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Smaller homes take lion’s share of sales

2009-09-14T23:50:00.000+08:00

Home-seekers have gotten hungrier for apartments in recent months but have yet to work up a hearty appetite for large units.

Across many property launches, studio apartments and two-beddersremain most popular, reflecting continued price sensitivity on the buyers’part. They are generally ’still not as ambitious’, says DMG & Partners property analyst Brandon Lee.

At NTUC Choice Homes’ Trevista in Toa Payoh where 550 units have been launched, the majority of units left are three and four-bedders. Many buyers went straight for the two-bedroom units when the project’s preview began some two weeks ago.

GuocoLand saw the same trend when it launched Sophia Residence in the Dhoby Ghaut area. ‘All one and two-bedders were snapped up as soon as they were launched,’ says a GuocoLand spokesman. The project also has three and four-bedroom units.

Anecdotal evidence also points to a preference for smaller homes at projects such as Viva and Ascentia Sky. In another instance, the 70-unit Airstream at St Michael’s Road – where most units measured 625 sq ft in size or smaller – sold out last month.

Aiding the trend, some developers caught sight of homeseekers’ shrinking pockets as the downturn came and reconfigured their projects to offer a bigger number of smaller units.
Although prices for smaller homes tend to be higher on a per square foot (psf) basis, they still work out to be lower in absolute terms. At Trevista, for example, prices of 4-bedders start from $850 psf or $1.448 million. But those of 2-bedders start from $880 psf or $770,000, drawing buyers wary of making huge financial commitments.

As Savills Residential director Phylicia Ang notes, many buyers in today’s market are first-time private home owners or HDB upgraders who have an ‘affordability threshold’.
Property consultancy DTZ’s recent analysis of caveats proves this further – as much as 78 per cent of private residential transactions in Q2 2009 involved apartments costing less than $1.5 million.

It has become more challenging to market larger units in such an environment. An agent who declined to be named says that penthouses are particularly hard to sell when most budgets stay below $1.5 million. His strategy is to promote them to foreign investors from countries such as Indonesia. Nonetheless, the market for larger apartments is far from dead. ‘Seasoned’ buyers or investors would still consider bigger units, says Ms Ang.

Keppel Land’s Madison Residences has attracted its share of buyers and is 65 per cent sold. The project comprises only three and four-bedders with sizes ranging from 1,464 sq ft to 4,047 sq ft, at an average price of about $1,700 psf on the interest absorption scheme (2 per cent more than the normal progressive payment scheme).

Keppel Land International general manager for marketing Albert Fooattributes this to the site’s prime freehold address and proximity to topschools and the upcoming Stevens MRT.
Unique features may also make larger units more attractive. GuocoLand says that four-bedroom units at Sophia Residence are ’selling very well’ because they can be rented out in two components – as studios and three-bedders with their own entrances.

Some expect larger units to gain favour in the next few months.
‘With the recovery of the economies, we could see more funds and institutional buyers forming the next wave of demand for the larger units in prime locations,’ says the GuocoLand spokesman.

DMG & Partners’ Mr Lee also expects more foreigners to enter the local property market as economies improve and the integrated resorts open, driving greater demand for larger units

Source : Business Times- 14th Sep 2009

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Genting Singapore in $1.6b cash call

2009-09-10T22:33:00.000+08:00

CASINO developer-operator Genting Singapore is turning to its shareholders to raise $1.63 billion in the second biggest rights issue here so far this year. Unveiling the major cash call yesterday, Genting said its $6.59 billion Resorts World at Sentosa (RWS) is ‘on track, both in terms of project costs and timing, for a soft opening in early 2010′.

The proceeds ‘will strengthen the company’s financials and put us in a strong position to tap strategic opportunities’, said Genting Singapore’smanaging director Justin Tan.

However, analysts suggest the funds will also come in handy after earlier cost overruns at the RWS, one of Singapore’s two integrated resorts. The company is offering shareholders one rights share for every five existing shares held at cost of 80 cents apiece. The offer price represents a 32.8 per cent discount to Tuesday’s closing price of $1.19 when it was last traded – a record high. The stock has rallied 70 per cent since the start of July.

This is the second time Genting has sought funds from shareholders in the past two years or so, after it raised about $2 billion in a rights issue in August 2007. Genting Singapore is a unit of Malaysian gaming giant Genting Berhad, which owns 54 per cent of Genting Singapore and has pledged to subscribe to one billion rights shares.

Mr Tan said support from banks had been very encouraging despite the uncertainty in the capital markets. About 60 per cent of the proceeds will be used to fund future acquisitions and investments. The funds may also be used to enter joint ventures, strategic collaborations or alliances ‘in areas related to its principal business in the leisure, hospitality and gaming sectors, as and when such opportunities arise’, it said in a statement to the Singapore Exchange.

The remaining funds will be used as working capital, which includes repayment of bank borrowings. The company probably took advantage of the sharp run-up in stock prices to get some money into the kitty,’ said OCBC Research analyst Carey Wong. ‘We see it as an insurance move to cover cost overruns of (RWS) and interest repayments of its huge debt and convertible bonds.’

There have long been concerns about cost overruns for the project. Genting has lifted cost estimates for the resort twice – in November 2007, the price tag for the resort was raised from $5.2 billion to $6 billion due to higher construction costs. Then in February this year, it raised the figure to $6.59 billion. The potential cash infusion of $1.63 billion will ease some pressure from interest payments, given that it is sitting on a $4 billion syndicated loan, analysts said.
Of Genting’s rights issue two years ago, about half, or some $1.19 billion, was used to finance the integrated resort. It also got a $4 billion syndicated credit facility in April last year to finance the resort.

Genting’s latest cash call came as something of a surprise, given that it said in its last statement that additional funding would come from operating cash flows when the complex opens next year. Genting Singapore, Britain’s No. 1 casino operator, may be looking to expand its Asian footprint. Market observers say potential investments on the radar could be Philippines’ Subic Bay, as well as in Macau.

Its parent, Genting Berhad, tumbled 30 Malaysian cents, or 4.18 per cent, to RM6.87 in Kuala Lumpur after the announcement.

Earlier in May, the Lim family which owns the Kuala Lumpur-listed flagship firm stunned the market by selling its entire 9 per cent stake in Genting Singapore for $615 million.
It was offloaded to institutions in a private placement at about 72 cents a share, representing a 16 per cent discount to the previous day’s closing price of 86.5 cents.

DBS Bank and CIMB Bank are arranging the offer. The issue will be fully underwritten by the two banks, as well as JPMorgan, RBS, CLSA, Deutsche Bank, HSBC and UBS.

The provisional allotments of rights shares may be accepted, and applications for excess rights shares may be made commencing from Sept 28 to Oct 12.

CapitaLand mounted the biggest rights issue so far this year, raising $1.84 billion in an offer announced in February.

Source : Straits Times – 10th Sep 2009

Don’t overlook mortgage insurance

2009-09-10T22:32:00.000+08:00

RECENTLY, my client Mr Wong called me for mortgage insurance advice. He had just bought a semi-detached house for close to $2 million. He took a loan of $1.2 million over 15 years, and was looking for a mortgage reducing term insurance that will pay off his mortgage in case of his death or total and permanent disability (TPD) while the loan is not fully paid.

Mr Wong told me that he will never forget the time that he and his younger siblings lost their family home when his father died of a heart attacksome 30 years ago, leaving his mother struggling to raise the four of them.

Certainly, he does not want this to happen to his homemaker wife and three children. ‘When I pass away, the last thing that I would want to put my family through is to also lose the roof over their heads,’ he said.

In Singapore, mortgage insurance is not made compulsory for privateproperty owners and those who are not using CPF to pay their monthly HDBhousing loan repayments. However, the Home Protection Scheme, or HPS, ismandatory for HDB/HUDC flat owners who service their mortgage loans with CPF funds.

Many private property owners baulk at mortgage insurance eitherbecause of inertia or misconception that it’s an unnecessary cost. Withoutmortgage insurance coverage, however, life could be a lot harder financiallyfor the family if things go wrong.

Over the past years, there have been newspaper reports on households having to surrender their private properties because the sole breadwinner passed away without mortgage insurance coverage. As such, I always advise my clients who own private properties to have mortgage insurance to protect their homes and families.

As the name implies, mortgage insurance safeguards your home and family against the unexpected, so that they will not be burdened with mortgage repayments or face the possibility of losing their home. It is available on a single or joint-life basis. If you and your spouse jointly own the home, you may want to consider a joint-life mortgage policy which pays out on the ‘first death’.

You can decide how long you want the policy to cover you, but most people have it to run concurrent with their mortgage.

The premium will increase with the mortgage size and the length of your term. In addition, age, gender and whether you smoke are big factors in determining how much you pay. Smokers pay a lot more than non-smokers, simply because they are more likely to make a claim. For example, based on the quotation from a local insurer, Mr Wong will need to pay around 40 per cent more if he were a smoker.

Most of the mortgage insurance plans are reducing coverage whereby the sum assured decreases annually and the rate of reduction depends on the mortgage interest rate and the policy term.

Some of the common benefits and features:

Total and permanent disability (TPD) coverage up to age70. The policyholder will receive the sum assured in instalments or a lump sum up to $2 million upon diagnosis of TPD;

Single or joint-life coverage is available for joint homeowners;
Premium payment termusually stops a few years before the end of policy term, while you continue to enjoy the coverage;

Option to add waiver of premium rider so all future premiums will be waived upon diagnosis of one of the 30 critical illnesses;

Mortgage insurance does not normally cover criticalillness, which means that in the event of a critical illness such as cancer,you will still need to pay the monthly mortgage repayments. Therefore, you may need to buy a separate policy for critical illness cover;

Most plans will not cover any disability caused by riot, civil commotion and terrorist activities.
Buying a home will likely be the largest undertaking you make in your lifetime, so protecting it should be a key part of your overall financial plan. Mortgage insurance will ensure that your dependants will not have the financial worry of trying to find the mortgage repayments or having to sell the property or downsizing in the event of your untimely death.

If you are looking for a mortgage insurance policy, do shop around as premium rates and features offered can vary greatly from insurer to insurer.

The writer is a Certified Financial Planner practitioner.The views expressed are his own

Source : Business Times – 10th Sep 2009

URA’s Serangoon Ave site likely to draw strong bids

2009-09-10T22:31:00.001+08:00

URBAN Redevelopment Authority yesterday launched the tender for a 99-year condo plot at Serangoon Ave 3. Market watchers expect top bids to be towards the upper band of the range of prices they predicted two weeks ago when URA first revealed it had received a successful application forthe site, which was in the reserve list.

The revision follows the strong showing at Tuesday’s state tender for a condo plot at Dakota Crescent, which drew 13 bids. URA said yesterday it has awarded the land parcel to UOL Development (Novena) Pte Ltd, which placed the highest bid of about $329 million or $508 per square foot per plot ratio (psf ppr).

URA also announced an Oct 7 closing date for the tender of the latest plot at Serangoon Ave 3, next to Lorong Chuan MRT Station and near Australian International School.

A fortnight ago, property consultants polled by BT generally predicted top bids for the plum site to be in the $350-450 psf ppr range, with resulting breakeven costs of about $700-850 psf and target selling prices of $800-1,100 psf on average.

Yesterday, DTZ executive director (consulting) Ong Choon Fah predicted the highest offer for the land parcel will probably be towards the $450 psf ppr mark.

Colliers International executive director (investment sales) Ho Eng Joo too is betting that the winning bid will be around the $400 psf ppr level, or the higher end of the $350-$400 psf ppr price band he predicted earlier.

However, most consultants said they are not expecting run-away prices for this site. Knight Frank chairman Tan Tiong Cheng points to greater competition from nearby existing private housing stock for a new condo on the Serangoon Ave 3 site compared with a new project on the Dakota site.

Also, a condo project in the Serangoon area will appeal more to families and therefore have a bigger proportion of larger units. This will also put a cap on the per square foot pricing that its developer will be able to charge buyers.

This is unlike UOL’s strategy for the Dakota plot, where at least half of the units will be smaller two-bedroom units, which will allow it to push for a higher psf selling price.

Next Thursday (Sept 17), URA will close the tender for another plot – a commercial and residential plot at the corner of Yio Chu Kang and Seletar roads. ‘Those who missed on the last couple of tenders will become sharper in their pricing for the next few land tenders,’ says Knight Frank’s Mr Tan.

Since July 20, the government has announced the successful trigger of four sites in the reserve list. The first, a condo plot at Chestnut Ave, was bought by Hong Leong Group for $280 psf ppr.
Market watchers expect developers to make successful applications for the release of further sites on the government’s reserve list for the current half.

‘The mass-market is where the confidence is right now; there are many developers who have not secured sites in this segment,’ says Credo Real Estate managing director Karamjit Singh.
Despite the government last week raising the ‘definite possibility’ that it will restart confirmed list land sales from first-half next year, property consultants believe some developers will still press on with making applications to release more sites from the H2 2009 reserve list.

‘If they like something on the current reserve list, why wait? After all, they don’t know what sites will be in the H1 2010 confirmed list,’ said DTZ’s SE Asia research head Chua Chor Hoon.
Confirmed list sites are launched according to scheduled dates; reserve list sites are released only upon successful application by a developer with an undertaking to offer a minimum acceptable price.

Some market watchers expect that when government restarts the confirmed list, it will be ‘very calibrated’.BT understands that developers continue to urge the government not to revive the confirmed list, arguing that the reserve list is working well. However, analysts point out that it takes a longer time for a reserve list site to make it to the market as someone first has to make a successful application. ‘If no one triggers a site, it can sit on the backburner,’ says DTZ’s Mrs Ong.

‘The confirmed list is pretty much in your face. There is greater certainty.It’s a faster time to market,’ she adds. ‘The psychological message thatthe government sends out by restarting the confirmed list – of ensuring therewill be sufficient supply of land for private housing development – can also be quite powerful.

Source : Business Times – 10th Sep 2009

Punggol Spectra launched by HDB

2009-09-01T20:56:00.000+08:00

THE Housing and Development Board yesterday launched Punggol Spectra under the build-to-order (BTO) system, following strong interest in the recent BTO project, Punggol Residences.
Punggol Spectra will offer 1,142 units, comprising 301 with two rooms, 285 units of three rooms and 556 with four rooms.

Located on Punggol Central, Punggol Spectra is within walking distance of Oasis LRT station and Tampines Expressway is just a short drive away, offering good connectivity to the rest of Singapore, HDB said. The precinct has commercial facilities such as shops, an eating house and a supermarket. The future Punggol Town Centre is minutes away. Educational institutions such as Horizon Primary School and Punggol Secondary School are also nearby.

Prices at Punggol Spectra range from $89,000 to $109,000 for the two-room flats, $151,000 to $179,000 for three-room flats and $234,000 to $293,000 for the four-room flats. These prices are lower than those for similar flats in the market, making them affordable for first-time buyers, HDB said.

Based on the income of flat applicants in the first half of this year, HDB expects first-time buyers will need to use only 20-26 per cent of their monthly household income to meet their housing loan commitment.

Source : Business Times – 1 Sep 2009

Koh Brothers wins $58.9m HDB contract

2009-09-01T20:55:00.000+08:00

CONSTRUCTION company Koh Brothers Group has clinched a $58.9 million contract from the Housing and Development Board (HDB) to build the second part of Punggol Waterway – a 4.2km waterway that will be connected to Sungei Punggol.

In January, Koh Brothers won a $144.6 million contract from the HDB for the construction of the first part of the waterway.

The latest contract brings Koh Brothers’ order book to more than $579 million.
Construction of the second part of the waterway is set to start this month and is expected to be completed by the end of next year. Other ancillary works are expected to be completed by the fourth quarter of 2011.

The latest deal is not expected to have a positive material impact on the group’s financial performance for the year ending Dec 31, 2009.

Chief executive Francis Koh said that the company will continue to pursue public infrastructure and government building projects over private construction projects.

‘Our past record shows that public projects carry more certainty in terms of payment compared with private projects,’ said Mr Koh.

Koh Brothers announced last month that net profit surged to $4.4 million in the first half of the year ended June 30, 2009, from $0.5 million for the corresponding period a year earlier. The improvement was on the back of a 17 per cent increase in revenue to $138.6 million.

The group attributed the higher revenue to the good performance of its construction and real estate divisions.

A construction, property development and specialist engineering solutions provider, Koh Brothers now has ‘more than 40 subsidiaries, joint-venture and associated companies spread over Singapore, China, Indonesia, Malaysia and Vietnam’.

Koh Brothers shares closed down 1.8 per cent yesterday at 27 cents

Source : Business Times – 1 Sep 2009

Indonesia ready to lease out islands

2009-09-01T20:54:00.000+08:00

JAKARTA: Foreigners cannot own land in Indonesia. However, to boost tourism, the local authorities are inviting them to lease available islands across the sprawling archipelago.
On Sunday, Mr Ismeth Abdullah, governor of Riau Islands province, said he welcomes overseas investors who wish to manage islands in his province.

Bordering Singapore and Malaysia, the province is made up of 1,795 islands, of which only 394 are inhabited.

Mr Ismeth told The Jakarta Post that the presence of foreign investments has raised revenues for the province. He cited the popular Nikoi Island resort, located 21/2 hours away from Singapore by ferry and speedboat.

The province’s Investment Coordinating Agency usually takes about a month to issue leasing permits to investors, in line with government regulations, he added.

Separately, the head of Gorontalo province’s Investment Coordinating Board told The Jakarta Globe that a Singapore-based investor was keen on leasing three islands off North Sulawesi that boast a panoramic view.

Mr Rustamrin Akuba said the provincial government was currently reviewing the proposal.
The two men’s comments came days after a ruckus erupted over an alleged advertisement on the Canadian website www.privateislandsonline.com offering to sell three islands off the coast of West Sumatra to foreigners. This was reported by local media, which said the website was hawking Macaroni, Siloinak and Kandui – part of a group of 70 islands known as the Mentawai islands – for between US$1.6 million (S$2.3 million) and US$8million.

Many Indonesians were up in arms over the reports, with legislators lambasting the government for its lax attention to the country’s assets.

West Sumatran governor Gamawan Fauzi denied last Thursday that any of the Mentawai islands were for sale. A website check also found that Macaroni, Siloinak and Kandui referred to resorts located on three different islands that are popular with surfers.

Mr Gamawan told reporters that the resorts were run by a partnership of local and foreign businessmen, but the management wanted to sell their shares now because of an ‘internal problem’.

Mr Aji Sularso, a director-general at the Maritime Affairs and Fisheries Ministry, confirmed that the islands were still owned by Indonesia, adding that it was not possible for foreigners to own islands.

‘It is not supported by any regulation,’ he told The Jakarta Post.

Indonesia’s estimated 17,000 islands hold vast potential for maritime tourism, from diving to surfing to beach resorts. Only 5,000, though, have been named to date. The government has said it will set aside six billion rupiah (S$858,000) to determine the exact number of islands and register them as the country’s assets with the United Nations.

While he did not elaborate, Mr Aji said he anticipated a loosening of regulations with regard to coastal areas and remote islands, so that those areas could be put to ‘better use’ for the community and local government.

He did point out, however, that the government was getting only 600 million rupiah in tourist receipts from the Mentawai region each year.

‘This amount is too small, since Mentawai has some of the most beautiful waves in the world, and these are worth much more than that.

Source : Straits Times – 1 Sep 2009

Buyers snap up flats at Trevista condo in Toa Payoh

2009-08-30T10:26:00.000+08:00

320 of 590-unit project taken up; co-op to release more at weekend
IF it’s priced attractively, it still sells. Hungry home buyers yesterday bought around 320 units at the 590-unit Trevista condo in Toa Payoh.

By around 3pm yesterday, buyers were said to have snapped up some 190 of the total 210 units released in the first phase of the preview, resulting in developer NTUC Choice Homes Co-operative releasing a further 190 units in the early evening to satisfy demand. BT understands that the price was raised by about 2-3 per cent for the second batch from the initial phase’s average price of $898 per square foot (psf). However, some of the price gain also reflects the fact that units in the second batch are on higher floors and have better orientation.

While many people will baulk at this price for a 99-year leasehold project, what has been drawing buyers to Trevista is that the psf pricing is about 20 per cent lower than the closest competition from a comparable recently launched project – Far East Organization’s Centro Residences next to Ang Mo Kio Hub, which was released last month at an average price of $1,150 psf. However, Trevista’s units are generally bigger than Centro’s so in absolute dollar quantum per unit, the price difference between the two projects may be less.

The smallest units at Trevista – studios and apartments with one bedroom plus study – were the first to sell out yesterday. Some agents were seen armed with blank cheques from clients keen to secure the better units and who had given them authorisation to book units on their behalf.

Choice Homes CEO Margaret Goh had noted on Thursday that Trevista is the first private condo to be launched in the mature Toa Payoh estate since 1996. That was when City Developments Ltd launched the freehold Trellis Towers at an initial average price of $900 psf, according to newspaper reports at the time.

With 400 units or two-thirds of the total units in Trevista released by yesterday evening, Choice Homes stopped issuing queue numbers after 9pm and told those streaming into the showflat site to return the next day.

The co-op is expected to make further units available over the weekend to cater to demand. Trevista comprises a total of 590 units in three 39-storey towers. It is being marketed by CB Richard Ellis and ERA.

Developers sold 10,017 private homes in the first seven months of this year – more than double the 4,264 units in the whole of 2008 when home buying dried up due to the global financial crisis. The unexpectedly strong sales pick-up since February this year came about after developers cut prices. However, they have since been raising prices for some projects – and that has resulted in generally slower take-up.

Source : Business Times – 29 Aug 2009
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Property 101: prices can go down

2009-08-30T10:25:00.000+08:00

Judging from the brisk sales at launches, it appears many Singaporeans have jumped on the runaway property bandwagon.

But before you get caught up in the sales pitches and showroom euphoria of property agents cheering as each unit is sold, industry players warn that you should step back, take a breath and think twice.

This, they say applies to both HDB upgraders as well as those looking for a second property to spruce up their financial portfolio. Here are a few pointers that ought to be at the back of your mind.

1. Do your sums

It may sound obvious but it is often forgotten. Consider upgrading only if there have been significant changes in your credit profile, say, a pay rise and if your appreciating assets are holding up, said PropNex chief Mohamed Ismail.

If you’re upgrading from HDB, think about your net proceeds and what you can put into a new property to reduce your loan. Work out how much you need to pay each month. Be prudent and do not over-leverage. Consider the repayment period. Banks typically limit loan repayments to about 40 per cent of your gross monthly income.

Make sure you factor in other debts, expenses and what you need to save.
“Buy a property that will not overstretch your finances while maintaining a lifestyle of your desire,” Mr Ismail said.

Choose your home loan carefully. Interest absorption schemes may seem attractive but you may typically end up paying 2-3 per cent more for the entire property.
If you plan to rent out the property, your monthly rental should ideally cover your mortgage instalments.

2. Location, location, location

As an owner-occupier, you should think about transport options. If you’re an average HDB dweller, you would do well to choose a property near an MRT station, said Mr Chris Koh, director at Dennis Wee Group.

If you’re looking for capital gains or renting out the property, proximity to a MRT station is even more important as tenants (the foreign ones in particular) are looking for convenient public transport options to take them round the island.

Also check out which direction the unit is facing and the project’s surroundings.

3. Maintenance and other BILLS

Consider how much you will need to furnish or renovate the new apartment, advised Dennis Wee Group’s Mr Koh. Also factor in maintenance charges each month – how much more you will be paying for service and conservancy, parking and other charges.

4. Plan your interim options

Your HDB property may fetch a tidy sum now, but what about in two years when your private property obtains its Temporary Occupation Permit. Unless you intend to keep your HDB flat for rental, you should consider whether you to sell now or later.

If you choose to sell now, you need to think about where you will live in the meantime and the costs you will incur.

5. Be mentally prepared

Be aware that property prices fluctuate and prices may not return to the level at which you bought the property.

“If you can sleep through that, have really no regrets, you like the property and lifestyle, then well and good,” said Ngee Ann Polytechnic real estate lecturer, Nicholas Mak. “But don’t put everything into a private property thinking that prices will only go in one direction – up.”

Source : Today – 29 Aug 2009
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Sub-sales triple in second quarter

2009-08-30T10:23:00.000+08:00

The upbeat sentiment in the new private home market has lured out the sellers in the sub-sale market.

Sub-sales – the sale of uncompleted homes by their buyers – of non-landed private properties tripled to 1,200 units in the second quarter, according to a DTZ quarterly report.
This time, though, it is mainly the mass-market and mid-tier projects that are popular sub-sales. In 2007, it was the higher-end projects that found favour with buyers.
Also, the sellers are taking longer to sell their investment properties.

The DTZ study found that a few mass-market projects made their way to the Top 10 list of projects with the most sub-sales. These included Casa Merah, located near the Tanah Merah MRT Station, The Centris in Jurong West and The Quartz in Compassvale.

For instance, there were 54 sub-sales in Casa Merah in the second quarter, and the median sub-sale price rose from $658 psf in the first quarter to $734 psf in July and August.

The most popular sub-sale project in the second quarter was Rivergate, located at Robertson Quay.

The median price of its sub-sale units rose from $1,200 psf to $1,400 psf, and 105 of its 545 units changed hands in the second quarter alone. Prices have since risen further – deals done in July and August ranged from $1,400 to $1,880 psf, according to caveats lodged.
Two perennial favourites are The Sail @ Marina Bay and Icon, prime projects in the central locations of Marina Bay and Tanjong Pagar respectively.

Despite being launched between 2003 and 2005, they still remain popular in the sub-sale market. Their median prices rose 27 per cent and 17 per cent respectively from the last quarter.
Sub-sale buyers tend to be true investors, said HSR Property Group executive director Eric Cheng.

Upgraders, he said, prefer not to buy sub-sales as they do not wish to pay a premium. Those who do, however, find mass- to mid-tier market projects more affordable.

Analysts say that the higher number of sub-sales could be due to the many units that were completed this year.

Ms Chua Chor Hoon, DTZ’s head of South-east Asia research, says there is normally a high level of sub-sales for a project when it is nearing, or just after, completion.

‘In 2006, 6,250 units were completed. This year, 11,367 units are expected to be completed,’ she said.

Mr Cheng pointed out that projects sell out very quickly in today’s market, and some buyers who missed out on the chance of buying a unit do not mind paying a small premium to get a unit if the price is not too far away from the launch price.

These buyers often have compelling reasons, said Mr Cheng. They might have family living nearby, or even on the same unit level.

Despite the higher number of sub-sales now, the number of properties bought and sold within a short span of time is not as high as during 1996 or 2007, said Ms Chua.
‘The number and percentage of units bought and sold within a six-month period in the first half of the year is a lot less than those in 2007 and 1996,’ she said.

Citing data from Realis, she said 88 units were ‘flipped’ in the first half of this year, compared to 517 in 1996 and 835 in 2007.

Flipping occurs when someone buys a property and resells it quickly for a profit.
‘Buyers now tend not to buy another unit so quickly because they often have a choice of other surrounding units that are being sold as well,’ said Mr Cheng.

‘There are a lot of short-term investors who would like to resell for a profit, but might not be able to because they ask for too much. There are also a lot of launches coming up.

‘Market fundamentals are not that strong even though market sentiment is, and we might see a pull-back effect,’ he said

Source : Straits Times – 30 Aug 2009
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Park Hotel plans listing in 2011

2009-08-24T12:44:00.000+08:00

SINGAPORE-BASED Park Hotel Group has set its sights on listing in 2011, just in time for its 50th anniversary, although it is still mulling over the details.

‘We’re planning to list in 2011 either in Singapore or Hong Kong. We have to study the different criteria and policies the two stock exchanges are offering,’ director Allen Law told BT in an interview.

One issue that the group is still undecided on is whether to list as an equity or as a real estate investment trust (Reit). Other factors, such as how best to mitigate foreign exchange risk, will also come into play.

‘Looking at our portfolio, Singapore . . . contributes almost 40 per cent of our total revenue. In terms of trying to manage foreign exchange risk, Singapore would be a better choice,’ he pointed out, but then went on to add that Hong Kong offers better interest rates. ‘We have to see closer to the date. Quite a lot is driven by the structure of the stock exchange as well as the macro environment.’

The group’s portfolio currently includes eight hotels – three each in China and Singapore, one in Hong Kong and one in Japan.

It plans to grow its footprint in Japan and China, but also sees room for expansion in Singapore in the coming years.

‘This year, we’re eyeing a couple of potential acquisitions in Japan. Apart from Japan, we’re looking at China which has always been our key target market,’ he added.

And while all eight properties are currently owned and managed by the group, it also plans to branch out by taking on management contracts. In the short term, management contracts are expected to contribute 10 per cent of group revenue.

‘We are looking to further expand our presence not only through acquisition or development but also through management contracts. That will translate to a faster expansion,’ he said.
Meanwhile, though the first half of this year has proven to be a tough one for the hotel industry here, Mr Law is confident that the second half will be a stronger one.

‘Since June, we have seen very strong forward bookings for the second half of the year. We do forecast much stronger demand for the second half,’ he emphasised, adding that 65 per cent of revenue for this year should come from the second half.

Its Grand Park City Hall hotel has seen occupancy fall by 10-12 percentage points this year to the ‘high seventies’, while room rates have taken a 25 per cent dive.

However, the latest addition to the stable, Park Hotel Clarke Quay, which soft launched in May this year, is performing above expectations.

Its Park Hotel Orchard is currently undergoing an $80 million renovation and will be rebranded as the group’s flagship property, Grand Park Orchard, when it reopens in 2010. The Grand Park Orchard will also house a four-storey retail podium, Knightsbridge.

About half of Knightsbridge’s 83,000 square foot of space has been taken up so far, Mr Law said.

Source : Business Times – 24 Aug 2009

Property gains tax proposed because of earlier feedback

2009-08-24T12:43:00.000+08:00

The Finance Ministry said the property gains tax was proposed because of earlier feedback.
Speaking at a community event on Sunday, Second Finance Minister Lim Hwee Hua said certain property investors had wanted more certainty regarding the current rules.

Proposed changes to tax individuals who sell property before a four-year period were designed to shed some light on what defined a trader who sells property as a main source of income.
Public consultations were held, where more than 90 per cent of respondents said the system should be kept simple.

Property observers agreed with them, saying the current rules would avoid confusing sellers – which is critical in a recovering property market.

Analysts also said foreign investors are looking into Singapore as a potential market, so any adjustments to the tax regime may send them the wrong signal.

Mrs Lim said: “We wanted to give some certainty to a group of property owners. But it looks like there was some confusion and people were a little concerned about what the signals were. So based on the feedback, we decided that since that is not going to be well-understood, it is probably advisable to withdraw that proposal.”

For now, property sellers will continue to be judged on a case-by-case basis to determine if they should be taxed.

Source : Channel NewsAsia – 23 Aug 2009

Boom or bubble?

2009-08-22T18:39:00.001+08:00

Property prices appear to be on the rise again, but is the rebound sustainable?
ON A Monday night in the last week of July, commuters taking the train home to the eastern part of Singapore may have witnessed a small commotion at the Tanah Merah MRT station.
It was about 10pm, and a group of about 40 people who had formed a queue beside the station since late afternoon was being told to go home.

Apparently, they were queuing to be first in line when a new condominium – Optima@Tanah Merah – opened its doors for bookings. Except that it was not being launched the morning after, but on Friday morning. They were prepared to stand in line for three whole days to get first dibs.

Representatives from the developer TID, a tie-up between Hong Leong Group and Japan’s Mitsui Fudosan, implored the crowd to go home.

‘The queue will not be recognised. We will not sell anything until Friday morning,’ they said.
The crowd dispersed. But their desperation quickly became the talk of the town, and the clearest symbol yet of how unexpectedly hot the local property market has become.

Elsewhere around the world, many property markets are locked into a downward spiral. But the story is startlingly different in Singapore.

Last month, developers like TID sold a whopping 2,767 units of new private homes, smashing the record of 1,825 units set only in June.

These are numbers that have never been seen in Singapore – not even during the stratospheric heights of the 2007 property boom. In just two months this year, developers have sold 328 more homes than in the whole of last year.

In the midst of this buying frenzy, developers have begun raising their prices. Some have even dared to launch new units at record-high per sq ft (psf) prices.

Indeed, the classic signs of a boom are in place: weekend crowds at showflats, blank cheques handed to agents to secure prime units, and flyers flooding the mailbox of every home.
But this boom is different from the last one because of one very important reason: The 2006-07 boom coincided with a period of rapid economic expansion. Today, house prices are rising in the wake of Singapore’s deepest-ever recession, and at a time when the entire global economy is only just starting to recover from the shock of a financial crisis.

This has sparked a debate over whether the property boom is hopelessly out of sync with economic fundamentals.

The Government seems worried, and National Development Minister Mah Bow Tan has already suggested that an element of speculation may be involved in the current boom.
Politically, market watchers say the stakes are higher this time around for the Government, because it is the more accessible suburban projects rather than the posh condominiums that are breaking the records.

With the prospect of ordinary folk potentially getting burnt in a price crash, the million-dollar question is whether the current rebound in the market is a genuine recovery.
Or is it just another unsustainable bubble pumped up by hype?

The answer varies, depending on whom you talk to, of course.

Veteran property developer Kwek Leng Beng, chairman of real estate giant City Developments, thinks the market is not getting too frothy.

‘It should not be viewed as over-exuberant or extraordinary, bearing in mind that developers had put on hold many of their launches in 2008,’ he said at a recent press conference.
In other words, people could have wanted to buy new homes last year, but there was no supply in view of 2008’s lacklustre conditions.

Now that there are more launches in 2009, this pent-up demand for homes is being satisfied all at once, accounting partly for the record sales volume in recent months.

Prices are not unreasonably high, Mr Kwek added, noting that the low- and mid-tier markets have yet to recover since their peaks in 1996.

CBRE Research data shows that me-dian prices of

new non-landed homes reached $690 psf in the second quarter, compared with $749 psf at the 1996 peak, though the level surged to $800 psf last month.

Analysts also say that the demand is real, driven by buyers awash with liquidity.
People still have money saved from the bonuses of the boom years, and some may have profited from the stock market rally in April and May.

But investment options are few and far between, with savings interest rates near zero and the stock market now losing some steam.

‘After the Lehman Brothers structured products failure, property is also increasingly viewed as a safe investment alternative as its value will not drop to zero,’ says Ms Chua Chor Hoon, head of South-east Asia research at property consultancy DTZ.

At the same time, labour market resilience is helping. The job market gloom and doom prevalent at the start of the year has been replaced by guarded optimism as government stimulus spending has halted a large upswing in the number of jobless people.

‘No matter how much cash you have, if you think you’re going to lose your job in the next six months, you’re not going to invest in property,’ says Citigroup economist Kit Wei Zheng.
But with the economy looking up and the spectre of job losses fading, many feel there is no better time than now or place to park their money than in bricks and mortar.

After all, some see a bet on the property market as a bet on the long-term growth of Singapore as a global city.

Mr Leong Sze Hian, president of the Society of Financial Service Professionals, points out that 79,000 permanent residents and 21,000 citizens were added to the population last year.
And more will be added in the future as Singapore heads towards its target population of 6.5 million.

The buzz generated by the completion of the integrated resorts could hasten foreigner arrivals, say optimists.

Finally, some analysts note that this buying power in the market is being supported by younger home buyers who are coming up against a tight supply of Housing Board flats. This has the effect of hiking HDB prices and narrowing the price gap between public and private homes.
With home loan rates also near historic lows, cheap funding is another key factor driving the demand – combining with the other factors to make private property a very attractive and affordable proposition.

It is primarily because of these factors that most experts agree there is some real demand that justifies the higher prices and sales volumes in the market.

They say the current market should be seen against the backdrop of a market that was stuck in the doldrums only four or five months ago.

With buyers reluctant to commit, some developers had to slash prices by as much as 30 to 35 per cent early this year to generate interest in their projects.

Still, despite the resale and sub-sale markets moving ahead, experts say there remain a lot more over-optimistic sellers than there are buyers.
A collective sale frenzy, like the one that gripped the property market in 2006 and 2007, is also nowhere in sight.

‘What we are seeing is recovery phase activity,’ says Associate Professor Sing Tien Foo from the National University of Singapore’s real estate department. ‘It takes a while for a bubble to build up.’

DTZ’s Ms Chua notes: ‘A bubble means that prices are rising way too fast relative to GDP (gross domestic product) growth. So far, we have seen only one quarter of rising prices in the property market.’

But while many experts don’t see a bubble yet, it doesn’t mean that one won’t form, and what happens next will be very important.

Property consultant Nicholas Mak expects home prices to reach a plateau, with the lows seen earlier this year unlikely to be repeated.

‘Right now, prices may continue to run for a few months before stabilising. Ultimately, the market has to return to market fundamentals,’ he says.

The problem is that prices may not take that rational trajectory if buyers get carried away. Property consultants and developers have warned that demand is coming from those who missed out on the 2007 high-end boom.

Eyebrows have already been raised at the sort of prices buyers have been willing to pay for suburban properties.

Units at Centro Residences, which is next to Ang Mo Kio MRT station, sold for between $1,117 psf and $1,228 psf last month, a record for suburban homes in Singapore.

‘When there is fear or belief that prices are going to keep rising, and many speculators jump in in the hope of making capital gains over the next few years, prices could be driven up beyond fundamental levels like in 1996 and 2000,’ says Ms Chua.

‘The future’s a sure bet but what’s happening right now is beyond our wildest dreams. No one would have predicted the July sales figure,’ says Cushman & Wakefield managing director Donald Han.

‘We’ve seen price increases of 15 per cent on average since April. It seems too short, too fast a time… At some stage, prices should stabilise.’

One property expert, who declines to be named, thinks that for this to happen, buyers must do a serious reality check: ‘Every round of recovery, we see people getting carried away by the herd instinct. There’s a total disconnect with reality. It’s momentary madness.’

That is why economists and analysts recommend that home buyers sober up by reminding themselves of some hard economic truths before signing on the dotted line.

One such truth is that how the economy fares over the coming months will be a key indicator of the future of property prices. And on that, the jury is still out.

Although the economy surged 20.7 per cent between April and June compared to the first quarter, Trade and Industry Minister Lim Hng Kiang says it is too early to cheer.
Key markets like the United States and Europe have pulled out of recession but growth is likely to be anaemic for the next few years.

CIMB-GK economist Song Seng Wun says: ‘The global slowdown does seem to have stabilised, but a recovery could still be far away.

‘And while Asian growth may be holding steady, it may not be as strong as we are used to, as developed economies are not seeing the strong recovery.’
HSR Property Group executive director Eric Cheng points to another cold, hard truth: ample property supply.

There are still 62,350 uncompleted homes in the pipeline, according to Urban Redevelopment Authority data. Slightly less than half have been sold.

In particular, major developers are still holding back their large luxury launches because the foreign funds and investors who bought into the posh homes in districts 9, 10 and 11 have not returned in significant numbers.

‘The key is whether the price growth at this recovery stage can be sustained. It remains unclear who will pick up the prime homes,’ says Prof Sing.
Many buyers also seem to have ignored the fact that residential rents are still falling.

‘But Singapore has never been a yield-driven market like mature markets like Australia and the UK,’ concedes Credo Real Estate managing director Karamjit Singh. ‘The two key drivers here are owner-occupier demand and sentiment.’

Looking ahead, property commentators forecast a variety of outcomes for the months to come – from another slump to continued buoyancy.

Credo’s Mr Singh is looking at the recovery lasting up to 12 months before prices start to moderate as more launch-ready projects come onstream.

More bearish analysts like RBS’ Fera Wirawan say a mass market bubble has already formed. In an Aug 13 report, she predicted that the bubble will burst, sending residential prices plummeting by 10 to 20 per cent over the next 12 months.

Then, there is the wild card factor of the Government.
‘If queues continue to form and people continue to flip, then we may see some (government) intervention,’ says Mr Song.

Property experts say this could mean the re-introduction of outright land sales to boost supply, or the abolishment of the interest absorption scheme that allows buyers to defer paying the bulk of the purchase price until the development is completed.
But they also believe the Government will exercise extreme caution. Mr Song believes policymakers won’t want to prick the bubble too early as that may deflate the economy.
But he adds: ‘But if you let it simmer and build up, it will also be troublesome when it bursts.’
One expert, who does not wish to be identified, warns that if a crash were to come, ‘it may take us all by surprise’, just as the recovery did.

The best thing to do, advises Mr Song, is to exercise the same type of ‘extreme caution’ over the coming 12 months.

He says: ‘My take is that this recovery’s not going to be simple. Global growth is not going to rebound to the previous pace. We can show a couple of quarters of sharp rebound, but it is likely to slow after that…

‘Any bubble could well deflate on its own.’

Source : Straits Times – 22 Aug 2009
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More homes in the pipeline

2009-08-22T18:37:00.000+08:00

More than 40,000 units are due to come onto the market over the next few years
PROPERTY supply is not a problem, according to National Development Minister Mah Bow Tan. He believes that there are plenty of homes in the supply pipeline for Singaporeans, pointing out at a recent event that more than 40,000 units are due to come onto the market over the next three or four years.

The latest market data certainly supports his view. Figures from Savills Research and Consultancy point to a healthy stream of launches.

It says 5,753 units will become available in the second half of this year and 5,576 units next year. In 2011, 13,418 will be launched; 13,751 in 2012; and 11,058 in 2013.

Of those becoming available between this year and 2012, the bulk – 52 per cent – will be in prime districts 9, 10, 11 and 15, which analysts suggest is a direct consequence of the en bloc buying sprees in these districts in 2005 and 2006.

The rest will largely come from city-fringe developments at Sentosa and the new Marina Bay.
2009

OF THE 5,753 units becoming available in the second half of the year, most are mid-tier and mass-market units. They number 2,292 and 2,083 respectively.

These include 556 units in Casa Merah at Tanah Merah, 610 units in The Centris at Boon Lay and 338 units in Carabelle on the west coast.

But more than 90 per cent – 5,284 units – have already been sold, so Savills anticipates no oversupply situation this year.

2010

ANALYSTS have mixed views about the supply situation next year.
The 5,576 units available next year will be concentrated in prime areas, with 3,304 units up for grabs.

They include 428 units at Marina Bay Residences and 231 units at The Trillium along Kim Seng Road. Savills estimates about 75 per cent of the uncompleted units have been sold, leaving little room for oversupply.

Instead, the concern is insufficient supply given the drastic fall in supply numbers.
In the first quarter of last year, 17,545 units were projected for completion in 2010. The number tumbled to 8,538 in last year’s third quarter and continued downwards to 5,394 from the second quarter of this year, according to the Urban Redevelopment Authority.

But Ms Tay Huey Ying, director for research and advisory at Colliers International, feels the supply trend is in line with expected economic conditions, making a supply shortage an unlikely scenario.

‘While the worst may be over for Singapore’s economy, growth will remain slow for a few more quarters. Moreover, the major economies of the United States and European Union remain weak,’ she says.

‘Hence, Singapore’s expatriate population is largely expected to see only moderate growth in 2010.’

DTZ senior director and head of Southeast Asia research, Ms Chua Chor Hoon, adds that with the economy apparently on the mend, rent declines will begin to moderate and could bottom out in the first half of next year.

2011

2011 will bring an explosion in supply, particularly in the prime districts.
Some 13,418 units are slated to be completed during the year, Savills figures indicate.
About half, or 6,512 units, will be situated in the prime districts and 4,224 in the mid-tier districts.

Among the developments in the prime districts, Martin Place Residences in River Valley, for example, will offer 302 units. Scotts Square in Orchard will have 338 units and One Shenton in the Central Business District another 341 units.

About half of the 13,418 units have been sold, while the remainder are unsold or have yet to be launched.

The demand for uncompleted units between 2000 and 2008 has hovered at an average of 7,230 units per year.

With a high of almost twice this number becoming available in 2011, market watchers fear oversupply.

But some factors may help mitigate this.
Developers are likely to pace construction and launches in line with market needs; the Government’s move to suspend the sale of confirmed sites helps sustain demand; and, if the economy returns to growth in 2011, accompanying growth in the expatriate population will support demand for new homes.

One upside to any glut – if you are a tenant – is that new supply will keep rental increases down, says DTZ’s Ms Chua.

2012

THE 13,751 units to be completed in 2012 will further boost supply.
Some 6,414 units will be located in the prime districts and 4,774 from the mid-tier market. The rest will be for the mass market.

Mid-tier offerings include Soleil at Sinaran in Novena with 417 units, Rosewood Suites in Woodlands with 200 units, and The Arte@Thomson with 336 units.
Of these, 30 per cent of units planned and under construction have been sold.
These numbers are, however, subject to change with developers adjusting project timings to market conditions, says Ms Chua.

And Collier’s Ms Tay thinks a return of collective sale market fever could be a factor that moderates the net new supply coming on stream in 2011 and 2012.

2013

HOW the supply situation in 2013 will pan out is too far ahead to determine right now.

No change to property sales tax framework

2009-08-22T18:36:00.000+08:00

MOF drops proposed change aimed at giving certainty after public consultation exercise
THE government has decided not to change the current income tax framework with regard to individuals who sell their properties, a move that was welcomed by industry players including the Real Estate Developers’ Association of Singapore (Redas).

Under a proposal put up for public consultation, the Ministry of Finance (MOF) had suggested that individuals who sold their properties would be certain that the gains they made would not be subject to income tax if they had not sold any other properties in the preceding four years.
But this was seen by the market as an anti-speculation measure, as it means that those who sell more than one property within four years will not be exempt.

‘We remain believers of the idea that the government may be sending out a signal through this proposal to cool property transactions, especially in the high-end,’ said CIMB analyst Donald Chua in a note last month.

Keen to quell rumours about an anti-speculation drive, MOF then clarified that the proposal is unlikely to lead to more individuals being taxed. Rather, it offers greater clarity on whether gains will be taxed as it proposes a condition that would guarantee no tax: an individual who sells a property on or after Jan 1, 2010 will not be taxed on the gains if he has not sold any other property in the previous four years.

Currently, property sellers do not pay tax on gains unless the Inland Revenue Authority of Singapore (IRAS) sees them as traders and treats the gains as income. IRAS makes its decision on a case-by-case basis, considering factors such as why the properties were sold, how long the sellers owned them and how frequently the sellers transacted properties in the past.

MOF decided not to implement the change following the recent public consultation exercise.
The proposal was put up for feedback under the Income Tax Act public consultation exercise from June 22 to July 14. A total of 64 comments were received on the proposed relaxation of income tax treatment for individuals who sell their properties, and of these, 60 comments were not in support of the proposed change.

Among other things, feedback said that the proposed change could bias property purchase decisions towards investing in one bigger property, rather than numerous smaller properties. This is because certainty of non-taxation would be provided for disposal of one property within any four years, regardless of the property’s value.

Concern was also raised that the proposed change could create inadvertent uncertainty for individuals who sell more than one property within any four years – even though there was no change to the current income tax treatment for such cases.

‘The Ministry of Finance sees merits in these points raised in the public feedback to the proposed change,’ MOF said in a statement. It has therefore decided that it is, on balance, best to retain the current framework of income tax treatment for individuals who sell their properties.

Industry players welcomed MOF’s decision.

‘We welcome the Ministry of Finance’s decision not to change the current income tax framework for individuals who sell their properties,’ said a Redas spokeswoman. ‘Redas appreciates the government’s consultative approach and understanding of the industry’s concern on the matter.’
‘We welcome the positive news that the Ministry of Finance has listened to public feedback,’ said Owi Kek Hean, head of tax services at KPMG in Singapore. ‘The decision not to change the current income tax framework for individuals who sell their properties clearly demonstrates how the government takes differing views on-board in its formulation and changes proposed to Singapore tax policy.’

MOF also said that it has accepted for implementation 85 out of the 113 suggestions received on the draft Income Tax (Amendment) Bill 2009. The draft contains proposed legislation to put into effect the income tax changes announced in Budget 2009, as well as other changes arising from the periodic review of the income tax system.

Source : Business Times – 22 Aug 2009
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On the road to recovery

2009-08-17T12:48:00.000+08:00

Pauline GohManaging DirectorCB Richard Ellis Singapore

DESPITE an economy that’s still in negative territory, there has been significant demand for private residential housing. New home sales totalled 7,250 in the first half of 2009 – up 70.0 per cent from 4,264 sold in the whole of 2008.

Several factors combined to bring about this pick-up. Potential home-buyers who had substantial savings when the economy was booming from 2005-07 were priced out of the private residential market as prices rose too quickly. Now that prices have corrected – some 25 per cent from the peak in Q2 2008 – buyers are taking advantage of the opportunity to purchase. In addition, investors have switched their focus to property after losing faith in structured products during the debacle that affected big-name financial institutions last year.

Kelvin LumExecutive DirectorL C Development

GLOBAL market conditions remain challenging due to weak economic fundamentals. But there has been positive data signalling some form of recovery in Singapore. Positive signs are also showing up in the United States, with home prices there rising in May for the first time in three years. The fact of the matter is, economies are faring better than they were a year back.
Recent positive indicators have likely fuelled the rallies in the equity markets and lifted investor confidence. With borrowing costs and deposit rates at all-time lows, investors are looking to re-invest in the real estate market to obtain a better yield and to hedge against inflation.
The pick-up is evident in the mass to mid-market residential sectors. The commercial and luxury residential sectors remain relatively subdued. In a market such as this, positive sentiment makes all the difference. The sustainability of the pick-up, therefore, depends on continued investor confidence which, in turn, will be driven by economic news out of the US and major regional markets such as China.

Barring unforeseen circumstances, players will likely support the equity markets, which in turn will have an impact on the sustainability of the property market. Although Singapore’s economic well-being depends on the economies of its major trading partners, it is unlikely that a correction – if any – will be as acute as that seen in 2008.

Gary HarveyCEOiPac Wealth Management Asia

LIKE most investment markets, in the latter half of 2008, the Singapore residential property market may have overshot on the downside. Demand almost dried up as a result of the extremely poor economic outlook. Moving through 2009, Singapore has not truly seen the forced sales that many parts of the world have experienced. Nor did the forecast number of foreigners leaving materialise. These factors, combined with low interest rates and the willingness of banks to still lend, have led to the property market returning to a more realistic level.

For the rally to be sustained, investors should now start focusing on fundamentals. Vacancy rates, rental yields and an increase in foreign investment will need to improve for any recovery to be sustained. I believe speculators should be cautious as we are in a market that depends on global trade. Any sign that recovery is not gaining momentum would be a cause for concern.

Darren ThomsonPresident and Chief ExecutiveManulife (Singapore)ChairmanManulife Asset Management (Singapore)

WE are living in unusual times and should expect to see movements in markets that may make us feel uncomfortable. However, my experience of the Singapore property market is that it is somewhat erratic – which means that the unusual is usual.

Our market has a number of variables that others do not have to contend with. In particular, the proportion of foreign buyers and speculators may be disproportionate compared with other markets. And, of course, we have insufficient land.

Property is a popular asset class, and the imbalance of investor money – institutional and private – vis-a-vis the domestic home buyer market may be the key variable to analyse.
I have seen violent swings in the past four to five years in both directions. In particular, the speed of price movements can be quite remarkable. I have, therefore, conditioned myself to expect the unexpected.

The paradox is that I would become concerned if the property market became stable or less volatile. But that would be unusual, which is, er, usual?

Krishna RamachandraManaging DirectorArfat Selvam Alliance

THE recent accelerated pick-up in prices has boosted hopes that the property market may be over the worst. As prices had fallen rapidly, market activity picked up as more bargain-hunters – confident that prices did not have much further to fall – joined the fray. The frenzy simply perpetuated itself. And as lenders loosened their lending criteria, prices started rising further.
These factors, combined with pent-up demand in the past nine months, defines the irrational way in which the property market has risen so quickly. I believe the market is likely to sustain itself and perhaps ride on the performance of the stock market.

In addition, there will be pockets of property – those directly affected by the opening of the integrated resorts, for instance – that will keep on rising after prices generally stabilise.
I think government intervention at this point would be premature. The banks are still relatively tight with credit, and those who are coming out to play – institutions and investors – do not need interventionist measures to rein them in. There is no sizeable bubble to be concerned about right now. On the contrary, the rising property market engenders positivism, which even if slightly misguided, is to be encouraged.

Dora HoanGroup CEOBest World International

SEVERAL factors have triggered the current price boom. Low interest rates due to the weak global economy makes investing in properties quite tempting. Investors have also become extra-cautious about complex financial products. For this reason, many have bet on Singapore as the safest place to park their money by investing in property here.

To add to that, there are signs of economic recovery, the stockmarket rally, and the pending completion of major tourism infrastructure projects. Population increase is also a significant factor in a nation with limited land, where the aspiration of every family is home ownership.
However, we should be on the lookout for speculative buying. We do not have to go far back to know what happens when greed gets the upper hand. In view of this, the responsibility of market players is to steer clear of unwarranted speculation that could send prices soaring out of control. That would hurt the economy at a time when it is barely recovering from a slump.

Glenndle SimChief Executive OfficerMencast Holdings

THE recent pick-up in the property market can be attributed largely to two pools of buyers – foreigners who are attracted to Singapore and plan to set up homes here, and Singaporeans who are picking up properties to buffer against inflation, or who have liquidity after withdrawing from equities when the stock market was down last year.

Foreign buyers are drawn to Singapore not only because of its political and social stability but also the ease of settling down in a comfortable and cosmopolitan city with many facilities. The open economy makes it attractive for people to start businesses and to work here. And the multicultural environment of different races, religions and nationalities makes it easier for foreigners to be assimilated.

Locals and foreigners will likely be willing to pay a premium for properties here as long as Singapore continues to be an attractive place to live and work. Going forward, prices may stabilise, with some dips. But they are unlikely to crash.

Liu ChunlinCEOK&C Protective Technologies

THE property market seems to have moved in tandem with the stock market and commodity prices. The same question of whether it is sustainable applies to the stock market and the property market. I believe recent market movements may be running ahead of the economic upturn.

The little bits of good economic news from the stimulus efforts here and abroad, plus recent commodity price increases, have fanned this sentiment. From what I hear, there have also been some genuine property buyers moving in. Having waited, they are now afraid of higher prices.
While a bit of such sentiment is good to stoke optimism, I believe the focus in the coming months should be on re-structuring, consolidation and regaining productivity. After all, jobs are still being lost and companies are still digesting the structural changes and trying to regain output.
My concern is that a premature pick-up in the property market, especially if it becomes heady, will add to inflationary pressures, force a serious correction later on and divert the focus from productivity efforts.

Cathlyn LeyauManaging DirectorFIL Skin, Body & Spa Intelligence

OVER-SUPPLY and recession are causing developers to sell units at lower prices to attract buyers, which has catalysed the recent hype in the property market. The plain fact is the property market may not recover before the stock market does. It has long been noted that a recovery in the stock market precedes one in the property market, and there is always a lead-lag effect. Buyers snapping up homes in recent weeks may be jumping into the market way before it has hit rock bottom. The property market remains largely weak, even though recent sales have sparked a glimmer of hope. The big concern is that many people may jump the gun and mistake the pick-up in property market as the first sign of recovery. There are lots of opportunities to do things with your money, but the big danger is that you might end up locked up for a long time. The key for investors is patience. Do not be misled by false dawns.

Choe Peng SumCEOFrasers Hospitality

THERE has been a drop in real estate prices since the economic downturn in October last year. Hence, consumers who are on the hunt could be afraid to ‘miss the boat’ if they do not capitalise on some of the ‘good buys’ currently on offer. Unlike the past few years, however, I think that this time, consumers will tread with greater caution, and will not jump on the bandwagon. Further, the situation will be closely monitored and necessary action could be taken if the market gets too hot too fast.

Wee PiewCEOHG Metal Manufacturing

BEFORE the property bubble burst last year, the market was going from strength to strength fuelled by easy money and confidence that Singapore was re-inventing itself. Then came Bear Sterns, AIG and Lehman Brothers, which sent the property market, not just in Singapore but almost everywhere else, into a steep decline.

If there had not been a global meltdown last year, would Singapore’s property market have continued its run from 2007? I believe the answer is yes, because in the medium to longer term, Singapore’s re-invention story is still intact. I, therefore, believe the current pick-up in property prices is a continuation of the run from 2007. Yes, confidence has been badly bruised, but it is beginning to get back on its feet.

What is different now from 2007 is that while there has been a speculative element of late, buyers and investors remain cautious towards all investments – not just property – after the collapse of 2008. If you believe in the Singapore re-invention story, the property market will remain healthy, though hopefully at a less fanatic pace compared with 2007.

Another positive for the property market boils down to Economics 101. When you print money, inflation goes up and real assets go up. This is fundamental. So what have all the governments in the world been doing? Printing money. And not just printing money, but an unprecedented amount of it. A corollary is low interest rates, which I believe governments are likely to maintain for a while as economic recovery at this stage is still fragile.

All this means that property, like all other real assets, is likely to move up in price. We are already seeing this in many parts of Asia besides Singapore – for example, Hong Kong and China.

Tan Tiong ChengChairmanKnight Frank

THERE is a general feeling that we have seen the worst in the global, regional and local economies. This is reflected in the stockmarket rallies since March. The local residential property market, being sentiment driven, has followed suit. Buyers, local and foreign, sense that we are poised for price recovery, and developers are capitalising on the opportunity to embark on new launches and clear previously launched projects. This explains the market activity in the past five months.

Many will recall that sales fell off a cliff after the Lehman collapse. Today, that fear has largely dissipated. As long as the economic numbers show an improving situation, coupled with greater job opportunities and a low interest rate environment, a sustained recovery can be expected. The danger is over-zealous buying leading to over-zealous pricing that chokes the market.

David LeongManaging DirectorPeopleWorldwide Consulting

SINGAPORE’S liquidity-driven economy has propped up not only the Straits Times Index but all asset classes. The 52-week range is 1,455.47-2,843.57 – a doubling. The Singapore dollar remains strong and stable, and functions as a channel for financial intermediation from investors in Asia, Europe and the Middle East. Such a channel will give rise to volatile cross-border capital flows that typically are driven by factors or reasons unrelated to local economic fundamentals.
The sharp spike in demand for property can be mostly attributed to such fund flows from overseas. It is patently clear that the domestic economic weakness cannot spur such frivolous consumption.

Foreign capital inflows can be unpredictable and volatile. The property pick-up is unlikely to be sustainable if this is the major force supporting it.

Domestically, we are seeing more local investors taking strong positions in the hope of economic recovery in 2010. With a high take-up rate at new property launches, there is clearly a certain momentum. Snapping up risky assets is also fuelled by attractive interest rates.
The economic tide seems to have turned. It is not about pessimism in the air, but how strongly the tide will turn to lift everyone up for fresher air.

Roland MathysCEOJurong Cement

I THINK there are two fundamental forces at play:
~ People in Singapore have a lot of wealth they need to put at work and, in the long run, property is a safe bet in a country with limited land and a formal policy to increase population to six million;

~ People realise that the money-printing exercise happening all over the world will ultimately result in high inflation, if not hyper-inflation, and the only way to protect your wealth is to invest in real assets.

Lim Soon HockManaging DirectorPlan-B ICAG

I DO not believe the recent pick-up in the property market can be sustained. The recovery is more likely to be a ‘W’ shape, with a broad base and low vertex.

The recent rally is due to buyers who were bottom fishing, saw signs of pick-up, then panicked and made a bull run. These are also likely to be purchasers – locals and foreigners – who have access to loans or have cash on stand-by, and are taking advantage of more favourable prices.
I do not believe there are too many such people. Therefore, I do not believe the recovery can be sustained. My pessimism is largely due to the continuing global malaise. The world financial system remains unhealthy; global unemployment is on the rise, especially for PMETs; demand and consumption of goods and services is still weak and the global property market has yet to turn the corner. If there is one barometer of imminent economic recovery, it is the latter – the same factor that triggered the sub-prime crisis – that must pick up. Until then, in such an adverse environment, it is difficult to sustain a market rally, given that property purchases are big-ticket items.

Speculation thrives in such an environment, generally driven by the herd mentality. It needs to be kept in check to avoid a bubble that is completely out of step with the depressed state of the economy. In this regard, it is heartening to note that the government has sounded the alarm bells.

Pramod RatwaniPresident and Executive ChairmanConsilium Software

THE underlying economic reasons which caused the downfall of property prices remain. The recent increase is mainly due to speculation plus some genuine demand from first-time buyers who were waiting for property to cool. There is risk for people looking for investment gains if prices were to pull back due to lack of demand and over-supply of completed housing that will start hitting the market in the next few months. This is likely going to be a ‘W’-shaped recovery and people need to be cautious in spending their hard-earned money.

Loi Pek YenGroup CEOCWT

GREED and fear drive prices. Barely half a year ago, gloom dominated and fear led to panic selling by some. Now, with low housing loan rates, fear of perceived inflation and fear of missing the boat, prices are being chased up. At the same time, greed has resulted in speculators loading up on property to cash in on the ascent. Property prices are rising in other part of Asia too – not just in Singapore. The pick-up is likely to be sustained so long as lending rates remain low.

Tan Ka HuatManaging DirectorCEI Contract Manufacturing

THE property pick-up seems to be the result of convergence of several factors:
~ Direct correlation with the STI and other Asian stockmarket indices.~ Recent positive news on economic recovery.~ The relatively high savings and cash holdings of Singapore households.~ Expectations, coupled with bandwagon syndrome.

David LowCEOFuturistic Store Fixtures

IN comparison to the 2007 boom when saw prestige homes take centrestage, the recent spate of property sales is very much mass-market driven. The rush has been mainly triggered by low interest rates coupled with pent-up demand from those who did not capitalise on the last boom.
The pick-up will be sustained as long as long-term investment is pursued rather than speculation. Speculation is like a party – it can lead to a vicious hangover. And we are talking about mass-market buyers, so the negative effect can be alarming. So as long as prices do not escalate overnight, there should be no cause for concern.

Thomas Preben HansenCEORickers Maritime

LOWER property prices, excess liquidity and low interest rates are likely to have been key drivers in the recent property rebound. With the benefit of built-in inflation protection, the property investment proposition could make good sense in today’s uncertain times.

However, investors and banks should be careful not to commit to excessive leveraging, as near-term returns could be volatile. A backlog of launches equals a substantial amount of supply in the pipeline, which could add to pressure on rents. A combination of falling rents and higher interest rates could rapidly erode yields in the near term.

With Asia set to lead the world out of recession, and talk of an ‘Asian century’, we can expect to see an acceleration in foreign investment and in the number of people seeking a career in Asia, all of which, over medium to long term, should stimulate property prices in Singapore.

Stefanie Yuen ThioHead, CorporateTSMP Law Corporation

THE reason for the rally can be summed up in something a Generation Y-er said: ‘If this is the world’s worst recession ever, it ain’t so bad.’

I don’t think people have truly felt the harsh reality of the recession in Asia. Governments have been incredibly adept at going into damage control, pumping billions into the system, shoring up lending and helping businesses stave off retrenchment. These were necessary measures from an economic and confidence viewpoint. But they had the side-effect of insulating most of the population from the naked reality of the economic crisis we’re going through.

Talk to people on the street and you may find, as I have, that there are some who have not been able to find a job for a year, and others – mostly under 30 – whose spending patterns have hardly changed since the boom days of 2007.

Because many have been sheltered from the real effects of the global financial crisis, I think we may be living in what is another, potentially much larger, bubble. And while we had quick-acting governments to come charging in to save us from the last one, who can we look to for salvation when the governments’ rescue plans run out of ammunition?

I think it’s crucial that we work out what went wrong and put in place measures to try to prevent similar mistakes. This is the responsibility not just of national regulators but also global banks and professionals who form the backbone of so many corporate structures. It’s time we brought corporate social responsibility out of the charitable arena and into the boardroom.

Deb DuttaVice-President, Asia-PacificBrocade

THERE is a general perception that the real estate market has bottomed out. As a result, people are rushing in, which is boosting property prices. I don’t want to rain on the parade but I do not quite agree with this optimism, despite Singapore’s limited land supply.
Singapore’s reputation and the government’s efforts to make the island a regional educational hub attract foreign students, which supports the rental market somewhat. At the same time, we have low interest rates, which is motivating upgraders to buy property, putting a somewhat positive spin on the market.

None of the factors that have driven the global slowdown have changed markedly – anywhere in the world. And Singapore does not have the critical mass to set its own trend.
I am starting to see promising signs, but we are definitely not out of the woods.

Reto IsenringManaging DirectorVP Bank (Singapore)

THE current popularity of property can be attributed to its tangible nature. Many investors were burned or turned cautious after the Lehman collapse. The resulting lack of confidence in financial regulations has dented the appeal of mutual and hedge funds, currency options and commodities, etc. So a lot of savings/assets have been sitting idle in almost-zero yielding accounts for the past year. Property prices have also fallen reasonably in the last year.

All of this has created the perfect backdrop for a surge of investment in property, driving prices up more than 20 per cent in the past three to six months alone. It also appears that many property purchases are for investment rather than owner occupancy.

With the amount of liquidity available, prices can be sustained in the short term. But unless rental demand and yield remain strong, the longer-term outlook for property can be bleak.
Teng Yeow Heng MichaelManaging DirectorCorporate Turnaround Centre

THE recent pick-up in the property market is due to feel-good sentiment from the rise of the equity market. Funds are flowing into Asia again owing to fiscal stimulus injected by the various central banks a few months ago. Also, residents in Singapore who sold their homes previously in en bloc deals are looking for property to buy to occupy. Others are finding that the banks are offering very low interest rates on fixed deposits, and have decided it is better to park their money in property. Some are anticipating hyper-inflation in the years to come and are investing in property to hedge against this. Others are rushing into the fray so as not to miss the boat.

I do not think that this is a sustainable trend. The world is still in recession, though signs are indicating the worst may be over. It will take several years for things to get back to normal. Companies will continue to downsize even when the economy recovers, and when people lose their jobs they will have less appetite to invest in property.

Source : Business Times – 17 Aug 2009

A call for self-restraint

2009-08-17T12:47:00.000+08:00

WHEN National Development Minister Mah Bow Tan warned against property speculation recently, many – especially those in the real estate business – thought he was being a party pooper coming in to spoil the fun.

He had said: “Some of the practices and habits that you saw in the last property boom are beginning to come back, so I think we’ll have to be careful.”

The note of caution was appropriate and timely, given that we are still in the midst of a recession and headed for negative growth at year’s end, despite the strong comeback of the stock and property markets. And look at how crowds continue to throng showflats, sometimes days ahead of the launch.

Greed is back.

The Real Estate Developers Association of Singapore (Redas) was quick to downplay Mr Mah’s observations, saying: “In the current market, not all the property launches have been snapped up as reported in the media. Only a selected few launches have been highly successful for various reasons. This could also be a result of pent-up demand.”

But there are undoubtedly signs of some irrational exuberance creeping in, with prices of some properties, especially in the outlying areas, exceeding even the prices during the 2007 boom.
For instance, Optima at Tanah Merah, jointly developed by the Hong Leong Group and Japan’s Mitsui Fudosan, sold out its 297 units within three days of its launch at over $800 per square foot (psf) – a 19-per-cent premium to the nearby Casa Merah project launched during the 2007 boom.

Even more exuberance was displayed at the launch of Far East Organisation’s Centro Residences which, despite being a 99-year leasehold project of 329 units at Ang Moh Kio, saw prices of between $1,100 and $1,200 psf – almost what Sui Generis in the prime district of Balmoral Park went for.

While there are certainly genuine buyers, especially among Housing and Development Board upgraders and en bloc sale beneficiaries, there is little doubt that speculators are back with a vengeance. Just look at the classified advertisements for resale properties. Many of the flippers are said to be real estate agents.

For those so-called “specu-vestors” who put down money for properties that have yet to be completed, they are not going to get the benefits of rental income for some time to come. Which will be a problem if they run into cash flow problems.

Some of the blame for the current resurgence in the property market is being placed on the low deposit rates, meaning those with large cash hoards think they could be better off in the long run banking on capital gains from property investments than in putting their money in the bank.
Also fuelling the market are the low interest rates and easy terms that financial institutions are charging for housing loans. One local bank, for instance, is now offering fixed interest rates of 1.99 per cent per annum for three-year loans and 2.65 per cent per annum for five-year loans.
In the equity markets, the recent upturn in property prices has caused many analysts to take a bullish view on property stocks. However, an analyst from The Royal Bank of Scotland Asia Securities (Singapore) is taking a contrarian view and calling for a sell on most of them.

Not only does RBS find valuations of the property stocks rich, it also feels that sliding rental yields will drive down residential prices. It says that low interest rates are supporting unattractive rents and that the yields at well below 2 per cent per annum are “unsustainable”.
I agree.

Investors, especially speculators, should therefore exercise more caution and allow some air to be let out of the growing bubble before it reaches bursting point. Will the Government introduce a capital gains tax to temper the exuberance? I don’t think so.

But, in the first place, why allow the Government to take any restrictive measures when self restraint on the part of all participants in the real estate business would be a better solution?

Source : Today – 17 Aug 2009

Mass-market home prices ‘at 2007 peak’

2009-08-17T12:46:00.000+08:00

ANTI-SPECULATIVE measures, falling rental yields and ballooning supply may drive residential property prices down by about 20 per cent, says an analyst.

Sounding a contrarian view that runs against current sentiments, RBS Singapore analyst Fera Wirawan warned that prices of some segments of the market have risen to 2007 peaks amid a strong upswing in buying levels.

Based on her analysis, prices of mass-market homes, or low-end private properties, are now at peak October 2007 levels, while prices of mid-tier and high-end homes are just 8 per cent and 22 per cent off their peaks respectively.

With prices surging 16 per cent to 26 per cent in recent months, the residential property sector may have peaked, Ms Wirawan cautioned.

‘The residential sector recovery was initially driven by pent-up demand and cheap capital values, but we now see speculation in all residential segments, particularly the mass segment,’ she said.

Average selling prices (ASPs) at recent property launches are 30 per cent to 80 per cent above the ASPs of nearby projects. This is markedly higher than the historical average of 20 per cent.
‘Capital values have been rising in the face of falling rents and a full supply pipeline, a phenomenon we attribute to low average mortgage rates of 2 per cent.’

She noted that the strong residential volumes were triggered by Frasers Centrepoint’s launch of the mass market Caspian project at an affordable $580 per sq ft in February, which attracted a high take-up owing to pent-up demand in the mass residential segment.

The positive sentiment from the sale of Caspian units quickly filtered through to the mid-tier and high-end segments.

This frantic level of buying, in annualised terms, almost matched the record number of new homes sold by developers in 2007.

Property developers here sold more than 7,000 private homes in the first half of this year, double what they sold in the same period last year.

When annualised, sales are only 2 per cent short of the record 14,811 sold in the 2007 boom year.

The low-end segment performed the best in the first three months of this year, contributing 63 per cent of the 2,552 primary units sold.

The second quarter, however, saw a change, with 40 per cent of the 4,552 units sold represented by the mid-tier segment, followed by 31 per cent in the high-end segment.
The broad-based recovery has fuelled a sharp rally of property counters such as City Developments and SC Global Developments.

The Singapore FTSE ST Real Estate index, which tracks Singapore-listed property stocks, has doubled from its March lows.

With increasing speculation, worsening affordability, declining rental yields and plentiful supply in the property development pipeline, prices are likely to cool, said Ms Wirawan.

‘The Government is watching the market and could implement anti-speculative policies if speculation in the market goes on unabated,’ she said. ‘We expect prices to fall 10 per cent to 20 per cent in the residential sector over the next 12 months.’

National Development Minister Mah Bow Tan said last month that signs of speculation are re-emerging in the property market and stressed that the Government is monitoring the the situation closely. His comments came after speculative pricing practices began to emerge late last month, especially in the mass-market segment.

Ms Wirawan pointed to the sale of Centro Residences, a mass-market 99-year leasehold project located at Ang Mo Kio, which was sold at between $1,100 and 1,200 psf.

That price, she said, was close to the price of a bulk purchase of Sui Generis, located at Balmoral Park, a prime area, which sold for $1,260 psf.

Industry players generally agree that it is not sustainable to price low-end properties at about $1,000 psf.

The Government recently made cautionary statements owing to concerns that such homes may become unaffordable to the mass-market home-buyer.

The warning, however, appeared to have fallen on deaf ears as property launches continued to attract throngs of buyers, including many Housing Board upgraders, over the first two weekends of this month.

DMG & Partners Securities analyst Brandon Lee said that he expects ‘residential sales momentum to continue’, while OCBC Investment Research analyst Foo Sze Ming said demand in the mass-market segment was more sustainable.

Source : Straits Times – 17 Aug 2009

Dubai home prices drop further

2009-08-11T13:05:00.000+08:00

Dubai house prices fell by 24 per cent in the second quarter from the prior quarter but the pace of decline slowed, in line with improving global property markets, Landmark Advisory said on Sunday.

Prices fell less in the same period in Abu Dhabi, as the United Arab Emirates’ (UAE) capital, home to most of the country’s oil, continues to weather the global downturn better than its neighbour.

The average sale price for villas in Dubai fell 24 per cent while apartments declined 17 per cent, Landmark said.

Prices for villas and apartments fell 32 per cent and 23 per cent respectively in the first quarter from the fourth quarter, the firm said in its May report.

Dubai’s once-booming real estate sector has been hit hard by the global financial crisis, but the pick-up in more mature markets such as the United States and Britain is starting to cheer investors.

Prices in the US rose in May for the first time in three years while prices in Britain gained for a third month running in July.

House prices in Dubai are likely to stabilise by the fourth quarter, after falling 9 per cent in the second quarter from the previous quarter, Colliers International said last week.

Rents for villas in Dubai fell 19 per cent to 220,350 dirhams (S$86,480) in the second quarter, while apartment rents dropped 23 per cent to 129,900 dirhams, Landmark said.

Transaction volumes rose 25 per cent and 20 per cent respectively as more people relocated to Dubai from the neighbouring emirates of Abu Dhabi and Sharjah, it said.

In Abu Dhabi, sale prices fell by up to 11 per cent for apartments in the second quarter and 8 per cent for villas compared with the previous quarter, but prices are unlikely to suffer further significant declines, the report said.

The rate of decline also slowed as prices for both categories fell 20 per cent and 30 per cent respectively in the first quarter from the fourth quarter, Landmark said in May.
Rents for both apartments and villas fell by roughly 10 per cent in the second quarter, it said, adding average rents would likely fall significantly as more supply enters the market.
Seven emirates make up the UAE federation.

Landmark Advisory is part of real estate brokerage and consultancy Landmark Properties, which has offices in the UAE and London.

Source : Business Times – 11 Aug 2009

Fans of American architect saves The Last Wright

2009-08-11T13:04:00.000+08:00

Frank Lloyd Wright enthusiasts are claiming victory in their effort to restore the architect’s last standing hotel, a northern Iowa landmark that has fallen apart over the past few decades.
The Park Inn Hotel in Mason City, designed by Wright and completed in 1910, has been used as a hotel, apartments and even a strip club. It fell further into neglect while city officials searched unsuccessfully for a way to maintain the historic structure.

Now, a private group has taken over the effort.

‘It certainly has been an eyesore, it has had a very, very chequered history over the past 40-50 years,’ said Ann MacGregor, executive director of Wright on the Park Inc, the group behind a planned US$18 million restoration.

The hotel is the last remaining of six designed by Wright after the Imperial Hotel in Tokyo was demolished in 1968.

The Park Inn Hotel will have 20 suites when it reopens to the public in early 2011, Ms MacGregor said.

The restoration has caused discord in the city that was home to The Music Man creator Meredith Willson. His boyhood home has been made into a museum, and there’s a life-sized replica of The Music Man movie set in downtown Mason City.

Some wonder why the hotel designed by Wright, considered by many to be America’s greatest architect, hasn’t had the same support.

‘There are naysayers for this project . . . who don’t appreciate or understand the architectural, historical nature of this property,’ Ms MacGregor said. ‘They question what it will do for downtown Mason City.’

Market analysis shows that there is demand for such a tourist destination, and a hotel management company based in Fort Atkinson, Wisconsin, has been hired to ensure things operate smoothly, she said.

Former Mason City Mayor Jean Marinos, who serves as president of Wright on the Park’s board, also believes that the hotel would help economic development. The group plans to invite presidential candidates to the hotel during the Iowa caucuses and hopefully host a televised debate.

‘Five years from now, when this hotel is up and running, we’ll really have some great opportunities in the downtown for small businesses to come in,’ said Ms Marinos.
The hotel made national headlines in 2004 when the city council put an ad on eBay to sell it for US$10 million to anyone who promised to restore it. When that failed, Wright on the Park stepped in, and the city signed over the deed.

‘It wasn’t that they didn’t want (the restoration) done,’ Ms Marinos said, ‘it was just they didn’t want the city to do it.’

Wright enthusiasts have been in a race for funding. The state of Iowa came through with about US$8.2 million through its Vision Iowa programme, and various federal and state historic grants and donations will pay for much of the work. There’s only about US$2 million left to be raised.
‘I think we’ve moved mountains in a relatively short period of time,’ said Ms MacGregor.
Alaina Santizo, the programme manager for Vision Iowa, said that state officials believe that the project will draw tourists from across the country.

‘This historic gem will be restored to its original splendour, while providing modern amenities that will appeal to today’s travellers,’ she said.

Born in Richland Center, Wisconsin, Wright was part of the Prairie School, a residential architectural movement that started in Chicago and spread through the Midwest.

He came to Mason City in 1908 after two local lawyers hired him to build new law offices and sandwich them between a hotel and a bank for added revenue.

Wright also built a private residence in Mason City called the Stockman House that’s now a museum.

Bruce Pfeiffer, director of archives for the Frank Lloyd Wright Foundation in Scottsdale, Arizona, said that the Park Inn Hotel was interesting because it includes bank and law offices, but it’s been ‘very badly mutilated over the years’.

‘It’s such a remarkable building, it should definitely be preserved back into its original condition,’ he said. ‘I think a lot of people would be outraged if anybody ever thought of demolishing it.’
Film director Lucille Carra created a one-hour documentary called The Last Wright that is being released on DVD this month in North America and Australia. The film traces 100 years of the economic and social history in Mason City, with special attention to the hotel’s fate.

Source : Business Times – 11 Aug 2009

Battered owners hopeful as home sales, prices rise

2009-08-11T13:03:00.000+08:00

But analysts remain sceptical on the longer-term outlook for property prices

For homeowners around the world struck by the collapse of property markets, figures showing the downward spiral may be halting are the most meaningful signs yet of a possible economic recovery.

As battered banks and stocks rally again, news that US house prices are finally rising after nearly three years of traumatic decline offers the greatest hope to hard-pressed homeowners from California to Krakow.

The sub-prime home loan crisis in America was the pressure-point that exposed underlying global financial chaos – and many economists say that property prices there are the linchpin for confidence in broader economic recovery.

US home sales have been rising and the latest Standard & Poor’s/Case Shiller index of home prices in 20 major US cities showed a 0.5 per cent increase between April and May – the first monthly rise since 2006.

‘This is the first time we have seen broad increases in home prices in 34 months. This could be an indication that home price declines are finally stabilising,’ said Standard & Poor’s analyst David Blitzer.

Data from the National Association of Realtors also showed that the median price of existing US home sales was US$181,600 (S$261,704) in June – 15 per cent lower than a year ago, but up from US$174,700 in May.

Celia Chen, an analyst at credit rating agency Moody’s, said that there were ‘tantalising signs that the descent in house prices is at least moderating’, but warned that house prices will not reach their 2006 highs until 2020.

Joel Naroff at Naroff Economic Advisors disagreed with that downbeat view, saying the increase ‘could start increasing much more rapidly than projected’.

Analysts remain sceptical on the longer-term outlook for property prices as stable economic growth remains vulnerable to rising unemployment and government strategies for a clean exit from recession after unprecedented fiscal stimulus.

But that is doing little to dampen cautious optimism on property markets.
Official data in China is showing house prices in 70 cities were up 0.8 per cent in June from May, rising for the fourth straight month, while real estate investment nationwide rose 9.9 per cent in the first half of the year.

In Britain, house prices rose by 1.1 per cent last month to just under £160,000 (S$384,808) from June, but were down 12.1 per cent over 12 months, a survey from home-loans provider Halifax showed this week.

In neighbouring Ireland, however, prices have fallen by up to 40 per cent from their peak in 2006 and are still going down – with the government now working to provide 90 billion euros (S$184 billion) in guarantees to the loan market.

Likewise, Spain’s second-biggest bank BBVA has forecast that house prices, after a decade-long, tourism-fuelled property boom, will still fall by nearly 30 per cent between 2008 and 2011 before they start to recover.

In the Gulf emirate of Dubai, house prices have almost halved over the past year. The sector there is struggling with a shortage of liquidity and job security for expatriates who represent over 80 per cent of the population.

The decline in Dubai has had wider implications, with US bank Morgan Stanley saying that world steel production will remain below 75 per cent capacity as it awaits a revival in the construction sector in the Middle East.

And, despite the price rises in Britain, China and the United States, IHS Global Insight analyst Howard Archer warns that there may be surprises in store.

‘We suspect that they will be prone to relapses over the coming months,’ Mr Archer said, referring to British house prices.

He warned that houses could become less affordable because of ‘the economic climate of recession, sharply rising unemployment and slowing wage growth’.

Source : Business Times – 11 Aug 2009

China property sales leap 60% in first 7 months

2009-08-11T13:02:00.000+08:00

Concern over asset bubbles brought on by record lending

China’s property sales surged 60 per cent in the first seven months amid concern that record lending will stoke asset bubbles in the world’s fastest-growing major economy.

The gain in the value of sales, announced by the statistics bureau on its website yesterday, compares with a 53 per cent increase in the first half from a year earlier. Real estate investment accelerated to 11.6 per cent growth from 9.9 per cent, the agency said.

Home prices in 70 major cities gained one per cent in July from a year earlier, the biggest increase in nine months, the National Development and Reform Commission (NDRC) said yesterday in a separate statement.

Premier Wen Jiabao reiterated on Sunday that monetary policy will remain unchanged, after climbing asset prices triggered speculation that a tightening could be imminent.

‘Policymakers may be getting a bit edgy about asset bubbles developing,’ said David Cohen, an economist with Action Economics in Singapore. ‘They may use administrative measures to cool prices.’

Improved property sales are part of a broader recovery. China’s economic growth accelerated in the second quarter and the Shanghai Composite Index of stocks has climbed almost 80 per cent this year, powered by US$1.1 trillion of lending in the first six months. Home prices in the 70 cities began to rise in June after declining for the previous six months.

Property sales by area climbed 37 per cent in the first seven months from a year earlier, the statistics bureau said.

‘The overall increase that we’re seeing in property prices is still manageable, the government would be more concerned about the stock market,’ said Sherman Chan, an economist at Moody’s Economy.com in Sydney. ‘Higher confidence and more liquidity’ are causing price gains, she added.

Central bank and finance ministry officials said on Aug 7 that they will scrutinise gains in stock prices without capping new lending. The Financial Times reported the same day that the central bank had told the largest state- controlled lenders to slow growth in new loans, citing unidentified sources.

China Construction Bank Corp president Zhang Jianguo said last week that the bank will cut new lending by about 70 per cent in the second half to avert a surge in bad debt.
Property prices are being boosted by a lack of investment alternatives in China, Kenneth Tsang, Asia-Pacific head of research at LaSalle Investment Management, said on Aug 6.
‘It’s property or the stock market,’ he said. ‘Some of the government officials lately are increasingly concerned about the situation in China and there may be a bubble.’

In July, new home prices rose in 43 cities and fell in 26 from a year earlier, the NDRC said. The largest increase was a 6.4 per cent gain in the eastern city of Ningbo. Month-on-month, 63 cities posted increases in new home prices, with three reporting declines.

Across the 70 cities, home prices climbed 0.9 per cent from June, the fifth straight monthly again.

Source : Business Times – 11 Aug 2009

Luxury retailers still expanding here

2009-08-11T13:01:00.000+08:00

WITH consumers hesitant to spend, and visitor arrivals dwindling, it is no surprise that retail sales have been on a downward slide in recent months.

But a stroll down Orchard Road reveals one segment of the industry that still shines: luxury retail.

Despite the recession, luxury developers and retailers here have not put the brakes on their glittery expansions.

The next high-end development on its way is Knightsbridge, an 83,000sqft, four-storey retail podium connected to Park Hotel Orchard and scheduled to open in May next year.

Unveiled last month, Knightsbridge will house its eight to 10 luxe tenants in double-storey flagship units.

The developer, Park Hotel Group, has secured 50per cent tenancy and says it is confident of opening with a full house next year.

It joins two other upcoming or newly completed projects on the strip, in proximity to the existing temples of luxury, Palais Renaissance, Paragon and Ngee Ann City.

Just opposite Knightsbridge is the 190,000sqft Mandarin Gallery, expected to host the likes of Emporio Armani and Mont Blanc when it opens in October.

Up the road, crowds continue to throng the Louis Vuitton and Cartier outlets at the month-old Ion Orchard.

Luxe industry players are confident the industry will remain buoyant here, pointing to a continuing demand for such goods in the Asian region.

They also cater to a segment which has been less buffeted by a turn of fortunes.
‘The luxury market is less volatile than the mass market in a downturn. Those who immediately feel the pinch are the mid-income groups, but high-income earners don’t really drop their spending,’ said Mr Allen Law, group director of Park Hotel Group.

A spokesman for Club 21, which is opening five stores in Ion Orchard and three in Mandarin Gallery, noted that there is still room for Singapore’s growth as a financial and fashion capital.
They may have reason to be confident. Market research by UM Consulting has found that the performance of the luxury goods sector has steadily increased every quarter since last year.
It estimates spending in that sector to be $369.3million for the first quarter of this year, compared to $289.1million in the same period last year.

There is a steady hunger for bags and bling among Asians, who make up the bulk of visitors to Singapore.

‘Developing countries like Indonesia and India are seeing their appetites being sustained, even increasing,’ observes UM Consulting analyst Ramesh Brahmadathan.
Asia has been a focus for luxury brands’ expansions.

Worldwide, they have taken a beating: the world’s biggest luxury house LVMH, which owns top brands like Louis Vuitton, Givenchy and Tag Heuer, saw a 12per cent drop in its first-half operating earnings.

In stark contrast to luxe’s ascent, there have been signs that the mid-tier market here may be flagging.

It was estimated to be worth $1.65billion in the first quarter of this year, dropping from $2.14billion in the quarter before that.

Mr Law predicted: ‘The luxury sector will still grow, and it will grow faster than the rest of the market.’

A LESS VOLATILE MARKET

‘The luxury market is less volatile than the mass market in a downturn. Those who immediately feel the pinch are the mid-income groups, but high-income earners don’t drop their spending.’- Mr Allen Law, group director of Park Hotel Group

Source : Straits Times – 11 Aug 2009

Parkway Reit cautious despite good results

2009-08-07T12:04:00.000+08:00

It has also secured a $50m Islamic revolving credit financing facility

PRUDENCE is the call at Parkway Life Reit, even as the healthcare trust reported an improved set of second-quarter results yesterday. The trust has secured a $50 million Islamic revolving credit financing facility by The Islamic Bank of Asia, even though it already has ample funding facilities to support potential acquisitions.

‘This $50 million is both a defensive and competitive strategy,’ said Yong Yean Chau, CEO of Parkway Trust Management, which manages the trust. ‘Defensive in a sense that the market has rallied, no doubt, but we’re not very sure whether the recovery is sustainable or it may break somewhere.

‘It could, well, pardon me, crash and go back down to the bottom. With this facility, because we’ve got a $34 million loan that is due next year July, if market crashes, the capital market can close easily and we don’t want to be stuck without financing.’

However, the maturity of its existing $34 million debt can be extended to 2012. In the event that the Islamic financing facility is not used, then it will serve to beef up its war chest for opportunistic acquisitions.

Parkway Life Reit has previously set up a $500 million multi-currency term note programme that has yet to be tapped. It also has access to credit facilities of $160 million, of which $34 million has been drawn. Other long-term borrowing include a term loan facility and several revolving credit facilities amounting to 13.66 billion yen (S$207.9 million), due in late 2011. This was used in 2008 to finance the acquisition of Japan properties.

The trust has a debt headroom of $308.3 million before reaching 40 per cent gearing ratio. Its gearing ratio stood at 22.7 per cent, but it does not intend to gear up above 35 per cent.
Parkway Life owns the Mount Elizabeth, Gleneagles, and East Shore hospitals in Singapore, and 10 assets located in Japan, including nursing homes and a pharmaceutical product distributing and manufacturing facility.

For the three months ended June, the Reit posted a 13.7 per cent increase in income available for distribution to $11.4 million. This brings distribution per unit (DPU) to 1.89 cents, higher than the 1.66 cents in Q2 last year.

Gross revenue for the quarter rose 28.9 per cent to $16.1 million, primarily due to higher revenue contribution from its Japan properties. This was further driven by the higher rent from the group’s Singapore hospital properties, which is pegged to a CPI + 1 per cent (ie 6.25 per cent) formula.

Property expenses went up 43.6 per cent to $1.1 million, resulting in net property income of $15 million, a jump of 27.9 per cent over last year.

For the half year, income available for distribution went up 15.1 per cent to $22.8 million. DPU rose to 3.78 cents, from 3.29 cents.

Despite the downturn, there has been little change in the valuations of healthcare and healthcare-related properties, according to Mr Yong. However, the lacklustre economic climate has presented more opportunities for investment as more healthcare players and owners explore an asset-light strategy. ‘And these are very good names, both in Singapore and overseas,’ he said.

Shares of Parkway Life Reit closed 3 cents higher at $1.08 yesterday, before its results were released.

Source : Business Times – 7 Aug 2009

MCL Land Q2 profit soars to US$36.7m

2009-08-07T12:03:00.000+08:00

H1 results boosted mainly by sales proceeds from The Fernhill, Tierra Vue

HONG KONG Land subsidiary MCL Land yesterday posted group net earnings of US$36.7 million for the second quarter ended June 30, 2009, up from a US$3.2 million net profit in the same period last year. Revenue rose from US$353,000 in Q2 2008 to US$135.8 million in Q2 this year.

Q2 earnings per share were 9.92 US cents, against 0.86 US cent a year ago.
Net earnings for the six months ended June 2009 were US$38.1 million, up from US$8.2 million in the same year-ago period. Revenue rose from US$718,000 in H1 last year to US$144.1 million in H1 2009, due mainly to recognition of sales proceeds from The Fernhill and Tierra Vue projects which were completed in Q1 and Q2 this year respectively.

The Fernhill, which comprises a total 25 apartments, obtained Temporary Occupation Permit (TOP) in March this year and MCL Land booked a net profit of US$2.4 million for only five of the apartments in Q1. It did not recognise profit at the time on the other 20 units as a China party that had bought the apartments on the deferred payment scheme failed to make outstanding payment to MCL at TOP.

However, the China party later managed to sell the 20 units in the subsale market, albeit at a loss, and paid up MCL. Hence the developer recognised the balance net profit of US$9.9 million from The Fernhill only in May.

Tierra Vue, at St Patrick’s Road in the Marine Parade area, obtained TOP in June and contributed a net profit of US$26.3 million in Q2.

The group had US$97 million net debt and 24 per cent net gearing as at June 30, 2009, an improvement from the US$181 million and 46 per cent respectively as at end-2008. ‘The two completions in the first half of the year, together with the completion of Hillcrest Villa in the second half, will produce an overall satisfactory performance for the full year. These projects are also generating good cashflows that will enhance further the group’s strong financial position,’ MCL chairman YK Pang said in a statement.

Net asset value per share stood at US$1.09 as at June 30, 2009, 3 US cents higher than the figure at Dec 31, 2008.

On the stockmarket yesterday, the counter ended 2 Singapore cents higher at S$1.49. MCL is maintaining its policy of not paying an interim dividend.

The group’s Hillcrest Villa cluster housing project near Dunearn Road is slated for completion in the second half of 2009.

D’Pavilion, a 50-unit apartment development at Upper Serangoon Road, and Waterfall Gardens condo at Farrer Road, are scheduled to complete in 2010, followed by The Peak @ Balmeg, a 180-unit condo in the Pasir Panjang area, in 2011. In addition, the group has seven development projects in Singapore at various stages of planning approval.

MCL may launch in the current half a 99-year leasehold condo near Yishun MRT Station and fronting Lower Seletar Reservoir, and a freehold condo it is jointly developing with Ho Bee on the Holland Hill Mansions site.

MCL said Wangsa Walk, a retail mall project in Kuala Lumpur by a group joint venture company, is slated to be ready in the current half. The 25,000 sq metres net lettable area is about 90 per cent pre-leased.

Source : Business Times – 7 Aug 2009

Homes from sold-out projects back on market

2009-08-07T12:02:00.000+08:00

Speculators a minority as they shoot for small flipping gains

Some buyers who managed to lay their hands on units at projects sold out recently are trying to get lucky for the second time – by selling what they snapped up, for a profit.

This brings to mind the government’s warning last week – that some element of speculation is back in the property market. Industry watchers say, however, that subsales are common for fully sold projects and speculation still remains mild.

Advertisements for subsales at Optima@Tanah Merah have surfaced in the last few days – with owners seeking prices which are at least 5 per cent more than what they paid.

This comes less than a week after all 297 units at the 99-year-leasehold project were taken up in just three days.

Developer TID sold the units at an average price of about $810 per square foot (psf). It had to conduct two rounds of balloting as home seekers descended upon the showflat in droves.
There are also offers for subsales at 8@Woodleigh. Frasers Centrepoint sold all 330 units at the 99-year-leasehold project over a few weeks in June.

According to industry watchers, sellers in the subsale market need to charge a premium of at least 5 per cent to break even. This would cover stamp duty, legal fees and any agent’s commission. To earn more, some may set prices which are up to 10 per cent more than what they paid.

But given the market today, those flipping properties would be glad to come out of the deal with $50,000 to $80,000, said ERA Asia Pacific associate director Eugene Lim.

He pointed out, though, that speculation today is ‘not excessive’. Every new project will attract a small number of speculators but most buyers today are ready to keep and lease out the property, he explained.

It is when the project is sold out that these buyers may change their minds, he added. ‘While some people buy with a medium-term view, because the project is sold out, it presents an opportunity for them to make a quick gain.’

Savills Residential director Phylicia Ang also believes that most buyers do not plan to ‘flip’ their properties initially. But she noted that if there is profit to be made, some are willing to hear out the offer and may sell later.

She also suggested that not all advertisements may be placed by owners – some property agents may take the initiative to promote units, test market interest and ‘gather more leads’.
Both Mr Lim and Ms Ang highlighted that speculation is nowhere as feverish as it was some two years ago. According to Mr Lim, buyers in the subsale market today are more particular – probably looking out for specific units they could not get during the launch.

Rising optimism in the property market seems to be benefiting older projects as well. Casa Merah – which is near Optima and will receive Temporary Occupation Permit soon – has seen prices at its units rise in the last few months. While caveats lodged for units there in February reflected prices of $631-$665 psf, those in July showed prices of $699-$751 psf.

Meanwhile, new launches continue to do well. The 70-unit Airstream at St Michael’s Road, for instance, was fully sold through balloting on Wednesday. Previews for Keppel Land’s 56-unit Madison Residences have begun, while previews for Allgreen’s Viva in Novena will start this weekend.

Source : Business Times – 7 Aug 2009

Demand for private homes on an upward curve

2009-08-07T12:01:00.000+08:00

‘Natural demand’ may be higher as immigrants step in; supply not a nagging issue
Even as Urban Redevelopment Authority yesterday launched the tender for a plum 99-year leasehold site for condo development at Dakota Crescent, expectations are running high that developers will trigger the launch of more housing sites from the government’s reserve list in the coming months.

This is against a backdrop of strong sales for mass-market projects, the latest being the Optima condo next to Tanah Merah MRT Station.

Mass-market home prices have risen about 10 to 20 per cent from the recent low in Q1, according to property consultants.

One concern is whether the market is running out of supply of mass-market condos and whether this will set the base for further price hikes.

The current pipeline has about 7,500 mass market homes yet to be launched on sites sold in the past, according to CB Richard Ellis data. These include three 99-year leasehold condo projects in Toa Payoh, Yishun and West Coast Crescent on earlier sites sold by the government.

The rest include 99-year projects by Hong Leong Group on a large historic landbank in Pasir Ris, projects by Far East Organization and Frasers Centrepoint on remaining land on the former Waterfront site along Bedok Reservoir, and a host of freehold projects by various developers in places like West Coast Road, Tampines Road, Yio Chu Kang Road, Toh Tuck Drive and Hillview Avenue.

After the recent launch of two housing sites (at Dakota Crescent and Chestnut Avenue) from the government reserve list following successful applications by developers, this list still has sites that can potentially generate a total of about 5,800 private homes. Some are attractively located near MRT stations in places like Bishan, Serangoon Ave 3, Bartley Road and Bedok. The last two sites will be ready for application by developers in November and December respectively.
The government could add more sites to its reserve list for first-half 2010, or even reintroduce the confirmed list, where sites are launched according to a prestated schedule, unlike reserve list sites, which are launched for tender only upon successful application by developers undertaking to offer minimum bids acceptable to the state.

It will take some time for site launches to translate to new condo launches. However, ensuring there’s enough supply should not be a nagging issue.

But beyond looking at supply, one needs to also understand why demand has spiked since February. Developers have sold a total of 7,250 private homes in the first six months of 2009 – exceeding the 4,264 units sold in the whole of last year. Some consultants are predicting the number for the whole of this year may reach the record of 14,811 units set in 2007.

The current home buying wave began in the mass-market segment, then permeated upwards. Some of the buying represents pent-up demand. People are also taking the opportunity to pick up their dream home at current prices – which despite recent price hikes are still below peak-2007 levels – for fear of missing the boat as they did during the property run-up in 2006 and 2007.

Property speculators are also busying themselves.

But other factors are also at play that are creating a paradigm shift which could suggest that ‘natural demand’ henceforth may be higher than the average 8,000 private homes developers sold annually over the past 10 years (between 1999 and 2008).

These include an increase in immigration into Singapore over the past few years as it embraces foreign talent and wealth and a gradual ‘internationalisation’ of the Singapore property market as foreigners are drawn by Singapore’s emergence as a global city.

Another point to consider when understanding why there could be higher natural demand for private homes is to look at the public housing segment.

The Housing & Development Board’s construction of new flats has slowed down over the years. During 1981-85, an average of about 37,000-plus flats were built by HDB per year. In 1998 too, some 36,600 new flats were built. Later in the face of a supply glut, HDB scaled back building new flats; the figure eased to about 10,000 units a year completed in 2002 and 2003, and fell further to about 5,000 units completed in 2007.

A smaller supply of new HDB homes has made it easier for HDB residents to sell their flats in the resale market and upgrade to entry-level private homes in the suburbs.

Incomes of Singaporeans have grown over the decade, making more aspire to own a private home.

The low-interest rate policies adopted by governments around the world to cope with the global financial meltdown have translated to near-zero returns on fixed deposits and low mortgage rates – making property an attractive investment option. The strong distaste for structured financial products post-Lehman has made property more sought-after.

The home-buying frenzy of late has also come about due to a confluence of two important factors – a recognition of value by buyers (following price chops by developers in Q1) and an improvement in sentiment.

More value-recognition will emerge for real estate as Singapore’s railway network is doubled to 278 km by 2020, boosting connectivity and cutting travel time from homes in locations once called suburbs to the city.

Perhaps we should not be too surprised if strong demand for private residential properties persists. Of course, if another international disaster takes place and foreign property investors again exit, demand could dive, like it did last year during the global financial crisis.

Spikes and dips in home buying and property prices could become more pronounced by virtue of Singapore’s real estate market becoming more international.

Source : Business Times – 7 Aug 2009

Keep HDB flats affordable to the sandwiched class

2009-08-03T13:05:00.000+08:00

I REFER to last Thursday’s report, ‘Mah sounds warning on property buzz’, on the current property buying frenzy, and National Development Minister Mah Bow Tan’s warning that a property bubble may be forming.

I would like to highlight the plight of genuine home seekers in such an environment. Many young couples, including my fiancee and me, who are looking for a suitable home to start a family have seen affordability plunge in the past few years.

As reported in the media several times, private property prices have spiked recently due to speculative demand and better-off buyers going in for fear property prices will continue to rise. Property developers are making use of this window of opportunity to launch property developments at premium prices.

The prices of HDB resale flats, although subject to less speculation pressures due to sale restrictions, have also increased dramatically.

In the current economic downturn, most salaried Singaporeans would count their lucky stars if they did not have to suffer a pay cut.

Affordability of buying a home has simply plunged.

It is important to ensure that homes, especially new or resale HDB flats, continue to be affordable to most Singaporeans and young couples looking to start a family. Given the spike in HDB resale prices, as well as prices of new flats to a lesser extent, and the corresponding plunge in affordability, it is timely for the HDB to review how it can continue to fulfil its first mission: ‘We provide affordable homes of quality and value.’

The CPF housing grant and the HDB housing loan are two schemes that have helped maintain the affordability. However, like all policies, these schemes need to be refreshed and reviewed.
The combined income ceiling of $8,000 a month to be eligible for the schemes has been in place since 1994. Since then, the HDB resale price index has gone up by a staggering 190 per cent.

Beside these schemes, perhaps HDB can innovate and come up with new schemes to assist the sandwiched class like us, so its flats continue to be affordable.

Alan Teo

Source : Straits Times – 3 Aug 2009

Caught offguard by property rebound

2009-08-03T13:04:00.000+08:00

When China’s property market slumped late last year, Ms Zhao Jun, 33, rejoiced.
The department manager of a technology company in Beijing had long been searching in vain for an affordable apartment.

‘We thought that the time had finally come to buy a home that met our budget of 5,000 yuan (S$1,000) per sq m,’ said the mother of a one-year-old daughter.

She had been paying rent of 4,000 yuan a month – 40 per cent of her salary – and wanted a place to call her own.

But little did she expect that home prices in Beijing’s fourth ring, a location she favoured, would fall to 16,000 yuan per sq m and no further.

And then within a few months, prices abruptly shot up again – way beyond her reach – to well over 20,000 yuan per sq m.

This has forced Ms Zhao to settle for an apartment much further away in the eastern suburbs. ‘Im afraid that at the rate the market is rising, if I don’t buy now, property will be even more expensive in future,’ she said late last month.

Indeed, a sudden revival of real estate fever across China would turn home prices from bust to boom, leaving thousands of first-time home-buyers in the lurch.

In Beijing, average house prices in the capital leapt 27 per cent from January to June, while Shanghai has seen a 78-per-cent spike in residential sales, and the climb has continued since.
But it is not just residents in top-tier cities who are hit. Those in up-and-coming ones such as Tianjin have also been hit as analysts predict these ’second-tier cities’ will grow even faster than first- tier ones – and prices will be swept along upwards. In Tianjin, property prices rose 2 per cent in May against the previous month on the back of a 19 per cent jump in daily transaction volumes.

Even so, 90 per cent of Tianjin home-seekers in a recent online poll by property portal House Focus are already complaining that prices are way beyond what they can afford.

To these people, it looks like the government’s measures to turn around the property sector – which had slumped a year ago after Beijing took steps to curb speculation and overheating – have worked all too well.

As China’s economy entered rougher waters late last year, Beijing moved to revive the property sector – a key engine of growth. It cut minimum deposits and banks’ mortgage rates for first-time home-buyers. And it also slashed the minimum proportion of capital funding that a developer is required to hold in order to build new projects.

This has sparked a rush among China’s developers back into the market, especially in second-tier cities.

They went on buying sprees for land at record prices, prompting Mr Pan Shiyi, chief of Chinese developer SOHO to declare to local media last month: ‘The bidders have gone irrational.’
Developers have poured 1.45 trillion yuan into property development in the first half of this year, up almost 10 per cent compared with the same period a year ago, according to the National Bureau of Statistics. This has pushed up demand and prices for existing units, as buyers rush in, expecting developers to raise prices soon in a fast-recovering market.

But another, perhaps even more potent, factor in what analysts warn may be a property market bubble is hot money flows. These oozed from the 7.4 trillion yuan of new bank loans released as part of Beijing’s stimulus package in the first half of the year.

Some 30 per cent of the loans meant for projects under the stimulus plan may have been channelled into real estate, Mr Wei Jianing, a senior researcher at the State Council Development and Research Centre, told state media recently.

The aggregate home prices across major Chinese cities had in fact, only reversed last month, correcting a five- month decline and rising 0.2 per cent in June, compared with a year ago, official statistics showed. But analysts say this momentum will only grow faster.

In particular, second-tier cities such as Tianjin, Chongqing, Shenyang and Chengdu are seeing a strong recovery in home prices as their economies pick up pace, spurred by their governments’ stimulus measures, noted Mr Carlby Xie of Colliers International in Beijing.

‘These cities are experiencing a very exciting period of property development boom – not only in the residential but also the commercial sector,’ he said.

Large-scale developers which had previously concentrated on top-tier cities are starting to venture into second-tier ones where profit margins may be higher.

Meanwhile, demand is growing among increasingly affluent urban residents for new, top-quality housing, added Mr Xie.

This trend is, however, bad news for Mr Zhou Jinhai, 27, a hotel manager in Tianjin who hopes to buy a small apartment before proposing to his girlfriend.

‘Growth in second-tier cities and property markets is good – but not when genuine first-time buyers like me have to make sacrifices and bear the cost of it,’ he lamented.

WHAT’S FUELLING BOOM

~ Beijing’s move to revive the property sector has sparked a rush among China’s developers back into the market, especially in cities such as Tianjin, Chongqing, Shenyang and Chengdu.
~ Demand and prices for existing units have been pushed up as buyers rush in. Developers are expected to raise prices soon.

~ Hot money flows from the 7.4 trillion yuan (S$1.6 trillion) of new bank loans released as part of Beijing’s stimulus package in the first half of the year.

Source : Straits Times – 3 Aug 2009

Drawing property investors

2009-08-03T13:03:00.002+08:00

MALAYSIA aims to sell RM20 billion (S$8.2 billion) in domestic real estate to foreigners over the next decade, three times more than the current average of RM600 million or 2 per cent of the RM30 billion annually transacted in the residential market.

It hopes a newly incorporated public-private initiative Malaysia Property Inc (MPI) can successfully brand the country as ‘as an international property investment destination.’

Indeed, selling an average RM2 billion a year to foreign buyers ought not to be too onerous given that the local currency is increasingly buying less against major foreign currencies. MPI has also commended recent moves to liberalise the property sector, which makes it easier for foreigners to purchase commercial real estate.

Those who invest cite many reasons for doing so: the warm and mild climate, centrally located geographically, wide English speaking population, general political stability, excellent food, and reasonably good quality build.

But although Malaysian properties sell at only a fraction of those in the region – especially Singapore and Hong Kong against which they are commonly compared – the MPI acknowledges crime and poor public transport are major turn-offs to investors, one widespread, the other sorely lacking.

Syndicates’ prey

Because it is more insidious, crime is the more immediate problem. According to news reports, the total reported cases of crime last year was 211,648 or a 35.5 per cent increase over 2004’s of 156,648.

Crime had begun to rear its ugly head in the late 1990s – in 1997 total crimes reported was 121,176 cases – but because fighting crime was never a priority, it has emboldened criminals and made it necessary to be vigilant, even at airports, restaurants, and hotels, given the many syndicates preying on the unwary.

Whether the country has become known for the ‘easy pickings’ there have been reports of syndicates flying in for a week or two to loot before flying out again.

The proliferation of ‘gated’ communities – questionably illegal because residents have decided to close entry points to public roads with drums and bars – reflects the insecurity. In the extreme, some consider themselves prisoners in their own homes.

Prime Minister Najib Razak last week set the home ministry the target of reducing crime by a fifth by the end of next year as part of its key performance index.

Only in recent times has he conceded crime to be a major problem. Many found his comments last year that crime in the country was actually lower than in Japan and Hong Kong and that it was only public ‘perception’ that it was on the rise, incredulous and out of touch.

To upgrade the police force, the government has provided RM8 billion under the current five-year Malaysia plan to 2010, triple the amount in the previous plan. The whopping increase, notwithstanding, 97 per cent of 6,678 respondents in a recent poll by the Home Ministry said they do not fee safe because of the high crime rate.

The National House Buyers Association has projected communities will be increasingly gated and guarded until residents feel more secure.

Or as a concerned citizen observed in a letter to the editor of a local newspaper: ‘The ever increasing number of gated residential communities points clearly to two conclusions: The public do not feel safe from crime, and the public has given up on the police for protection.’

The government ought to seriously consider instituting the police reforms suggested by the Royal Commission set up in 2005 as this would not only help restore public trust in the police but also inspire confidence that Malaysia is serious about tackling crime.

That would arguably be a more effective selling aid than planned international road-shows.

Source : Business Times – 3 Aug 2009

ARA buys Suntec Convention Centre in $235m deal

2009-08-03T13:03:00.001+08:00

ARA Asset Management finally has a full house in its hand of cards – the real estate fund management firm added the Suntec International Convention & Exhibition Centre to its portfolio of Suntec-brand properties on Saturday.

ARA, an affiliate of Li Ka-shing’s Cheung Kong group, sealed the $235 million deal for the convention centre with Suntec City Development Pte Ltd, of which Mr Li is an indirect shareholder. This deal will add one million square feet of space to ARA’s portfolio.

With this acquisition, ARA will own both the convention centre as well as most of the office and mall space in Suntec City, come the finalisation of the deal in October. The office and mall spaces are owned by Suntec Reit, which is managed by ARA.

The convention centre, however, will be owned separately under the ARA Harmony Fund which was created by ARA for this purpose.

‘We chose the word ‘harmony’ because now all the three components – retail, office and convention space – will be able to operate together in a harmonious manner,’ John Lim, ARA’s group chief executive officer, told BT.

This acquisition will bring 76 per cent of the whole Suntec complex under the ownership of ARA.
‘We have always had a plan to buy back the remaining 24 per cent. We will do it if the price is good,’ said Mr Lim.

While the decision was made not to include the convention centre in Suntec Reit, the trust will have a 20 per cent stake in the Harmony Fund.

The rest of the fund will be held by private investors.

‘At the moment, the convention centre is an operating business, and the Reit cannot buy an operating business because the income fluctuates. The Reit looks for stable income from its properties,’ Mr Lim explained.

Mr Lim was keen to stress that despite the change in ownership, it will be business as usual for the convention centre.

Pieter Idenburg, who has been the convention centre’s chief executive officer since 2005, will continue to run the show. Mr Idenburg regards the acquisition as an opportunity to leverage on the shared resources of the mall and the convention centre.

‘Going forward, we will be looking at the franchising opportunities for the Suntec brand overseas. With the backing of ARA as our management, we can now start those plans to go abroad,’ said Mr Idenburg.

‘Hopefully, we will put one and one together, but get three with this synergy. The retail side will benefit from the people coming into the convention centre, and the convention centre will have the infrastructural support of the mall area,’ Mr Lim added.

In 2004, ARA had listed Suntec Reit in the biggest initial public offering of the year, having bought the Suntec City mall and a stake in the five-tower office development from Suntec City Development Pte Ltd. It did not, however, buy the convention centre which was loss-making at the time.

‘Back then, the convention centre was held back by the owners as the price was not right, given that it was just post-Sars and the convention business was difficult,’ said Mr Lim.
‘We are happy with the $235 million price tag because it is worth the goodwill of the branding and the management expertise that we will get.’

ARA, which also owns Hong Kong-based Fortune Reit and Prosperity Reit, posted a 2 per cent increase in revenue to $17.8 million and a 10 per cent increase in net profit to $10.1 million for Q1 FY2009.

Source : Business Times – 3 Aug 2009

Singapore Botanic Gardens to be expanded with new parkland

2009-08-03T13:02:00.001+08:00

Singapore’s Botanic Gardens will be expanded with the addition of a new parkland.
National Development Minister Mah Bow Tan said a 9.8-hectare parkland at Tyersall Avenue will be added to the Gardens.

This parkland will form a seamless extension to the west of the Gardens, bringing the total area of the Botanic Gardens to almost 74 hectares.

And, there will be a new arboretum on the parkland. The Tyersall addition is slated to be completed by 2012.

Mr Mah said: “A rich diversity of flora and fauna, including some rare species, exists in the forest at this new site. An arboretum will be developed to capitalise on this rich biodiversity, integrating the forest in the extension with the existing rainforest within the Botanic Gardens to form an enlarged forest habitat.

“This Tyersall Learning Forest will showcase the best of tropical trees that grow under local conditions, and strengthen the Botanic Gardens’ position as a premier institute for research, conservation and education.

“Visitors will be able to appreciate this unique collection of trees and plants through various thematic walks within the Tyersall Learning Forest, featuring giant trees with the potential to grow up to some 60 metres in height, trees with interesting forms and barks of various textures, a conservation collection of rare fruit and nut species, and a bamboo garden.”

Another highlight of the parkland will be a new marshland that will showcase a diversity of tropical wetland plant species and aquatic wildlife, including birds and amphibians. And nature lovers can take in the beauty of the marshland from viewing decks along boardwalks on the marshland.

Mr Mah was speaking at the opening of “Garden of Hope”, a new section at the Botanic Gardens, on Monday.

The Garden of Hope comprises four mini gardens connected by footpaths with plants and recycled materials woven into the garden to create lovely forms.

It is a project by students from Assumption Pathway School and Northlight School.
Over the past month, these students had worked under the guidance of two internationally recognised, award-winning garden designers – Australia’s Jim Fogarty, and Singapore’s Alan Tan – to design and build the garden.

Source : Channel NewsAsia – 3 Aug 2009

From resort to water sports attraction?

2009-07-29T12:37:00.002+08:00

ONLY days after the NTUC Club pulled the plug on its planned resort at Sentosa, the site that was supposed to be used for the resort is already attracting other development ideas.

A new water-sports type of an attraction is being looked at to take up the prime real estate.

Sentosa Leisure Group chief executive officer Mike Barclay said he is keen to have an ‘attraction that offers safe water-play outside the sea’.

He added that it will preferably be a place where families can retreat to for activities during wet weather.

Last week, the recreational arm of the National Trades Union Congress said it was abandoning plans for the $45 million Palawan Beach resort because of spiralling construction and land costs.
The resort was supposed to be operational by the end of last year but when asked then, NTUC Club said plans for it were being reviewed. It was finally scrapped this year as ‘no longer viable’.
Landlord Sentosa, which will take back development of the 3ha site, is reviewing plans for the site, which is zoned for family and sports use.

Source : Straits Times – 29 Jul 2009

Can new Orchard Road malls thrive despite recession?

2009-07-29T12:37:00.001+08:00

Addition of hundreds of new shops will further squeeze retailers’ profits
CAN the three huge new malls on Singapore’s main retail strip thrive despite a limp global economy?

The revamp of Orchard Road, along with two resorts featuring the country’s first casinos opening next year, is part of the government’s plans to make Singapore a regional tourist and shopping mecca and fuel a rebound from its worst recession ever.

But retailers on Orchard Road, which packs some 40 shopping centres into 2.5 kilometres, could struggle for some time.

Locals and tourists are spending less while the addition of hundreds of new shops in nearly a fifth more retail space will further squeeze profits.

‘The timing of the new malls wasn’t great,’ said David Cohen, an economist at consultancy Action Economics in Singapore. ‘Sales could be soft for a while.’

So far this year, Singapore’s retail sales are down more than 10 per cent from a year earlier. Big-ticket items – such as jewellery, cars and furniture – have been especially hard hit.

‘We really started to feel the recession in November, and in the last few months sales have been recovering very gradually,’ said Desmond Png, a manager at a Hugo Boss store in Ngee Ann City mall on Orchard. ‘Before, if a customer liked a shirt, and we had it in three colours, he’d buy all three.’ ‘Now he’s getting just one.’

The biggest of the new malls, the ION Orchard, opened 70 per cent of its stores last week after offering a 30 per cent rebate on rent through October to attract tenants to fill its 640,000 square feet of retail space. Costing about $2 billion, the project includes a luxury 52-storey condominium.

Rents at prime Orchard spaces will likely fall up to 12 per cent this year, according to consultancy CB Richard Ellis.

‘Yes, we’ve just gone through one of the worst global recessions ever,’ said Soon Su Lin, chief executive of Orchard Turn Development, ION’s landlord. ‘But the tenants see this as a long-term investment. We believe the market will improve.’

A regional economic recovery is also key for Orchard Road since tourists from countries such as Indonesia, Malaysia and China account for at least 20 per cent of the country’s retail sales, Mr Cohen said.

Annual tourist arrivals, which fell 12 per cent in the first five months of the year, are equal to 173 per cent of Singapore’s total population, the second highest ratio in the region after Hong Kong.

‘Compared to Malaysia or Hong Kong, I prefer shopping in Singapore because of the comfort and safety,’ said Fitria Evariany, a 33-year-old Indonesian housewife who visits Singapore three times a year to shop. ‘I come here to buy certain brands I can’t get back home.’

Most economists are optimistic that government tax breaks and spending programmes will keep the unemployment rate low, and the economy will grow more than 4 per cent next year after a 5 per cent drop this year.

‘As long as unemployment doesn’t get out of control, consumers will still spend,’ said Selena Ling, an economist with OCBC Bank in Singapore. ‘But if there’s a protracted recession, then it’s a totally different ball game.’

Source : Business Times – 29 Jul 2009

Start-ups feel at home in Stamford House

2009-07-29T12:36:00.000+08:00

STAMFORD House might as well bill itself as The Entrepreneur Mall now.
About half of the 51 units in the historic three-storey building are rented to first-time business owners, drawn there by the low rents and short-term leases.

Last month, a company importing organic cosmetics set up its first retail store in the block; this weekend, a 20-year-old entrepreneur will debut her concept store, where members have the right to pick from a range of free product samples.

The block made its name as a ‘go to’ place for furniture in the late 1990s, with big tenants like Picket & Rail and Pennsylvania House.

But they started moving out because of low traffic arising from a lack of publicity, and a high tenant turnover due to the short-term leases. A clutch of local designers moved in next, only to start leaving for similar reasons.

Stamford House’s short-term leases last up to a year, instead of the market practice of two or three years with a high chance of renewal thrown in, said Mr Colin Tan, director of research and consultancy at real estate consultancy Chesterton Suntec International.

The leases are short because the building is on the Reserve List of the Government Land Sales Programme, and could be redeveloped the moment a developer offers the minimum bid.
Mr Tan said few established retailers would accept such short leases; they do not find it worth their while to renovate the premises for only a short stay.

It is thus no surprise that the building has become popular with start-ups looking to fine-tune their businesses.

‘It is located in the heart of town, with relatively low rents,’ he said. ‘The more start-ups keep costs down, the longer they will survive. This is critical in the first few years.’
He noted that rents at Stamford House are half, or even less than half, those in nearby malls like Raffles City.

The low rent and the short lease attracted Ms Elfanie Tan, who pays $7 per sq ft to run Fr3b, the concept store which will give away free product samples to its registered members. She said: ‘The building has the feel of a hotel and rent is low. It made it possible to start. If the rent were higher, I might have been too scared to take it up.’

For home-grown designer Jo Soh, 33, a month’s lease was enough time to find out how her creations under the Hansel label would fare in the market.

Now thinking of opening her first permanent store, she said: ‘The response at Stamford was good. Now we know opening a store is an option.’

The Singapore Land Authority, the building’s landlord, said the high tenant turnover has not dampened occupancy, now at more than 90 per cent.

Its spokesman said: ‘We do not limit the trades allowed or specially source for tenants of a particular trade. The current trade mix evolved on its own based on market demand and supply.’

Some current tenants are, however, disgruntled with Stamford House’s lack of identity. Make-up Forever manager Alicia Chong said of the short leases: ‘I’ve put off renovating for many years. The landlord keeps saying rents might not be renewed, but then they are. It’s frustrating not knowing what will happen next.’

Source : Straits Times – 29 Jul 2009

CapitaLand answers A$281.6m cash call

2009-07-28T13:43:00.000+08:00

CapitaLand will inject A$281.6 million (S$333.1 million) into Australand by taking up its full entitlement in the Australian property unit’s A$475 million rights issue.

Sydney-based Australand – which yesterday posted a first-half net loss of A$268.8 million – says the proceeds will strengthen its balance sheet amid a challenging second half. It is the company’s second rights issue in about a year.

The exercise will ‘provide additional headroom against the covenant limits of Australand’s debt facilities, sufficient liquidity to meet all anticipated funding requirements over the next two years and (to) take advantage of selective opportunities in a disciplined manner’, Australand said.

To raise A$475 million – comprising A$380 million from an institutional tranche and A$95 million from a retail tranche – Australand is making a seven-for-10 non-renounceable pro-rata entitlement offer of new stapled securities at A$0.40 apiece. The offer price is a 20 per cent discount to the last closing price of A$0.50 on July 24.

CapitaLand, which has a 59.27 per cent stake in Australand, will take up its full entitlement for A$281.6 million cash. It does not expect its subscription or the rights issue to materially affect its net tangible assets per share or earnings per share for the financial year ending Dec 31. Its effective interest in Australand should stay the same.

‘The current weak environment in Australia is largely the result of uncertainties in global financial markets,’ CapitaLand said. It believes Australand – a ’strategic business unit’ – will benefit from Australia’s future economic growth.

The rest of the rights issue is fully underwritten by JP Morgan Australia and UBS Australia. The proceeds would have lowered Australand’s pro forma gearing at June 30 from 39.8 per cent to 27.6 per cent.

In September last year, Australand raised A$461 million through a rights issue. CapitaLand also took up its full entitlement in that exercise.

Australand announced the latest fund-raising with its financial results yesterday. For the half-year ended June 30, the company incurred a net loss attributable to stapled security holders of A$268.8 million – reversing a net gain of A$25.6 million a year ago.

This followed a 29 per cent year-on-year fall in revenue from continuing operations to A$311.3 million. Results were hurt by unrealised losses from property revaluations amounting to A$235.3 million, and impairments to development and joint venture inventories of A$93.5 million after tax, which Australand warned about last week.

Australand expects the rest of the year to be challenging and has downgraded its performance guidance. It expects its full-year operating profit after tax – excluding unrealised revaluations gains or losses, impairments and the impact of the rights issue – to be 35 per cent lower than last year, not 30 per cent as previously thought.

It will pay an interim distribution of A$0.03 per stapled security for the half-year ended June 30. There could also be a final distribution of A$0.02 per stapled security for the year ending Dec 31.

CapitaLand shares lost three cents yesterday to close at $3.94. Trading in Australand’s shares will resume tomorrow, after a two-day trading halt at the company’s request.

Source : Business Times – 28 Jul 2009
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HDB deploying more staff to up appointment slots

2009-07-28T13:42:00.002+08:00

WE REFER to the letter from Mr Gopinath Maasi, ‘Buying resale flat – Why does HDB take so long when most of the transactions are computerised?’ (July 18).

HDB adopts a two-stage process to ensure resale transactions are carried out smoothly while safeguarding the interests of both buyers and sellers. At the first appointment, HDB meets both buyers and sellers to assess their eligibility to buy/sell the flat, and explains the relevant policies and procedures. Depending on the volume of resale transactions, it usually takes about five weeks to secure the first appointment.

The next stage involves preparing the legal documents, cheque for sellers, processing housing grants and loans, and so on. For buyers taking a mortgage loan from the banks, more parties will be involved, including the bank’s solicitors. On average, this process takes about six to eight weeks, depending on the complexity of the transaction. Overall, a typical resale transaction takes about three months to complete, which is comparable with the time taken to complete a private housing transaction.

In recent months, the volume of resale transactions has increased by more than 50 per cent. As more appointment slots are taken up, some buyers or sellers of resale flats might not be able to book an earlier first-appointment date. HDB will be deploying more manpower resources to increase the appointment slots and shorten the waiting time for first appointments.
We thank the writer for the feedback.

Loh Swee HengDeputy Director (Resale)for Director(Estate Admin & Property)

Housing and Development Board

Source : Straits Times – 28 Jul 2009
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Phase 1 of GuocoLand’s Ascot Park all sold

2009-07-28T13:42:00.001+08:00

THE first phase of Guoco- Land’s Ascot Park project in Nanjing, China has been fully sold, the group said yesterday.

Phase 1 of Ascot Park – comprising 594 units with a mix of 2 and 3-bedroom units in sizes ranging from 87 to 130 square metres – has been sold at an average price of 7,100 yuan (S$1,500) per sq m. Phase 2, comprising the remaining 518 units, will be launched in a few months.

The development caters to a niche market segment for units with bare finishes, enabling homebuyers to fit out their homes according to their preference.

Construction of Phase 1 is expected to be completed by the end of this year.
Located 14 kilometres from Nanjing city centre, the Balinese-themed development includes a man- made lake, a clubhouse with an extensive range of amenities, and a multi-purpose commercial centre with a selection of eateries and retail stores.

The project is on a 90,000 sq m site with a total gross floor area of about 240,000 sq m. GuocoLand (China) group MD Violet Lee said: ‘The strong sales for Phase 1 affirm the demand for our niche products which provide a quality setting with lush landscaping for our homebuyers to fit out their individual units to their liking. We are confident that Phase 2, to be launched in the next few months, will also be well received.’

Source : Business Times – 28 Jul 2009

Expats say they’ll stay in S’pore, but spend less: HSBC survey

2009-07-28T13:41:00.001+08:00

EXPATRIATES in Singapore feel fairly secure about staying here despite the global economic downturn.

A recent global survey by HSBC has shown that 91 per cent of 192 expatriates living in Singapore said that they have not considered returning home despite the downturn.
This is higher than the global average of 85 per cent, said HSBC in its annual “Expat Explorer” survey released yesterday.

More than 3,100 expats from over 50 countries were polled between February and April for this online survey that looks at the expats financial circumstances.

Countries hit hard by the financial crisis, such as the United Kingdom and United States, are seeing a greater exodus of expatriates. According to the poll, 44 per cent and 23 per cent of expats from those two markets, respectively, are considering returning home.

Meanwhile, among the minority expatriates that left Singapore amid the economic crisis, 28 per cent had to do so because their employment contracts were shortened. This was also higher than the global average of 15 per cent.

Although expats here are staying put, they are spending less. The survey found that two-thirds of the expats who stayed on had reduced their spending, especially on luxury items.
This is despite the fact that 47 per cent of those surveyed have more than $4,000 in disposable income.

“Our expat clients have told us that reductions in rent over the last nine months have increased their disposable income,” said HSBC Singapore head of personal financial services Sebastian Arcuri.

“However, due to the uncertain economic times, most of them are opting not to spend this increase in their income. Instead, we are seeing more of our expat clients use the additional funds to make provisions for their future needs as well as those of their families.”

Couple sue NTUC Income over reverse mortgage deal gone sour

2009-07-28T13:40:00.000+08:00

A couple are suing NTUC Income – in what is seen as a test case – over a reverse mortgage deal in which their property was sold amidst falling property prices.

Derek Chua, who is in his 70s and his wife Colleen Ng, who is in her late 50s, claim they lost their matrimonial home at Upper Serangoon in 2006.

NTUC Income demanded repayment of a loan procured in 1997 under a reverse mortgage, and the couple claim they had to sell their home to repay it, according to a writ of summons filed earlier this month and seen by BT.

The company’s chief financial officer Jeffrey Lee said in an emailed statement that NTUC Income had been ‘more than reasonable’ in trying to help the borrowers and that the couple had been advised on the terms of the deal.

The couple claimed that the 1997 reverse mortgage valued their house at $2.1 million, and based on a loan to valuation ratio of at most 80 per cent, they were given $495,000 cash to pay off their previous mortgage and payments of up to $2,000 a month.

In May 2004, the couple were told the value of their house had dropped to $1.1 million and they were in breach of the 80 per cent loan to valuation limit, based on the outstanding loan amount of $926,000.

According to the couple, they were told to top up $46,400 to bring the ratio down to the 80 per cent limit, and their monthly payments of $2,000 were reduced in steps to $1,500 from October that year.

A year later, in October 2005, NTUC Income said the outstanding loan, at $1.014 million, exceeded the 80 per cent limit based on the property value of $1.15 million. The couple were told they would get just $300 a month until June 2006, after which the company would ‘exercise (its) right to recall the property for auction sale’. The couple could also procure a buyer on their own or find another place to stay, according to a letter from NTUC Income, the couple said.
By then, the couple owed $1,045,802.91. On June 30, solicitors for NTUC Income sent the couple a letter demanding repayment or else face legal proceedings.

The couple handed over possession of their property on Aug 31, according to their writ.
The property was later sold for just over $1 million, leaving an alleged shortfall of about $55,000, which the couple were asked to pay.

They claim that if not for NTUC Income’s letter, they would not have sold the property – which in 2008 was again sold for about $1.5 million, the writ says.
NTUC Income has yet to file its defence.

The couple have engaged senior counsel Michael Khoo through legal aid. NTUC Income is represented by Rodyk & Davidson.

Source : Business Times – 28 Jul 2009

The cybertect

2009-07-28T13:39:00.002+08:00

FED UP with the view outside your apartment window?
Fancy being transported to the buzz of a New York street instead?
If you live in one of James Law’s “intelligent” apartments, you would be able to – literally – change the view outside your window to one from a variety of cities – in real time.
Flashback to the first day of the new millennium, when James, an architect, announced he wasn’t going to be an architect any more.

The then 30-year-old wanted to be known as a “cybertect”.

James had thought long and hard about where he and architecture were headed, and decided it was as good a time to launch his vision for the future.

“Cybertecture”, the chairman and chief cybertect of the eponymously-named firm tells me, is a merging of two words – cyber (to mean new innovation) and tecture (to mean the fabric of our world).

“‘Cybertecture’ is a new way that we will design our world, whether it is buildings, cities, technologies, systems, communities … (to) bring out the best in human wisdom and ingenuity for the betterment of mankind in the 21st century,” says James, 39.

This means the embracing of “clever and wise” technologies, he says, pointing – as an example – to the PAD Tower in Dubai in the United Arab Emirates which his firm James Law Cybertecture International is building.

The 26-floor building with 231 intelligent apartments was inspired by the iPod.
“This building keeps people healthy by detecting their health, keeps them connected to family by linking their homes digitally, keeps them linked to the world by changing colour in the home when emails, SMSes, voicemails arrive, keeps them connected to the world as a portal by linking over 100 real-time locations to their window.”

In the bathroom, for example, there is technology for the occupant to check weight, blood pressure and temperature.

His vision is not elitist, James says.

The sophisticated buildings his firm designs “do tend to be for the higher band of society” but the practice – which operates in Hong Kong, Dubai and India – is also working on public housing, and institutional projects for the masses.

A division in the company designs, builds and manufactures new mass technologies and solutions to help people be “happier and healthier”.

One of its first products is a mirror able to monitor a person’s health such as blood pressure and temperature, introduced at the recent Asia Pacific Commercial Property Awards 2009 in Singapore where his firm picked up an architecture award for “The Cybertecture Egg”, an intelligent building in Mumbai, India.

“I believe in destiny. Ever since I could remember, I was fascinated with design, technology, science fiction, movies, et cetera,” says James, who is Hong Kong-born and London-trained.
As a seven-year-old, he saw the movie The Fountainhead on television. In the film version of the Ayn Rand novel, actor Gary Cooper played an architect called Howard Roark, a champion of a new form of modern architecture.

“He stood up against a world of mediocrity and tried his best to make his vision come to life, and in doing so opened new opportunities and benefits for mankind.”

The young James knew then he wanted to be an architect. As one, he realised he wanted to go beyond conventional architecture. Hence “cybertecture”, a term he has had patented.
“Sceptics used to tell me I was wasting my time, and that I would be throwing away a fruitful career in conventional architecture. Others told me that there was no market … Thus, I will be bankrupt as I started with next to no money.”

Nine years and a slew of awards later, his answer now, just like before, is: “We should all believe in the future, and that in the future, all things will be different. If we do not accept and understand the potential of new concepts and technologies, we will miss the potential of a better future for mankind … and that will be our greatest mistake.”

Besides renowned architect Peter Cook and Gary Cooper’s character, his influences include George Lucas, Bill Gates, Google founders Sergey Brin and Larry Page, and Steve Jobs. And Captain James T Kirk and the Star Trek crew – for “going boldly where no man has gone before”.

Not a surprising influence for a man who believes that courage is his conviction. “Cultivating Cybertecture, inspiring it, pushing it” are all part of “the greatest project” for him, says the father of two, a boy aged 13 and an eight-year-old girl.

It will, he says, last him a life time.

“I never see projects as finite things … they are a journey.”

Source : Today – 28 Jul 2009

Trusts’ resilience boosts Reit index

2009-07-28T13:39:00.001+08:00

INVESTORS are heaving a sigh of relief – and putting some money back into the stock market – following better-than-expected results from some real estate investment trusts (Reits).
The FTSE ST Real Estate Investment Trusts Index has risen by almost 4 per cent on heavier trading volume since Reits started posting results a week ago. It closed at 494.82 yesterday.
Generally, results released so far ‘are either in line, if not slightly above’ expectations, said DBS Vickers analyst Lock Mun Yee.

Despite concerns about falling rents and occupancies in the office sector for instance, CapitaCommercial Trust (CCT) and K-Reit Asia have managed to post year-on-year increases in distributable income and distribution per unit (DPU) for their latest financial quarter.
CCT’s operating results exceeded the expectations of OCBC Investment Research analysts Meenal Kumar and Foo Sze Ming. It was ‘able to achieve new rents 45 per cent higher than previously signed rents, despite the 17.5 per cent quarter-on-quarter decline in Grade A office rent in 2Q 2009′.

Some retail Reits also displayed resilience amid the recession. Frasers Centrepoint Trust, which manages a portfolio of suburban malls, achieved a slightly higher DPU for the last financial quarter compared with a year ago.

And considering how the hospitality industry has been hit by the downturn and the spread of H1N1 flu, the year-on-year fall in Ascott Residence Trust’s DPU in the latest quarter did not surprise many. In fact, the market could have been comforted by the trust manager’s observations – that the sector is showing signs of stabilisation.

Ascott Reit’s unit price has gained more than 9 per cent since results were released last Thursday morning.

Of course, investors’ outlook could have improved even before they got a glimpse of the Reits’ results. The government recently revised its GDP forecast upwards and stock markets have been enjoying a long rally.

Ms Kumar and Mr Foo believe that ‘the price performance is more a function of outlook rather than Q2 performance’. Looking back further, the FTSE ST Real Estate Investment Trusts Index breached the 400-point mark in as early as May, and has risen by more than 16 per cent since.
While market forecasts have become rosier, a robust recovery has yet to take shape and investors could remain jumpy.

Ms Kumar and Mr Foo advise investors to continue paying attention to Reits’ balance sheets – the risk of falling asset values still exists and that could increase gearing levels.
DBS Vickers’ Ms Lock also said that Reits’ operational strength will come into focus, as they try to maintain earnings under ‘moderated economic conditions’.

Property upswing: Beware the exuberance

2009-07-28T13:38:00.000+08:00

THE real estate sector is stirring, though not lustily yet. There is every reason to support the rationale that the upswing this time is better moderate than precipitous. The lesson learnt of the irrational exuberance in the second half of 2007 was that asset price inflation that began to eviscerate purchasing power in Singaporeans’ foremost ownership ambition was socially fraught. The trap can be avoided. Now that the second-quarter GDP rebound and intermittent stock market rallies will provide real estate momentum, it is not too early to counsel caution.

But one should still be thankful. The property turnaround is tracking closely the people’s confidence, which has withstood better than thought the effects of the recession. There are also the multiplier gains for businesses providing appliances, furniture, electronic gadgets, home decor and renovation works. Although the Urban Redevelopment Authority’s monitoring showed that prices of private property declined again in the second quarter, what was noteworthy was that the slower rate of quarterly dip (4.7 per cent against 14.1 per cent) mirrored the improved buyer sentiment evident since February. In the HDB market, confidence has been more pronounced as prices and values stayed up through the worst of the economic slump.

Real estate companies have a responsibility to steer the recovery along a steady path that will bring them sustained earnings while keeping condominiums and flats affordable. The temptation to raise prices too sharply and quickly to catch the crest of the wave (it is not rolling fast yet) must be resisted. Precipitate repricing when the market is still tentative will set the recovery back – then it will be a case of all fall down. Property consultancies for their part should stay true to their ethical principles to not talk up the market and drive fear into people waiting to time their purchases correctly. So far, the actions of these two market catalysts have been mainly responsible. Long may this continue.

And buyers? They should never give in to the unwarranted fear of ‘missing’ their entree in a rising market. The evidence shows that HDB upgraders, en-bloc sellers and middle-aged types with savings have been the dominant buyers. Young couples with neither the CPF cache nor dependable careers can be expected to dive into the private market soon. They should stay well clear. The HDB is created for them as a step-up ladder. This cautionary tale may require review when rich foreigners and funds start buying sight unseen, as in 2007. Even then, prices can get out of whack only to the eventual dismay of developers – to say nothing of bona fide home owners.

Source : Straits Times – 28 Jul 2009

Suburban condos drawing buyers

2009-07-28T13:37:00.000+08:00

IN THE latest sign of the buoyant suburban property market, home hunters in Ang Mo Kio have been submitting cheques to buy homes at prices rarely seen outside Singapore’s prime central areas.

Buyers are said to be paying prices starting from $1,150 per sq ft (psf) for the upcoming 329-unit Centro Residences by Far East Organization.

This means two-bedroom units cost more than $800,000, while three-bedroom apartments will cost $1.1 million and above.

Consultants said the Centro Residences is one of the few 99-year leasehold projects in the suburban areas that has crossed this level.

Jones Lang LaSalle’s head of South-east Asia research, Dr Chua Yang Liang, said he was ‘a bit shocked’ by the pricing.

‘I’m afraid at this moment there’s a lot of euphoria, so there will be demand for this project even at this price,’ he said.

Plus points for the project include its location in a popular mature estate right next to the Ang Mo Kio MRT station, as well as its proximity to international schools.

But Dr Chua voiced concern over the ‘long-term sustainability of this pricing’, saying that upgraders may not be able to afford it.

At another suburban condo, Optima, located next to the Tanah Merah MRT station, more than 40 people lined up yesterday afternoon to stake claim on the 297 units for sale, even before the showflat opens on Friday.

Many of those in the Optima queue were property agents holding places for their clients with blank cheques in hand.

However, some in the queue were possibly property agents lining up with a view to buying properties for their own investment purposes.

Pricing for the 99-year leasehold project has not even been finalised, according to developer TID, a tie-up between Hong Leong Group and Japan’s Mitsui Fudosan.

Agents estimate that prices will be about $750 to $850 psf, with two-bedroom units going for about $600,000 to $700,000 and three-bedroom units from $700,000 to over $800,000.
They say buyers are so keen on the units that they have submitted blank cheques for them to fill in the amounts once the price list is available – a fairly common tactic in a boom market, and one that has resurfaced in recent weeks.

TID was alerted to the existence of the queue at about 5pm yesterday. At 10pm last night, TID representatives told those in the queue to go home, saying that the queue would not be recognised. The queue soon dispersed.

‘We’re not going to sell anything until Friday,’ a Hong Leong spokesman had said earlier. A preview would be held for Hong Leong and TID staff on Thursday.

Last week, Hong Leong said in a press release that more than 1,000 inquiries have come in for Optima, which it said was ‘the last condominium site available in the vicinity’ of the Tanah Merah area.

With developers starting to tentatively raise prices for projects on the back of strong demand, Jones Lang LaSalle’s Dr Chua warned that these price increases ‘need to be supported by economic growth or wage growth in the long term’, or they may lead to ‘excess inflation’ and a property bubble.

Far East will start its preview of Centro tomorrow and will release two-bedroom and three-bedroom units. Agents say some buyers have already written cheques to register their interest.
One reason for the relatively high price of Centro is the cost of the land. Far East bought the state-owned site in September 2007 for $601 psf of potential gross floor area, a record price for suburban condo land.

Over the weekend, suburban condos continued to do fairly well. Far East sold another 59 units at its Waterfront Key condo in Bedok Reservoir, bringing the total number of units sold to 278. The average price was $735 psf.

UOL Group also sold 70 units at Meadows@Peirce in Upper Thomson over the weekend, after selling 180 units on the first day of sales on Friday. The buyers, mainly Singaporeans, paid an average of $880 psf.

But weekend sales were slower at mid-tier projects closer to the city. Far East sold five units of Silversea in Amber Road at an average price of $1,380 psf, for a total of 59 units sold so far. At its Vista Residences in Thomson, seven more units were sold at prices starting from $1,100 psf, bringing total units sold to 144.

Source : Straits Times – 28 Jul 2009

No go for NTUC’s Sentosa resort

2009-07-24T12:39:00.001+08:00

THE entertainment arm of the National Trades Union Congress (NTUC) has put the brakes on a $45 million resort project on Sentosa.

NTUC Club unveiled plans for the Palawan Beach resort in 2005, and the 200-unit development was to be ready in 2008. But by September last year, the project was still under review.
A joint statement yesterday by NTUC and Sentosa Development Corporation (SDC), which manages and promotes Sentosa Island, put an end to the wait.

‘Due to the rising land premium and construction costs, NTUC Club Investments (NCI) has reviewed the initial plans and concluded that it is no longer viable to continue with the project,’ the statement said.

Both parties have a ‘good understanding about the decision’, it said. SDC will review the site for future development.

As the integrated resort edges towards completion, visitor-number projections may have increased, leading to a higher land premium, property consultant Nicholas Mak suggested.
SDC could consider raising the commercial component of the site to make it more attractive to bidders, he added.

Earlier reports cited surging construction costs as a factor delaying the project’s progress. In September last year, NTUC Club that said it was ‘reviewing the concept and plans of the resort’.
NTUC Club had hoped to offer union members an affordable holiday spot – the resort would have had facilities such as a spa, an infinity pool and free wireless broadband Internet access. It would also have been near the upcoming integrated resort.

Source : Business Times – 24 Jul 2009

Results for two Reits paint different scenarios

2009-07-24T12:38:00.002+08:00

TWO real estate investment trusts (Reits) – CapitaRetail China Trust (CRCT) and Ascott Residence Trust (ART) – posted sharply differing second-quarter results yesterday.
ART’s distributable income lost 17 per cent to $11 million while CRCT’s gained 14.2 per cent to $12 million, compared to the second quarter last year.

CRCT owns eight retail malls in China. Its first-half distributable income was $25.3 million, a 31 per cent rise from last year. First-half distribution per unit (DPU) went up by 25.5 per cent to 4.08 cents. Its second-quarter DPU gained 0.24 cent to 1.94 cents. Unitholders will be paid on Sept 25.

Second-quarter gross revenue rose by 15.4 per cent to $30.4 million, due to a stronger yuan and higher occupancy in Shanghai’s Qibao Mall and Xinwu Mall in Anhui province. First-half gross revenue rose 23.4 per cent to $60.8 million.

Rental reversions were stable, with 79 new leases and renewals signed at 0.3 per cent below previous rental rates. It has locked in over 90 per cent of gross rental income with committed leases.

CRCT Management chairman Victor Liew said the firm was ‘confident in providing our unitholders with a sustainable and stable distribution for 2009′, adding it would benefit from the anticipated Chinese economic recovery.

ART, which owns serviced apartments in countries such as Singapore, Japan and the Philippines, suffered a 20 per cent fall in first-half distributable income to $21.9 million. Its second-quarter DPU lost 18 per cent to 1.79 cents, and first-half DPU fell 21 per cent to 3.55 cents. The distribution date is Aug 28.

Gross second-quarter revenue fell 7 per cent to $43 million and first-half revenue slid 7 per cent to $85.1 million, as business travel cuts and oversupply in Beijing and Shanghai weakened demand for serviced residences in Singapore and China.

‘The global economic downturn continues to impact the Asian hospitality industry,’ said ART Management chairman Lim Jit Poh, adding that ‘there are early signs that the decline in hospitality demand is levelling out’.

ART expects a profit from this year’s operating performance but less than last year’s.
CRCT units gained two cents to close at $1.23 and ART units gained 1.5 cents to close at 84 cents.

Source : Straits Times – 24 Jul 2009

Isetan to open 6th store in Singapore

2009-07-24T12:38:00.001+08:00

Mainboard-listed retailer Isetan (Singapore) will open its sixth Isetan department store here by end-2010 in the upcoming Serangoon mall called nex.

To cost a reported $1.3 billion, the store is said to be Isetan’s first in 15 years in Singapore. It will occupy a total retail area of about 53,000 square feet over three floors, Isetan said yesterday.

Source : Today – 24 Jul 2009

Here’s a house – and a $50k mattress

2009-07-24T12:37:00.000+08:00

Hersing Corporation’s Harry Chua does not want to sell you just a house – he wants to sell you a mattress along with it, as well.

Two months after Hersing’s quiet opening of the Dozz Mattress showroom at its headquarters in Toa Payoh, the holding company of real estate agency ERA is going for gold.

At a private launch today with guests from the Ferrari and Lamborghini jet-set, it will be launching a mattress with a 22-carat gold cover from Italian brand Magniflex that will cost as much as $50,000.

This new venture will sit alongside Hersing’s eclectic assortment of dealings in the real estate, storage and money transfer industries.

In 2003, Hersing – which holds the local franchises for property broker ERA and remittance agency Western Union – set up a wholly-owned self storage firm, Storhub, which has since grown to five locations in Singapore.

To Jack Chua, Hersing’s president, the group’s move into mattresses makes perfect sense. ‘After buying a house, the customer needs a mattress. We’re just providing them with a customer service,’ he said.

With 18 mattress brands, the showroom has seen a 30 per cent increase in monthly revenue since its soft launch in May.

The group expects the showroom to break even this month, according to Hersing’s founder and chairman Harry Chua.

The latest feather in its cap where the mattress business is concerned is Hersing’s clinching of the exclusive distributor rights for the Magniflex brand for South-east Asia.

The group is currently looking into the mega-retail mattress store concept for its foray into the rest of Asia.

While $50,000 will get buyers a super king-sized Magniflex Gold – a personalised mattress with gold thread in its cover – normal Magniflex mattresses also retail at the showroom from a less eye-widening $1,298.

To date, more than 100 units of the Magniflex Gold have been moved globally, with the gold thread being touted for its anti-bacterial and anti-static qualities.

Despite the current downturn, Mr Harry Chua is unperturbed by the prospect of offering the Rolls Royce of mattresses to the Ferrari-owning crowd.

‘If you can pay a million dollars for a car, what is $50,000 for a mattress in which you spend eight hours a day? I think we will do very well. As well as Storhub,’ he said.

With the financial market currently displaying volatility, perhaps the monied classes can be persuaded to put their money in mattresses instead of under them.

Source : Business Times – 24 Jul 2009

Govt buildings leading green drive

2009-07-24T12:36:00.000+08:00

MR GRANT W. Pereira’s Forum Online letter, ‘Let’s walk the talk on green buildings’ (July 14), urged the Government to walk the talk by suggesting that ‘all new government buildings should be at least 10 per cent powered by solar energy’.

It is important to design buildings which will inherently consume less energy. This can be achieved through better building orientation, designs that minimise heat absorption through the building envelope and facilitate natural ventilation, and use of energy-efficient equipment and fittings.

The Building and Construction Authority’s (BCA) Green Mark scheme, which rates green buildings, emphasises such energy-efficient designs.

The incorporation of clean energy sources like solar panels is another solution to complement energy efficiency in buildings. BCA is currently test-bedding solar energy infrastructure at its new Zero Energy Building to ascertain its effectiveness and potential.

More HDB precincts will also have solar panels on their rooftops, as part of a $31 million largescale solar test-bedding scheme. The Government hopes this will encourage wider adoption of solar panels which will help lower the cost.

This two-pronged strategy of exploring clean energy supply and lowering energy demand is a balanced approach to overall energy conservation. Already, new buildings and existing buildings undergoing major retrofitting must achieve the minimum Green Mark certified standard.

The Government is taking the lead in the green building movement by committing its buildings to attain even higher Green Mark standards. Current buildings must attain at least Green Mark GoldPlus by 2020, and new air-conditioned government buildings must obtain the highest Green Mark Platinum rating, which will achieve at least 30 per cent in energy savings.

To date, the BCA Green Mark scheme has received strong support from developers and the industry.

From only 17 green buildings when the scheme started in 2005, we now have close to 300 buildings that have been certified to various Green Mark ratings.

There are also incentives available to encourage the private sector to achieve higher Green Mark ratings and energy savings in both new and existing buildings.

We will continue to review our policies and initiatives to ensure that Singapore’s future built environment remains green and sustainable.

We thank Mr Pereira for his suggestion.

Tan Tian ChongDirector, Technology Development Division Building and Construction Authority

Source : Straits Times – 24 Jul 2009

Agents’ ‘greed’ prompts warnings

2009-07-24T12:35:00.002+08:00

THE sizzling-hot property market and the rush by buyers to secure choice units have led some property agents to turn greedy.

Some agents are offering potential buyers their services to secure a booking for their choice units if they pay them a commission. This has prompted at least two marketing agencies to warn their agents against this practice.

This scheme is reportedly rampant at the freehold Meadows@Peirce development near Teachers’ Estate, which is supposed to be open for preview only from today.

Some marketing agents, however, told Today that it is the potential buyers that are offering commissions to agents to secure for them their choice units.

The fee earned by these agents is said to be about 1 per cent of the property value. With unit prices at Meadows@Peirce ranging from $900,000 to more than $1 million, these agents could potentially earn between $9,000 and more than $10,000 for each unit that they can secure for an eager buyer.

In an email to its 3,000 associates on Wednesday, ERA Realty Network, one of the marketing agents for the project, warned: “Please do NOT collect commission from buyers for Meadows@Peirce or any other projects. Anyone caught doing so will be terminated from ERA and no commission will be paid to the associates.”

ERA’s associate director Eugene Lim said the email was a “preventive measure”.
“We want to stop it before anyone receives a commission. It is not right,” he added.
Of late, ERA has been cracking the whip on its agents in an industry where complaints of rogue or ignorant agents are rife. Last week, ERA warned its agents against submitting transactions under the names of senior colleagues to garner a higher share of the commissions.

And in February, a couple successfully sued ERA after its agents profited from “flipping” an apartment they were engaged to sell. The couple had sold their apartment through ERA agent Jeremy Ang, but it turned out that the buyer, Ms Natassha Sadiq, was the wife of his boss Mike Parikh, a senior director at ERA. She immediately resold the unit for a $257,000 gain.

Another marketing agent for Meadows@Peirce also issued an email warning a few days ago. Knight Frank reminded its 700 agents that they cannot receive or ask for commission from buyers, cannot collect an entrance fee into the showflat and cannot ask for blank cheques, which can subsequently cause the buyer to feel pressured to make a purchase.

The company’s executive director Foo Suan Peng said: “This is something we don’t condone because it will give rise to conflict of interest.”

Agents Today spoke to said the “fee for secured booking” practice happens with other projects, too. One said there was “nothing wrong” for buyers to pay agents, as both are willing parties.
Singapore Accredited Estate Agencies chief executive Tan Tee Khoon disagrees. He told Today: “The agent receives a commission from buyers when they are already hired by the developer to provide the services. That is unethical.”

Source : Today – 24 Jul 2009

Some S’pore-listed REITS maintained or raised payouts

2009-07-24T12:35:00.001+08:00

DESPITE the economic recession weighing on the property market, some Singapore-listed real estate investment trusts (Reit) that posted their results yesterday maintained or raised their payouts for the quarter ended June compared to a year ago.

CapitaRetail China Trust

Distribution per unit (DPU) in the second quarter rose 14.1 per cent from a year earlier to 1.94 cents. Distributable income was $12 million, up 14.2 per cent on-year.

Net property income grew 5.8 per cent on-year. The Reit said it retained $0.8 million of the actual income available for distribution in a move to be prudent.

Frasers Centrepoint Trust

DPU rose 3 per cent on-year to 1.94 cents. The shopping mall trust’s net property income for the quarter grew 4 per cent from a year ago to $14.7 million.

As enhancement works at the Northpoint mall are ending soon, the Reit said it expects the changes to increase Northpoint’s average rent and full-year net property income by 20 per cent and 30 per cent respectively.

First Reit

The healthcare trust’s DPU edged up 0.5 per cent from a year ago to 1.92 cents. Distributable income rose 1.5 per cent to $5.3 million.

The Reit expects private nursing care demand to grow as the Government moves to allow MediSave to be used for palliative care.

Mapletree Logistics Trust

The quarter’s DPU slumped to 1.48 cents, down by over 27 per cent from 2.04 cents in the same period last year. This was “due to additional units arising from the rights issue in Aug 2008″, said the trust.

Distributable income rose about 27 per cent from a year ago to $28.7 million, while net property income jumped 19 per cent to $45.7 million.

Ascott Residence Trust

The serviced apartment Reit’s second-quarter DPU slid 18 per cent from a year ago to 1.79 cents. It said weaker demand in Singapore and China, as well as increased competition from new supply in Beijing and Shanghai, caused total distributable income to fall 17 per cent on-year to $11 million.

Source : Today – 24 Jul 2009

Profile of showflat visitors

2009-07-24T12:34:00.001+08:00

1 PURE INVESTORS

Many investors have been waiting for an opportunity to jump into the property market – but timing is everything, and they have been waiting until the price is right.

Mr Ashok Veerappan, a 56-year-old manufacturing executive, wants to buy a unit at Parc Imperial on Pasir Panjang Road as an investment. One-bedders of about 400 sq ft cost around $550,000.

Some investors are in no hurry to buy. Ms Eunice Lee, 39, a customer service professional, is keen to invest but is holding back as she expects prices to fall further.

Another investor, Mr Chan, in negotiations to buy a condo unit, said banks are paying little interest. ‘Stocks are volatile but real estate is quite stable. I don’t think prices will go down because external investors from countries like Indonesia and China are still there,’ he said.

2 RENTERS

Many of those who are renting their current premises and other first-time buyers are also considering buying property despite the downturn.

Condo renter Sundaresan N., 46, a bank employee, recently visited The Peak @ Balmeg showflat.

A three-bedroom 1,500 sq ft apartment costs about $1.4 million.

‘Rents have gone up so much, so it makes sense to buy, but I will buy only if the price is right – I have no problem waiting and trying to squeeze a lower rent out of my landlord.’ He has been seriously searching for six months.

Mr Eddie Koh, 40, who owns a cleaning company, is renting a condo unit but is thinking of buying his own place to live in. ‘If prices are not very high, then it’s worth it, like now,’ he said in Mandarin.

3 HDB UPGRADERS/LONG-TERM INVESTORS

Some HDB upgraders want to buy property for both residential and investment purposes. Mr H.G. Cheng, a regional sales executive in his 40s, is keen to buy a unit soon and live there. ‘I’ll see in two to three years’ time whether to rent it out or stay on. If the price is high, I’ll sell it, otherwise I will live in it myself.’

He was viewing a showflat at Double Bay Residences in Simei, where units range from $850,000 for a three-bedder to $1 million for a four-bedder.

Mr E.C. Ho, 48, a construction industry worker, said his plan to buy a home is unrelated to the economy. ‘We are half-upgrading and half-investing. My family of three live in an HDB flat and we are considering buying a condo now only because we didn’t have enough money before,’ he said.

4 BROWSERS/SHOWFLAT-HOPPERS

Amid the furious buying, many people are just browsing at the showflats, curious about the recent property launches.

‘We happened to see so many developments all of a sudden, and thought we might as well look for one as a long-term investment and upgrade,’ said Ms Eileen Chua, a childcare centre worker in her late 40s with two teenage children.

Mr K. Leong, a 32-year-old banker who was at The Gale, is keen to buy but added: ‘I’m just trying to see the market pricing. There is a perception that the economy is getting better and that is probably why everyone is buying right now.’

Source : Straits Times – 24 Jul 2009

Eager buyers snapping up home deals

2009-07-24T12:32:00.000+08:00

THE current recession-defying surge in home sales is being driven by pent-up demand from local buyers with enough savings to swoop on lower-priced units and a determination to invest or upgrade.

These buyers are not acting on impulse but have been saving up for years.
Another key factor is the fear of missing the boat ahead of another property boom, The Straits Times has found after speaking to buyers and market analysts.

Last month, an all-time record of 1,825 private homes were sold, continuing a major upswing that started in February. The June figure exceeded that of August 2007 – the height of the last property boom.

On recent weekends, showflats have been crammed with families, couples and singles. Some want to buy a condo as an investment with prices still quite low; others wish to upgrade from HDB flats.

A few others have been renting condos in the hopes of picking up a bargain later, while another group is just browsing.

‘I think that now is the right time,’ said investor Therence Tay, an engineering firm owner in his 30s who bought a two-bedroom-plus-study unit at Changi condo The Gale on Sunday. He lives with his family in an HDB flat.

On average, such a unit is about 1,120 sq ft with a price tag of about $770,000, based on a price range of $650-$725 per sq ft (psf).

Mr Tay said in Mandarin that he had slogged for over a decade to save enough cash. ‘Interest is very low from bank savings now, so we might as well put our money somewhere more useful,’ he said.

A company chief operating officer, who asked to be known only as Mr Chan, 51, said he is in the middle of negotiations to buy a unit at Bukit Timah Road condo Ferrell Residences, where units are 1,840 sq ft on average and cost at least $3 million.

The Singapore permanent resident is mainly using his cash savings to buy the investment property. He will live there alone; his family lives overseas.

‘I missed the boat in the last boom,’ he said. ‘By the time I decided to buy, prices were already $1,800-$2,000 psf. By then it was out of reach, and I was kicking myself very hard.’
Property consultants say a combination of pent-up demand and lower prices has sparked this strong sales streak, in contrast to the previous boom.

‘The last property boom was fuelled by foreign demand for luxury and high-end homes from investors and speculators, which eventually filtered down to the mid- and mass-market segments,’ said Colliers International property consultant Tay Huey Ying.

Dr Chua Yang Liang of Jones Lang LaSalle said: ‘Some upgraders were excluded from the market during the last property boom due to high prices and there appears to be a correction now.’

Ms Chua Chor Hoon, a property consultant at DTZ Debenham Tie Leung, noted that the price gap between HDB flats and condos has narrowed.

For instance, an executive HDB flat in a prime location like Bishan costs up to $650,000, while some suburban condos with facilities are about the same price.

HDB upgrader Abdullah Muhamad, 50, a supervisor, who has a wife and four children, said that he wanted to buy a condo for his family while prices were still affordable.

He had saved for 20 years before buying a two-room condo unit on Sunday at Oasis@Elias in Pasir Ris, which had 190 visitors that day. Units there are going for $670 psf on average. Mr Abdullah’s unit cost him about $640,000.

‘We liked the facilities here, and were worried that property prices will increase further,’ Mr Abdullah said. Executive HDB flats in Pasir Ris have sold for over $500,000 in the past three months.

Also waiting for a good buy is Dr Phoon Kok Fai, 56, a professor at the Singapore Management University who is currently renting a condo.

He did not buy a unit in the last boom as he had other financial considerations on his plate then. But this year, Dr Phoon has set his sights on a Ferrell Residences unit, which he plans to move into with his wife.

‘This condo is within my reach and I have the security of a good location with reasonable value. I also sense that real estate prices have bottomed out,’ he said.

Many others have enough cash and are interested, but are in no rush. ‘In the last few weeks, buying sentiment has been very strong, but there is no panic,’ said Mr Eugene Lim of property firm ERA Singapore.

‘We can afford to wait,’ said prospective investor Raymond Ting, 40, who works in building maintenance and lives in a condo with his wife and 10-year-old son.

‘I expect prices to drop because there are so many new developments being released. What goes up will come down.’

A GOOD TIME TO BUY

‘I think that now is the right time… Interest is very low from bank savings now, so we might as well put our money somewhere more useful.’ – Mr Therence Tay, an investor who bought a two-bedroom-plus-study unit at Changi condo The Gale

Source : Straits Times – 24 Jul 2009
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Preview of two condo projects planned for next week

2009-07-24T12:31:00.000+08:00

One is next to Ang Mo Kio Hub and the other beside Tanah Merah MRT Station
TWO 99-year-leasehold condominium projects next to MRT stations are slated to be previewed next week – Far East Organization’s Centro Residences next to Ang Mo Kio Hub and TID’s Optima@Tanah Merah.

Prices at the 34-storey Centro Residences are tipped to start from $1,150 per square foot (psf). Far East bought the site at a state tender in September 2007 for $601 psf per plot ratio. That was a record price for suburban condo land.

Analysts reckon Far East’s breakeven cost for the project could be close to $1,000 psf.
They suggest that Far East is releasing the project, which is along Ang Mo Kio Avenue 8, to ride on the current home buying momentum but it may release only about 100 or so units initially and sell the rest as construction proceeds to extract higher prices progressively. The condo has a total of 329 units.

Far East is starting its preview on Wednesday evening and will release two and three-bedroom units.

A typical two-bedder of about 800 square feet could cost about $900,000, while a typical three-bedroom apartment of 950 sq ft may be priced on average at about $1.15 million.
As for Optima, beside the Tanah Merah MRT Station, market watchers suggest it could be priced at about $750-$800 psf on average.

They based this estimate on current average pricing for Waterfront Key in Bedok ($735 psf) and Dakota Residences ($900 psf) and adjusted for locational differences.

The 297-unit Optima will be a 14-storey project comprising one-bedroom studio apartments as well as two, three and four-bedroom apartments plus 18 penthouses.

Developer TID is a joint venture between Mitsui Fudosan of Japan and Hong Leong Group Singapore.

Another Hong Leong unit, Tripartite Developers, previewed The Gale along Upper Changi Road two weeks ago. The 329-unit freehold project, priced at $650 to $725 psf, is over 80 per cent sold.

With the release of Centro and Optima, the pipeline of suburban condos on 99-year-leasehold sites bought at state tenders will shrink further.

This will increase impetus on developers to trigger the release of sites on the government’s reserve list, analysts say.

Already, the government has announced the release of two sites from this list this week – at Chestnut Avenue and Dakota Crescent.

Source : Business Times – 24 Jul 2009

FCOT gets nod for rights, property buy

2009-07-23T12:50:00.002+08:00

ALL resolutions at Frasers Commercial Trust’s (FCOT) extraordinary general meeting, including its proposal to raise $214 million in a three-for-one rights issue and the acquisition of a property from its sponsor for $342.5 million, were passed by unitholders yesterday.

This confirms the $675 million in loans which FCOT earlier said it had secured from a consortium of lenders, on the condition that shareholders approved its proposed recapitalisation exercise.

The new loans, and proceeds from the rights issue, will be used to refinance a significant portion of FCOT’s existing debt, including all debt maturing this year, FCOT said in its June 30 announcement of proposed recapitalisation measures.

The rights issue had been widely expected as the trust’s gearing had risen to 58 per cent at the end of Q1 2009. The real estate investment trust (Reit) had gross borrowings of $945.5 million as at March 31, $624.5 million of which will mature in the second half of this year.

Showing its support, FCOT’s sponsor Frasers Centrepoint Limited (FCL), which has a deemed stake of 22.2 per cent in FCOT now, said that it would take up its entire pro rata entitlement of the rights units and is willing to subscribe for up to 32.7 per cent of all of FCOT’s rights units.
Unitholders’ approval yesterday confirmed that FCOT would buy Alexandra Technopark from FCL and pay for it by issuing convertible perpetual preferred units entitling FCL to a distribution of 5.5 per cent a year. FCL will also undertake the master lease for the property for five years, giving FCOT an annual rent guarantee of $22 million.

At the EGM, the shareholders also approved an amendment to expand FCOT’s current investment policy, allowing it to invest in real estate assets located in the Asia-Pacific region used for commercial purposes.

Source : Business Times – 23 Jul 2009

Keppel Land Q2 net profit rises 10.4%

2009-07-23T12:50:00.001+08:00

Property group will speed up launches as market recovers in S’pore and region
KEPPEL Land – which reported a 10.4 per cent year-on-year rise in second-quarter earnings yesterday – says it will speed up launches in Singapore and the region as the property market picks up.

‘With improved market sentiment, we plan to launch Madison Residences and The Promont in the second half of 2009,’ said group CEO Kevin Wong at a briefing. They will debut in 1-2 months’ time at market prices, which are hard to fix now because prices can move very quickly nowadays, he added.

For the second quarter ended June 30, Keppel Land posted a net profit of $58.2 million – up 10.4 per cent from a year ago. This was driven by a 34.4 per cent increase in sales to $249.9 million.

Reflecting the recent upturn in the property sector, Keppel Land’s performance was markedly better than it was a quarter ago. Its Q2 net profit was 57.7 per cent higher than that in Q1, boosted by a 60.3 per cent higher contribution from property trading.

These contributions came from local and overseas residential projects. Here, Marina Bay Residences, The Sixth Avenue Residences and The Tresor were some which did well. Also, Park Infinia at Wee Nam is almost fully sold. Buyers took up 26 units there from January to June at about $1,400 per square foot on average – some $500 psf more than when the project was launched in Q2 2005.

Keppel Land is still holding back on the Marina Bay Suites project and may launch it if the market improves further.

Keppel Land also sold over 1,440 units in China in the first half of the year and resumed sales at The Estella in Vietnam. The company will accelerate project launches in both countries.
Besides property trading, property investment also improved from the previous quarter, by 5.2 per cent. This came on the back of higher rental income from Singapore and a greater share of profit from K-Reit Asia.

Keppel Land noted that the office leasing market has become more active as the economy stabilises. Pre-lease negotiations have also begun for Ocean Financial Centre, and more leasing enquiries have come in for Phases One and Two at Marina Bay Financial Centre, which have pre-commitment rates of around 66 and 55 per cent respectively.

In contrast, earnings from fund management fell from Q1 while hotels, resorts and other businesses registered a small loss.

Keppel Land’s private fund management vehicle Alpha Investment Partners runs a few funds. Its Alpha Asia Macro Trends Fund raised $1.7 billion and has invested around 11 per cent of this. The portfolio includes a retail property in Tokyo.

As at June 30, Keppel Land’s net debt-to-equity ratio stood at 0.23. This fell from 0.54 a year ago after the company undertook a rights issue in April, raising gross proceeds of some $707 million.

Supported by a cash position of around $1.2 billion, Keppel Land said that its property development and fund management divisions are actively looking to acquire assets.

Keppel Land’s first half results were dragged by weak performance in Q1. For the half year ended June 30, net profit was $95.1 million, down 15.8 per cent from a year ago. Sales fell 13.8 per cent to $395.6 million. The company did not declare a dividend for the period.

In its best showing in more than a month, the counter yesterday gained five cents to close at $2.54.

Source : Business Times – 23 Jul 2009

CCT distributable income rises 33.2% for Q2

2009-07-23T12:49:00.001+08:00

Trust will pay unitholders DPU of 3.33cents for first half of this year
CAPITACOMMERCIAL Trust (CCT), one of the island’s biggest office landlords, has posted distributable income of $48 million for the second quarter ended Q2 2009, up 33.2 per cent from the same year-ago period.

For the first half of this year, the trust will pay unitholders a distribution per unit (DPU) of 3.33 cents (adjusted for its recent rights issue). On an annualised basis, the payout works out to 6.72 cents, reflecting a distribution yield of 7.72 per cent based on yesterday’s closing price of 87 cents.

Q2 revenue rose 34.4 per cent or $25.6 million year-on-year to $99.97 million, due mainly to the acquisition of One George Street and Wilkie Edge as well as higher rental income due to positive rent reversions. Net property income improved 42.2 per cent to $73.3 million.

First-half gross revenue of $197.4 million was 35.6 per cent above that in the same period last year. CCT achieved net property income of $143.2 million in H1 2009, around 42 per cent higher than the same year-ago period. More than half of this increase came from acquisitions and the rest from organic growth.

The H1 2009 net property income was 4.3 per cent above the trust manager’s forecast, due largely to higher contribution from Capital Tower, 6 Battery Road, Starhub Centre and Market Street Car Park and the 60 per cent interest in Raffles City, offset partly by lower contribution from One George Street, Robinson Point, Bugis Village and Wilkie Edge. The trust also benefited from lower property tax, utilities and maintenance expenses. As well, borrowing costs were $14.1 million or 22.4 per cent lower than projected due to lowering borrowings and lower average cost of funds than forecast.

Of the $804.2 million net proceeds raised under CCT’s recent one-for-one rights issue, $664 million were used to repay part of CCT’s borrowings on July 3. Following this, gearing has been trimmed to 31 per cent. CapitaCommercial Trust Management Ltd said it can use up to $140 million of the remaining rights proceeds to repay much of the $235 million borrowings due next year.

In addition, the trust has an untapped balance of $665 million from its $1 billion multicurrency medium term note programme and about $3 billion worth of unencumbered properties – giving it enhanced financial flexiblity.

With its balance sheet bolstered from the rights issue, the immediate priority for CCT going forward is to ‘continue to focus on strengthening our fundamentals through astute asset management and prudent capital management to entrench CCT’s competitive edge’ said CapitaCommercial Trust Management Ltd’s (CCTML’s) CEO Lynette Leong.

In May and June this year, renewals and new leases for nearly 140,000 sq ft or 4.1 per cent of the trust’s portfolio net lettable area were inked at rental rates 45 per cent above the previous rent levels for the space involved on a weighted average basis.

As at end-June 2009, 92 per cent of this year’s forecast gross rental income has been locked in with committed leases.

Analysts expect challenging times ahead for office landlords like CCT amidst the massive new office supply to be completed in the next few years from a slew of projects, including Marina Bay Financial Centre, Ocean Financial Centre and 50 Collyer Quay.

However, Ms Leong argued that there is still possibility of positive rental reversion for CCT given that the average monthly passing office rent for its portfolio of $8.14 per square foot as at Q2 is below the average monthly market rental values – of $8.60 psf for prime office space and $10.15 psf for Grade A space as at Q2.

Source : Business Times – 23 Jul 2009
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Another condo site to go on sale

2009-07-23T12:48:00.000+08:00

URA gets offer for 99-year leasehold site on reserve list at Dakota Crescent
For the second time this week, a 99-year leasehold condo site on the government reserve list has been triggered for launch.

Urban Redevelopment Authority said yesterday it has received a successful application for the 1.7 hectare site, which is located at Dakota Crescent and is next to the Dakota Residences condo being developed by Ho Bee.

The developer that successfully applied for the latest plot to be released has undertaken to bid for the site at a minimum $130 million, which works out to about $200 per square foot of potential gross floor area.

This is 62 per cent lower than the $524 psf per plot ratio (psf ppr) that Ho Bee paid for its site in June 2007. Ho Bee launched Dakota Residences at an average price of about $970 psf last year.
It relaunched the project a few months ago at an average price of about $900 psf. URA’s monthly developer sales figures for June show a total 27 units were sold in the project during the month at a median price of $870 psf.

Knight Frank chairman Tan Tiong Cheng reckons the top bid for the site could be about $350 psf ppr, which would work out to a breakeven cost of of slightly below $700 psf. ‘Bidding should be hot.

‘The site is next to Dakota MRT station and fronts the Geylang River. And it’s in a proven location,’ he added.

Based on URA statistics, Ho Bee had sold about 60 per cent of the 348-unit Dakota Residences as at the end of last month.

Earlier this week, the Housing & Development Board (HDB) said it will launch the tender for a 99-year leasehold site for a condominium development at Chestnut Avenue on the reserve list after receiving a successful application.

Following up on that announcement, HDB said yesterday that the tender for the site will close at noon on Aug 19. That plot was also from the government’s reserve list, and its launch follows a successful application by an unnamed party undertaking to bid at least $62 million at the tender, which works out to $120.83 psf ppr.

Mr Tan expects developers to trigger launches of more residential sites from the government reserve list, as it offers a good source of land for developing entry-level condos catering to HDB upgraders.

‘Right now, a lot of developers are focusing on the mass market; they’ve seen a recovery in the low end and it seems a safer bet. They may already have enough stock of high-end sites,’ he added.

Locations of residential sites in the second-half 2009 reserve list include Tampines, Jalan Jurong Kechil, Upper Thomson Road, Bishan St 14 and Serangoon Avenue 3.

Source : Business Times – 23 Jul 2009

$15m revamp for Parkway Parade

2009-07-23T12:47:00.000+08:00

PARKWAY Parade, one of the first suburban malls in Singapore, is undergoing an extensive $15 million revamp.

The renovations will add an annex block and an alfresco dining area to the popular shopping centre in Marine Parade.

The revamp, which began three months ago and is set to be completed in October, will integrate part of the mall’s ground-floor area – previously occupied by tenants like fast-food restaurants Burger King and Kentucky Fried Chicken – with its 720 sq m outdoor refreshment area.
Before the changes, the outdoor area housed food outlets and cafes such as Long John Silver’s and Starbucks.

When completed, the new wing will be air-conditioned and will feature new tenants, including an outlet of the Western casual dining chain New York New York and Pu Tien Restaurant, which serves Heng Hua cuisine.

To cater to Singaporeans’ love affair with food, more food and beverage outlets will be added and the alfresco dining area will be set up on the second level of the new wing. The rest of the mall will also be spruced up.

New floor tiles will be added to make it look brighter, while waterless urinals will be installed.
Parkway Parade, which turned 25 in March, sees about 1.7 million shoppers each month.
The main reason for the revamp, said its property manager Lend Lease, is to allow the mall to ’stay ahead of the competition…especially in the face of increasing competition from malls in the East and the others in the Orchard belt’. Several new shopping centres have opened this year, including Tampines 1, Orchard Central and Ion Orchard.

Parkway Parade, which has six floors of shops and a 17-storey office tower, opened in 1984. Once touted as the biggest shopping complex here, with a total floor area of 123,000 sq m, it was very popular at the start.

However, when MRT trains began running in 1987 – making it much easier for Singaporeans to travel from the suburbs to areas like Orchard Road or to other suburban malls – the centre lost some of its sheen.

Lend Lease, which took over management of the mall in 2000, carried out development works seven years ago, bringing in new tenants like Giant Hypermarket and upgrading parts of the centre.

Retailers at the mall are hoping the latest upgrade will give business a shot in the arm.
Ms Regine Lim, owner of the Nail De Classic salon, who has been a tenant there for seven years, said business has been hit this year because of the recession and recent H1N1 fears.
Young East-side dwellers such as student Byorn Tan, 14, are also looking forward to the new-look mall.

Said the Secondary 2 student: ‘Parkway has been there for as long as I remember. But there isn’t much to eat and do there, it seems to cater to older shoppers.
‘It will be more attractive if there are more cafes and fast-food joints for students to chill and hang out.’

Source : Straits Times – 23 Jul 2009

Finding that jewel of a house

2009-07-23T12:46:00.002+08:00

While most bungalow plots are in the central and eastern districts, they can be found anywhere in Singapore

IT’S not called house hunting for nothing. But if you find a gem of a home, the effort will be very much worthwhile.

Some of the more rewarding finds are big bungalow plots in areas outside central Singapore which, for one reason or another, have so far escaped redevelopment.

By definition, a bungalow here has to be on a site no smaller than 400 square metres and no less than 10m wide. This may be small compared with a Good Class Bungalow (GCB) – 1,400 sq m minimum – but it’s twice as big as a semi-detached plot and five times as big as an intermediate terrace (Type II) plot.

Most people associate bungalow plots with the few GCB areas in prime central districts. But at the turn of the 20th century, many of Singapore’s wealthy businessmen chose to build homes on the seafront – and it’s here that many of these bungalow plots still exist.

One such area is the East Coast. Propnex CEO Mohamed Ismail says Mountbatten and Siglap are good hunting grounds, where such plots may start around $700 per sq ft. ‘They make good investments because of the limited supply,’ he adds.

A large bungalow site in Mountbatten that was sold in recent years was Chan’s Ville, which belonged to the late Chan Ah Kow, patriarch of one of Singapore’s leading sports families.
The 55,000 sq ft site was acquired by SC Global for about $11 million in 2004, which worked out to be just $200 psf. In 2005, it was reported that the developer would add four bungalows to the site and sell them for about $5 million each.

About the time Chan’s Ville was sold, another bungalow in Mountbatten was sold for $11.8 million or $305 psf for the 38,662 sq ft site. And this site was redeveloped too.

Indeed, with many waking up to the opportunity for redevelopment, the number of large sites on the East Coast has been dwindling.

Still, there are other areas to hunt in, and Mr Ismail suggests Upper Thomson and Braddell Road.

Donald Han, managing director of Cushman & Wakefield, reckons there are about 20,000 detached houses in Singapore, not counting GCBs. Many are in District 15, but other areas include Sunset Way, Jalan Binchang, Westlake estate, Eng Neo Avenue, Faber Park and Serangoon Gardens.

But as Mr Han points out: ‘There is hardly enough supply to cater to demand.’
This demand comes from the desire of many Singaporeans to own a landed home.
As an investment, however, landed properties generally give a lower yield of 2 per cent per annum, compared with 3 per cent or more for condominiums, as bungalows are not as easily leased. ‘But landed properties tend to be closer to the hearts of owner occupiers and investors alike,’ Mr Han says.

William Wong, managing director of RealStar Premier Property Consultant, believes that while most bungalow plots are in the central and eastern districts, ‘there are quite a number of them and they can be found anywhere in Singapore’.

Occasionally, bungalow plots in unusual locations are offered by the government.
In 2007, the Urban Redevelopment Authority (URA) auctioned a 4,477 sq ft bungalow plot in Sembawang. After closely fought bidding, the plot sold for $940,000 or $209 psf.
Of course, Sembawang may not be quite the same as Queen Astrid Park – but not many will want to pay between $700 and $1,000 psf for a bungalow plot in a prime district.
What is important to note is that landed housing areas are strictly protected by urban design guidelines. For instance, if you do buy a GCB, you can be sure a condominium is not going to be built on the plot next to yours.

The same cannot be said about plots outside landed housing areas. Indeed, if you happen to come across a detached house sandwiched between condominiums, chances are the area has been gazetted for high-density living.

So before buying landed property – especially if it is outside a safeguarded landed housing area – make sure you check the zoning. This will reveal what can be built. For instance, Mr Wong says mixed zoning means that either terraced, semi-detached or bungalows can be built.

Another important consideration is height restrictions in particular areas. This can significantly alter the redevelopment potential of a site, especially if you intend to build a three-storey house when only two storeys are allowed.

In some instances, landed properties may be in areas that have been rezoned with higher plot ratios. A plot ratio of 1.4 is enough to see neighbourhoods of landed homes slowly redeveloped into apartment buildings. This means that even if most of the properties on the street are landed homes, any of them can be redeveloped as a high rise if the plot is big enough. Of course, for some this represents a windfall.

Steven Ming, Savills director for prestige homes, says the GCB market is extremely active. ‘And we can similarly expect demand for detached houses, even those outside GCB areas, to remain strong as well,’ he says. ‘Recent strong sales have been fuelled by vast liquidity, availability of cheap finance and a general belief that the worst of the global crisis is over and that the panic-selling phase has passed.’

Mr Ming believes that if current buying momentum continues, detached house prices can be expected to appreciate 10-15 per cent during the rest of the year.

Source : Business Times – 23 Jul 2009

Rental income boosts CCT’s first-half gains

2009-07-23T12:46:00.001+08:00

REAL estate investment trust (Reit) CapitaCommercial Trust (CCT) posted strong results yesterday and forecast a positive outlook for commercial rents to the end of the year.

The Reit’s second-quarter distributable income jumped 33.2 per cent to $48 million while first-half distributable income rose 29.9 per cent to $93.4 million. Both gains were said to have been driven by higher rental income and improved operating margin.

The trust owns high-rise commercial buildings like Capital Tower and Six Battery Road, and has a 60 per cent stake in Raffles City.

More than half of CCT’s leases due to expire this year have been renewed, said Ms Lynette Leong, chief executive officer of CCT’s manager.

CCT said that following its successful $828.3 million rights issue in May, it would not need any major debt refinancing until 2011.

After adjustment for the rights issue, CCT’s estimated distribution per unit (DPU) for the second quarter rose by 0.42 cent to 1.71 cents, from last year’s 1.29 cents.

First-half DPU increased to 3.33 cents from 2.58 cents.

Gross revenue leapt 34.4 per cent to $99.9 million compared to the second quarter last year, buoyed by CCT’s acquisition of One George Street and Wilkie Edge, plus higher rental income.
First-half gross revenue of $197.4 million exceeded last year’s by 35.6 per cent.

May and June’s rental reversion – the term used to describe the rental a new tenant pays or the renewed rental of an existing tenant – rose 45 per cent. This means that negotiated rents during those months were 45 per cent higher than expired rates.

And CCT secured new leases and renewals for 139,380 sq ft of space in May and June, with some 92 per cent of gross rental income locked in under committed leases as of June 30.
‘Singapore’s office market is still susceptible to downside risks,’ Ms Leong said, but noted: ‘The rate of decline in office rents has eased…amid better sentiment (this quarter).’

The trust expects positive rental reversion for the rest of this year and Ms Leong added that CCT was set to focus on managing existing tenants to keep occupancy high.

CCT distributes income twice a year and unitholders will receive their next distribution payment on Aug 28. CCT units yesterday closed one cent lower at 87 cents.

Source : Straits Times – 23 Jul 2009

KepLand to launch two projects soon

2009-07-23T12:45:00.000+08:00

TWO new residential projects will soon be launched by property developer Keppel Land (KepLand) in an indication of the rebound in market sentiment.

The firm has yet to launch any residential projects this year, unlike other developers which have launched projects week after week in recent months to capitalise on the new-found optimism.
KepLand said yesterday it will be launching luxury projects Madison Residences in Bukit Timah and The Promont at Cairnhill Circle in the next two months.

This comes only four months after it made the decision to defer the construction of Madison Residences in March, citing weak market conditions.

The Promont is due for completion this year, said the firm.

Group chief executive Kevin Wong said yesterday at its financial results briefing that as markets in the region improve, ‘we will accelerate our project launches in Singapore, China and Vietnam to achieve faster returns’.

The firm posted a 10.4 per cent increase in net profit to $58.2 million for the three months ended June 30, compared to the same quarter last year.

Revenue came in at $250 million for the second quarter, up 34.4 per cent from a year ago due to progressive sales from launched projects in Singapore such as Park Infinia at Wee Nam and The Tresor at Duchess Road.

Keppel Land’s growing footprint overseas also helped to boost turnover, as sales from projects in China and Indonesia were registered.

Overseas earnings accounted for 30 per cent of net profit, compared to 18 per cent for the same quarter last year, said KepLand.

The firm is determined to expand its presence in China, recently announcing its proposal to delist Evergro, a China-focused property group, to merge both entities.

It had offered 29 cents per share – a 16 per cent premium over Evergro’s last traded share price of 25 cents on the Friday before the announcement.

Shareholders can also opt for one new Keppel Land share for every seven Evergro shares they own. This plan will allow KepLand to ‘tap on combined operational expertise, industry knowledge and extensive networks’ for expansion in China, said Mr Wong.

KepLand had raised some $708 million in a fully subscribed, nine-for-10 rights issue at $1.09 a share in June.

This has improved the firm’s borrowing position, and it is now looking for land to buy, said its finance chief Lim Kei Hin.

For the first half of this year, net profit was down 15.8 per cent at $95.1 million from the same period last year because of poorer first-quarter sales arising from lower revenue recognition for projects in Singapore and overseas.

Overall, turnover was down 13.8 per cent at $395.6 million compared to the first half of last year.

Earnings per share for the half-year ended June 30 was 8.2 cents, down from 11.1 cents previously.

Net asset value per share stood at $2.29 as at June 30, compared to $3.39 as of Dec 31, 2008.
Keppel Land shares closed five cents up at $2.54 yesterday.

Source : Straits Times – 23 Jul 2009
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Sophia Residence sells 85% of released units

2009-07-23T12:44:00.000+08:00

GUOCOLAND Group’s Sophia Residence has drawn a strong response from property buyers here, with 85 per cent of its 138 released units sold thus far.

The 138 units included 100 units that were released during the official launch of the development last weekend. GuocoLand said it decided to release 100 units as the initial 38 units released earlier during the preview were all snapped up.

The units sold were a mix of studio, two-, three-, four-bedroom and penthouse units with selling prices ranging from $1,450 to $1,850 per sq ft.

The development features 272 freehold units. All studio and two-bedroom units have been snapped up, said GuocoLand.

Margaret Thean, executive director of real estate agent DTZ, pointed to Sophia Residence’s ‘extremely attractive’ location as the key draw.

Sixty per cent of the buyers are Singaporeans, while the rest are permanent residents and foreigners.

ERA president Jack Chua said that ‘foreign buyers are buying the units for their children’ due to the property’s proximity to institutions of learning, such as the Singapore Management University.

Additional units will be released this weekend.

Source : Business Times – 23 Jul 2009

Housing market shows classic recovery signs

2009-07-23T12:42:00.000+08:00

Subsales and foreigner purchases up in Q2; HDB upgraders’ share falls
Three classic signs of a recovery have emerged in the Singapore housing market. Subsales and foreign buying have accelerated while the share of HDB upgraders in the private home buying pie has declined.

The number of subsale deals for private homes has more than doubled from 414 in Q1 this year to 1,041 in Q2 and the median subsale price has also risen 18.1 per cent over the same period to $959 psf, based on Jones Lang LaSalle’s analysis of caveats lodged for private homes captured by URA’s Realis system as at July 17.

HDB upgraders’ share of total caveats, which had been increasing for six consecutive quarters since Q4 2007, slipped in Q2 this year as purchases by those with private addresses rose at a faster clip. This could be because Q2 saw more mid and mid-upper projects launched, compared with predominantly mass-market launches catering to upgraders in Q1, says Knight Frank chairman Tan Tiong Cheng.

The number of caveats for private homes lodged by foreigners, including PRs, nearly tripled – from 496 in Q1 to 1,418 in Q2. The increase outpaced a 103.9 per cent rise in Singaporean buying. As a result, foreigners’ share of private home buying rose from 15.5 per cent in Q1 to 20.5 per cent in Q2. The most popular districts among these buyers were Districts 9, 10 and 15 while the more sought-after projects included Rivergate and Martin Place Residences (district 9), The Arte (district 11), The Lakeshore in Jurong and Mi Casa in Choa Chu Kang.

‘Singapore properties are more affordable today than they were during the peak. Foreigners, like local buyers, are finding value in the local property market and looking at the upside potential,’ says JLL’s head of South-east Asia and Singapore research Chua Yang Liang, adding that the positive economic growth in China, India and Indonesia had nudged their citizens into investing here. He also observed a rise in purchases by Myanmar buyers.

Malaysians were the top buyers of homes in Singapore in Q2, making up 29.3 per cent of total caveats lodged by foreigners, followed by Indonesians (20.3 per cent share), mainland Chinese (14.9 per cent) and Indians (12.1 per cent).

Foreigners were drawn to prime district projects like Martin Place Residences in the primary market and Rivergate and Seaview in the secondary market in Q2, said CB Richard Ellis executive director (residential) Joseph Tan.

JLL’s head of residential Jacqueline Wong has seen more high networth individuals from India, Hong Kong and China looking to make their maiden property investments here. ‘They are not PRs and are looking at apartments 3,000 sq ft and above in the Orchard Road belt. They’re drawn by value; prices in the luxury sector are today about 15 to 25 per cent below the 2007 peak levels,’ she said.

Going ahead, foreign buying is expected to gain momentum, if the property recovery and regional economic upturn continue.

In the subsale market, the most popular projects transacted in Q2 were Rivergate (95 units), The Centris (46 units) and City Square Residences (45 units). Rivergate and Phase 2 of City Square Residences obtained Temporary Occupation Permit (TOP) in March, and Centris, this month.

The median subsale price in Rivergate has risen from $1,200 psf in Q1 to $1,400 psf in Q2 and that for The Centris increased from $587.50 psf to $625 psf. City Square Residences’ median subsale price rose from $791 psf to $893 psf and that for The Sail @ Marina Bay, from $1,321 to $1,623 psf.

Subsales are secondary market deals in projects that have yet to obtain Certificate of Statutory Completion. This could be three to 12 months after the project gets TOP. Market watchers note that there’s typically more sales activity around the time that projects receive TOP.

‘There are buyers who like to have the finished product because it’s ready for immediate occupation or renting out,’ says Knight Frank chairman Tan Tiong Cheng. Sellers who bought for investment, especially on Deferred Payment Scheme, can also cash out.

Analysts reckon that with a significant number of private homes heading for completion in the next 18 months, more subsale transactions can be expected.

Buyers with HDB addresses accounted for 44 per cent of total caveats lodged for private homes in Q2, down from the 56 per cent share in the preceding quarter.

The fall in proportion of purchases by HDB ugpraders was due to a bigger Q-on-Q jump of 174 per cent in Q2 in caveats lodged by those with private addresses, compared with a 70.8 per cent increase in caveats lodged by those with HDB addresses.

The most popular projects among HDB upgraders in Q2 were Mi Casa, with 145 caveats at a median price of $630 psf, followed by Double Bay Residences (106 units changed hands at a median price of $665 psf) and The Arte, (87 units transacted at $899 psf median price).
The share of HDB upgraders may slip further in coming months as the proportion of mass-market developments among project launches lessens as developers release more upper-end condos.

Source : Business Times – 23 Jul

HSBC home loans offer ‘portability’ perk

2009-07-22T12:59:00.001+08:00

HSBC borrowers with either the bank’s Singapore Interbank Offered Rate-pegged (Sibor) loyalty package or its Sibor-pegged relationship- based loan package will now not lose any of the time-related loyalty discounts they have earned when moving house.

The bank has launched a loan ‘portability’ feature for those with these packages. This allows them to carry forward the discount level they have reached to their new home. Customers can sell their property and continue from where they left off on the sliding interest rate spread offered to them under the two specific loan schemes.

For the relationship-based home loan package, HSBC customers see a year-on-year decrease in the interest spread until the 10th year, when it hits zero.

The Sibor-pegged loyalty home loan deal cuts the interest rate spread at the end of every anniversary year, up to the third year of the loan.

The two packages – both launched last year – are designed to reward longer-term borrowers.
Typically, loans pegged to the Sibor – the rate at which banks lend cash to one another – have either flat or increasing interest rate spreads.

Under the new arrangement, if a customer has a Sibor-pegged relationship-based loan and sells his property in the third year of the loan when the interest rate is 1.69 per cent – Sibor plus 1 per cent, assuming Sibor is 0.69 per cent – he can enjoy a first-year loan interest rate of 1.69 per cent on his new property.

From there, he can go on to enjoy the year-on-year decrease in interest rate spreads offered by his original Sibor-pegged deal with the bank.

Mr Sebastian Arcuri, HSBC’s head of personal financial services, said that loan portability meant customers can enjoy the flexibility to redeem their loan, buy a new home and still benefit from a lower interest rate spread year on year.

He added that for customers to enjoy this benefit, they must have a total balance of $100,000 and above in deposits, investments and insurance with HSBC. They must also finance their new home loan, on a completed property, within six months.

Source : Straits Times – 22 Jul 2009

Corporate governance: In Asia, S’pore is #1

2009-07-22T12:58:00.000+08:00

SINGAPORE has been ranked No.1 in Asia in terms of corporate governance in a new research report just when the issue is front and centre for global investors.

The report, by Swiss banking giant UBS and global corporate research firm GovernanceMetrics International (GMI), heaps praise on the way the Republic oversees the corporate and financial sector.

But there is some criticism, too – with suggestions that disclosure and shareholder rights could be improved here.

The research report, the first of its kind by UBS and GMI, comes after the global financial crisis and various corporate scandals helped bring sharp focus to issues of corporate governance.
A handful of Singapore-listed China companies have been rocked by scandal in recent months – though none on the scale of IT giant Satyam, which is at the centre of India’s biggest ever fraud case.

The new report cited various factors for Singapore’s strength in corporate governance, such as a strong centralised leadership and government oversight via its investment arm Temasek Holdings.

Corporate governance can affect the share price, growth strategies and shareholder returns, said UBS managing director of investment research Bill Sohn.

‘A lot of the fundamentals of companies such as earnings and cash flow, in essence, are driven by the way companies are managed,’ said Mr Sohn.

For investors looking at the longer term, good corporate governance lifts shareholder returns, the report found. Firms with high governance ratings tend to outperform low-rated ones in periods over a year but no such link emerged over three to six months.

The study analysed nearly 700 companies in 10 Asian markets, taking into account factors such as board accountability, financial disclosure, internal controls, shareholder rights and directors’ pay.

It also considered broader socio-economic factors such as the business environment and regulatory developments.

The Republic’s banking and finance sector was the best governed of those surveyed due to tight regulations imposed by the Monetary Authority of Singapore. These include a 12 per cent capital adequacy ratio imposed on banks.

‘The strong regulatory framework, especially in banking and finance, puts Singapore in good stead,’ said GMI research director John Jarrett.

Singapore also scored well on disclosure of directors’ pay and board accountability but some areas needed improving.

For example, the nation still lags behind other developed markets such as Hong Kong in terms of shareholder rights and financial disclosure.

‘Singapore’s corporate ownership is characterised by a pyramid structure where one single entity holds the controlling interest in a chain of companies,’ said the report. This means power being exercised by one block of shareholders at the expense of other shareholders, it said.
Disclosure and enforcement of accounting standards still lag behind those in developed economies such as the United States, partly as the professional accounting body here does not face scrutiny the way its US counterpart does.

Unexpectedly, financial centre rival Hong Kong came in No. 6 in the ranking.
It lost out because of several factors, including strong family-ownership control within companies and its board of directors. Earnings are disclosed twice a year, as opposed to quarterly here.

The focus on corporate governance and fundamentals will grow more vital as an investment consideration as the world emerges from recession, said Mr Sohn.

Mr David Gerald, president of Securities Investors Association of Singapore said more has to be done to put the Republic on par with world’s best practice.

‘Corporate governance standards in Asia are pathetic. We’ve come a long way from 10 years ago but is still far from the developed markets such as US and Europe.’

Source : Straits Times – 22 Jul 2009

Fragrance to launch at least 6 more home projects in H2

2009-07-22T12:57:00.002+08:00

Group posts 11.4% rise in Q2 net profit to $17.7 million

FRAGRANCE Group says it intends to launch at least another six residential projects with about 480 units in the second half of this year.

It said this in its latest financial results statement, which showed it posted an 11.4 per cent year-on-year increase in net profit for the second quarter ended June 30 to $17.7 million. Turnover rose 33.1 per cent to $79.5 million.

For the first half, the group’s net earnings slipped 8.9 per cent year- on-year to $27.8 million despite a 15.5 per cent improvement in turnover to $130.3 million. The lower bottom line was partly due to lower profit margins by the property development business as a result of lower selling prices.

Earnings per share increased from 1.9 cents in Q2 2008 to 2.1 cents in Q2 2009. Net asset value per share rose from 15.3 cents on Dec 31 last year to 18 cents on June 30, 2009.

For Q2 2009, profit before taxation (PBT) from property rose 9.8 per cent year-on-year to $15 million and PBT from hotels increased 7.6 per cent to $5.9 million.

The group’s cash and bank balances stood at $25.7 million on June 30, 2009, up from $13.8 million on Dec 31, 2008. Its total borrowings decreased to $178.4 million from $212.1 million on Dec 31, 2008, mainly due to loan repayment relating to sold and completed projects, which was partly offset by new loans for development projects.

The group generated a positive cash flow from operations of $53.6 million during the first half of 2009. This arose mainly from the projects that were sold and completed during the period.
These proceeds were used to settle the borrowings pertaining to the sold and completed projects as well as purchase of property, plant and equipment.

Source : Business Times – 22 Jul 2009

HSBC offers new lure to keep home loan customers

2009-07-22T12:57:00.001+08:00

HSBC is offering customers of its declining-rate-spread home loans who sell their houses a chance to continue benefiting from lower interest rate spreads, if they take out a new loan with the bank.

The latest tweak to its variable-rate mortgage offering is aimed at persuading customers to stay with the bank, even if they sell their home and redeem their existing loan.

HSBC charges customers of its Sibor-pegged home loans the three-month Singapore interbank offered rate or Sibor, plus an extra margin or spread that declines after the first year.

When the bank launched its Sibor-pegged ‘loyalty’ home loan package last July, the spread was 0.75 percentage points above Sibor in the first year, 0.65 points in the second year and 0.55 points subsequently. The current spreads are 1.3 points for the first year, 1.2 points for the second year and 1.1 points subsequently.

In March this year the bank launched a new ‘relationship-based’ home loan package that charged a spread that started at 1.5 percentage points above Sibor in the first year, then declined by 0.075 point each year until the 10th year, when the spread fell to zero, before rising again to 1.2 points subsequently.

Since then, the spreads have been revised. They now start at 1.2 points in the first year and fall by 0.1 point each year until they reach 0.8 point, where the level stays until the ninth year. The spread then falls to zero in the 10th year, and rises to 1.3 points subsequently. Sebastian Arcuri, head of personal financial services at HSBC, said the response to both packages has been ‘extremely positive’, with three-quarters of the bank’s home loan customers choosing one of the two, instead of fixed-rate loans.

With the latest ‘portability’ feature, customers who sells their home and redeem their mortgage early – say, in the third year – and takes out another Sibor-pegged home loan with HSBC for a new property will pay the same spreads as before on the redeemed loan amount, instead of starting at the top rate. If the Sibor rises significantly, however, the overall interest rate paid by a borrower may still increase from one year to the next.

Mr Arcuri said the feature will help customers save on interest. ‘With loan portability, our customers can enjoy the freedom and flexibility to redeem their loan, buy a new home and still benefit from a lower interest rate spread on their home loan year on year,’ he said.

To qualify for the rate-spread discounts and the portability feature, customers must keep at least $100,000 in deposits, investments or insurance with HSBC.

Source : Business Times – 22 Jul 2009
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Let’s have a real estate relay

2009-07-22T12:56:00.001+08:00

THE race is on. Four months after National Development Minister Mah Bow Tan declared current real estate regulations untenable and hinted at mandatory standards for housing agents, the two factions in the industry are vying for regulatory clout.

On one side is the Singapore Accredited Estate Agencies (SAEA), which provides voluntary accreditation in what some have termed a ‘cowboy’ industry. On the other is the Institute of Estate Agents (IEA).

Since Mr Mah’s announcement in March, both the SAEA and IEA have met the authorities separately to argue why each is best placed to provide the industry with regulation.
Last Friday, the SAEA announced new initiatives to get more agents accredited, and the IEA responded by saying that it was unveiling a new entry-level course for property agents.
Given the rivalry between the two bodies, working out a new real estate regulatory framework would require egos to be carefully handled.

Yet there is no running away from the facts: Years of emphasis on ’self-regulation’ has not changed the situation substantially. The market has not matured; consumers are none the wiser. The number of housing scams have not receded; they have merely changed with the times.
When the market was buoyant, it was common to hear of housing agents brokering transactions that inflated the price of a flat to help buyers obtain larger loans than they merited. Now that prices are depressed, we hear of deals to under-declare the price of flats so that sellers who had used their retirement savings to pay for their properties need not refund the full proceeds into their account.

Some may point to the increasing number of agencies getting accredited to argue that the current system is making progress. But these numbers tell only part of the story.
The number of housing agencies accredited by SAEA has risen from 161 in 2006 to about 300 now. From 2006 to June this year, the SAEA handled 212 complaints, of which 39 per cent were referred to the accredited agencies involved for settlement. In the meantime, the IEA, whose membership has doubled since 2007 to 2,000, received 324 complaints from 2007 to 2008.
All these numbers are dwarfed by the number of real estate-related complaints that the Consumers Association of Singapore (Case) gets each year. Consumers made 1,100 complaints last year, 1,113 in 2007, and 991 in 2006.

In other words, consumers either do not know about the industry associations trying – but without authority – to regulate their players, or they do not trust these associations to give them a fair deal.

The picture gets more complicated when we examine how companies currently deal with attempts at regulation. Large housing agencies usually park their agents in two subsidiary or related companies. When new industry standards are introduced, the subsidiary which has agents with higher qualifications is submitted for scrutiny. The seal of approval awarded to the subsidiary, however, is often mistaken as a sign that the entire company has passed muster.
Hardly anyone bothers to ask if the agent they are dealing with is accredited because most do not look beyond the logo of the property group on a housing agent’s name card.

One can think up many ways to plug this loophole, but they do not address the key problem: that individual housing agents are not licensed. Someone who signs up with an agency is allowed to sell homes almost immediately.

In theory, the Inland Revenue Authority of Singapore licenses housing agencies, which in turn are supposed to keep tabs on the agents who sign up with them. In practice, few agencies have the guts to sack an unethical but high-performing agent.

The average Singaporean would probably demand that the Government should step in to license agents itself. But that would be too daunting a task given that there are close to 30,000 agents in the market. Setting up a government regulatory framework from scratch would be a waste of resources when there are industry players who are willing, and able to do the job – if only they are given enough teeth.

As it is, the three-year-old SAEA is trying its best to prod agents to take the Common Examination for House Agents and the lower-level Common Examination for Salespersons. But it has thus far accredited just 6,000 of the 30,000 individual agents in the market, because accreditation is not compulsory.

The IEA tries to keep its house in order by maintaining an online registry of agents from 360 participating companies and plugging its new entry level course on marketing and ethics.
Rather than reinvent the wheel, the Government might arm the industry groups by making regulation compulsory. It can set the broad parameters of regulation but let the industry groups handle the details.

But for this to work, we must deal first with the rivalry between the SAEA and IEA. Although both run programmes that overlap somewhat, they complement each other in many ways. The former, after all, is mainly an accreditation body for real estate companies, while the latter deals with agents on an individual basis.

It is not difficult to imagine the two bodies working seamlessly together to regulate agents, if the authorities play matchmaker and throw in some carrots for good measure.
With a little patience, the race between the two can be turned into a relay. And thousands of consumers out there will have one less worry when trying to buy or sell a home.

Source : Straits Times – 22 Jul 2009

Every transaction should be taxed

2009-07-20T12:46:00.001+08:00

THE tweak to property tax announced last week – from Jan 1 next year, individuals who have sold a property in the prior four years will be subject to income tax on any subsequent home sales – is more than equitable.

In fact, taxes should be imposed on every property transacted irrespective of the number of times a sale is carried out.

I was recently invited to a property launch only to be informed that all units had already been sold.

True to form, the in-demand units were advertised openly the following day for $100,000 more than the price at which the developer had sold them – when the project had not even been built.
What is capital gains tax compared to this sort of profit? It’s a pittance!

Many other countries have a capital gains tax policy. Singapore should also have such a policy or property prices will continue to skyrocket when the economy rebounds.

The four-year period where taxes are to be paid if more than one property is transacted should be reviewed periodically to ensure that house prices stay under control.

A check on the Internet shows that a 1,000 sq ft condominium unit in Australia or Canada goes for between $200,000 and $300,000, while in Singapore we might pay close to $1 million for an average home.

Could such prohibitive property prices be part of the reason why our brightest talents choose to move abroad or why expatriates fail to sink roots here?

It is time the authorities rethink Singapore’s housing policy so that a roof over our heads becomes more competitive and affordable.

Source : Today – 20 Jul 2009

Cost shouldn’t be sole factor in tenders

2009-07-20T12:45:00.000+08:00

I REFER to last Wednesday’s report, ‘Civil servants rapped for sloppiness’, and the remarks by Mr Khong Kiong Seng in his letter last Thursday, ‘Quality first’.

The Construction Industry Joint Committee shares the view of Mr Khong on the need to also consider quality when deciding on awarding tenders. While we do not have complete details of the reported case of rejecting the lowest bid, we would like to highlight to readers, in particular procurers, the ill effects of abnormally low tenders (ALTs) which can occur if procurers award projects with an overt emphasis on the lowest bid.

In Europe, the construction industry set up a working group under the auspices of the European Commission to study the harmful effects of ALTs more than 10 years ago. It found that ALTs had serious adverse effects, not only on the company that submits the ALT but also on owners and users of the works.

Companies which submit ALTs will suffer financial losses, leading to excessive pressures to save costs and reduce expenditure on quality, health and safety. These effects are passed on via the supply chain to sub-contractors, suppliers and employees. Owners and users are also affected as the works will most likely be substandard, leading to poor value for money.

We trust that government agencies’ procurers are aware that awarding a project to the lowest bid does not necessarily result in the best outcome.

Since end 2004, the Building and Construction Authority has advocated quality and price as the basis for selecting consultants and builders in public sector projects. A quality-and-price method of evaluating bids emphasises quality and capabilities of firms in addition to cost. This is a good practice which should be emulated by both private and public sectors.

Cost should not be the sole determinant of the winning tender in both public and private sector projects. The track record and the capabilities of the bidding firms should also be assessed to ensure optimal quality while keeping to the allocated budget of the project. This will ensure that owners and users get the best value for money in their projects.

Lee Bee Wah (Ms)ChairmanConstruction Industry Joint Committee

Source : Straits Times – 20 Jul 2009

Work begins on Yanlord’s 4b yuan development in Zhuhai

2009-07-20T12:44:00.000+08:00

YANLORD Land Group broke ground last Friday for its four billion yuan (S$849.7 million) residential and commercial development in Zhuhai.

Zhuhai Yanlord Marina Centre will have about 3.2 million square feet gross floor area, comprising high-end apartments, a retail mall, grade A offices and a five-star hotel, Yanlord said in a release.

The development, situated along the coastal front, will have five high-rise towers including a 45-storey, 180-metre tall integrated hotel and office tower, as well as four residential blocks interconnected via a four-storey shopping podium.

The project’s designer is US architectural and design firm NBBJ, which also did The Sail @ Marina Bay condo in Singapore.

Zhuhai Yanlord Marina Centre will feature an angled flat panel facade to mimic five open sails that will be interwoven with the surrounding natural features to accentuate a ‘waveform highlighting the visual extension of Zhuhai City’s coastline into the horizon’, Yanlord said.
The project will benefit from the economic developments in Macau, Guangzhou and Hong Kong. The development is strategically located next to the Zhuhai-Macau immigration checkpoint at Gongbei, the gateway into Zhuhai.

Yanlord chairman and chief executive Zhong Sheng Jian said: ‘When completed, Yanlord Marina Centre will complement our other investments and serve to consolidate our presence within the expanding real estate sector of the Pearl River Delta region.’

Currently, the group has a total gross floor area of about 5.4 million sq ft spread across key Chinese cities such as Nanjing, Chengdu, Tianjin and Zhuhai for the development of serviced residences, malls, Grade A offices and hotels.

The property developer last month unveiled plans to issue new shares and convertible bonds (CBs) to raise about half a billion dollars.

It said that it plans to spend at least half of the net proceeds of $497.7 million to fund new development sites, investments and other strategic alliances.

The remaining sum will be used for general working capital requirements.
Yanlord closed unchanged at $2.30 last Friday.

Source : Business Times – 20 Jul 2009

50-60 units sold at Volari, 120 at Waterfront Key

2009-07-20T12:43:00.000+08:00

PROPERTY sales over the past few days continued to post encouraging numbers.
City Developments is understood to have sold between 50 and 60 units of its 85-unit Volari@Balmoral condo at Balmoral Road. The 12-storey freehold project, priced at about $2,000 psf on average, will be built on the current Garden Hotel site. Residents will enjoy views of the lush greenery of the Goodwood Hill area. It was released for sale late last week.

Over at Bedok Reservoir, Far East Organization and Frasers Centrepoint have sold 120 units of Waterfront Key at an average price of $735 psf.

This pricing is about 5-8 per cent higher than the $680-700 psf average price at which the two developers are selling units at the adjacent Waterfront Waves, which was 78 per cent sold as of last Thursday. Both projects are 99-year leasehold.

As for their latest condo, the 437-unit Waterfront Key, 176 units have been released since Friday. Far East said that in terms of absolute quantum, prices range from $593,000 for a two-bedroom unit of 840 sq ft to $1.42 million for a 1,518 sq apartment with four bedrooms. The sole penthouse in the initial batch of 176 units is a 2,992 sq ft unit priced at $3.14 million.

Buyers of nearly all the 120 units sold did not opt for an interest absorption scheme (IAS), which comes at a 4 per cent price premium. The units released so far comprise a good mix of reservoir-facing, park-fronting and pool-view apartments. The 15-storey condo has a total of eight blocks.
Volari’s prices range from $1,800 psf to $2,300 psf. BT understands that an IAS is included in the price. However, the majority of buyers are understood to have opted for normal progressive payments, which means that they save 2 per cent on the pricing.

Developers have sold over 7,300 private homes in Singapore in the first six months of this year, surpassing the measly 4,264 units sold for the whole of last year. This has started to give developers some pricing power.

A seasoned property developer said that typically, price stability sets in when developers sell about 5,500 to 6,000 units over a 12-month period.

Increasingly, property analysts are predicting an increase in private home prices for the whole of this year and see the trend gaining momentum in 2010. Analysts’ estimates of full-year sales for this year range from around 9,000 to 14,000 units.

The strong home buying in recent months runs counter to the backdrop of wage cuts and job losses amid the recession.

Analysts credit the revival in home buying to developers’ strategy of chopping prices earlier this year, pent-up demand, the stock-market rally, a low interest rate environment, lack of trust among investors in financial instruments after Lehman’s collapse and the appeal of property as an anti-inflationary hedge.

Source : Business Times – 20 Jul 2009

A Low Interest Home Loan = A Good Home Loan?

2009-07-19T23:06:00.003+08:00

By: Zeng Han Jun, CPCG, Singapore

A good mortgage is not just about the rates. The lower rate does not translate immediately to being a good package. Let's think about it for a moment, if a bank decides to lower its mortgage rate for a particular home loan - much lower than its competitors. What does the bank earn? If the bank cannot earn from you at the designated low interest rate, could it try to think of any other method to earn from you? Of course it does!

Many of these low rate home loan are packaged with all sorts of terms and conditions. Here is a real life example: An ex client of mine got himself a really low interest rate mortgage. However that rate only stayed fixed for the first year, and he has to lock himself in with the bank for the next 3 years. The rate for the next two years was structured as floating rates, meaning that they could change anytime. If it goes down, you win. If it goes up, you lose. Simple as that.

Attracted to the first year rate, he could not resist the temptation and took up that package. You see, many instruments in the financial market are constantly changing and mortgages are one of those few that will be able to offer you something fixed for a certain period. Getting a well structured mortgage gives you a peace of mind and allows you to focus on other investments. Why give yourself more headaches by taking up something unfixed when everything around you is already so uncertain?

The rate went up drastically in the second and third year and ate into his existing income. As he had monthly saving plans, insurance and a couple of other stuffs to clear off, his disposable income had to take the hit.

It was not that bad for him, but you can imagine that things could get worse with a couple of unforeseen circumstances thrown in. What if he has to take a pay cut, and still has to clear all the debts and insurance? Throw in a son who is going to study in university this coming August. You get the idea.

Sure, you might be thinking of refinancing. A word of caution: Normally banks offer you low rate as a teaser, and they will lock you in with all sorts of terms, claw backs and conditions. If you decide to refinance after enjoying the low teaser rate, you will realize that you might have to pay off a hefty amount of "fine" to your existing financier before moving to the next one. Mathematically speaking, that move might not be so appealing after all.

The only way to save yourself from all these sort of troubles is to do it right the first time.

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2009-07-19T23:06:00.000+08:00

Property plays fall on tax concerns

2009-07-14T17:21:00.000+08:00

A PROPOSED tax change designed to make the rules clearer on profits made from the sale of property was still creating a stir yesterday about a week after news of it first broke.

Even though the Government has clarified that the proposal is not intended to stifle speculation, traders are still concerned that it might have a detrimental impact on the property sector.

Under the proposed change, an individual will escape tax on gains made from selling a property if he has not sold any other property over the preceding four years.

But there remain lingering fears among analysts that home buyers might interpret it negatively, despite government assurances that there are no plans to change the tax treatment of individuals selling more than one property within a four-year period.

Market watchers spent the weekend carefully gauging the mood at showflats. And, going by the carnival atmosphere witnessed by many, some analysts have concluded that sentiment remains positive – especially for condos targeted at mid-range buyers and HDB upgraders.

This positivity, however, has not allayed concern that the planned tax change – set to become law in January – may well dent the top-end of the residential market, where condos are invariably bought for investment purposes.

So it was not surprising to find property counters caught in a fierce tug-of-war between the bulls and bears as the tax-change debate continued to rage.

Among the property sector’s big losers of the day were City Developments which fell 20 cents to $8, CapitaLand which lost eight cents to $3.31, United Overseas Land which slipped nine cents to $3.21, and Wing Tai Holdings which was down four cents at $1.23.

Elsewhere, local banks were hit by selling activity as investors looked forward with some apprehension to United States lenders, such as Citigroup and JPMorgan Chase, reporting their quarterly earnings later this week.

DBS Group Holdings fell 22 cents to $11.42, United Overseas Bank lost 16 cents to $14.42, and OCBC Bank was down 20 cents at $6.86.

Given somewhat reduced investor appetites, even the telcos – which were being snapped up last week because of their high dividend yields – came under selling pressure. SingTel lost four cents to $3.12 and StarHub fell six cents to $2.13.

The general sell-off caused the benchmark Straits Times Index to plummet 41.34 points, or 1.8 per cent, to 2,266.64. Because of the lacklustre investor interest, only 1.05 billion shares worth $863.2 million changed hands.

Across the region, a general state of uncertainty saw both Hong Kong’s Hang Seng and Japan’s Nikkei-225 dropping about 2.6 per cent each.

Citigroup Investment Research noted in a report yesterday that funds investing in Asian markets suffered a net outflow of US$365 million (S$534 million) last week. Although trifling when compared to the second-quarter net inflow of US$13.2 billion, the outflow raised fears that it might signal the shape of things to come.

Source : Straits Times – 14 Jul 2009
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A whiff of growth after four quarters of contraction

2009-07-14T17:20:00.000+08:00

Q2 flash estimates today may finally buck the trend in on-quarter terms
After months in the red, economies across Asia are expected to report positive GDP numbers for the April-June quarter, starting with Singapore today.

Singapore’s Ministry of Trade and Industry is due to release early this morning flash estimates of the economy’s Q2 gross domestic product (GDP) growth, which economists widely expect to be not just positive but in double digits. But only in the seasonally adjusted, annualised on-quarter terms, which have so far seen four negative quarters since Q2 2008.

The year-on-year (y-o-y) pace will probably still, for the third straight quarter, spell contraction.

The advance estimates to be unveiled this morning are based on only two months’ data, not the full quarter. But seemingly strong April and May industrial output figures have spurred economists to put out fairly bullish Q2 forecasts in recent weeks, even revise up their full-year projections in some cases.

Apart from a lone negative forecast from Standard Chartered Bank, most of the Q2 quarter-on-quarter (q-o-q) estimates are in the double-digit teens, with Citigroup’s near-23 per cent pace about the most upbeat – until Daiwa Institute of Research’s forecasts came along over the weekend.

Daiwa’s Asia chief economist P K Basu’s ‘conservative’ Q2 estimate is 35 per cent q-o-q (adjusted) growth, which translates to minus 1.5 per cent y-o-y.

‘In fact, even minus 1.5 per cent maybe a little bit too low, because financial services and business services would both have grown at a fairly decent clip, construction would have grown a little over 10 per cent, and manufacturing actually grew in the first two months of the year,’ he told BT.

‘So I find it pretty difficult to see real GDP contracting at all in Q2. But, conservatively, I’d say minus 1.5 per cent because otherwise, the q-o-q would be something quite spectacular.’
Stock-market turnover rose 2.3 per cent y-o-y in Q2 after sharp declines in the previous two quarters, and bank credit continued to grow, he noted. And business services would also have been buoyed by the turnaround in real estate. Plus, a ‘better’ set of June manufacturing data would mean a GDP surge of 40 per cent q-o-q, he added.

‘Our top-of-the-street forecast for 2009 real GDP may need to be raised further!’ he said. Months ago, Mr Basu already forecast minus 3.3 per cent for 2009 GDP – against official projections of 6 to 9 per cent contraction – though Citigroup has recently upped its forecast to minus 2.7 per cent.

Macquarie Securities economist Rajeev Malik also just raised his full-year forecast by one point to minus 5 per cent. He sees the economy rebounding by 16.5 per cent in adjusted q-o-q terms in Q2, or minus 5 per cent y-o-y.

‘On our revised trajectory, y-o-y GDP growth will continue to improve, and is expected to return to the black in Q4 2009,’ says Mr Malik.

Also highly bullish – not just about Singapore but the region, particularly China – is DBS Bank’s David Carbon, who wrote in a report published yesterday: ‘It’s payback time. The V-shaped recovery in industrial production and exports in Asia over the past few months will show up in double-digit GDP growth in most of Asia in Q2 2009, starting this week with China and Singapore.’

He expects Singapore to report sequential GDP growth of 15-16 per cent for Q2, and China, 16-17 per cent. South Korea, Taiwan and Thailand are expected to follow in the weeks ahead.
But Stanchart, which is sticking to its off-trend bearish forecast for Q2, notes that both external and domestic demand remain weak.

‘We expect the services sector to be the main drag on economic growth in Q2 2009 while construction growth should slow in Q2 . . . the surprise on the upside could come from manufacturing,’ the bank said in a recent report.

In any case, it remains to be seen if an end to negative q-o-q numbers translates eventually to full economic recovery.

Source : Business Times – 14 Jul 2009

Recession over, strong V-shaped recovery seen

2009-07-14T17:19:00.002+08:00

THERE are tentative signs that Singapore’s worst ever recession is over and a strong V-shaped recovery is to follow over the rest of this year, according to HSBC’s Asian Economics report for the third quarter.

‘Unemployment is expected to peak at the end of this year at 4.2 per cent and then come down to 3.4 per cent at the end of 2010,’ said Robert Prior-Wandesforde, HSBC senior Asian economist, at a media briefing for Asian Outlook 2009.

‘For Singapore, we’re looking at negative 6 per cent GDP growth this year, towards the better end of the government’s forecast range. For 2010, we’re looking at positive 5.3 per cent growth.’
For Asia ex-Japan, GDP growth is expected to 4.2 per cent this year, and 6.9 per cent in 2010.
‘We are optimistic about the recovery and we see increased evidence that recovery has begun,’ Mr Prior-Wandesforde said.

In the Asian Economics report for Q3, three overlapping stages of the recovery process which underpin HSBC’s belief in a sustained pick-up in growth are discussed – initial post-crisis relief bounce, effects of various policy stimulus packages across Asia, and the self-sustaining phase of growth.

‘Since the collapse of Lehman Brothers, there was a feeling that we were heading into a second great depression, the end of the financial world as we know it,’ said Mr Prior-Wandesforde.
‘But thanks to the very aggressive policy action that is being taken by governments and central banks around the world, particularly the US, it seems to us that scenario is pretty much gone.’
Asia ex-Japan will see quarter-on-quarter annualised GDP growth of more than 8 per cent in the second quarter, the report says. ‘Omens are looking even better for the third quarter, with double-digit quarter-on-quarter annualised GDP growth.’

The HSBC coincident indicator includes Chinese and South Korean composite lead indicators, the Commodity Research Bureau index, German IFO business expectations and the S&P 500 equity market index.

This means that ‘we can rule out an L-shaped kind of recovery, and also an U-shaped one’, explained Mr Prior-Wandesforde.

The second phase relates to various policy stimulus packages put in place across Asia – the biggest and most synchronised easing of fiscal policy and monetary policy ever.
It is estimated that these will add ‘at least one per cent of GDP growth in the region this year and another 2 per cent in 2010′.

‘This reflects the length of time it often takes in Asia to get these infrastructural projects in place, and also the fact that monetary policy works with a significant lag in Asia – with 12 to 24 months’ lag being typical,’ noted Mr Prior-Wandesforde.

With all these policy effects stimulating domestic demands within Asia, it is expected to ‘at least create a regional trade recovery before world recovery’.

Tracking the level of Asia ex-Japan private consumption and investment as a proportion of the equivalent series for the US, the latter was actually 20 per cent higher than its American counterpart last year.

Asian private consumption came to just 40 per cent of the US level in 2008 but it has grown more in absolute terms in each of the last two years.

‘Our Asia ex-Japan and China export lead indicator points to a pick-up in year-on-year real export growth Q309,’ Mr Prior-Wandesforde said.

‘It’s typically the most open economies, like Singapore and Malaysia that crashed the most, which we think will see the greatest trade recovery kicking in.’

Source : Business Times – 14 Jul 2009
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CBRE expects smaller fall in retail rents this year

2009-07-14T17:19:00.001+08:00

It cites healthy demand for Orchard Rd space, limited suburban supply
CB RICHARD Ellis (CBRE) now expects Orchard Road retail rents to fall 10-12 per cent this year – less than its earlier estimate of 15-20 per cent.

‘We expect the rate of rental decline for prime space along Orchard Road to ease given the healthy demand for existing shop space as well as high pre-commitment levels at yet-to-be completed malls,’ CBRE said in a report released yesterday.

The firm now also expects suburban mall rents to contract just 5-6 per cent for the whole year – down from its earlier estimate of 10-15 per cent.

Prime Orchard Road rents fell to $33.90 per sq ft (psf) per month on average in Q2 2009 – down 2.9 per cent quarter-on-quarter and 7.8 per cent year-on-year. This means that according to CBRE’s data, prime Orchard Road rents fell 6 per cent in the first half of this year.

Prime suburban rents were unchanged in Q2, averaging $28.30 psf pm. They were supported by the limited pipeline of supply in the suburbs, and the fact that suburban malls owned by real estate investment trusts (Reits) are under pressure to be yield-accretive and so are less likely to drop rents drastically. Prime suburban rents dipped a marginal 2.4 per cent in H1 2009.

The three new major malls coming up in Orchard Road have so far reported healthy leasing figures. Ion Orchard said recently that it is 94 per cent leased. And at the other end of Orchard Road, 80 per cent of the space at Orchard Central is committed. 313@Somerset, which is due to open at year-end, has said that it is 85 per cent leased so far and will be 100 per cent let by the time it opens.

Analysts have said that the fall in retail rents is expected to moderate in H2 2009 with seasonal activities such as the Great Singapore Sale, F1 Grand Prix and Christmas festive season.
Source : Business Times – 14 Jul 2009

Strong demand at two weekend condo previews

2009-07-14T17:17:00.000+08:00

DEMAND for new private property developments remains strong, judging by the interest generated at two previews held over the weekend.

At high-end condominium Ascentia Sky’s preview for selected clientele, over 90 per cent of the 80 units released were snapped up for as much as $1,250 per sq ft (psf), according to developer Wing Tai’s spokesman.

‘We received strong public demand at the launch,’ said the spokesman, citing the prime location in the Alexandra-Tanglin area as a key selling point.

A public preview is set to be held this weekend before the official launch, which is likely to take place over the following weeks.

The high-rise development has 373 units comprising two- to four-bedroom units, two five-bedroom penthouses and three super penthouses.

Mass-market-priced freehold condominium The Gale, located at Flora Road, was already 65 per cent taken up after its preview that began last Friday. Units were sold at an average price of between $650 and $700 psf.

Hong Leong Holdings had originally planned to release 80 units at the preview, out of a total of 329, but ended up opening 135 more units to interested buyers.

It had employed a novel marketing strategy by setting up a Facebook page featuring information about the property and the preview dates.

The official launch will be held on Saturday, where units including one-bedroom and two-plus-one types – the largest being four-bedroom apartments with a roof terrace – can be viewed.
Buyers have the option to join the Interest Absorption Scheme, meaning they have to pay only 20 per cent of the price of the unit upfront and the remainder upon the condominium’s completion.

The Gale is the latest project from Tripartite Developers’ Upper Changi properties. Tripartite Developers is a joint venture involving Hong Leong Holdings, City Developments, and Trade and Industrial Development.

Source : Straits Times – 14 Jul 2009

Top-end home sales gently pick up pace

2009-07-14T17:16:00.000+08:00

More transactions streaming in at higher price bands as bottom-up recovery starts to take root
High-end residential transactions continue to stream in steadily, in both the primary and secondary markets. Two units were sold recently at Nassim Park Residences by its developer at above $3,000 per square foot (psf), one of them at $3,813 psf.

Buyers returning: Two units were sold recently at Nassim Park Residences at above $3,000 psf, one of them at $3,813 psf

In the sub-sale market, a caveat has surfaced for a 37th floor unit at The Orchard Residences at about $3,550 psf last month.

Caveats have also been lodged for transactions of three units at The Ardmore Park at $2,375-$2,513 psf, and for a sub-sale deal at Marina Bay Residences at $2,200 psf in June.

Also in the sub-sale market, a three-bedroom unit on the 13th floor of Tate Residences at Claymore Road has been sold for $2,400 psf or about $5.25 million.

The seller and buyer were both Indonesians, says Jerry Tan, managing director of JTResi, which brokered the sale. The option was exercised about 10 days back. Two months ago, JTResi had also handled the sale of a 17th-floor unit in the development, facing the same way, at a lower price of $2,150 psf.

The 36-storey freehold project is slated for completion in a few months. ‘Prices at Tate Residences have trended up from the lows of $1,850-1,950 psf seen in March-April. Those were some of the scariest months in the property market,’ Mr Tan adds.

In the primary market, at the freehold Nassim Park Residences near Botanic Gardens, an option was exercised last week for a second-storey unit at $3,813 psf or $13.25 million. The unit is in the premium block, on an elevated part of the project, with a pool view and with the back facing Nassim Hill.

The 3,477 sq ft unit has four bedrooms and a study. The buyer is Indonesian, said CB Richard Ellis (CBRE) executive director Joseph Tan, whose firm is the joint-marketing agent for Nassim Park Residences.

The project’s developer is also said to have issued last weekend an option for the sale of a fourth-level unit at $3,081 psf. The five-storey condo is being developed by UOL Group, Kheng Leong and Orix Corporation.

‘Of late, we have been seeing an increase in transactions in the market above $2,000 psf. However, what this covers may be the top 5 per cent of buyers, who remain selective and are project specific. We’re seeing an equal mix of foreigners and Singaporeans buying. Current prices – which are about 20-25 per cent off the 2007 peak levels – are pretty attractive,’ CBRE’s Mr Tan added.

CBRE also brokered the sale of a fifth floor unit at Ho Bee development The Orange Grove last week for $2,200 psf, or $4.7 million, to a Singaporean buyer. According to government data, five units in the project were sold by Ho Bee in May at between $2,255 psf and $2,380 psf. These levels are roughly 20 per cent lower than the $2,800 psf average price for the project early last year.

Orchard Turn Developments has sold 10 units at The Orchard Residences since May at $2,700 psf to $3,300 psf. The buyers comprise a mix of Singaporeans, permanent residents (PRs) and foreigners.

Despite a return of transactions in the higher-price segments, DTZ executive director Margaret Thean notes that ‘buyers are more cautious with their offers’.

JTResi’s Mr Tan observes that the pick-up in transactions of higher-priced units has led some developers, who had earlier planned to launch or relaunch projects, to hold back. ‘They basically don’t want to under-price their projects,’ he added.

Ho Bee executive director Ong Chong Hua said: ‘Sales are beginning to filter to the higher end, but not in a big way yet – because the overall quantums involved are usually quite large. Banks are also more cautious about granting home loans for this segment, whereas for the mass and mid-market projects, banks have relaxed on lending and valuations are no longer an issue.’
Hong Leong Holdings said yesterday that 215 units have been sold at The Gale, a freehold condo in the Upper Changi area, since last Friday. The average price is said to be about $650-660 psf.
At Alexandra Road, Wing Tai sold over 70 units at the 99-year leasehold Ascentia Sky during last weekend’s preview. The average price is $1,250 psf.

Over the weekend, MCL Land sold 55 units at The Peak @ Balmeg, a freehold condo at Pasir Panjang, bringing total sales to 100 units. The average price is $1,000 psf.

Interest absorption schemes are available for all three projects at price premiums.
Remarks Mr Ong: ‘What we’re seeing is a bottom-up recovery, which is more sustainable – unlike the last recovery from 2005 to 2007, which was top down.’

Strong growth suggests Singapore emerging from recession

2009-07-14T17:15:00.000+08:00

Singapore said Tuesday its economy grew for the first time in a year in the second quarter, led by biomedicals and electronics, suggesting the city was emerging from its worst ever recession.
The economy soared 20.4 per cent in the three months to June compared with the first quarter on a seasonally adjusted annualised basis, the Ministry of Trade and Industry said, while raising its forecast for 2009.

A Dow Jones Newswires poll of 10 analysts had tipped an average 14.1 per cent economic expansion.

Gross domestic product (GDP) was now expected to contract 4-6 per cent for the year from an earlier projection of 6-9 per cent, the ministry said, while warning that any recovery would be weak due to the fragile global economy.

It was the first quarter-on-quarter growth in five quarters.

Trade-driven Singapore became the first Asian economy to slip into a recession in the second half of last year after a financial and economic crisis that started in the United States hit demand for its exports.

Tuesday’s data means Singapore is the first of the Asian countries hit by recession to release statistics pointing to a recovery.

Compared with the previous year, however, output in the June quarter was down 3.7 per cent, indicating that the economy remained weak.

“I guess technically the recession would have ended, the economy is growing again,” said David Cohen, an economist with research house Action Economics.

“Growth won’t be very strong but it should remain in an upward trajectory,” he told AFP.
“The Singapore economy registered a stunning turnaround in the second quarter, much in line with our expectation,” DBS Group said in a research note.

Despite the quarter-on-quarter growth, the trade ministry cautioned that “the outlook for the rest of the year remains largely unchanged: of a weak recovery susceptible to downside risks.”
“At this juncture, there is no evidence yet of a decisive improvement in final demand,” the ministry said in a statement, adding the second quarter surge “may not be sustained.”
The services sector, which accounts for two-thirds of the economy, continued to shrink with a decline of 5.1 per cent in the June quarter from a year ago, the ministry said.
It noted that rising unemployment and reduced consumer spending in Singapore’s major export markets like the United States and Europe reflected the continued weakness in the global economy.

Action Economics’ Cohen said however he was cheered by the second quarter numbers.
“I think this will be the first in a series of upbeat GDP reports for the second quarter from Asian economies,” he said, noting that China and South Korea would also be announcing their growth data in the next two weeks.

“Maybe this will provide some reassurance to the markets which have been jittery in the last few weeks about the sustainability of the recovery. It shows that Asian economies have turned the corner in the second quarter.”

Dariusz Kowalczyk, chief investment strategist with SJS Markets trading house, said the June quarter data suggested Singapore may not have been as hit hard by the global recession as initially thought.

“Production and exports account for such a large proportion of the Singapore economy that global trends will determine whether it grows or contracts but I am upbeat on the global economy so this bodes well for Singapore,” he said.

He added that he has revised the city-state’s 2009 growth outlook to a contraction of 4.3 per cent from 5.9 per cent previously forecast.

The June quarter figures are computed mainly from the April-May period and the ministry is expected to release a more detailed picture in the next few weeks.

Source : Channel NewsAsia – 14 Jul 2009

Motorsports hub proposal hits bumps

2009-07-13T19:57:00.003+08:00

Terms of tender, poor economic climate, site conditions raise risks, costs for potential bidders

The race to build the Changi Motorsports Hub (CMH) is turning into a bumpy ride.

Since the Request For Proposal (RFP) for the project was released on March 30, seven parties – both local and international consortia – have obtained the tender documents, said the Singapore Sports Council (SSC).

But potential bidders are finding the terms in the RFP too onerous, said an industry source. And with the economy still barely on the mend, the risks involved in going into such a mega project are heightened, added the source.

In essence, the proposed CMH will feature a permanent circuit on a 41-hectare site, as well as an entertainment complex, food and beverage facilities, retail outlets and convention halls. The track will be at least 3.5km long and will be Grade 2 certified by the Federation Internationale de l’Automobile and Grade 1 certified by the Federation Internationale de Motocyclisme.

One challenge facing potential bidders appears to be landing the funding to pull off the project, especially given that banks are treading cautiously in the current economic climate. Without financial support from the banks, embarking on the project would require deep cash reserves.

In addition, the site – which sits on reclaimed land – appears to present technical difficulties. Soil conditions are not ideal and soil settlement could affect the facilities built on the site. Sewer lines also need to be run, all of which translates to high costs.

With a total price tag in the region of several hundred million dollars, potential bidders are finding this a tough decision to make.

‘We are currently studying the commercial viability of the project,’ said a spokesman for Haw Par Corp, one of the parties looking to bid for the tender.

‘The government has got to work together with the winning bidders to keep the costs low. If they can help relieve some of these costs, it is workable,’ said Knight Frank managing director Danny Yeo, adding that the CMH will benefit Singapore as well. The firm is part of a consortium that is keen to bid for the project.

Difficulties aside, Mr Yeo is convinced of the potential that the CMH offers. ‘We are excited. There’s a lot of potential,’ he said, pointing to the various uses of the track, coupled with the integrated commercial activities, as well as its close location to the city. Other parties reportedly in the running to bid for the project include the SUTL Group, Singapore Agro Agricultural and Peter Kwee’s group, Exklusiv.

In response to queries from The Business Times, SSC said: ‘In the current economic climate, it is expected that the consortia are facing the same challenges as other businesses when it comes to securing finances. We can therefore expect to see a mixture of debt financing and equity financing from the market.’

At this point, there is no indication that any of them are pulling out of the bidding, it added.

‘We understand that some of them are approaching one another to explore consolidation of resources to put forth bigger and better proposals. We will continue to engage them in regular dialogue sessions leading up to the closing date of bid submissions,’ SSC said.

The closing date is August 27.

The successful bidder – expected to build and operate the track for 30 years – will be selected by early next year. Project completion is scheduled for the fourth quarter of 2011, with the track opening by the first quarter of 2012.

Source : Business Times – 13 Jul 2009

KepLand to delist Evergro Properties

2009-07-13T19:57:00.001+08:00

SHAREHOLDERS of Evergro Properties, a thinly traded stock, will be given the chance to exit their investment under a delisting plan by its parent.

Keppel Land (KepLand), which has an 85.4 per cent stake in the China-focused property group, is offering Evergro shareholders either cash or its own shares in exchange for their shares.

They will get 1,000 new KepLand shares for every 7,000 Evergro shares owned. Alternatively, they may choose to receive $290 for every 1,000 Evergro shares.

The share offer represents a premium of about 21.1 per cent to Evergro’s closing price of 25 cents last Friday.

The cash offer, on the other hand, works out to be 16 per cent higher than the closing share price.

The purpose of this exercise is to combine Evergro and KepLand into a single entity. Following this, Evergro shares will be delisted from the Singapore Exchange.

The delisting will remove the compliance costs of maintaining a separate listing for Evergro.

‘By combining the operational expertise, industry knowledge and extensive networks of both companies, Keppel Land will be in an even stronger position to capture opportunities and growth in China,’ explained KepLand chief executive officer Kevin Wong.

The exit offer is also an opportunity for Evergro shareholders to unlock the value of their investment at a premium to market, Mr Wong added.

Those who wish to participate in the future growth of KepLand may opt for the share swop instead of accepting cash.

The delisting will cost KepLand up to $54 million, if all Evergro shareholders choose the cash option.

Evergro, which was formerly known as Dragon Land, has not been an exciting play for its shareholders. Its shares are not widely followed by investors, with daily trading volume averaging just 130,000 shares.

On the other hand, KepLand is a big player, with total assets of $6.3 billion as of March 31. The group, which focuses on two core businesses of property development and property fund management, has significant presence in Asia, particularly in Singapore, China, Vietnam, India and Indonesia.

For the year ended Dec 31, Evergro chalked up net profits of just $545,000 on turnover of $43.6 million.

On a brighter note, the group is sitting on a healthy cash pile of $134.7 million as of March 31, thanks to a rights issue last August priced at 18 cents apiece.

Even then, the issue was not an unqualified success as some minority shareholders gave it a miss, which allowed KepLand to mop up unwanted shares and boost its stake in Evergro.

Merrill Lynch (Singapore) has been appointed as financial adviser to KepLand while the Evergro board will soon appoint an independent financial adviser to advise independent directors on the merit of the delisting proposal and exit offer.

Source : Straits Times – 13 Jul 2009

KepLand offering 29 cents a share to delist Evergro

2009-07-13T19:56:00.000+08:00

Investors can opt for 1 KepLand share for every 7 Evergro shares they own

KEPPEL Land yesterday said it will pay 29 cents a share to delist Evergro Properties, its China unit.

The price is a 16 per cent premium over Evergro’s last traded price on Friday of 25 cents a share.

Shareholders can also opt for one new Keppel Land share for every seven Evergro shares they own, Keppel Land said.

Evergro stock has rebounded sharply in the past three months since reaching a year-low of 10.5 cents in mid-March.

Keppel Land now owns 85.4 per cent of Evergro and will have to pay $54m if all other shareholders choose to sell for cash. The voluntary offer values Evergro at $368.2m.

‘By combining the operational expertise, industry knowledge and extensive networks of both companies, Keppel Land will be in an even stronger position to capture opportunities and growth in China,’ said Kevin Wong, group chief executive officer of Keppel Land.

‘It provides us with a stronger platform to maximise the potential of our existing portfolio and collective strengths as we continue to grow Keppel Land as the choice developer of homes in China.’

Evergro said it will appoint an independent financial adviser to advise the board on the exit offer.

Merrill Lynch has been appointed to advise Keppel Land on the offer.

The delisting proposal will delay Evergro’s planned results announcement for its April-June second quarter, the company said.

This is so that the results can be reviewed by its auditor and financial adviser.

Evergro said it will release its financial results and reports from its auditor and financial adviser ‘in due course but no later than Aug 14′.

Evergro, the former Dragon Land, reported net profit of $389,000 for the quarter ended March 31, or 0.03 cents per share.

Sales fell 39 per cent to $5.7 million, from $9.4 million a year ago. It had net asset value of 16.97 cents a share.

For its 2008 financial year, it posted net profit of $545,000, up from $196,000 the previous year, while revenue rose 9.8 per cent to $43.63 million.

As at March 31, the company holds cash of $134.6 million, after a rights issue last year raised about $137 million.

It had announced a three for two rights issue on May 30 and also a capital reduction to write off accumulated losses of $36.5 million.

But only three-quarters of the rights shares were taken up, leaving Keppel Land to subscribe for the rest.

Evergro has three residential projects and two golf courses in China.

It is developing a 300 hectare residential project within the Tianjin eco-city project, which comes with a golf course that has already opened.

It is also building an apartment complex in Jiangyin city, which when completed in 2013 should also include retail and office buildings.

A condominium project in Changzhou was completed in January and is 90 per cent sold.

Keppel Land is the property arm of local conglomerate Keppel Corp, with assets of $6 billion as at last year and a land bank of 100 million square feet across Asia and the Middle East.

Last month, it raised $708 million in a fully-subscribed, nine-for-ten rights issue at $1.09 a share. The stock closed at $2.10 on Friday.

Source : Business Times – 13 Jul 2009

No fear of property gains tax on show

2009-07-13T19:55:00.000+08:00

Investors, home seekers throng property launches over weekend

FEAR and uncertainty over how gains from property sales would be taxed vanished as quickly as they came last week.

Home seekers still thronged showflats over the weekend and smaller apartments remained popular picks.

Turnout at property launches was healthy, observed DMG & Partners Securities analyst Brandon Lee, who visited a handful of showflats in the last few days.

News that the government could change income tax laws on profits from property sales did not seem to have an adverse impact, he said.

Word got round last Wednesday of a proposal to make current laws clearer – by guaranteeing that anyone who sells only one property in any four-year period will not be taxed on the gains.

This left many industry players wondering if sellers who failed to meet the criterion would automatically be taxed. Their fears were eased when the government said that this was not the case.

Given how much property prices have fallen, there is still a chance to profit – with or without taxes – said Mr Lee in a note last Thursday. ‘Even if a maximum 20 per cent personal income tax rate is levied on profits, the seller should still reap healthy income.’

Investors seemed to recognise this and joined genuine homeseekers at showflats for new projects, such as Parc Imperial at Pasir Panjang, Ascentia Sky along Alexandra Road and Sophia Residence at Mount Sophia.

According to agents, buyers had taken up around 80 per cent of Parc Imperial’s 138 units by yesterday afternoon.

Studio and two-bedroom apartments at the freehold project were the most popular, with prices starting from $1,200 psf.

At Luxus Hills, a recently-launched 999-year leasehold landed development at Ang Mio Kio, 63 of 78 units have been sold. Prices ranged from about $1.75 million for intermediate terrace homes to $2.05 million for corner terraces.

Existing properties also found buyers. In four days, The Straits Trading Company sold 10 units at Gallop Green, a freehold estate near Farrer Road which received Temporary Occupation Permit in 2002.

Prices averaged $1,400-$1,435 psf and buyers comprised owner-occupiers and investors, said the company’s executive vice-president Eric Teng.

Source : Business Times – 13 Jul 2009

Economists expect Singapore’s economy to grow by 12-23% in Q2

2009-07-13T19:54:00.000+08:00

Most economists expect Singapore to achieve a double-digit economic growth for the second quarter of 2009.

This could range between 12 and 23 per cent on a seasonally-adjusted, quarter-on-quarter basis.

They attribute the forecast to better industrial production and external trade numbers over the past months.

In addition, observers said the financial services sector, stock market and property sector have all improved in the second quarter.

On a year-on-year basis, economists project Singapore’s gross domestic product (GDP) to shrink by between 3.8 and 6 per cent.

This compares to the 10.1 per cent on-year contraction in the first quarter.

Despite the upbeat outlook, some economists expect unemployment to hit 4.2 per cent this year, before dipping to 3.4 per cent by the end of 2010.

There are also signs that Singapore is on course for a “V-shaped” recovery.

Robert Prior-Wandesforde, Co-Head, Asian Economics, Global Markets, HSBC, said: “We think it will be sustained, there are risks; clearly, this initial phase of recovery has been driven heavily by the volatile pharmaceutical sector, and of course that could slow again.

“But what is important is that we are seeing bigger industries like electronics showing at least tentative signs of recovery, and I think the scale of policy easing within the region is going to lift trade in Asia, including the most open economies in Asia like Singapore.”

Source : Channel NewsAsia – 13 Jul 2009

CBRE revises rental forecasts lower

2009-07-13T19:53:00.000+08:00

Property consultancy CB Richard Ellis (CBRE) is revising its rental forecasts for 2009, given better-than-expected average rentals in the second quarter.

The firm now expects Orchard Road rents to fall between 10 and 12 per cent this year, a less drastic decrease than its earlier estimate of 15 to 20 per cent.

Suburban mall rents are likely to contract between 5 and 6 per cent, down from its earlier estimate of 10 to 15 per cent. CBRE said Prime Orchard Road rents averaged S$33.90 per square foot in the second quarter, down 7.8 per cent year-on-year.

For the first half of this year, prime Orchard Road rents have fallen 6 per cent. The consultancy said prime suburban rents remained unchanged in the quarter averaging S$28.30 per square foot, supported by the limited pipeline supply in the suburbs.

Going forward, CBRE said there is a high level of anticipation with many new malls in Orchard Road on schedule to be opened in the second half of the year, including ION Orchard, Orchard Central and 313@ Somerset.

Source : Channel NewsAsia – 13 Jul 2009