted action is needed to mitigate its impact. Beyond delivering financial performance, businesses have a responsibility to their investors, stakeholders and the community to drive environmental stewardship. We are immensely honoured to be recognised as the world’s most sustainable real estate company. Over the past two decades, our ethos to conserve as we construct has led to our prioritisation of ESG integration to create value and future-proof our business. The Global 100 ranking affirms our progress and initiatives to drive transformations for our industry and be a change catalyst. We will continue to strengthen our ESG targets, innovate and proactively encourage a global green-minded business mindset.

Working together with other stakeholders within the larger ecosystem, we will forge ahead in the new climate economy and steer our built environment towards a more sustainable future.” CDL’s Future Value 2030 Sustainability Blueprint Since CDL launched its Future Value 2030 sustainability blueprint in 2017, which sets ambitious ESG targets that contribute towards the UN SDGs, CDL increased its carbon emissions reduction target from 38% to 59% (from baseline year of 2007) and aims to reduce embodied carbon in building materials by 24% compared to their conventional equivalents.

In addition, CDL proactively adopts sustainable construction methods and integrate innovative technologies to enhance the environmental performance and financial value of its properties, as well as create comfortable green living spaces. To optimise resource and cost-savings, sustainability considerations are factored into the entire development lifecycle, starting from land acquisition and design to construction and building management. Since 2011, CDL has set a minimum target for all its new developments to achieve a Green Mark GoldPLUS certification by Singapore’s Building and Construction Authority (BCA), exceeding the mandatory Green Mark certification level. To date, close to 70% of CDL’s portfolio of Green Mark certified developments and office interiors are rated Green Mark GoldPLUS and Platinum – the highest tier certification. It is also on track to achieve its target of achieving Green Mark certification for 80% of CDL owned and/or managed buildings by 2030.

Mr Toby Heaps, Corporate Knights Chief Executive Officer, said, “Over the years, CDL has consistently demonstrated that a company that inculcates sustainability within its business goes hand-in-hand with good financial performance. Rising the ranks to become the world’s top real estate company on the Global 100 is a remarkable achievement and I commend CDL for their steadfast commitment, years of perseverance to drive change for the built environment. CDL is a trailblazer for the real estate sector and Singapore; and I extend my heartiest congratulations.”

In addition to the above accolade, CDL is listed on 11 other leading sustainability benchmarks, rankings and indices such as CDP (since 2008); Dow Jones Sustainability Indices (since 2011); FTSE4Good Index Series (since 2002); and MSCI ESG Leaders Indexes (since 2009) and ‘AAA’ rating by MSCI ESG Research (since 2010).

On Jan 20, CDL emerged as the only Singapore company in Southeast Asia and Hong Kong to be placed in the 2019 CDP A List for its steadfast action on climate change and robust carbon strategy.

CDL is also listed as the only Singapore company which specialises in real estate listed on Bloomberg Gender Equality Index 2020 (GEI) for 3 consecutive years. The GEI tracks the financial performance of public companies committed to supporting gender equality through policy development, representation, and transparency. The reference index measures gender equality across five pillars: female leadership and talent pipeline, equal pay and gender pay parity, inclusive culture, sexual harassment policies, and pro-women brand.

To promote the awareness and adoption of diversity and inclusion within the company and wider community, CDL established an internal Diversity and Inclusion Task Force in 2017. This Task Force complements CDL’s Women4Green network, a first in Singapore, which inspires and empowers women to create a financially, environmentally and socially sustainable future.

Currently, women employees form 67% of CDL’s workforce and 50% of its department heads. Over the past 5 years, CDL has consistently had over 65% of its workforce comprising female employees and the number of women department heads in CDL has steadily increased over the past few years.

In 2017, CDL also adopted a formal Board Diversity Policy, which sets a clear framework for promoting diversity on its Board. Currently, two (or 25%) out of eight directors on CDL’s Board are women.

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Punggol Digital District to be powered by Open Digital Platform

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Author: Ravi Philemon

Punggol Digital District: Singapore’s first business park powered by Open Digital Platform

Punggol Digital District (PDD) will be the business park that anchors business innovation and activity in the town. Masterplanned and developed by JTC, the PDD groundbreaking marks the first phase of its development. With 210,000 square metres of business park and mixed use spaces available from 2023, PDD will leverage on the larger Punggol town to be a living lab for cybersecurity, smart living and smart estates solutions. The co-location of SIT’s campus with the business park buildings in PDD will provide students with a full-fledged applied learning environment, while businesses will have access to young talents at close quarters.

punggol digital district

Image: Smartnation.sg

Punggol Digital District will be Singapore’s first business park to offer businesses ‘plug and play’ digital infrastructure through the Open Digital Platform (ODP).

ODP is a smart city platform co-developed by ST Engineering, JTC, the Government Technology Agency, Cyber Security Agency of Singapore (CSA), and Infocomm Media Development Authority. With district-level data, businesses and students from SIT can tap on the ODP to conduct rapid prototyping and deployment of technology solutions in a real-world setting, which translates to cost savings and greater operational efficiency.

Punggol Digital District will be an attractive work and lifestyle destination with lush green spaces and an experiential digital environment with smart features. In addition to CSA, the Association of Information Security Professionals (AiSP) has also expressed interest to relocate its operations to PDD in 2023. AiSP plans to organise activities such as conferences, knowledge sharing events, awareness talks, and certification courses for individuals, organisations and the community to build up the cybersecurity sector.

As an environmentally sustainable business park, Punggol Digital District aims to achieve 30% higher energy efficiency than standard commercial buildings, zero water wastage with eco-ponds to collect rainwater for irrigation and to be reused as non-potable water, as well as 100% food and horticulture waste recycling into fertiliser.

Senior Minister and Coordinating Minister for National Security Mr Teo Chee Hean shared these plans at the groundbreaking ceremony of the Punggol Digital District and the launch of the PDD exhibition.

PDD is part of plans to integrate Punggol residential districts, a business park, a university campus, community facilities, and a network of parks and waterbodies, transforming the way we live, work, learn, and play. Bringing together residents, businesses and students, Punggol is slated to become a thriving, tech-enabled, sustainable town showcasing our Smart Nation ambitions.

Punggol will provide opportunities for industry, the Singapore Institute of Technology (SIT) and public agencies to co-create, test and deploy innovative solutions in areas such as cybersecurity and smart facilities management. A multi-agency effort1 will enable greater integration in the planning and running of infrastructure and services, and contribute to a vibrant and innovative ecosystem.

Punggol has been designated as a Strategic National Project for Smart Nation. It will be key in realising Singapore’s Smart Nation vision, and will drive adoption of digital and smart urban solutions throughout Singapore. The trials conducted in Punggol will be scaled to guide the development of future new towns and districts such as Tengah and Jurong Lake District, as well as the redevelopment of existing towns across Singapore.

Punggol: A thriving, smart and sustainable town for all

Punggol will be a demonstration of the future of living in Singapore. It will showcase how digital technologies can improve liveability and sustainability, create business opportunities, and forge a closer community. This builds on existing efforts by the Housing & Development Board (HDB) to develop Punggol as Singapore’s first eco-town since 2010. The entire Punggol town, with its housing precincts and the PDD, provides a unique environment for innovation to prosper, and for companies, researchers, students and even residents to work together on novel and impactful ideas. Technology will also be deployed to re-engineer services to respond to citizens’ different and changing needs.

Progressively from 2023, Punggol will serve as a living lab to test out new concepts of living, working and service delivery. The wider Punggol community can look forward to:

  • New operating and service delivery concepts. Smart amenities that citizens can look forward to include a Specialist Community Club, imPAct@Punggol Digital District, which will be a one-stop social space, with a focus on programmes for youth and working professionals. There are also plans to develop one-stop, seamless public services to citizens in Punggol. Residents can look forward to the Punggol Regional Sport Centre that supports online and offline engagement such as virtual coaching, Augmented Reality gamification and online facilities booking. A hawker centre with a smart facilities management system will use technology to provide more efficient cleaning and maintenance services.
  • A smart transport system that improves travelling around Punggol. This includes the pilot deployment of autonomous buses in the early 2020s, to enable the Punggol community to travel around the town efficiently and conveniently.
  • A pro-enterprise business environment that nurtures innovation and collaboration. Academia, industry and government will forge a “Triple Helix Partnership” to develop ideas, productise them and overcome regulatory
    hurdles; and accelerate the testing and translation of new concepts to tackle challenges in areas like cybersecurity, smart grid and smart facilities management. This will help create job opportunities in key growth sectors of the digital economy.
  • A green and sustainable town that minimises wastage and maximises resource efficiency. When completed later this year, residents living in the Punggol Northshore housing district can look forward to having their homes outfitted with built-in smart sockets and smart distribution boards that enable smart applications for the home, such as better monitoring of household energy consumption. Around the estate, features such as smart lighting will help save energy. In addition to the provision of solar panels by HDB on the roofs of housing blocks, JTC, SIT and SP Group will also collaborate on smart energy grid solutions to integrate energy generation and storage systems such as solar photovoltaic and batteries within PDD so as to optimise energy consumption and reduce carbon footprint by up to 1,500 tonnes annually. The implementation of pneumatic waste conveyance systems will also benefit the wider Punggol community. It allows for waste to be collected via air suction in underground pipes, minimising the traffic, noise, pests and smell nuisances associated with traditional waste collection.

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Investment sales, office space & residential sub markets remained resilient

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Investment sales, office space & residential sub markets remained resilient


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Author: Ravi Philemon

Investment sales and office space cum residential sub markets remained resilient in a subdued 2019 says new Research

Notwithstanding a muted domestic economy, the on-going trade war and other geopolitical tensions, private investment in real estate and the demand for office space remained robust as the Singapore property market continues to position itself as a safe haven for investment and commerce.

Investment sales

investment salesIn tandem with the slowdown in sites sold under the Government Land Sales (GLS) Programme due in part to the soft residential collective sales market, the overall investment sales value dropped to $23.2bn in 2019, down 22.2 per cent from 2018’s $29.9bn.

Private investment sales, however, gained momentum, accounting for 78.1 per cent of total sales compared 76.2 per cent in 2018. Activity was supported by notable transactions in the office and hospitality sectors.

With Chevron House’s $1bn transaction topping the list in 2019, and the sale of Bugis Junction Towers in Q4 for $547.5m, the office sector enjoyed a 53.5 per cent year-on-year (y-o-y) increase in total private sector deals and GLS sites.

Hospitality assets – underpinned by yet another record year in international visitor arrivals to Singapore – likewise enjoyed brisk deal activity, with investment sales value increasing 216 per cent y-o-y. Q4 2019 saw the sales of the luxury Andaz Singapore hotel for $475m and Liang Court for $163.3m.

EDMUND TIE’s chief executive officer, Ms Ong Choon Fah said: “Given escalating risks in equities and shrinking yields in the debt market, real estate presents itself as an alternative asset class in which investors can safely park their wealth over the mid- to long-term.”

“In addition to a stable political landscape, the historical strength and stability of the Singapore dollar also preserves the value of investments, hence making the country a highly attractive destination for investors,” she added.

Office space investment sales

Sound fiscal and pro-business policies, supported by strong economic fundamentals, have also catalysed activity for office space, with substantial demand originating from the information & communications and finance & insurance sectors, even as the co-working industry continues to expand its footprint here.

“As businesses here undergo digital transformation, there is a healthy demand for IT and digital solutions as well as sustained demand for payment processing services,” said Ms Alice Tan, EDMUND TIE’s head of research and consulting.

Notable movements in Q4 2019 included the relocation of First Abu Dhabi Bank to 22,000 sq ft of space in Asia Square Tower 2, technology firm Upgrade Pack’s setting up office at 9 Battery Road, and JustCo’s opening of its 50,000 sq ft co-working office in Manulife Centre.

Ms Tan added: “Firms providing asset management and legal services could also be on the lookout for office space since inbound investment to Singapore is expected to step up as investors search for safe haven investment destinations in Asia.”

Residential investment sales

While the total sales volume of private homes is anticipated to reach 19,000 units for 2019, lesser than the 22,139 units sold in 2018, residential demand nonetheless stayed remarkably resilient in spite of the soft economy and modest job market.

Well-conceptualised projects with good locational and site attributes enjoyed good sell-through rates. One Holland Village Residences, for example, achieved a sell-through rate of about 29 per cent one month after its launch in end November 2019, transacting 87 out of its total of 296 units.

Other integrated developments with residential units launched in the fourth quarter that saw encouraging responses include Midtown Bay, which saw a sell-through rate of 22 per cent since October 2019, and Sengkang Grand Residences, which enjoyed a 35 per cent sell-through rate since November 2019.

“Notwithstanding the new high pricing set by new launch projects in 2019, there is growing acceptance from homebuyers on the price premium factors accorded to well-located projects with concepts that appeal in lifestyle and convenience,” said Ms Tan.

Ms Ong added: “Home ownership as an aspirational goal has long been a key element of the Singaporean dream since the nation’s formative years. Barring severe shocks, there will always be latent demand that will respond positively to quality supply that comes on-stream. Developers, who continually seek to raise the bar and create more value for homeowners, will continue to outperform the market.”

Everyone wants to know how to make money from investment sales. For those interested in real estate investments, the decision is between jumping in and buying (and perhaps overpaying for reading the market wrongly), and a long, hard wait where one might potentially lose a lot of capital in the process.

Understanding the property cycle and current market conditions would help those interested in investment sales to determine if it is a good time to invest. In order to correctly understand the market, buyers of real estate investment properties need to properly model the market to capture all the inputs and outputs.

Those interested in real estate investment should only go for high quality properties in good location with historical strong rental demand. One important thing such prospective buyers should ask is, “if money is not an issue, where would you rent?”

The prospective buyer would only know where the rental demand is after speaking to 30 – 50 people. So, always buy in those areas where people want to rent (because when times are good, one can get good rentals and when bad, it is still rent-able at a lower rent), you will still be able to find tenants because of the desirable locations.

Look for units that have some price distortion or buy good facing units that are going for less premium during high market. (Note: Some more speculative projects have a price difference of 20 -30 per cent between good facing and average facing units. For example, between 2800 psf versus 2200 psf, during a low cycle, the difference could narrow to 5 to 10 per cent.)

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SG real estate market to retain its lustre in 2020 amid uncertainty

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Author: Ravi Philemon

– Bright spots in the SG real estate market, with marginal improvement in economic growth expected in 2020
– Low global interest rates, benign growth, and strategic asset allocation strategy should position SG real estate market favourably among investors
– Hotel and Office properties tipped as assets that offer mid- to long-term growth in SG real estate marke
– Within SG real estate market industrial and retail sectors bottomed but will remain fragile
– Residential developers to selectively acquire sites as they pare inventory within SG real estate market

SG real estate market

Image credit: Alpha Stock Images

Colliers International today published its Singapore Market Outlook 2020 report, which highlights its growth forecasts for the market and the real estate opportunities in various property sectors in Singapore.

Broadly, Colliers Research expects the Singapore real estate market to retain its lustre this year, with the possibility of some sectors outdoing 2019’s performance. This is against a backdrop of the relatively more positive economic outlook in Singapore, stabilising global economy, the favourable interest rate environment, and the US-China trade truce which helps to mitigate some uncertainty in the market.

Tricia Song, Head of Research for Singapore at Colliers International, said, “In 2020, we expect office, hotel and residential sectors to post mild growth in 2020 on favorable demand-supply dynamics. Meanwhile, the industrial and retail property sectors should continue to stabilise after years of consolidation, while the office sector takes a breather after a strong 26% rental growth over three years. In the capital market, while valuations are high, office and hotels would still offer the best risk-reward proposition on the mid- to long-term horizon.”

SG Real Estate Market Outlook 2020 Highlights

Hotel Property Outlook
Colliers Research expects demand for rooms to remain healthy in 2020, supported by rising visitor arrivals, new tourist attractions, and large-scale MICE (meetings, incentives, conferences, exhibitions) events, such as The International Trademark Association’s 142nd Annual Meeting and the 103rd Lions Clubs International Convention. The long-term growth drivers for the hospitality sector include the new airport terminal and expansion of the Integrated Resorts.

In terms of trading performance, revenue per available room (RevPAR) – which has recovered since 2017 – could grow by 1% year-on-year (YOY) in 2020 on tight near-term supply and continued growth in visitor arrivals. Meanwhile, occupancy is expected to improve with limited supply in 2020-2022F. Even with potentially increased room completions in 2023 and 2024, the total new completions over 2020-2024 would average around 1,400 rooms per annum, still well below the last 10-year average of about 2,800 rooms per annum.

Office Property Outlook
In 2020, Colliers Research expects office demand to continue to be led by the technology and flexible workspace sectors, albeit at a slower rate than 2019. The rapid expansion in the flexible workspace sector could lose steam as operators focus more on sustainability and profitability; the tight office vacancy will also likely constrain the sector’s growth.

The average rent of Grade A office space in the central business district (CBD) is projected to rise at a slower pace of 1% YOY to SGD10.19 per square foot per month (psf pm) in 2020, as rents are on a 10-year high and tenants resist further rent hikes in view of macro-economic uncertainty. Colliers Research estimates that CBD Grade A vacancy could increase to 5% in 2020 as net demand declines. That said, the limited supply in 2020-2021 should keep vacancy below the 10-year average of 6.2%.

Retail Property Outlook
The overall retail market will continue to bottom in 2020 with relatively flat rental growth, as the market digests the large new supply that was completed in 2019. Colliers Research anticipates any recovery to be subdued given the lack of catalysts. Ground-floor rents at Orchard Road are expected to rise marginally (+0.3% YOY) in 2020, while that of Regional Centres could stay flat. Island-wide vacancy could also improve in 2020-2023 as front-loaded supply in 2018 and 2019 gets absorbed.

Key themes in the retail sector this year are: consolidation; “reinventing” retail; and omni-channel retail. Retailers are expected to adopt technology to enhance customer experience, as well as diversify their business models and expand their product offerings or services to provide more options for consumers. For the landlords, F&B expansions and the inclusion of flexible workspace in retail malls are likely to continue into 2020.

Residential Property Outlook
About 44 private residential projects are expected to be launched in 2020, of which 45% would be in the prime districts. Colliers Research notes that foreigners are still attracted to selected super luxurious projects.

Colliers Research is of the view that steady household formation, low unemployment, and favourable interest rates will support housing demand. It expects developers to sell about 9,800 new homes in 2020, on par with 2019. From the land sale tender results since the cooling measures in July 2018, developers have been active but cautious in their land bids. Colliers Research expects developers to remain prudent in land bidding, and to focus on moving inventory for most of 2020.

Industrial Property Outlook
Leasing demand is expected to remain soft on weaker trade before outpacing supply in 2021, supported by a projected gradual recovery in the global electronics cycle. According to JTC’s data, total net new supply is projected to intensify in 2020 to 18.5 million square feet, led by factory segment at 77%, before tapering off from 2021 onwards.

In general, Colliers Research forecasts continued two-tier performance between older lower-specifications and newer higher-specifications facilities. In particular, warehouse rents will likely stabilise over 2020-2021, before recovering from 2022 as supply diminishes. In contrast, business park and high-specs rents could improve slightly on sustained demand.

Investment Sales Outlook
Broadly, Colliers Research expects that total investment sales should increase by 6% YOY to SGD31.3 billion in 2020, given the strong institutional interest in Singapore real estate, especially in the commercial property sector.

Tang Wei Leng, Managing Director at Colliers International, said, “We expect the remarkable pace of commercial deals to continue, supported by favorable interest rate outlook, healthy office market, and Singapore’s status as a key global business hub. The government’s effort to rejuvenate the city centre, coupled with investors’ interest and confidence should help to maintain the strong investment momentum in commercial sector.”

In addition, Colliers Research forecasts industrial sales to accelerate, with more big-ticket transactions by industrialists and institutional investors into yield-accretive assets such as business parks and data centres. The investment demand for hospitality assets will remain firm, owing to the muted supply pipeline and robust visitor arrivals on more attractions and MICE events.

The post SG real estate market to retain its lustre in 2020 amid uncertainty appeared first on iCompareLoan Resources.

Trump at Davos urges countries to ‘put their own citizens first’ as he touts US economic success

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Trump at Davos urges countries to ‘put their own citizens first’ as he touts US economic success


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Hours before his impeachment trial was set to begin in earnest back home, Trump touted his “America First” agenda to world leaders at Davos.