Saturday, August 7, 2010
Thursday, August 5, 2010
British Land NAV growth slows
(LONDON) British Land reported slowing growth in first quarter net asset value yesterday, amid fresh worry for the economy and fears that banks could choke a property market revival with tough lending restrictions.
The biggest office landlord in the City of London booked 2.2 per cent growth in net asset value to 515 pence (S$11) a share for the quarter to end-June, compared with 15.1 per cent growth in the previous quarter, as more investors cite the continued lack of finance for a slowdown in UK commercial property price growth.
The value of its portfolio rose 1.4 per cent to £8.68 billion.
Average commercial property values have risen by just 1.8 per cent in the second quarter, after gaining 3.9 per cent in the first three months of this year, data from Investment Property Databank shows. 'Overall, risks to the global economy seem to have increased in recent months and we remain alert to the potential impact of the fiscal measures needed to address budget deficits not only in the UK, but across Europe,' chief executive Chris Grigg said.
Despite caution about the near-term outlook, British Land said that its overall occupancy increased to 97.8 per cent in the period, reflecting strong London office leasing activity and demand for space in its prime retail real estate.
A Europe-wide health check on European banks on July 23 showed lenders had largely rehabilitated their battered balance sheets but few analysts expect a surge in commercial property lending soon, even though just seven of 91 banks were shown to have inadequate capital to withstand new financial market shocks.
Net mortgage lending growth - a key barometer for the future stability of the UK property market - contracted to £665 million pounds from £838 million in May, Bank of England data showed. -- Reuters
Source: Business Times, 5 Aug 2010
The biggest office landlord in the City of London booked 2.2 per cent growth in net asset value to 515 pence (S$11) a share for the quarter to end-June, compared with 15.1 per cent growth in the previous quarter, as more investors cite the continued lack of finance for a slowdown in UK commercial property price growth.
The value of its portfolio rose 1.4 per cent to £8.68 billion.
Average commercial property values have risen by just 1.8 per cent in the second quarter, after gaining 3.9 per cent in the first three months of this year, data from Investment Property Databank shows. 'Overall, risks to the global economy seem to have increased in recent months and we remain alert to the potential impact of the fiscal measures needed to address budget deficits not only in the UK, but across Europe,' chief executive Chris Grigg said.
Despite caution about the near-term outlook, British Land said that its overall occupancy increased to 97.8 per cent in the period, reflecting strong London office leasing activity and demand for space in its prime retail real estate.
A Europe-wide health check on European banks on July 23 showed lenders had largely rehabilitated their battered balance sheets but few analysts expect a surge in commercial property lending soon, even though just seven of 91 banks were shown to have inadequate capital to withstand new financial market shocks.
Net mortgage lending growth - a key barometer for the future stability of the UK property market - contracted to £665 million pounds from £838 million in May, Bank of England data showed. -- Reuters
Source: Business Times, 5 Aug 2010
British home prices edge up in July
(LONDON) British house prices moved higher in July, but the market remains flat so far this year, data from top home-loans provider Halifax showed yesterday.
'House prices increased by 0.6 per cent in July, reversing the fall in June,' said Martin Ellis at Halifax. 'Overall, there has been little change in prices during 2010 so far,' he added. 'The mixed pattern of monthly rises and falls over the first seven months of the year is consistent with a slowing market. It is also in line with our view that house prices will be broadly unchanged over 2010 as a whole.'
Halifax, part of state-controlled Lloyds Banking Group (LBG), also revealed that the average house price in Britain stood at £167,425 (S$358,850).
In a separate statement, LBG said it bounced back into profit in the first half. Pre-tax profit stood at £1.6 billion in the six months to the end of June, which compared with a loss of about £4 billion in the same period of 2009. -- AFP
Source: Business Times, 5 Aug 2010
'House prices increased by 0.6 per cent in July, reversing the fall in June,' said Martin Ellis at Halifax. 'Overall, there has been little change in prices during 2010 so far,' he added. 'The mixed pattern of monthly rises and falls over the first seven months of the year is consistent with a slowing market. It is also in line with our view that house prices will be broadly unchanged over 2010 as a whole.'
Halifax, part of state-controlled Lloyds Banking Group (LBG), also revealed that the average house price in Britain stood at £167,425 (S$358,850).
In a separate statement, LBG said it bounced back into profit in the first half. Pre-tax profit stood at £1.6 billion in the six months to the end of June, which compared with a loss of about £4 billion in the same period of 2009. -- AFP
Source: Business Times, 5 Aug 2010
Nine Chow family properties sold for $175m
NINE properties owned by the companies of three feuding brothers have been sold for more than $175 million.
Chow House, the most prominent of the nine assets, went for more than $100 million and could be redeveloped into a residential project.
The nine assets were owned by Associated Development Pte Ltd, Chow Cho Poon (Pte) Ltd and Lee Tung Company (Pte) Ltd. Property investor Chow Cho Poon set up these firms and his three sons became directors and shareholders.
Mr Chow owed debts to the companies when he died in 1997. The debts could not be paid off as his estate's assets were mainly tied up as shares in the companies.
In 2007, eldest son Chow Kwok Chi asked the High Court to wind up the companies so the brothers could go their separate ways.
Deloitte & Touche's head of financial advisory services Tam Chee Chong was appointed liquidator to sell the companies' assets and distribute the proceeds among shareholders. DTZ handled the public tender for the nine properties.
According to DTZ, there were 'overwhelming responses from both local and foreign interested parties'.
The freehold Chow House drew nine bidders and was sold for just over $100 million. BT reported earlier that the buyer could be a group whose shareholders include WyWy Group founder YY Wong.
DTZ said the authorities have granted outline permission for the site to be developed into a new residential project with commercial space on the ground floor.
The other eight properties - at Lorong Telok, North Canal Road, Jalan Besar, Upper Serangoon Road and Lavender Street - went to various other investors.
Source: Business Times, 5 Aug 2010
Chow House, the most prominent of the nine assets, went for more than $100 million and could be redeveloped into a residential project.
The nine assets were owned by Associated Development Pte Ltd, Chow Cho Poon (Pte) Ltd and Lee Tung Company (Pte) Ltd. Property investor Chow Cho Poon set up these firms and his three sons became directors and shareholders.
Mr Chow owed debts to the companies when he died in 1997. The debts could not be paid off as his estate's assets were mainly tied up as shares in the companies.
In 2007, eldest son Chow Kwok Chi asked the High Court to wind up the companies so the brothers could go their separate ways.
Deloitte & Touche's head of financial advisory services Tam Chee Chong was appointed liquidator to sell the companies' assets and distribute the proceeds among shareholders. DTZ handled the public tender for the nine properties.
According to DTZ, there were 'overwhelming responses from both local and foreign interested parties'.
The freehold Chow House drew nine bidders and was sold for just over $100 million. BT reported earlier that the buyer could be a group whose shareholders include WyWy Group founder YY Wong.
DTZ said the authorities have granted outline permission for the site to be developed into a new residential project with commercial space on the ground floor.
The other eight properties - at Lorong Telok, North Canal Road, Jalan Besar, Upper Serangoon Road and Lavender Street - went to various other investors.
Source: Business Times, 5 Aug 2010
Ayala Land pumping US$220m into China eco-city
Total foreign investment in Sino-S'pore project hits 28b yuan
(TIANJIN) The Philippines' largest property company, Ayala Land, has become the fourth foreign real estate developer to join an 'eco-city' development project in north China's Tianjin Municipality.
The company signed an agreement to invest US$220 million in the project on Tuesday, taking total foreign investment in the 'eco-city' to 28 billion yuan (S$5.6 billion).
Other foreign property developers involved include Mitsui Fudosan Group and Sunway Real Estate Investment Trust, said Wu Caiwen, president of the Sino-Singapore Tianjin Eco-City Investment and Development.
The Tianjin 'eco-city' development is the second of its kind between the Chinese and Singapore governments, following on from the China-Singapore Suzhou Industry Park.
Both projects feature cooperation in advanced technology and personnel exchange.
Located in the Tianjin Binhai New Area, the 30 square kilometre Tianjin Eco-City lies 150 km east of Beijing. It is hoped that the city would become a harmonious and sustainable community that meets the needs of China as it urbanises.
'The Tianjin Eco-city aims to be a model for the cities of China's future, as well as being a real international eco-city,' Mr Wu said.
The 'eco-city' is 50 km away from downtown Tianjin. It is designed to be a modern metropolis where 350,000 residents can live, work and play by the time it is completed in 2020.
Ayala Land has agreed to develop a 9.78 hectare residential complex in the city designed to accommodate 1,100 households by 2013.
Mr Wu said that all buildings in the eco-city conform with environmentally friendly standards in design, technology, construction and management. 'The foreign developers' experience in building environmentally friendly properties will help push forward the project and allow it to meet its eco-targets.' - Xinhua
Source: Business Times, 5 Aug 2010
(TIANJIN) The Philippines' largest property company, Ayala Land, has become the fourth foreign real estate developer to join an 'eco-city' development project in north China's Tianjin Municipality.
The company signed an agreement to invest US$220 million in the project on Tuesday, taking total foreign investment in the 'eco-city' to 28 billion yuan (S$5.6 billion).
Other foreign property developers involved include Mitsui Fudosan Group and Sunway Real Estate Investment Trust, said Wu Caiwen, president of the Sino-Singapore Tianjin Eco-City Investment and Development.
The Tianjin 'eco-city' development is the second of its kind between the Chinese and Singapore governments, following on from the China-Singapore Suzhou Industry Park.
Both projects feature cooperation in advanced technology and personnel exchange.
Located in the Tianjin Binhai New Area, the 30 square kilometre Tianjin Eco-City lies 150 km east of Beijing. It is hoped that the city would become a harmonious and sustainable community that meets the needs of China as it urbanises.
'The Tianjin Eco-city aims to be a model for the cities of China's future, as well as being a real international eco-city,' Mr Wu said.
The 'eco-city' is 50 km away from downtown Tianjin. It is designed to be a modern metropolis where 350,000 residents can live, work and play by the time it is completed in 2020.
Ayala Land has agreed to develop a 9.78 hectare residential complex in the city designed to accommodate 1,100 households by 2013.
Mr Wu said that all buildings in the eco-city conform with environmentally friendly standards in design, technology, construction and management. 'The foreign developers' experience in building environmentally friendly properties will help push forward the project and allow it to meet its eco-targets.' - Xinhua
Source: Business Times, 5 Aug 2010
Bullish condo sentiment in KL despite oversupply
AN OVERSUPPLY of high-end condominiums in Kuala Lumpur's most popular residential spots notwithstanding, developers are taking heart from strong uptake in recent launches and new benchmark prices.
While prices for landed residential property in the Klang Valley have remained robust, the interest in luxury condos, or rather those with a unique selling point, has been a surprise.
In June, Malaysia recorded what is believed to be its biggest condo transaction - that of a super penthouse in The Binjai On The Park for RM38 million (S$16 million). One of only two, the 14,300 sq ft triplex was sold at about the equivalent of RM2,660 psf to an unidentified corporate chieftain who owns properties worldwide, yet loved the unobstructed views of the Kuala Lumpur Convention Centre (KLCC) skyline afforded by the penthouse.
In nearby Mont Kiara, private developer Bukit Kiara Properties (BKP) has also been creating waves. Last month, it sold about four-fifths of the 200 plus units of its fourth and final block in the development called Verve Suites, at an average RM1,200 psf. Although the apartments come with fittings and furnishings, the cost per sq ft of the 'designer units' is close to prices in many developments in the Kuala Lumpur city centre.
Interestingly, secondary transactions have been much slower, a point that realtors attribute to BKP's easy financing scheme. A buyer need only pay 2.5 per cent in down-payment - or as little as RM20,000 - because of the developer's 5 per cent rebate and bank financing of up to 92.5 per cent. The developer also absorbs interest charges during the construction period as well as the legal fees for the sales and purchase and loan agreements.
Easy terms are a factor, but Verve Suites is very different from others in the market, BKP maintains. As with its previous blocks, the company 'sacrificed' the highest floor, which commands a premium, to build a common area for the use and enjoyment of residents. In its latest called the Vox Tower, the main pull is a sky beach, 37 storeys above ground 'with the magnificent view of the Kuala Lumpur skyline as the backdrop'.
Could buyers be planning to flip the property in three years when it is completed? BKP sales manager Jenny Phui tells BT with a shrug: 'I have a customer - just retired - who bought a unit in all four blocks. That's why he said he doesn't want to come here - because he will get tempted.'
The loyal customer would have purchased a unit in the first block at an average RM560 psf in 2006, rising to RM750 for the second block and to RM950 for the third.
Most of the purchasers, however, are yuppies aged 30-45 years keen on the lifestyle concept.
With liquidity swirling and yields on fixed deposits a mere 2.6-3.6 per cent, many prefer to invest in property despite supply outstripping demand in areas such as Mont Kiara, in which average occupancy has been pegged at about 75 per cent.
Increasing land scarcity notwithstanding, developers continue to maximise space by building more condominiums, perhaps buoyed by such sentiment.
Over the next few months, developer Mah Sing Properties will officially launch Icon Residence Mont Kiara, a 260-unit development whose modular design the company says is inspired by the Greek island of Santorini.
Despite indicative prices of RM1,100-RM1,200 psf, some 6,000 applicants - and counting - have registered their interest, drawn perhaps to the landscape and water features which hint of a 'Mediterranean feel'.
Source: Business Times, 5 Aug 2010
While prices for landed residential property in the Klang Valley have remained robust, the interest in luxury condos, or rather those with a unique selling point, has been a surprise.
In June, Malaysia recorded what is believed to be its biggest condo transaction - that of a super penthouse in The Binjai On The Park for RM38 million (S$16 million). One of only two, the 14,300 sq ft triplex was sold at about the equivalent of RM2,660 psf to an unidentified corporate chieftain who owns properties worldwide, yet loved the unobstructed views of the Kuala Lumpur Convention Centre (KLCC) skyline afforded by the penthouse.
In nearby Mont Kiara, private developer Bukit Kiara Properties (BKP) has also been creating waves. Last month, it sold about four-fifths of the 200 plus units of its fourth and final block in the development called Verve Suites, at an average RM1,200 psf. Although the apartments come with fittings and furnishings, the cost per sq ft of the 'designer units' is close to prices in many developments in the Kuala Lumpur city centre.
Interestingly, secondary transactions have been much slower, a point that realtors attribute to BKP's easy financing scheme. A buyer need only pay 2.5 per cent in down-payment - or as little as RM20,000 - because of the developer's 5 per cent rebate and bank financing of up to 92.5 per cent. The developer also absorbs interest charges during the construction period as well as the legal fees for the sales and purchase and loan agreements.
Easy terms are a factor, but Verve Suites is very different from others in the market, BKP maintains. As with its previous blocks, the company 'sacrificed' the highest floor, which commands a premium, to build a common area for the use and enjoyment of residents. In its latest called the Vox Tower, the main pull is a sky beach, 37 storeys above ground 'with the magnificent view of the Kuala Lumpur skyline as the backdrop'.
Could buyers be planning to flip the property in three years when it is completed? BKP sales manager Jenny Phui tells BT with a shrug: 'I have a customer - just retired - who bought a unit in all four blocks. That's why he said he doesn't want to come here - because he will get tempted.'
The loyal customer would have purchased a unit in the first block at an average RM560 psf in 2006, rising to RM750 for the second block and to RM950 for the third.
Most of the purchasers, however, are yuppies aged 30-45 years keen on the lifestyle concept.
With liquidity swirling and yields on fixed deposits a mere 2.6-3.6 per cent, many prefer to invest in property despite supply outstripping demand in areas such as Mont Kiara, in which average occupancy has been pegged at about 75 per cent.
Increasing land scarcity notwithstanding, developers continue to maximise space by building more condominiums, perhaps buoyed by such sentiment.
Over the next few months, developer Mah Sing Properties will officially launch Icon Residence Mont Kiara, a 260-unit development whose modular design the company says is inspired by the Greek island of Santorini.
Despite indicative prices of RM1,100-RM1,200 psf, some 6,000 applicants - and counting - have registered their interest, drawn perhaps to the landscape and water features which hint of a 'Mediterranean feel'.
Source: Business Times, 5 Aug 2010
Global Orion makes first foray in residential market
Eyeing the mid-end segment, it will redevelop Balestier site for $80 million
(SINGAPORE) Industrial property developer Global Orion is making its first foray into the local private residential market with a freehold project at Balestier.
It is eyeing the mid-end segment, and hopes to establish itself by offering 'affordable luxury'.
Global Orion's director Satia Narjadin shared these plans with BT. The firm sealed the first collective sale of the year when it bought an industrial building at 6 Jalan Ampas in February, and it will be redeveloping the site into a new condominium.
The firm expects to invest a total of around $80 million in the yet unnamed project, which could have about 100 units. The launch is expected to take place in the first quarter of next year, and prices will be in line with those of new projects in the area.
According to caveats lodged with the authorities in June, units of upcoming developments nearby changed hands at $1,029-$1,506 psf.
Global Orion 'wants to be here for the long haul' and it is designing its first residential project in Singapore carefully, Mr Narjadin said. For starters, it is not keen to offer shoebox units - the smallest one at this development will measure at least 500 sq ft.
The firm also wants its projects to be both functional and aesthetically pleasing. 'I don't want to have to shield my eyes when I go past some of my projects,' he quipped.
Global Orion was incorporated in 2006 and is a family business. Mr Narjadin's father started out in the building materials industry more than 40 years ago, and the family has been developing residential and commercial projects as and when opportunities arose, in a few markets such as Indonesia and Australia.
It was on entering the Singapore market that the family decided to set up a vehicle to focus on property development.
Global Orion chose to get its feet wet in the industrial property sector. Compared with residential projects, industrial ones tend to involve fewer regulatory issues, and there are fewer details to take care of, Mr Narjadin said.
Entering the industrial sector was a way to 'get to know how things work, before we can confidently say ok, we're ready to do a residential project the right way,' he explained.
Global Orion has four industrial developments under its belt - the latest being Meissa at Pasir Panjang. It will launch the freehold 58-unit project in the third quarter.
The seven-storey building will be suitable for light industrial firms, and units range from 969-3,595 sq ft in size. Prices are likely to be around $700 per sq ft.
While Global Orion is using the industrial sector as a stepping stone to the residential sector, it will not be neglecting the former. The firm aims to have a balanced portfolio of projects, Mr Narjadin said.
Source: Business Times, 5 Aug 2010
(SINGAPORE) Industrial property developer Global Orion is making its first foray into the local private residential market with a freehold project at Balestier.
It is eyeing the mid-end segment, and hopes to establish itself by offering 'affordable luxury'.
Global Orion's director Satia Narjadin shared these plans with BT. The firm sealed the first collective sale of the year when it bought an industrial building at 6 Jalan Ampas in February, and it will be redeveloping the site into a new condominium.
The firm expects to invest a total of around $80 million in the yet unnamed project, which could have about 100 units. The launch is expected to take place in the first quarter of next year, and prices will be in line with those of new projects in the area.
According to caveats lodged with the authorities in June, units of upcoming developments nearby changed hands at $1,029-$1,506 psf.
Global Orion 'wants to be here for the long haul' and it is designing its first residential project in Singapore carefully, Mr Narjadin said. For starters, it is not keen to offer shoebox units - the smallest one at this development will measure at least 500 sq ft.
The firm also wants its projects to be both functional and aesthetically pleasing. 'I don't want to have to shield my eyes when I go past some of my projects,' he quipped.
Global Orion was incorporated in 2006 and is a family business. Mr Narjadin's father started out in the building materials industry more than 40 years ago, and the family has been developing residential and commercial projects as and when opportunities arose, in a few markets such as Indonesia and Australia.
It was on entering the Singapore market that the family decided to set up a vehicle to focus on property development.
Global Orion chose to get its feet wet in the industrial property sector. Compared with residential projects, industrial ones tend to involve fewer regulatory issues, and there are fewer details to take care of, Mr Narjadin said.
Entering the industrial sector was a way to 'get to know how things work, before we can confidently say ok, we're ready to do a residential project the right way,' he explained.
Global Orion has four industrial developments under its belt - the latest being Meissa at Pasir Panjang. It will launch the freehold 58-unit project in the third quarter.
The seven-storey building will be suitable for light industrial firms, and units range from 969-3,595 sq ft in size. Prices are likely to be around $700 per sq ft.
While Global Orion is using the industrial sector as a stepping stone to the residential sector, it will not be neglecting the former. The firm aims to have a balanced portfolio of projects, Mr Narjadin said.
Source: Business Times, 5 Aug 2010
Singapore still 3rd priciest office location in Asia-Pacific
SINGAPORE remains the third most expensive office location in the Asia-Pacific region after top-placed Tokyo and second-placed Hong Kong, says Colliers International.
Sydney, Mumbai, Perth, Brisbane, Ho Chi Minh City, Delhi and Shanghai round out the list of the 10 most expensive office locations in the region in the second quarter of 2010.
In the latest Colliers International Asia-Pacific office market overview, the real estate firm says overall office leasing demand in the region showed no sign of abating in Q2, despite the shadow of a sovereign debt crisis in Europe.
Led by financial services firms, leasing demand during the quarter was particularly strong in cities with high financial services components, such as Hong Kong and Singapore.
In Singapore, official statistics show the net absorption of island-wide office space was 398,000 square feet in Q2 - a 68 per cent quarter-on-quarter increase from 237,000 sq ft in Q1.
On the back of this, office rents here rebounded 6.1 per cent quarter-on- quarter in Q2 - the third fastest rate of growth in the region. Hong Kong registered the fastest quarter-on-quarter rebound of 8.4 per cent, followed by Wellington at 6.8 per cent.
At end-June, Grade A office space in Singapore's central business district was estimated to command an average monthly gross rent of $6.77 per sq ft.
Besides a flight to quality, the increase in office rents here can be attributed to companies taking advantage of competitive rates and adding space to meet an anticipated rise in headcount, Colliers says.
It expects Singapore's office rents to strengthen a further 10 per cent in the current second half.
Financial institutions looking to hire, companies expanding their operations and new set-ups are expected to back-fill vacant space from tenants relocating to newer buildings.
Source: Business Times, 5 Aug 2010
Sydney, Mumbai, Perth, Brisbane, Ho Chi Minh City, Delhi and Shanghai round out the list of the 10 most expensive office locations in the region in the second quarter of 2010.
In the latest Colliers International Asia-Pacific office market overview, the real estate firm says overall office leasing demand in the region showed no sign of abating in Q2, despite the shadow of a sovereign debt crisis in Europe.
Led by financial services firms, leasing demand during the quarter was particularly strong in cities with high financial services components, such as Hong Kong and Singapore.
In Singapore, official statistics show the net absorption of island-wide office space was 398,000 square feet in Q2 - a 68 per cent quarter-on-quarter increase from 237,000 sq ft in Q1.
On the back of this, office rents here rebounded 6.1 per cent quarter-on- quarter in Q2 - the third fastest rate of growth in the region. Hong Kong registered the fastest quarter-on-quarter rebound of 8.4 per cent, followed by Wellington at 6.8 per cent.
At end-June, Grade A office space in Singapore's central business district was estimated to command an average monthly gross rent of $6.77 per sq ft.
Besides a flight to quality, the increase in office rents here can be attributed to companies taking advantage of competitive rates and adding space to meet an anticipated rise in headcount, Colliers says.
It expects Singapore's office rents to strengthen a further 10 per cent in the current second half.
Financial institutions looking to hire, companies expanding their operations and new set-ups are expected to back-fill vacant space from tenants relocating to newer buildings.
Source: Business Times, 5 Aug 2010
Time to finish project on state land shortened
Project completion period cut to 5 years to make supply keep up with demand
THE government is cutting the amount of time that developers have to build private residential projects on state land by a year, to ensure that there would be enough homes to meet demand.
It announced this yesterday evening, as it put up three more sites from the confirmed list for tender. They can potentially yield 1,260 units.
All government land sale sites come with a project completion period (PCP) to make sure that developers finish work within a reasonable period of time. The PCP is measured from the date the site is awarded to the date the project obtains Temporary Occupation Permit.
The authorities are reducing the PCP for private residential sale sites to five years from six years, 'to further ensure more timely supply of private housing to meet demand'. The shorter PCP will apply to sites released for sale from today.
The PCP for executive condominium (EC) sale sites will remain at four years. The Urban Redevelopment Authority (URA) told BT that projects might meet unexpected delays in construction and there will not be sufficient buffer if the PCP for EC sites is cut further.
Market watchers supported the move, although they did not think there would be a significant impact on the market.
DTZ executive director (consulting) Ong Choon Fah said that most developers do want to build their projects as soon as possible to avoid holding costs and unknown market risks ahead. It would also be disadvantageous for them to hold on to 99-year leasehold sites for too long.
Nevertheless, the shorter PCP 'will give developers an additional impetus' to complete their projects, she said.
Cushman & Wakefield managing director Donald Han felt that the government made a prudent move. It is sending a signal to developers, that they should make their projects available quickly to help maintain stability in the property market, he said.
Going by information from URA, the shorter PCP is unlikely to affect most developers. URA said that based on development trends in the last eight years, the completion period for private residential sale sites was about four years on average. Also, none of the private residential projects on sale sites exceeded their stipulated PCP last year.
The shorter PCP will apply to two of the three latest sites up for sale starting today. One is a land parcel at Hougang Avenue 7. The 1.56 hectare site has a maximum permissable gross floor area (GFA) of 471,083 sq ft and can be developed into a 395-unit condominium project. Its tender will close on Sept 17.
The second is a 2-ha plot at the junction of Pasir Ris Drive 3 and 4. It has a maximum permissable GFA of 452,086 sq ft and can yield about 380 condominium units. Its tender will close on Sept 30.
The new PCP rule will not apply to an EC site at Punggol Drive/Punggol East up for sale. It is near the Kadaloor LRT station, and has a site area of 1.57 ha and a maximum allowable GFA of 574,577 sq ft. The site can accommodate about 485 units, and its tender will close on Sept 23.
More sites will be rolled out this month. URA will launch another plot from the confirmed list at Petir Road for sale; four sites from the reserve list will be made available for application.
Source: Business Times, 5 Aug 2010
THE government is cutting the amount of time that developers have to build private residential projects on state land by a year, to ensure that there would be enough homes to meet demand.
It announced this yesterday evening, as it put up three more sites from the confirmed list for tender. They can potentially yield 1,260 units.
All government land sale sites come with a project completion period (PCP) to make sure that developers finish work within a reasonable period of time. The PCP is measured from the date the site is awarded to the date the project obtains Temporary Occupation Permit.
The authorities are reducing the PCP for private residential sale sites to five years from six years, 'to further ensure more timely supply of private housing to meet demand'. The shorter PCP will apply to sites released for sale from today.
The PCP for executive condominium (EC) sale sites will remain at four years. The Urban Redevelopment Authority (URA) told BT that projects might meet unexpected delays in construction and there will not be sufficient buffer if the PCP for EC sites is cut further.
Market watchers supported the move, although they did not think there would be a significant impact on the market.
DTZ executive director (consulting) Ong Choon Fah said that most developers do want to build their projects as soon as possible to avoid holding costs and unknown market risks ahead. It would also be disadvantageous for them to hold on to 99-year leasehold sites for too long.
Nevertheless, the shorter PCP 'will give developers an additional impetus' to complete their projects, she said.
Cushman & Wakefield managing director Donald Han felt that the government made a prudent move. It is sending a signal to developers, that they should make their projects available quickly to help maintain stability in the property market, he said.
Going by information from URA, the shorter PCP is unlikely to affect most developers. URA said that based on development trends in the last eight years, the completion period for private residential sale sites was about four years on average. Also, none of the private residential projects on sale sites exceeded their stipulated PCP last year.
The shorter PCP will apply to two of the three latest sites up for sale starting today. One is a land parcel at Hougang Avenue 7. The 1.56 hectare site has a maximum permissable gross floor area (GFA) of 471,083 sq ft and can be developed into a 395-unit condominium project. Its tender will close on Sept 17.
The second is a 2-ha plot at the junction of Pasir Ris Drive 3 and 4. It has a maximum permissable GFA of 452,086 sq ft and can yield about 380 condominium units. Its tender will close on Sept 30.
The new PCP rule will not apply to an EC site at Punggol Drive/Punggol East up for sale. It is near the Kadaloor LRT station, and has a site area of 1.57 ha and a maximum allowable GFA of 574,577 sq ft. The site can accommodate about 485 units, and its tender will close on Sept 23.
More sites will be rolled out this month. URA will launch another plot from the confirmed list at Petir Road for sale; four sites from the reserve list will be made available for application.
Source: Business Times, 5 Aug 2010
CityDev's KL site may set new price benchmark
Land for high-end condo project could top RM3,000 psf
(KUALA LUMPUR) Singapore property tycoon Kwek Leng Beng is in talks to sell a parcel of land in Jalan Bukit Bintang, Kuala Lumpur, which could possibly fetch a record price for a land deal, says a report in Malaysia's Business Times.
It is understood that the selling price for the land, owned by Mr Kwek's City Developments Ltd (CDL), is being negotiated for more than RM3,000 (S$1,282) per sq ft.
To date, the most expensive land deal reported has been Sunrise Bhd's acquisition of Wisma Angkasa Raya in Jalan Ampang, Kuala Lumpur, for RM2,588 per sq ft. In May this year, FFM Bhd and Kuok Brothers Sdn Bhd sold a piece of land in Jalan Perak, Kuala Lumpur, for RM2,200 per sq ft.
CDL's land in Jalan Bukit Bintang is about 32,000 sq ft. At RM3,000 per sq ft, the deal could fetch RM96 million.
The land sits between the Grand Millennium Kuala Lumpur hotel and the Pavilion Kuala Lumpur shopping centre. CDL, which is part of Singapore's Hong Leong Group, also owns the Grand Millennium hotel.
Contenders for the land are believed to be the owner of Pavilion Kuala Lumpur and the YTL group, both of which have sizeable assets along Jalan Bukit Bintang.
Sources told Malaysia's Business Times that the RM500 million Millennium Residences project originally planned for the site and launched in 2007 had been aborted and that the land was being negotiated for sale.
A quick check at the site revealed that the project signage and hoarding had been removed. Some work on the 42-storey high-end condominium with an additional 15-storey crown started in 2008, but has since stalled.
In late March, a spokesperson for Singapore's Hong Leong said that the Millennium Residences would be launched later this year.
However, replying to a follow-up question from MBT last week, the spokesperson said: 'There are no details on the Millennium Residences available at this point.'
When asked if the project had been scrapped and the land was being negotiated for sale, the spokesperson said: 'We have no comment at this stage.'
Pavilion Kuala Lumpur is wholly owned by Urusharta Cemerlang Sdn Bhd, which in turn is 51 per cent owned by Urusharta Cemerlang Development Sdn Bhd and 49 per cent by the Qatar Investment Authority (QIA).
Pavilion Kuala Lumpur will be managing the new Fahrenheit 88 shopping centre, previously known as KL Plaza. It belongs to Makna Mujur Sdn Bhd, which is owned by Pavilion International Development Fund Ltd, of which the principal is the QIA.
YTL owns the Starhill Gallery and Lot 10 shopping centres and the JW Marriott hotel in the vicinity.
Source: Business Times, 5 Aug 2010
(KUALA LUMPUR) Singapore property tycoon Kwek Leng Beng is in talks to sell a parcel of land in Jalan Bukit Bintang, Kuala Lumpur, which could possibly fetch a record price for a land deal, says a report in Malaysia's Business Times.
It is understood that the selling price for the land, owned by Mr Kwek's City Developments Ltd (CDL), is being negotiated for more than RM3,000 (S$1,282) per sq ft.
To date, the most expensive land deal reported has been Sunrise Bhd's acquisition of Wisma Angkasa Raya in Jalan Ampang, Kuala Lumpur, for RM2,588 per sq ft. In May this year, FFM Bhd and Kuok Brothers Sdn Bhd sold a piece of land in Jalan Perak, Kuala Lumpur, for RM2,200 per sq ft.
CDL's land in Jalan Bukit Bintang is about 32,000 sq ft. At RM3,000 per sq ft, the deal could fetch RM96 million.
The land sits between the Grand Millennium Kuala Lumpur hotel and the Pavilion Kuala Lumpur shopping centre. CDL, which is part of Singapore's Hong Leong Group, also owns the Grand Millennium hotel.
Contenders for the land are believed to be the owner of Pavilion Kuala Lumpur and the YTL group, both of which have sizeable assets along Jalan Bukit Bintang.
Sources told Malaysia's Business Times that the RM500 million Millennium Residences project originally planned for the site and launched in 2007 had been aborted and that the land was being negotiated for sale.
A quick check at the site revealed that the project signage and hoarding had been removed. Some work on the 42-storey high-end condominium with an additional 15-storey crown started in 2008, but has since stalled.
In late March, a spokesperson for Singapore's Hong Leong said that the Millennium Residences would be launched later this year.
However, replying to a follow-up question from MBT last week, the spokesperson said: 'There are no details on the Millennium Residences available at this point.'
When asked if the project had been scrapped and the land was being negotiated for sale, the spokesperson said: 'We have no comment at this stage.'
Pavilion Kuala Lumpur is wholly owned by Urusharta Cemerlang Sdn Bhd, which in turn is 51 per cent owned by Urusharta Cemerlang Development Sdn Bhd and 49 per cent by the Qatar Investment Authority (QIA).
Pavilion Kuala Lumpur will be managing the new Fahrenheit 88 shopping centre, previously known as KL Plaza. It belongs to Makna Mujur Sdn Bhd, which is owned by Pavilion International Development Fund Ltd, of which the principal is the QIA.
YTL owns the Starhill Gallery and Lot 10 shopping centres and the JW Marriott hotel in the vicinity.
Source: Business Times, 5 Aug 2010
S'pore office rents still region's third most costly
SINGAPORE has recorded the third fastest office rental growth in the Asia-Pacific region, with rents up 6.1 per cent in the second quarter, said the latest report from Colliers International.
The Republic is still the region's third most expensive office location, after Tokyo and Hong Kong, the property consultancy said.
Across the region, office rentals posted 1.4 per cent growth on average in the second quarter from the first.
Office leasing demand showed no signs of abating despite the looming sovereign debt crisis in Europe, Colliers said in a statement.
'Led by occupiers engaged in the financial service sector, leasing demand was particularly strong in certain cities with a high financial service component, such as Hong Kong and Singapore,' it said.
Indeed, Hong Kong saw the fastest growth in office rentals at 8.4 per cent quarter-on-quarter, followed by Wellington, New Zealand, which registered a 6.8 per cent rise in office rents.
Singapore's No. 3 spot came despite concerns over the impact of plenty of new office space coming on stream.
At the end of June, average Grade A gross office rents in Singapore's Central Business District were up 6.1 per cent to $6.77 per sq ft a month from the first quarter. Colliers expects office rentals in Singapore to increase by another 10 per cent in the second half.
It said that some companies are taking the chance to flock to better quality offices, while others are taking advantage of competitive rental rates to take up more space in anticipation of hiring extra staff as the economy rebounds.
The office market recovery here has been stronger than expected, though rents for old buildings lacking modern infrastructure will lag behind those for newer ones, said Collier's director of research and advisory Tay Huey Ying.
Source: Straits Times, 5 Aug 2010
The Republic is still the region's third most expensive office location, after Tokyo and Hong Kong, the property consultancy said.
Across the region, office rentals posted 1.4 per cent growth on average in the second quarter from the first.
Office leasing demand showed no signs of abating despite the looming sovereign debt crisis in Europe, Colliers said in a statement.
'Led by occupiers engaged in the financial service sector, leasing demand was particularly strong in certain cities with a high financial service component, such as Hong Kong and Singapore,' it said.
Indeed, Hong Kong saw the fastest growth in office rentals at 8.4 per cent quarter-on-quarter, followed by Wellington, New Zealand, which registered a 6.8 per cent rise in office rents.
Singapore's No. 3 spot came despite concerns over the impact of plenty of new office space coming on stream.
At the end of June, average Grade A gross office rents in Singapore's Central Business District were up 6.1 per cent to $6.77 per sq ft a month from the first quarter. Colliers expects office rentals in Singapore to increase by another 10 per cent in the second half.
It said that some companies are taking the chance to flock to better quality offices, while others are taking advantage of competitive rental rates to take up more space in anticipation of hiring extra staff as the economy rebounds.
The office market recovery here has been stronger than expected, though rents for old buildings lacking modern infrastructure will lag behind those for newer ones, said Collier's director of research and advisory Tay Huey Ying.
Source: Straits Times, 5 Aug 2010
Govt launches 3 sites, cuts time for project completion
THE Government yesterday launched three mass market residential sites for sale and cut from six to five years the time developers have to complete a housing project.
The sites - in Hougang Avenue 7, at the corner of Punggol Drive and Punggol East, and the junction of Pasir Ris Drive 3 and Pasir Ris Drive 4 - are expected to yield about 1,260 units. Their tenders close separately next month.
The three 99-year leasehold plots are the first to have the new five-year project completion period for private residential sale sites applied to them.
From today, all such sites released for sale will have to conform to the new rule, which is to 'further ensure more timely supply of private housing to meet demand', said the Housing Board in a statement yesterday.
Experts believe the change - it does not apply to executive condominium (EC) sites which have to be built in four years - will not have a major impact on the market.
Cushman & Wakefield managing director Donald Han said: 'In a peak market like now, it's not a problem at all. Developers usually take three to four years to build a mass market condo.
'It's just a precautionary measure. The Government just wants to ensure that what has been tendered out will be completed in five years, so that supply can meet demand.'
Experts note that few developers want to take too long to build on leasehold sites.
'Based on development trends in the last eight years, we found that the actual completion period for sale sites for private residential developments was generally about four years on average,' said the Urban Redevelopment Authority (URA). Only about 13 per cent of these projects took longer than five years to complete, it said.
Prior to 1997, the project completion period for government residential sites was four to five years. It was extended to eight years in late 1997 due to the then economic crisis, said the URA.
This was cut to six years in 1999 and has remained so, although the Government in last year's Budget allowed developers to apply to extend completion periods by up to one year with applications having to be made by Jan 21 this year.
Of the sites launched yesterday, the Hougang plot is 15,630 sq m in size with a maximum gross floor area of 43,765 sq m.
The Punggol site is 15,700 sq m in size with an allowable gross floor area of 53,380 sq m. It is earmarked for executive condos and is near Kadaloor LRT station.
The Pasir Ris plot is a short distance from NTUC Downtown East, has a site area of some 20,000 sq m and an allowable gross floor area of 42,000 sq m.
Ngee Ann Polytechnic lecturer Nicholas Mak predicted that the sites would attract less aggressive bids given that they are not near MRT stations.
The Hougang site may attract bids of $320-$370 per sq ft per plot ratio (psf ppr), while the one at Pasir Ris may garner bids of $350-$390 psf ppr, he said. The Punggol EC plot, being in a new estate, may draw bids of $250-$290 psf ppr, added Mr Mak.
Source: Straits Times, 5 Aug 2010
The sites - in Hougang Avenue 7, at the corner of Punggol Drive and Punggol East, and the junction of Pasir Ris Drive 3 and Pasir Ris Drive 4 - are expected to yield about 1,260 units. Their tenders close separately next month.
The three 99-year leasehold plots are the first to have the new five-year project completion period for private residential sale sites applied to them.
From today, all such sites released for sale will have to conform to the new rule, which is to 'further ensure more timely supply of private housing to meet demand', said the Housing Board in a statement yesterday.
Experts believe the change - it does not apply to executive condominium (EC) sites which have to be built in four years - will not have a major impact on the market.
Cushman & Wakefield managing director Donald Han said: 'In a peak market like now, it's not a problem at all. Developers usually take three to four years to build a mass market condo.
'It's just a precautionary measure. The Government just wants to ensure that what has been tendered out will be completed in five years, so that supply can meet demand.'
Experts note that few developers want to take too long to build on leasehold sites.
'Based on development trends in the last eight years, we found that the actual completion period for sale sites for private residential developments was generally about four years on average,' said the Urban Redevelopment Authority (URA). Only about 13 per cent of these projects took longer than five years to complete, it said.
Prior to 1997, the project completion period for government residential sites was four to five years. It was extended to eight years in late 1997 due to the then economic crisis, said the URA.
This was cut to six years in 1999 and has remained so, although the Government in last year's Budget allowed developers to apply to extend completion periods by up to one year with applications having to be made by Jan 21 this year.
Of the sites launched yesterday, the Hougang plot is 15,630 sq m in size with a maximum gross floor area of 43,765 sq m.
The Punggol site is 15,700 sq m in size with an allowable gross floor area of 53,380 sq m. It is earmarked for executive condos and is near Kadaloor LRT station.
The Pasir Ris plot is a short distance from NTUC Downtown East, has a site area of some 20,000 sq m and an allowable gross floor area of 42,000 sq m.
Ngee Ann Polytechnic lecturer Nicholas Mak predicted that the sites would attract less aggressive bids given that they are not near MRT stations.
The Hougang site may attract bids of $320-$370 per sq ft per plot ratio (psf ppr), while the one at Pasir Ris may garner bids of $350-$390 psf ppr, he said. The Punggol EC plot, being in a new estate, may draw bids of $250-$290 psf ppr, added Mr Mak.
Source: Straits Times, 5 Aug 2010
Wednesday, August 4, 2010
Double-dip recession unlikely
DESPITE the global economic recovery since the second half of 2009, a minority of observers continue to forecast a double-dip recession, at least in the United States. These include respected economists such as Paul Krugman of Princeton and Robert Shiller of Yale. Theirs is, however, not the mainstream view - which holds that while a slowdown in the second half of 2010 is likely, a recession is not on the cards.
What does the evidence suggest so far? Certainly, there are grounds for concern. US unemployment is stubbornly stuck at close to 10 per cent. The effects of the 2009 economic stimulus programme are now waning. The housing market - a key forward-looking indicator - has yet to turn around.
In a recent speech to a banking conference, US Federal Reserve chairman Ben Bernanke served a sobering reminder. Despite the fact that the economy is expanding, 'we have a considerable way to go to achieve a full recovery', he said. The most recent estimates of retail sales and consumer confidence have also not been good. Tellingly, the pace of the recovery has slowed from an annualised rate of 3.7 per cent in the first quarter to 2.4 per cent in the second quarter.
Over in Europe, there has been much bad news this year, particularly relating to the sovereign debt crisis in the eurozone. This has led to austerity programmes being put in place in several countries, the effects of which we have yet to see.
However, the picture is not all dire. Some of the latest data out of the US, from the Institute of Supply Management, suggests that manufacturing activity expanded for the 12th consecutive month in July. Second-quarter GDP rose 2.4 per cent quarter-on-quarter, beating many analysts' expectations. And on the corporate front, more than 75 per cent of the over 300 companies in the S&P 500 have reported results that have also beaten the average estimates of analysts.
Even Europe has shown some upside surprises. Thanks partly to the weaker euro, the German economy is enjoying an export-led revival. The country's central bank, the Bundesbank, expects 1.9 per cent growth this year, which again is better than earlier anticipated. Germany's growth will vitally help at least cushion the downturn in the eurozone.
The brightest spot of the global economy is Asia, particularly China and India, where growth forecasts remain rosy for this year: close to 10 per cent for China and 8.5 per cent for India.
For the global economy as a whole, last month the International Monetary Fund (IMF) revised up its growth forecast to 4.6 per cent in 2010 from 4.2 per cent in April - although it did note that 'downside risks have risen sharply amid renewed financial turbulence'.
Given what we have witnessed over the last two years, it would be imprudent to rule out unpleasant surprises, including a double-dip recession. But on the weight of the evidence, and with loose monetary policies still in place, this looks unlikely - at least for now.
Source: Business Times, 4 Aug 2010
What does the evidence suggest so far? Certainly, there are grounds for concern. US unemployment is stubbornly stuck at close to 10 per cent. The effects of the 2009 economic stimulus programme are now waning. The housing market - a key forward-looking indicator - has yet to turn around.
In a recent speech to a banking conference, US Federal Reserve chairman Ben Bernanke served a sobering reminder. Despite the fact that the economy is expanding, 'we have a considerable way to go to achieve a full recovery', he said. The most recent estimates of retail sales and consumer confidence have also not been good. Tellingly, the pace of the recovery has slowed from an annualised rate of 3.7 per cent in the first quarter to 2.4 per cent in the second quarter.
Over in Europe, there has been much bad news this year, particularly relating to the sovereign debt crisis in the eurozone. This has led to austerity programmes being put in place in several countries, the effects of which we have yet to see.
However, the picture is not all dire. Some of the latest data out of the US, from the Institute of Supply Management, suggests that manufacturing activity expanded for the 12th consecutive month in July. Second-quarter GDP rose 2.4 per cent quarter-on-quarter, beating many analysts' expectations. And on the corporate front, more than 75 per cent of the over 300 companies in the S&P 500 have reported results that have also beaten the average estimates of analysts.
Even Europe has shown some upside surprises. Thanks partly to the weaker euro, the German economy is enjoying an export-led revival. The country's central bank, the Bundesbank, expects 1.9 per cent growth this year, which again is better than earlier anticipated. Germany's growth will vitally help at least cushion the downturn in the eurozone.
The brightest spot of the global economy is Asia, particularly China and India, where growth forecasts remain rosy for this year: close to 10 per cent for China and 8.5 per cent for India.
For the global economy as a whole, last month the International Monetary Fund (IMF) revised up its growth forecast to 4.6 per cent in 2010 from 4.2 per cent in April - although it did note that 'downside risks have risen sharply amid renewed financial turbulence'.
Given what we have witnessed over the last two years, it would be imprudent to rule out unpleasant surprises, including a double-dip recession. But on the weight of the evidence, and with loose monetary policies still in place, this looks unlikely - at least for now.
Source: Business Times, 4 Aug 2010
Sim Lian tops bids for DBSS site in Tampines
It plans 680-unit project: 60% 4-room flats; 25% 3-room; the rest 5-room
SIM Lian Land, which emerged as the highest bidder for a site in Tampines designated for public housing under the Design, Build and Sell Scheme (DBSS), plans to build about 680 flats on the plot if awarded the site.
'About 60 per cent of the units will be four-room flats, another 25 per cent will be three-room flats and the remaining 15 per cent will comprise five-room flats,' Sim Lian Group executive director Diana Kuik told BT yesterday.
Sim Lian's top bid of about $178.2 million works out to about $261 per square foot of potential gross floor area. The tender drew five bids.
Sim Lian's price was about 22 per cent higher than the next highest offer of $213.62 per square foot per plot ratio (psf ppr) by Qingdao Construction (Singapore). A joint venture between Hoi Hup Realty and Sunway Developments offered about $205 psf ppr. Realty Consortium (a unit of Koh Brothers) bid $200.91 psf ppr.
The lowest offer of $110 million or $161.20 psf ppr was from Ho Lee Group.
The site will be sold on 103-year leasehold tenure inclusive of a four-year construction period.
DBSS gives developers an opportunity to design, develop, price and sell HDB flats to buyers who have to meet criteria set by the Housing & Development Board, including a monthly household income ceiling of $8,000.
The plot is next to Singapore's first DBSS project, The Premiere@Tampines, which was also developed by Sim Lian. That is fully sold.
As for the latest DBSS plot, Sim Lian hopes to launch the project around the third quarter of next year, says Ms Kuik.
In March this year, the group clinched a 99-year leasehold condo site at Tampines Ave 1/Ave 10, facing Bedok Reservoir, at a state tender.
It plans to build a 696-unit project to be named Waterview on this plot, with the majority of units being two and three-bedroom apartments. 'We'll probably launch the project around Q4 this year,' said Ms Kuik. Sim Lian paid $302 million or $421 psf ppr for the site.
Sim Lian also has available 62 units at its Clover By the Park condo in Bishan, which is still under construction. Most of these units are three and four-bedders and are priced in the high-$900 to $1,000 psf range. The 39-storey, 99-year leasehold project has a total of 616 units. It was released in June 2008.
Source: Business Times, 4 Aug 2010
SIM Lian Land, which emerged as the highest bidder for a site in Tampines designated for public housing under the Design, Build and Sell Scheme (DBSS), plans to build about 680 flats on the plot if awarded the site.
'About 60 per cent of the units will be four-room flats, another 25 per cent will be three-room flats and the remaining 15 per cent will comprise five-room flats,' Sim Lian Group executive director Diana Kuik told BT yesterday.
Sim Lian's top bid of about $178.2 million works out to about $261 per square foot of potential gross floor area. The tender drew five bids.
Sim Lian's price was about 22 per cent higher than the next highest offer of $213.62 per square foot per plot ratio (psf ppr) by Qingdao Construction (Singapore). A joint venture between Hoi Hup Realty and Sunway Developments offered about $205 psf ppr. Realty Consortium (a unit of Koh Brothers) bid $200.91 psf ppr.
The lowest offer of $110 million or $161.20 psf ppr was from Ho Lee Group.
The site will be sold on 103-year leasehold tenure inclusive of a four-year construction period.
DBSS gives developers an opportunity to design, develop, price and sell HDB flats to buyers who have to meet criteria set by the Housing & Development Board, including a monthly household income ceiling of $8,000.
The plot is next to Singapore's first DBSS project, The Premiere@Tampines, which was also developed by Sim Lian. That is fully sold.
As for the latest DBSS plot, Sim Lian hopes to launch the project around the third quarter of next year, says Ms Kuik.
In March this year, the group clinched a 99-year leasehold condo site at Tampines Ave 1/Ave 10, facing Bedok Reservoir, at a state tender.
It plans to build a 696-unit project to be named Waterview on this plot, with the majority of units being two and three-bedroom apartments. 'We'll probably launch the project around Q4 this year,' said Ms Kuik. Sim Lian paid $302 million or $421 psf ppr for the site.
Sim Lian also has available 62 units at its Clover By the Park condo in Bishan, which is still under construction. Most of these units are three and four-bedders and are priced in the high-$900 to $1,000 psf range. The 39-storey, 99-year leasehold project has a total of 616 units. It was released in June 2008.
Source: Business Times, 4 Aug 2010
Singapore is priciest Asian country to build in: report
Republic is 10th most expensive country to build in worldwide
(SINGAPORE) Singapore is the most expensive Asian country to build in except Japan and one of the 10 most expensive worldwide, according to a new report from EC Harris.
The consultancy's international construction cost report, which covers 50 countries, found Singapore is the 10th most expensive country to build in worldwide, on a list topped by Switzerland. Hong Kong, the second most expensive Asian country to build in, is ranked 21st globally.
The report does not include values for Japan, as EC Harris did not have any projects there in the past two years. Generally, tender prices in Tokyo are around 20-30 per cent higher than in Singapore and Hong Kong.
Richard Warburton, EC Harris's regional head of cost and commercial management in Asia, said Singapore continues to be the most expensive Asian country except Japan to build in despite a drop in tender prices of 5-8 per cent last year.
'The Singapore market appears to be recovering on the back of sustained demand and strong economic growth,' he said. 'We are also seeing localised 'hot' markets, such as the substantial amount of new office building fit-out activity that is under way.'
This may create supply chain pressures and lift tender prices further. Mr Warburton expects 3-5 per cent growth in general tender prices over the coming year, although a key factor determining this will be how much commodity prices rise, he noted.
Another property and construction consultancy, Rider Levett Bucknall, predicted in April that building tender prices in Singapore could climb 3 per cent this year.
Analysts have said recent hikes in iron ore prices are likely to lead to higher steel prices. Increases in the foreign worker levy and cut in man-year entitlements will also cause construction costs to rise.
According to EC Harris's survey, which benchmarks the cost of building in each country against the UK, the price of construction in Singapore is almost 7 per cent higher than in the UK, where it fell almost 20 per cent from its peak in the previous year.
Hong Kong is Singapore's closest Asian counterpart on the expensive list. It ranks second in Asia, at 7 per cent below the UK benchmark.
China ranks fifth among Asian countries, behind South Korea and Thailand. At the other end of the scale, Sri Lanka is the cheapest Asian country to build in, at 27 per cent of the cost of UK construction.
According to Mr Warburton, the greatest uncertainty in tender price inflation in Asia exists in Hong Kong.
Construction workloads and tender prices in Hong Kong rose steadily throughout 2009, driven largely by government spending on infrastructure. Now there is a sense that a period of readjustment is on the way, Mr Warburton added.
EC Harris calculated the figures through a survey of construction costs in 50 countries. The survey was conducted across the consultancy's offices worldwide, with data collected in cost per square metre format for a wide range of buildings, including industrial, offices, retail, residential and hotels.
Source: Business Times, 4 Aug 2010
(SINGAPORE) Singapore is the most expensive Asian country to build in except Japan and one of the 10 most expensive worldwide, according to a new report from EC Harris.
The consultancy's international construction cost report, which covers 50 countries, found Singapore is the 10th most expensive country to build in worldwide, on a list topped by Switzerland. Hong Kong, the second most expensive Asian country to build in, is ranked 21st globally.
The report does not include values for Japan, as EC Harris did not have any projects there in the past two years. Generally, tender prices in Tokyo are around 20-30 per cent higher than in Singapore and Hong Kong.
Richard Warburton, EC Harris's regional head of cost and commercial management in Asia, said Singapore continues to be the most expensive Asian country except Japan to build in despite a drop in tender prices of 5-8 per cent last year.
'The Singapore market appears to be recovering on the back of sustained demand and strong economic growth,' he said. 'We are also seeing localised 'hot' markets, such as the substantial amount of new office building fit-out activity that is under way.'
This may create supply chain pressures and lift tender prices further. Mr Warburton expects 3-5 per cent growth in general tender prices over the coming year, although a key factor determining this will be how much commodity prices rise, he noted.
Another property and construction consultancy, Rider Levett Bucknall, predicted in April that building tender prices in Singapore could climb 3 per cent this year.
Analysts have said recent hikes in iron ore prices are likely to lead to higher steel prices. Increases in the foreign worker levy and cut in man-year entitlements will also cause construction costs to rise.
According to EC Harris's survey, which benchmarks the cost of building in each country against the UK, the price of construction in Singapore is almost 7 per cent higher than in the UK, where it fell almost 20 per cent from its peak in the previous year.
Hong Kong is Singapore's closest Asian counterpart on the expensive list. It ranks second in Asia, at 7 per cent below the UK benchmark.
China ranks fifth among Asian countries, behind South Korea and Thailand. At the other end of the scale, Sri Lanka is the cheapest Asian country to build in, at 27 per cent of the cost of UK construction.
According to Mr Warburton, the greatest uncertainty in tender price inflation in Asia exists in Hong Kong.
Construction workloads and tender prices in Hong Kong rose steadily throughout 2009, driven largely by government spending on infrastructure. Now there is a sense that a period of readjustment is on the way, Mr Warburton added.
EC Harris calculated the figures through a survey of construction costs in 50 countries. The survey was conducted across the consultancy's offices worldwide, with data collected in cost per square metre format for a wide range of buildings, including industrial, offices, retail, residential and hotels.
Source: Business Times, 4 Aug 2010
Buying within your means
IN THE rush to secure a home amid escalating property prices, first-time homebuyers, especially young adults, may inadvertently commit themselves to properties beyond their means.
Since mortgage payments and other home bills take priority over other basic necessities, rising mortgage rates may push some homebuyers to suffer a housing-induced fall in their standards of living. It is important, thus, to take a long-term perspective on housing affordability.
Affordability is usually measured by the ratio of monthly mortgage payment to current monthly household income. In the United States, if this ratio is less than 30 per cent it is assumed that the property is affordable. In Singapore, a cut-off ratio of 40 per cent is one of the criteria banks use to decide on home loans.
However, this is not a good measure of affordability for two reasons. First, by extending the amortisation period, monthly mortgage payment can be reduced. This can give the impression that affordability has improved, although the total interest burden has gone up. Second, the measure essentially focuses on short-run housing affordability by using current income instead of an estimate of permanent income. Undue reliance on short-run housing affordability measurements was one of the triggers in the US sub-prime mortgage crisis.
A much better indicator of housing affordability is the ratio of house price to lifetime income - house price being the discounted present value of future mortgage payments. Lifetime income can also be worked out as a discounted present value of the future income stream, using the same mortgage rate.
(For example, if the annual interest rate is 5 per cent, the discounted present value of $105 one will receive next year is $100. Alternatively, if one saves $100 today at the 5 per cent interest rate, one will receive $105 next year.)
Under some conditions, the two ratios - mortgage payment to permanent income, and house price to lifetime income - are the same. We can thus use a cut-off ratio like 30 per cent to define an affordability limit. We have not worked out an optimal cut-off value for Singapore yet.
Homebuyers know the prices of the houses they want and the transaction costs involved. What they need is an estimate of their lifetime income - that is, their accumulated savings plus the discounted present value (DPV) of their earnings, over their remaining working life.
Using survey data collected by the Department of Statistics, we can decipher predicted income profiles by birth cohorts for different income groups over the working ages of 20-64. We now have data only for three income levels: lower (25th), middle (50th) and upper (75th ) percentiles.
Since our focus is on young homebuyers, the accompanying table presents estimates of the DPV of household income for households headed by 30-year-olds. By adding their own accumulated savings to the income figures, young homebuyers can obtain an estimate of their lifetime income. They can then divide the price (including the transaction cost) of the home they are buying by their estimated lifetime income to see what percentage of their lifetime income will be consumed by the property.
The rest of the table provides illustrative computations of housing affordability for the three income group references. Accumulated savings (including interest earnings) were estimated from household expenditure survey data, and transaction costs were estimated using current rates on stamp duties and other fees and charges. Property taxes and costs of home insurance and maintenance were not included.
Some general observations that emerge from this table are worth highlighting:
# First, when the mortgage rate goes up, homebuyers have to spend a higher percentage of their lifetime income on housing, and affordability goes down.
# Second, given that current mortgage rates are above 5 per cent, and if we use the 30 per cent cut-off rule, HDB resale flats of four rooms and above are not that affordable for low-income groups.
# Third, at current mortgage rates, HDB resale flats are well within the affordable range for middle- and upper-income groups.
# Fourth, private properties are obviously for high-income groups. Still, even for those in the 75th income percentile, private residential properties at median prices are not within the affordable range at current mortgage rates.
Tilak Abeysinghe is deputy director of the Singapore Centre for Applied and Policy Economics, National University of Singapore. Gu Jiaying is pursuing a PhD at the University of Illinois at Urbana-Champaign.
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A much better indicator of housing affordability is the ratio of 'house price' to 'lifetime income'.
For a 30-year-old earning $5,520 a month with savings of $118,900, affordable homes would be an HDB executive flat or lower, using a cut-off ratio of about 30%.
Source: Straits Times, 4 Aug 2010
Since mortgage payments and other home bills take priority over other basic necessities, rising mortgage rates may push some homebuyers to suffer a housing-induced fall in their standards of living. It is important, thus, to take a long-term perspective on housing affordability.
Affordability is usually measured by the ratio of monthly mortgage payment to current monthly household income. In the United States, if this ratio is less than 30 per cent it is assumed that the property is affordable. In Singapore, a cut-off ratio of 40 per cent is one of the criteria banks use to decide on home loans.
However, this is not a good measure of affordability for two reasons. First, by extending the amortisation period, monthly mortgage payment can be reduced. This can give the impression that affordability has improved, although the total interest burden has gone up. Second, the measure essentially focuses on short-run housing affordability by using current income instead of an estimate of permanent income. Undue reliance on short-run housing affordability measurements was one of the triggers in the US sub-prime mortgage crisis.
A much better indicator of housing affordability is the ratio of house price to lifetime income - house price being the discounted present value of future mortgage payments. Lifetime income can also be worked out as a discounted present value of the future income stream, using the same mortgage rate.
(For example, if the annual interest rate is 5 per cent, the discounted present value of $105 one will receive next year is $100. Alternatively, if one saves $100 today at the 5 per cent interest rate, one will receive $105 next year.)
Under some conditions, the two ratios - mortgage payment to permanent income, and house price to lifetime income - are the same. We can thus use a cut-off ratio like 30 per cent to define an affordability limit. We have not worked out an optimal cut-off value for Singapore yet.
Homebuyers know the prices of the houses they want and the transaction costs involved. What they need is an estimate of their lifetime income - that is, their accumulated savings plus the discounted present value (DPV) of their earnings, over their remaining working life.
Using survey data collected by the Department of Statistics, we can decipher predicted income profiles by birth cohorts for different income groups over the working ages of 20-64. We now have data only for three income levels: lower (25th), middle (50th) and upper (75th ) percentiles.
Since our focus is on young homebuyers, the accompanying table presents estimates of the DPV of household income for households headed by 30-year-olds. By adding their own accumulated savings to the income figures, young homebuyers can obtain an estimate of their lifetime income. They can then divide the price (including the transaction cost) of the home they are buying by their estimated lifetime income to see what percentage of their lifetime income will be consumed by the property.
The rest of the table provides illustrative computations of housing affordability for the three income group references. Accumulated savings (including interest earnings) were estimated from household expenditure survey data, and transaction costs were estimated using current rates on stamp duties and other fees and charges. Property taxes and costs of home insurance and maintenance were not included.
Some general observations that emerge from this table are worth highlighting:
# First, when the mortgage rate goes up, homebuyers have to spend a higher percentage of their lifetime income on housing, and affordability goes down.
# Second, given that current mortgage rates are above 5 per cent, and if we use the 30 per cent cut-off rule, HDB resale flats of four rooms and above are not that affordable for low-income groups.
# Third, at current mortgage rates, HDB resale flats are well within the affordable range for middle- and upper-income groups.
# Fourth, private properties are obviously for high-income groups. Still, even for those in the 75th income percentile, private residential properties at median prices are not within the affordable range at current mortgage rates.
Tilak Abeysinghe is deputy director of the Singapore Centre for Applied and Policy Economics, National University of Singapore. Gu Jiaying is pursuing a PhD at the University of Illinois at Urbana-Champaign.
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A much better indicator of housing affordability is the ratio of 'house price' to 'lifetime income'.
For a 30-year-old earning $5,520 a month with savings of $118,900, affordable homes would be an HDB executive flat or lower, using a cut-off ratio of about 30%.
Source: Straits Times, 4 Aug 2010
Buyers snap up 80 units at preview of The Greenwich
THE Greenwich condominium caused a rare traffic jam in the quiet Seletar Hills estate on Monday when potential buyers flocked to its showflat to get the first bite of the cherry in a special preview.
Developer Far East Organization said yesterday that it has sold 80 out of 96 units released at the 319-unit The Greenwich on Monday. The showflat closed at 2am the following morning, in order to cope with the demand.
Prices ranged from $650,000 to $1.25 million, with the price per sq ft (psf) at $980 on average. The psf price is a record for the area, said Ngee Ann Polytechnic real estate lecturer Nicholas Mak.
'The buyers are those who really like this corner of Singapore,' he said.
Singaporeans accounted for almost all of the buyers at the preview, Far East said in a statement yesterday. Most are from the Seletar estate area, it added.
More than 80 per cent of the one- and two-bedroom units released were snapped up, and all 10 of the three-bedroom units released were sold, it said.
The Greenwich, at the junction of Seletar and Yio Chu Kang roads, has residential units and retail shops. Of the 319 residential units, 160 are one-bedroom units that Far East describes as Soho-type (small office, home office) units.
Ranging in size from 603 sq ft to 721 sq ft, they offer users the flexibility to combine an efficient work environment with the comfort and privacy of a home, Far East said. It has since sold 32 out of 40 such units released in the preview. The two- to three-bedroom units go up to 1,485 sq ft in size.
The retail shops will be in a 45,000 sq ft two-storey mall called Greenwich V, which is close to 60 per cent committed.
Far East's executive director and chief operating officer of property sales, Mr Chia Boon Kuah, said The Greenwich is 'quite unlike the typical suburban condominium'.
'It differentiates itself as a new 'trans-urban' development, set to transform the suburban enclave into a vibrant live-work-and-play urban environment,' he said.
Recently, another new 99-year leasehold project, The Scala near Lorong Chuan MRT station, also attracted hordes of eager buyers.
It has since sold 90 per cent of the 468 units, said developer Hong Leong Holdings yesterday. The Scala was priced at $1,150 psf on average.
Source: Straits Times, 4 Aug 2010
Developer Far East Organization said yesterday that it has sold 80 out of 96 units released at the 319-unit The Greenwich on Monday. The showflat closed at 2am the following morning, in order to cope with the demand.
Prices ranged from $650,000 to $1.25 million, with the price per sq ft (psf) at $980 on average. The psf price is a record for the area, said Ngee Ann Polytechnic real estate lecturer Nicholas Mak.
'The buyers are those who really like this corner of Singapore,' he said.
Singaporeans accounted for almost all of the buyers at the preview, Far East said in a statement yesterday. Most are from the Seletar estate area, it added.
More than 80 per cent of the one- and two-bedroom units released were snapped up, and all 10 of the three-bedroom units released were sold, it said.
The Greenwich, at the junction of Seletar and Yio Chu Kang roads, has residential units and retail shops. Of the 319 residential units, 160 are one-bedroom units that Far East describes as Soho-type (small office, home office) units.
Ranging in size from 603 sq ft to 721 sq ft, they offer users the flexibility to combine an efficient work environment with the comfort and privacy of a home, Far East said. It has since sold 32 out of 40 such units released in the preview. The two- to three-bedroom units go up to 1,485 sq ft in size.
The retail shops will be in a 45,000 sq ft two-storey mall called Greenwich V, which is close to 60 per cent committed.
Far East's executive director and chief operating officer of property sales, Mr Chia Boon Kuah, said The Greenwich is 'quite unlike the typical suburban condominium'.
'It differentiates itself as a new 'trans-urban' development, set to transform the suburban enclave into a vibrant live-work-and-play urban environment,' he said.
Recently, another new 99-year leasehold project, The Scala near Lorong Chuan MRT station, also attracted hordes of eager buyers.
It has since sold 90 per cent of the 468 units, said developer Hong Leong Holdings yesterday. The Scala was priced at $1,150 psf on average.
Source: Straits Times, 4 Aug 2010
Sim Lian puts in record bid for DBSS site
Developer's $178m offer for Tampines plot tops 4 others
SIM Lian Land has put in what is likely to be a record bid for a design, build and sell scheme (DBSS) plot amid buoyant prices in the Housing Board market.
It topped the tender for a Tampines Avenue 5 site, released under HDB's DBSS, with a higher-than-expected bid of $178.13 million, or $261 per sq ft per plot ratio (psf ppr).
The offer was 22 per cent ahead of the second highest bid of $145.77 million, or $213.6 psf ppr, from China-based Qingdao Construction (Singapore).
In third place was joint venture Hoi Hup Realty and Sunway Developments' $139.9 million, or $205 psf ppr.
The plot attracted five offers, and construction firm Ho Lee Group came last with its offer of $110 million, or $161 psf ppr.
According to Ngee Ann Polytechnic real estate lecturer Nicholas Mak, Sim Lian's bid sets a new land price record for a DBSS site and breaks the previous high of $237 psf ppr set in February 2008 for a Bishan site. He had expected the tender to draw up to seven bidders with offers of between $160 and $200 psf ppr.
At $261 psf ppr, Sim Lian will have to sell three-room flats for $380,000 to $400,000, and four-room flats for $530,000 to $550,000, said Mr Mak.
Five-room units would have to be pitched at between $640,000 and $670,000.
Sim Lian executive director Diana Kuik said the developer planned to build 680 homes on the Tampines site. She said the bulk of the units - 60 per cent - will be four-room flats. Three-room flats will account for 25 per cent of the total, while five-room units will make up the remaining 15 per cent.
'Tampines is an extremely mature estate and demand is very strong for new flats,' said Ms Kuik.
The Tampines site has a maximum allowable gross floor area of 63,395 sq m, including 1,060 sq m for social and commercial facilities. It is adjacent to Singapore's first DBSS project, The Premiere@Tampines, also developed by Sim Lian, which placed a bid of $82.22 million, or $113.67 psf ppr, in January 2006.
Response then was overwhelming and saw the pilot project almost five times oversubscribed. The five-room flats eventually went for $308,000 to $450,000.
Market watchers suggest Sim Lian's aggressive bid may also be because it is better able to control costs as it has its own construction arm.
Under DBSS, private developers can design, build and sell HDB flats directly to buyers, but they have to set aside 95 per cent of the flats for first-time buyers.
Source: Straits Times, 4 Aug 2010
SIM Lian Land has put in what is likely to be a record bid for a design, build and sell scheme (DBSS) plot amid buoyant prices in the Housing Board market.
It topped the tender for a Tampines Avenue 5 site, released under HDB's DBSS, with a higher-than-expected bid of $178.13 million, or $261 per sq ft per plot ratio (psf ppr).
The offer was 22 per cent ahead of the second highest bid of $145.77 million, or $213.6 psf ppr, from China-based Qingdao Construction (Singapore).
In third place was joint venture Hoi Hup Realty and Sunway Developments' $139.9 million, or $205 psf ppr.
The plot attracted five offers, and construction firm Ho Lee Group came last with its offer of $110 million, or $161 psf ppr.
According to Ngee Ann Polytechnic real estate lecturer Nicholas Mak, Sim Lian's bid sets a new land price record for a DBSS site and breaks the previous high of $237 psf ppr set in February 2008 for a Bishan site. He had expected the tender to draw up to seven bidders with offers of between $160 and $200 psf ppr.
At $261 psf ppr, Sim Lian will have to sell three-room flats for $380,000 to $400,000, and four-room flats for $530,000 to $550,000, said Mr Mak.
Five-room units would have to be pitched at between $640,000 and $670,000.
Sim Lian executive director Diana Kuik said the developer planned to build 680 homes on the Tampines site. She said the bulk of the units - 60 per cent - will be four-room flats. Three-room flats will account for 25 per cent of the total, while five-room units will make up the remaining 15 per cent.
'Tampines is an extremely mature estate and demand is very strong for new flats,' said Ms Kuik.
The Tampines site has a maximum allowable gross floor area of 63,395 sq m, including 1,060 sq m for social and commercial facilities. It is adjacent to Singapore's first DBSS project, The Premiere@Tampines, also developed by Sim Lian, which placed a bid of $82.22 million, or $113.67 psf ppr, in January 2006.
Response then was overwhelming and saw the pilot project almost five times oversubscribed. The five-room flats eventually went for $308,000 to $450,000.
Market watchers suggest Sim Lian's aggressive bid may also be because it is better able to control costs as it has its own construction arm.
Under DBSS, private developers can design, build and sell HDB flats directly to buyers, but they have to set aside 95 per cent of the flats for first-time buyers.
Source: Straits Times, 4 Aug 2010
Fewer default on HDB loan repayments
Downsizing, refinancing and loan deferments help households in need
FOR seven years, receptionist L. Boey, 63, had been struggling to make the monthly $1,450 loan repayment to the Housing Board (HDB) for her four-room Choa Chu Kang flat.
Earlier this year, she had a lifeline thrown to her. The HDB found her a studio apartment in Bishan which was big enough for her and her 90-year-old mother, and affordable enough for her to buy using her Central Provident Fund (CPF) savings. She sold her flat in May this year, cleared her debt and moved in.
Financially relieved flat buyers like her have helped to halve the number of those with loan arrears (owing three months' instalments or more) from the peak of 55,700 cases in December 2003.
'I guess I didn't have a choice, but I also felt I was getting old and didn't need such a big apartment,' said Miss Boey.
She was among 2,000 home owners whom HDB helped to 'right-size' their flats between August 2008 and June this year, as a long-term solution to their debt problems.
Another measure the HDB instituted to help households falling behind on payment: allowing them to take an extra loan from the HDB to help them downgrade, even though they had already enjoyed two concessionary loans.
Between January 2008 and June this year, the HDB approved about 2,700 such loans.
These measures, along with others introduced in recent years, and the recovering economy have cut down the number of households who are in hock over HDB loan payments.
There are now about 26,000 HDB households who owe the HDB payments, making up 6.6 per cent of 393,000 accounts with an HDB loan as at June this year. This is down from 33,670 cases forming 7.9 per cent in September 2008.
The HDB team which helped to tackle HDB arrears cases will receive an award for its efforts at the Ministry of National Development's National Day Observance Ceremony on Friday.
An HDB spokesman told The Straits Times it has helped close to 20,000 cases since January 2008.
Short-term measures include reducing loan payments for up to six months, deferring loan instalments for up to six months, and instalment plans to clear arrears.
If the home owner still has difficulty paying the instalments, long-term solutions, such as flat downsizing, would be suggested.
In Miss Boey's case, she had sold off her first Choa Chu Kang flat for a profit and bought another four-room Choa Chu Kang flat for $335,000 on the open market in 1996.
She had a job then as a purchaser, and was granted an HDB loan of $224,000 at a concessionary rate. But in 2003, she lost her job. The money from her earlier sale was also depleted. Even after she found another job in 2008, and rented out a room, she was unable to make the payments.
Her HDB counsellor, who had been working on her case since 2006, suggested that she sell her flat and downgrade. In May this year, she sold her flat for $310,000 and bought the Bishan studio apartment for $83,000 using her CPF savings.
Miss Boey is all praise for the HDB and her MP Zaqy Mohamad. 'If the HDB didn't help me, I guess I would still have to sell my flat, but I may not have been able to find another place within my budget.'
The HDB spokesman said compulsory acquisitions are 'very rare' - slightly more than 1,480 since January 2008 - and usually happen only after a household does not take proactive steps to pay up.
Some households, the HDB said, would include working family members as joint owners to help pay for the flat, or try to enhance household income by sub-letting a room.
Mr Dennis Ng, founder of mortgage consultancy web portal housingloansg.com, said loan repayment problems arise when people do not budget for crises.
Some people, he said, use up to 50 per cent of their monthly income to service their housing loan, when the maximum should be 35 per cent.
'If you use half your income to pay for your house, you might be in trouble in bad times, when you face job loss or a pay cut...people must budget first if they don't want problems paying in the future,' he said.
Source: Straits Times, 4 Aug 2010
FOR seven years, receptionist L. Boey, 63, had been struggling to make the monthly $1,450 loan repayment to the Housing Board (HDB) for her four-room Choa Chu Kang flat.
Earlier this year, she had a lifeline thrown to her. The HDB found her a studio apartment in Bishan which was big enough for her and her 90-year-old mother, and affordable enough for her to buy using her Central Provident Fund (CPF) savings. She sold her flat in May this year, cleared her debt and moved in.
Financially relieved flat buyers like her have helped to halve the number of those with loan arrears (owing three months' instalments or more) from the peak of 55,700 cases in December 2003.
'I guess I didn't have a choice, but I also felt I was getting old and didn't need such a big apartment,' said Miss Boey.
She was among 2,000 home owners whom HDB helped to 'right-size' their flats between August 2008 and June this year, as a long-term solution to their debt problems.
Another measure the HDB instituted to help households falling behind on payment: allowing them to take an extra loan from the HDB to help them downgrade, even though they had already enjoyed two concessionary loans.
Between January 2008 and June this year, the HDB approved about 2,700 such loans.
These measures, along with others introduced in recent years, and the recovering economy have cut down the number of households who are in hock over HDB loan payments.
There are now about 26,000 HDB households who owe the HDB payments, making up 6.6 per cent of 393,000 accounts with an HDB loan as at June this year. This is down from 33,670 cases forming 7.9 per cent in September 2008.
The HDB team which helped to tackle HDB arrears cases will receive an award for its efforts at the Ministry of National Development's National Day Observance Ceremony on Friday.
An HDB spokesman told The Straits Times it has helped close to 20,000 cases since January 2008.
Short-term measures include reducing loan payments for up to six months, deferring loan instalments for up to six months, and instalment plans to clear arrears.
If the home owner still has difficulty paying the instalments, long-term solutions, such as flat downsizing, would be suggested.
In Miss Boey's case, she had sold off her first Choa Chu Kang flat for a profit and bought another four-room Choa Chu Kang flat for $335,000 on the open market in 1996.
She had a job then as a purchaser, and was granted an HDB loan of $224,000 at a concessionary rate. But in 2003, she lost her job. The money from her earlier sale was also depleted. Even after she found another job in 2008, and rented out a room, she was unable to make the payments.
Her HDB counsellor, who had been working on her case since 2006, suggested that she sell her flat and downgrade. In May this year, she sold her flat for $310,000 and bought the Bishan studio apartment for $83,000 using her CPF savings.
Miss Boey is all praise for the HDB and her MP Zaqy Mohamad. 'If the HDB didn't help me, I guess I would still have to sell my flat, but I may not have been able to find another place within my budget.'
The HDB spokesman said compulsory acquisitions are 'very rare' - slightly more than 1,480 since January 2008 - and usually happen only after a household does not take proactive steps to pay up.
Some households, the HDB said, would include working family members as joint owners to help pay for the flat, or try to enhance household income by sub-letting a room.
Mr Dennis Ng, founder of mortgage consultancy web portal housingloansg.com, said loan repayment problems arise when people do not budget for crises.
Some people, he said, use up to 50 per cent of their monthly income to service their housing loan, when the maximum should be 35 per cent.
'If you use half your income to pay for your house, you might be in trouble in bad times, when you face job loss or a pay cut...people must budget first if they don't want problems paying in the future,' he said.
Source: Straits Times, 4 Aug 2010
Tuesday, August 3, 2010
Prime Balmoral Condo up for sale by tender
It has an indicative price tag of $171m to $175m
BALMORAL Condominium, located in the prime District 10 area, has been put up for sale by tender with an indicative price tag of $171 million to $175 million, or about $1,866 to $1,910 per square foot per plot.
Marketing agent Savills Singapore said over 80 per cent of owners have agreed to the collective sale. A previous unsuccessful attempt at enbloc sale had been made in 2007 at much lower prices.
The 18-year- old redevelopment site sits on about 57,007 square feet (5,296 sq m) of prime residential land located at 16 Balmoral Road.
The site, which has a development baseline of 91,622 sq ft, already exceeds the permissible plot ratio of 1.6 in the 2008 Master Plan. Hence, no development charge is likely to be payable.
Savills said in its press release yesterday that the sale site can potentially accommodate 65 apartments averaging 1,300 sq ft each, subject to a 12-storey height restriction.
Units on the higher floors can enjoy views of Goodwood Hill.
Balmoral Condominium is located along Balmoral Road - an exclusive and popular address which is minutes' drive to and from the Orchard Road shopping belt, Newton MRT Station, Balmoral Plaza and prestigious clubs such as The Pines and Tanglin Club.
The property is also within a one-kilometre radius of reputable and popular primary schools such as the Anglo-Chinese School (Barker Road) and the Singapore Chinese Girls' Primary School.
'We expect strong interest for Balmoral Condominium due to the lack of choice residential plots in the prime districts,' said Suzie Mok, Savills' director of investment project.
The adjoining Volari development was fully sold at prices surpassing $2,200 psf last year. The tender for Balmoral Condominium will close at 3 pm on Sept 8, 2010.
Source: Business Times, 3 Aug 2010
BALMORAL Condominium, located in the prime District 10 area, has been put up for sale by tender with an indicative price tag of $171 million to $175 million, or about $1,866 to $1,910 per square foot per plot.
Marketing agent Savills Singapore said over 80 per cent of owners have agreed to the collective sale. A previous unsuccessful attempt at enbloc sale had been made in 2007 at much lower prices.
The 18-year- old redevelopment site sits on about 57,007 square feet (5,296 sq m) of prime residential land located at 16 Balmoral Road.
The site, which has a development baseline of 91,622 sq ft, already exceeds the permissible plot ratio of 1.6 in the 2008 Master Plan. Hence, no development charge is likely to be payable.
Savills said in its press release yesterday that the sale site can potentially accommodate 65 apartments averaging 1,300 sq ft each, subject to a 12-storey height restriction.
Units on the higher floors can enjoy views of Goodwood Hill.
Balmoral Condominium is located along Balmoral Road - an exclusive and popular address which is minutes' drive to and from the Orchard Road shopping belt, Newton MRT Station, Balmoral Plaza and prestigious clubs such as The Pines and Tanglin Club.
The property is also within a one-kilometre radius of reputable and popular primary schools such as the Anglo-Chinese School (Barker Road) and the Singapore Chinese Girls' Primary School.
'We expect strong interest for Balmoral Condominium due to the lack of choice residential plots in the prime districts,' said Suzie Mok, Savills' director of investment project.
The adjoining Volari development was fully sold at prices surpassing $2,200 psf last year. The tender for Balmoral Condominium will close at 3 pm on Sept 8, 2010.
Source: Business Times, 3 Aug 2010
Park Regis hotel, Chow House sold
50 per cent stake in retail portion of Malacca Centre in Raffles Place also transacted
INVESTMENT sales of property have been gathering momentum in the private sector, with several deals inked recently.
They include the Park Regis hotel at New Market Street/Merchant Road near the Singapore River, which is said to have been sold for $218 million to Indonesian mining magnate Yusuf Merukh.
Separately, a 50 per cent stake each in the retail portion of Malacca Centre in the Raffles Place area and three shop units at Coronation Plaza have been sold to a single buyer in a deal valuing the assets at about $40 million. BT understands that the deal involves a yield guarantee.
Over at Robinson Road, Chow House is believed to have been sold for slightly over $100 million. The price for the six-storey freehold office block, which has redevelopment potential, is said to work out to about $1,200 per square foot per plot ratio (psf ppr) assuming it is redeveloped into a new office block.
If redeveloped into apartments, the unit land price is closer to $1,300 psf ppr. The site has a land area of 9,084 sq ft and is currently zoned for commercial use with an 11.2+ plot ratio under Master Plan 2008.
Outline planning permission has also been granted to redevelop the property into residential use with commercial use on the first storey.
Chow House is understood to have been bought by a group whose shareholders include entrepreneur YY Wong, founder of the WyWy Group. It is one of nine properties put up for sale by liquidator Tam Chee Chong of Deloitte & Touche, as part of the resolution of a family dispute. The other properties are mostly shophouses. DTZ marketed the properties.
Over in the Singapore River area, Park Regis hotel is being sold just ahead of its scheduled opening next month. The $218 million deal involves the 203-room, four-star hotel and a seven-storey office block comprising about 42,000 sq ft of net lettable space.
A market watcher suggested that the hotel component alone could be valued at about $730,000 per room or $148 million. The asset is being sold by an entity controlled by Asok Kumar Hiranandani of Royal Brothers Group who developed the property on a 99-year leasehold site clinched at a state tender in October 2007.
While Mr Hiranandani is selling his stake in the hotel, Australian-based StayWell Hospitality Group, in which he also has an interest, will continue to manage it, as originally planned.
In an interview with BT in June, Mr Hiranandandi put the total investment in the property at about $175 million.
Separately, RB Capital, controlled by Mr Hiranandani's nephew Kishin, is said to have sold a half stake in two retail assets for a total of about $40 million recently.
They are: the retail podium of Malacca Centre comprising close to 5,300 sq ft spread over basement 1, ground and mezzanine levels; and three shop units with a total strata area of about 6,300 sq ft at Coronation Plaza in Bukit Timah. The buyer is a Singapore private investor who has been given a three-year rental guarantee. Malacca Centre has 999-year leasehold tenure while Coronation Plaza is freehold.
Source: Business Times, 3 Aug 2010
INVESTMENT sales of property have been gathering momentum in the private sector, with several deals inked recently.
They include the Park Regis hotel at New Market Street/Merchant Road near the Singapore River, which is said to have been sold for $218 million to Indonesian mining magnate Yusuf Merukh.
Separately, a 50 per cent stake each in the retail portion of Malacca Centre in the Raffles Place area and three shop units at Coronation Plaza have been sold to a single buyer in a deal valuing the assets at about $40 million. BT understands that the deal involves a yield guarantee.
Over at Robinson Road, Chow House is believed to have been sold for slightly over $100 million. The price for the six-storey freehold office block, which has redevelopment potential, is said to work out to about $1,200 per square foot per plot ratio (psf ppr) assuming it is redeveloped into a new office block.
If redeveloped into apartments, the unit land price is closer to $1,300 psf ppr. The site has a land area of 9,084 sq ft and is currently zoned for commercial use with an 11.2+ plot ratio under Master Plan 2008.
Outline planning permission has also been granted to redevelop the property into residential use with commercial use on the first storey.
Chow House is understood to have been bought by a group whose shareholders include entrepreneur YY Wong, founder of the WyWy Group. It is one of nine properties put up for sale by liquidator Tam Chee Chong of Deloitte & Touche, as part of the resolution of a family dispute. The other properties are mostly shophouses. DTZ marketed the properties.
Over in the Singapore River area, Park Regis hotel is being sold just ahead of its scheduled opening next month. The $218 million deal involves the 203-room, four-star hotel and a seven-storey office block comprising about 42,000 sq ft of net lettable space.
A market watcher suggested that the hotel component alone could be valued at about $730,000 per room or $148 million. The asset is being sold by an entity controlled by Asok Kumar Hiranandani of Royal Brothers Group who developed the property on a 99-year leasehold site clinched at a state tender in October 2007.
While Mr Hiranandani is selling his stake in the hotel, Australian-based StayWell Hospitality Group, in which he also has an interest, will continue to manage it, as originally planned.
In an interview with BT in June, Mr Hiranandandi put the total investment in the property at about $175 million.
Separately, RB Capital, controlled by Mr Hiranandani's nephew Kishin, is said to have sold a half stake in two retail assets for a total of about $40 million recently.
They are: the retail podium of Malacca Centre comprising close to 5,300 sq ft spread over basement 1, ground and mezzanine levels; and three shop units with a total strata area of about 6,300 sq ft at Coronation Plaza in Bukit Timah. The buyer is a Singapore private investor who has been given a three-year rental guarantee. Malacca Centre has 999-year leasehold tenure while Coronation Plaza is freehold.
Source: Business Times, 3 Aug 2010
Ex-bankers launch new property venture
Trio of ex-Morgan Stanley veterans set up GreenOak Real Estate
(LONDON) Three of the world's most accomplished real estate bankers John Carrafiell, Sonny Kalsi and Fred Schmidt have launched a new investment and advisory firm as the pace of restructuring in the property sector ramps up.
The trio of ex-Morgan Stanley veterans has set up GreenOak Real Estate ahead of an expected surge in distressed loan disposals, asset firesales and mortgage-backed security (MBS) workouts in its core target markets of Europe, Japan and the United States.
GreenOak has secured US$110 million of seed capital, comprising a US$10 million working capital loan and a US$100 million co-investment commitment from Amsterdam-listed investment company Tetragon Financial Group Limited, the closed-ended investor said in a statement yesterday.
Tetragon's investment will fund a limited fixed percentage amount of any GreenOak investment deal and will take a 10 per cent equity stake in GreenOak under terms of the arrangement.
Entities linked to Tetragon, including Polygon Management LP, are considering additional infusions of capital into GreenOak in the future, the Tetragon statement said.
'We think there are significant opportunities in the real estate market, including widespread distressed opportunities, and gaining further exposure to this asset class especially at attractive fee levels is very appealing,' Paddy Dear, a director of TFG and Principal of Polygon Credit Management LP, TFG's investment manager said.
GreenOak is initially likely to focus on securing advisory mandates in complex property restructuring cases across Europe and make an immediate play for distressed physical real estate and mortgage buys in Japan as a principal investor, market sources said.
It will pursue both strategies in the US from the outset, the sources added.
Mr Carrafiell stepped down as joint global head of Morgan Stanley's real estate group in December 2008, setting up his own advisory firm, Alpha Real Estate Advisors.
Mr Kalsi, who replaced Mr Carrafiell, and Mr Schmidt, who headed up the bank's Japanese property operations, left the bank in October 2009 and February 2010 respectively. -- Reuters
Source: Business Times, 3 Aug 2010
(LONDON) Three of the world's most accomplished real estate bankers John Carrafiell, Sonny Kalsi and Fred Schmidt have launched a new investment and advisory firm as the pace of restructuring in the property sector ramps up.
The trio of ex-Morgan Stanley veterans has set up GreenOak Real Estate ahead of an expected surge in distressed loan disposals, asset firesales and mortgage-backed security (MBS) workouts in its core target markets of Europe, Japan and the United States.
GreenOak has secured US$110 million of seed capital, comprising a US$10 million working capital loan and a US$100 million co-investment commitment from Amsterdam-listed investment company Tetragon Financial Group Limited, the closed-ended investor said in a statement yesterday.
Tetragon's investment will fund a limited fixed percentage amount of any GreenOak investment deal and will take a 10 per cent equity stake in GreenOak under terms of the arrangement.
Entities linked to Tetragon, including Polygon Management LP, are considering additional infusions of capital into GreenOak in the future, the Tetragon statement said.
'We think there are significant opportunities in the real estate market, including widespread distressed opportunities, and gaining further exposure to this asset class especially at attractive fee levels is very appealing,' Paddy Dear, a director of TFG and Principal of Polygon Credit Management LP, TFG's investment manager said.
GreenOak is initially likely to focus on securing advisory mandates in complex property restructuring cases across Europe and make an immediate play for distressed physical real estate and mortgage buys in Japan as a principal investor, market sources said.
It will pursue both strategies in the US from the outset, the sources added.
Mr Carrafiell stepped down as joint global head of Morgan Stanley's real estate group in December 2008, setting up his own advisory firm, Alpha Real Estate Advisors.
Mr Kalsi, who replaced Mr Carrafiell, and Mr Schmidt, who headed up the bank's Japanese property operations, left the bank in October 2009 and February 2010 respectively. -- Reuters
Source: Business Times, 3 Aug 2010
A China real estate bubble built on conflicting policy
Top state-owned banks may be sitting on enormous unreported debt
(WUHU) The Anhui Salt Industry Corp is a state-owned company that has 11,000 employees, access to government salt mines and a Communist Party boss.
Now it has swaggered into a new line of business: real estate.
The company is developing a complex of luxury high-rises here called Platinum Bay on a parcel it acquired last year by outbidding two other developers to win a local government land auction.
Anhui Salt is hardly alone among big state-owned companies. The China Railway Group is developing residential complexes in Beijing after winning the auction for a huge piece of land there.
Likewise, the China Ordnance Group, a state-led military manufacturer best known for amphibious assault weapons, paid US$260 million for Beijing property where it plans to build luxury residences and retail outlets.
And in one of China's biggest land deals yet, the state-run shipbuilder Sino Ocean paid US$1.3 billion last December and March to buy two giant tracts from Beijing's municipal government to develop residential communities.
All around the nation, giant state-owned oil, chemical, military, telecom and highway groups are bidding up prices on sprawling plots of land for big real estate projects unrelated to their core businesses.
'These are the ones that have the money to buy the land,' said Deng Yongheng at the National University in Singapore. 'Because in China, it's the government that controls the money supply and the spending.'
By driving up property prices, the state-owned companies, which are ultimately controlled by the national government, are working at cross-purposes with the central government's effort to keep China's real estate boom from becoming a debt-fuelled speculative bubble - like the one that devastated Western financial markets when it burst two years ago.
Land records show that 82 per cent of land auctions in Beijing this year have been won by big state-owned companies outbidding private developers - up from 59 per cent in 2008.
A recent study by the National Bureau of Economic Research in Cambridge, Massachusetts, found that land prices in Beijing had jumped by about 750 per cent since 2003 and that half of that gain came in the last two years. Housing prices have also skyrocketed, doubling in many cities over the last few years.
The report pegged a big part of the increase to state-owned enterprises that have 'paid 27 per cent more than other bidders for an otherwise equivalent piece of land'. Critics say the central government in Beijing unwittingly propelled the land frenzy by pushing a huge US$586 billion economic stimulus package last year and encouraging state-owned banks to lend more aggressively.
And as the prices of new apartments soar - in Shanghai, for instance, they exceed US$200,000, while the average disposable income is only about US$4,000 a year - the trend also threatens to undermine the central government's social goal of affordable housing for the rising middle class.
In some cases, local governments - which earned more than US$230 billion from land auctions in 2009 - are also being accused of demolishing old neighbourhoods and unfairly compensating residents. In a recent poll conducted by China Youth Daily, a state-run newspaper, more than 80 per cent of the respondents said local governments were a 'major driving force' behind the skyrocketing property prices.
All of this is happening to the chagrin of private developers that dominated China's property market for more than a decade but are now feeling squeezed out of a game that favours developers with state-backed financing.
'It's a little like a son who borrows money from his mother,' said Yang Shaofeng, head of the Conworld Real Estate Agency in Beijing.
Last year, state banks made a record US$1.4 trillion in loans, nearly twice as much as the year before. Analysts now say they believe much of that money was diverted into the property market through off-balance-sheet manoeuvres, leading to the record land bids and soaring property prices.
That belief is adding to concerns that some of China's biggest state-owned banks may be sitting on enormous unreported debt.
Beijing is now struggling to rein in credit without slowing the nation's roaring economy. And regulators are trying to stop state banks from using clever manoeuvres to secretly lend money to overly aggressive state-owned developers.
Beijing also wants to restrain state companies that have little or no expertise in real estate. Last March, the State Assets Supervision and Administration Commission - one of the national government's most powerful bodies - ordered 78 state-owned companies to shed their real estate divisions.
But analysts say the government will have difficulty stopping hundreds of state-owned companies and their various subsidiaries from participating in what has become one of the country's hottest industries.
Experts say that more than 90 of the 125 state-owned companies directly under Beijing's control still have property divisions. And local and provincial governments control many additional developers.
The national government is grappling with a complex set of incentives that drive state-run companies to speculate in the property market with the aid of local governments. - NYT
Source: Business Times, 3 Aug 2010
(WUHU) The Anhui Salt Industry Corp is a state-owned company that has 11,000 employees, access to government salt mines and a Communist Party boss.
Now it has swaggered into a new line of business: real estate.
The company is developing a complex of luxury high-rises here called Platinum Bay on a parcel it acquired last year by outbidding two other developers to win a local government land auction.
Anhui Salt is hardly alone among big state-owned companies. The China Railway Group is developing residential complexes in Beijing after winning the auction for a huge piece of land there.
Likewise, the China Ordnance Group, a state-led military manufacturer best known for amphibious assault weapons, paid US$260 million for Beijing property where it plans to build luxury residences and retail outlets.
And in one of China's biggest land deals yet, the state-run shipbuilder Sino Ocean paid US$1.3 billion last December and March to buy two giant tracts from Beijing's municipal government to develop residential communities.
All around the nation, giant state-owned oil, chemical, military, telecom and highway groups are bidding up prices on sprawling plots of land for big real estate projects unrelated to their core businesses.
'These are the ones that have the money to buy the land,' said Deng Yongheng at the National University in Singapore. 'Because in China, it's the government that controls the money supply and the spending.'
By driving up property prices, the state-owned companies, which are ultimately controlled by the national government, are working at cross-purposes with the central government's effort to keep China's real estate boom from becoming a debt-fuelled speculative bubble - like the one that devastated Western financial markets when it burst two years ago.
Land records show that 82 per cent of land auctions in Beijing this year have been won by big state-owned companies outbidding private developers - up from 59 per cent in 2008.
A recent study by the National Bureau of Economic Research in Cambridge, Massachusetts, found that land prices in Beijing had jumped by about 750 per cent since 2003 and that half of that gain came in the last two years. Housing prices have also skyrocketed, doubling in many cities over the last few years.
The report pegged a big part of the increase to state-owned enterprises that have 'paid 27 per cent more than other bidders for an otherwise equivalent piece of land'. Critics say the central government in Beijing unwittingly propelled the land frenzy by pushing a huge US$586 billion economic stimulus package last year and encouraging state-owned banks to lend more aggressively.
And as the prices of new apartments soar - in Shanghai, for instance, they exceed US$200,000, while the average disposable income is only about US$4,000 a year - the trend also threatens to undermine the central government's social goal of affordable housing for the rising middle class.
In some cases, local governments - which earned more than US$230 billion from land auctions in 2009 - are also being accused of demolishing old neighbourhoods and unfairly compensating residents. In a recent poll conducted by China Youth Daily, a state-run newspaper, more than 80 per cent of the respondents said local governments were a 'major driving force' behind the skyrocketing property prices.
All of this is happening to the chagrin of private developers that dominated China's property market for more than a decade but are now feeling squeezed out of a game that favours developers with state-backed financing.
'It's a little like a son who borrows money from his mother,' said Yang Shaofeng, head of the Conworld Real Estate Agency in Beijing.
Last year, state banks made a record US$1.4 trillion in loans, nearly twice as much as the year before. Analysts now say they believe much of that money was diverted into the property market through off-balance-sheet manoeuvres, leading to the record land bids and soaring property prices.
That belief is adding to concerns that some of China's biggest state-owned banks may be sitting on enormous unreported debt.
Beijing is now struggling to rein in credit without slowing the nation's roaring economy. And regulators are trying to stop state banks from using clever manoeuvres to secretly lend money to overly aggressive state-owned developers.
Beijing also wants to restrain state companies that have little or no expertise in real estate. Last March, the State Assets Supervision and Administration Commission - one of the national government's most powerful bodies - ordered 78 state-owned companies to shed their real estate divisions.
But analysts say the government will have difficulty stopping hundreds of state-owned companies and their various subsidiaries from participating in what has become one of the country's hottest industries.
Experts say that more than 90 of the 125 state-owned companies directly under Beijing's control still have property divisions. And local and provincial governments control many additional developers.
The national government is grappling with a complex set of incentives that drive state-run companies to speculate in the property market with the aid of local governments. - NYT
Source: Business Times, 3 Aug 2010
NZ property listings down 2.3% in July
(WELLINGTON) Fewer New Zealanders want to sell their homes and the average asking price is falling as the property market slows, according to an industry website.
The number of properties listed for sale fell 2.3 per cent in July from June, according to a report on realestate.co.nz on Sunday. The average asking price dropped 1.1 per cent.
The weak housing market adds to signs of slow domestic demand which may prompt central bank governor Alan Bollard to pause his interest-rate rises later this year. Last week, he raised the official cash rate a quarter point and said the pace and extent of further increases is 'likely to be more moderate' than he previously expected.
The level of unsold houses in the market rose 3 per cent from June and would take 46.8 weeks to sell, based on the current pace of completed sales, the report showed. -- Bloomberg
Source: Business Times, 3 Aug 2010
The number of properties listed for sale fell 2.3 per cent in July from June, according to a report on realestate.co.nz on Sunday. The average asking price dropped 1.1 per cent.
The weak housing market adds to signs of slow domestic demand which may prompt central bank governor Alan Bollard to pause his interest-rate rises later this year. Last week, he raised the official cash rate a quarter point and said the pace and extent of further increases is 'likely to be more moderate' than he previously expected.
The level of unsold houses in the market rose 3 per cent from June and would take 46.8 weeks to sell, based on the current pace of completed sales, the report showed. -- Bloomberg
Source: Business Times, 3 Aug 2010
London luxury-home prices slide in July
Dip is the first in 16 months as recovery persuades more owners to sell
(LONDON) Luxury-home prices in central London declined in July for the first time in 16 months as the recovery persuaded more owners to sell, broker Knight Frank LLP said.
Prices of properties costing at least £1 million (S$2.1 million) fell 0.5 per cent from June, the London-based real estate adviser said in an e-mailed report yesterday. They rose 17 per cent from a year earlier, the smallest gain since February.
Values have climbed more than 23 per cent since a yearlong price slump ended in March 2009, boosted chiefly by overseas buyers encouraged by a weaker pound. The British currency's 6.3 per cent appreciation against the euro this year has reduced demand from Europeans, while owners are becoming too optimistic about the prices their homes will fetch, the broker said.
'Expectations of vendors are still very high after the rise in prices,' said Andrew Giller, who heads London property searches for The Buying Solution, an arm of Knight Frank that advises and acts for wealthy buyers. 'People have been rejoicing slightly too early.'
The luxury slowdown mirrors the broader UK housing market. Liam Bailey, Knight Frank's head of residential research, predicts that a drop in the second half will cut the 2010 gain for luxury homes in central London to 5 per cent.
Sale prices of residential property in England and Wales rose 8.4 per cent in June from a year earlier, down from the 9.7 per cent annual gain in the previous month, according to Land Registry figures released on July 28.
Mr Bailey estimates that some sellers are overpricing luxury homes by as much as 10 per cent. Another sign of 'over-ambitious pricing' is that sales are achieved at 95 per cent of the asking price, down from 97 per cent in May, he said.
The number of luxury properties for sale has increased by 7 per cent since May, while the higher costs of purchasing a home in neighbourhoods such as Chelsea, Belgravia and Kensington caused the number of buyers to fall 8 per cent, the broker said.
Some potential purchasers have chosen to rent instead, lifting rents for prime homes in central London by 9.2 per cent in the second quarter from a year earlier. The number of prime rental homes fell 64 per cent in the past two years as owners decided to sell, Knight Frank research shows.
Properties priced at £3 million to £5 million were most affected by July's drop in values after they had the biggest gains in the past 15 months.
Overall, values are still 6.1 per cent below the March 2008 peak, the broker said.
Knight Frank compiles its luxury-homes index from estimated values of properties in the Mayfair, St John's Wood, Regent's Park, Kensington, Notting Hill, Chelsea, Knightsbridge, Belgravia and South Bank neighbourhoods of London. -- Bloomberg
Source: Business Times, 3 Aug 2010
(LONDON) Luxury-home prices in central London declined in July for the first time in 16 months as the recovery persuaded more owners to sell, broker Knight Frank LLP said.
Prices of properties costing at least £1 million (S$2.1 million) fell 0.5 per cent from June, the London-based real estate adviser said in an e-mailed report yesterday. They rose 17 per cent from a year earlier, the smallest gain since February.
Values have climbed more than 23 per cent since a yearlong price slump ended in March 2009, boosted chiefly by overseas buyers encouraged by a weaker pound. The British currency's 6.3 per cent appreciation against the euro this year has reduced demand from Europeans, while owners are becoming too optimistic about the prices their homes will fetch, the broker said.
'Expectations of vendors are still very high after the rise in prices,' said Andrew Giller, who heads London property searches for The Buying Solution, an arm of Knight Frank that advises and acts for wealthy buyers. 'People have been rejoicing slightly too early.'
The luxury slowdown mirrors the broader UK housing market. Liam Bailey, Knight Frank's head of residential research, predicts that a drop in the second half will cut the 2010 gain for luxury homes in central London to 5 per cent.
Sale prices of residential property in England and Wales rose 8.4 per cent in June from a year earlier, down from the 9.7 per cent annual gain in the previous month, according to Land Registry figures released on July 28.
Mr Bailey estimates that some sellers are overpricing luxury homes by as much as 10 per cent. Another sign of 'over-ambitious pricing' is that sales are achieved at 95 per cent of the asking price, down from 97 per cent in May, he said.
The number of luxury properties for sale has increased by 7 per cent since May, while the higher costs of purchasing a home in neighbourhoods such as Chelsea, Belgravia and Kensington caused the number of buyers to fall 8 per cent, the broker said.
Some potential purchasers have chosen to rent instead, lifting rents for prime homes in central London by 9.2 per cent in the second quarter from a year earlier. The number of prime rental homes fell 64 per cent in the past two years as owners decided to sell, Knight Frank research shows.
Properties priced at £3 million to £5 million were most affected by July's drop in values after they had the biggest gains in the past 15 months.
Overall, values are still 6.1 per cent below the March 2008 peak, the broker said.
Knight Frank compiles its luxury-homes index from estimated values of properties in the Mayfair, St John's Wood, Regent's Park, Kensington, Notting Hill, Chelsea, Knightsbridge, Belgravia and South Bank neighbourhoods of London. -- Bloomberg
Source: Business Times, 3 Aug 2010
Oxley Land unit buys stake in owner of Devonshire site
Redevelopment could yield about 120 units averaging 300 sq ft each
GOLDEN Flower Group, controlled by the family of Indonesian businessman Nico Po, has sold a majority stake in the company that owns a residential site at 55 Devonshire Road. The buyer is an an associate company of Oxley Land.
The deal is understood to have valued the freehold site at about $1,380 per sq ft per plot ratio inclusive of an estimated development charge of under $2 million.
Working backwards, analysts estimate the lump-sum value of the site would be about $50 million for the transaction.
Golden Flower paid $42 million for the site in 2007.
The 13,404 sq ft plot, which is now bare, formerly housed Mayer Mansion, a 10-unit apartment development.
The plot is zoned for residential use with 2.8 plot ratio - the ratio of maximum potential gross floor area to land area - under Master Plan 2008.
Buyer Oxley, which is controlled by Ching Chiat Kwong, was in the news last year when it launched Suites@Guillemard, featuring what is believed to be Singapore's smallest apartment unit at 258 sq ft.
Since then, the authorities have been approving development applications with apartment components only if the apartments are at least 300 sq ft each, according a BT report last October.
Oxley could redevelop the 55 Devonshire site into a new project with about 120 units averaging 300 sq ft.
The sale of 55 Devonshire was done through a private treaty deal brokered by DTZ.
In a separate transaction, Knight Frank last week sold at auction a property comprising six adjoining freehold shophouses in Desker Road in the Jalan Besar conservation area at $10.3 million.
The freehold shophouses have two storeys and attics.
The seller, believed to be Claremont Group, operates a 25-room hotel on the second and attic floors.
The hotel will close as Claremont has undertaken to give the new owner vacant possession of the second floor and attics along with the ground floor of one of the units, which serves as the hotel's entrance and lobby.
The other five ground- floor shop lots are tenanted with leases expiring at various times from year-end to June 2011.
The six shophouses have a combined land area of 6,664 sq ft and a total gross floor area of 11,500 sq ft.
Source: Business Times, 3 Aug 2010
GOLDEN Flower Group, controlled by the family of Indonesian businessman Nico Po, has sold a majority stake in the company that owns a residential site at 55 Devonshire Road. The buyer is an an associate company of Oxley Land.
The deal is understood to have valued the freehold site at about $1,380 per sq ft per plot ratio inclusive of an estimated development charge of under $2 million.
Working backwards, analysts estimate the lump-sum value of the site would be about $50 million for the transaction.
Golden Flower paid $42 million for the site in 2007.
The 13,404 sq ft plot, which is now bare, formerly housed Mayer Mansion, a 10-unit apartment development.
The plot is zoned for residential use with 2.8 plot ratio - the ratio of maximum potential gross floor area to land area - under Master Plan 2008.
Buyer Oxley, which is controlled by Ching Chiat Kwong, was in the news last year when it launched Suites@Guillemard, featuring what is believed to be Singapore's smallest apartment unit at 258 sq ft.
Since then, the authorities have been approving development applications with apartment components only if the apartments are at least 300 sq ft each, according a BT report last October.
Oxley could redevelop the 55 Devonshire site into a new project with about 120 units averaging 300 sq ft.
The sale of 55 Devonshire was done through a private treaty deal brokered by DTZ.
In a separate transaction, Knight Frank last week sold at auction a property comprising six adjoining freehold shophouses in Desker Road in the Jalan Besar conservation area at $10.3 million.
The freehold shophouses have two storeys and attics.
The seller, believed to be Claremont Group, operates a 25-room hotel on the second and attic floors.
The hotel will close as Claremont has undertaken to give the new owner vacant possession of the second floor and attics along with the ground floor of one of the units, which serves as the hotel's entrance and lobby.
The other five ground- floor shop lots are tenanted with leases expiring at various times from year-end to June 2011.
The six shophouses have a combined land area of 6,664 sq ft and a total gross floor area of 11,500 sq ft.
Source: Business Times, 3 Aug 2010
S'porean buyer snaps up Ibis on Bencoolen
A subsidiary of Grand Line Int'l has paid over $200m for hotel: sources
(SINGAPORE) Ibis Singapore on Bencoolen, a three-star hotel that opened last year, has been sold for more than $200 million to a Singaporean buyer.
Hospitality group Accor and real estate investor LaSalle Investment Management said in a statement yesterday that they have sold the 538-room hotel. The partners did not disclose the sale price or the identity of the purchaser due to confidentiality obligations.
But sources told BT that a subsidiary of Singapore-based Grand Line International has paid more than $200 million for the property.
According to past reports, Accor and LaSalle put in $145 million to develop the hotel at Bencoolen Street after winning the tender for the site in 2006 in a 30:70 venture. The hotel opened in February 2009.
Accor, which owns the Ibis brand, will continue to manage the hotel under a long-term management contract.
'The sale of the hotel is in line with Accor's 'asset right' strategy where the value of the property is being realised with Accor continuing to manage the hotel with the Ibis brand, under a long-term management contract,' said Michael Issenberg, chairman and chief operating officer of Accor Asia Pacific.
Accor and LaSalle put up Ibis Singapore for sale through a private tender that began in May. The owners decided to formally offer the hotel for sale after receiving a number of unsolicited offers from investors.
Ibis Singapore now enjoys occupancies in the mid-90 per cent range and an average room rate of about $140, LaSalle said. In addition to the comprising 538 guest rooms, the property also has two retail outlets, two food and beverage outlets and 68 carpark lots.
'Singapore lacked quality inventory of economy hotel rooms, despite strong inbound demand from value-conscious travellers in Asia. Although around 80 per cent of travellers fly economy class, some 90 per cent of hotels rooms in Singapore were business or first class, so there was a clear market mismatch which we capitalised on,' said Andrew Heithersay, international director at LaSalle Investment Management.
Ibis Singapore is Grand Line International's first hotel asset in Singapore. BT understands that the company, which used to be in the shipping business, owns some properties in Australia.
Source: Business Times, 3 Aug 2010
(SINGAPORE) Ibis Singapore on Bencoolen, a three-star hotel that opened last year, has been sold for more than $200 million to a Singaporean buyer.
Hospitality group Accor and real estate investor LaSalle Investment Management said in a statement yesterday that they have sold the 538-room hotel. The partners did not disclose the sale price or the identity of the purchaser due to confidentiality obligations.
But sources told BT that a subsidiary of Singapore-based Grand Line International has paid more than $200 million for the property.
According to past reports, Accor and LaSalle put in $145 million to develop the hotel at Bencoolen Street after winning the tender for the site in 2006 in a 30:70 venture. The hotel opened in February 2009.
Accor, which owns the Ibis brand, will continue to manage the hotel under a long-term management contract.
'The sale of the hotel is in line with Accor's 'asset right' strategy where the value of the property is being realised with Accor continuing to manage the hotel with the Ibis brand, under a long-term management contract,' said Michael Issenberg, chairman and chief operating officer of Accor Asia Pacific.
Accor and LaSalle put up Ibis Singapore for sale through a private tender that began in May. The owners decided to formally offer the hotel for sale after receiving a number of unsolicited offers from investors.
Ibis Singapore now enjoys occupancies in the mid-90 per cent range and an average room rate of about $140, LaSalle said. In addition to the comprising 538 guest rooms, the property also has two retail outlets, two food and beverage outlets and 68 carpark lots.
'Singapore lacked quality inventory of economy hotel rooms, despite strong inbound demand from value-conscious travellers in Asia. Although around 80 per cent of travellers fly economy class, some 90 per cent of hotels rooms in Singapore were business or first class, so there was a clear market mismatch which we capitalised on,' said Andrew Heithersay, international director at LaSalle Investment Management.
Ibis Singapore is Grand Line International's first hotel asset in Singapore. BT understands that the company, which used to be in the shipping business, owns some properties in Australia.
Source: Business Times, 3 Aug 2010
Ibis Singapore on Bencoolen sold to private investor
IBIS Singapore on Bencoolen, a three-star hotel, has been sold just 18 months after it opened its doors.
Details were not disclosed but it is understood a Singapore private investor paid a figure above $200 million for it.
The hotel was put up for sale via a private tender in June by joint owners LaSalle Investment Management and French hotel group Accor.
They announced the sale yesterday, but did not disclose the price or purchaser 'due to confidentiality obligations'.
It is the largest Ibis outside Europe, with 538 rooms, two retail outlets, 68 parking spaces, and two food and beverage outlets. The hotel will continue to be managed by Accor under a long-term management contract for its economy brand Ibis.
LaSalle's international director, Mr Andrew Heithersay, said the hotel's occupancy rate is in the 'mid 90 per cent range' and the average room rate is about $140.
An industry expert, Mr David Ling, HVS Asia Pacific managing director, said: 'The room rate is higher than that for the usual economy hotels here. It is the first economy hotel of international standard here and has a contemporary design, so the transacted price would reflect the stronger income position. Generally, international-grade hotels here are expected to trade at a 6 per cent to 7 per cent yield,' he said.
The hotel sale was brokered by Jones Lang LaSalle Hotels. Its managing director of investment sales in Asia, Mr Michael Batchelor, said he could not disclose the buyer's identity but that there was interest not only from Singapore investors but also from groups in Indonesia, Malaysia, Hong Kong and Thailand.
'In 2009, many industry observers felt the market was going to go though a challenging period with the large amount of supply and dwindling arrivals,' he said. 'The complete opposite has happened 12 months on... Singapore is now one of the strongest markets in Asia.'
He said most hotels here are running at 90 per cent occupancy even after 6,000 rooms were added in the past year.
'Around the region, we are seeing a renewed interest in hotels... With hotel profitability returning, hotel values are expected to rise in the future.'
The hotel was 70 per cent-owned by LaSalle via its LaSalle Asia Opportunity Fund II and 30 per cent by Accor.
Source: Straits Times, 3 Aug 2010
Details were not disclosed but it is understood a Singapore private investor paid a figure above $200 million for it.
The hotel was put up for sale via a private tender in June by joint owners LaSalle Investment Management and French hotel group Accor.
They announced the sale yesterday, but did not disclose the price or purchaser 'due to confidentiality obligations'.
It is the largest Ibis outside Europe, with 538 rooms, two retail outlets, 68 parking spaces, and two food and beverage outlets. The hotel will continue to be managed by Accor under a long-term management contract for its economy brand Ibis.
LaSalle's international director, Mr Andrew Heithersay, said the hotel's occupancy rate is in the 'mid 90 per cent range' and the average room rate is about $140.
An industry expert, Mr David Ling, HVS Asia Pacific managing director, said: 'The room rate is higher than that for the usual economy hotels here. It is the first economy hotel of international standard here and has a contemporary design, so the transacted price would reflect the stronger income position. Generally, international-grade hotels here are expected to trade at a 6 per cent to 7 per cent yield,' he said.
The hotel sale was brokered by Jones Lang LaSalle Hotels. Its managing director of investment sales in Asia, Mr Michael Batchelor, said he could not disclose the buyer's identity but that there was interest not only from Singapore investors but also from groups in Indonesia, Malaysia, Hong Kong and Thailand.
'In 2009, many industry observers felt the market was going to go though a challenging period with the large amount of supply and dwindling arrivals,' he said. 'The complete opposite has happened 12 months on... Singapore is now one of the strongest markets in Asia.'
He said most hotels here are running at 90 per cent occupancy even after 6,000 rooms were added in the past year.
'Around the region, we are seeing a renewed interest in hotels... With hotel profitability returning, hotel values are expected to rise in the future.'
The hotel was 70 per cent-owned by LaSalle via its LaSalle Asia Opportunity Fund II and 30 per cent by Accor.
Source: Straits Times, 3 Aug 2010
Monday, August 2, 2010
Ascott unveils its expansion plans
Group to expand its portfolio by over 50% in next five yrs
CAPITALAND'S service residence arm, The Ascott Limited, is expanding its portfolio by more than 50 per cent in the next five years.
The division hopes to contribute more significantly to CapitaLand as it grows - perhaps accounting for as much as 20 per cent of group earnings in future.
Ascott chief executive Lim Ming Yan shared these plans for 'transformational change' with the media, in conjunction with the launch of the group's project - Ascott Huai Hai Road Shanghai. The 278-unit property near the Xintiandi entertainment district is owned by Hong Kong-listed real estate group Lai Fung Holdings.
Ascott now has some 26,000 service residence apartments in its portfolio and it aims to raise this number to 40,000 by 2015.
The target is achievable looking at Ascott's rate of growth, Mr Lim said. This year, the firm will be rolling out about 3,100 apartments. Of these, some 1,600 units across seven properties will be ready in the second half, in countries such as China and Indonesia.
Much of the envisioned growth will come from China. Ascott has just won contracts to manage four Ascott-branded properties in Ningbo, Hangzhou, Suzhou and Guangzhou. The biggest among these will be Ascott Guangzhou IFC, with 314 units, due to open next year.
South-east Asia is likely to be the next fastest growing market for Ascott. For instance, Mr Lim is positive about Singapore's service apartment sector as the country develops as a regional business centre.
Occupancy rates for Ascott's properties in Singapore exceed 90 per cent, and 'we are constantly on the lookout for new opportunities', he said.
India and Europe are also on Ascott's radar. It could enter Italy, Switzerland, Turkey and the east European countries.
While merely taking on more management contracts is a fast way to grow, Ascott will continue to focus more on buying and running properties.
It owns and manages about 67 per cent of its portfolio, and is prepared to invest in key gateway cities, Mr Lim said.
Ascott could obtain capital for growth from private equity funds, such as the Ascott China Fund. It could also sell assets to Ascott Residence Trust for funds to re-invest.
Mr Lim did not say how much the entire portfolio expansion would cost.
But he disclosed that Ascott will invest $50 million to refurbish more than 10 of its properties in Asia and Europe over the next 12 months. This is on top of around $20 million it has put in to renovate some properties such as Somerset Liang Court.
As Ascott grows, it 'can and should be a significant part of CapitaLand', Mr Lim said. On average, it has accounted for some 10 per cent of the group's earnings in the last few years, but it would be possible and 'more meaningful' to raise this to up to 20 per cent, he added.
Source: Business Times, 2 Aug 2010
CAPITALAND'S service residence arm, The Ascott Limited, is expanding its portfolio by more than 50 per cent in the next five years.
The division hopes to contribute more significantly to CapitaLand as it grows - perhaps accounting for as much as 20 per cent of group earnings in future.
Ascott chief executive Lim Ming Yan shared these plans for 'transformational change' with the media, in conjunction with the launch of the group's project - Ascott Huai Hai Road Shanghai. The 278-unit property near the Xintiandi entertainment district is owned by Hong Kong-listed real estate group Lai Fung Holdings.
Ascott now has some 26,000 service residence apartments in its portfolio and it aims to raise this number to 40,000 by 2015.
The target is achievable looking at Ascott's rate of growth, Mr Lim said. This year, the firm will be rolling out about 3,100 apartments. Of these, some 1,600 units across seven properties will be ready in the second half, in countries such as China and Indonesia.
Much of the envisioned growth will come from China. Ascott has just won contracts to manage four Ascott-branded properties in Ningbo, Hangzhou, Suzhou and Guangzhou. The biggest among these will be Ascott Guangzhou IFC, with 314 units, due to open next year.
South-east Asia is likely to be the next fastest growing market for Ascott. For instance, Mr Lim is positive about Singapore's service apartment sector as the country develops as a regional business centre.
Occupancy rates for Ascott's properties in Singapore exceed 90 per cent, and 'we are constantly on the lookout for new opportunities', he said.
India and Europe are also on Ascott's radar. It could enter Italy, Switzerland, Turkey and the east European countries.
While merely taking on more management contracts is a fast way to grow, Ascott will continue to focus more on buying and running properties.
It owns and manages about 67 per cent of its portfolio, and is prepared to invest in key gateway cities, Mr Lim said.
Ascott could obtain capital for growth from private equity funds, such as the Ascott China Fund. It could also sell assets to Ascott Residence Trust for funds to re-invest.
Mr Lim did not say how much the entire portfolio expansion would cost.
But he disclosed that Ascott will invest $50 million to refurbish more than 10 of its properties in Asia and Europe over the next 12 months. This is on top of around $20 million it has put in to renovate some properties such as Somerset Liang Court.
As Ascott grows, it 'can and should be a significant part of CapitaLand', Mr Lim said. On average, it has accounted for some 10 per cent of the group's earnings in the last few years, but it would be possible and 'more meaningful' to raise this to up to 20 per cent, he added.
Source: Business Times, 2 Aug 2010
JTC plans medtech park, new industrial complex
It's also enhancing cluster knowledge, says chief executive
(SINGAPORE) With a long list of new and ongoing projects to look after, JTC Corporation's chief executive officer Manohar Khiatani hardly has time for hobbies.
He would like to pick up golf, but new projects such as a proposed medical technology park and a new complex for the surface finishing sector are keeping him busy.
Mr Khiatani, 50, took over the helm at JTC last October. Prior to that, he was deputy managing director at the Economic Development Board (EDB) where he had spent over 10 years in various other positions including director (Europe) and director (logistics and transport engineering).
Barely a year into his new job, Mr Khiatani is already rolling out new projects. The proposed medical technology (medtech) park is one of his more immediate tasks.
The park will be located on a 7.4 hectare site in the Tukang area and will offer 185,000 square metres of space when it is ready.
JTC plans to develop the park in stages, with the first phase expected to yield 75,000 sq m of space when it is completed by late 2013.
The park will provide basic space which medtech companies can retrofit for their specialised needs. There will also be facilities which firms can share so that starting up can be cheaper and faster. JTC's plan is to create synergy by housing equipment manufacturers, suppliers and other supporting firms together.
A second key project, one which is still being conceptualised, is a complex for companies involved in surface finishing.
These firms use electroplating and other processes to make metal products more durable, and they service the automobile, electronics, telecommunications and many other industries.
As with the medtech park, the complex will have common facilities for tenants. They will be able to share the treatment of industrial waste water, the recycling of treated water and other services. JTC intends to minimise the complex's water usage and carbon footprint.
More projects could be in the pipeline. 'We want to enhance our innovation capacity, particularly in areas such as land intensification and optimisation, energy efficiency and built environment sustainability,' Mr Khiatani says.
But it is not just concrete projects that Mr Khiatani is focused on. He also wants JTC to deepen relationships with industries so that it can build the right facilities for them.
'JTC has to be more than just a landlord,' he says. 'We want to better understand the needs of our customers, the industries they operate in, and work together with them to develop innovative infrastructure solutions.'
JTC restructured its organisation last year to try to achieve this. Business units had been grouped according to property types but they now serve key sectors such as electronics, media, bio-medicals and clean technology.
'We are now developing a deeper understanding of strategic industry clusters,' Mr Khiatani shares. 'With this cluster knowledge, our officers are now able to engage our customers more deeply and holistically. Certainly more so than a normal landlord,' he says.
Source: Business Times, 2 Aug 2010
(SINGAPORE) With a long list of new and ongoing projects to look after, JTC Corporation's chief executive officer Manohar Khiatani hardly has time for hobbies.
He would like to pick up golf, but new projects such as a proposed medical technology park and a new complex for the surface finishing sector are keeping him busy.
Mr Khiatani, 50, took over the helm at JTC last October. Prior to that, he was deputy managing director at the Economic Development Board (EDB) where he had spent over 10 years in various other positions including director (Europe) and director (logistics and transport engineering).
Barely a year into his new job, Mr Khiatani is already rolling out new projects. The proposed medical technology (medtech) park is one of his more immediate tasks.
The park will be located on a 7.4 hectare site in the Tukang area and will offer 185,000 square metres of space when it is ready.
JTC plans to develop the park in stages, with the first phase expected to yield 75,000 sq m of space when it is completed by late 2013.
The park will provide basic space which medtech companies can retrofit for their specialised needs. There will also be facilities which firms can share so that starting up can be cheaper and faster. JTC's plan is to create synergy by housing equipment manufacturers, suppliers and other supporting firms together.
A second key project, one which is still being conceptualised, is a complex for companies involved in surface finishing.
These firms use electroplating and other processes to make metal products more durable, and they service the automobile, electronics, telecommunications and many other industries.
As with the medtech park, the complex will have common facilities for tenants. They will be able to share the treatment of industrial waste water, the recycling of treated water and other services. JTC intends to minimise the complex's water usage and carbon footprint.
More projects could be in the pipeline. 'We want to enhance our innovation capacity, particularly in areas such as land intensification and optimisation, energy efficiency and built environment sustainability,' Mr Khiatani says.
But it is not just concrete projects that Mr Khiatani is focused on. He also wants JTC to deepen relationships with industries so that it can build the right facilities for them.
'JTC has to be more than just a landlord,' he says. 'We want to better understand the needs of our customers, the industries they operate in, and work together with them to develop innovative infrastructure solutions.'
JTC restructured its organisation last year to try to achieve this. Business units had been grouped according to property types but they now serve key sectors such as electronics, media, bio-medicals and clean technology.
'We are now developing a deeper understanding of strategic industry clusters,' Mr Khiatani shares. 'With this cluster knowledge, our officers are now able to engage our customers more deeply and holistically. Certainly more so than a normal landlord,' he says.
Source: Business Times, 2 Aug 2010
Traders see property upside
DATA released by the Urban Redevelopment Authority and the Housing Board last week showed price increases had accelerated across the property sector, from resale flats and private housing to industrial and retail properties.
Rentals are also spiking, as the economy forges ahead strongly.
For the second quarter, private residential rentals registered a 5.9 per cent quarterly growth, while demand for office space rose about 71 per cent to 441,320 sq ft, from 258,334 sq ft in the first quarter.
Traders hope the rental increases mean bumper earnings for property counters going ahead.
In a report, Deutsche Bank said property companies are trading at an average discount of 18 per cent to their revalued net asset value.
'With rising risks for residential, we continue to prefer the office and integrated players and Reits (real estate investment trusts),' the report said last week.
But risks include an economic growth trend reversal and further government tightening measures.
Traders can get exposure to property counters by trading the covered warrants issued by foreign banks. For CapitaLand, Macquarie Bank will list two call warrants and one put warrant today.
One of the new call warrants offers investors the option to buy the mother share at $4.20 till next January, while the other call gives them till next June to buy at $4.30. This will enable a profit if the warrant moves in tandem with any gains made by CapitaLand.
For the put warrant, investors can sell the counter at $4 until next February. Investors stand to gain from any rise in the warrant, if CapitaLand falls in price.
Source: Straits Times, 2 Aug 2010
Rentals are also spiking, as the economy forges ahead strongly.
For the second quarter, private residential rentals registered a 5.9 per cent quarterly growth, while demand for office space rose about 71 per cent to 441,320 sq ft, from 258,334 sq ft in the first quarter.
Traders hope the rental increases mean bumper earnings for property counters going ahead.
In a report, Deutsche Bank said property companies are trading at an average discount of 18 per cent to their revalued net asset value.
'With rising risks for residential, we continue to prefer the office and integrated players and Reits (real estate investment trusts),' the report said last week.
But risks include an economic growth trend reversal and further government tightening measures.
Traders can get exposure to property counters by trading the covered warrants issued by foreign banks. For CapitaLand, Macquarie Bank will list two call warrants and one put warrant today.
One of the new call warrants offers investors the option to buy the mother share at $4.20 till next January, while the other call gives them till next June to buy at $4.30. This will enable a profit if the warrant moves in tandem with any gains made by CapitaLand.
For the put warrant, investors can sell the counter at $4 until next February. Investors stand to gain from any rise in the warrant, if CapitaLand falls in price.
Source: Straits Times, 2 Aug 2010
Sunday, August 1, 2010
Taking the mickey out of home buyers
Prices of small projects and tiny apartments unlikely to hold up well, say experts
Property prices may be strong and on the uptrend.
But not all private homes will appreciate equally in value or be able to maintain their value in bad times.
For example, small projects and tiny 'mickey mouse' units of less than 500 sq ft may be the first to be hit should the market suffer a reversal, experts said.
A lot of risk also hinges on entry price levels, which can be high in boom times, they added.
A property expert, who declined to be named, said smallish developments - some having just 15 to 30 units - have limited appeal.
'These developments do not have full facilities and the road outside is usually very narrow,' he said.
'In the Telok Kurau area, you can sell a unit in a small development for maybe $900 per sq ft (psf) if you are lucky. But nearby, big condominiums such as One Amber or The Seaview can go for $1,200 psf.'
The lorongs in Telok Kurau are often narrow two-lane roads, whereas One Amber and The Seaview are on main traffic ways.
Investors should also do their homework before rushing to invest in 'mickey mouse' apartments of less than 500 sq ft.
These apartments, sometimes called 'bikini units', can work out well if they are located in the city or near an MRT station as single expatriates may be drawn to them, the expert said.
'It becomes a question mark when people start building them in the suburban areas,' he said. 'If investors want to sell or rent them out, there may be some resistance.'
Mr Colin Tan, research and consultancy director of Chesterton Suntec International, said the small apartments are like penny stocks. They have much speculative potential but have little worth otherwise, he said.
Ms Tay Huey Ying, director of research and advisory at Colliers International, said that generally, properties that have comprehensive recreational facilities and sufficient green areas will fare better in terms of rentals and values than apartments that do not.
Investors should also be wary of ageing 99-year leasehold developments, said the expert.
The price gap between a freehold and a leasehold property - which can be marginal in boom times - may widen as the leasehold property ages and its lease shortens.
Ms Tay said it all depends on what investors are looking for.
If they are looking for pure rental income, they can go for 99-year leasehold properties as these can generate more attractive yields than freehold properties, she said.
A freehold property may generate a rental yield of 3 per cent to 3.5 per cent while a leasehold property may offer a slightly higher yield of 4 per cent to 5 per cent.
But if they are looking for capital appreciation, ageing leasehold properties of 40 years and above may see weaker price appreciation compared with their freehold counterparts.
A second expert, who also declined to be named, said: 'There is the danger of facing limited capital appreciation or even losses if you chase new leasehold projects at sky-high prices.'
These high-risk investments are 99-year leasehold projects priced above $1,000 psf, he said.
'In five years' time, you may not be hit if the market is good. But in 20 years' time, the risks rise as the lease would have run down and the condo design will likely become outdated.'
Property experts also point to walk-up apartments, and cluster homes with basements located in flood-prone areas, as potential high-risk investments.
'The design of a walk-up is quite outdated. Many people, especially families with elderly members, do not want to climb three or four flights of stairs to their apartments. But investors buy these for their collective sale potential,' said one.
'Lower-priced properties - but not necessarily cheap properties - in red-light districts or in very inaccessible places' are also high-risk investments, said Mr Tan.
'Don't buy something just because it is cheap or cheaper. Get your priorities right. Buy for the right reasons,' he advised.
Source: Sunday Times, 1 Aug 2010
Property prices may be strong and on the uptrend.
But not all private homes will appreciate equally in value or be able to maintain their value in bad times.
For example, small projects and tiny 'mickey mouse' units of less than 500 sq ft may be the first to be hit should the market suffer a reversal, experts said.
A lot of risk also hinges on entry price levels, which can be high in boom times, they added.
A property expert, who declined to be named, said smallish developments - some having just 15 to 30 units - have limited appeal.
'These developments do not have full facilities and the road outside is usually very narrow,' he said.
'In the Telok Kurau area, you can sell a unit in a small development for maybe $900 per sq ft (psf) if you are lucky. But nearby, big condominiums such as One Amber or The Seaview can go for $1,200 psf.'
The lorongs in Telok Kurau are often narrow two-lane roads, whereas One Amber and The Seaview are on main traffic ways.
Investors should also do their homework before rushing to invest in 'mickey mouse' apartments of less than 500 sq ft.
These apartments, sometimes called 'bikini units', can work out well if they are located in the city or near an MRT station as single expatriates may be drawn to them, the expert said.
'It becomes a question mark when people start building them in the suburban areas,' he said. 'If investors want to sell or rent them out, there may be some resistance.'
Mr Colin Tan, research and consultancy director of Chesterton Suntec International, said the small apartments are like penny stocks. They have much speculative potential but have little worth otherwise, he said.
Ms Tay Huey Ying, director of research and advisory at Colliers International, said that generally, properties that have comprehensive recreational facilities and sufficient green areas will fare better in terms of rentals and values than apartments that do not.
Investors should also be wary of ageing 99-year leasehold developments, said the expert.
The price gap between a freehold and a leasehold property - which can be marginal in boom times - may widen as the leasehold property ages and its lease shortens.
Ms Tay said it all depends on what investors are looking for.
If they are looking for pure rental income, they can go for 99-year leasehold properties as these can generate more attractive yields than freehold properties, she said.
A freehold property may generate a rental yield of 3 per cent to 3.5 per cent while a leasehold property may offer a slightly higher yield of 4 per cent to 5 per cent.
But if they are looking for capital appreciation, ageing leasehold properties of 40 years and above may see weaker price appreciation compared with their freehold counterparts.
A second expert, who also declined to be named, said: 'There is the danger of facing limited capital appreciation or even losses if you chase new leasehold projects at sky-high prices.'
These high-risk investments are 99-year leasehold projects priced above $1,000 psf, he said.
'In five years' time, you may not be hit if the market is good. But in 20 years' time, the risks rise as the lease would have run down and the condo design will likely become outdated.'
Property experts also point to walk-up apartments, and cluster homes with basements located in flood-prone areas, as potential high-risk investments.
'The design of a walk-up is quite outdated. Many people, especially families with elderly members, do not want to climb three or four flights of stairs to their apartments. But investors buy these for their collective sale potential,' said one.
'Lower-priced properties - but not necessarily cheap properties - in red-light districts or in very inaccessible places' are also high-risk investments, said Mr Tan.
'Don't buy something just because it is cheap or cheaper. Get your priorities right. Buy for the right reasons,' he advised.
Source: Sunday Times, 1 Aug 2010
Saturday, July 31, 2010
US growth slows to 2.4% in Q2
Consumers turn cautious but business spending shows some encouraging signs
(Washington) THE United States' economic recovery lost momentum in the spring as growth slowed to a 2.4 per cent pace, its most sluggish showing in nearly a year and too weak to drive down unemployment.
Consumers spent less, companies slowed their restocking of shelves and the nation's trade deficit dragged more on the economy in the April-to-June quarter.
In a separate report, the Commerce Department said the recession was deeper than previously estimated.
The Commerce Department's report released yesterday also showed that the economy grew at a 3.7 per cent pace in the first three months of this year. That was much better than the 2.7 per cent pace estimated just a month ago.
Still, the recovery has been losing power for two straight quarters. That raises concerns about whether it will fizzle out. Or worse, tip back into a 'double-dip' recession.
Consumer spending, usually the lifeblood of economic activity, slowed in the second quarter. Such spending rose at an anaemic 1.6 per cent pace. That was down from a 1.9 per cent pace in the first quarter and was the weakest showing since the end of last year.
Instead, Americans saved more. They saved 6.2 per cent of their disposable income in the second quarter, the highest share in a year.
The 2.4 per cent growth rate logged in the April-to-June quarter was slightly less than the 2.5 per cent pace economists were forecasting.
It was also the weakest since a 1.6 per cent pace in the third quarter of last year, when a record streak of four straight losing quarters came to an end.
'The economy is growing but not enough to make most Americans happy. At this weak pace, it will take more time than many hoped for people to really feel the benefits of this upturn,' said Joel Naroff, president of Naroff Economic Advisors.
In the revisions issued yesterday, the government estimated that the economy shrank 2.6 per cent last year - the steepest drop since 1946.
However, there were some encouraging signs in terms of business spending. Spending by businesses on equipment and software increased at a blistering 21.9 per cent pace in the second quarter, the most in nearly 13 years.
Builders boosted spending on commercial projects, such as office buildings and plants, at a 5.2 per cent pace. It marked the first increase after seven straight quarters of cuts.
Overall economic growth was bolstered in the second quarter by strong spending by the federal government. It boosted spending at a 9.2 per cent pace, the most in a year. And, state and local governments, coping with budget shortfalls, increased their spending for the first time in a year. -- AP
Source: Business Times, 31 Jul 2010
(Washington) THE United States' economic recovery lost momentum in the spring as growth slowed to a 2.4 per cent pace, its most sluggish showing in nearly a year and too weak to drive down unemployment.
Consumers spent less, companies slowed their restocking of shelves and the nation's trade deficit dragged more on the economy in the April-to-June quarter.
In a separate report, the Commerce Department said the recession was deeper than previously estimated.
The Commerce Department's report released yesterday also showed that the economy grew at a 3.7 per cent pace in the first three months of this year. That was much better than the 2.7 per cent pace estimated just a month ago.
Still, the recovery has been losing power for two straight quarters. That raises concerns about whether it will fizzle out. Or worse, tip back into a 'double-dip' recession.
Consumer spending, usually the lifeblood of economic activity, slowed in the second quarter. Such spending rose at an anaemic 1.6 per cent pace. That was down from a 1.9 per cent pace in the first quarter and was the weakest showing since the end of last year.
Instead, Americans saved more. They saved 6.2 per cent of their disposable income in the second quarter, the highest share in a year.
The 2.4 per cent growth rate logged in the April-to-June quarter was slightly less than the 2.5 per cent pace economists were forecasting.
It was also the weakest since a 1.6 per cent pace in the third quarter of last year, when a record streak of four straight losing quarters came to an end.
'The economy is growing but not enough to make most Americans happy. At this weak pace, it will take more time than many hoped for people to really feel the benefits of this upturn,' said Joel Naroff, president of Naroff Economic Advisors.
In the revisions issued yesterday, the government estimated that the economy shrank 2.6 per cent last year - the steepest drop since 1946.
However, there were some encouraging signs in terms of business spending. Spending by businesses on equipment and software increased at a blistering 21.9 per cent pace in the second quarter, the most in nearly 13 years.
Builders boosted spending on commercial projects, such as office buildings and plants, at a 5.2 per cent pace. It marked the first increase after seven straight quarters of cuts.
Overall economic growth was bolstered in the second quarter by strong spending by the federal government. It boosted spending at a 9.2 per cent pace, the most in a year. And, state and local governments, coping with budget shortfalls, increased their spending for the first time in a year. -- AP
Source: Business Times, 31 Jul 2010
Tanjong Pagar site expected to fetch over $1b
THE landscape around Tanjong Pagar MRT Station is set to be transformed over the next few years when a new development is built, rising to about 60 storeys.
The project, opposite International Plaza, will be built on a 'white' site launched by the Urban Redevelopment Authority (URA) yesterday and which is expected to fetch over $1 billion.
The 99-year leasehold site can generate nearly 1.7 million square feet maximum gross floor area (GFA), of which at least 60 per cent must be for offices and another 10 per cent for hotel use. Most market watchers expect the successful developer to put the balance 30 per cent GFA to residential use, cashing in on strong demand for inner-city apartments. Sales of apartments will help part-finance the development, say property consultants.
The apartments are expected to be built on the 1.5 hectare site's front portion (facing Wallich Street and Maxwell Chambers), which can have a maximum height of 280 metres above mean sea level (AMSL). This is currently the maximum height control allowed in Singapore and will optimise views of the apartments.
Caveats of new residential launches in the vicinity such as Altez and 76 Shenton range from $1,900 to $2,300 psf, from sales in the past six months, says CB Richard Ellis executive director Li Hiaw Ho.
Cushman & Wakefield Singapore managing director Donald Han estimates the residential component can generate between 400 and 540 apartments, assuming an average unit size of 1,200 sq ft and 900 sq ft respectively.
The project is expected to generate about 846,000 sq ft net lettable area of offices - based on the minimum 60 per cent office component stipulated, says CBRE.
As at the second quarter of this year, the average monthly rental of premium-grade office space in the Tanjong Pagar area was about $6.80 psf, compared with $8.37 psf in the Marina Bay area. During the office market peak in Q2/Q3 2008, the figures were $12.50 psf and $19 psf respectively.
'Office rents have bottomed and the overall pipeline supply will taper off after 2012. Hence the development will benefit from an upswing in office rents, barring any slowdown or decline in the major economies,' says Chua Chor Hoon, head of Southeast Asia research at DTZ.
Cushman's Mr Han also observed that on the back of strong take-up for new office projects, confidence and appetite for commercial-dominated developments in the financial district is slowly building up among developers.
He estimates that the project's minimum hotel component - 10 per cent of GFA - would be enough for a 315 to 320-room hotel.
DTZ's Ms Chua expects the site to draw only a handful of bidders, mainly bigger developers experienced with office projects. Mr Han predicts 4-6 bids, most of them in the $650-$720 per square foot per plot ratio (psf ppr) range. This range of unit land price works out to absolute land bids of about $1.1 billion-$1.2 billion.
Some analysts reckon bids could be pushed even higher, to around $800 psf ppr or $1.4 billion.
'Strong interest is expected from the 'usual suspects' of listed developers and foreign funds either individually or on a joint- venture basis. As this is a big-ticket site, we expect participation by foreign developers like Hongkong Land and Cheung Kong,' says Mr Han.
While a chunk of the site has a maximum building height of 280 metres AMSL, the rear portion (facing Peck Seah Street) can be built up to 200 metres AMSL. Part of the site (mostly above the MRT station box) has a maximum six-storey height.
Analysts say the project will contribute to the rejuvenation of the Tanjong Pagar area and inject new office space in the old CBD - helping to offset some of the loss of stock from the conversion of ageing office blocks into apartments.
The Tanjong Pagar site is being offered under the Government's Confirmed List for the second half of 2010. Its tender will close on Nov 16. 'Selection of the successful tenderer will be based on the tendered land price only,' URA said.
Source: Business Times, 31 Jul 2010
The project, opposite International Plaza, will be built on a 'white' site launched by the Urban Redevelopment Authority (URA) yesterday and which is expected to fetch over $1 billion.
The 99-year leasehold site can generate nearly 1.7 million square feet maximum gross floor area (GFA), of which at least 60 per cent must be for offices and another 10 per cent for hotel use. Most market watchers expect the successful developer to put the balance 30 per cent GFA to residential use, cashing in on strong demand for inner-city apartments. Sales of apartments will help part-finance the development, say property consultants.
The apartments are expected to be built on the 1.5 hectare site's front portion (facing Wallich Street and Maxwell Chambers), which can have a maximum height of 280 metres above mean sea level (AMSL). This is currently the maximum height control allowed in Singapore and will optimise views of the apartments.
Caveats of new residential launches in the vicinity such as Altez and 76 Shenton range from $1,900 to $2,300 psf, from sales in the past six months, says CB Richard Ellis executive director Li Hiaw Ho.
Cushman & Wakefield Singapore managing director Donald Han estimates the residential component can generate between 400 and 540 apartments, assuming an average unit size of 1,200 sq ft and 900 sq ft respectively.
The project is expected to generate about 846,000 sq ft net lettable area of offices - based on the minimum 60 per cent office component stipulated, says CBRE.
As at the second quarter of this year, the average monthly rental of premium-grade office space in the Tanjong Pagar area was about $6.80 psf, compared with $8.37 psf in the Marina Bay area. During the office market peak in Q2/Q3 2008, the figures were $12.50 psf and $19 psf respectively.
'Office rents have bottomed and the overall pipeline supply will taper off after 2012. Hence the development will benefit from an upswing in office rents, barring any slowdown or decline in the major economies,' says Chua Chor Hoon, head of Southeast Asia research at DTZ.
Cushman's Mr Han also observed that on the back of strong take-up for new office projects, confidence and appetite for commercial-dominated developments in the financial district is slowly building up among developers.
He estimates that the project's minimum hotel component - 10 per cent of GFA - would be enough for a 315 to 320-room hotel.
DTZ's Ms Chua expects the site to draw only a handful of bidders, mainly bigger developers experienced with office projects. Mr Han predicts 4-6 bids, most of them in the $650-$720 per square foot per plot ratio (psf ppr) range. This range of unit land price works out to absolute land bids of about $1.1 billion-$1.2 billion.
Some analysts reckon bids could be pushed even higher, to around $800 psf ppr or $1.4 billion.
'Strong interest is expected from the 'usual suspects' of listed developers and foreign funds either individually or on a joint- venture basis. As this is a big-ticket site, we expect participation by foreign developers like Hongkong Land and Cheung Kong,' says Mr Han.
While a chunk of the site has a maximum building height of 280 metres AMSL, the rear portion (facing Peck Seah Street) can be built up to 200 metres AMSL. Part of the site (mostly above the MRT station box) has a maximum six-storey height.
Analysts say the project will contribute to the rejuvenation of the Tanjong Pagar area and inject new office space in the old CBD - helping to offset some of the loss of stock from the conversion of ageing office blocks into apartments.
The Tanjong Pagar site is being offered under the Government's Confirmed List for the second half of 2010. Its tender will close on Nov 16. 'Selection of the successful tenderer will be based on the tendered land price only,' URA said.
Source: Business Times, 31 Jul 2010
Multi-purpose site beside Tanjong Pagar station up for tender
A PRIME multi-purpose site in the Central Business District has been put up for tender.
The 1.5ha plot at the corner of Peck Seah and Choon Guan streets and next to Tanjong Pagar MRT station was launched yesterday as a confirmed list site.
The development will have a gross floor area of 157,744 sq m with at least 60 per cent earmarked for offices and a minimum of 10 per cent for hotel-related use.
The remaining area can be used for commercial, hotel or residential purposes, said the Urban Redevelopment Authority (URA) yesterday.
The 99-year leasehold site could yield an estimated 490 apartments, 315 hotel rooms and 102,380 sq m of commercial space.
It could reach 280m above sea level, commanding panoramic views of the city skyline across the CBD to Marina Bay and Chinatown, the URA said.
An underground pedestrian network will link the site to Capital Tower and 8 Shenton Way.
Executive director Li Hiaw Ho of CBRE Research said the development will tower over others in the vicinity and change the landscape of the Tanjong Pagar micro-market, hastening the area's pace of rejuvenation.
Mr Li said that with inner-city living growing in popularity over recent years, the successful tenderer would be tempted to utilise the remaining 30 per cent of floor space for flats.
Caveats lodged in the past six months from new launches at Altez and 76 Shenton ranged from $1,900 to $2,300 per sq ft (psf) while the completed Icon project has had recent resale transactions from $1,600 to $1,700 psf, CBRE Research said.
Knight Frank consultancy and research manager Ong Kah Seng expects 'keen interest' and about five bids for the prime site.
He also highlighted the attractiveness of the Tanjong Pagar area, where 'prime commercial area is complemented by a variety of lifestyle amenities and entertainment hangouts'.
Mr Ong added that with the office market in early recovery, this presents the best opportunity to develop or invest, as rents and prices are still attractive and economic fundamentals are in sight.
'Developers also have better access to financing compared to during an economic downturn,' he added.
The site, which can take up to seven years to be fully developed, might also appeal to developers who prefer a cautious stance as they would be able to adjust development plans according to prevailing market conditions, Mr Ong added.
The tender, which is part of the Government's land sales programme, closes on Nov 16.
Source: Straits Times, 31 Jul 2010
The 1.5ha plot at the corner of Peck Seah and Choon Guan streets and next to Tanjong Pagar MRT station was launched yesterday as a confirmed list site.
The development will have a gross floor area of 157,744 sq m with at least 60 per cent earmarked for offices and a minimum of 10 per cent for hotel-related use.
The remaining area can be used for commercial, hotel or residential purposes, said the Urban Redevelopment Authority (URA) yesterday.
The 99-year leasehold site could yield an estimated 490 apartments, 315 hotel rooms and 102,380 sq m of commercial space.
It could reach 280m above sea level, commanding panoramic views of the city skyline across the CBD to Marina Bay and Chinatown, the URA said.
An underground pedestrian network will link the site to Capital Tower and 8 Shenton Way.
Executive director Li Hiaw Ho of CBRE Research said the development will tower over others in the vicinity and change the landscape of the Tanjong Pagar micro-market, hastening the area's pace of rejuvenation.
Mr Li said that with inner-city living growing in popularity over recent years, the successful tenderer would be tempted to utilise the remaining 30 per cent of floor space for flats.
Caveats lodged in the past six months from new launches at Altez and 76 Shenton ranged from $1,900 to $2,300 per sq ft (psf) while the completed Icon project has had recent resale transactions from $1,600 to $1,700 psf, CBRE Research said.
Knight Frank consultancy and research manager Ong Kah Seng expects 'keen interest' and about five bids for the prime site.
He also highlighted the attractiveness of the Tanjong Pagar area, where 'prime commercial area is complemented by a variety of lifestyle amenities and entertainment hangouts'.
Mr Ong added that with the office market in early recovery, this presents the best opportunity to develop or invest, as rents and prices are still attractive and economic fundamentals are in sight.
'Developers also have better access to financing compared to during an economic downturn,' he added.
The site, which can take up to seven years to be fully developed, might also appeal to developers who prefer a cautious stance as they would be able to adjust development plans according to prevailing market conditions, Mr Ong added.
The tender, which is part of the Government's land sales programme, closes on Nov 16.
Source: Straits Times, 31 Jul 2010