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YTL sparks hope in dreary property sector







SINGAPORE, Nov 3 — Finding investors bullish about Singapore's property market is rather like finding a needle in a haystack these days, so the arrival of Malaysian tycoon Francis Yeoh last week seemed like a godsend. Yeoh's ambitious deal-making was one of the few bright spots on the corporate scene devastated by falling markets and jittery investors.


His listed YTL Corp inked a S$285 million agreement to take a stake in Macquarie Prime Reit as well as the manager of the Reit (real estate investment trust).


This was the first bit of positive news the property sector had heard for a long time and analysts, market watchers — and journalists — pounced on it with glee.


Macquarie Prime has stakes in Wisma Atria and Ngee Ann City — key landmarks along Orchard Road.


Yeoh paid 82 cents apiece for the units, a very attractive discount of 49 per cent to the Reit's net asset value.


However, his price was at a 17 per cent premium over the Reit's 30-day volume-weighted average price and 52 per cent over its last traded price of 54 cents before the deal was announced. Put that down to the global turmoil that has hit Reits and other shares.


And Friday's close at 52 cents meant Yeoh is looking at a S$74 million paper loss.


Such turbulent markets are not for the faint-hearted. The STI is down 48 per cent this year while property stocks have slumped even more.


Reits are so badly hit that their yields have grown wildly attractive. Ascendas India Reit offers a handsome 13 per cent yield.


The Singapore property market is so quiet that local residents have suspended what used to be a favourite pastime — traipsing around showflats.


Collective sale deals have completely died while the Government is removing sites from its confirmed list and putting them on the reserve list. This means the sites will not be released for sale unless there is a bid that manages to trigger the reserve price — a big achievement these days.


Not only is sentiment in the sector poor, but competition is also hotting up. Wisma Atria's neighbour, the soon-to-open high-end Ion Orchard, will raise the stakes in Orchard Road.


Further down the road is the revamped Mandarin Gallery while developments such as Orchard Central at Somerset are coming along.


Even as competition looms, visitor arrivals have fallen for a fourth straight month, so the ranks of those seeking retail therapy are thinning.


Meanwhile, Yeoh's fellow tycoons in Singapore look to have gone to ground after the euphoria of last year.


CapitaLand chief executive Liew Mun Leong was quoted recently as saying: “There are plenty of opportunities floating in front of us. As I see it now, it's still not bottoming. You may think it's cheap but tomorrow, it'll be cheaper.”


New launches are few and far between as property players dare not risk taking a chance.


Yet, amid all this, Yeoh remains unfazed.


For the brave, the weak equity and credit markets are a chance to buy in at much lower levels than at the start of the year. Star investor Warren Buffett has already said that he will be buying American stocks.


Hopefully, Yeoh's moves will start the ball rolling in the equity markets.


Hopefully, he is right about Singapore's structural transformation — that the country is moving into the league of global cities.


And hopefully, too, Singapore's own property head honchos will start making forays into more investments and listed companies rather than keeping their money under the proverbial mattress. — Straits Times Singapore







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