Take two reveals a brighter property picture

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(SINGAPORE) Credit Suisse, which predicted in January that an astonishing
200,000 foreigners and permanent residents (PRs) might leave Singapore in 2009
and 2010 on the back of job losses, now thinks that the exodus may not be as
bad as it had expected.

The evidence for this can be gleaned from the
bank's forecasts for the property market.

Based on its economists'
expectations of historically high job losses (up to 240,000) and an exodus of
foreigners (up to 200,000) by the end of 2010, the firm's property analyst
Tricia Song had previously assumed that 15,000 homes could be vacated by
2011.

But in a report dated June 19, she says she now believes that just
3,000 private homes will be vacant from 2009 to 2011 as foreigners leave the
country.

'Anecdotally, we expect that the number of foreigners leaving
Singapore will not be as high as we had expected,' said Ms Song in the
report.

This also means that private home prices will not be as badly
hit as the firm predicted just six months ago. Credit Suisse had expected
private home prices to fall by as much as 60 per cent from the peak to 2005
levels, partly because of the projected 200,000-foreigner exodus.

However, in part due to the smaller-than-expected job losses and foreigner
exodus, Ms Song now says home prices could dip 25 per cent in 2009 before
recovering 10-15 per cent in 2010.

The main cause for the change of view
is a recent update by economist Cem Karacadag, who was part of the team that in
January predicted that some 200,000 foreigners and PRs might leave Singapore in
2009 and 2010.

Credit Suisse said then that the potential drop in
employment and population would have far-reaching implications for the
economy.

But in a recent report, Mr Karacadag said job losses have not
been as large as he had feared.

'Singapore's labour market has held up
remarkably well in this recession and much better than we had anticipated,' he
said in a June 19 economics note.

Among various things, employers
appear to have adjusted labour costs through salary cuts rather than cuts in
headcount, he said.

Job losses so far this year have been surprisingly
low against unprecedented job gains in 2007 and 2008, the note said. Net
employment fell by only 6,200 in Q1 2009, although Singapore's real GDP was 10
per cent lower in Q1 2009 compared to Q1 2008.

Mr Karacadag also
upgraded his forecast for Singapore's 2010 GDP growth to 4.4 per cent, from 3.9
per cent.

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