ERA Daily Research - 20 May

Ample liquidity drives pricier landed-home deals, stock trading in Q1

The Business Times, 20 May 2021, Thu      

By Fiona Lam

THE number of landed homes transacted at S$5 million and above in the first quarter this year again rose in tandem with the surge in trading activity on the Singapore stock exchange's mainboard.

This correlation between big-ticket purchases and turnover in the equity market was driven by increased liquidity and an improvement in overall sentiment at the time, said Lee Nai Jia, deputy director of the Institute of Real Estate and Urban Studies (IREUS) at the National University of Singapore.

However, the city-state's recent increase in Covid-19 cases and tightened restrictions could put a dent in sentiment, slowing sales in the landed-home segment as well as equity investments on the Singapore Exchange (SGX), he noted. "Buyers are likely to adopt a wait-and-see attitude until there are clearer signs that the Covid-19 situation is controlled."

A total of 822 landed residential properties - detached, semi-detached and terrace houses - changed hands in Q1 this year, showed data from the Urban Redevelopment Authority's Realis platform downloaded on May 17. That was a tad fewer than the 868 houses purchased in Q4 2020, but slightly surpassed the 809 in Q2 2018 - which was during the last en-bloc sales boom, when many unit owners went on to buy landed housing with their windfall gains.

Specifically, for landed homes that fetched S$5 million or more, there were 200 deals in Q1 2021, up from 145 in the prior quarter. It is also more than the 161 houses that changed hands in Q2 2018 at S$5 million and above, and 136 of such pricier transactions in Q4 2012, before cooling measures including the total debt servicing ratio were introduced in 2013.

Meanwhile, the total value of mainboard-listed shares traded during Q1 2021 grew 25 per cent to about S$87.86 billion, from S$70.44 billion in Q4 2020, showed SGX data.

Year on year, the mainboard turnover value had also been "slowly inching back" to the S$93.36 billion recorded for Q1 2020, before Singapore's "circuit breaker" started last April in response to the Covid-19 pandemic, Dr Lee noted.

Those who earned returns from the stock market may use part of the proceeds to fund their purchases of landed residential properties, he said.

For well-heeled equity investors, the amount they are able to earn from the stock market can be "quite substantial" and thus "trigger them to act" and buy such assets, he added. Landed homes are typically seen as a proxy of the highest percentile of wealth among Singaporeans.

In addition, wealthy prospective homebuyers, flush with capital, may have found the past few quarters a "favourable" time to purchase the landed properties they want, given the current low interest-rate environment. The low rates also encouraged existing owners of landed properties to take up home-equity loans or term loans to invest in Singapore-listed equities, thus adding to the SGX mainboard turnover, Dr Lee said.

The bourse operator said last month that global markets were buoyed by investor optimism on the strength of the economic recovery, with Singapore's stock market "ranking amongst the strongest of the global benchmarks". That drove SGX's total securities market turnover, including mainboard and Catalist equities, to grow 12 per cent quarter on quarter to S$94.2 billion in January-March this year, while the securities daily average value rose 18 per cent to S$1.52 million.


WeWork says demand for space exceeds pre-pandemic levels

The Business Times, 20 May 2021, Thu      

WEWORK, the office-rental company most closely associated with entrepreneurial excess, has seen demand bounce back in the aftermath of the Covid-19 pandemic and inquiries from potential customers exceed what they were before nationwide lockdowns, its executive chair said. 

"The demand for WeWork space today is higher than it was prior to the pandemic," said Marcelo Claure, who is also chief operating officer of SoftBank Group, WeWork's biggest investor, at the Bloomberg Businessweek virtual summit. A spokeswoman for WeWork said revenue had recovered after a pandemic dip. "Sales are back to pre-pandemic levels, and our sales pipeline is strong," she wrote in an e-mail. 

WeWork attempted an initial public offering two years ago, but the deal imploded after investors lost confidence in its former chief executive officer (CEO), Adam Neumann, and its lofty US$47 billion valuation. After its very public meltdown, the company retrenched, cutting thousands of jobs. 

Now, WeWork is again seeking to go public, this time with a new CEO, real-estate veteran Sandeep Mathrani, and on the Nasdaq via a US$9 billion merger with a special purpose acquisition company, BowX Acquisition. Shares of BowX rose 7 per cent on Tuesday after Mr Claure's comments. Covid-19 shutdowns gave WeWork a chance to "reinvent" itself, he said, prompting the company to slash costs. In March, WeWork said revenue excluding China for 2021 was estimated at US$3.2 billion, on par with 2020 and 2019. 

Now, as more employers experiment with bringing workers back to the office on flexible schedules, WeWork said it is ready. Customers "are basically sending us their employees because they don't know how many days they're going to be working", Mr Claure said. Because many companies are reluctant to sign long-term leases, WeWork's flexible terms hold greater appeal, he added.


Frasers Property Retail buffs digital platforms amid tightened restrictions

Edgeprop, 18 May 2021, Tue       

By Timothy Tay

Frasers Property Retail, the retail platform managing the local retail assets of Frasers Property Singapore, has boosted its digital platforms to support its tenants amid the tightened safe management measures. (See: Frasers Property steps up preventive measures in malls, offices and other properties) 

With the cessation of dine-in at F&B outlets from May 16 to June 13, Frasers Property Retail has extended free delivery options to tenants and customers for all orders placed through its food ordering digital application, Frasers Makan Master, until June 30. 

The launch of the Frasers Experience (FRx) application in January 2021 is timely as occupancy limits at shopping malls are reduced during the Phase Two (Heightened Alert). The app provides store-to-door service for tenants and shoppers, and shoppers will enjoy free delivery for all purchases made through the e-store until June 30. 

All vehicles entering malls managed by Frasers Property will also enjoy a 30-minute grace period. This supports delivery riders and drivers, as well as shoppers visiting to pick up food or grocery orders. 


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