DAVID Lawrence has a suggestion for dealing with the problem of rogue housing agents whom the government is trying to rein in: by introducing legislation.
Either the Ministry of National Development or Housing and Development Board could set up a separate statutory body and give it exclusive rights to deal in resale HDB flats, he says.
Such legislation may be difficult to apply retroactively for the existing flats, he notes. But when HDB sells new flats, it could write in the agreement that when the lessees wish to re-sell their flats after the five-year minimum occupation period, they will have to go through the new stat body.
'If you wish to sell your flat, all you'll have to do is to list it with this new stat body,' Mr Lawrence, who is chief executive of Wheelock Properties (Singapore), told BT in a recent interview. 'The new body would not have to be involved in the pricing. People can put their own price, as in a free market. If it doesn't sell within three months, then they've priced it too high,' he said.
The proposed new stat body would employ agents who have been screened and found suitable. 'The commission charges could be low but it will still pay for this stat body to handle all these sales,' Mr Lawrence said.
The body would have an approved panel of lawyers and valuers with all money going through proper controls, he suggested. 'That will cut out crooked agents ripping off some of the old people on HDB estates and taking double fees. I don't agree with all that nonsense.'
According to Mr Lawrence, since HDB built and sold the flats, he sees no reason why a public sector body such as the one he is suggesting should not be sole agent for their resale.
On another front, Mr Lawrence says he is not alarmed by the recent increase in HDB's resale flat price index. Viewed over a 10-year period, the index has risen 34 per cent, which works out to an average increase of 3.4 per cent per annum. He describes this as 'fairly gentle capital appreciation' that is good for the 82 per cent of the population that live in HDB flats.
Source: Business Times, 31 Oct 2009
Saturday, October 31, 2009
Upbeat outlook on luxury market
WHEELOCK Properties (Singapore) CEO David Lawrence remains upbeat about prospects for Singapore's luxury residential property market, as the island is increasingly attracting rich people and businesses.
'The interesting thing is that more and more people are becoming PRs and citizens,' he says. 'A lot of them are very rich and want the best product. So you've got to be a good developer producing good products like Wheelock or SC Global or Hotel Properties Ltd (HPL).'
Wheelock owns about 16 per cent of SC Global and almost 21 per cent of HPL. 'We're happy with our stakes in these companies,' Mr Lawrence said in a recent interview with BT.
In April last year, he apologised to shareholders at an annual general meeting for having bought a stake in SC Global at the top of the market in 2007. But now he lets on: 'I should tell you that I have had approaches from Middle Eastern investors recently to buy our stake in SC Global and I said: 'Not interested. Thank you very much'.'
Wheelock acquired its SC Global stake at an average price of $2.35 a share. SC Global's stock price fell from a high of $3.40 in June 2007 to a low of 29.5 cents in March this year. It has since been recovering, ending at $1.41 yesterday, down one cent from Thursday's closing price.
The focus of the Singapore Government's recent measures to stabilise the property market are on the mass and mid segments, which Mr Lawrence reckons 'went out of control a little bit'. 'I don't think the government needs to be concerned about the luxury sector,' he said.
The government has done enough to cool the private residential property market - for instance, by promising to release more land in the first half of next year, he feels.
The recent phenomenon of developers chasing sites and paying high land prices has been fuelled by low interest rate loans to developers by banks. 'If this liquidity gets out of hand, the government can just release more sites. They've got plenty of sites ready to go,' Mr Lawrence said.
Around this time last year, he urged investors to buy Singapore property stocks because they were looking cheap after being battered during the financial crisis. Now that property stocks, along with the overall market, have surged - in some cases 100 per cent or even more - Mr Lawrence advises investors to switch out of property stocks and into real or physical assets. 'Property is one class of real assets and will provide a long-term hedge against inflation,' he argued.
'I am not saying the property markets are going to shoot up, because the Urban Redevelopment Authority is there to stabilise the market. But now is the time to take profit on paper assets and move into physical assets, which are still the best long-term hedge against inflation. And inflation will be coming back in the next few years.'
Sovereign wealth funds and savvy investors are already following this strategy, Mr Lawrence says.
Source: Business Times, 31 Oct 2009
'The interesting thing is that more and more people are becoming PRs and citizens,' he says. 'A lot of them are very rich and want the best product. So you've got to be a good developer producing good products like Wheelock or SC Global or Hotel Properties Ltd (HPL).'
Wheelock owns about 16 per cent of SC Global and almost 21 per cent of HPL. 'We're happy with our stakes in these companies,' Mr Lawrence said in a recent interview with BT.
In April last year, he apologised to shareholders at an annual general meeting for having bought a stake in SC Global at the top of the market in 2007. But now he lets on: 'I should tell you that I have had approaches from Middle Eastern investors recently to buy our stake in SC Global and I said: 'Not interested. Thank you very much'.'
Wheelock acquired its SC Global stake at an average price of $2.35 a share. SC Global's stock price fell from a high of $3.40 in June 2007 to a low of 29.5 cents in March this year. It has since been recovering, ending at $1.41 yesterday, down one cent from Thursday's closing price.
The focus of the Singapore Government's recent measures to stabilise the property market are on the mass and mid segments, which Mr Lawrence reckons 'went out of control a little bit'. 'I don't think the government needs to be concerned about the luxury sector,' he said.
The government has done enough to cool the private residential property market - for instance, by promising to release more land in the first half of next year, he feels.
The recent phenomenon of developers chasing sites and paying high land prices has been fuelled by low interest rate loans to developers by banks. 'If this liquidity gets out of hand, the government can just release more sites. They've got plenty of sites ready to go,' Mr Lawrence said.
Around this time last year, he urged investors to buy Singapore property stocks because they were looking cheap after being battered during the financial crisis. Now that property stocks, along with the overall market, have surged - in some cases 100 per cent or even more - Mr Lawrence advises investors to switch out of property stocks and into real or physical assets. 'Property is one class of real assets and will provide a long-term hedge against inflation,' he argued.
'I am not saying the property markets are going to shoot up, because the Urban Redevelopment Authority is there to stabilise the market. But now is the time to take profit on paper assets and move into physical assets, which are still the best long-term hedge against inflation. And inflation will be coming back in the next few years.'
Sovereign wealth funds and savvy investors are already following this strategy, Mr Lawrence says.
Source: Business Times, 31 Oct 2009
Govt could release office sites again next year
Wheelock Properties boss cites firming in office rents, and suggests govt will act fast to keep rents reasonable.
THE government could release two or three large office sites for sale fairly soon - as early as first half next year - as office rents are starting to firm, says Wheelock Properties (Singapore) CEO David Lawrence, based on his experience with the group's Wheelock Place office tower.
The sites could be in the Marina area and part of the confirmed list, he said in a recent interview with BT.
A potential tenant was recently in discussions with the property group to lease a 4,000 sq ft office unit at Wheelock Place in Orchard Road. But when it was a day late reverting and the offer deadline lapsed, Wheelock immediately signed a deal with another party at a rental rate $1 per sq ft more than that discussed with the earlier party, Mr Lawrence disclosed. He declined to give further details, citing confidentiality reasons.
According to him, the slight pick-up in rents probably has to do with Singapore raising its profile again lately - the way the government has come through the global financial crisis, good corporate governance, the integrity and pragmatism of the government. It is becoming attractive for firms - particularly in commodities, fund management and wealth management - in Europe and the US, who want to tap the Asia growth story, to operate in Singapore.
The same phenomenon is taking place in Hong Kong, he observes.
Hence, notwithstanding the substantial supply pipeline, of about 7.7 million sq ft of offices slated for completion from Q4 this year to end-2012, according to CB Richard Ellis figures, Mr Lawrence believes the government will release office sites quite soon.
'I don't know this for a fact, but I think it is part of government policy or should be part of government policy to keep releasing sufficient land so that office rents are kept reasonable in Singapore, because there are a lot of spin-offs into the economy from having these companies and people in Singapore,' he said.
'Some people will say: 'But that space won't be (completed) for four years.' Actually, as soon as people know there is the expectation of a lot more supply in the future, it tends to have a pretty immediate effect on office rents in fact, because landlords become defensive to keep tenants.
'It has an immediate effect on the psychology of the market and landlords.'
According to CBRE data, the average monthly Grade A office rental value surged from $5.70 per sq ft in Q4 2005 to $18.80 psf in Q3 last year on the back of booming demand and a shortage of space. The government, however, soon responded, releasing office sites in the Marina Bay area, as well as transitional office sites around the island.
When the global economic crisis set in, the hardest hit was the financial industry - key occupiers of Grade A office space - and Singapore's office market was battered. The average Grade A office rent has since slipped to $8.80 psf last quarter.
'They (government) are quite sharp now and they've been very active in the residential sector,' Mr Lawrence said. 'Now this (office) is the one to look at. It's quite difficult with these office rents sometimes. Nobody gets it right all the time. But just releasing the sites will cool the market.
'I think (National Development Minister) Mah Bow Tan is quite aware of what's going on in the office market.
'No problem with sites. The government has been very clever. You look at the Marina area. They have so many sites with the infrastructure ready to go.'
Source: Business Times, 31 Oct 2009
THE government could release two or three large office sites for sale fairly soon - as early as first half next year - as office rents are starting to firm, says Wheelock Properties (Singapore) CEO David Lawrence, based on his experience with the group's Wheelock Place office tower.
The sites could be in the Marina area and part of the confirmed list, he said in a recent interview with BT.
A potential tenant was recently in discussions with the property group to lease a 4,000 sq ft office unit at Wheelock Place in Orchard Road. But when it was a day late reverting and the offer deadline lapsed, Wheelock immediately signed a deal with another party at a rental rate $1 per sq ft more than that discussed with the earlier party, Mr Lawrence disclosed. He declined to give further details, citing confidentiality reasons.
According to him, the slight pick-up in rents probably has to do with Singapore raising its profile again lately - the way the government has come through the global financial crisis, good corporate governance, the integrity and pragmatism of the government. It is becoming attractive for firms - particularly in commodities, fund management and wealth management - in Europe and the US, who want to tap the Asia growth story, to operate in Singapore.
The same phenomenon is taking place in Hong Kong, he observes.
Hence, notwithstanding the substantial supply pipeline, of about 7.7 million sq ft of offices slated for completion from Q4 this year to end-2012, according to CB Richard Ellis figures, Mr Lawrence believes the government will release office sites quite soon.
'I don't know this for a fact, but I think it is part of government policy or should be part of government policy to keep releasing sufficient land so that office rents are kept reasonable in Singapore, because there are a lot of spin-offs into the economy from having these companies and people in Singapore,' he said.
'Some people will say: 'But that space won't be (completed) for four years.' Actually, as soon as people know there is the expectation of a lot more supply in the future, it tends to have a pretty immediate effect on office rents in fact, because landlords become defensive to keep tenants.
'It has an immediate effect on the psychology of the market and landlords.'
According to CBRE data, the average monthly Grade A office rental value surged from $5.70 per sq ft in Q4 2005 to $18.80 psf in Q3 last year on the back of booming demand and a shortage of space. The government, however, soon responded, releasing office sites in the Marina Bay area, as well as transitional office sites around the island.
When the global economic crisis set in, the hardest hit was the financial industry - key occupiers of Grade A office space - and Singapore's office market was battered. The average Grade A office rent has since slipped to $8.80 psf last quarter.
'They (government) are quite sharp now and they've been very active in the residential sector,' Mr Lawrence said. 'Now this (office) is the one to look at. It's quite difficult with these office rents sometimes. Nobody gets it right all the time. But just releasing the sites will cool the market.
'I think (National Development Minister) Mah Bow Tan is quite aware of what's going on in the office market.
'No problem with sites. The government has been very clever. You look at the Marina area. They have so many sites with the infrastructure ready to go.'
Source: Business Times, 31 Oct 2009
CapitaLand gets shareholder nod to list retail arm
CAPITALAND shareholders at an extraordinary general meeting (EGM) yesterday approved the company's plan to spin off and list its $20.3 billion retail portfolio - after just one hour.
But many of them were concerned with two issues - how much the special dividend payout from CapitaMalls Asia's (CMA) listing will amount to, and whether they will get preference when it comes to subscribing for CMA shares.
In response to their queries, CapitaLand's management said it could not say at present how much the special dividend payout will be.
Market watchers have estimated that if CapitaLand floats a 30 per cent stake of CMA, it could book a pre-tax profit of $800 million to $1.4 billion from the IPO.
Chief financial officer Olivier Lim said the company will only pay dividends from IPO profits, not gross proceeds, and only after setting aside funds to take advantage of opportunities to grow the group's other business divisions.
The company also reiterated that it will not give existing CapitaLand shareholders preference when it comes to applying for CMA shares. To do so would disadvantage overseas investors, Mr Lim said.
Investors also asked about CapitaLand's plans for its two retail real estate investment trusts (Reits) - CapitaMall Trust (CMT) and CapitaRetail China Trust (CRCT) - which will be held under CMA. Both Reits will continue to enjoy the existing rights of first refusal they have from the group.
'CMT and CRCT are still very much a core part of our overall strategy,' Mr Lim said.
In early October, CapitaLand announced plans to rename its retail arm CapitaLand Retail and float its shares on the Singapore Exchange.
The newly minted CMA, which will have a pan-Asian portfolio of 86 retail properties, will take the lead on all future retail activities, while CapitaLand will focus on non-retail businesses.
To kick off yesterday's EGM, CapitaLand chief executive Liew Mun Leong told shareholders the listing to CMA will make CapitaLand stronger. 'After this, CapitaLand will be much stronger in our finance,' he added.
About 380 CapitaLand shareholders and proxies attended the EGM yesterday. The company's shares gained six cents, or 1.5 per cent, to close at $4.14 yesterday.
Source: Business Times, 31 Oct 2009
But many of them were concerned with two issues - how much the special dividend payout from CapitaMalls Asia's (CMA) listing will amount to, and whether they will get preference when it comes to subscribing for CMA shares.
In response to their queries, CapitaLand's management said it could not say at present how much the special dividend payout will be.
Market watchers have estimated that if CapitaLand floats a 30 per cent stake of CMA, it could book a pre-tax profit of $800 million to $1.4 billion from the IPO.
Chief financial officer Olivier Lim said the company will only pay dividends from IPO profits, not gross proceeds, and only after setting aside funds to take advantage of opportunities to grow the group's other business divisions.
The company also reiterated that it will not give existing CapitaLand shareholders preference when it comes to applying for CMA shares. To do so would disadvantage overseas investors, Mr Lim said.
Investors also asked about CapitaLand's plans for its two retail real estate investment trusts (Reits) - CapitaMall Trust (CMT) and CapitaRetail China Trust (CRCT) - which will be held under CMA. Both Reits will continue to enjoy the existing rights of first refusal they have from the group.
'CMT and CRCT are still very much a core part of our overall strategy,' Mr Lim said.
In early October, CapitaLand announced plans to rename its retail arm CapitaLand Retail and float its shares on the Singapore Exchange.
The newly minted CMA, which will have a pan-Asian portfolio of 86 retail properties, will take the lead on all future retail activities, while CapitaLand will focus on non-retail businesses.
To kick off yesterday's EGM, CapitaLand chief executive Liew Mun Leong told shareholders the listing to CMA will make CapitaLand stronger. 'After this, CapitaLand will be much stronger in our finance,' he added.
About 380 CapitaLand shareholders and proxies attended the EGM yesterday. The company's shares gained six cents, or 1.5 per cent, to close at $4.14 yesterday.
Source: Business Times, 31 Oct 2009
Improving mood among business spreads
More expect business conditions to be more favourable in next 6 months: EDB survey
BUSINESS sentiment for both the manufacturing and service sectors has improved further, yesterday's release of findings from official surveys showed.
Among manufacturers, the number of optimistic companies exceeded pessimistic ones, yielding a net weighted balance of 9 per cent who now expect business conditions to be more favourable in the next six months.
It is the most positive that this gauge of business sentiment - derived from a survey of 400 companies by the Economic Development Board - has been since the third quarter of 2007.
Even more bullish were those in the services sector. A net weighted balance of 17 per cent of the 1,400 enterprises surveyed by the Department of Statistics expect better business from this month till next March. This, too, was a marked turnaround from the net negative of 3 per cent recorded in August's survey.
But the majority of businesses remained reserved. Sixty-one per cent of those in services and 65 per cent of manufacturers expect business conditions in the next six months to remain 'the same' as in the period from July to September.
Still, what increased optimism there was, was widespread. Across the service sector, hoteliers and caterers were the most optimistic, followed by the financial services. Banks and finance companies, brokers, fund managers and insurance companies, expect greater business activity in the next half-year, the DOS said.
Retailers and wholesalers, too, expect better business, with festive shopping boosting year-end sales, and sales of industrial machinery equipment and motor vehicles expected to rise too.
Those offering business services - such as recruitment firms and travel agencies - also expect a pick-up, while real estate firms think demand will hold up. Even the least optimistic of the lot - firms providing transport and storage services - foresee a stable business climate ahead.
Services will contribute to the bulk of economic growth in 2010, the Monetary Authority of Singapore said in its macroeconomic review earlier this week.
On the manufacturing side, improved sentiment did permeate most, but not all, clusters. Electronics, still a mainstay of Singapore's manufacturing economy, was the most optimistic - a net weighted balance of 22 per cent of firms expect improved business conditions.
General manufacturing firms were upbeat, too, while the precision engineering and chemical clusters turned positive for the first time since the financial crisis exploded last year. But the chemicals cluster 'remains concerned about excess supply of petrochemicals and petroleum refined products in the region', EDB said.
Less positive among the manufacturers were those in transport engineering. Although the marine and offshore and land transport firms expect orders to rise as oil prices trend up and the global economy recovers, the aerospace firms are not expecting any upswing.
Also, though sentiment is up, output could sink. A net weighted 3 per cent of manufacturers expect output to decline in the fourth quarter from the third, as all clusters other than electronics, precision engineering and general manufacturing, expect to report a fall in production.
For the chemicals sector, this is due to 'maintenance shutdowns, intense competition and seasonal factors', while biomedical manufacturers are forecasting lower output due to a different pharmaceutical mix, EDB said.
Source: Business Times, 31 Oct 2009
BUSINESS sentiment for both the manufacturing and service sectors has improved further, yesterday's release of findings from official surveys showed.
Among manufacturers, the number of optimistic companies exceeded pessimistic ones, yielding a net weighted balance of 9 per cent who now expect business conditions to be more favourable in the next six months.
It is the most positive that this gauge of business sentiment - derived from a survey of 400 companies by the Economic Development Board - has been since the third quarter of 2007.
Even more bullish were those in the services sector. A net weighted balance of 17 per cent of the 1,400 enterprises surveyed by the Department of Statistics expect better business from this month till next March. This, too, was a marked turnaround from the net negative of 3 per cent recorded in August's survey.
But the majority of businesses remained reserved. Sixty-one per cent of those in services and 65 per cent of manufacturers expect business conditions in the next six months to remain 'the same' as in the period from July to September.
Still, what increased optimism there was, was widespread. Across the service sector, hoteliers and caterers were the most optimistic, followed by the financial services. Banks and finance companies, brokers, fund managers and insurance companies, expect greater business activity in the next half-year, the DOS said.
Retailers and wholesalers, too, expect better business, with festive shopping boosting year-end sales, and sales of industrial machinery equipment and motor vehicles expected to rise too.
Those offering business services - such as recruitment firms and travel agencies - also expect a pick-up, while real estate firms think demand will hold up. Even the least optimistic of the lot - firms providing transport and storage services - foresee a stable business climate ahead.
Services will contribute to the bulk of economic growth in 2010, the Monetary Authority of Singapore said in its macroeconomic review earlier this week.
On the manufacturing side, improved sentiment did permeate most, but not all, clusters. Electronics, still a mainstay of Singapore's manufacturing economy, was the most optimistic - a net weighted balance of 22 per cent of firms expect improved business conditions.
General manufacturing firms were upbeat, too, while the precision engineering and chemical clusters turned positive for the first time since the financial crisis exploded last year. But the chemicals cluster 'remains concerned about excess supply of petrochemicals and petroleum refined products in the region', EDB said.
Less positive among the manufacturers were those in transport engineering. Although the marine and offshore and land transport firms expect orders to rise as oil prices trend up and the global economy recovers, the aerospace firms are not expecting any upswing.
Also, though sentiment is up, output could sink. A net weighted 3 per cent of manufacturers expect output to decline in the fourth quarter from the third, as all clusters other than electronics, precision engineering and general manufacturing, expect to report a fall in production.
For the chemicals sector, this is due to 'maintenance shutdowns, intense competition and seasonal factors', while biomedical manufacturers are forecasting lower output due to a different pharmaceutical mix, EDB said.
Source: Business Times, 31 Oct 2009
Top-line oven to warm home buyers' hearts
More property developers are throwing in branded ovens and other luxury fittings to draw homemakers
A MIELE oven can do more than bake a cake these days - it might just help whip up a home sale. More developers are including branded appliances in apartments to impress home seekers, and some have certainly stopped to gawk at the gadgetry.
But will all house hunters bite? Anecdotal evidence suggests that some would still care more about the prices of the homes, especially if they were never fans of the brands to begin with.
'The inclusion of branded appliances has both its good and bad points,' said Chesterton Suntec International research and consultancy director Colin Tan.
'If the developer knows his target market well, it is a plus. . . It is a negative if the buyer does not recognise the brand or appreciate it.'
Developers of mid to high-end units have used premium furnishings to boost their projects' image for some time, but the trend gathered more steam some two years ago when markets boomed.
Rich consumers searched for new ways to spend, and steel fridges and dishwashers quickly became the new status symbols.
It is easy to get used to a good thing but difficult to quit it. The recession may have eroded some consumers' savings but not their aspirations for luxury. This is especially so in Asia, which did not bear the brunt of the downturn.
'As consumers become more globalised and develop a taste for fine living, they are more willing to pay for luxury homes that are distinguished in areas such as design and architecture, premium fittings and furnishings as well as facilities,' said Keppel Land marketing general manager Albert Foo.
CapitaLand and Far East Organization also shared that they use fittings which meet home owners' lifestyle needs.
To stand out among the competition, prime-district projects such as Keppel Land's The Promont, Viva, and Belle Vue Residences will have bathrooms decked out with Axor fittings.
The brand comes under Hansgrohe and according to the latter, Axor Starck, Axor Citterio and Axor Massaud fittings are popular with developers here. Single-lever high-riser basin mixer from these lines are priced from around $1,300 to $2,190. 'We have achieved consistent and very significant growth in our partnership with property developers,' Hansgrohe said.
Developers are also giving attention to kitchens. Units at The Ritz-Carlton Residences and The Marq On Paterson Hill will come with a 90cm Miele oven, which is priced at a cool $15,730.
'Apart from the key essentials which are cooker hoods, hobs and ovens, many property developers have further embraced lifestyle components such as Miele wine cellars, coffee makers, steam ovens and plate warmers for their luxury developments,' said Miele projects general manager Roland Ong.
And reflecting the growing trend of using branded appliances, even mass-market projects such as Trevista in Toa Payoh and The Peak @ Balmeg in West Coast are creating a splash in their bathrooms with Hansgrohe fittings.
'Not only in the prime areas - in other districts also, more developers are using branded goods,' Knight Frank executive director (residential) Peter Ow observed.
Ngee Ann Polytechnic real estate lecturer Nicholas Mak estimates that 6-8 per cent of the cost of building a high-end apartment goes to appliances and furnishings such as dryers and cooker hoods. For mass-market condominium units, the figure is about 5-6 per cent.
Chesterton Suntec's Mr Tan believes that the money is well spent for prime projects which compete less on pricing. The appliances 'add considerably to the overall show apartment experience' and with them, 'developers are able to go some way to justify the higher prices'.
In fact, market watchers reckon that developers could have received discounts from buying the appliances in bulk. This would lower the cost of including them in units.
But the strategy may not be as effective for mass-market projects which tend to draw more price-sensitive buyers. A civil servant who declined to be named told BT that she recently bought a resale condominium unit because it cost less than a newly launched one. The place did not come with fancy appliances but she later installed one - a Hansgrohe shower.
Home seekers in this market may also place less emphasis on brands and developers need to know their target markets well, Mr Tan said.
Source: Business Times, 31 Oct 09
A MIELE oven can do more than bake a cake these days - it might just help whip up a home sale. More developers are including branded appliances in apartments to impress home seekers, and some have certainly stopped to gawk at the gadgetry.
But will all house hunters bite? Anecdotal evidence suggests that some would still care more about the prices of the homes, especially if they were never fans of the brands to begin with.
'The inclusion of branded appliances has both its good and bad points,' said Chesterton Suntec International research and consultancy director Colin Tan.
'If the developer knows his target market well, it is a plus. . . It is a negative if the buyer does not recognise the brand or appreciate it.'
Developers of mid to high-end units have used premium furnishings to boost their projects' image for some time, but the trend gathered more steam some two years ago when markets boomed.
Rich consumers searched for new ways to spend, and steel fridges and dishwashers quickly became the new status symbols.
It is easy to get used to a good thing but difficult to quit it. The recession may have eroded some consumers' savings but not their aspirations for luxury. This is especially so in Asia, which did not bear the brunt of the downturn.
'As consumers become more globalised and develop a taste for fine living, they are more willing to pay for luxury homes that are distinguished in areas such as design and architecture, premium fittings and furnishings as well as facilities,' said Keppel Land marketing general manager Albert Foo.
CapitaLand and Far East Organization also shared that they use fittings which meet home owners' lifestyle needs.
To stand out among the competition, prime-district projects such as Keppel Land's The Promont, Viva, and Belle Vue Residences will have bathrooms decked out with Axor fittings.
The brand comes under Hansgrohe and according to the latter, Axor Starck, Axor Citterio and Axor Massaud fittings are popular with developers here. Single-lever high-riser basin mixer from these lines are priced from around $1,300 to $2,190. 'We have achieved consistent and very significant growth in our partnership with property developers,' Hansgrohe said.
Developers are also giving attention to kitchens. Units at The Ritz-Carlton Residences and The Marq On Paterson Hill will come with a 90cm Miele oven, which is priced at a cool $15,730.
'Apart from the key essentials which are cooker hoods, hobs and ovens, many property developers have further embraced lifestyle components such as Miele wine cellars, coffee makers, steam ovens and plate warmers for their luxury developments,' said Miele projects general manager Roland Ong.
And reflecting the growing trend of using branded appliances, even mass-market projects such as Trevista in Toa Payoh and The Peak @ Balmeg in West Coast are creating a splash in their bathrooms with Hansgrohe fittings.
'Not only in the prime areas - in other districts also, more developers are using branded goods,' Knight Frank executive director (residential) Peter Ow observed.
Ngee Ann Polytechnic real estate lecturer Nicholas Mak estimates that 6-8 per cent of the cost of building a high-end apartment goes to appliances and furnishings such as dryers and cooker hoods. For mass-market condominium units, the figure is about 5-6 per cent.
Chesterton Suntec's Mr Tan believes that the money is well spent for prime projects which compete less on pricing. The appliances 'add considerably to the overall show apartment experience' and with them, 'developers are able to go some way to justify the higher prices'.
In fact, market watchers reckon that developers could have received discounts from buying the appliances in bulk. This would lower the cost of including them in units.
But the strategy may not be as effective for mass-market projects which tend to draw more price-sensitive buyers. A civil servant who declined to be named told BT that she recently bought a resale condominium unit because it cost less than a newly launched one. The place did not come with fancy appliances but she later installed one - a Hansgrohe shower.
Home seekers in this market may also place less emphasis on brands and developers need to know their target markets well, Mr Tan said.
Source: Business Times, 31 Oct 09
Home away from home
For many in a busy city, the office may be their second home but feels nothing like one. To reinvent your perception of working space, apbcOffices recently launched its latest project, 75 High Street, which it has refurbished to the tune of $5 million.
The eight-storey serviced apartment looks and feels like a boutique hotel with a reception styled like a bartop, complete with a chess set, miniature Japanese garden and an extensive menu of snacks and beverages from pretzels to champagne.
“(But) we wanted to take this concept further. To create not only a space where business professionals of all industries could gather and exchange ideas but we also wanted our space to inspire and act as icebreakers,” said CEO of apbcOffices Tony Chen.
In the basement, meeting places go beyond your square rooms with stark interiors with plush white spaces and cushioned enclaves ushering you into private spaces. You may book the space for a cocktail event or product launch.
Otherwise, the office block functions like a typical serviced office, with concierge, secretarial and information support.
75 High Street was designed by Mr Colin Seah of Ministry of Design, whose works include the New Majestic Hotel at Chinatown. The 20,000 sq ft development houses 44 offices. Monthly rental is between $1,500 and $1,800 per work station. It is already 30-per-cent committed. Tenants include IT companies, education and lifestyle companies.
Marketed as a “premium boutique serviced office”, apbcOffices is the serviced office arm of Singapore-based state investment and management company Timothy Holdings, which has a portfolio of some $200 million in Asia.
Source: Today, 31 Oct 2009
The eight-storey serviced apartment looks and feels like a boutique hotel with a reception styled like a bartop, complete with a chess set, miniature Japanese garden and an extensive menu of snacks and beverages from pretzels to champagne.
“(But) we wanted to take this concept further. To create not only a space where business professionals of all industries could gather and exchange ideas but we also wanted our space to inspire and act as icebreakers,” said CEO of apbcOffices Tony Chen.
In the basement, meeting places go beyond your square rooms with stark interiors with plush white spaces and cushioned enclaves ushering you into private spaces. You may book the space for a cocktail event or product launch.
Otherwise, the office block functions like a typical serviced office, with concierge, secretarial and information support.
75 High Street was designed by Mr Colin Seah of Ministry of Design, whose works include the New Majestic Hotel at Chinatown. The 20,000 sq ft development houses 44 offices. Monthly rental is between $1,500 and $1,800 per work station. It is already 30-per-cent committed. Tenants include IT companies, education and lifestyle companies.
Marketed as a “premium boutique serviced office”, apbcOffices is the serviced office arm of Singapore-based state investment and management company Timothy Holdings, which has a portfolio of some $200 million in Asia.
Source: Today, 31 Oct 2009
Hong Kong tycoon sheds stock, loads up on land
BILLIONAIRE Lee Shau-kee said he has sold as much as 30 per cent of his Hong Kong stock investments and is buying land, betting that the government’s efforts to cool home prices won’t work.
Mr Lee, chairman and controlling shareholder of Henderson Land Development Co, has put HK$20 billion (S$3.6 billion) of proceeds from the sale of shares into real estate, he said at a press conference in Hong Kong on Thursday.
Hong Kong’s third-richest man is increasing his holdings as the government tries to rein in a 28 per cent surge in home values that’s sparked tensions with the city’s developers. The government has raised downpayments for luxury apartments and threatened to intervene if the market becomes ‘unhealthy’.
‘The new mortgage measures are not going to have much impact on luxury home prices,’ said Mr Lee, 81, whose wealth was estimated at US$9 billion by Forbes magazine in March. ‘Most of those buyers are tycoons and don’t need to take up mortgages to buy.’
Mr Lee’s comments came as Hong Kong Financial Secretary John Tsang stepped up criticism of developers’ sales tactics and expressed concern that the boom in the luxury market would spread to smaller apartments.
‘Developers should not mislead the market or distort the public’s views on the market,’ Mr Tsang told legislators on Thursday, according to a transcript on the government’s website. ‘I’m concerned about the confusion over the recent sales tactics and transacted prices of the primary residential market.’
Lawmakers have criticised Henderson for renumbering floors in its 39 Conduit Road development. The top floor of the 46-story building was labelled 88 because the number is considered lucky in Chinese.
‘Our clients like auspicious numbers and it’s common for Hong Kong developers to omit some floors,’ Mr Lee said on Thursday. The floor-numbering was specified in the developer’s brochures and is ‘nothing special’, he said.
Mr Lee also said the HK$439 million price paid for a duplex in 39 Conduit Road was ‘100 per cent real’. Henderson claimed the HK$71,280 per square foot price was a record for Asia.
‘I don’t lie,’ Mr Lee said. ‘Buyers like these apartments as they are similar to rare jewellery. The more expensive it is, the more the buyers like it.’
The increase in luxury prices hasn’t affected the mid-segment market, he said. An apartment larger than 1,000 square feet is categorised as luxury under local industry standards.
Hong Kong luxury home prices rose 28 per cent in the first nine months of 2009, according to Colliers International, while the benchmark Hang Seng Index almost doubled. On Oct 14, Hong Kong Chief Executive Donald Tsang expressed concern that a property bubble may be forming.
The Hong Kong dollar is pegged to the US currency, so a decline in the US dollar makes the city’s assets cheaper for non-residents, boosting demand further. ‘With the depreciation in the dollar, if you don’t buy fixed assets, you will lose money,’ Mr Lee noted.
Henderson Land and partner New World Development Co will pay HK$9.6 billion for a building site, Mr Lee said.
Henderson is also spending more than HK$10 billion buying old buildings for redevelopment.
Values of homes of at least 160 square metres have broken a previous record set in the third quarter of 1997, the Hong Kong Monetary Authority, the city’s de facto central bank, said in an Oct 23 statement to banks when it tightened downpayment requirements.
Source: Business Times, 31 Oct 2009
Mr Lee, chairman and controlling shareholder of Henderson Land Development Co, has put HK$20 billion (S$3.6 billion) of proceeds from the sale of shares into real estate, he said at a press conference in Hong Kong on Thursday.
Hong Kong’s third-richest man is increasing his holdings as the government tries to rein in a 28 per cent surge in home values that’s sparked tensions with the city’s developers. The government has raised downpayments for luxury apartments and threatened to intervene if the market becomes ‘unhealthy’.
‘The new mortgage measures are not going to have much impact on luxury home prices,’ said Mr Lee, 81, whose wealth was estimated at US$9 billion by Forbes magazine in March. ‘Most of those buyers are tycoons and don’t need to take up mortgages to buy.’
Mr Lee’s comments came as Hong Kong Financial Secretary John Tsang stepped up criticism of developers’ sales tactics and expressed concern that the boom in the luxury market would spread to smaller apartments.
‘Developers should not mislead the market or distort the public’s views on the market,’ Mr Tsang told legislators on Thursday, according to a transcript on the government’s website. ‘I’m concerned about the confusion over the recent sales tactics and transacted prices of the primary residential market.’
Lawmakers have criticised Henderson for renumbering floors in its 39 Conduit Road development. The top floor of the 46-story building was labelled 88 because the number is considered lucky in Chinese.
‘Our clients like auspicious numbers and it’s common for Hong Kong developers to omit some floors,’ Mr Lee said on Thursday. The floor-numbering was specified in the developer’s brochures and is ‘nothing special’, he said.
Mr Lee also said the HK$439 million price paid for a duplex in 39 Conduit Road was ‘100 per cent real’. Henderson claimed the HK$71,280 per square foot price was a record for Asia.
‘I don’t lie,’ Mr Lee said. ‘Buyers like these apartments as they are similar to rare jewellery. The more expensive it is, the more the buyers like it.’
The increase in luxury prices hasn’t affected the mid-segment market, he said. An apartment larger than 1,000 square feet is categorised as luxury under local industry standards.
Hong Kong luxury home prices rose 28 per cent in the first nine months of 2009, according to Colliers International, while the benchmark Hang Seng Index almost doubled. On Oct 14, Hong Kong Chief Executive Donald Tsang expressed concern that a property bubble may be forming.
The Hong Kong dollar is pegged to the US currency, so a decline in the US dollar makes the city’s assets cheaper for non-residents, boosting demand further. ‘With the depreciation in the dollar, if you don’t buy fixed assets, you will lose money,’ Mr Lee noted.
Henderson Land and partner New World Development Co will pay HK$9.6 billion for a building site, Mr Lee said.
Henderson is also spending more than HK$10 billion buying old buildings for redevelopment.
Values of homes of at least 160 square metres have broken a previous record set in the third quarter of 1997, the Hong Kong Monetary Authority, the city’s de facto central bank, said in an Oct 23 statement to banks when it tightened downpayment requirements.
Source: Business Times, 31 Oct 2009
CDLHT’s distributable income for Q3 slips 30.5%
CDL Hospitality Trusts (CDLHT) has posted distributable income of about $16.97 million for the third quarter ended Sept 30, 2009, a 30.5 per cent drop from the same period last year.
The $16.97 million is after deducting $1.66 million that the trust is retaining for working capital.
The net distributable income for Q3 2009 reflects a distribution per unit of 2.04 cents for the period, which is 30.4 per cent lower than the 2.93 cents in the same year-ago period. However, CDLHT will not be making a payout for Q3.
CDLHT owns five Singapore hotels, the Orchard Hotel Shopping Arcade as well as Rendezvous Hotel Auckland.
Although its Singapore hotels suffered a 28 per cent year-on-year decline in room revenue per available room (or RevPAR) to $154 in Q3 2009, this was the strongest quarter performance this year.
The Q3 showing was a ’significant improvement compared to the 39.6 per cent year-on-year decline in RevPAR in Q2 2009′, CDLHT said. ‘Management expects the positive trend of an easing in year-on-year RevPAR decline to continue into Q4 2009.’
Beyond this year, the trust is ‘poised to participate in the next tourism growth cycle as new demand generators act as catalysts in enhancing Singapore’s appeal’, it added.
Gross revenue slipped 21.4 per cent year on year to $22.9 million for Q3.
Although the Singapore hotels were able to maintain their occupancy rates at 86 per cent in the third quarter of 2009 due to contributions from the Apec conference and the Formula One Singapore Grand Prix, the average room rates achieved for the quarter remained soft due to stiff market competition, which was fuelled by cutbacks in business and leisure travel following the global financial crisis.
Net property income fell 21.5 per cent to $21.4 million for Q3 2009.
The counter ended three cents higher at $1.59 yesterday.
Source: Business Times, 31 Oct 2009
The $16.97 million is after deducting $1.66 million that the trust is retaining for working capital.
The net distributable income for Q3 2009 reflects a distribution per unit of 2.04 cents for the period, which is 30.4 per cent lower than the 2.93 cents in the same year-ago period. However, CDLHT will not be making a payout for Q3.
CDLHT owns five Singapore hotels, the Orchard Hotel Shopping Arcade as well as Rendezvous Hotel Auckland.
Although its Singapore hotels suffered a 28 per cent year-on-year decline in room revenue per available room (or RevPAR) to $154 in Q3 2009, this was the strongest quarter performance this year.
The Q3 showing was a ’significant improvement compared to the 39.6 per cent year-on-year decline in RevPAR in Q2 2009′, CDLHT said. ‘Management expects the positive trend of an easing in year-on-year RevPAR decline to continue into Q4 2009.’
Beyond this year, the trust is ‘poised to participate in the next tourism growth cycle as new demand generators act as catalysts in enhancing Singapore’s appeal’, it added.
Gross revenue slipped 21.4 per cent year on year to $22.9 million for Q3.
Although the Singapore hotels were able to maintain their occupancy rates at 86 per cent in the third quarter of 2009 due to contributions from the Apec conference and the Formula One Singapore Grand Prix, the average room rates achieved for the quarter remained soft due to stiff market competition, which was fuelled by cutbacks in business and leisure travel following the global financial crisis.
Net property income fell 21.5 per cent to $21.4 million for Q3 2009.
The counter ended three cents higher at $1.59 yesterday.
Source: Business Times, 31 Oct 2009
How condos protect their funds
SOME managing agents of condominiums here are not allowed to sign on cheques to make payments on behalf of the estates they run. Such duties are usually entrusted to the estate’s management councils. Usually, at least two signatures – that of the chairman and treasurer or secretary – are needed for cheque payments.
It is a safeguard against possible misappropriation of funds by managing agents, said Mr Vijayen Nair, a property manager from Philip Motha Property Management, which runs about 30 condominiums and commercial buildings here.
The 52-year-old, who manages The 101 complex – a residential and commercial building in Beach Road, keeps the cheque books to the estate’s funds under lock and key. His employees have to present invoices and purchase orders for him to verify before he writes the cheques. They will then get the necessary signatures from the estate’s council members. ‘If any money goes missing, I become personally liable,’ he told The Straits Times.
Mr Chan Kok Hong, managing director of CKH Strata Management which looks after 95 condominiums, said his firm has become increasingly reliant on Internet banking to keep tabs on the money that goes in and out of an estate’s fund. ‘Its faster to track this way. With Internet banking, I can verify almost immediately that the money has been deposited, rather than wait for the bank slip at the end of the month.’
Both he and Mr Nair stressed the importance of dilligence when documenting evidence of transactions. Mr Chan said council treasurers should ’scrutinise the accounts, ask a lot of questions and sign off on all documents’ to avoid fraud being committed.
Kimberly Spykerman
Source: Straits Times, 31 Oct 2009
It is a safeguard against possible misappropriation of funds by managing agents, said Mr Vijayen Nair, a property manager from Philip Motha Property Management, which runs about 30 condominiums and commercial buildings here.
The 52-year-old, who manages The 101 complex – a residential and commercial building in Beach Road, keeps the cheque books to the estate’s funds under lock and key. His employees have to present invoices and purchase orders for him to verify before he writes the cheques. They will then get the necessary signatures from the estate’s council members. ‘If any money goes missing, I become personally liable,’ he told The Straits Times.
Mr Chan Kok Hong, managing director of CKH Strata Management which looks after 95 condominiums, said his firm has become increasingly reliant on Internet banking to keep tabs on the money that goes in and out of an estate’s fund. ‘Its faster to track this way. With Internet banking, I can verify almost immediately that the money has been deposited, rather than wait for the bank slip at the end of the month.’
Both he and Mr Nair stressed the importance of dilligence when documenting evidence of transactions. Mr Chan said council treasurers should ’scrutinise the accounts, ask a lot of questions and sign off on all documents’ to avoid fraud being committed.
Kimberly Spykerman
Source: Straits Times, 31 Oct 2009
Frasers plans most aggressive expansion ever
Frasers Hospitality is embarking on its most aggressive expansion plan yet, notwithstanding the global downturn that has stung the business clientele it predominantly serves.
The hospitality arm of conglomerate Fraser & Neave is opening 26 new properties over the next two years, but is already looking beyond this number.
Its latest goal is to sign up as many as three times that figure in the coming years, said Frasers Hospitality chief executive officer Choe Peng Sum.
?’We are opening up 26 projects, but we are probably looking at double or triple that for new sign-ups going forward,’ he said.
He was speaking at an interview before signing a management contract with landlord China Resources Land (CRL) yesterday to manage Frasers’ fourth service residence in Shanghai.
The signing ceremony was witnessed by Mrs Lim Hwee Hua, Singapore’s Second Minister for Finance and Transport and a Minister in the Prime Minister’s Office, who was the guest-of-honour.
‘The window of opportunity will come up within this year or next. We need to gear up for that. We want to scale up the business and extend our footprint,’ Mr Choe told The Straits Times.
This sort of scalability – which allows companies to grow their businesses without needing to make major changes or investments – is key in the service hospitality sector, he said, not unlike the case for global hotel chains such as Marriott and Four Seasons.
‘The more we sign up, the more we earn,’ he said.
This growth model – which has enabled Frasers to boost revenues fairly quickly – is underpinned by high occupancy rates at its 35 properties worldwide, despite a fall in business travel caused by the global downturn.
Even in Europe, where economies are among the hardest-hit, occupancy rates at Frasers properties have held up.
‘In Europe, banks are reluctant to lend, and they are very careful and all,’ Mr Choe said. ‘But business-wise, we have been pleasantly surprised that occupancy at our existing properties is in the high 80 to 90 per cent range – from London to Paris, even at our two properties in Scotland.’
Though Europe has managed to hold its own, there is no denying that the real growth story is coming out of Asia, particularly in India and China. Frasers has inked deals to open six properties in India, while in China, it will be managing 18 properties, with more to come.
The latest addition – the 212-unit Fraser Place Shanghai, set to open in 2011 – will take the total number of residences in its portfolio in the Chinese city alone to 1,271. Overall, Frasers currently operates 4,171 apartments in nine major cities in China.
Worldwide, it has more than 5,000 individual residences.
‘And with another 4,000 residences already on the drawing board, the company is on course to manage nearly 10,000 residences by the end of 2012,’ Frasers said in a statement yesterday.
Beyond its traditional base, the company is also looking to establish a foothold in North and South America.
In New York, it has set up a sales office to help direct and manage the housing needs of American firms whose employees have been posted to markets where Frasers has a presence.
Setting up shop in Brazil is also a distinct possibility, Mr Choe said, given the potential offered by the South American market. Further, Brazil’s hosting of the 2014 World Cup Finals and 2016 Olympics should open up more opportunities.
While demand for service apartments remains strong, the same cannot be said of revenues. Ascott Residence Trust, a Singapore-based trust that derives its earnings from the service hospitality business, reported this week that its distributable income to unit holders had fallen by 25 per cent for the third quarter. It attributed the fall to a 24 per cent drop in average revenue per available room.
Mr Choe acknowledged that Frasers faced similar pricing pressure, with average rates dropping by 15 per cent to 20 per cent. Still, this segment is faring better than hotels, whose average revenue per available room has declined by 35 per cent to 40 per cent, he added.
Mr Stiven Tan, who manages the almost fully occupied 317-apartment Fraser Suites Shanghai, said that service apartments remain the preferred housing choice for expatriates, even though they might be able to secure cheaper accommodation through individual landlords.
Expats appreciate not having to deal with mundane but troublesome issues such as where to seek help if their washing machines break down, especially when they do not speak the local language, he said.
Source: Straits Times, 31 Oct 2009
The hospitality arm of conglomerate Fraser & Neave is opening 26 new properties over the next two years, but is already looking beyond this number.
Its latest goal is to sign up as many as three times that figure in the coming years, said Frasers Hospitality chief executive officer Choe Peng Sum.
?’We are opening up 26 projects, but we are probably looking at double or triple that for new sign-ups going forward,’ he said.
He was speaking at an interview before signing a management contract with landlord China Resources Land (CRL) yesterday to manage Frasers’ fourth service residence in Shanghai.
The signing ceremony was witnessed by Mrs Lim Hwee Hua, Singapore’s Second Minister for Finance and Transport and a Minister in the Prime Minister’s Office, who was the guest-of-honour.
‘The window of opportunity will come up within this year or next. We need to gear up for that. We want to scale up the business and extend our footprint,’ Mr Choe told The Straits Times.
This sort of scalability – which allows companies to grow their businesses without needing to make major changes or investments – is key in the service hospitality sector, he said, not unlike the case for global hotel chains such as Marriott and Four Seasons.
‘The more we sign up, the more we earn,’ he said.
This growth model – which has enabled Frasers to boost revenues fairly quickly – is underpinned by high occupancy rates at its 35 properties worldwide, despite a fall in business travel caused by the global downturn.
Even in Europe, where economies are among the hardest-hit, occupancy rates at Frasers properties have held up.
‘In Europe, banks are reluctant to lend, and they are very careful and all,’ Mr Choe said. ‘But business-wise, we have been pleasantly surprised that occupancy at our existing properties is in the high 80 to 90 per cent range – from London to Paris, even at our two properties in Scotland.’
Though Europe has managed to hold its own, there is no denying that the real growth story is coming out of Asia, particularly in India and China. Frasers has inked deals to open six properties in India, while in China, it will be managing 18 properties, with more to come.
The latest addition – the 212-unit Fraser Place Shanghai, set to open in 2011 – will take the total number of residences in its portfolio in the Chinese city alone to 1,271. Overall, Frasers currently operates 4,171 apartments in nine major cities in China.
Worldwide, it has more than 5,000 individual residences.
‘And with another 4,000 residences already on the drawing board, the company is on course to manage nearly 10,000 residences by the end of 2012,’ Frasers said in a statement yesterday.
Beyond its traditional base, the company is also looking to establish a foothold in North and South America.
In New York, it has set up a sales office to help direct and manage the housing needs of American firms whose employees have been posted to markets where Frasers has a presence.
Setting up shop in Brazil is also a distinct possibility, Mr Choe said, given the potential offered by the South American market. Further, Brazil’s hosting of the 2014 World Cup Finals and 2016 Olympics should open up more opportunities.
While demand for service apartments remains strong, the same cannot be said of revenues. Ascott Residence Trust, a Singapore-based trust that derives its earnings from the service hospitality business, reported this week that its distributable income to unit holders had fallen by 25 per cent for the third quarter. It attributed the fall to a 24 per cent drop in average revenue per available room.
Mr Choe acknowledged that Frasers faced similar pricing pressure, with average rates dropping by 15 per cent to 20 per cent. Still, this segment is faring better than hotels, whose average revenue per available room has declined by 35 per cent to 40 per cent, he added.
Mr Stiven Tan, who manages the almost fully occupied 317-apartment Fraser Suites Shanghai, said that service apartments remain the preferred housing choice for expatriates, even though they might be able to secure cheaper accommodation through individual landlords.
Expats appreciate not having to deal with mundane but troublesome issues such as where to seek help if their washing machines break down, especially when they do not speak the local language, he said.
Source: Straits Times, 31 Oct 2009
S'pore is 2nd best place for business: Poll
Reasons cited include growth of private wealth management in country
WASHINGTON: New York has withstood the worst economic crisis in seven decades and remains the leading global financial centre, followed by Singapore, which pipped London as investors' preferred place for doing business, according to the Bloomberg Global Poll.
Twenty-nine per cent of respondents in the quarterly poll of investors, traders and analysts who subscribe to the Bloomberg terminal said New York will be the best place for financial services two years from now. Singapore was chosen by 17 per cent of respondents while London was the pick of 16 per cent. Shanghai had 11 per cent, while Tokyo, once considered a global hub, got the nod from only 1 per cent.
'Despite the carnage of 2008, I still expect the 'new new' thing in financial services to be developed and nurtured here (in New York), and ultimately exported to the world,' said respondent Peter Rup.
On a separate question, respondents said China, Brazil and India offered investors the best opportunities for making money. The United States, Europe and Japan were seen to have less potential.
Both US and British lawmakers are working to rebuild a web of financial regulations and raise taxes after the credit crisis and recession wiped out trillions of dollars in household wealth and more than 10 million jobs.
Investors said they expected the US administration under President Barack Obama to be more restrained in reining in risk-taking than that of British Prime Minister Gordon Brown.
The quarterly Bloomberg Global Poll of investors and analysts in six continents was conducted between Oct 23 and 27. It was based on interviews with a random sample of 1,452 Bloomberg subscribers, representing decision-makers in markets, finance and economics.
The ascent of Singapore and the decline of London reflect the rise of specialised financial centres that cater to specific segments of the industry.
Many hedge funds have left the British capital because of a new top income tax rate of 50 per cent and regulations planned by the European Union that restrict the amount they can borrow.
Singapore and Shanghai are growing in popularity as firms look for ways to tap the wealth that has accumulated in China and the rest of Asia. Private wealth management, in particular, is growing in Singapore, which has no capital gains tax.
'Everything in Singapore is so well organised. Everything is so efficient. Everything works,' said Mr Gary Addison, a partner at private equity firm Actis Capital. He worked in London, then Tokyo, before moving to Singapore two years ago.
Singapore's investment climate also attracts firms seeking high returns.
Dubai, like China and Singapore, remains a popular regional financial centre for investors who want to take advantage of the oil wealth in the Middle East. The sheikhdom was the preferred locale of 5 per cent of those polled.
BLOOMBERG
Source: Straits Times, 31 Oct 2009
WASHINGTON: New York has withstood the worst economic crisis in seven decades and remains the leading global financial centre, followed by Singapore, which pipped London as investors' preferred place for doing business, according to the Bloomberg Global Poll.
Twenty-nine per cent of respondents in the quarterly poll of investors, traders and analysts who subscribe to the Bloomberg terminal said New York will be the best place for financial services two years from now. Singapore was chosen by 17 per cent of respondents while London was the pick of 16 per cent. Shanghai had 11 per cent, while Tokyo, once considered a global hub, got the nod from only 1 per cent.
'Despite the carnage of 2008, I still expect the 'new new' thing in financial services to be developed and nurtured here (in New York), and ultimately exported to the world,' said respondent Peter Rup.
On a separate question, respondents said China, Brazil and India offered investors the best opportunities for making money. The United States, Europe and Japan were seen to have less potential.
Both US and British lawmakers are working to rebuild a web of financial regulations and raise taxes after the credit crisis and recession wiped out trillions of dollars in household wealth and more than 10 million jobs.
Investors said they expected the US administration under President Barack Obama to be more restrained in reining in risk-taking than that of British Prime Minister Gordon Brown.
The quarterly Bloomberg Global Poll of investors and analysts in six continents was conducted between Oct 23 and 27. It was based on interviews with a random sample of 1,452 Bloomberg subscribers, representing decision-makers in markets, finance and economics.
The ascent of Singapore and the decline of London reflect the rise of specialised financial centres that cater to specific segments of the industry.
Many hedge funds have left the British capital because of a new top income tax rate of 50 per cent and regulations planned by the European Union that restrict the amount they can borrow.
Singapore and Shanghai are growing in popularity as firms look for ways to tap the wealth that has accumulated in China and the rest of Asia. Private wealth management, in particular, is growing in Singapore, which has no capital gains tax.
'Everything in Singapore is so well organised. Everything is so efficient. Everything works,' said Mr Gary Addison, a partner at private equity firm Actis Capital. He worked in London, then Tokyo, before moving to Singapore two years ago.
Singapore's investment climate also attracts firms seeking high returns.
Dubai, like China and Singapore, remains a popular regional financial centre for investors who want to take advantage of the oil wealth in the Middle East. The sheikhdom was the preferred locale of 5 per cent of those polled.
BLOOMBERG
Source: Straits Times, 31 Oct 2009
Condo's clerk ordered to return $2.2m
Man in civil claim also under criminal probe for reported fraud
AN ACCOUNTS clerk was ordered to return some $2.2 million that he took over 18 months from a condominium management office, where he had worked since May 2003.
Mr Chew Swee Siong, 30, did not show up in court to contest the High Court claim brought by the West Bay Condominium management committee. He was served with court papers last month.
The police told The Straits Times yesterday that Mr Chew is also under criminal investigation for the reported fraud.
On Thursday, Assistant Registrar Leong Weng Tat ordered Mr Chew to pay up after having heard earlier from West Bay's lawyer, Mr Leslie Netto, in the condo's civil claim.
Mr Chew was also ordered to pay damages and costs to be assessed later. It is believed he had gambling debts.
According to court documents filed, Mr Chew's duties at the condo included taking charge of all cheque books, fixed deposit receipts and other documents such as bank statements, payment vouchers and correspondence files in relation to the accounts of the condo management.
As the sole employee in charge of the condo's finance accounts, he was also responsible for collecting, recording and banking all funds received by the condo.
He had the task of preparing the accounts in the annual audits for the annual general meetings, as well as updating and maintaining accounting records.
The 15-year-old condo in West Coast Crescent, in Pasir Panjang, has 318 units. According to the management committee chairman, Mr Chew had cleaned out the condo's management and sinking funds meant for upgrading, repair and maintenance, and paying contractors for work done.
The matter came to light in December 2007 after a new management committee took over. The chairman, Mr Jaffar Hassan, said yesterday: 'When we took over, there was just $1,200 left in the bank account for the condominium's upkeep.'
Mr Jaffar's team hired forensic accountants to trace how the money was taken in the 18-month period from June 2006. A police report was also lodged.
Among other things, it emerged that Mr Chew opened an additional bank account in the condo's name without getting authorisation from the committee.
According to court documents filed, he forged signatures to make cheque payments to himself. Cheques were meant to be signed by two office-bearers of the management committee.
Mr Jaffar said the committee was saddled with unpaid bills for cleaners, security guards and other contractors amounting to about $300,000.
There was also an unusable lift that needed $21,000 to repair.
Mr Jaffar said a general meeting was called and residents agreed to each contribute six instalments totalling $2,400. The contributions allowed the condo to continue with its upkeep.
He said: 'We had to move this at a very difficult time as there was a turnaround with an economic downturn.
'I hope the lessons learnt at West Bay will serve to make others more aware in the management of their estates.'
Source: Straits Times, 31 Oct 2009
AN ACCOUNTS clerk was ordered to return some $2.2 million that he took over 18 months from a condominium management office, where he had worked since May 2003.
Mr Chew Swee Siong, 30, did not show up in court to contest the High Court claim brought by the West Bay Condominium management committee. He was served with court papers last month.
The police told The Straits Times yesterday that Mr Chew is also under criminal investigation for the reported fraud.
On Thursday, Assistant Registrar Leong Weng Tat ordered Mr Chew to pay up after having heard earlier from West Bay's lawyer, Mr Leslie Netto, in the condo's civil claim.
Mr Chew was also ordered to pay damages and costs to be assessed later. It is believed he had gambling debts.
According to court documents filed, Mr Chew's duties at the condo included taking charge of all cheque books, fixed deposit receipts and other documents such as bank statements, payment vouchers and correspondence files in relation to the accounts of the condo management.
As the sole employee in charge of the condo's finance accounts, he was also responsible for collecting, recording and banking all funds received by the condo.
He had the task of preparing the accounts in the annual audits for the annual general meetings, as well as updating and maintaining accounting records.
The 15-year-old condo in West Coast Crescent, in Pasir Panjang, has 318 units. According to the management committee chairman, Mr Chew had cleaned out the condo's management and sinking funds meant for upgrading, repair and maintenance, and paying contractors for work done.
The matter came to light in December 2007 after a new management committee took over. The chairman, Mr Jaffar Hassan, said yesterday: 'When we took over, there was just $1,200 left in the bank account for the condominium's upkeep.'
Mr Jaffar's team hired forensic accountants to trace how the money was taken in the 18-month period from June 2006. A police report was also lodged.
Among other things, it emerged that Mr Chew opened an additional bank account in the condo's name without getting authorisation from the committee.
According to court documents filed, he forged signatures to make cheque payments to himself. Cheques were meant to be signed by two office-bearers of the management committee.
Mr Jaffar said the committee was saddled with unpaid bills for cleaners, security guards and other contractors amounting to about $300,000.
There was also an unusable lift that needed $21,000 to repair.
Mr Jaffar said a general meeting was called and residents agreed to each contribute six instalments totalling $2,400. The contributions allowed the condo to continue with its upkeep.
He said: 'We had to move this at a very difficult time as there was a turnaround with an economic downturn.
'I hope the lessons learnt at West Bay will serve to make others more aware in the management of their estates.'
Source: Straits Times, 31 Oct 2009
October home sales slow down
Only 355 private homes sold in the first nine days of the month
OCTOBER appears to have been a much quieter month in the private property market than recent months.
Just over 350 private homes were sold in the first nine days of the month - the only solid figures available so far.
Property consultants say the pace of buying did not appear to have picked up for the rest of the month. They say the market seems to be pausing for breath as buyers resist higher prices.
Savills Singapore said caveats lodged from Oct 1 to 9 - the only available October caveats - show 355 residential units were sold, including just 40 units of new homes and 52 sub-sale units.
In comparison, 787 units were sold in the first nine days of September, including 276 new homes and 102 sub-sale units, it said.
In the first nine months of this year, new private home sales hit a recession-defying 12,828 units, resales touched 10,185 units, while sub-sales totalled 2,780 units.
The quiet market reflects price rises over the past six months, property experts said. The Urban Redevelopment Authority's quarterly price index registered a 15.8 per cent rise - the largest in 28 years - in the July to September period.
Market watchers say mass market prices have now risen to previous peak levels.
Mid-tier prices are about 10 per cent to 15 per cent off those peaks while high-end prices are still about 25 per cent below.
Home prices have generally stabilised, and are likely to rise moderately in line with economic recovery, said DTZ head of South-east Asia research Chua Chor Hoon.
'In the past six months, the market had raced ahead of economic fundamentals. The high sales volume was not sustainable so what we are seeing now is a return to more sustainable levels,' she said.
Considering that the 10-year average for new home sales is 8,200 units, last year's 4,264 units was very weak, she said.
Sales of new homes this year are likely to be similar to 2007's record of 14,811, but next year's sales should drop back to close to the average, said Ms Chua.
The Government's mid-September measures to calm the property market also caused buyers to think twice, especially with prices rising, experts said.
By then, the market was already starting to slow a little, after surging furiously for several months, said Knight Frank chairman Tan Tiong Cheng.
'At the end of last month and the start of this month, after the Government removed the interest absorption scheme, buyers were concerned about the impact of the move and what's next,' said PropNex's chief executive Mohamed Ismail. 'But for us, resales have picked up.'
The market for new launches, however, appears quieter as there were no major suburban launches this month - the star performers this year.
'October is quieter compared with the previous months. Generally, launches have moved from the mass market ones to the mid- to higher-end projects, which entail larger price quantums. So some buyers may need a longer time to consider and commit,' said Savills' residential director Phylicia Ang.
This month's few big launches include Lincoln Suites, next to United Square mall. The project's developers - Koh Brothers, Heeton Holdings, KSH Holdings and Lian Beng Group - say they have sold 51 of 56 units released in a soft launch earlier this month.
Most of the units sold were studio units as well as the one- to two-bedders. The condo will be launched today.
In the first nine days of the month, only nine new units in districts 9, 10 and 11 were sold, compared with 144 in the same period last month, caveats showed.
The rest of the year may be relatively quiet, though buying might step up in the first quarter of next year, experts said.
Source: Straits Times, 31 Oct 2009
OCTOBER appears to have been a much quieter month in the private property market than recent months.
Just over 350 private homes were sold in the first nine days of the month - the only solid figures available so far.
Property consultants say the pace of buying did not appear to have picked up for the rest of the month. They say the market seems to be pausing for breath as buyers resist higher prices.
Savills Singapore said caveats lodged from Oct 1 to 9 - the only available October caveats - show 355 residential units were sold, including just 40 units of new homes and 52 sub-sale units.
In comparison, 787 units were sold in the first nine days of September, including 276 new homes and 102 sub-sale units, it said.
In the first nine months of this year, new private home sales hit a recession-defying 12,828 units, resales touched 10,185 units, while sub-sales totalled 2,780 units.
The quiet market reflects price rises over the past six months, property experts said. The Urban Redevelopment Authority's quarterly price index registered a 15.8 per cent rise - the largest in 28 years - in the July to September period.
Market watchers say mass market prices have now risen to previous peak levels.
Mid-tier prices are about 10 per cent to 15 per cent off those peaks while high-end prices are still about 25 per cent below.
Home prices have generally stabilised, and are likely to rise moderately in line with economic recovery, said DTZ head of South-east Asia research Chua Chor Hoon.
'In the past six months, the market had raced ahead of economic fundamentals. The high sales volume was not sustainable so what we are seeing now is a return to more sustainable levels,' she said.
Considering that the 10-year average for new home sales is 8,200 units, last year's 4,264 units was very weak, she said.
Sales of new homes this year are likely to be similar to 2007's record of 14,811, but next year's sales should drop back to close to the average, said Ms Chua.
The Government's mid-September measures to calm the property market also caused buyers to think twice, especially with prices rising, experts said.
By then, the market was already starting to slow a little, after surging furiously for several months, said Knight Frank chairman Tan Tiong Cheng.
'At the end of last month and the start of this month, after the Government removed the interest absorption scheme, buyers were concerned about the impact of the move and what's next,' said PropNex's chief executive Mohamed Ismail. 'But for us, resales have picked up.'
The market for new launches, however, appears quieter as there were no major suburban launches this month - the star performers this year.
'October is quieter compared with the previous months. Generally, launches have moved from the mass market ones to the mid- to higher-end projects, which entail larger price quantums. So some buyers may need a longer time to consider and commit,' said Savills' residential director Phylicia Ang.
This month's few big launches include Lincoln Suites, next to United Square mall. The project's developers - Koh Brothers, Heeton Holdings, KSH Holdings and Lian Beng Group - say they have sold 51 of 56 units released in a soft launch earlier this month.
Most of the units sold were studio units as well as the one- to two-bedders. The condo will be launched today.
In the first nine days of the month, only nine new units in districts 9, 10 and 11 were sold, compared with 144 in the same period last month, caveats showed.
The rest of the year may be relatively quiet, though buying might step up in the first quarter of next year, experts said.
Source: Straits Times, 31 Oct 2009
Friday, October 30, 2009
Ideal Accommodation’s appeal dismissed
The High Court on Thursday dismissed Ideal Accommodation’s appeal against a court order to pay Cove Development rental arrears amounting to over $872,000.
The sum represents approximately two months of rental arrears for units at Grangeford Apartments which were leased to Ideal.
Earlier this year, Ideal was charged with illegally renting out 171 units of Grangeford Apartments – 141 of which had been divided into 600 sub-units, violating the Planning Act.
Cove Development terminated its lease with Ideal Accommodation to regain possession of the apartments in June this year.
Source: Channel News Asia, 30 Oct 2009
The sum represents approximately two months of rental arrears for units at Grangeford Apartments which were leased to Ideal.
Earlier this year, Ideal was charged with illegally renting out 171 units of Grangeford Apartments – 141 of which had been divided into 600 sub-units, violating the Planning Act.
Cove Development terminated its lease with Ideal Accommodation to regain possession of the apartments in June this year.
Source: Channel News Asia, 30 Oct 2009
BTO flats in Sengkang & Jurong West almost 4 times subscribed
There were almost four times the numbers of applicants for the 1,200 flats released in HDB’s Build-To-Order (BTO) flats in Sengkang and Jurong West.
However, one industry player sees this demand for BTO flats as the norm and not as a result of the recent high prices in the HDB resale market.
Mohammed Ismail, CEO of Propnex, said: “BTO are generally in greater demand and the usual number of subscription actually depends on the location. If the BTO appears in a mature estate, we could see a very high number, (one which could) well exceed five times (the number of available flats).”
Prices for resale flats are expected to remain high over the next few quarters because of the demand from those who do not qualify for the BTO or Design, Build and Sell Scheme (DBSS) projects.
Eugene Lim, ERA’s Asia-Pacific’s associate director, commented that new BTO flats will do little to dampen resale prices.
He said: “Currently, the take-up in the resale market is pretty strong, so we do not foresee that resale prices will come down. They may continue to trickle upwards.
“The number of new flats released by HDB caters predominantly for first-time home owners as most of the flats are prioritized for them.
“Those that do not qualify or cannot wait for three years will go to the resale market. So in that sense, only a small portion of the resale market has been affected.”
HDB will release 13,500 flats by the end of this year, with another 4,000 slated to be released in November and December in Punggol, Bukit Panjang, Sembawang and Dawson.
Source: Channel News Asia, 30 Oct 2009
However, one industry player sees this demand for BTO flats as the norm and not as a result of the recent high prices in the HDB resale market.
Mohammed Ismail, CEO of Propnex, said: “BTO are generally in greater demand and the usual number of subscription actually depends on the location. If the BTO appears in a mature estate, we could see a very high number, (one which could) well exceed five times (the number of available flats).”
Prices for resale flats are expected to remain high over the next few quarters because of the demand from those who do not qualify for the BTO or Design, Build and Sell Scheme (DBSS) projects.
Eugene Lim, ERA’s Asia-Pacific’s associate director, commented that new BTO flats will do little to dampen resale prices.
He said: “Currently, the take-up in the resale market is pretty strong, so we do not foresee that resale prices will come down. They may continue to trickle upwards.
“The number of new flats released by HDB caters predominantly for first-time home owners as most of the flats are prioritized for them.
“Those that do not qualify or cannot wait for three years will go to the resale market. So in that sense, only a small portion of the resale market has been affected.”
HDB will release 13,500 flats by the end of this year, with another 4,000 slated to be released in November and December in Punggol, Bukit Panjang, Sembawang and Dawson.
Source: Channel News Asia, 30 Oct 2009
Home sales: Boom with a difference
PROPERTY developers here appear set to sell at least as many new homes this year as in the record year of 2007.
But the total value of these new private homes is on track to be only about half of that two years ago, underlining how different the two property booms have been.
This shift is partly thanks to a dramatic rise in sales of smaller, mass market units, says a new analysis by CBRE Research.
The running total for units sold in the first three quarters of this year is 12,828 compared to 2007’s 14,811 – so even average sales for the final three months will take this year’s total close to that of 2007.
The total value of new homes sold two years ago was $23.04 billion, based on caveats lodged. In comparison, the total from January to the first week of October this year was $11.2 billion – just 48.6 per cent of 2007’s record.
This is because back in 2007, the luxury end of the residential market achieved top-line record prices with units that were usually large in size, said CBRE Research executive director Li Hiaw Ho.
‘Unit sizes were often greater than 2,000 sq ft,’ he said, adding that much of the demand came from the luxury segment where overall prices were high.
This year, mass market homes positioned to attract HDB upgraders accounted for most of the demand, Mr Li pointed out. In addition, the proliferation of smaller homes of less than 500 sq ft – which have a lower total price – also helped to bring down the overall value.
Developers were keen to ensure affordability this year as they scrambled to reconfigure their unit sizes to allow for smaller apartments.
‘Our high-end market has not started to move. It’s the reverse of Hong Kong, where the property market picked up with the high-end segment,’ said Mr Donald Han, managing director of Cushman & Wakefield. ‘Luxury prices are generally 25 per cent below the peak of the market in the first quarter of 2008.’
Another key difference between the previous boom year and this year is the number of foreigners buying into Singapore’s private housing market, said CBRE Research.
Two years ago, about 1,736 foreigners bought new homes in the primary market. A fair number were speculators who were not based here but were attracted to the Singapore growth story and the gains to be made in real estate.
‘Developers were doing a lot of road shows overseas then. We had buyers from Europe, Japan looking at huge penthouses, and the funds were buying,’ said Mr Han.
But, so far this year, only 651 foreigners have bought new homes, just a third or so of 2007’s figure, said CBRE’s Mr Li.
Knight Frank executive director (residential) Peter Ow said that for much of this year, prices have been generally lower, which was why many buyers jumped in to buy.
‘The market in 2007 was also more speculative. In the first half-year of 2009, buyers were mostly owner-occupiers.’
Although some speculators have returned to the market since then, this year’s market is generally a lot more stable compared with 2007’s, said Mr Ow.
A total of 2,780 units was traded in the sub-sale market in the first three quarters of this year, compared with 4,193 units done in the first three quarters of 2007, according to data from the Urban Redevelopment Authority (URA).
Price rises earlier in the year were fast and furious but the increases cooled somewhat after the Government’s market-calming measures were introduced in mid-September, said Mr Ow.
Some new private home prices are now high enough to cause buyers to think twice, he said.
The breather is thus good as buyers need time to accept current prices and the fact that the low prices of the earlier part of this year are likely gone forever, he said.
‘Developers are not in a hurry to launch in view of rising land prices. There isn’t a lot of supply coming up. While the land sales programme will have more land, it will take time for it to roll out,’ said Mr Ow.
Next year, gradual price rises are likely with the high-end market set to improve, said Mr Han.
Source: Straits Times, 30 Oct 2009
But the total value of these new private homes is on track to be only about half of that two years ago, underlining how different the two property booms have been.
This shift is partly thanks to a dramatic rise in sales of smaller, mass market units, says a new analysis by CBRE Research.
The running total for units sold in the first three quarters of this year is 12,828 compared to 2007’s 14,811 – so even average sales for the final three months will take this year’s total close to that of 2007.
The total value of new homes sold two years ago was $23.04 billion, based on caveats lodged. In comparison, the total from January to the first week of October this year was $11.2 billion – just 48.6 per cent of 2007’s record.
This is because back in 2007, the luxury end of the residential market achieved top-line record prices with units that were usually large in size, said CBRE Research executive director Li Hiaw Ho.
‘Unit sizes were often greater than 2,000 sq ft,’ he said, adding that much of the demand came from the luxury segment where overall prices were high.
This year, mass market homes positioned to attract HDB upgraders accounted for most of the demand, Mr Li pointed out. In addition, the proliferation of smaller homes of less than 500 sq ft – which have a lower total price – also helped to bring down the overall value.
Developers were keen to ensure affordability this year as they scrambled to reconfigure their unit sizes to allow for smaller apartments.
‘Our high-end market has not started to move. It’s the reverse of Hong Kong, where the property market picked up with the high-end segment,’ said Mr Donald Han, managing director of Cushman & Wakefield. ‘Luxury prices are generally 25 per cent below the peak of the market in the first quarter of 2008.’
Another key difference between the previous boom year and this year is the number of foreigners buying into Singapore’s private housing market, said CBRE Research.
Two years ago, about 1,736 foreigners bought new homes in the primary market. A fair number were speculators who were not based here but were attracted to the Singapore growth story and the gains to be made in real estate.
‘Developers were doing a lot of road shows overseas then. We had buyers from Europe, Japan looking at huge penthouses, and the funds were buying,’ said Mr Han.
But, so far this year, only 651 foreigners have bought new homes, just a third or so of 2007’s figure, said CBRE’s Mr Li.
Knight Frank executive director (residential) Peter Ow said that for much of this year, prices have been generally lower, which was why many buyers jumped in to buy.
‘The market in 2007 was also more speculative. In the first half-year of 2009, buyers were mostly owner-occupiers.’
Although some speculators have returned to the market since then, this year’s market is generally a lot more stable compared with 2007’s, said Mr Ow.
A total of 2,780 units was traded in the sub-sale market in the first three quarters of this year, compared with 4,193 units done in the first three quarters of 2007, according to data from the Urban Redevelopment Authority (URA).
Price rises earlier in the year were fast and furious but the increases cooled somewhat after the Government’s market-calming measures were introduced in mid-September, said Mr Ow.
Some new private home prices are now high enough to cause buyers to think twice, he said.
The breather is thus good as buyers need time to accept current prices and the fact that the low prices of the earlier part of this year are likely gone forever, he said.
‘Developers are not in a hurry to launch in view of rising land prices. There isn’t a lot of supply coming up. While the land sales programme will have more land, it will take time for it to roll out,’ said Mr Ow.
Next year, gradual price rises are likely with the high-end market set to improve, said Mr Han.
Source: Straits Times, 30 Oct 2009
In dollar terms, ‘09 home sales pale before record of ‘07
Volumes may be as high, but units sold this year are smaller and less expensive
Numbers tell only half the story. While developers are heading towards the record number of private homes sold in 2007, CB Richard Ellis says that the total transaction value of primary market sales in 2009 so far – at about $11.2 billion – is only about half the $23 billion worth of new homes sold in the peak year of 2007.
The smaller value of total private homes sold by developers this year reflects the fact that mass-market homes have hogged the limelight this year, unlike 2007, when the spotlight was on the luxury market.
Median prices per unit transacted, both in absolute dollar as well as per square foot terms, have also been lower this year compared with 2007. With the focus on small-format units to move sales, the median size of units sold so far this year is also smaller than in 2007.
CBRE based its analysis on caveats data captured up to Oct 27 in Urban Redevelopment Authority’s Realis system.
This year, the strongest quarterly showing was in Q3, when developers sold about $5.8 billion worth of private homes, up from $1.36 billion in Q1 and $4.05 billion in Q2.
This pick-up has much to do with the stages of recovery in home buying.
‘The buying momentum started in the mass market in the first quarter before filtering to the mid segment in Q2. It was only in Q3 that developers started rolling out their higher-priced projects – not just in the Core Central Region but in the suburbs,’ notes Knight Frank executive director Peter Ow.
DTZ executive director Ong Choon Fah reckons the total value of homes sold by developers is likely to slow again in the current quarter, due to a seasonal effect of the year-end holiday period combined with a quieter market after the government’s cooling measures last month.
Agreeing, Mr Ow says: ‘Developers are also likely to hold off launching projects for the rest of this year, in the hope of getting higher prices again in 2010, when the opening of the two integrated resorts is expected to create another wave of activity in the market.’
CBRE’s analysis showed that the median quantum per unit sold by developers so far this year was $930,000, about 21 per cent lower than the $1.18 million for full-year 2007.
In per square foot terms, this year’s median price of $863 was 7 per cent below the $928 for 2007.
The most expensive private home in the primary market sold this year was a third-floor apartment at Seven Palms Sentosa Cove which fetched $13.89 million.
In 2007, the priciest sale was that of a 19th-floor unit at The Marq On Paterson Hill which sold for $31.40 million. Both projects are by SC Global.
According to caveats data, in per square foot terms, the most expensive unit sold by a developer so far this year was $4,099 psf for a 43rd-floor apartment at The Orchard Residences, compared with the $5,262 psf for a 16th-floor apartment at The Marq in 2007.
However, this is not the record price. That was set in October 2007 when the developer of The Orchard Residences sold a 53rd-level penthouse for $5,600 psf – although a caveat does not appear to have been lodged for this transaction.
Another finding from CBRE’s analysis is a reduction in median size of units sold by developers from 1,292 sq ft in full-year 2007 to 1,206 sq ft this year.
The Urban Redevelopment Authority’s survey of developers shows they sold 12,828 private homes in the first nine months of 2009. This means they will have to sell 1,983 units in the current quarter to match 2007’s full-year record of 14,811 units.
‘The current good performance of 2009, a recession year no less, does not show the same characteristics of the previous residential boom of 2007,’ observed CBRE executive director Li Hiaw Ho.
‘In 2007, the luxury end of the residential market achieved top-line record prices with units that were more often than not large in size. Unit sizes were often greater than 2,000 sq ft. Much of the demand came from the luxury segment where the overall price quantums were high,’ he noted.
In contrast, much of 2009’s demand has been for mass-market homes positioned for HDB upgraders. ‘The proliferation of small-format homes of less than 500 square feet has also led to relatively lower price quantums, compared with that of 2007,’ Mr Li noted.
Another difference between the years 2007 and 2009 is a drop in the number of foreign buyers.
‘In 2007, 1,736 foreigners bought private homes in the primary market. However, in 2009 to date, only 651 foreign purchasers have bought new homes,’ CBRE said.
Source: Business Times, 30 Oct 2009
Numbers tell only half the story. While developers are heading towards the record number of private homes sold in 2007, CB Richard Ellis says that the total transaction value of primary market sales in 2009 so far – at about $11.2 billion – is only about half the $23 billion worth of new homes sold in the peak year of 2007.
The smaller value of total private homes sold by developers this year reflects the fact that mass-market homes have hogged the limelight this year, unlike 2007, when the spotlight was on the luxury market.
Median prices per unit transacted, both in absolute dollar as well as per square foot terms, have also been lower this year compared with 2007. With the focus on small-format units to move sales, the median size of units sold so far this year is also smaller than in 2007.
CBRE based its analysis on caveats data captured up to Oct 27 in Urban Redevelopment Authority’s Realis system.
This year, the strongest quarterly showing was in Q3, when developers sold about $5.8 billion worth of private homes, up from $1.36 billion in Q1 and $4.05 billion in Q2.
This pick-up has much to do with the stages of recovery in home buying.
‘The buying momentum started in the mass market in the first quarter before filtering to the mid segment in Q2. It was only in Q3 that developers started rolling out their higher-priced projects – not just in the Core Central Region but in the suburbs,’ notes Knight Frank executive director Peter Ow.
DTZ executive director Ong Choon Fah reckons the total value of homes sold by developers is likely to slow again in the current quarter, due to a seasonal effect of the year-end holiday period combined with a quieter market after the government’s cooling measures last month.
Agreeing, Mr Ow says: ‘Developers are also likely to hold off launching projects for the rest of this year, in the hope of getting higher prices again in 2010, when the opening of the two integrated resorts is expected to create another wave of activity in the market.’
CBRE’s analysis showed that the median quantum per unit sold by developers so far this year was $930,000, about 21 per cent lower than the $1.18 million for full-year 2007.
In per square foot terms, this year’s median price of $863 was 7 per cent below the $928 for 2007.
The most expensive private home in the primary market sold this year was a third-floor apartment at Seven Palms Sentosa Cove which fetched $13.89 million.
In 2007, the priciest sale was that of a 19th-floor unit at The Marq On Paterson Hill which sold for $31.40 million. Both projects are by SC Global.
According to caveats data, in per square foot terms, the most expensive unit sold by a developer so far this year was $4,099 psf for a 43rd-floor apartment at The Orchard Residences, compared with the $5,262 psf for a 16th-floor apartment at The Marq in 2007.
However, this is not the record price. That was set in October 2007 when the developer of The Orchard Residences sold a 53rd-level penthouse for $5,600 psf – although a caveat does not appear to have been lodged for this transaction.
Another finding from CBRE’s analysis is a reduction in median size of units sold by developers from 1,292 sq ft in full-year 2007 to 1,206 sq ft this year.
The Urban Redevelopment Authority’s survey of developers shows they sold 12,828 private homes in the first nine months of 2009. This means they will have to sell 1,983 units in the current quarter to match 2007’s full-year record of 14,811 units.
‘The current good performance of 2009, a recession year no less, does not show the same characteristics of the previous residential boom of 2007,’ observed CBRE executive director Li Hiaw Ho.
‘In 2007, the luxury end of the residential market achieved top-line record prices with units that were more often than not large in size. Unit sizes were often greater than 2,000 sq ft. Much of the demand came from the luxury segment where the overall price quantums were high,’ he noted.
In contrast, much of 2009’s demand has been for mass-market homes positioned for HDB upgraders. ‘The proliferation of small-format homes of less than 500 square feet has also led to relatively lower price quantums, compared with that of 2007,’ Mr Li noted.
Another difference between the years 2007 and 2009 is a drop in the number of foreign buyers.
‘In 2007, 1,736 foreigners bought private homes in the primary market. However, in 2009 to date, only 651 foreign purchasers have bought new homes,’ CBRE said.
Source: Business Times, 30 Oct 2009
Indonesia property: Developers building on upbeat mood
IMMUNE may not be quite the right word to describe the response of Indonesia’s property market to the global downturn and its more recent tentative recovery.
But overall, the sector does seem to have taken the events of the wider world in its stride. There was no crash in property prices when the crisis hit late last year, and unlike places such as Singapore, Hong Kong and South Korea, there has been little talk of a property bubble as the global economy recovers.
Supply and demand mechanisms are very local. Stability in the Indonesian property market has also been enhanced by the fact that the wider economy has weathered the crisis well, thanks to a stable financial system and low dependence on exports.
Stability, however, is not the same as stagnation. Indeed, there has been huge growth in the sector in recent years, with strong domestic demand and a growing middle class encouraging the construction of numerous shopping centres, condominiums and office buildings in the capital Jakarta.
Property consultants also point to the untapped demand in secondary cities such as Bandung, Semarang and Makassar as evidence of the likelihood that the trend will continue.
Tracking trends in Indonesia’s property market offers a revealing window into the changing attitudes of foreign investors. Take the pattern of demand for residential property.
Ten years ago, notes Ms Vivin Harsanto of property consultants Jones Lang LaSalle in Jakarta, most expatriates arriving in the capital were Westerners looking for luxury apartments. Today, however, potential tenants tend to be middle management employees seeking more modestly priced residences. There has also been a marked increase in the number of Koreans, Indians and Filipinos looking for accommodation.
The implication is that large numbers of foreign investors have moved beyond the start-up phase and are now beginning to bring in the specialists and technical advisers they need to implement their business plans. Indonesia also appears to have become an attractive location for a wider range of foreign investors.
The continuing interest of local corporations in property development also attests to an optimistic mood among local investors. Large property developers such as Lippo Karawaci, Agung Podomore and Duta Pertiwi do not have the field to themselves. Rather they must share the pie with local conglomerates whose expertise often lies in quite different industries.
The Dua Mutiara Group, originally specialising in chemicals and agriculture, for example, is part of the consortium that owns Jakarta’s JW Marriott and Ritz Carlton hotels in the upmarket Kuningan district. Cigarette maker Jarum is also heavily involved in the refurbishment of the Hotel Indonesia in Jalan M.H. Thamrin and the construction of associated apartment, commercial and office buildings.
Foreigners who want a piece of the action are limited by laws preventing non-citizens from acquiring land. Manufacturers are usually able to get around this by taking advantage of government regulations that allow them to build factories on land with long-term leases. Foreign residents in Bali have also resorted to using local proxies to acquire ownership of residential properties. But the contracts involved are of dubious legality. The practice is also rare in Jakarta, where the vast majority of foreigners have no intention of taking up long-term residence.
One of the key characteristics of Jakarta’s rental market over the last 10 years has been the lack of volatility. Before the 1998 Asian financial crisis, rentals on three-bedroom luxury apartments were going for around US$4,000 to US$5,000 a month. Today, such prices are still the norm at the upper end of the market.
But there is now far greater variety, and average apartment rentals are closer to US$3,000 to US$4,000 (S$4,200 to S$5,600) in buildings such as Plaza Senayan and the Ritz Carlton. For those on tighter budgets, it is even possible to rent a studio apartment in a reasonably central location from as little as US$500 a month.
The steady prices are not the result of persistently low demand. Instead, according to Jones Lang LaSalle, they are the result of the increasing supply and growing competition. Whether such competition will help dismantle long-standing market practices that foreigners find annoying, such as the demand that tenants pay the equivalent of one year’s rental in advance, is difficult to say.
But some companies managing purpose-built condominiums have recently become more flexible, allowing tenants to pay only six months in advance. According to Ms Harsanto, however, many foreign start-ups find this demand still too high and prefer that their employees stay in more expensive serviced apartments that can be rented on a monthly basis.
Overall, however, there is an optimism in the Indonesian property market that is hard to miss. Many players are betting that, with the recent inauguration of President Susilo Bambang Yudhoyono for a second term, the foreign investors that have avoided the country in the past will soon be taking another look. They may well be right.
Source: Straits Times, 30 Oct 2009
But overall, the sector does seem to have taken the events of the wider world in its stride. There was no crash in property prices when the crisis hit late last year, and unlike places such as Singapore, Hong Kong and South Korea, there has been little talk of a property bubble as the global economy recovers.
Supply and demand mechanisms are very local. Stability in the Indonesian property market has also been enhanced by the fact that the wider economy has weathered the crisis well, thanks to a stable financial system and low dependence on exports.
Stability, however, is not the same as stagnation. Indeed, there has been huge growth in the sector in recent years, with strong domestic demand and a growing middle class encouraging the construction of numerous shopping centres, condominiums and office buildings in the capital Jakarta.
Property consultants also point to the untapped demand in secondary cities such as Bandung, Semarang and Makassar as evidence of the likelihood that the trend will continue.
Tracking trends in Indonesia’s property market offers a revealing window into the changing attitudes of foreign investors. Take the pattern of demand for residential property.
Ten years ago, notes Ms Vivin Harsanto of property consultants Jones Lang LaSalle in Jakarta, most expatriates arriving in the capital were Westerners looking for luxury apartments. Today, however, potential tenants tend to be middle management employees seeking more modestly priced residences. There has also been a marked increase in the number of Koreans, Indians and Filipinos looking for accommodation.
The implication is that large numbers of foreign investors have moved beyond the start-up phase and are now beginning to bring in the specialists and technical advisers they need to implement their business plans. Indonesia also appears to have become an attractive location for a wider range of foreign investors.
The continuing interest of local corporations in property development also attests to an optimistic mood among local investors. Large property developers such as Lippo Karawaci, Agung Podomore and Duta Pertiwi do not have the field to themselves. Rather they must share the pie with local conglomerates whose expertise often lies in quite different industries.
The Dua Mutiara Group, originally specialising in chemicals and agriculture, for example, is part of the consortium that owns Jakarta’s JW Marriott and Ritz Carlton hotels in the upmarket Kuningan district. Cigarette maker Jarum is also heavily involved in the refurbishment of the Hotel Indonesia in Jalan M.H. Thamrin and the construction of associated apartment, commercial and office buildings.
Foreigners who want a piece of the action are limited by laws preventing non-citizens from acquiring land. Manufacturers are usually able to get around this by taking advantage of government regulations that allow them to build factories on land with long-term leases. Foreign residents in Bali have also resorted to using local proxies to acquire ownership of residential properties. But the contracts involved are of dubious legality. The practice is also rare in Jakarta, where the vast majority of foreigners have no intention of taking up long-term residence.
One of the key characteristics of Jakarta’s rental market over the last 10 years has been the lack of volatility. Before the 1998 Asian financial crisis, rentals on three-bedroom luxury apartments were going for around US$4,000 to US$5,000 a month. Today, such prices are still the norm at the upper end of the market.
But there is now far greater variety, and average apartment rentals are closer to US$3,000 to US$4,000 (S$4,200 to S$5,600) in buildings such as Plaza Senayan and the Ritz Carlton. For those on tighter budgets, it is even possible to rent a studio apartment in a reasonably central location from as little as US$500 a month.
The steady prices are not the result of persistently low demand. Instead, according to Jones Lang LaSalle, they are the result of the increasing supply and growing competition. Whether such competition will help dismantle long-standing market practices that foreigners find annoying, such as the demand that tenants pay the equivalent of one year’s rental in advance, is difficult to say.
But some companies managing purpose-built condominiums have recently become more flexible, allowing tenants to pay only six months in advance. According to Ms Harsanto, however, many foreign start-ups find this demand still too high and prefer that their employees stay in more expensive serviced apartments that can be rented on a monthly basis.
Overall, however, there is an optimism in the Indonesian property market that is hard to miss. Many players are betting that, with the recent inauguration of President Susilo Bambang Yudhoyono for a second term, the foreign investors that have avoided the country in the past will soon be taking another look. They may well be right.
Source: Straits Times, 30 Oct 2009
Property agents’ 2+2 commission formula is wrong
WHY do some property agents insist on a commission of 2 per cent from the seller and 2 per cent from the buyer, and accuse others who accept less of undercutting?
Till today, most agents will tell you it is standard. However, that 2+2 formula was when HDB flats changed hands at well below $50,000. It was to compensate agents for losses compared to private properties, which was then 2 per cent from the seller only, as they did about the same amount of work.
Incidentally, the cheapest private properties in Serangoon Gardens went for about $300,000. See the gap?
In the past 10 years, HDB prices have risen but some agents still demand 2+2 commission from unsuspecting buyers and sellers. From my observations, most who pay 2+2 commissions are illiterate HDB flat owners. The more educated ones pay only 1 per cent. I have paid less.
Lim Teck Seng
Source: Straits Times, 30 Oct 2009
Till today, most agents will tell you it is standard. However, that 2+2 formula was when HDB flats changed hands at well below $50,000. It was to compensate agents for losses compared to private properties, which was then 2 per cent from the seller only, as they did about the same amount of work.
Incidentally, the cheapest private properties in Serangoon Gardens went for about $300,000. See the gap?
In the past 10 years, HDB prices have risen but some agents still demand 2+2 commission from unsuspecting buyers and sellers. From my observations, most who pay 2+2 commissions are illiterate HDB flat owners. The more educated ones pay only 1 per cent. I have paid less.
Lim Teck Seng
Source: Straits Times, 30 Oct 2009
Flat valuation reflects state of property market
I REFER to Mr Daniel Choy’s letter on Tuesday, ‘Curbing price hikes’.
His assertion that valuation chases after cash over valuation (COV) is incorrect. Rather the valuation process reflects the state of the property market. If there are sufficient buyers who are prepared to pay a higher price than valuation, this should result in a higher valuation.
As Mr Choy rightly pointed out, ‘buyers are generally prepared to fork out between $50,000 and $100,000 for a good location’. This would be an indication of the market demand for properties in good locations, which will result in a higher valuation of such properties.
His suggestion to base ‘a typical flat’s valuation on the average price for the whole of Singapore’ is not valuation, but rather an administrative decision or policy which will be difficult to implement as it would mean that ‘better properties’ would be sold at a lower price and ‘poorer properties’ at a higher one.
In valuation, we need to consider unique characteristics such as location, size, age and condition of the property concerned, and not based on the average prices of all properties.
Janet Han (Ms)
Secretariat
Singapore Institute of Surveyors and Valuers
Source: Straits Times, 30 Oct 2009
His assertion that valuation chases after cash over valuation (COV) is incorrect. Rather the valuation process reflects the state of the property market. If there are sufficient buyers who are prepared to pay a higher price than valuation, this should result in a higher valuation.
As Mr Choy rightly pointed out, ‘buyers are generally prepared to fork out between $50,000 and $100,000 for a good location’. This would be an indication of the market demand for properties in good locations, which will result in a higher valuation of such properties.
His suggestion to base ‘a typical flat’s valuation on the average price for the whole of Singapore’ is not valuation, but rather an administrative decision or policy which will be difficult to implement as it would mean that ‘better properties’ would be sold at a lower price and ‘poorer properties’ at a higher one.
In valuation, we need to consider unique characteristics such as location, size, age and condition of the property concerned, and not based on the average prices of all properties.
Janet Han (Ms)
Secretariat
Singapore Institute of Surveyors and Valuers
Source: Straits Times, 30 Oct 2009
Aspial buys another residential site
ASPIAL Corporation said yesterday that it has agreed to buy a property at 26C Lorong Marzuki for $2.5 million.
The freehold site has an area of 281.1 square metres and is zoned for residential use with a 1.4 plot ratio.
Aspial previously bought two properties at 29 and 31 Lorong Melayu for $5.6 million in all.
Based on the combined maximum permissible area of around 1,795 sq m, the average purchase price for the three properties works out to about $459 per sq ft per plot ratio, inclusive of development charges.
Aspial intends to amalgamate the three plots to develop a 40-unit residential project.
The cost of the latest acquisition and development will be funded internally and through bank borrowings, Aspial said.
The transaction is not expected to have a material impact on the earnings or net tangible assets of the company in FY2009.
Source: Business Times, 30 Oct 2009
The freehold site has an area of 281.1 square metres and is zoned for residential use with a 1.4 plot ratio.
Aspial previously bought two properties at 29 and 31 Lorong Melayu for $5.6 million in all.
Based on the combined maximum permissible area of around 1,795 sq m, the average purchase price for the three properties works out to about $459 per sq ft per plot ratio, inclusive of development charges.
Aspial intends to amalgamate the three plots to develop a 40-unit residential project.
The cost of the latest acquisition and development will be funded internally and through bank borrowings, Aspial said.
The transaction is not expected to have a material impact on the earnings or net tangible assets of the company in FY2009.
Source: Business Times, 30 Oct 2009
Industrial site in Jurong West for sale
THE Urban Redevelopment Authority (URA) will put a 30-year leasehold industrial site in Jurong West up for tender.
The plot is at Pioneer Road North and Soon Lee Drive, near Pioneer MRT station. It became available for sale through the reserve list on Oct 30 last year.
URA said yesterday it has received an application from a developer for the 18,958.8 sq m site, which has a maximum gross plot ratio of two.
The unnamed developer committed to bid at least $8.2 million or about $20 per sq ft per plot ratio (psf ppr).
The site is zoned for Business 2 development – a range of clean, light and general industrial uses.
There has been healthy demand for recent industrial sites triggered for sale. For instance, a plot in Kaki Bukit Road 2 attracted 18 bids when the tender closed in August, while one at Woodlands drew eight bids when its tender closed in July.
Going by these results, Colliers International director (industrial) Tan Boon Leong expects ‘a handful’ of bids for the Pioneer Road North site.
This is because the absolute price is unlikely to be high and there is a shortage of good industrial sites, he said. But he does not expect competition for it to be as stiff as that for the more centrally located Kaki Bukit site.
Mr Tan reckons bids for the Pioneer Road North site are unlikely to go beyond $22.4 million or $50-55 psf ppr.
URA will launch the public tender for the site in about two weeks.
Source: Business Times, 30 Oct 2009
The plot is at Pioneer Road North and Soon Lee Drive, near Pioneer MRT station. It became available for sale through the reserve list on Oct 30 last year.
URA said yesterday it has received an application from a developer for the 18,958.8 sq m site, which has a maximum gross plot ratio of two.
The unnamed developer committed to bid at least $8.2 million or about $20 per sq ft per plot ratio (psf ppr).
The site is zoned for Business 2 development – a range of clean, light and general industrial uses.
There has been healthy demand for recent industrial sites triggered for sale. For instance, a plot in Kaki Bukit Road 2 attracted 18 bids when the tender closed in August, while one at Woodlands drew eight bids when its tender closed in July.
Going by these results, Colliers International director (industrial) Tan Boon Leong expects ‘a handful’ of bids for the Pioneer Road North site.
This is because the absolute price is unlikely to be high and there is a shortage of good industrial sites, he said. But he does not expect competition for it to be as stiff as that for the more centrally located Kaki Bukit site.
Mr Tan reckons bids for the Pioneer Road North site are unlikely to go beyond $22.4 million or $50-55 psf ppr.
URA will launch the public tender for the site in about two weeks.
Source: Business Times, 30 Oct 2009
BCA giving Green Mark awards for cluster devts
THE Building and Construction Authority (BCA) has added another category to its Green Mark certification – it is now giving Green Mark awards for cluster developments.
The first two projects certified under the new BCA Green Mark for Districts scheme – Resorts World Sentosa and NUS University Town – have been lauded for maximising sustainability by integrating green concepts into their master planning and building design.
NUS University Town and Resorts World Sentosa have achieved the second-highest Green Mark rating of GoldPlus.
Resorts World Sentosa will feature Singapore’s largest solar power installation, capable of generating more than 500,000 kWh of energy a year – equivalent to the power consumption of 108 typical four-room flats. Other green features include an eco-lagoon and underground tanks to collect and store stormwater to irrigate landscaped areas.
NUS University Town, being built on rolling terrain with lush natural greenery, was lauded for adopting sustainable design principles that preserve the existing habitat.
‘The BCA Green Mark for Districts is a pilot scheme to promote and recognise environmentally friendly and sustainable practices in the design and implementation of precinct or district developments,’ BCA said.
Earlier this year, it expanded the Green Mark scheme to offer certifications in three more categories – infrastructure, office interiors and landed houses. Previously, the scheme was only offered to buildings.
Source: Business Times, 30 Oct 2009
The first two projects certified under the new BCA Green Mark for Districts scheme – Resorts World Sentosa and NUS University Town – have been lauded for maximising sustainability by integrating green concepts into their master planning and building design.
NUS University Town and Resorts World Sentosa have achieved the second-highest Green Mark rating of GoldPlus.
Resorts World Sentosa will feature Singapore’s largest solar power installation, capable of generating more than 500,000 kWh of energy a year – equivalent to the power consumption of 108 typical four-room flats. Other green features include an eco-lagoon and underground tanks to collect and store stormwater to irrigate landscaped areas.
NUS University Town, being built on rolling terrain with lush natural greenery, was lauded for adopting sustainable design principles that preserve the existing habitat.
‘The BCA Green Mark for Districts is a pilot scheme to promote and recognise environmentally friendly and sustainable practices in the design and implementation of precinct or district developments,’ BCA said.
Earlier this year, it expanded the Green Mark scheme to offer certifications in three more categories – infrastructure, office interiors and landed houses. Previously, the scheme was only offered to buildings.
Source: Business Times, 30 Oct 2009
Growth next year will be slow and steady
Weak key export markets will weigh on S'pore, says MAS
FIRST, the good news. Singapore's economy has moved beyond the initial post-crisis bounce of growth and will continue to expand as genuine demand begins to stabilise around the world.
But Singaporeans must prepare for a 'slower and steadier' pace of expansion next year than they are used to, said the Monetary Authority of Singapore (MAS) yesterday.
Even though Asian economies have recovered strongly, many of Singapore's key export markets remain weak. In fact, half of the country's exports go to economies that are expected to grow more slowly than usual next year.
And once governments withdraw their stimulus packages, which have provided a cushion, there could be a period of adjustment before 'normal' private-sector demand rises enough to take over.
This will weigh on Singapore's growth, making it lower than in previous post-recession periods, MAS said in its twice-yearly Macroeconomic Review.
While MAS did not provide any growth projections, its assessment implies that average growth for the next four quarters will come in lower than 4 per cent quarter-on-quarter, the rate of growth after the 2001 downturn.
By comparison, the economy surged unexpectedly by double digits in the second and third quarters this year - by 22 per cent and 14.9 per cent quarter-on-quarter respectively. Average quarterly growth between 2005 and 2007 was about 7.5 per cent.
'It is hard to disagree with the assessment that growth will taper off in the next couple of quarters after the very strong rebound we have seen; the only question is the extent to which it slows,' said Citigroup economist Kit Wei Zheng.
Services will be the key in future growth
'Factory production has rebounded so much further along than exports, so it will take a bit of a breather...as exports catch up.'
The Government will release its official forecast for next year in a few weeks' time, but most private-sector economists are already predicting that full-year growth for next year will come in at between 4 per cent and 6 per cent.
While this looks good at first glance, economists emphasised that it comes from a low base. Yesterday, the International Monetary Fund predicted Singapore will grow 4.3 per cent next year, up from a previous tip of 4.1 per cent.
After this recession, Singapore is likely to concentrate on growing its services sectors, especially 'modern services', such as financial intermediation, business services and information and communications, said MAS.
While manufacturing will remain a key pillar of future growth, services have proved to be more resilient in the downturn and will contribute more to growth next year. In particular, activities that rely on regional demand, such as tourism and transport and financial services, could pick up more quickly.
By contrast, manufacturing will grow at a more moderate pace, and construction is likely to falter next year as mega projects, including the integrated resorts, are completed and there are fewer new projects in the pipeline.
While growth will be slower in this post-crisis period than in past recoveries, inflation will rise more quickly than usual, said MAS. It is predicting that inflation will rise to between 1 per cent and 2 per cent next year, although this does not include any possible revision to the annual values of HDB flats, which are determined by the taxman. HDB prices have soared to record highs in recent months.
MAS also highlighted that the employment market has stabilised, but job creation will be modest next year. Firms cut far fewer jobs in this recession than in previous downturns, which means they may be carrying surplus labour that they can use to meet a rise in demand.
Source: Straits Times, 30 Oct 2009
FIRST, the good news. Singapore's economy has moved beyond the initial post-crisis bounce of growth and will continue to expand as genuine demand begins to stabilise around the world.
But Singaporeans must prepare for a 'slower and steadier' pace of expansion next year than they are used to, said the Monetary Authority of Singapore (MAS) yesterday.
Even though Asian economies have recovered strongly, many of Singapore's key export markets remain weak. In fact, half of the country's exports go to economies that are expected to grow more slowly than usual next year.
And once governments withdraw their stimulus packages, which have provided a cushion, there could be a period of adjustment before 'normal' private-sector demand rises enough to take over.
This will weigh on Singapore's growth, making it lower than in previous post-recession periods, MAS said in its twice-yearly Macroeconomic Review.
While MAS did not provide any growth projections, its assessment implies that average growth for the next four quarters will come in lower than 4 per cent quarter-on-quarter, the rate of growth after the 2001 downturn.
By comparison, the economy surged unexpectedly by double digits in the second and third quarters this year - by 22 per cent and 14.9 per cent quarter-on-quarter respectively. Average quarterly growth between 2005 and 2007 was about 7.5 per cent.
'It is hard to disagree with the assessment that growth will taper off in the next couple of quarters after the very strong rebound we have seen; the only question is the extent to which it slows,' said Citigroup economist Kit Wei Zheng.
Services will be the key in future growth
'Factory production has rebounded so much further along than exports, so it will take a bit of a breather...as exports catch up.'
The Government will release its official forecast for next year in a few weeks' time, but most private-sector economists are already predicting that full-year growth for next year will come in at between 4 per cent and 6 per cent.
While this looks good at first glance, economists emphasised that it comes from a low base. Yesterday, the International Monetary Fund predicted Singapore will grow 4.3 per cent next year, up from a previous tip of 4.1 per cent.
After this recession, Singapore is likely to concentrate on growing its services sectors, especially 'modern services', such as financial intermediation, business services and information and communications, said MAS.
While manufacturing will remain a key pillar of future growth, services have proved to be more resilient in the downturn and will contribute more to growth next year. In particular, activities that rely on regional demand, such as tourism and transport and financial services, could pick up more quickly.
By contrast, manufacturing will grow at a more moderate pace, and construction is likely to falter next year as mega projects, including the integrated resorts, are completed and there are fewer new projects in the pipeline.
While growth will be slower in this post-crisis period than in past recoveries, inflation will rise more quickly than usual, said MAS. It is predicting that inflation will rise to between 1 per cent and 2 per cent next year, although this does not include any possible revision to the annual values of HDB flats, which are determined by the taxman. HDB prices have soared to record highs in recent months.
MAS also highlighted that the employment market has stabilised, but job creation will be modest next year. Firms cut far fewer jobs in this recession than in previous downturns, which means they may be carrying surplus labour that they can use to meet a rise in demand.
Source: Straits Times, 30 Oct 2009
Thursday, October 29, 2009
URA to launch tender for Pioneer Road North industrial site
The Urban Redevelopment Authority (URA) will launch a tender for an industrial site at Pioneer Road North and Soon Lee Drive.
The land parcel was previously placed under the reserve list system. It has an area of 1.9 hectares and a lease period of 30 years.
Under the system, a site would be released for sale only if it receives a bid with a minimum price that is acceptable to the government.
An unnamed developer has made an application to bid at a price of not less than S$8.2 million for the site.
The public tender for the site will be launched in about two weeks’ time.
Source: Channel News Asia, 29 Oct 2009
The land parcel was previously placed under the reserve list system. It has an area of 1.9 hectares and a lease period of 30 years.
Under the system, a site would be released for sale only if it receives a bid with a minimum price that is acceptable to the government.
An unnamed developer has made an application to bid at a price of not less than S$8.2 million for the site.
The public tender for the site will be launched in about two weeks’ time.
Source: Channel News Asia, 29 Oct 2009
Trump card for CapitaLand in CMA
CAPITALAND’S third-quarter report card released this week was a marked improvement from its showing in the first two quarters of this year. Still, the $167.2 million net profit that it achieved for the first nine months of this year is a far cry from the $1.18 billion in the same period last year.
However, plans to float a stake in its integrated shopping centre business under CapitaMalls Asia (CMA) by the year-end could add handsomely to CapitaLand’s fourth-quarter and full-year bottom lines.
CMA has a net asset value of $5.3 billion but assuming that its assets are valued at 1.5 to two times book value during the initial public offering (IPO), the total market worth of CMA would be about $8-10 billion. If CapitaLand floats a stake of 30 per cent, the pre-tax profit that it stands to book from the IPO could be in the order of $800 million to $1.4 billion.
CapitaLand’s management has indicated that the board may consider recommending a special dividend to shareholders following CMA’s flotation.
UBS Investment Research, in a recent paper, estimates that assuming an $8 billion valuation for CMA and a 30 per cent free float, the special dividend would work out to 27 cents per CapitaLand share if it decides to pay out 50 per cent of the IPO proceeds, and 54 cents per share assuming a 100 per cent payout.
On a $10 billion valuation for CMA and a 40 per cent free float, the payout could range from 45-90 cents per share.
Since CapitaLand announced its plans earlier this month to float CMA, its share price rallied about 21.5 per cent to a high of $4.46 on Monday, although it has given up much of the gain, ending at $4.15 yesterday.
By UBS’s calculations, an $8-10 billion valuation for CMA will add 61 cents to $1.06 to its revalued net asset value (RNAV) per share for CapitaLand, which it estimates at $4.30 based on CMA’s $5.3 billion book value. By launching an IPO, a higher value will be placed on the CMA business than if it remained as an unlisted part of CapitaLand. Or as CapitaLand’s management has put it, its plans to float CMA will ‘unlock shareholder value by crystallising the value of CapitaLand Group’s integrated shopping mall business’.
CapitaLand shareholders stand to gain by approving the group’s plans to float CMA. No doubt it will also be good for members of its management, whose pay packets should benefit from a stronger bottom line. And not to forget JP Morgan, the sole financial adviser.
However, some CapitaLand shareholders may also hold stakes in CapitaMall Trust (CMT) and CapitaRetail China Trust (CRCT), which many analysts reckon may fare less favourably after CMA is listed.
CMT may face short-term price weakness from asset reallocation to CMA, as UBS says. The process has already begun. CMT’s unit price has slipped from $1.82 before the announcement on CMA to yesterday’s closing price of $1.60.
CMA, with a portfolio of 86 malls in China, Singapore, Malaysia, Japan and India, may be more appealing to investors than CMT – which has a presence only in Singapore. CMA’s free float market cap could rival CMT’s. Still, CMA could find it worthwhile to sell assets, such as its 50 per cent stake in ION Orchard, to CMT given the tax transparency that CMT, as a real estate investment trust (Reit), enjoys in Singapore. In other words, if ION remains in CMA, the income from the mall will be taxed at the corporate tax rate (at the vehicle or CMA level). If however, ION is sold to CMT, the mall’s income will be exempt from payment of corporate tax at the Reit/vehicle level, under the tax flow-through allowed for Singapore Reits.
So CMA will retain an incentive (from the viewpoint of this tax saving at least) to develop, warehouse and sell assets to CMT – pretty much the arrangement that now exists between CapitaLand and CMT.
However, this may not be the case for CRCT. That’s because CRCT does not enjoy tax transparency since its income is derived from the ownership of malls in China, where it has to pay taxes on the income before it can bring it to Singapore.
This being the case, there could be less incentive for CMA to offload its China malls in future to CRCT. In fact, it may diminish or extinguish the raison d’etre of CRCT.
When CapitaLand floated CRCT in December 2006, it had planned to grow its initial $690 million portfolio of seven malls in China to $3 billion by end-2009. So far, it hasn’t been very successful. Today, its portfolio comprises eight malls worth $1.2 billion.
Who knows, CapitaLand could eventually privatise CRCT and let its China malls business sit entirely in CMA. This could provide a nice exit for CRCT shareholders.
These are some questions that CapitaLand shareholders who also own units in CMT and CRCT may ponder as they vote tomorrow on CapitaLand’s plans to float CMA.
Source: Business Times, 29 Oct 2009
However, plans to float a stake in its integrated shopping centre business under CapitaMalls Asia (CMA) by the year-end could add handsomely to CapitaLand’s fourth-quarter and full-year bottom lines.
CMA has a net asset value of $5.3 billion but assuming that its assets are valued at 1.5 to two times book value during the initial public offering (IPO), the total market worth of CMA would be about $8-10 billion. If CapitaLand floats a stake of 30 per cent, the pre-tax profit that it stands to book from the IPO could be in the order of $800 million to $1.4 billion.
CapitaLand’s management has indicated that the board may consider recommending a special dividend to shareholders following CMA’s flotation.
UBS Investment Research, in a recent paper, estimates that assuming an $8 billion valuation for CMA and a 30 per cent free float, the special dividend would work out to 27 cents per CapitaLand share if it decides to pay out 50 per cent of the IPO proceeds, and 54 cents per share assuming a 100 per cent payout.
On a $10 billion valuation for CMA and a 40 per cent free float, the payout could range from 45-90 cents per share.
Since CapitaLand announced its plans earlier this month to float CMA, its share price rallied about 21.5 per cent to a high of $4.46 on Monday, although it has given up much of the gain, ending at $4.15 yesterday.
By UBS’s calculations, an $8-10 billion valuation for CMA will add 61 cents to $1.06 to its revalued net asset value (RNAV) per share for CapitaLand, which it estimates at $4.30 based on CMA’s $5.3 billion book value. By launching an IPO, a higher value will be placed on the CMA business than if it remained as an unlisted part of CapitaLand. Or as CapitaLand’s management has put it, its plans to float CMA will ‘unlock shareholder value by crystallising the value of CapitaLand Group’s integrated shopping mall business’.
CapitaLand shareholders stand to gain by approving the group’s plans to float CMA. No doubt it will also be good for members of its management, whose pay packets should benefit from a stronger bottom line. And not to forget JP Morgan, the sole financial adviser.
However, some CapitaLand shareholders may also hold stakes in CapitaMall Trust (CMT) and CapitaRetail China Trust (CRCT), which many analysts reckon may fare less favourably after CMA is listed.
CMT may face short-term price weakness from asset reallocation to CMA, as UBS says. The process has already begun. CMT’s unit price has slipped from $1.82 before the announcement on CMA to yesterday’s closing price of $1.60.
CMA, with a portfolio of 86 malls in China, Singapore, Malaysia, Japan and India, may be more appealing to investors than CMT – which has a presence only in Singapore. CMA’s free float market cap could rival CMT’s. Still, CMA could find it worthwhile to sell assets, such as its 50 per cent stake in ION Orchard, to CMT given the tax transparency that CMT, as a real estate investment trust (Reit), enjoys in Singapore. In other words, if ION remains in CMA, the income from the mall will be taxed at the corporate tax rate (at the vehicle or CMA level). If however, ION is sold to CMT, the mall’s income will be exempt from payment of corporate tax at the Reit/vehicle level, under the tax flow-through allowed for Singapore Reits.
So CMA will retain an incentive (from the viewpoint of this tax saving at least) to develop, warehouse and sell assets to CMT – pretty much the arrangement that now exists between CapitaLand and CMT.
However, this may not be the case for CRCT. That’s because CRCT does not enjoy tax transparency since its income is derived from the ownership of malls in China, where it has to pay taxes on the income before it can bring it to Singapore.
This being the case, there could be less incentive for CMA to offload its China malls in future to CRCT. In fact, it may diminish or extinguish the raison d’etre of CRCT.
When CapitaLand floated CRCT in December 2006, it had planned to grow its initial $690 million portfolio of seven malls in China to $3 billion by end-2009. So far, it hasn’t been very successful. Today, its portfolio comprises eight malls worth $1.2 billion.
Who knows, CapitaLand could eventually privatise CRCT and let its China malls business sit entirely in CMA. This could provide a nice exit for CRCT shareholders.
These are some questions that CapitaLand shareholders who also own units in CMT and CRCT may ponder as they vote tomorrow on CapitaLand’s plans to float CMA.
Source: Business Times, 29 Oct 2009
Barring same-agent property brokerage not practical
I REFER to last Saturday’s editorial, ‘The problem in same-agent property brokerage’.
While I welcome and support the Ministry of National Development’s draft plan to regulate real estate brokerage, including a radical suggestion to prohibit an agent from acting for both seller and buyer in HDB resale transactions, I doubt its effectiveness in practice.
It may delay resale transactions and result in lost opportunities. Besides, there is no guarantee that co-broking or unethical practice will be completely wiped out.
The trade rigidity will inconvenience both parties – the genuine sellers and buyers – as both sides will have to wait for suitable buyers and sellers to seal a transaction.
However, if win-win solutions can be found to expedite genuine transactions, there is no dispute that the public will favour a separation of agent functions.
The underlying or radical problem emerges from the greed and dishonesty of some agents who think only of securing maximum commission. Hence, if trade accreditation can be set up speedily to enforce stricter rules of licensing and censure, as well as ensuring that all agents pass the standardised examination and accreditation, then the image of the industry will improve. This will definitely boost public confidence and trust in the profession.
Most important, the industry’s accreditation board must set high ethical standards in its code of conduct and practice for the profession.
Teo Kueh Liang
Source: Straits Times, 29 Oct 2009
While I welcome and support the Ministry of National Development’s draft plan to regulate real estate brokerage, including a radical suggestion to prohibit an agent from acting for both seller and buyer in HDB resale transactions, I doubt its effectiveness in practice.
It may delay resale transactions and result in lost opportunities. Besides, there is no guarantee that co-broking or unethical practice will be completely wiped out.
The trade rigidity will inconvenience both parties – the genuine sellers and buyers – as both sides will have to wait for suitable buyers and sellers to seal a transaction.
However, if win-win solutions can be found to expedite genuine transactions, there is no dispute that the public will favour a separation of agent functions.
The underlying or radical problem emerges from the greed and dishonesty of some agents who think only of securing maximum commission. Hence, if trade accreditation can be set up speedily to enforce stricter rules of licensing and censure, as well as ensuring that all agents pass the standardised examination and accreditation, then the image of the industry will improve. This will definitely boost public confidence and trust in the profession.
Most important, the industry’s accreditation board must set high ethical standards in its code of conduct and practice for the profession.
Teo Kueh Liang
Source: Straits Times, 29 Oct 2009
How new rules can protect property agents
I REFER to the letter by Mr Chua Khim Leng, ‘New rules should protect property agents’ (Oct 19).
As a real estate consultant for the past 20 years and running my agency in a niche market, I fully understand the plight of many real estate agents, who are disadvantaged because of the lack of rules that clients should abide by when they engage agents to handle their properties.
Many clients do not give exclusivity, as by appointing agents without signing a contract, they can take advantage of the agents’ advertisements and feedback, and then leverage on the prices received to sell direct to friends or neighbours and so avoid paying commission. These clients will also cut commission at the crucial moment of signing the option, say they will not sell or give the sale to another agent who charges lower commission.
An agent who had refrained from closing a sale quickly as the market was improving rapidly, waited and worked to achieve better offers, but was later disadvantaged because the client paid nothing if the sale was not concluded by that agent.
Other agents and buyers are allowed to cut in at the 11th hour. This undesirable situation does not support agents who work professionally and diligently in the interest of their clients.
I have some suggestions:
- Make it compulsory for clients to give and honour exclusivity, whether by written or verbal agreement.
- Appoint one or no more than two agents exclusively for eight weeks, with a termination clause of two weeks’ notice if agents do not perform satisfactorily.
- Explore means to prevent agents from being unfairly treated by clients or agencies.
- Compensate agents who have spent time, produced advertisements and conducted more than a dozen viewings, if soon after their marketing efforts, the sale is concluded through other parties (limit the period of ’soon after’).
- Give recourse to aggrieved agents to address their disputes without them having to resort to civil suits that involve time and more opportunity costs.
Clients play a part to help raise the standard and professionalism of the real estate industry. They must respect and reward agents who are reliable and competent, and appreciate that they work for a living. Of course, there are many honourable and trustworthy clients who become lifelong friends of agents.
Teresa Yao (Mrs)
Source: Straits Times, 29 Oct 2009
As a real estate consultant for the past 20 years and running my agency in a niche market, I fully understand the plight of many real estate agents, who are disadvantaged because of the lack of rules that clients should abide by when they engage agents to handle their properties.
Many clients do not give exclusivity, as by appointing agents without signing a contract, they can take advantage of the agents’ advertisements and feedback, and then leverage on the prices received to sell direct to friends or neighbours and so avoid paying commission. These clients will also cut commission at the crucial moment of signing the option, say they will not sell or give the sale to another agent who charges lower commission.
An agent who had refrained from closing a sale quickly as the market was improving rapidly, waited and worked to achieve better offers, but was later disadvantaged because the client paid nothing if the sale was not concluded by that agent.
Other agents and buyers are allowed to cut in at the 11th hour. This undesirable situation does not support agents who work professionally and diligently in the interest of their clients.
I have some suggestions:
- Make it compulsory for clients to give and honour exclusivity, whether by written or verbal agreement.
- Appoint one or no more than two agents exclusively for eight weeks, with a termination clause of two weeks’ notice if agents do not perform satisfactorily.
- Explore means to prevent agents from being unfairly treated by clients or agencies.
- Compensate agents who have spent time, produced advertisements and conducted more than a dozen viewings, if soon after their marketing efforts, the sale is concluded through other parties (limit the period of ’soon after’).
- Give recourse to aggrieved agents to address their disputes without them having to resort to civil suits that involve time and more opportunity costs.
Clients play a part to help raise the standard and professionalism of the real estate industry. They must respect and reward agents who are reliable and competent, and appreciate that they work for a living. Of course, there are many honourable and trustworthy clients who become lifelong friends of agents.
Teresa Yao (Mrs)
Source: Straits Times, 29 Oct 2009
Ascott Reit distribution slips 25%
ASCOTT Residence Trust (Ascott Reit) said that third- quarter unit-holders’ distribution fell 25 per cent to $11.8 million from $15.9 million a year ago as it saw weaker demand for its serviced residences in Singapore and China.
Distribution per unit (DPU) was 1.92 cents for the quarter ended Sept 30, 2009, down 26 per cent from 2.61 cents in Q3 2008.
‘The lower performance as compared to Q3 2008 was a result of the global economic slowdown, increased competition from new supply in Beijing and Shanghai, and the strong performance in August 2008 due to the Beijing Olympics,’ said the real estate investment trust (Reit) in a statement. Revenue per available unit, or RevPAU, fell 24 per cent year-on-year to $124 in Q3 2009. The reduction in RevPAU was due to reduction in both average daily rates as well as occupancies at the group’s serviced residences. Revenue for Q3 2009 fell 17 per cent to $44.4 million.
The trust’s management said, however, that the challenges posed by the global economic downturn to the hospitality industry eased somewhat in Q3 2009 compared to Q2.
‘Our Q3 operating performance has shown further signs of stabilisation in hospitality demand,’ said Lim Jit Poh, the trust’s chairman. ‘While we remain cautious over the pace and extent of recovery, we are confident of the longer-term growth in the markets in which we operate.’ On a sequential basis, unit-holders’ distribution and DPU were 7 per cent higher than Q2’s $11 million and 1.79 cents respectively.
Ascott Reit’s portfolio operating performance also improved in Q3 over Q2, led by RevPAU growth in Japan, Singapore and China of 24 per cent, 15 per cent and 7 per cent respectively.
To ride on the expected upturn in demand as the economy recovers, Ascott Reit has accelerated its asset enhancement initiatives for selected properties. It will also continue to seek yield-accretive acquisitions, it said. The company’s shares fell 2 cents, or 1.8 per cent, to $1.07 yesterday.
Source: Business Times, 29 Oct 2009
Distribution per unit (DPU) was 1.92 cents for the quarter ended Sept 30, 2009, down 26 per cent from 2.61 cents in Q3 2008.
‘The lower performance as compared to Q3 2008 was a result of the global economic slowdown, increased competition from new supply in Beijing and Shanghai, and the strong performance in August 2008 due to the Beijing Olympics,’ said the real estate investment trust (Reit) in a statement. Revenue per available unit, or RevPAU, fell 24 per cent year-on-year to $124 in Q3 2009. The reduction in RevPAU was due to reduction in both average daily rates as well as occupancies at the group’s serviced residences. Revenue for Q3 2009 fell 17 per cent to $44.4 million.
The trust’s management said, however, that the challenges posed by the global economic downturn to the hospitality industry eased somewhat in Q3 2009 compared to Q2.
‘Our Q3 operating performance has shown further signs of stabilisation in hospitality demand,’ said Lim Jit Poh, the trust’s chairman. ‘While we remain cautious over the pace and extent of recovery, we are confident of the longer-term growth in the markets in which we operate.’ On a sequential basis, unit-holders’ distribution and DPU were 7 per cent higher than Q2’s $11 million and 1.79 cents respectively.
Ascott Reit’s portfolio operating performance also improved in Q3 over Q2, led by RevPAU growth in Japan, Singapore and China of 24 per cent, 15 per cent and 7 per cent respectively.
To ride on the expected upturn in demand as the economy recovers, Ascott Reit has accelerated its asset enhancement initiatives for selected properties. It will also continue to seek yield-accretive acquisitions, it said. The company’s shares fell 2 cents, or 1.8 per cent, to $1.07 yesterday.
Source: Business Times, 29 Oct 2009
No takers yet for lot beside Obama home
Owner inflating asking price to double what was paid 19 months ago
(CHICAGO) A vacant lot next to President Barack Obama's Chicago home is on the market for almost double what the owner paid 19 months ago.
The land was once owned by the wife of former fundraiser Antoin 'Tony' Rezko, who later was convicted of influence peddling, and was part of a US$1.75 million real estate deal that hurt Mr Obama's election campaign. The 15-by-46-metre lot is being offered for US$1.3 million.
The opportunity to live next to the president hasn't helped sell the house on the other side of the Obama residence. Those neighbours set a US$1.85 million price this week, seven weeks after putting their home up for bid.
'The high-end market has taken more of a hit in this downturn,' said Jim Kinney, vice-president of luxury home sales for Baird & Warner real estate in Chicago. 'The whole stimulus package has been aimed at the bottom end of the market.'
Illinois real estate is showing signs of improvement. The Illinois Association of Realtors said last Friday that year-over-year sales increased in September for the first time since March 2006, with first-time buyers driving the rebound. September unemployment in the metropolitan area was 10.5 per cent, more than the national average of 9.8 per cent.
John Poulos, a lawyer, and his wife, Marjorie, paid US$675,000 for the lot in March last year, when they purchased it from 5050 S Greenwood LLC, property records show. Michael Sreenan, a former attorney for Rezko, said that he wholly owned that corporation.
'We've gotten some inquiries, but haven't found that perfect buyer,' said Karen Ashley-Bowman, the listing agent for Urban Search Corp of Chicago. The vacant lot is south of the Obama family's red brick mansion in the Kenwood neighbourhood.
Mr Poulos declined to comment, citing a desire to maintain privacy for himself and the president's family.
The limited-liability 5050 S Greenwood bought the lot from Rezko's wife, Rita, in December 2006, two months before Mr Obama announced his presidential bid.
The land earlier was listed as part of the property that the Obamas purchased in 2005, shortly after he was elected to the US Senate. The sellers listed the home and lot separately, asking US$1.95 million for the house and US$625,000 for the landscaped side property.
The Obamas bought their house for US$1.65 million, and Rita Rezko purchased the lot for US$625,000, its full asking price. She then sold one-sixth of the lot to the Obamas for US$104,500 to help them create a larger buffer for their property.
Mr Obama said that the deal was 'boneheaded' because Rezko at the time was known to be under federal investigation, the Washington Post reported in December 2006.
Rezko, a developer and Illinois fundraiser, was convicted in June last year for taking part in a scheme to extract kickbacks in exchange for influencing the award of state business under Governor Rod Blagojevich, who was removed from office earlier this year. Rezko, 54, is awaiting sentencing, while Blagojevich faces trial on corruption charges.
Hillary Clinton, now Mr Obama's Secretary of State, used his connection to Rezko to criticise him during one of their campaign debates last year. She said that she was fighting Republican proposals while Mr Obama was representing a contributor's 'slum-landlord business' in Chicago.
Rezko was among the first three donors to Mr Obama's 1996 run for the Illinois Senate. In 2007, Mr Obama gave to charity more than US$44,000 in campaign donations linked to him.
The Obamas' home has 6,400 square feet of space. Mr Obama, 48, and his family have spent one weekend there since the president took office on Jan 20. White House spokesman Ben LaBolt declined to comment.
The Obamas's neighbour to the north, Bill Grimshaw, 71, listed his family's 6,000-square-foot home last month, touting the eight-bedroom home's proximity to the president's house.
Trish Hoffman, a spokeswoman for Chicago-based Matt Garrison Group, the real estate firm handling the Grimshaw house, said that there have been many inquiries about it.
Sellers often think a unique location, such as next door to the US president, makes a property worth more than the market price, Mr Kinney said.
'That will have its pluses, as well as its minuses,' he said. 'The property is going to stand on its own merits, unless you have a true Obama fan.'
A listing for the lot states that access is restricted and a copy of a driver's licence is required prior to a showing.
Even without such challenges, the market for building homes is probably the slowest part of the high-end market, Mr Kinney said.
'There are just so many choices that people can make a deal on for empty, new construction,' he said.
Ms Ashley-Bowman said that the owners purchased it with the intention of building a 10,000-square-foot home but changed their minds.
Neighbourhood residents often tell her that they think the Obamas should purchase the vacant lot to expand the buffer around their home, she said.
'I imagine he has more pressing problems right now,' Ms Ashley-Bowman said. 'But it would be nice in terms of finishing off his property.' - Bloomberg
Source: Business Times, 29 Oct 2009
(CHICAGO) A vacant lot next to President Barack Obama's Chicago home is on the market for almost double what the owner paid 19 months ago.
The land was once owned by the wife of former fundraiser Antoin 'Tony' Rezko, who later was convicted of influence peddling, and was part of a US$1.75 million real estate deal that hurt Mr Obama's election campaign. The 15-by-46-metre lot is being offered for US$1.3 million.
The opportunity to live next to the president hasn't helped sell the house on the other side of the Obama residence. Those neighbours set a US$1.85 million price this week, seven weeks after putting their home up for bid.
'The high-end market has taken more of a hit in this downturn,' said Jim Kinney, vice-president of luxury home sales for Baird & Warner real estate in Chicago. 'The whole stimulus package has been aimed at the bottom end of the market.'
Illinois real estate is showing signs of improvement. The Illinois Association of Realtors said last Friday that year-over-year sales increased in September for the first time since March 2006, with first-time buyers driving the rebound. September unemployment in the metropolitan area was 10.5 per cent, more than the national average of 9.8 per cent.
John Poulos, a lawyer, and his wife, Marjorie, paid US$675,000 for the lot in March last year, when they purchased it from 5050 S Greenwood LLC, property records show. Michael Sreenan, a former attorney for Rezko, said that he wholly owned that corporation.
'We've gotten some inquiries, but haven't found that perfect buyer,' said Karen Ashley-Bowman, the listing agent for Urban Search Corp of Chicago. The vacant lot is south of the Obama family's red brick mansion in the Kenwood neighbourhood.
Mr Poulos declined to comment, citing a desire to maintain privacy for himself and the president's family.
The limited-liability 5050 S Greenwood bought the lot from Rezko's wife, Rita, in December 2006, two months before Mr Obama announced his presidential bid.
The land earlier was listed as part of the property that the Obamas purchased in 2005, shortly after he was elected to the US Senate. The sellers listed the home and lot separately, asking US$1.95 million for the house and US$625,000 for the landscaped side property.
The Obamas bought their house for US$1.65 million, and Rita Rezko purchased the lot for US$625,000, its full asking price. She then sold one-sixth of the lot to the Obamas for US$104,500 to help them create a larger buffer for their property.
Mr Obama said that the deal was 'boneheaded' because Rezko at the time was known to be under federal investigation, the Washington Post reported in December 2006.
Rezko, a developer and Illinois fundraiser, was convicted in June last year for taking part in a scheme to extract kickbacks in exchange for influencing the award of state business under Governor Rod Blagojevich, who was removed from office earlier this year. Rezko, 54, is awaiting sentencing, while Blagojevich faces trial on corruption charges.
Hillary Clinton, now Mr Obama's Secretary of State, used his connection to Rezko to criticise him during one of their campaign debates last year. She said that she was fighting Republican proposals while Mr Obama was representing a contributor's 'slum-landlord business' in Chicago.
Rezko was among the first three donors to Mr Obama's 1996 run for the Illinois Senate. In 2007, Mr Obama gave to charity more than US$44,000 in campaign donations linked to him.
The Obamas' home has 6,400 square feet of space. Mr Obama, 48, and his family have spent one weekend there since the president took office on Jan 20. White House spokesman Ben LaBolt declined to comment.
The Obamas's neighbour to the north, Bill Grimshaw, 71, listed his family's 6,000-square-foot home last month, touting the eight-bedroom home's proximity to the president's house.
Trish Hoffman, a spokeswoman for Chicago-based Matt Garrison Group, the real estate firm handling the Grimshaw house, said that there have been many inquiries about it.
Sellers often think a unique location, such as next door to the US president, makes a property worth more than the market price, Mr Kinney said.
'That will have its pluses, as well as its minuses,' he said. 'The property is going to stand on its own merits, unless you have a true Obama fan.'
A listing for the lot states that access is restricted and a copy of a driver's licence is required prior to a showing.
Even without such challenges, the market for building homes is probably the slowest part of the high-end market, Mr Kinney said.
'There are just so many choices that people can make a deal on for empty, new construction,' he said.
Ms Ashley-Bowman said that the owners purchased it with the intention of building a 10,000-square-foot home but changed their minds.
Neighbourhood residents often tell her that they think the Obamas should purchase the vacant lot to expand the buffer around their home, she said.
'I imagine he has more pressing problems right now,' Ms Ashley-Bowman said. 'But it would be nice in terms of finishing off his property.' - Bloomberg
Source: Business Times, 29 Oct 2009
US home prices may hit bubble
(NEW YORK) The gains in US home prices in recent months may not be sustainable and increases in some areas of the country appear to be in 'bubble territory', an economist known for his property market expertise said on Tuesday.
Robert Shiller, an economics professor at Yale University and co-developer of Standard and Poor's S&P/Case-Shiller Home Price Indices, told Reuters Television that he does not give quantitative forecasts on where home prices are headed but is concerned about the recent pace of increases.
Home prices in certain areas, such as Minneapolis and San Francisco, have risen by double digits over a mere four months, and if viewed on an annualised basis, they look like they are in 'bubble territory', Prof Shiller said. 'It is a time of great uncertainty,' he added.
US home prices in August rose for the fourth straight month. The Standard & Poor's/Case-Shiller composite index of home prices in 20 metropolitan areas rose 1.2 per cent in August from July, topping the estimate of a 0.7 per cent rise according to in a Reuters poll.
'The prominent fact that we are seeing with this data is that home prices are just zipping up,' Prof Shiller said. 'It is entirely possible that even with the bad news we are getting, home prices could start a major increase.' Prices in the top 10 US metropolitan areas gained 1.3 per cent in August after a 1.7 per cent rise the previous month, according to the S&P composite index. - Reuters
Source: Business Times, 29 Oct 2009
Robert Shiller, an economics professor at Yale University and co-developer of Standard and Poor's S&P/Case-Shiller Home Price Indices, told Reuters Television that he does not give quantitative forecasts on where home prices are headed but is concerned about the recent pace of increases.
Home prices in certain areas, such as Minneapolis and San Francisco, have risen by double digits over a mere four months, and if viewed on an annualised basis, they look like they are in 'bubble territory', Prof Shiller said. 'It is a time of great uncertainty,' he added.
US home prices in August rose for the fourth straight month. The Standard & Poor's/Case-Shiller composite index of home prices in 20 metropolitan areas rose 1.2 per cent in August from July, topping the estimate of a 0.7 per cent rise according to in a Reuters poll.
'The prominent fact that we are seeing with this data is that home prices are just zipping up,' Prof Shiller said. 'It is entirely possible that even with the bad news we are getting, home prices could start a major increase.' Prices in the top 10 US metropolitan areas gained 1.3 per cent in August after a 1.7 per cent rise the previous month, according to the S&P composite index. - Reuters
Source: Business Times, 29 Oct 2009
Aussie mortgage market stirring after 2-year lull
Analysts expect more issues of mortgage-backed securities as market sentiment improves
(SYDNEY) Australia's commercial mortgage-backed securities market is coming back to life after a two-year lull thanks to improving investor appetite and because banks are looking to cut their exposure to property borrowers.
With A$2.4 billion (S$3 billion) of debt maturing next year, analysts expect a sprinkling of issues.
'I could see around A$2 billion,' said Chad Karpes, head of the Australian dollar bond syndicate at RBS in Sydney.
'If we start to see the market sentiment improve, as it has been, ... we could see A$2 billion-plus from a number of issuers across the commercial spectrum.'
Issuance of commercial mortgage-backed securities, or CMBS, has virtually evaporated since the market peaked in 2007 at US$230 billion globally when the US sub-prime mortgage crisis triggered billions of dollars in loan defaults worldwide.
Australia's A$6.6 billion market of outstanding CMBS was also brought to a standstill as real estate firms were forced to raise capital elsewhere or sell assets to raise funds.
In September, shopping centre owner Macquarie Countrywide Trust became the first property borrower to break the spell by selling A$265 million of notes in the first Australian issue backed by commercial mortgages since 2007.
The offer was also one of the few issues completed globally this year as more US real estate lenders fight for survival.
On Sunday, US real estate company Capmark Financial became the latest casualty and filed for bankruptcy protection.
Australia has been relatively sheltered thanks to a resilient economy and a restrained jobless rate.
Still, the commercial property industry was badly hit as asset prices tumbled and shopping mall owner Centro Properties Group became Australia's highest profile casualty.
As market sentiment improves and liquidity returns, bankers expect more borrowers to test the waters as just over A$1 billion of CMBS notes mature in the first quarter of next year.
'There is lot of refinancing coming up early next year and there is institutional interest depending on the margin and the pool quality,' said Bob Sahota, head of fixed interest at Challenger Financial Services.
Mr Sahota, who likes mortgages originated by shopping centres, favours Australian CMBS because they are simply structured - unlike those offered in the United States.
US commercial mortgage-backed securities have a much more complex structure and often more complex asset pools with multiple small loans and originators, according to Stephen Maher, head of debt markets at Macquarie Bank.
'It's very messy,' he said.
At the peak of the crisis, triple A-rated CMBS spreads reached 1,000 basis points over bank bill swap rate from around 20 bps before the meltdown.
New commercial- backed notes would now pay 300 to 350 bps, according to bankers, a level that may suit property firms, in particular those seeking funding diversification.
'Real estate firms cannot indefinitely raise equity or sell all their assets or look to bank debt alone,' said Satish Chand, securitisation director at National Australia Bank.
'They need to access diversified funds.' Mr Chand sees a pipeline of commercial mortgage-backed offers with modest issue sizes of A$250 million to A$300 million compared with up to A$1 billion before the crisis.
But not all investors are confident of a CMBS revival. John Sorrell, fund manager at Tyndall-Suncorp Investment Management, says he would consider investing in commercial mortgage-backed notes but is not certain about the appetite for the securities in Australia.
'I just think there is a range of divergent attitudes.' Mr Sorrel is watching Centro's next debt maturity and is mindful of a deterioration of the CMBS market in the United States.
'If the US gets worse, it will hardly improve sentiment in Australia.' - Reuters
Source: Business Times, 29 Oct 2009
(SYDNEY) Australia's commercial mortgage-backed securities market is coming back to life after a two-year lull thanks to improving investor appetite and because banks are looking to cut their exposure to property borrowers.
With A$2.4 billion (S$3 billion) of debt maturing next year, analysts expect a sprinkling of issues.
'I could see around A$2 billion,' said Chad Karpes, head of the Australian dollar bond syndicate at RBS in Sydney.
'If we start to see the market sentiment improve, as it has been, ... we could see A$2 billion-plus from a number of issuers across the commercial spectrum.'
Issuance of commercial mortgage-backed securities, or CMBS, has virtually evaporated since the market peaked in 2007 at US$230 billion globally when the US sub-prime mortgage crisis triggered billions of dollars in loan defaults worldwide.
Australia's A$6.6 billion market of outstanding CMBS was also brought to a standstill as real estate firms were forced to raise capital elsewhere or sell assets to raise funds.
In September, shopping centre owner Macquarie Countrywide Trust became the first property borrower to break the spell by selling A$265 million of notes in the first Australian issue backed by commercial mortgages since 2007.
The offer was also one of the few issues completed globally this year as more US real estate lenders fight for survival.
On Sunday, US real estate company Capmark Financial became the latest casualty and filed for bankruptcy protection.
Australia has been relatively sheltered thanks to a resilient economy and a restrained jobless rate.
Still, the commercial property industry was badly hit as asset prices tumbled and shopping mall owner Centro Properties Group became Australia's highest profile casualty.
As market sentiment improves and liquidity returns, bankers expect more borrowers to test the waters as just over A$1 billion of CMBS notes mature in the first quarter of next year.
'There is lot of refinancing coming up early next year and there is institutional interest depending on the margin and the pool quality,' said Bob Sahota, head of fixed interest at Challenger Financial Services.
Mr Sahota, who likes mortgages originated by shopping centres, favours Australian CMBS because they are simply structured - unlike those offered in the United States.
US commercial mortgage-backed securities have a much more complex structure and often more complex asset pools with multiple small loans and originators, according to Stephen Maher, head of debt markets at Macquarie Bank.
'It's very messy,' he said.
At the peak of the crisis, triple A-rated CMBS spreads reached 1,000 basis points over bank bill swap rate from around 20 bps before the meltdown.
New commercial- backed notes would now pay 300 to 350 bps, according to bankers, a level that may suit property firms, in particular those seeking funding diversification.
'Real estate firms cannot indefinitely raise equity or sell all their assets or look to bank debt alone,' said Satish Chand, securitisation director at National Australia Bank.
'They need to access diversified funds.' Mr Chand sees a pipeline of commercial mortgage-backed offers with modest issue sizes of A$250 million to A$300 million compared with up to A$1 billion before the crisis.
But not all investors are confident of a CMBS revival. John Sorrell, fund manager at Tyndall-Suncorp Investment Management, says he would consider investing in commercial mortgage-backed notes but is not certain about the appetite for the securities in Australia.
'I just think there is a range of divergent attitudes.' Mr Sorrel is watching Centro's next debt maturity and is mindful of a deterioration of the CMBS market in the United States.
'If the US gets worse, it will hardly improve sentiment in Australia.' - Reuters
Source: Business Times, 29 Oct 2009
Thomson Village strata units, site on collective sale
Separate Colliers auction sees 2 shop units, 2 houses and 1 apartment sold
(SINGAPORE) The owners of eight freehold strata-titled commercial units and vacant site at Thomson Village, off Upper Thomson Road, have joined forces to sell their properties through a tender. The properties have a combined site area of 13,387 sq ft and an asking price of $24 million.
Under Master Plan 2008, the site is zoned for commercial use. 'The plot ratio is not indicated but the site is under a streetblock plan, which means the potential developer will have to follow an envelope control guideline for the area set by Urban Redevelopment Authority. The properties could be redeveloped into a low-rise specialty retail mall,' said Galven Tan, assistant manager (investment properties) at CB Richard Ellis, which is marketing the site.
'Depending on the design of a new development, a 2.8 plot ratio could be achieved,' according to Mr Tan. Plot ratio is the ratio of maximum gross floor area to land area. Assuming this plot ratio, an estimated development charge (DC) of $5 million would be payable to the state. The $24 million price works out to $774 psf per plot ratio inclusive of DC.
The owners of the strata commercial units and the vacant site have signed a collective sale agreement, which means the sale will not be subject to an application to the Strata Titles Board. The tender closes on Nov 25.
There is adjoining state land of about 6,400 sq ft that could potentially be purchased by the successful bidder, CBRE says.
Separately, at an auction conducted by Colliers International yesterday, five properties were sold - an apartment at The Horizon at Holt Road; two freehold landed houses at Jalan Taman and Lowland Road, both off Upper Serangoon Road; and a shop unit each at Sim Lim Square and Golden Landmark.
The ground floor unit at Sim Lim Square, which involved a liquidator sale, was sold to a private investor for $3.75 million, reflecting $6,970 psf based on the unit's 538 sq ft strata area. The unit faces the main concourse. Last week, Second Chance Properties picked up 22 shop units at Sim Lim Square for $35 million or an average price of $3,644 psf based on their total area of 9,604 sq ft.
Over at Golden Landmark, near Bugis MRT Station, a 355 sq ft corner shop on the third floor with double frontage changed hands at $365,000 or $1,028 psf.
The third-floor freehold apartment at The Horizon was sold for $1.8 million or $1,154 psf. The two-storey intermediate terrace house at Jalan Taman was sold for $1.25 million or $630 psf of land area.
At 74 Lowland Road, which is next to a temple, the three-storey semi-detached house with six bedrooms was sold for $1.72 million or $636 psf of land area. The buyer is understood to be a former Chinese national who is now a Singapore citizen.
Source: Business Times, 29 Oct 2009
(SINGAPORE) The owners of eight freehold strata-titled commercial units and vacant site at Thomson Village, off Upper Thomson Road, have joined forces to sell their properties through a tender. The properties have a combined site area of 13,387 sq ft and an asking price of $24 million.
Under Master Plan 2008, the site is zoned for commercial use. 'The plot ratio is not indicated but the site is under a streetblock plan, which means the potential developer will have to follow an envelope control guideline for the area set by Urban Redevelopment Authority. The properties could be redeveloped into a low-rise specialty retail mall,' said Galven Tan, assistant manager (investment properties) at CB Richard Ellis, which is marketing the site.
'Depending on the design of a new development, a 2.8 plot ratio could be achieved,' according to Mr Tan. Plot ratio is the ratio of maximum gross floor area to land area. Assuming this plot ratio, an estimated development charge (DC) of $5 million would be payable to the state. The $24 million price works out to $774 psf per plot ratio inclusive of DC.
The owners of the strata commercial units and the vacant site have signed a collective sale agreement, which means the sale will not be subject to an application to the Strata Titles Board. The tender closes on Nov 25.
There is adjoining state land of about 6,400 sq ft that could potentially be purchased by the successful bidder, CBRE says.
Separately, at an auction conducted by Colliers International yesterday, five properties were sold - an apartment at The Horizon at Holt Road; two freehold landed houses at Jalan Taman and Lowland Road, both off Upper Serangoon Road; and a shop unit each at Sim Lim Square and Golden Landmark.
The ground floor unit at Sim Lim Square, which involved a liquidator sale, was sold to a private investor for $3.75 million, reflecting $6,970 psf based on the unit's 538 sq ft strata area. The unit faces the main concourse. Last week, Second Chance Properties picked up 22 shop units at Sim Lim Square for $35 million or an average price of $3,644 psf based on their total area of 9,604 sq ft.
Over at Golden Landmark, near Bugis MRT Station, a 355 sq ft corner shop on the third floor with double frontage changed hands at $365,000 or $1,028 psf.
The third-floor freehold apartment at The Horizon was sold for $1.8 million or $1,154 psf. The two-storey intermediate terrace house at Jalan Taman was sold for $1.25 million or $630 psf of land area.
At 74 Lowland Road, which is next to a temple, the three-storey semi-detached house with six bedrooms was sold for $1.72 million or $636 psf of land area. The buyer is understood to be a former Chinese national who is now a Singapore citizen.
Source: Business Times, 29 Oct 2009
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