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British Land NAV growth slows

2010-08-05T18:22:00.001+08:00

(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

British home prices edge up in July

2010-08-05T18:21:00.001+08:00

(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

Nine Chow family properties sold for $175m

2010-08-05T18:20:00.003+08:00

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

Ayala Land pumping US$220m into China eco-city

2010-08-05T18:20:00.000+08:00

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

Bullish condo sentiment in KL despite oversupply

2010-08-05T18:18:00.002+08:00

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

Global Orion makes first foray in residential market

2010-08-05T18:18:00.000+08:00

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 still 3rd priciest office location in Asia-Pacific

2010-08-05T18:17:00.000+08:00

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

Time to finish project on state land shortened

2010-08-05T18:14:00.001+08:00

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

CityDev's KL site may set new price benchmark

2010-08-05T18:12:00.002+08:00

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

S'pore office rents still region's third most costly

2010-08-05T18:11:00.000+08:00

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

Govt launches 3 sites, cuts time for project completion

2010-08-05T18:09:00.001+08:00

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

Double-dip recession unlikely

2010-08-04T18:26:00.000+08:00

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

Sim Lian tops bids for DBSS site in Tampines

2010-08-04T18:24:00.000+08:00

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

Singapore is priciest Asian country to build in: report

2010-08-04T18:23:00.000+08:00

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

Buying within your means

2010-08-04T18:01:00.000+08:00

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

Buyers snap up 80 units at preview of The Greenwich

2010-08-04T18:00:00.000+08:00

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

Sim Lian puts in record bid for DBSS site

2010-08-04T17:59:00.000+08:00

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

Fewer default on HDB loan repayments

2010-08-04T17:55:00.000+08:00

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

Prime Balmoral Condo up for sale by tender

2010-08-03T18:33:00.001+08:00

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

Park Regis hotel, Chow House sold

2010-08-03T18:33:00.000+08:00

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

Ex-bankers launch new property venture

2010-08-03T18:32:00.000+08:00

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

A China real estate bubble built on conflicting policy

2010-08-03T18:31:00.000+08:00

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

NZ property listings down 2.3% in July

2010-08-03T18:30:00.000+08:00

(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

London luxury-home prices slide in July

2010-08-03T18:29:00.001+08:00

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

Oxley Land unit buys stake in owner of Devonshire site

2010-08-03T18:28:00.000+08:00

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

S'porean buyer snaps up Ibis on Bencoolen

2010-08-03T18:27:00.000+08:00

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

Ibis Singapore on Bencoolen sold to private investor

2010-08-03T17:54:00.000+08:00

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

Ascott unveils its expansion plans

2010-08-02T18:35:00.000+08:00

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

JTC plans medtech park, new industrial complex

2010-08-02T18:34:00.000+08:00

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

Traders see property upside

2010-08-02T17:53:00.000+08:00

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

Taking the mickey out of home buyers

2010-08-01T17:47:00.000+08:00

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

US growth slows to 2.4% in Q2

2010-07-31T18:39:00.000+08:00

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

Tanjong Pagar site expected to fetch over $1b

2010-07-31T18:37:00.001+08:00

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

Multi-purpose site beside Tanjong Pagar station up for tender

2010-07-31T17:46:00.000+08:00

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

More firms expect slower growth in second half

2010-07-31T17:45:00.000+08:00

THE key manufacturing and services sectors are still optimistic about the months ahead but more bosses are bracing themselves for slower growth.

Two surveys out yesterday point to a change in the economic climate, which could bring slower growth and a cut-back on hiring.

An Economic Development Board (EDB) poll showed that a weighted 25 per cent of manufacturers expect business conditions to improve over the next six months, down from 34 per cent in the April survey. And a weighted 7 per cent of companies felt things would get worse in the second half, up from 5 per cent three months ago.

About 376 manufacturers were surveyed between May and June.

Within manufacturing, firms in the electronics sector which have seen a huge uptick in fortunes over the past six months remained the most positive.

A weighted 43 per cent said things will get better, and another 45 per cent expect to increase production for the third quarter, with more export orders coming for Christmas.

'The firms foresee orders being sustained by demand for consumer electronic products such as wireless handsets and mobile computing devices,' said the EDB.

But only 7 per cent of manufacturers expect to hire workers over the next six months compared with 10 per cent three months ago.

Hiring is expected mainly in the electronics and precision engineering sectors.

OCBC economist Selena Ling said: 'We are seeing a more cautious tone. Certain sectors will be looking at a more modest pace of growth.

'Manufacturing is not going to be the main job creator going ahead, services is going to be, and we are really talking about the financial and tourism sectors in particular.'

A Department of Statistics survey of about 1,400 firms in the services sector found that a weighted 39 per cent of firms expect a more positive outlook, down from 45 per cent three months ago.

More firms also felt that things would stay the same, while slightly fewer firms said things would get worse.

The opening of the two integrated resorts and the upcoming Youth Olympic Games (YOG) and Formula One (F1) race appear to have given the services sector a boost in prospects.

The most positive were those in amusement and recreation - a new industry category that first appeared in the April survey.

A weighted 67 per cent in this segment expect a brighter second half, up from 34 per cent three months ago, while 51 per cent of hotels and caterers also expect things to get better, up from 48 per cent in April.

A weighted 40 per cent of companies in the information and communications sector also believe things will improve, compared with just 11 per cent in April.

Hoteliers also expect a rise in occupancy and the hiring of more people for the next three months for the F1 and YOG.

In April, 70 per cent of banks, fund managers and insurers felt things would get better but this has fallen to 41 per cent, with 4 per cent expecting worse conditions. Three months ago, no one expressed such pessimism.

But firms in the financial sector are the most bullish about hiring, with 46 per cent expecting to increase employment, a reflection that fund flows are still coming into Asia and Singapore, said Ms Ling.

Source: Straits Times, 31 Jul 2010

Three more HUDC estates to be privatised

2010-07-31T17:44:00.000+08:00

THREE HUDC estates comprising 797 flats in Hougang and Potong Pasir have been given the green light to privatise.

Two of the estates are in Hougang North - blocks 344 to 350 in Hougang Avenue 7 and blocks 713 to 720 in Hougang Avenue 2. The other covers blocks 110 to 112 in Potong Pasir Avenue 1.

The homes are all in opposition wards represented either by Hougang MP Low Thia Khiang of the Workers' Party or Potong Pasir MP Chiam See Tong of the Singapore People's Party.

Privatisation means HUDC residents become owners of their units as well as the common property, and so have better control over the running of their estate. They will also no longer be subject to HDB's housing policies such as having to seek approval to sublet their flats.

This is the seventh batch of HUDC estate privatisations and will allow home owners to enjoy price gains, experts say.

PropNex chief executive Mohamed Ismail said prices of homes in the HUDC estates might go up an estimated 20 per cent once the privatisation process is complete.

'Residents will have control of their estate and can improve facilities such as introducing a security system... There's also an enhanced lifestyle and image,' he said.

The Ministry of National Development (MND) said the estates were selected as residents had registered an interest in going private.

The privatisation costs that lessees might incur - there are legal and survey fees, for example - will be capped at $30,000 per flat for three years from Aug 2. The Government will absorb the difference if costs exceed the cap. But residents must acquire 75 per cent support for privatisation within this three-year period.

After that, privatisation costs will be adjusted to account for the prevailing redevelopment potential of the land.

The three estates can now form committees of resident representatives to garner support for the privatisation and liaise with involved parties such as the HDB.

Once the 75 per cent support is obtained, residents can lodge a Strata Titles Application with the Registry of Titles so they can get subsidiary strata certificates of title for their flats.

The process of legal transfer of title from HDB to the flat owners will take about 21/2 years, the MND said. Once the conversion to strata titles has been done, residents will have to form a management council to run and maintain the estate.

A Potong Pasir resident, who did not want to be named, said he was glad his estate was finally chosen for the conversion. 'I've been living here for about 25 years... We see others getting privatised and we ask ourselves when it'll be our turn. At last we've got that chance.'

HUDC flats were built in the 1970s and 1980s as an option for middle-income families, but were phased out in 1987 as demand declined. Privatisation began in 1995 in response to the rising aspirations of Singaporeans to own private housing.

All but the Braddell View HUDC estate have been privatised or identified for privatisation. The MND said as that estate was developed in two phases, the issue of lease harmonisation has to be resolved before the estate can be privatised.

Source: Straits Times, 31 Jul 2010

Service sector powers S'pore's job growth

2010-07-31T17:42:00.000+08:00

Pace of creation slows to 26,500 jobs but Manpower Minister remains upbeat

THE Singapore economy continues to enjoy strong employment growth, adding 26,500 jobs in the second quarter.

The fuel for growth came overwhelmingly from the service sector, thanks to the two integrated resorts, new hotels and heartland shopping malls.

Although the pace of job creation has slowed from the first quarter, when 36,500 jobs were added, Manpower Minister Gan Kim Yong is upbeat about the outlook for the rest of the year.

'Looking ahead, unemployment appears to have broadly stabilised and the labour market outlook for 2010 is optimistic, with robust employment growth expected,' he wrote in a posting on his ministry's newly set up blog.

The overall, seasonally adjusted unemployment rate was 2.3 per cent last month, up slightly from that in March but significantly lower than the rate of 3.2 per cent a year ago.

The resident unemployment rate - among Singaporeans and permanent residents - was 3.3 per cent last month, with an estimated 87,800 residents without jobs.

Redundancies also fell across the manufacturing, construction and service sectors, from a total of 2,400 in the first quarter to 1,900 in the second quarter.

Mr Gan described the fall as 'reassuring'.

The slowdown in job creation in the second quarter as compared with the first quarter could be due more to 'tight supply, rather than soft demand', Citigroup economist Kit Wei Zheng said.

Hiring difficulties could stem from more picky job seekers and a slower inflow of foreign workers, as compared with previous years, he added.

In terms of job growth, the service sector created 27,400 jobs in the second quarter. Construction added some 1,800 jobs, while manufacturing actually lost 2,400 jobs.

Economists believe job losses in manufacturing should not be a big source of concern, given the recent strong output growth. The losses were more likely due to the ongoing restructuring of the economy, said National University of Singapore economist Shandre Thangavelu.

'It will be very interesting to see third-quarter figures, whether employers will adjust slowly or immediately to the end of Jobs Credit,' he added.

He was referring to the $4.5 billion government scheme to subsidise local worker payrolls and encourage employers not to lay off workers during the recession. The scheme ended last month.

Looking ahead, the war for talent is likely to heat up as employee turnover is increasing, said Ms Yvonne Cox, South-east Asia managing director of human resource consultancy Towers Watson.

'The service sector, in particular the hospitality and retail industries, is experiencing spikes in employee turnovers as the integrated resorts have ramped up in the last six months,' she said.

Service-sector firms are upbeat about business conditions in the second half of this year, according to a Department of Statistics survey on third-quarter business expectations released yesterday.

Among those hoping to grow their business is coffee-shop chain Ya Kun Kaya Toast, which plans to open five outlets in November. The tight labour market, however, presents problems.

Its operations manager Jimmy Ng said it faces difficulties hiring young Singaporeans and a cap on hiring foreigners.'It's a good time to expand the business now but, without staff, we cannot open new outlets,' he said.

Mr Gan addressed the issue in his ministry's blog.

As productivity gains will take some time to materialise, employers 'may need to bring in additional foreign workers this year, despite the higher levy which took effect this month', he wrote.

But he also called on employers to step up efforts to raise productivity to meet the pace of growth, innovate and 'reduce their dependence on foreign manpower'.

Source: Straits Times, 31 Jul 2010

More HDB carparks on the way

2010-07-31T17:41:00.000+08:00

Plans to add more than 5,000 parking spaces to ease residents' woes

MORE than 5,000 new parking spaces, costing $66 million, will be added in public housing estates in the next three years by the Housing Board (HDB).

The announcement was made yesterday by the HDB, following queries from The Straits Times.

The HDB estimates that about 10 per cent of its carparks do not have enough spaces for residents nearby.

What's causing the carpark crunch?

The HDB cited the increase in car ownership, including households with more than one car, in recent years as the chief reason.

Members of Parliament (MPs) whom The Straits Times spoke to also attributed it to the rising number of HDB households owning more than one car.

According to HDB figures, the number of such households has surged from 22,700 in 2006 to 36,370 now - a jump of 60 per cent.

HDB households owning more than one car make up about 12 per cent of the pool of car-owning households, up from 9 per cent in 2006.

MPs and residents have been complaining about the tight squeeze in HDB carparks for more than a year, as the car population has surged faster than the supply of parking spaces.

There are currently 1,810 HDB carparks, with a total of 551,430 parking spaces.

Mr Yeo Guat Kwang, MP for Aljunied GRC, noted wryly: 'Last year was the economic downturn, but the car population grew instead.'

The increase is in tandem with a rise in the overall car population in Singapore.

According to Land Transport Authority (LTA) figures for June, there are now 577,163 cars on the roads, about 100,000 more than in 2006.

This figure does not include rental cars, taxis and goods vehicles.

The HDB said the extra parking spaces will be created by increasing the capacity of existing carparks as well as by building new multi-storey carparks to replace existing surface ones.

The MP for Paya Lebar ward in Aljunied GRC, Madam Cynthia Phua, said: 'It's a relief that HDB is looking into this matter. But HDB needs to look at the long term as 5,000 new lots may be taken up very quickly.'

The new multi-storey carparks being built must be structures that can have even more storeys added in future, she said.

Madam Phua has on average 20 to 30 people a month complaining to her about the lack of parking spaces.

Over in Hougang Avenue 4, MP Mr Yeo plans to have 80 spaces added to an existing carpark. Parking spaces are hard to come by there because the carpark is near a busy neighbourhood centre.

Tampines resident Murugian Vadiveloo, 61, is looking forward to the new parking spaces. The HDB is building a multi-storey carpark one block away from his home in Block 939. The carpark will have space for 260 vehicles.

The Singapore Airlines cabin crew operations supervisor now spends half an hour circling around the carpark in his

area before finding a parking space if he returns home after 9pm.

Often, he has to park at another carpark 300m away.

Mr Vadiveloo, who has been living in Tampines for 25 years, said: 'The shortage worsened in the past year. Many people were parking illegally along the road.'

Mr Chew Kay Ping, who lives in Hougang Avenue 1, is cheered by the news too as he now has to while away time at a coffee shop - with his car parked illegally along the road - as he waits for an empty parking space.

Said the 58-year-old part-time contractor: 'I really look forward to HDB's addition of new lots. Then I don't have to waste so much time any more - and risk getting traffic summons.'

Source: Straits Times, 31 Jul 2010

HDB offers 1,016 flats in 2 BTO projects

2010-07-30T18:44:00.000+08:00

This year's launches now top offers for whole of last year

THE Housing & Development Board (HDB) is launching two new Build-To-Order (BTO) projects with 1,016 units at Bukit Panjang and Jurong West.

This brings the number of new flats it has introduced under the scheme so far this year to 9,844 - exceeding the 9,000 for the whole of last year.

Senja Gateway, located at the junction of Kranji Expressway and Woodlands Road, will have 741 standard flats. They consist of 254 studio apartments, 313 four-roomers and 174 five-roomers.

The site is near the LRT station at Ten Mile Junction, and is surrounded by schools such as Pioneer Junior College.

A five-room flat at the estate will go for $308,000 to $398,000. According to HDB, comparable resale flats in the area cost $378,000 to $450,800.

The second project, Corporation Tiara, is at the junction of Corporation Road and Yung Kuang Road. Up for sale are 275 premium flats, comprising 171 four-roomers and 104 five-roomers.

The project will include another 190 studio apartments but HDB will put these up for sale later.

Corporation Tiara is some distance from the Lakeside and Boon Lay MRT stations. But it is near green lungs - Chinese Garden and Japanese Garden.

A five-room flat at the estate will cost $304,000 to $389,000. Prices of comparable resale flats in the vicinity range from $384,000 to $420,000.

HDB has ramped up the supply of new flats this year as prices of resale flats continue to climb - they rose 4.1 per cent in Q2 from Q1. Buyers also had to pay larger cash premiums.

The agency will be rolling out another 1,400 new flats in Yishun next month, and it plans to offer up to 16,000 BTO flats for the whole year.

HDB pointed out that the annual take-up of HDB flats ranged from 7,000 to 16,100 in the last 10 years. 'There were balance flats almost every year,' it added.

Source: Business Times, 30 Jul 2010

Singapore's richest get 17% wealthier this year

2010-07-30T18:41:00.001+08:00

(SINGAPORE) The Republic's wealthiest are enjoying better fortunes this year, in tandem with the local economy's improving performance, according to data collected by Forbes Asia.

The publication, which tracks the wealth of Singapore's 40 richest people, said their total net worth this year is US$45.7 billion (S$62.4 billion) - up 17 per cent from last year's US$39 billion.

Of the lot, 26 tycoons saw their wealth increase this year, while seven suffered declines.

The family of the late Ng Teng Fong - who died in February - topped the list with a combined net worth of US$7.8 billion.

Still, they were among the few whose wealth declined - from US$8 billion the year before, as the value of their shareholding in Hong Kong developer Tsim Sha Tsui Properties fell 18 per cent over the past year, on fears of a slowdown in China. Forbes Asia said the biggest chunk of the family's wealth continues to come from its privately held Singapore property development company Far East Organization.

Meanwhile, the family of the late Khoo Teck Puat (who died in 2004) is second, with a total net worth of US$5.9 billion, up from US$5.5 billion in 2009. The family - the 14 children who inherited the fortune - sold its stake in Standard Chartered Bank to Temasek for US$4 billion in 2004. Its main asset is the Goodwood Group of hotels and a minor stake in the Ng family's Orchard Parade Holdings.

United Overseas Bank chairman Wee Cho Yaw moves up to third from fifth place last year, adding US$500 million to his wealth. Wilmar International's chairman Kuok Khoon Hong holds steady in fourth place with a net worth of US$3.5 billion. He's expected to add more to his fortunes, however, with the recently inked US$1.5 billion deal to buy Sucrogen (the largest raw sugar producer in Australia and maker of fuel ethanol) expected to be completed by September.

There were also some notable entrants to the list this year. Making a debut, at No 5, is New Zealand- born social entrepreneur Richard Chandler, who became a Singapore resident in 2008. The 52-year-old heads RF Chandler (a fund which invests in emerging markets) and has also set aside US$100 million for educational causes in the developing world.

The other newcomers to the top-40 list this year are Otto Marine's Yaw Chee Siew, who comes in at No 22, with a total net worth of US$385 million, and ARA Asset Management's John Lim at No 38, with US$202 million.

And returning to the list, after a two-year absence, is Osim International's Ron Sim. He re-enters at No 28, with a net worth of US$301 million, after having written off his investment in loss-making Brookstone in 2008.

Hotelier Ong Beng Seng and his wife Christina Ong are also first-time billionaires - with a combined wealth of US$1 billion, up from US$700 million last year, thanks to the better performance of their hotel and retailing empire. Between them, they control Hotel Properties, UK fashion house Mulberry, the Club 21 retail chain and the Como Group.

Meanwhile, among those suffering a decline in fortunes is Yanlord Land Group's Zhong Sheng Jian, who made his fortune from China's property boom over the last two decades, and was named 'Businessman of the Year' at BT's Singapore Business Awards 2010. His net worth fell 10 per cent from the year before, to US$1.8 billion this year, as Yanlord's stock price fell due to worries about the Chinese government's efforts to curb real estate prices.

The full list of Singapore's richest can be found in the August issue of Forbes Asia.

The magazine said it compiled the list by calculating the individuals' public net worth using share prices and exchange rates as at July 14. For privately held wealth, it estimated what they would be worth if they were public.

The publication also said that this ranking, unlike the Forbes billionaire list, includes numerous family assets shared by individuals and their children, grandchildren and siblings. Where family assets are held by extended families, such as the Kwek cousins (that is, Kwek Leng Beng, Kwek Leng Kee and Kwek Leng Peck), Forbes Asia split them into separate entries.

Source: Business Times, 30 Jul 2010

Building sector uneasy with cool demand up to May

2010-07-30T18:41:00.000+08:00

But prelim figures for June, upcoming projects paint brighter picture

(SINGAPORE) The value of construction contracts awarded in the first five months of the year was less than hoped for, keeping the building industry on edge.

Nevertheless, authorities are keeping their full year construction demand forecast intact as preliminary June figures and upcoming projects paint a brighter picture of the industry.

According to figures released by the Building and Construction Authority (BCA) to the public, construction demand from January to May was $8.17 billion. Some 59 per cent or $4.84 billion of this came from the private sector, and the remaining 41 per cent or $3.33 billion was from the public sector.

The demand up to May - compared with BCA's full year forecast of $21-27 billion - triggered some unease among industry insiders.

'It looks as though the target of $21-27 billion may not be reached this year,' said Rider Levett Bucknall (RLB) managing partner Winston Hauw yesterday. He was giving an update on how the construction sector has fared at a conference organised by the Real Estate Developers' Association of Singapore (Redas).

He cited other figures from BCA that implied slowing construction demand. The value of contracts awarded in April and May was $2.6 billion, which is around 18 per cent less than the $3.1 billion in the same period last year.

Davis Langdon & Seah director Seah Choo Meng shared similar concerns with BT. 'Contractors feel that there is still not enough work in the market,' he said.

Construction demand has come off sharply from the record $35.7 billion in the boom year of 2008. The subsequent economic slowdown forced many private sector projects off the pipeline, and the construction sector was left with excess capacity after completing large jobs.

The arrival of more foreign contractors looking for work as construction demand dries up in markets such as Dubai has exacerbated the situation. 'Competition is high at the moment,' said Lum Chang Building Contractors executive director Tan Wey Pin.

While the current situation does not look too promising, Mr Hauw, Mr Seah and Mr Tan hesitated to write off the year's performance. Construction demand might still meet BCA's full- year forecast if the public sector awards more contracts later this year, they said. One of the most awaited projects is Stage 3 of the MRT Downtown Line.

Still, there is hope. In response to queries from BT yesterday, BCA shared preliminary figures on the value of construction contracts awarded from January to June - about $11 billion.

Going by the agency's mid-year review, another $10 billion to $16 billion worth of contracts are likely to be awarded in the second half.

These projects include the widening of Keppel Viaduct and the conversion of the former Supreme Court and City Hall to the National Art Gallery. Contractors will also be needed for the International Cruise Terminal, Lanxess Butyl's synthetic rubber plant, and various condominium developments.

'This will bring the total construction demand for this year to $21-27 billion, similar to the original projection released by BCA in January,' said a BCA spokesperson.

At yesterday's seminar, Redas launched a new Real Estate Sentiment Index, which it developed jointly with the National University of Singapore's real estate department.

'Redas will work even more closely with higher institutes of learning, professional bodies and government agencies to embark on new initiatives in research and executive programmes,' said Redas president Simon Cheong.

Source: Business Times, 30 Jul 2010

Double-dip recession a part of recovery process?

2010-07-30T17:36:00.000+08:00

THE optimism that emerged in the early stages of the recovery has given way to more sobering assessments of challenges facing the global economy and its constituent national parts.

In many countries, fears have arisen of a prolonged period of slow and occasionally negative growth or, worse, of a Japanese- style 'lost decade' with multiple recessions, or, even worse, of a depression.

But are multiple downturns so unusual in periods of severe economic distress?

The global recession was severe, probably unmatched since World War II. From the start of the crisis in December 2007 to its apparent end last year, the decline in

real gross domestic product (GDP) in the United States was 3.8 per cent.

All the other G-7 economies (Japan, Germany, Italy, France, Canada and Britain) also saw severe recessions in this period. Major middle-income trading economies like Brazil, Singapore, South Korea and Taiwan saw brief but even sharper declines. The downturn was so severe, and for so long, that some used the term 'depression', before settling on 'Great Recession'.

How is a recession defined? Different national statistical agencies define, and thus date, such episodes differently. In the US, recessions are officially dated by a non-partisan, non-profit, private research institution, thus depoliticising the measurement.

The point at which the economy stops growing is called the 'peak', and the 'trough' is when it stops contracting. The period from when the economy starts to grow again until the point at which it reaches the previous peak is the 'recovery'. Growth thereafter is an 'expansion'.

For economists, a recession ends when the economy starts to grow. The economy falls to the bottom of a well, and then, as soon as it begins to climb out of it, the recession is declared 'over', even though it may be a long climb back to the top.

Little wonder, then, that ordinary citizens consider a recession over only when the economy has returned to 'normal', which means that incomes are rising and jobs are no longer desperately scarce.

A common rule of thumb is that two consecutive quarters of falling real GDP constitute a recession. But sometimes recessions don't satisfy this rule. Neither the 2001 nor the 1974-75 US recessions met that criterion. Besides real GDP, employment, income and sales are considered, as are the depth, duration and diffusion of the downturn.

Dating a recession is, at times, a judgment call. America had a brief, sharp recession in 1980, followed by a long and severe one in 1981-82. Many economists believe it was one major episode, and that is probably appropriate, in a broader context.

But the economy did indeed grow in the interim - just barely enough to consider them distinct recessions. And, since they were separated by a transition from president Jimmy Carter to president Ronald Reagan, it was politically consequential that two recessions were identified. Likewise, the recent recession was dated as starting in December 2007, but it could equally well have been dated as starting in mid-2008 because, in the interim, the economy grew.

Double-dip downturns are more the rule than the exception. If we focus on real GDP and define a double dip as a historical sequence in which a period long enough to be declared a recession is followed by recovery, and then quickly followed by a second recession, the 1980-82 period in the US is a classic example. In fact, defined more loosely as a sequence that includes periods of growth followed by periods of decline, followed by further periods of growth and decline, the 1973-75 period, with eight quarters of alternating gains and losses in real GDP, was one quadruple-dip recession.

These are not rare occurrences: About the same time, Germany saw this type of double dip and the UK a quadruple dip. In the early 1980s, Britain, Japan, Italy and Germany all had double dips. America's 2001 recession was one brief, mild double dip. Within the current recession, we have already had a double dip; a dip at the start of 2008, some growth, another long, deep dip, then renewed growth. If the economy declines again - a highly plausible prospect - the US would have a triple dip, although perhaps not an outright second recession.

So history suggests that economies seldom grow out of recessions continuously, without an occasional subsequent decline. Dips - double, triple and quadruple - have been America's recessionary experience since World War II.

While the baseline forecast seems to be slow global growth, history suggests that another decline would hardly be surprising before sustained stronger growth emerges.

The writer is professor of economics at Stanford University. He was chairman of President George H. W. Bush's Council of Economic Advisers from 1989-1993.

PROJECT SYNDICATE

Source: Straits Times, 30 Jul 2010

New index shows property market likely to worsen

2010-07-30T17:35:00.000+08:00

A NEW index tracking the property market shows that developers and other industry players remain positive but believe conditions will cool down from the bullish levels seen in recent months.

More developers also believe the slowing global economy and an increased supply of new development land may hit market sentiment over the next six months.

The Real Estate Sentiment Index, which was launched at a seminar yesterday, also points to rising interest rates and an excessive supply of new property launches as market risks. The index has been jointly developed by the Real Estate Developers Association of Singapore (Redas) and the department of real estate at the National University of Singapore (NUS). It is based on data collected in a quarterly survey of Redas members to get a snapshot of market sentiment. The poll started in the first quarter.

The reading for the second quarter stood at 5.9, down from 6.8 in the first quarter. This shows that while industry players are still positive, they expect market conditions to worsen.

With empirical data, it is always about the past, said Dr Yu Shi Ming, head of NUS' department of real estate.

'With the index, we hope that as soon as a policy is announced, we can get a sense of how the industry feels,' he said.

Redas chief executive Steven Choo said that apart from its members, policymakers, banks and other firms may find it useful.

There have been about 70 respondents for the survey each quarter - about 60 per cent are developers and the rest consultants and other industry figures.

About 51 per cent of developers polled for the second quarter expect prices of new launches to rise, compared with 85 per cent in the first quarter. About 68 per cent expect more new units to be launched over the next six months, compared with 83 per cent in the first quarter.

About half of the developers polled feel the level of interest for public and private development land will remain unchanged in the near term. Developers are most concerned with rising land prices, followed by the cost of building materials and labour.

At Redas' seminar yesterday, Rider Levett Bucknall's managing partner, Mr Winston Hauw, said: 'It's good to tender this year as there's more uncertainty next year. We think prices will go up slightly next year.'

Source: Straits Times, 30 Jul 2010

1,016 new flats on offer in Bukit Panjang, Jurong West

2010-07-30T17:34:00.000+08:00

TWO build-to-order (BTO) Housing Board (HDB) projects that will add 1,016 new flats to the market were launched yesterday. The launch means 9,844 flats have been released in seven months, exceeding the 9,000 units offered for the whole of last year.

The projects are Senja Gateway in Bukit Panjang and Corporation Tiara in Jurong West.

Senja Gateway at the junction of Kranji Expressway and Woodlands Road will have 741 standard flats, comprising 254 studios, 313 four-room flats and 174 five-roomers.

Studios of 35 sq m to 45 sq m will cost $67,000 to $95,000, four-room flats of 90 sq m will be from $242,000 to $306,000 while five-roomers of 110 sq m will go from $308,000 to $398,000.

Corporation Tiara in Jurong West, at the junction of Corporation Road and Yung Kuang Road, will have 275 premium flats, comprising 171 four-roomers and 104 five-roomers.

Four-roomers of between 90 sq m and 93 sq m will cost between $242,000 and $325,000 while five-room flats of 110 sq m to 113 sq m will cost between $304,000 and $389,000.

Under the BTO scheme, flats are built only when a certain level of demand for the project is met.

PropNex chief executive Mohamed Ismail expects this launch to be more than three times oversubscribed as demand is still strong due to the high cash-over-valuations (COV) asked for in the HDB resale market.

He added that the pattern of demand from past BTO launches showed that four- and five-room flats were often the most popular.

'I think demand will be sustained throughout this year and we might even see a record number of BTO flats being launched,' he said.

The HDB said that if demand from first-time buyers is sustained, it is prepared to offer up to 16,000 BTO flats this year. This is a significant supply as the total annual take-up of HDB flats in the last 10 years ranged from 7,000 in 2006 to 16,100 in 2000, with flats left unsold almost every year, the board said.

Buyers can expect about 1,400 flats to be launched in Yishun next month while upcoming projects include areas like Woodlands, Punggol and Sengkang.

The BTO stock will also be supplemented by an upcoming supply of 4,700 units under the design, build and sell scheme (DBSS) and executive condominium scheme such as a site launched for tender in Tampines Avenue 5 last month.

The HDB said it is prepared to launch more DBSS sites if demand keeps up.

Applications for the BTO flats launched yesterday can be made online at www.hdb.gov.sg until Aug 11.

Source: Straits Times, 30 Jul 2010

The Scala: Crowd ballots for chance to buy

2010-07-29T20:38:00.002+08:00

Units fetch average price of $1,150 psf

The public launch of The Scala yesterday drew a huge turnout and defied official data of slowing private home sales in recent months. Over a thousand property buyers turned up and balloted for a chance to make a purchase.

The developer, Hong Leong, said it had sold over 75 per cent of the 468 units available as of yesterday. It said the units, sized between 474 and 2,142 square feet, were sold at an average of $1,150 per square foot.

Hong Leong also said that the buyers comprised a good mix of HDB upgraders and investors, with local buyers making up the majority.

Buyers who spoke to MediaCorp said properties in the central area were out of their price range. Instead, they picked The Scala because of its suburban location.

One of them is Mr Andrew Low, 43, an IT manager at an insurance firm, who wanted to buy a two-bedroom unit for investment. He said: “The Scala should not be affected by the recent dip in private sales. It is close to the Lorong Chuan MRT and near the NEX Mega Mall. I see a 10- to 20-per-cent increase in prices in two years.”

Some buyers were also encouraged by the potential rental yields as they reckon that the units can attract expatriates due to their proximity to international schools.

“If I rent it out, I’m looking at a monthly rent of between $3,000 and $4,000 a month. If not, I can move in here myself,” said Mr Low.

Also looking for a two-bedroom unit was Mr Zhao Han, a permanent resident from China, who had been working here as a technical specialist in the automotive industry for three years.

He said: “Mainland Chinese have too much cash but they can only invest in property because other sectors like manufacturing and enterprises in China have not been fully developed yet.”

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said that bullish property investors may be willing to pay a premium and push the property prices higher still. “At $1,150 psf, the price can still go up to $1,200 and some units may even reach $1,250,” he said.

Source: Today, 29 Jul 2010

Most firms less bullish about Q3 growth: Poll

2010-07-29T20:24:00.002+08:00

THE threat of a fallout from the euro zone debt crisis has dented the confidence of some local firms, but most remain optimistic going into the third quarter, according to a new survey.

Bosses polled by credit rating firm D&B Singapore were largely positive and expect increases in profits, sales and new orders over the next three months.

D&B said the optimism was mainly down to the strong performance of key sectors here, with construction, services and manufacturing leading the way.

Ms Audrey Chia, a D&B senior director, also singled out the biomedical and electronics sectors as star performers, as the global recovery continues.

'A positive business outlook was observed across the board (for the third quarter) with the overall optimism index for both net profit and employment maintaining in the positive region,' she said.

'Nevertheless, the anxiety from Europe's sovereign debt crisis and the global financial fragility are starting to take their toll on overall business confidence with reported figures appearing less robust than in the previous quarter.'

Although less optimistic, most of the 200 companies polled by D&B still had high hopes for the third quarter.

The survey was to compile the Business Optimism Index (BOI), which compares the net percentages of the respondents' expectations in areas such as sales, profits and hiring activities with those in the previous quarter. A positive reading indicates optimism, a zero reading signals no change, while a negative one means the respondent expects a drop in performance.

'The majority of companies surveyed have indicated continued optimism towards their third-quarter performance for sales volume, net profit, selling price, employment and inventory,' said Ms Chia. 'Although overall sentiment is less bullish than in the second quarter.'

Compared with second-quarter figures, the third-quarter index for net profit dipped from 45 per cent to 26 per cent, sales volume from 41 per cent to 29 per cent, and new orders from 42 per cent to 35 per cent.

The BOI for employment also dipped from 14 per cent to 13 per cent, although it remained in the positive range for the fifth quarter running.

However, selling prices are expected to rise moderately in most sectors, led strongly by the mining, services and construction sectors, said Ms Chia.

The BOI results were also in line with similar studies done in recent months.

Last week, the HSBC Small Business Confidence Monitor revealed that small and medium-sized enterprises here were among the most confident in Asia, with more investing to expand in the first half of this year. The official growth forecast for the year was revised upwards last month from 7 to 9 per cent to 13 to 15 per cent.

With Singapore set for record growth, it came as no surprise that businesses were in a buoyant mood. Mr Alex Lau, managing director of Anacle, one of Singapore's fastest growing technology start-ups, said he was 'extremely positive' about the outlook for the rest of the year. 'Our order books have already surpassed our expectations, but the real question is how much of the recovery is driven by real demand and not government stimulus.'

Source: Straits Times, 29 Jul 2010

Exodus of property agents expected

2010-07-29T20:23:00.001+08:00

New rules on education level likely to shrink pool, but lifeline exists

THOUSANDS more property agents are set to bail out of the industry over the next 17 months due to tough new rules being introduced by the Government.

The regulations will impose a basic educational standard - a minimum four GCE O-level passes - on estate agents.

There are now no such requirements and no mandatory examination, so anyone can easily become a property agent.

While the new rules allow agents who do not meet the educational requirements to sit an industry exam to earn qualification, the immediate effect will be an exodus from the industry, say experts.

ERA Asia-Pacific associate director Eugene Lim estimates that the number of agents who do not have four O-level passes may comprise up to 30 per cent of the 30,000-strong pool of agents.

Experts forecast a drop of up to 25 per cent to 30 per cent in the number of agents by the end of next year.

About 15 per cent to 20 per cent will drop out by the end of this year, and possibly another 10 per cent by the end of 2011, although new ones may join, said Mr Lim.

But there is a lifeline for existing agents once the rules kick in later this year.

The Ministry of National Development (MND) recently told real estate agencies that agents who have done at least three property deals over the past two years will not need to have the minimum O-level passes.

But they will need to pass the new mandatory exam for agents within a year from January 2011.

This means that older, experienced full-time agents who do not have the four O-levels or the equivalent will have more time to pass the industry exam.

New agents who may have joined the industry earlier this year will also benefit as they will be able to complete three deals fairly quickly, said Dennis Wee Group director Chris Koh.

Under the new rules, agents need to have a minimum educational requirement and take an industry exam.

They will also have to register through their firms at a new statutory board called the Council for Estate Agencies.

But the expected clear-out should not affect the industry too much, given the big number of agents, including inactive ones.

'Nobody knows exactly how many agents are out there. Many agencies have not done any housekeeping at all. I won't be surprised if some names are repeated at different agencies,' said Mr Koh.

He recently let go of 1,500 inactive agents, leaving 3,500. That was after he tried to recall all agents to update their particulars to meet MND requests.

Mr Koh said the 1,500 agents had not done any deals in a year and had failed to update their particulars. Some quit as they are in the civil service and do not want their names in the public registry, as is required under the new rules.

'Every month, I bring in new agents and let go of some inactive agents. But previously, there was no urgency to terminate so many,' Mr Koh said.

At HSR Property Group, executive director (agency) Jeffrey Hong said the firm will do a 'screening exercise' in the next two weeks. It now has 7,000 agents and has not had a regular practice of terminating inactive ones.

There has been little change at the other two big agencies - ERA and PropNex - as they have been doing their housekeeping.

ERA's Mr Lim said: 'We do not need to chop just because of the new rules. On average, we let go of about 100 inactive agents every month. Our sales force is about 3,000-strong and it is active.'

PropNex chief executive Mohamed Ismail added: 'I let go of 2,800 agents two years ago and another 1,200 this January.

'All my agents are covered by professional indemnity insurance and are active. My next audit will be in October.'

Source: Straits Times, 29 Jul 2010

Mass market condos still hot property

2010-07-29T20:23:00.000+08:00

200 units at The Scala in Serangoon snapped up at launch yesterday

HUNDREDS of eager buyers yesterday braved the early morning rain, making a beeline for the public launch of Hong Leong's The Scala, as keen interest in mass market condominiums shows no sign of abating.

Demand for the 300 or so remaining units of the 99-year leasehold project near Lorong Chuan MRT station was so strong that balloting was needed to sort out who got to enter the showflat first.

By late morning, more than 800 property agents and potential buyers who had submitted blank cheques had packed the balloting tent at the condo site in Serangoon Avenue 3. This is the biggest turnout at a mass market public launch since Trevista in Toa Payoh and Hundred Trees in the West Coast area were launched late last year.

A private preview was held on Tuesday for Hong Leong staff and buyers who had registered their interest with the developer. About 150 units were sold then.

Hong Leong said that as of yesterday, more than 75 per cent of the project's 468 units had been sold. That means more than 350 were sold, of which about 200 went yesterday.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said the condo had set a benchmark price for new projects near MRT stations in the north-east.

'There is a demand for mass market homes among investors and they generally feel more comfortable buying projects near MRT stations,' he said.

Mr Colin Tan, research and consultancy director of Chesterton Suntec International, said: 'The market is still hungry, and the proximity of the project to the Circle Line has given (buyers) a reason to buy.' He said worries over the euro debt crisis had receded so buying sentiment had turned positive again.

Property experts say the strong demand for mass market homes is expected to continue, with prices set to rise about 7 per cent in the second half of this year.

The Government is rolling out a record number of residential sites in the second half of this year, and has assured buyers that there will be no shortage of homes.

Units at The Scala, in five residential towers, are between 474 and 2,142 sq ft each and range from one- to four-bedroom apartments. They were sold at an average of $1,150 per sq ft (psf).

In terms of total price, the smallest units were priced from $600,000 while the four-bedders were from $1.5 million.

Hong Leong said the buyers, mainly locals, comprised a good mix of HDB flat upgraders and investors.

Most buyers The Straits Times spoke to listed as key selling points the project's close proximity to newly opened Lorong Chuan MRT station and the range of amenities such as the NEX mega mall due to be completed next year.

Some buyers also cited nearby schools such as the Australian International School and the Stamford American International School. They said this could mean high rental yields.

Sales executive Tammy Lim, 30, bought a two-bedroom unit. She said the project is near her parents' home.

In addition, the project is close to schools that her three-year-old daughter could attend later, she said. 'Prices keep increasing. We decided to buy now rather than keep waiting.'

Nearby Chiltern Park condo, completed in 1995, saw an average selling price of $746 psf for five units sold last month, according to caveats lodged with the Urban Redevelopment Authority.

The Scala is expected to be completed in the first quarter of 2014.

Source: Straits Times, 29 Jul 2010

Why flats were taken back

2010-07-29T20:22:00.001+08:00

IN AN unprecedented crackdown on illegal subletting, the Housing Board (HDB) has taken action against four flat owners and compulsorily acquired their flats.

These owners did not live in the flats they purchased and sublet their homes without meeting the minimum period of occupation - five years for subsidised flats and three years for non-subsidised flats - or obtaining the HDB's approval.

Locked out, then found out

The owner sought the HDB's help in getting into his flat after he was locked out of it.

That was when he was found out. He had allowed his three-room flat in the western part of Singapore to be used as collateral for a loan. His moneylender had sublet the flat as repayment.

After he got back into his flat, the HDB reminded him repeatedly that he had to resume occupation of it and evict the tenants.

But he did neither, even after he was given a grace period.

The HDB thus took over the flat.

Let out too soon

She let out her flat without the HDB's approval only a year after she had bought the property. The HDB requires home owners to live in their flats for a minimum period before they can let them out.

Though she did as told by the HDB and evicted her tenants, she failed to move back in, and left the flat empty.

The HDB then took over the flat.

Didn't live in matrimonial home

She bought the flat with her former husband, a foreigner, while they were married.

But she never moved in. Instead, she lived abroad and sublet the flat without meeting the minimum occupation period or getting approval from the HDB.

When their marriage broke down, her ex-husband wrote to the HDB to say that the flat was never intended as their matrimonial home and he had, in fact, never even seen it.

Even after she returned to Singapore, she chose to live with her family and not in her own property.

The HDB proceeded to acquire the flat.

Sublet to religious group

The flat owner lived in another home with her family while she sublet her unit to a religious group.

The flat was compulsorily acquired on the grounds that it was let out without the HDB's approval and that the owner did not resume occupation.

Source: Straits Times, 29 Jul 2010

HDB seizes flats of four home owners

2010-07-29T20:21:00.001+08:00

Six other flat owners fined, in clampdown on illegal subletting

FOUR Housing Board home owners lost their flats in the first five months of this year, after the HDB launched an unprecedented crackdown on those who let out their flats illegally.

Six others have been fined amounts that ranged from $4,200 to $14,400.

Making good its earlier pledge to clamp down on illegal subletting, HDB inspectors checked 2,600 homes from January to May, four times more than in the preceding five months last year.

Some 2,300 flat owners are in the clear, but of the 300 still being investigated, 59 cases have been classified as suspicious.

The crackdown comes after measures announced in March to ensure that heavily subsidised HDB flats are used as homes, and not as money-making tools.

For example, the minimum occupation period for resale flat buyers before they can sell the flat was lengthened to three years, up from as short as one year, to cool speculative demand for HDB flats.

The Government had said that illegal subletting was not rampant, but it also gave the assurance that it would step up enforcement against owners who flouted the rules to milk rental income.

The HDB confirmed that this is the biggest number of flats checked and compulsorily acquired over a five-month time frame.

In the preceding two years, the HDB repossessed four flats out of 56 illegal subletting cases. The other 52 were fined amounts ranging from $1,000 to $21,000.

'HDB flats are primarily meant for owner occupation. Subletting of HDB flats without HDB's approval is an infringement of the lease conditions,' its spokesman said yesterday.

As of the end of last month, 30,500 HDB flat owners, or 3.6 per cent, out of a total of 841,000 flat owners have obtained approval to sublet their flats.

In the latest blitz, the spokesman said that in all 10 cases, the flat owners were not living in their homes and had sublet the whole flat without HDB approval.

She said a fine would generally be imposed on first-time offenders, unless their actions were particularly blatant, such as repeatedly ignoring HDB reminders to evict tenants.

Then, under the HDB Act, it would resort to compulsory acquisition, returning the owner only the value at which he had bought the flat.

A penalty would also be deducted from that amount.

The HDB cited one case in which a woman bought a flat with her then-husband but stayed overseas all the while.

When the marriage broke up, the ex-husband confirmed that they had no intention of living in the flat, which had been sublet before the expiry of the minimum occupation period.

One owner even allowed his moneylender to let out his flat to collect rent that constituted his debt repayment.

The HDB also found cases where flat owners skirted subletting rules by locking up one room and renting out the rest of the flat.

The rules mandate that owners can sublet their whole flats only after they fulfil the minimum occupation periods of five years for subsidised flats and three years for non-subsidised flats.

Approval must be obtained from the HDB, with caps on the number of sub-tenants allowed, based on flat size.

Former chairman of the Government Parliamentary Committee for National Development Charles Chong said the crackdown will 'send out a very strong message that the flats are not for people to make money, but for accommodation'.

There had been public concern that illegal subletting was indirectly linked to rising resale prices.

However, property analysts interviewed said that stricter enforcement is unlikely to have a significant impact on the market.

Said group managing director Danny Yeo of Knight Frank real estate consultancy: 'There are many illegal subletters, but compared to the total number of flats available, the numbers are small.'

Mr Gerard Thomas, marketing director of SHL Realty, said: 'There are also external factors to consider, for example, what the economy is like, whether there are any disasters.'

Mr Thomas added that the stricter enforcement would reduce the incentive for people to sublet illegally because the 'price is too high to pay'.

About three in every 10 cases in the crackdown came from public tip-offs.

While flat owners who rent out rooms do not need HDB approval, they must register the subletting details within a week, on pain of a fine of up to $3,000.

This move helps track tenants who use the flat addresses to borrow from loan sharks.

A six-month grace period for those who had sublet their flats before the start of February expires at the end of this month.

Those who want to report on illegal subletting can call the HDB on 1800-555-6370.

Source: Straits Times, 29 Jul 2010

Iskandar shows more promise

2010-07-29T19:57:00.001+08:00

WHEN the two Prime Ministers of Singapore and Malaysia announced recently, and rather unexpectedly, a resolution to the long-standing issue of Malaysian railway land, there was a quiet sense of relief on both sides. But for none more so than among the backers of Iskandar Malaysia, an ambitious concept mooted in 2006 by the Malaysian government with the vision of transforming greenfield clusters in Johor into a sustainable and prosperous metropolis by 2025.

Singapore's initial response to the mega development plan was lukewarm. Singapore businesses viewed warily the rosy forecast of lucrative investment opportunities in waterfront projects and building and operating educational institutions and theme parks. The onslaught of the global financial crisis in 2008 did not help matters and Iskandar developments appeared to be moving slowly.

However, to the credit of the project's planners and managers, and the commitment of the Malaysian government, hundreds of millions of dollars have been sunk into developing the necessary infrastructure. Roads and highways were built, rivers cleaned up, and water and energy services to the area upgraded. In short, Malaysia's planners spared no effort and now the development is ripe for takeoff.

Private investments have been picking up. The catalytic driver of investments for the area, Iskandar Investments, signed on some major projects and achieved its own target for joint ventures. Indeed, Iskandar Malaysia is reported to have gone beyond its target of achieving US$13.2 billion in investments by 2010. However, there can be no denying that Singapore investors have been by and large in 'wait and see' mode.

Several business delegations have gone across from Singapore over the past two years to take a look at the region and see developments for themselves. But except for a few small investors, there was no notable commitment from a Singapore party - until recently, when the Management Development Institute of Singapore (MDIS) announced one of its biggest forays overseas, a $128 million investment to set up a 30-acre campus in an area within Iskandar's EduCity. The new facility will be about five times bigger than its Singapore campus.

Now that political reassurances have been made, and basic infrastructure is in place, will potential investors from Singapore take the plunge? Already Temasek Holdings is eyeing some 200 hectares of land in the development zone for a medical and wellness centre. This must be the clearest signal that the Malaysian project has got that it is ready to fly.

But while government assurances and commitments are necessary, nothing can replace the hard-nosed approach of business people, who base their decisions purely on investment returns. How much, and how quickly, private investment flows into Iskandar Malaysia will be the real test. But it must be said that the prospects now look better than at any time since the project's launch.

Source: Business Times, 29 Jul 2010

Hang Lung profit rises on HK apartment sales

2010-07-29T19:56:00.003+08:00

(HONG KONG) Hang Lung Properties Ltd, the best performer in the Hang Seng Property Index this year, said full-year profit excluding gains from revaluations more than doubled after it sold more apartments in Hong Kong.

Net income excluding revaluation gains and deferred tax rose to HK$6.67 billion (S$1.2 billion) in the 12 months to June 30 from HK$2.39 billion a year earlier, the developer said in a statement to the Hong Kong stock exchange yesterday. That fell short of the average estimate of HK$6.96 billion from 12 analysts surveyed by Bloomberg.

Hong Kong's third-biggest developer by market value said full-year property sales jumped after it sold more luxury apartments at its HarbourSide project. Hong Kong home prices have risen 38 per cent since early 2009, fuelled by record-low mortgage costs, near-zero interest rates on savings deposits and buying by rich mainland Chinese.

Luxury home prices in the city may rise 10 per cent by the end of this year after already gaining 10 per cent in the first half, property consultant Jones Lang LaSalle Inc said last week.

'I'm optimistic about Hong Kong's luxury market in the long run,' Hang Lung chairman Ronnie Chan said at a press briefing yesterday.

The company sold 425 garden-view units at the HarbourSide development in West Kowloon and recorded profit from property sales of HK$5.26 billion, compared with HK$3 million a year earlier.

The shares fell 3.1 per cent to HK$32.60 at the 4pm close in Hong Kong, while the Hang Seng Property Index lost one per cent. The stock is up 6.5 per cent this year compared with a 3.6 per cent decline in the seven-member property index.

Hang Lung, which has two office and shopping mall complexes in Shanghai and one in Shenyang and is building several others in cities such as Wuxi and Jinan, said projects in China are progressing 'well'.

Rental profit from mainland China rose 14 per cent to HK$1.6 billion, it said.

The developer is seeking to buy more prime sites in China, according to yesterday's statement.

'We'll stay focused on mainland China's high-end commercial leasing properties, and focus primarily on second-tier cities, which generate returns as good as the first-tier cities,' Mr Chan said. 'China's system is flooded with money.'

Rental profit from its Hong Kong investment properties was little changed at HK$2.1 billion. Hang Lung owns the Hong Kong headquarters of Standard Chartered plc.

Hang Lung also booked a HK$21.2 billion gain reflecting the increased value of real estate held for investment, against a HK$3.5 billion gain the same period the previous year.

Including those gains, net income for the year surged more than 400 per cent to HK$22.3 billion, or HK$5.30 a share, from HK$4.13 billion, or 99 Hong Kong cents a share, a year earlier.

The company is the first of the city's biggest builders to announce earnings. Cheung Kong (Holdings) Ltd, Hong Kong's second-biggest developer controlled by billionaire Li Ka-shing, will report on Aug 5. Sun Hung Kai Properties Ltd, the city's biggest developer, and Sino Land Co will likely report next month.

Hang Lung will pay a final dividend of 54 Hong Kong cents, from 51 cents last year. -- Bloomberg

Source: Business Times, 29 Jul 2010

HK site fetches HK$10.4b, close to estimates

2010-07-29T19:56:00.000+08:00

Auction atmosphere not as good as expected, with no aggressive bidding

(HONG KONG) Nan Fung Development Ltd and Wharf (Holdings) Ltd bid HK$10.4 billion (S$1.85 billion) for a building site in Hong Kong's Peak district yesterday at an auction that was close to surveyors' estimates.

The price for the Mt Nicholson Road site in one of the city's most exclusive residential areas was lower than the HK$10.5 billion median estimate of seven analysts in a Bloomberg News survey.

Their forecasts ranged from HK$8.9 billion to HK$11.5 billion, or HK$27,000 to HK$35,000 per square foot of gross floor area.

The government has been trying to curb a 38 per cent surge in home prices since the beginning of 2009 amid concerns housing is out of reach of ordinary residents. The Hang Seng Property Index turned lower after the auction result, ending down one per cent at the 4 pm close in Hong Kong.

'The market is worried we're going to have a bubble burst again like after 1997,' when the market peaked, said Trevor Cheung, an analyst at BNP Paribas in Hong Kong.

Hong Kong's luxury home prices have been fuelled by record-low mortgage costs, near-zero interest rates on saving deposits and buying by mainland Chinese. The city's home prices have gained 9.6 per cent this year and last week rose to the highest since 1997, according to Centaline in a July 23 report.

Luxury home prices may rise another 10 per cent in the second half if interest rates stay at two-decade lows and the local economy keeps growing, property consultant Jones Lang LaSalle said this month.

Nan Fung, a privately held developer, and Wharf will develop the site in a 50-50 venture, said Donald Choi, managing director at Nan Fung, after the auction. Wharf owns two of Hong Kong's largest shopping centres and the city's cable TV operator.

The site at 103 Mt Nicholson Road, formerly used for government staff quarters, has a total gross floor area of 324,861 square feet (30,180 square metres). The auction was initiated by the government, which has pledged to increase land supply as part of its measures to keep home prices in check.

About 30 per cent of the gross floor area at the plot will be used to build townhouses, while the rest will be used for apartments, Mr Choi said. At HK$10.5 billion, the developers paid HK$32,014 per square foot for gross floor area.

It is a 'unique site in a very rare location' and there are not that many sites at the Peak, Mr Choi said. He said the price was 'reasonable.' Martin Lee, the youngest son of Henderson Land billionaire chairman Lee Shau-kee, in May paid HK$1.82 billion, or a record HK$68,200 per square foot, for a site on Barker Road in the Peak district at an auction held by Jones Lang. Mr Lee said afterwards he would use the site to build houses for his family.

'Hong Kong land prices are already so expensive,' Hang Lung Properties Ltd chairman Ronnie Chan said at the company's full-year earnings briefing as the auction elsewhere in the city got underway. 'With that kind of price we can develop three or even four Hang Lung plazas in Shenyang' in north-eastern China, he said, referring to estimates of about HK$10 billion for the Peak site.

Most government land sales in recent years have been triggered by developers who promised to pay minimum amounts for sites on a list of available plots under the so-called land application system. Regular government land auctions were halted in 2004 to support falling home prices.

Yesterday's auction attracted four bidders, with only two vying for the site from HK$9 billion.

'The atmosphere was not as good as we expected; there was no aggressive bidding at all,' said Alnwick Chan, executive director at property consultant Knight Frank LLP.

'The demand is there but the market is relatively small. There's speculation that because there are three other sites coming up to auction catering to the middle to upper income groups, they're saving their resources for that.'

The government will sell two sites in the Kowloon area at auction on Aug 17 and a residential plot in Kowloon Tong district on Aug 31.

Demand for luxury properties is being supported by a lack of new supply and an influx of mainland Chinese buyers, who account for about 20 per cent of local residential transactions this year, Ricky Poon, managing director for residential sales at Colliers International Ltd, said before the auction.

'This is a normal price; for a luxury site, demand is always there because developers are not taking a lot of risks,' said James Cheung, a director at the surveyor unit of Centaline Properties Ltd, one of the city's biggest real estate agencies.

'There will continue to be a healthy growth in Hong Kong's property market.' Nan Fung paid HK$3.42 billion in May for a site in the city's Tung Chung area in the government's first land auction in the fiscal year that started April 1. The price was a third less than surveyors' estimates.

Sun Hung Kai Properties Ltd, the world's biggest developer by market value, last month bought a site in the Ho Man Tin district for HK$10.9 billion. At HK$12,540 per square foot, it was the highest price paid in a government auction in urban Hong Kong since the market peaked in 1997. The gross floor area for the site is 869,000 square feet.

Luxury homes in Hong Kong are those at least 1,000 square feet or costing at least HK$10 million. -- Bloomberg

Source: Business Times, 29 Jul 2010

More than 75% of The Scala sold

2010-07-29T19:55:00.001+08:00

MORE than 75 per cent of the Hong Leong group's latest residential project, The Scala, has been sold at prices averaging $1,150 per square foot.

The 468-unit development in Serangoon Avenue 3 was publicly launched yesterday.

Hong Leong said yesterday that the units sold at the 99-year leasehold project are spread across five residential towers that feature one to four-bedroom units ranging from 474 square feet to 2,142 sq ft.

Buyers comprise a mix of Housing & Development Board upgraders and investors, with the majority being Singaporeans.

Betsy Chng, Hong Leong's head of sales and marketing, attributed the strong response to the project's location, unique features, finishing and pricing.

The Scala is next to the Circle Line's Lorong Chuan MRT Station and near several schools, including St Gabriel's Primary, Yangzheng Primary, Nanyang Junior College, the Australian International School, Stamford American International School and Lycee Francais de Singapour.

It is also close to a bus and MRT interchange at Serangoon Central, and the soon-to-be-opened NEX mega mall.

The project is slated for completion in the first quarter of 2014. Apart from the usual condominium facilities, The Scala will have features such as pavilions with wood-fired pizza ovens and teppanyaki hotplates, a Harvest Garden and a Green Gazebo.

Source: Business Times, 29 Jul 2010

Shanghai's Peace Hotel opens after restoration

2010-07-29T19:54:00.000+08:00

(SHANGHAI) The city's Peace Hotel, which once accommodated Charlie Chaplin and other celebrities, opened to guests yesterday after three years of restoration, the managers said in a statement.

Fairmont Peace Hotel will be managed by Chinese hotelier Shanghai Jin Jiang International Hotels (Group) Co and Fairmont Hotels & Resorts Inc, which runs the Savoy hotel in London.

Jin Jiang, which operates more than 600 hotels in China, spent HK$500 million (S$88 million) to restore the building.

Some of the main features of the hotel have been kept, including the lobby with an Octagon ceiling, the hoteliers said.

Rates start from 2,300 yuan (S$464) and go as high as more than 7,000 yuan for a night, the hotel's general manager, Kamal Naamani said at a press conference.

The hotel has 270 rooms including the so-called Nine Nations Suites.

The building, located on the Bund promenade overlooking the Huangpu River, has six restaurants and lounges, including the Jazz Bar patronised by former US Presidents Jimmy Carter and Ronald Reagan.

The Indian, English, Chinese and American suites have been preserved, while the French, Italian, Spanish, Japanese and German rooms were redesigned.

The hotel was previously called the Cathay Hotel and was built by British businessman Victor Sassoon, opening in 1929. The art deco property reopened as the Peace Hotel in 1956.

Jin Jiang also has an agreement with Swatch Group AG to develop the south wing of the old Peace Hotel, called Swatch Art Peace Hotel, part of which will serve as an arts centre. -- Bloomberg

Source: Business Times, 29 Jul 2010

HDB steps up checks on unauthorised sub-letting

2010-07-29T19:53:00.002+08:00

THE Housing and Development Board has cracked down on unauthorised sub-letting. Almost four times as many checks were carried out in the first five months of this year - 2,600, versus 690 between August and December 2009.

About 70 per cent of the 2,600 checks were routine inspections. The others were carried out after public feedback.

HDB said it has taken compulsory acquisition action against four flat owners this year and fined six others for unauthorised sub-letting.

Those whose flats were repossessed were not staying in them and had sub-let without HDB approval.

Owners are allowed to sub-let whole flats only after occupying them for at least five years if they are subsidised flats, or three years if they are non-subsidised.

Owners must also obtain written approval from HDB before sub-letting an entire flat. Different flat types have different limits on the number of sub-tenants allowed. One and two-room flats are allowed four sub-tenants, three-rooms are allowed six and larger flats are allowed up to nine sub-tenants.

Approval is not required for sub-letting of rooms, but flat owners must let HDB know within seven days of doing so.

Source: Business Times, 29 Jul 2010

Developer sentiment still positive for H2: survey

2010-07-29T19:52:00.000+08:00

But Q2 consensus as indicated by net balances weaker than in Q1 poll

MORE respondents polled for Real Estate Developers' Association of Singapore's (Redas's) and NUS Department of Real Estate's (DRE's) Q2 2010 survey were still positive rather than negative on the overall performance of the prime and suburban residential markets over the next six months. However, the consensus as indicated by the net balances was weaker compared with the Q1 survey.

A net balance of +32 per cent of respondents in Q2 said that they expect better future market performance (over the next six months) in the prime residential sector, down from a +54 per cent net balance in Q1.

Likewise, the net balance of respondents who indicated better future market performance for the suburban private housing sector also slipped from +38 per cent to +27 per cent.

For an assessment of current market performance (now compared with six months ago), the net balance also declined from +79 per cent to +43 per cent for the prime residential sector. In the suburban housing segment, the net balance for current performance fell from +69 to +47 per cent.

Net balance is defined as the difference between the proportion of respondents who have selected positive options (such as 'Better') and the proportion of respondents who have selected the negative options (such as 'Worse').

The respondents who selected the neutral option (such as 'Same') are omitted from the calculation. A '+' sign in the score denotes a net positive sentiment (optimism) and a '-' sign indicates net negative sentiment (pessimism). The derived net balance scores are not weighted by the size of the respondents' business.

Market watchers said the survey findings tallied with ground feedback. Generally, sentiment for the private housing market was less upbeat in Q2 as the sovereign debt problems in European economies unfolded. Some potential buyers also felt priced out of the market after rapid price increases and took a break during the World Cup and June school holiday season.

On the other hand, the outlook for the Singapore office sector improved in April-June as net office take-up continued to increase against the backdrop of the Republic's economic recovery.

Reflecting this, the survey shows net balance of +63 per cent in Q2 for future performance of the office sector, an improvement from the Q1 figure of +43 per cent. A lower percentage of developers in Q2 expect stronger interest in land sales - both the Government Land Sales (GLS) Programme and private sector en-bloc sales market - over the coming half year compared with those polled in Q1.

About half of the developers in the latest survey said that the level of interest for both sources of land will remain unchanged in the next half year.

Only about 27 per cent of developers surveyed in Q2 expect more interest in the GLS Programme in the next half year, down from 71 per per cent in Q1.

Similarly, in Q2, 31 per cent of developers forecast a higher interest level in the en bloc sales market, down from 61 per cent in the preceding quarter. Of developers polled in April-June, about 24 per cent and 15 per cent foresee lower interest in GLS and en bloc sales respectively in the next half year.

Developers were also asked to identify the potential risks that may adversely impact market sentiment in the next six months.

In the second quarter, about 73 per cent and 63 per cent view a global economic slowdown or decline and an increase in supply of new development land respectively as the key threats - significantly higher than the 56 per cent and 44 per cent recorded in the previous quarter.

Other major risk factors listed by developers in the latest Q2 survey include rising interest rates (49 per cent of developer respondents) and excessive supply of new property launches (54 per cent).

Notably, about 49 per cent of the developer respondents were concerned with government intervention to cool the market over the next six months, significantly lower than the 81 per cent registered in Q1 this year.

Following government measures to cool the market in September last year and February and the record GLS programme for second half 2010 announced in May, the market probably read that the danger of further cooling measures has receded for now, say market watchers.

Among development cost concerns over the coming half year, developers said that their biggest worry is rising land prices, building materials cost and labour cost, with 90, 76 and 73 per cent respectively of developers polled expressing a moderate to high level of concern.

Interestingly, the percentage of developers who are 'very concerned' about escalating land cost fell from 83 per cent in Q1 to 35 per cent in Q2. 'This could be due to the unexpected or suddenness of the spike in land bid prices seen at state tenders in Q1. In contrast, the 'shock effect' probably lessened as more tenders closed in the second quarter. However, I must emphasise that rising land cost is a very major issue for the development business,' says Redas CEO Steven Choo.

Source: Business Times, 29 Jul 2010

Greek villas marked down 45% as crisis devalues island homes

2010-07-29T19:49:00.002+08:00

(MADRID) Greek island homes, long coveted by millionaires and Hollywood stars such as Tom Hanks, are being marked down by as much as 45 per cent as the country's debt crisis destroys demand for holiday getaways.

A half-built villa on Mykonos, an island in the Aegean Sea known for its all-night beach parties, is being offered by brokers at Athens-based Ploumis Sotiropoulos OE for 2 million euros (S$3.5 million) after the price was reduced by 500,000 euros. The same firm is seeking a buyer for a three-bedroom home on Corfu for 750,000 euros, down from an original asking price of 1.4 million euros. So far, no bidders have emerged.

'It's a scary place to invest right now,' said Mike Braunholtz, a broker at Prestige Property Group, which markets properties on the Greek islands. 'Things aren't going to improve until the economic picture becomes clearer.'

Greece is counting on a 110 billion euro bailout from the European Union and the International Monetary Fund (IMF) to avert a default and end the nation's first recession since 1993. Prime Minister George Papandreou, having raised taxes and cut civil service wages, is imposing luxury property taxes to convince voters that the wealthy also are helping foot the bill.

Mr Papandreou's austerity package calls for an extra levy on properties valued at more than 5 million euros. Owners of homes worth more than 400,000 euros also will pay higher taxes.

The programme puts pressure on homeowners and debt-laden developers to lower prices, said Ioannis Kaligiannakis, an Athens-based property analyst at Colliers International Hellas.

Greece, which borders Albania, the Republic of Macedonia, Bulgaria and Turkey, has more than 1,000 islands and the 10th- longest coastline in the world. The country attracts about 15 million visitors a year, according to data compiled by the Hellenic Statistical Authority.

Property declines have been smaller in Spain, Portugal and Italy. Prices for luxury homes have dropped 8-10 per cent in Spain from the peak in 2008, according to Idealista.com, the country's largest real estate website.

The market is holding steady in Portugal, where 832 kilometres of coastline and the archipelagos of Madeira and Azores attract about 13 million tourists each year, said Liselore Ligtermoet, a Lisbon-based marketing manager at International Realty Group. 'We're not seeing bargain hunters here,' he said.

Discounts also have been hard to find in Italy since the country emerged from recession in the third quarter of 2009, said Angelo Savioli, a director at Sotheby's International Realty in Rome. 'Prices are actually rising in areas such as Rome, Venice, Milan and Florence,' he said.

Greece plans to increase the so-called objective value it places on real estate for tax purposes next year. The system depends on an assessment of a property's value based on the area and amenities, rather than on the actual market value, which is usually higher.

State revenue will increase next year with the new programme, Finance Minister George Papaconstantinou said on July 5.

'The tax overhaul is certainly a concern for property investors in Greece,' said Liam Bailey, head of residential research at Knight Frank LLC in London. 'These measures specifically target the rich, higher-end buyer.'

Prestige is marketing a three-storey, eight-bedroom villa with a swimming pool on Mykonos for 4.1 million euros, down from 5.5 million euros. More than a third of the island's 11,000 residents are foreigners, according to its official website.

Tom Hanks, Oscar-winning star of Forrest Gump, and his wife Rita Wilson, an actress whose father was born in Greece, have a property on Antiparos, according to a spokeswoman for the island's Community Council.

House prices on the mainland also are falling. Ploumis Sotiropoulos is helping sell a 450 square metre villa in Ekali, a wealthy suburb of Athens where former premier Andreas Papandreou lived until his death in 1996, for 2 million euros. The asking price has dropped 48 per cent.

'It's tough this year,' said Giannis Ploumis, CEO of Ploumis Sotiropoulos. 'More properties are on the market and fewer buyers are willing to invest.'

The economy will contract by about 4 per cent this year and by 2.6 per cent in 2011, according to estimates from the Greek Finance Ministry.

Greece is losing its cache with potential buyers 'simply looking at other places', said Mr Bailey of Knight Frank.

France is gaining in popularity as it offers plenty of bargains and the country's economic prospects make the market more attractive than Greece, Mr Braunholtz said. -- Bloomberg

Source: Business Times, 29 Jul 2010

Dubai office rents drop 17% in Q2

2010-07-29T19:48:00.002+08:00

(DUBAI) Office rents in Dubai dropped by as much as 17 per cent in the second quarter as new supply put pressure on landlords, CB Richard Ellis Group Inc (CBRE) said.

About 240,000 square metres of commercial space became available in areas such as Al Barsha, Tecom C and Jumeirah Lakes Towers, Matthew Green, head of United Arab Emirates research at CBRE, said in a report yesterday.

Rates at the Dubai International Financial Centre (DIFC), a tax-free hub that's home to hundreds of companies, dropped by 7.5 per cent to 3,982 dirhams (S$1,481) a square metre when offered by DIFC authority and 2,690 dirhams to 3,014 dirhams when offered by private developers, according to CBRE.

Companies in Dubai have shed thousands of jobs since the onset of the global credit crisis, increasing office vacancy rates.

Available commercial space is set to increase by almost 80 per cent by the end of 2011, Colliers CRE plc said in May.

Dubai's economy shrank 2.5 per cent last year, according to preliminary government estimates.

Power delays are pushing back the completion of construction in the Business Bay development, reducing the amount of office space coming onto the market in the second half, according to CBRE.

Office supply is increasing by about 5 per cent per quarter in Dubai, mainly in areas including Port Saeed, Al Mamzar, Airport Road and Diyafa Street, according to CBRE.

The value of leases has dropped by 60 per cent since the mid-2008 peak, while prices slumped by 57 per cent and occupancy dropped to about 71 per cent from 90 per cent, according to property researcher Colliers International.

The total space available will rise to about 6.4 million square metres from about 3.6 million square metres at the end of 2009. -- Bloomberg

Source: Business Times, 29 Jul 2010

CBRE, Jones Lang LaSalle rebound in Q2

2010-07-29T19:47:00.001+08:00

Pick-up in building sales, leasing boost commercial services firms' earnings

(NEW YORK) Two of the world's largest commercial real estate services firms reported sharply improved earnings on Tuesday, fuelled chiefly by a pick-up in building sales and leasing, particularly in the United States.

US commercial real estate has been struggling since it began to weaken in late 2007, with activity falling precipitously last year. That hurt commercial real estate firms such as Jones Lang LaSalle Inc and CB Richard Ellis Group (CBRE), which rely heavily on sales and leasing commissions.

However, during the second quarter, sales of investment-grade US commercial real estate rose 32 per cent over the first quarter to US$20.6 billion, according to preliminary data by real estate research firm Real Capital Analytics, which measures sales greater than US$5 million.

'In the US, we saw a very strong pick-up in property sales and leasing, reflecting recovering market conditions,' Brett White, CB Richard Ellis chief executive, said in a statement.

His company posted a second-quarter profit of US$54.8 million, or 17 cents a share, compared with a loss of US$6.6 million, or two cents per share, a year ago.

Excluding one-time charges related to acquisitions, severance, space consolidations and impairments, the Los Angeles- based company earned US$58.8 million, or 18 cents a share, exceeding analysts' average expectation of nine cents a share, according to Thomson Reuters I/B/E/S.

Revenue rose 23 per cent to US$1.2 billion in the second quarter. Revenue from the Americas region, which includes the United States, Canada and Latin America, rose 20 per cent to US$722.3 million. Jones Lang LaSalle reported a second-quarter profit of US$32 million, or 72 cents per share compared with a net loss of US$14 million, or 40 cents per share in the second quarter 2009.

Excluding restructuring and other charges, the company's income was US$37 million, or 83 cents per share, versus analysts' average forecast of 58 cents per share, according to according to Thomson Reuters I/B/E/S, and US$11 million, or 30 cents per share, a year earlier.

Chicago-based Jones Lang LaSalle said its revenue rose 18 per cent to US$680.3 million. In the Americas, second-quarter revenue rose 18 per cent to US$296 million.

'Business prospects for the year remain good, and we are moving forward with confidence while watching market and economic dynamics,' Colin Dyer, Jones Lang LaSalle chief executive, said in a statement. - Reuters

Source: Business Times, 29 Jul 2010

MapletreeLog to buy 3 properties in Japan

2010-07-29T19:44:00.001+08:00

MAPLETREE Logistics Trust has signed a binding memorandum of understanding (MOU) with Kabushiki Kaisha A-Max to acquire three properties in Japan, its manager Mapletree Logistics Trust Management (MLTM) said yesterday.

The properties are the Iwatsuki Logistics Centre, a distribution centre and office in Iwatsuki, with a gross floor area (GFA) of 30,000 sq m; the Iruma Logistics Centre, a distribution centre and office in Iruma, with GFA of 26,000 sq m, and Noda Logistics Centre, a distribution centre and office in Noda, with GFA of 36,000 sq m. All the locations are in Saitama Prefecture, which is Toyko's northern neighbour.

The properties will be acquired for a total of 13 billion yen, (about S$200 million). The vendor, A-Max, is a logistics facilities development and management company.

The acquisition is the sixth announced by Mapletree since December last year, totalling $430 million.

With the completion of all of these acquisitions, MapletreeLog will have a portfolio value of about $3.3 billion.

MLTM said the latest acquisition will have significant benefits arising from attractive net property income (NPI) yield and distribution per unit accretion. The properties are also 100 per cent leased for eight to 10 years, providing stable rental income, and are in good locations.

'Given the low interest rates in Japan, it is likely that this acquisition will be funded predominantly by debt,' said MLTM. 'Any proceeds from equity issuance will likely be applied towards other acquisitions or refinancing of other more expensive debt in the portfolio to maintain a gearing below 45 per cent.'

MLTM chief executive Richard Lai said: 'Japan's logistics market remains attractive to us because it has breadth and depth that is currently unmatched elsewhere in Asia. We will continue to expand our portfolio in Japan by selectively acquiring yield-accretive logistics assets of good quality and location. We also seek to enhance the quality of our income stream through addition of good-quality customers to our diversified customer base. We will continue to focus on such accretive third-party acquisitions as a key strategy to grow our portfolio, and in turn, the returns to our unit-holders.'

Source: Business Times, 29 Jul 2010

CapitaMalls Asia has up to $3b to develop, buy malls

2010-07-29T19:44:00.000+08:00

It is setting its sights on growth markets of Singapore, China and Malaysia: CEO

CAPITAMALLS Asia (CMA) has a potential war chest of some $2.5-3 billion for developing and buying malls, and it will be targeting its firepower at Singapore, China and Malaysia.

The retail property group's shares may have been hovering below the initial public offering price, but they should perform better in the longer term.

CMA chief executive Lim Beng Chee shared these views in an interview with the press yesterday. The group is sitting on around $1 billion of cash, which includes proceeds from the listing of CapitaMalls Malaysia Trust (CMMT) and the sale of Clarke Quay to CapitaMall Trust.

With that, the group can borrow another $1.5-2 billion for investments. This situation presents a 'very good opportunity' for acquisitions, he said.

In Singapore, the market has improved from a year ago, Mr Lim said. The economy has picked up, retail sales have grown, and tourist arrivals have increased.

CMA is eyeing state land for mall developments, and it is particularly keen on areas where it already has a presence. These would include the Jurong district, where IMM and the upcoming JCube are.

The group had bid for a mixed-use site in the Jurong Lake district in June, but lost out to Australian developer Lend Lease. 'It's ok, there are always sites two and three' in that area, Mr Lim said.

Another plot of interest is the one at Stamford Road/North Bridge Road, where Capitol Theatre is. The tender for the site will close next month and the winning developer can build an underground link to City Hall MRT station. Raffles City Singapore, which CMA has a stake in, is right next to the station.

Asked if CMA will be bidding for that land parcel, Mr Lim said: 'We'll consider any site.'

There have been concerns about an oversupply of retail space in Singapore but Mr Lim believes in just the opposite. 'My problem is, I've got no space.'

According to him, many global retail brands such as Abercrombie & Fitch are not here because they have a problem finding space for large flagship stores.

Besides Singapore, China remains a key growth market for CMA. The Chinese government is trying to boost domestic consumption for economic growth and CMA can benefit from that trend, Mr Lim said.

In Malaysia, CMA is also looking to acquire or develop malls. It is setting up a RM1 billion (S$428 million) fund for this.

Despite the many growth plans, investors appear unexcited. CMA's shares have been trading below their listing price of $2.12 in the last one month. The counter closed unchanged at $2.05 yesterday.

'I think a lot of shareholders don't understand this business,' Mr Lim said, explaining that CMA runs longer term operations of building and managing malls.

On the gap between the share price and the listing price he said: 'My sense is, we can actually overcome this very easily.

'It's a question of us making a few acquisitions over time that could actually correct the share price... I have no doubt that over time it will correct.'

Source: Business Times, 29 Jul 2010

NUS estimates confirm private home prices tapered off in June

2010-07-29T19:42:00.002+08:00

(SINGAPORE) Latest flash estimates from National University of Singapore (NUS) confirm what property industry players have already experienced on the ground - a rapid slowdown in the growth of non-landed private home prices in June compared with May.

NUS's overall price index for non-landed homes for June rose 0.3 per cent month on month, compared with month-on-month gains of 2.4 per cent each for May and April.

It was the same story for the sub-index for the Central region, which covers a basket of properties in districts 1-4 and 9-11. It increased 0.7 per cent month on month in June, slower than gains of 2.1 per cent in May and 3.4 per cent in April.

The sub-index for Non-Central region was unchanged in June from the preceding month, after rises of 2.7 per cent in May and 1.7 per cent in April.

The Singapore Residential Price Index (SRPI), compiled by the NUS Institute of Real Estate Studies, covers only completed properties.

DTZ executive director (consulting) Ong Choon Fah said: 'The latest indices confirm the slowdown in buying momentum felt on the ground in June - because of the school holidays, World Cup and continued uncertainty in the eurozone economies.

'People found no reason to rush and buy a home. Developers have also been holding back launches and the projects they did launch were not priced at the top end of their own target range; so developers have also moderated their own price expectation.'

Since the end of last year, all three NUS indices have appreciated - to the tune of 8.7 per cent for the overall index, 8.2 per cent for Central region and 9.2 per cent for Non-Central region. Based on the latest June flash estimates, NUS's overall SRPI is now 36.3 per cent above the post-financial crisis low in March 2009. Over the same period, the growth for the Central region has been 42.1 per cent and that for the Non-Central region, about 33.3 per cent.

The June flash estimate for Central region is still 3.5 per cent below the pre-crisis high in November 2007. However, for the Non-Central region, the latest index surpassed its respective pre-crisis peak in January 2008 by 11.2 per cent. As a result, the overall SRPI flash estimate for June is 5.7 above its November 2007 high.

Looking ahead, Mrs Ong reckoned the overall and Central region indices are likely to remain flat in July, but the index for the Non-Central region could either be flat or post a marginal increase, supported by high cash-over-valuations in the HDB resale market.

Meanwhile Hong Leong Holdings said yesterday it has sold over 75 per cent of the 468 units available at The Scala, a 99-year condo at Serangoon Avenue 3. The units are sized between 474 and 2,142 sq ft, and sold at an average of $1,150 per square foot. Buyers comprised a good mix of HDB upgraders and investors, with the majority made up of locals.

Source: Business Times, 29 Jul 2010

Real estate gets a new gauge of market pulse

2010-07-29T19:41:00.000+08:00

New industry-backed index to measure sentiment shows mood has sobered slightly

(SINGAPORE) In a historic move, the Real Estate Developers' Association of Singapore has teamed up with the National University of Singapore's Department of Real Estate (DRE) to develop a Real Estate Sentiment Index (RESI), and it shows a lower reading for the second quarter of this year than for the first quarter.

Developers and industry players continue to express positive sentiments but expect market conditions to be less robust, Redas and DRE said.

More respondents were still positive (rather than negative) on the overall performance of the prime and suburban private residential markets over the next six months but the consensus as indicated by net balances weakened in the second quarter compared with the first quarter.

On the other hand, the net balance for offices improved substantially, in tandem with improving sentiment in this segment in April-June.

The survey also found that 51 per cent of developers polled for Q2 expect price growth for new residential launches, down from 85 per cent in Q1.

About 68 per cent of developers surveyed in Q2 expect more units to be launched over the next six months, down from 83 per cent in the Jan-March period.

The findings of the survey will be officially released this morning at the Redas Property Prospects Update 2010 seminar at Orchard Hotel.

Some market watchers welcomed Redas efforts in coming up with an objective method of gauging the confidence level of senior executives of property developers - and making it public. 'It's good to hear from the horse's mouth,' said DTZ executive director Ong Choon Fah.

Redas CEO Steven Choo noted that 'while business expectation surveys are available for the manufacturing and service industries, there is currently no indicator specifically tracking sentiment in the fast-paced real estate market of Singapore'.

Some industry watchers also pointed to the refreshing change at Redas. 'Previously, something like this, showing a slowdown in sentiment, would have been considered extremely sensitive and developers may have tried to hide it. Now they're more open about it,' said an observer.

Mrs Ong said: 'Releasing the RESI shows just how far Redas has come. It reflects the maturity of the property market and stakeholders. It's important to give the true market signals to all stakeholders - including home buyers and government - if we're going to have a sustainable property market based on sound fundamentals.'

Redas and DRE developed the quarterly structured-questionnaire survey, which is conducted among senior executives of Redas member firms - mostly developers but also property consultants, architects, quantity surveyors and other professionals.

Dr Choo, who assumed the post of Redas CEO nearly a year ago, says: 'The partnership between NUS and Redas has ensured academic rigour and added credibility to the new index. We are confident that in time, RESI will become an authoritative index and a highly-valued forward indicator for the property market, as well as an invaluable tool to guide the market and industry players, including investors and policymakers.'

Redas received about 70 responses for each of the Q1 and Q2 surveys - from largely the same people.

The survey measures respondents' perceptions of current market conditions/ performance (now, compared with six months ago) and future expectations (over the next six months).

The RESI comprises three indices. The Current Sentiment Index, where respondents are asked to rate overall Singapore real estate market conditions now compared with six months ago, fell from 7.2 in Q1 to 5.8 in Q2. The Future Sentiment Index, where respondents rate overall property market conditions over the next six months, also slipped from 6.4 to 5.9.

As a result, the Composite Sentiment Index, which is the average of the two indices, declined from 6.8 in Q1 to 5.9 in Q2.

The index ranges from 0 to 10, with a score below 5 indicating deteriorating market conditions. A score above 5 shows improving market conditions. The Q2 score shows that developers and industry players continue to express positive sentiments and expect market conditions to remain favourable, but less robust than before.

Source: Business Times, 29 Jul 2010

Real estate agencies step up efforts to woo Chinese investors

2010-07-28T20:39:00.000+08:00

Some Singapore real estate agencies are wooing Chinese investors to buy properties here.

They are doing so by having a representative office in China and networking with private bankers to reach prospective buyers.

These initiatives have benefited HSR International Realtors and ECG Property.

It is not just about the property for most Chinese investors, it is the lifestyle.

Property agencies said that six-in-10 prospective Chinese customers are asking about Sentosa Cove, seen as prestigious waterfront living.

HSR said foreign buyers now account for about 40 per cent of its sales in prime districts.

To further tap the market, it now has a representative office in the second-tier city of Wuhan in China.

HSR hosts trips for a group of eight to 10 wealthy Chinese investors to Singapore once every two months.

Jeffery Hong, executive director, Agency, HSR International Realtors, said: “We target to do slightly more in the forth quarter of this year and the first quarter of next year. We may have exhibitions and roadshows; we may even bring prestigious local projects all the way to China to do a launch over there.”

Meanwhile, ECG Property has set up a team to link up with wealth managers to reach out to high net worth individuals in China.

Daryl Ou, executive director, ECG Property, said: “Either we will fly over there or correspond through emails, after which we will just shortlist the properties they wanted; they will usually fly over to Singapore over the weekends, that is when we will bring them around to see the properties.”

ECG said sales of high-end homes rose 5 per cent in the first half of the year, at five to six units each month.

It hopes to set up an investment office, likely in Guangzhou.

Property agents said the demand for homes from Chinese investors will hold up. That is because the yuan appreciation has strengthen their buying power, and homes in Singapore are also more affordable compared to properties in other Asian cities.

Industry data has shown that the number of buyers from China inched up slightly in recent months.

Based on caveats lodged, 190 private homes were bought by the Chinese in the second quarter, 10 units more than the first quarter.

Overall, foreigners purchased 1,036 homes in the first three months of the year, compared with 1,004 units in the second quarter. The top three groups of buyers include the Indonesians, Malaysians and Chinese.

Source: Channel News Asia, 28 Jul 2010

Just two bids for one-north office site

2010-07-28T20:27:00.001+08:00

A TENDER for a large high-rise commercial site in the 200ha innovation and research hub one-north has attracted just two bidders.

Ho Bee Developments put in the top bid of $410.99 million or $342.20 per sq ft per plot ratio (psf ppr).

That is about 7 per cent above the second highest bid of $384 million or $319.80 psf ppr from Mapletree Trustee.

Ho Bee's general manager of marketing and business development, Mr Chong Hock Chang, said its plan is to rent out the office units for recurring income, and it is looking at achieving office rents of $5 psf.

'We believe we can build an iconic building on this landmark site,' he said.

The 99-year leasehold site has been on the Government's reserve list of sites since April 2008. A tender was finally triggered in May when Mapletree committed to a minimum bid of $320 million, or $266 psf ppr, which the Government found acceptable.

The site of about 1.8ha is located at the junction of North Buona Vista Road and Commonwealth Avenue West and is near the Buona Vista MRT station. It has a

potential yield of 111,565 sq m, with 2,000 sq m being set aside for retail use.

JTC said the building will provide office space outside the Central Business District for the business support companies of the research institutes at one-north.

Cushman & Wakefield managing director Donald Han said the bids were within the expected range.

The low level of interest is due to the huge price sum involved, he added.

Also, 'as an office product, it is untested in the area, which is predominantly industrial in nature', he said.

CBRE Research said the development cost for a predominantly office tower is about $900 psf, based on the top bid.

Just under 1 million sq ft of net lettable area of commercial space could be developed on this parcel, said its executive director Li Hiaw Ho.

'This would facilitate the expansion of research and development functions at one-north and serve as an alternative source of office supply post-2013 in the Buona Vista sub-regional centre,' he said.

Mr Han said current rents in the area are about $3.80 psf to $4.50 psf.

As office rents have bottomed out in the second quarter, they are expected to rise in time. 'The rental yield would therefore be in excess of 5 per cent,' said Mr Han.

Source: Straits Times, 28 Jul 2010

Ho Bee Investment puts in top bid for Buona Vista site

2010-07-28T20:01:00.000+08:00

HO Bee Investment is planning to invest about $1 billion to develop a commercial project at North Buona Vista Drive.

The company told BT this after it submitted the top bid for a 99-year leasehold commercial plot located in the one-north research area yesterday.

The tender for the 1.8 hectare site attracted two bids. Ho Bee's was $410.99 million, which works out to $342 per sq ft per plot ration (psf ppr).

The second bid came from Mapletree Investments, at $384 million or $320 psf ppr.

The site has a maximum allowable gross floor area (GFA) of 1.2 million sq ft. Ho Bee hopes to set aside some 1-2 per cent of space in the commercial development for retail shops. It is also exploring the possibility of having service apartments within the development.

The site has a good size for creating 'a landmark building in a very attractive location', Ho Bee said. It plans to lease the development out for recurring income when it is ready in about four years' time.

Market watchers had expected demand for the site to be lukewarm given its large size, which would involve a huge capital commitment.

But the site has other attractions: it is near Buona Vista MRT Station and lies within a growing research cluster for the biomedical, infocommunication and media industries.

CB Richard Ellis Research executive director Li Hiaw Ho believes the site can yield a net lettable commercial area of just under a million sq ft. 'This would facilitate the expansion of R&D functions at one-north and serve as an alternative source of office supply post- 2013 in the Buona Vista sub-regional centre.'

Sentiment in the commercial property market has picked up of late. Official figures show that office rents increased 1.1 per cent in the second quarter from a quarter ago. Prices of office space climbed 4.6 per cent.

There was also a net increase of 398,264 sq ft in office space demand in the second quarter.

Source: Business Times, 28 Jul 2010

When fiscal stimulus turns into fiscal drag

2010-07-28T19:59:00.000+08:00

Analysts in panel give their take on the state of the world economy

PEOPLE wondering whether the economy is out of the woods still have reason to seek refuge in the trees.

Experts on the third NUS Business School-The Business Times CEO Luncheon Panel yesterday warned that the recovery of developed nations' economies was slated to lose momentum after the fiscal stimulus runs out.

'The best part of the recovery is over. Fiscal stimulus is going to turn into fiscal drag for most of the developed economies by the end of this year,' said Manu Bhaskaran, director and chief executive officer of Centennial Asia Advisors, at the luncheon.

Mr Bhaskaran pointed out that in the United States, housebuilders' confidence levels have plunged.

In July, the National Association of Home Builders/ Wells Fargo Housing Market Index (HMI) fell to its lowest level since April last year, as the federal home buyer tax credit programme expired.

Fixed mortgage rates in the US also declined to all-time record lows while housing starts in June fell to 5 per cent.

The outlook, while not abysmal, is turning out to be a cautious one, according to Mr Bhaskaran.

'Going forward, the cost of capital is going to be higher and fiscal tightening is going to be here to stay for many years to come,' he said.

On a more controversial note, Duan Jin-Chuan, director of NUS's Risk Management Institute, recommended during his talk yesterday that Greece default on its enormous debt.

'Greece can stay in the eurozone and massively deflate its economy or leave the eurozone to regain control of its monetary policy,' said Professor Duan.

Neither would be likely, which meant that defaulting on its debt would be the most probable outcome.

'Greece should consider the third option, which is to exercise its sovereign immunity, default on its debt and stay in the eurozone,' said Prof Duan.

'Default is a legitimate option, morally and legally, and should be exercised from time to time. Otherwise, why did the issuer pay the premium in the first place?'

He stressed, however, that he was not advocating a disorderly default of Greece's debt, but rather one involving negotiations and coming to reasonable terms like coupon payments after the declaration of default.

The euro, however, should continue to shuffle along for a while, according to him.

'The statistics give me no reason to think that the euro can't survive another 10 years or more, even if it may not look pretty.'

Source: Business Times, 28 Jul 2010

Is CCT saving cash hoard for Market Street Car Park?

2010-07-28T19:58:00.000+08:00

CAPITACOMMERCIAL Trust (CCT) reiterated last week that it will not distribute a special payout to unit-holders when it completes its $380 million sale of StarHub Centre in September. Likewise, it did not return proceeds to shareholders when it completed the sale of Robinson Point in April.

The trust has said it is setting aside the net cash proceeds from these two divestments - totalling about $577.5 million - for future acquisitions and to reduce debt.

On the debt front, CCT can choose to refinance debt when it falls due, given its current gearing ratio is relatively low at about 33 per cent.

As for acquisitions, the trust has thus far found it difficult to buy office blocks. In fact, it has been selling office blocks which it believes have reached the optimal stage of their life cycle as office assets - such as Robinson Point and StarHub Centre.

CCT's manager says it is keen to increase its exposure to the Singapore Grade A office sector. But buying such assets in today's market is not easy for a Reit, as owners of Grade A office buildings are pricing the recovery in rents into their asking prices. As a result, the yields on these properties are not high enough to generate accretion for a Reit if it were to buy such expensive assets.

Given this challenge, some analysts think that instead of keeping its cash for future acquisitions, CCT could be saving it for something else - perhaps to re-visit plans to redevelop Market Street Car Park into a Grade A office project.

It was in January 2008 that CCT first disclosed it had obtained outline planning permission (OPP) from the Urban Redevelopment Authority to redevelop Singapore's first multi-storey car park into a new office tower with gross floor area of about 850,000 sq ft and a maximum plot ratio of 14.49. It estimated the total cost then at $1-1.5 billion.

But the global financial crisis struck - and Singapore office rents started to slide. In January 2009, CCT's manager announced its decision to abort the redevelopment plan, citing the uncertain market outlook and tight credit conditions, as well as high development cost and significant project size.

Quizzed about the possibility of re-visiting the Market Street plan at CCT's second-quarter results briefing last week, CapitaCommercial Trust Management chief executive Lynette Leong said the OPP had lapsed, but added that the group continually reviews its assets. She also said that the Market Street property is generating an attractive net yield of more than 8 per cent based on its $47 million valuation as at June 30, 2010, thanks to a shortage of CBD parking lots. The yield surpasses that for office space.

However, some analysts think that the time could be right for CCT to make a fresh planning application to redevelop Market Street Car Park into offices. And approval from authorities should again be forthcoming. For one, there is concern among property consultants about a potential shortage of new prime Grade A office space post-2012. The redevelopment of Market Street Car Park into offices could help alleviate this to some extent.

Redeveloping the property will mean the loss of 704 CBD parking lots that provide season and hourly parking. But of course, the authorities could always require CCT to reinstate this supply in its new project. And some relief will come soon from 250 public parking lots - for hourly parking - that will be ready by October this year underneath the Lawn @ Marina Bay, which is part of the Marina Bay Financial Centre project.

Standard Chartered Equity Research estimates the cost of redeveloping Market Street Car Park has fallen from 2008, probably to $1 billion to $1.1 billion today, given lower construction costs and development charges now. 'If the Grade A office building (about 850,000 sq ft) conversion is completed by 2015 and rented for $10-14 per sq ft a month, the yield on cost would be about 6-8 per cent and development profit would be 6-25 cents per unit,' it said.

Given CCT's $6 billion asset size and the rule that development properties must make up no more than 10 per cent of a Reit's asset size, CCT will no doubt have to seek the appropriate structure to undertake the development, perhaps jointly with parent CapitaLand.

A cash hoard will come in handy for such a venture.

Source: Business Times, 28 Jul 2010

S’pore real estate firms axe thousands of agents ahead of new MND regulations

2010-07-27T20:37:00.000+08:00

Real estate firms in Singapore have axed thousands of agents, ahead of the regulatory framework to be implemented by the National Development Ministry.

The framework seeks to professionalise the industry, with the introduction of a new statutory board, known as the Council for Estate Agencies, and enhanced regulatory guidelines.

Channel NewsAsia understands that a Bill for the framework could be introduced in Parliament as early as October.

When contacted, the Ministry would only say that a Bill will be introduced in the second half of this year, with the Council operational by year-end.

Director of Dennis Wee Group, Chris Koh said: “It’s going to be difficult for agents with a full-time job while moonlighting as an agent. Because the moment the employer goes into this public registry, the employer will know that you are an agent, and you stand to lose your existing full-time job.”

Earlier this month, Dennis Wee Group’s (DWG) housing agents were called back to their office to update their personal information and be briefed on the requirements of the new regulatory framework. The information collected was then submitted to the National Development Ministry, to be part of a new central registry of all agents.

1,500 of 5,000 agents were axed as a result of the exercise – mostly inactive or part-time staff.

Under the new guidelines, agents will also be required to pass a mandatory industry examination. Only those who already have industry certification will be exempted.

Rather than wait for the new examination, DWG has asked all its agents to get themselves certified with either the Certified Estate Agent Course or the Common Examination for Salespersons.

Another firm, PropNex, terminated 1,200 agents at the start of this year, either because they were inactive or unwilling to take up personal indemnity insurance.

The insurance covers any financial liabilities arising from housing transactions.

Agents associated with money-lending were also released.

CEO of PropNex, Mohd Ismail said: “Any PropNex agent who has a money-lending licence will not be allowed to practice. He or she will have to make a decision, because we do see a conflict of interest. We have terminated an agent who has been very active, however, he wanted to maintain both and that was not acceptable to us.”

ERA, which has about 3,000 active agents, says it removes about 100 inactive agents from its database every month.

Associate director of ERA Asia Pacific, Eugene Lim said the company has also been conducting training to prepare their agents for the Common Examination for Salespersons.

To date, more than 2,500 ERA agents have taken this exam, with some having to do retakes for the paper.

HSR, which represents some 7,000 agents, says it regularly checks its database for inactive agents who are then put on a passive list and sent reminders to go for retraining.

There are an estimated 30,000 housing agents in Singapore.

The National Development Ministry has also been in consultation with various real estate firms to standardise documents used in the trade.

These include documents governing an agent’s exclusive right to sell a property.

Currently, each agency has its own terms and conditions, which can be confusing for consumers.

Source: Channel News Asia, 27 Jul 2010

US new home sales bounce off record lows

2010-07-27T20:30:00.000+08:00

WASHINGTON: Sales of new homes last month in the United States rose more than what was forecast following an unprecedented collapse in the previous month, a signal that the worst of the slump triggered by the end of a government tax credit is over.

Purchases increased 24 per cent from May to an annual pace of 330,000, figures from the Commerce Department showed yesterday. The rate was the second-lowest since 1963 after May's downwardly revised 267,000 pace.

The lowest mortgage rates on record may help underpin demand, stabilising the industry that triggered the worst recession since the 1930s.

Even so, increasing foreclosures are swelling the number of unsold existing homes, putting pressure on prices and keeping buyers on the sidelines as unemployment hovers near 10 per cent and the economy cools.

Sales are 'bouncing along the bottom', said Mr Eric Green, chief market economist at TD Securities in New York.

'The future is going to be dependent on job growth. There's no demand because confidence is weak and employment is weak.'

Economists forecast that sales would rise 3.3 per cent to an annual pace of 310,000, according to the median of 73 projections in a Bloomberg News survey. Estimates ranged from 260,000 to 360,000.

The government had initially estimated May sales at a 300,000 rate and revised figures downwards for every month since March.

The 37 per cent plunge in May was the biggest on record.

The median price decreased 0.6 per cent from June last year to US$213,400 (S$291,100).

Purchases increased in three of four regions, led by a 46 per cent jump in the north-east and a 33 per cent surge in the south, the largest area.

Demand dropped 6.6 per cent in the west to a record low 57,000 pace.

The report suggested the housing market may be close to working through the distortions following the end of a popular home-buyer tax credit in April, an incentive that brought forward sales.

Data last week showed home construction fell to an eight-month low last month, while existing home sales were the lowest in three months.

To become eligible for a federal incentive worth up to US$8,000, buyers had to sign contracts by April 30 and close deals by the end of last month.

The surge in demand prior to the April deadline prompted the government this month to extend the closing deadline until Sept 30 to ensure buyers had enough time to complete transactions.

BLOOMBERG, REUTERS

Source: Straits Times, 27 Jul 2010

Pastoral View tries to sell en bloc again

2010-07-27T20:29:00.000+08:00

After failed 2008 attempt, it is making another bid, this time with adjoining vacant plot

THE revival in the collective sale market this year is continuing, with a small development and adjoining land parcel in the Novena area the latest to go on sale.

The 50-unit Pastoral View and the vacant plot have a combined asking price of about $130 million to $150 million.

The two sites in Bassein Road have a total land area of 51,395 sq ft and can be built up to some 143,906 sq ft of gross floor area and a height of 36 storeys. They are near Novena MRT station.

Credo Real Estate, which is marketing the freehold sites, said the buyer can choose to build a high-rise tower comprising 140 apartments with an average size of 1,000 sq ft each.

The price translates to a land rate of $904 to $1,043 per sq ft per plot ratio, said its deputy managing director Tan Hong Boon.

This includes a modest development charge of about $157,000 for the plot at 11 Bassein Road to redevelop it.

No development charge is payable for the 10-storey Pastoral View, which was previously put up for sale in early 2008 at an asking price of $95 million without the adjoining plot.

But the market had turned for the worse by the time the tender closed in April that year, and it was not sold.

Credo said buyers can opt to tender for the combined sites or either one.

Pastoral View alone is 34,193 sq ft in size and going for $86.6 million to $100 million. If the sale goes through at the minimum asking price, the estate's owners will stand to reap at least $1.04 million to $4.56 million each, depending on their unit's size.

The smaller adjoining plot at 11 Bassein Road is 17,203 sq ft in size. The asking price for the plot alone is about $43.4 million to $50 million. A search shows that it is owned by OCBC Bank.

So far this year, at least 16 sites worth $786 million have been sold en bloc, compared with just one last year at $100.8 million, said Credo.

More sites are expected to be put up for collective sale this year, said Mr Tan.

Source: Straits Times, 27 Jul 2010

More courses for building specialists

2010-07-27T20:12:00.000+08:00

Shortage of industry professionals spurs BCAA, SISV initiative

THE booming construction industry over the years has created a shortage of qualified surveyors and other specialists.

As such, in a release by the Building and Construction Authority (BCA), it was revealed that the BCA Academy (BCAA) and Singapore Institute of Surveyors and Valuers (SISV) will put in place a number of initiatives to build up and strengthen the pool of building professionals within the industry.

Among the specialists in demand include quantity surveyors, land surveyors, valuers and property managers.

To resolve this, the BCAA and SISV will be jointly introducing more academic programmes such as diploma, specialist diploma and degree courses to train new professionals and to upgrade the skill sets of existing ones.

BCAA will also be working with SISV to initiate more dialogue sessions with firms in the industry to facilitate discussion on developing such capabilities.

To further promote the building profession, BCA and SISV signed a memorandum of understanding to share resources, promote educational programmes and jointly create and implement new products and services to drive the local building industry forward.

John Keung, CEO of BCA, said, 'I'm confident that this new collaboration will help elevate the occupational profile in the built environment. BCA looks forward to working with SISV to develop more programmes to train personnel at the technical and professional level to meet the needs of the industry.'

Source: Business Times, 27 Jul 2010

DLF to buy Dubai World's stake in JV

2010-07-27T20:11:00.000+08:00

(MUMBAI) Indian real estate firm DLF is buying out the stake held by a property unit of debt-laden Dubai World in an equal joint venture in India for about two billion rupees (S$58 million), The Economic Times reported yesterday.

A unit of DLF will buy the stake owned by Limitless Group, part of Dubai World, in Bidadi Knowledge City in southern Karnataka state, the newspaper said, citing a person with direct knowledge of the transaction.

Dubai World is currently restructuring US$23.5 billion in debt. Limitless said in April 2009 that it was reviewing a US$12 billion residential and commercial project in India because the authorities there had not bought the required land.

India's DLF and Limitless won the contract to build the Bidadi development on the outskirts of Bangalore in October 2007.

'Under the agreement, government agencies are responsible for the land acquisition,' a Limitless spokeswoman said in a statement at the time. 'Unfortunately, after 18 months, the land acquisition has not advanced. As a result, Limitless and DLF have notified the government that they are reconsidering their position.'

A spokeswoman from Limitless in Dubai declined to comment on the news report yesterday, pointing to the company's statement from last year.

A representative from DLF was not immediately available for comment. -- Reuters

Source: Business Times, 27 Jul 2010

Homesteads for income

2010-07-27T20:10:00.000+08:00

One US town is handing out city land now for future property tax revenues

(BEATRICE, Nebraska) GIVE away land to make money? It hardly sounds like a prudent scheme. But in a bit of deja vu, that is exactly what this small Nebraska city aims to do.

Beatrice was a starting point for the Homestead Act of 1862, the federal law that handed land to pioneering farmers. Back then, the goal was to settle the West. The goal of Beatrice's 'Homestead Act of 2010' is, in part, to replenish city coffers.

The calculus is simple, if counterintuitive: Hand out city land now to ensure property tax revenues in the future. 'There are only so many ball fields a place can build,' Tobias J Tempelmeyer, the city attorney, said the other day as he stared out at grassy lots, planted with lonely mailboxes, that the city is working to get rid of. 'It really hurts having all this stuff off the tax rolls.'

Around the nation, cities and towns facing grim budget circumstances are grasping at unlikely - some would say desperate - means to bolster their shrunken tax bases. Like Beatrice, places like Dayton, Ohio and Grafton, Illinois are giving away land for nominal fees or for nothing in the hope that it will boost the tax rolls and cut the lawn-mowing bills.

In Boca Raton, Florida, which faces a budget gap of more than US$7 million, leaders are thinking about expanding the city's size and annexing neighbourhoods as an antidote. Sure, more residents would cost more in services, but officials hope the added tax revenues will more than make up for it.

Non-profit organisations

And leaders in Manchester, New Hamshire and Concord, Massachusetts are taking an approach that might have once seemed politically unthinkable: they are re-examining whether their communities' non-profit organisations really deserve to be tax-free.

'The stress of the past couple of years is causing us to look absolutely everywhere,' said Anthony Logalbo, finance director in Concord, where officials realised that 15 per cent of the town's property value had become tax-exempt and sent letters to non-profit groups asking whether they would consider paying something to the town.

'Private schools and non-profit museums and community organisations benefit the town in lots of ways,' Mr Logalbo said, 'except that they don't contribute to the cost of running the town.'

Analysts say that this year and next, city budgets will reach their most dismal points of the recession, largely because of lag time inherent in the way taxes are collected and distributed. Despite signs of a recovery, if a slow one, in other elements of the economy, it may be years away for many municipalities. Between now and 2012, America's cities are likely to experience shortfalls totalling US$55-85 billion, according to a survey by the National League of Cities, because of slumping revenues from property taxes and sales taxes and reduced support from state governments. And even in places like Concord and Beatrice, where officials say budget strains are not severe enough to lead to layoffs or major cuts, a slow chafing has still taken a toll.

Beatrice (pronounced bee-AT-russ), which sits about 65 kilometres south of Lincoln down a highway called the Homestead Expressway, is recognised as home to the first Homestead Act application nearly 150 years ago. That law ultimately granted 270 million acres (109 million hectares) of land in 30 states to nearly anyone who could survive on it and pay a minimal fee.

Daniel Freeman, who came from Ohio, is said to have filed his claim for 160 acres near Beatrice just after midnight on Jan 1, 1863, the day the law took effect. There were others who filed claims in other places on the same day (some say they were actually first), but Freeman captured a place in history. The government paid to take back his Nebraska homestead decades later to turn it into a national monument that honours the Homestead Act and how it transformed the nation's population.

Beatrice's new Homestead Act is not the first to revive the land giveaway. Some tiny towns, particularly in the Great Plains, have made such offers before, mainly as a way to increase dwindling populations.

But disappearing is not the fear in Beatrice, which is home to several lawn-mowing equipment manufacturers and where the population has held steady at around 12,000 for decades. Instead, city officials are hoping to return some of the many lots the city has accumulated, because of unpaid taxes or flooding risks from the Big Blue River, and return them to the tax rolls. The city has not suffered gaping budget shortfalls or the property tax declines seen in some larger cities, but some large purchases and road reconstruction are on hold, waiting for a return to flusher times.

If the city were to give away just a few lots - and if people were to, as required by the law, build homes on them and stay for at least three years - Beatrice would secure annual real estate taxes on them, collect money for water, electric and sewer use, and no longer pay to mow the lawns. The arrival of new, improved homes might also have an infectious effect on existing neighbourhoods, said Neal Neidfeldt, the city administrator.

But the plan has its critics; at least one candidate for mayor here wonders what right the city has to give out public land to any non-taxpaying outsider who asks.

Officials acknowledge that the benefits sound modest, in the thousands of dollars annually, but say the revenue is needed. 'What is the value of a lot to us if it's empty?' said Tom Thompson, mayor of Grafton, where an offer of 32 city-owned lots, promoted with a television advertising campaign, has quickly led to eight takers so far. 'This is strictly financial - a way to go upstream from the trend.'

In Dayton, officials are offering thousands of vacant, foreclosed or abandoned properties under certain conditions for nominal fees - US$500, in many cases, to cover the cost of recording fees or US$1,200 if the city must initiate tax foreclosure proceedings. The prospect of city savings on mowing fees alone is enormous: each year, Dayton spends US$2 million to cut grass on the properties.

Daunting prospect

Back in Beatrice, though, the effort is only creeping along. Since the Homestead Act took effect in May, many people have called with inquiries, but no one has moved onto the lots along a gravel-covered road called Grace. Two families filled out an application - which seeks only a name, address and telephone number - but both have since put off plans.

One applicant, William Hendrix, 47, said the city's law requiring him to secure permits for a new home on the property within six months, then build within a year after that, was too daunting. What if he could not get loans? What if he could not pay for the construction? What if he built a home but could never sell it?

'Right now, giving away the land isn't going to be doing anybody favours,' Hendrix said. 'I realised that Beatrice will get the taxes they want, but it won't do me any good in this market.'

For their part, people in Beatrice sound patient. The peak of homesteading acres claimed under the federal act, they point out, came in 1913, some 50 years after the act's passage. -- NYT

Source: Business Times, 27 Jul 2010

Spain mortgage lending falls in May

2010-07-27T20:09:00.000+08:00

(MADRID) Spanish mortgage lending fell in May for the third straight month after a brief rise in February as the country's banks, five of which failed a Europe-wide stress test on Friday, continued to withhold credit.

Mortgage lending for homes totalled 6.4 billion euros (S$11.3 billion) in May, down 7.2 per cent from the same month a year earlier and following a one per cent drop in April.

February marked the first annual rise in mortgage lending in almost three years, a brief respite for a battered property sector hit by the credit crunch after a decade of strong growth.

Spain's mostly unlisted savings banks were heavily involved in expanding the property bubble by providing easy lending conditions to home buyers and property developers.

According to the Bank of Spain, the savings banks which failed the stress tests, which included property value declines of around 30 per cent, would need 1.835 billion euros in additional capital to withstand the worst-case scenario. -- Reuters

Source: Business Times, 27 Jul 2010

Korean construction shrinks as GDP grows

2010-07-27T20:08:00.000+08:00

Decline comes as economy chalks up quarterly growth of 1.5%

(SEOUL) South Korea's construction industry had its biggest annual contraction since at least 2008 in the second quarter, deepening a dilemma for policymakers faced at the same time with a sustained expansion in the broader economy.

Construction shrank 0.8 per cent over the three months through June compared with the prior quarter, the third drop in four quarters, and 0.5 per cent from a year ago, according to gross domestic product (GDP) data released yesterday by the Bank of Korea.

The decline contrasts with a quarterly growth rate for GDP of 1.5 per cent, which bolstered the case for the central bank to continue raising interest rates.

Concern about economy-wide inflation pressures outweighed risks from falling house prices when the bank increased its benchmark this month to 2.25 per cent from a record low 2 per cent.

'Policymakers can't stop raising interest rates just because the construction sector is in trouble, which was already doing badly when rates were at a record low,' said Lee Sung Kwon, an economist at Shinhan Investment Corp in Seoul.

'The government is seeking measures to support the industry, but it'll be difficult to find a good solution unless homebuyers' sentiment improves.'

The 36-member Korea Construction Index of stocks fell 0.4 per cent yesterday after the data were released, compared with a 0.6 per cent gain in the benchmark Kospi index. The building gauge has tumbled 18 per cent this year, while the Kospi has risen 5.1 per cent.

The government is contemplating steps to boost the property market after home prices in Seoul fell for three straight months through June, according to data from Kookmin Bank, the nation's largest lender.

The administration of South Korean President Lee Myung-bak, who suffered an unexpected reversal at local elections on June 2, last week delayed announcing the property policy after officials failed to reach agreement on the proposals.

Land Minister Chung Jong Hwan said on July 21 that he doesn't plan to loosen mortgage-lending controls for now, while Finance Minister Yoon Jeung Hyun said that the nation's property prices are unlikely to fall sharply.

'The property market has emerged as a major political concern,' Park Sang Hyun, chief economist at HI Investment & Securities Co in Seoul, said last week.

South Korea tightened restrictions on mortgage lending last year to slow loan growth. Banks can extend as much as 50 per cent of a borrower's annual income for purchases of homes in Seoul and 60 per cent for areas outside the capital.

The quarterly gain in GDP reported yesterday exceeded the 1.3 per cent median forecast in a Bloomberg News survey of seven economists. From a year earlier, GDP rose 7.2 per cent.

The growth figures raise the risk of the Bank of Korea boosting rates twice more by year-end, Barclays Capital analysts said yesterday as they increased their 2010 GDP growth projections to 6.1 per cent from 5.7 per cent. -- Bloomberg

Source: Business Times, 27 Jul 2010

OCBC, Pastoral View owners sell sites together

2010-07-27T20:07:00.000+08:00

OCBC, which has owned a site at 11 Bassein Road in the Novena area since the 1940s, has teamed up with the owners of Pastoral View next door who are doing a collective sale, to sell the two properties together.

Both Pastoral View, which is at 7 Bassein Road, and OCBC's site, at 11 Bassein Road, are freehold.

'The sellers are expecting offers in the region of $130-150 million. This translates to a land rate of $904-1,043 per sq ft per plot ratio, after factoring in a marginal development charge of about $157,000 payable for No. 11 Bassein Road, to redevelop the site up to a 2.8 gross plot ratio. No DC is payable for Pastoral View,' said Tan Hong Boon, deputy managing director at Credo Real Estate, which is marketing the two properties.

More than 80 per cent of owners by share value and strata floor area at the 50-unit Pastoral View have signed a collective sale agreement. OCBC's next door property is an empty site.

The two sites have a combined land area of 51,395 sq ft and can be developed into a new condo with a gross floor area of 143,906 sq ft. This allows for a 36-storey project with 140 apartments of average size of 1,000 sq ft.

The site is zoned for residential use with a 2.8 plot ratio under Master Plan 2008.

Interested parties can bid for one or both sites.

'We believe developers would find the enlarged site more attractive because it would offer economies of scale and broaden their offering,' said Mr Tan.

There will be space for the winning developer to build a showflat before Pastoral View residents move out, Mr Tan said. This means that the developer can market the new project earlier, reducing holding costs and market risks.

Novena is home to office and retail blocks such as United Square, and hospitals such as Tan Tock Seng.

Credo believes that the new residential project will attract medical professionals and medical tourists.

Near Pastoral View, units at D'Ixoras have changed hands at more than $1,240 psf in the past two months, based on caveats lodged.

Source: Business Times, 27 Jul 2010

Sun Hung Kai sells 300 Larvotto units

2010-07-27T20:06:00.000+08:00

Sale brings in HK$8b for firm, partners as demand stays strong

(HONG KONG) Sun Hung Kai Properties Ltd, the world's biggest developer by market value, has sold 300 flats at an apartment project in Hong Kong's Island South district over the past two weekends.

The sale at the Larvotto project has brought in a total of HK$8 billion (S$1.4 billion) in revenue for Sun Hung Kai and partners Kerry Properties Ltd and Paliburg Holdings Ltd, Victor Lui, an executive director at Sun Hung Kai's agency arm, said in an e-mailed statement yesterday.

The developers will offer another 64 apartments for sale this week, Mr Lui said.

Demand for luxury homes in Hong Kong remains strong even as the government tries to curb a 38 per cent surge in home prices since the beginning of last year amid concerns that housing is becoming unaffordable.

Luxury property prices may rise 20 per cent this year on a lack of supply and low interest rates, property broker Jones Lang LaSalle Inc said in a report last week.

'The atmosphere is very hot,' said Louis Chan, managing director of residential sales at Centaline Property Agency Ltd.

'There's a lot of momentum in both new and used home markets.'

Apartments at Larvotto, which have been selling for an average of HK$30 million, will be around 1,500 square feet to 2,500 square feet.

Larvotto is the name of the main public beach in Monaco.

Larvotto has a total 715 units. Hong Kong developers sell units in developments in batches instead of offering them all at once, to gauge demand and take advantage of rising prices.

There were 86 used-home transactions at 10 of Hong Kong's biggest private housing complexes over the weekend, little-changed from a week earlier, Mr Chan said. -- Bloomberg

Source: Business Times, 27 Jul 2010

First fall in UK house prices in 15 months

2010-07-27T20:05:00.000+08:00

Further decline seen as govt budget cuts bite, more putting homes on sale

(LONDON) UK house prices fell this month for the first time in 15 months as the government's budget squeeze curbed demand and more people tried to sell their properties, Hometrack Ltd said.

The average price in England and Wales fell 0.1 per cent from June to £158,700 (S$335,167), the London-based property researcher said in an e-mailed report yesterday, citing a survey of surveyors and real-estate agents. Home values in the capital led the decline, dropping 0.2 per cent. On the year, prices rose 2 per cent.

'The fall in prices marks a turning point for the housing market,' Richard Donnell, director of research at Hometrack, said in the report. 'Further modest price falls are inevitable over the second half of the year as the volume of homes for sale continues to rise and demand remains weak on the back of concerns over the wider economic outlook and uncertainty over the impact of recently announced cuts in government spending.'

The number of Britons expecting house prices to rise in the next year has dropped in a 'significant shift' in sentiment, Rightmove plc said in a separate report yesterday. The property market's outlook has dimmed as the nation braces for the deepest spending cuts since World War II and policy makers fret that threats to economic growth have increased.

An increase in the number of homes for sale is also depressing prices, with the amount of properties listed with estate agents rising 3.6 per cent this month, Hometrack said. In contrast, demand for homes has fallen, with the number of potential buyers registering with estate agents dropping 1.3 per cent, led by a 2.7 per cent decline in London.

'With falling demand and rising supply, there is a real possibility of sales volumes declining,' Mr Donnell said. 'With no immediate prospect of an upturn in demand, price levels are likely to remain under downward pressure in the coming months.'

Yesterday's report adds to evidence that the housing-market recovery is waning. Rightmove, owner of the UK's biggest property website, said last week that sellers cut prices for the first time this year and will probably keep doing so for the remainder of 2010, while Lloyds Banking Group plc's Halifax division said that house prices fell in June by the most in four months.

Confidence in future house prices has also fallen. The number of people expecting home values to be higher in a year fell to 41 per cent this month from 50 per cent in the previous quarter, Rightmove said yesterday. The company surveyed 22,010 people online between July 5 and July 19.

The drop 'is a significant shift', Miles Shipside, Rightmove's commercial director, said. 'With austerity measures starting to bite, a growing nervousness is to be expected.'

Bank of England policy makers considered adding to their emergency stimulus this month as they judged that the economy's growth prospects had 'probably deteriorated'.

Gross domestic product rose 1.1 per cent in the three months through June, almost twice as fast as the 0.6 per cent gain in a Bloomberg News survey of 32 economists. -- Bloomberg

Source: Business Times, 27 Jul 2010

New home sales surge in June

2010-07-27T20:04:00.000+08:00

(WASHINGTON) Sales of new US single-family homes rebounded strongly in June from the prior month's record low, driving the number of houses on the market to its lowest level in nearly 42 years.

The Commerce Department said yesterday sales jumped 23.6 per cent to a 330,000 unit annual rate from a downwardly revised 267,000 units in May. The sales pace last month was still the second lowest since records started in 1963. The percentage increase was the largest increase since May 1980, and partially unwound the prior month's historic 36.7 per cent decline.

Analysts polled by Reuters had forecast new home sales rising to a 320,000 unit pace last month from May's previously reported 300,000 units.

'Right now we're running about 60 per cent below the average annualised rate for the last decade, so there's a lot of potential out there for improvement,' said Michael O'Rourke, chief market strategist at BTIG LLC in New York. 'It seems like sales are bottoming, so its just a matter of that foreclosure inventory clearing up. After that, then we can start seeing some upside. I expect that to happen later this year, maybe next year.'

US government debt prices dipped on the home sales data, while US stocks added to gains. The US dollar pared losses against the yen.

Recent data have suggested the economy's recovery from its longest and deepest recession since the 1930s moderated somewhat in the second quarter. Economists expect weak housing activity to act as a drag on growth for much of the year.

The government is expected to report on Friday that GDP growth slowed to a 2.5 per cent annual rate in the April-June period from a 2.7 per cent pace in the first three months of the year.

The Commerce report suggested the housing market may be close to working through the distortions following the end of a popular home-buyer tax credit in April, an incentive that brought forward sales. Data last week showed home construction fell to an eight-month low in June, while sales of existing home sales were the lowest in three months.

Analysts, however, believe a drop in home building is unlikely to ignite a new recession since housing is a much smaller share of the economy now than it was at the top of the housing boom. The impact of a 10 per cent drop in home construction has about one-third the impact now as it did in 2006, according to economists at Bank of America-Merrill Lynch. -- Reuters

Source: Business Times, 27 Jul 2010

Biomed puts brake on June output growth

2010-07-27T20:03:00.000+08:00

Industrial production records first fall in 7 months on sharp slowdown in biomed

(SINGAPORE) June's factory output fell short of expectations for the first time this year, as a slowdown in pharmaceutical output put the brakes on manufacturing's acceleration.

Industrial production last month rose 26.1 per cent from a year ago, way under consensus expectations for 36.7 per cent growth. Factories also produced 23.4 per cent less than they had in May - the first sequential, seasonally-adjusted fall in seven months.

'The drop is very technically driven by the biomedical cluster, a segment that has provided significant impetus to growth since the start of this year,' said RBS's Singapore economist Lim Su Sian.

Biomedical output's year-on-year growth slowed to 29.8 per cent as pharmaceutical plants produced 30.8 per cent more than they had last June. This was a sharp slowdown from growth in excess of 100 per cent the month before, and June's biomed output was less than half that recorded in May.

Excluding biomedical manufacturing, overall production grew 24.8 per cent from last June but fell 1.8 per cent from May, data released by the Economic Development Board yesterday shows. Biomedical output accounts for a fifth of Singapore's value-added, the second largest industry share after electronics' 30 per cent.

Growth in the latter sector slowed slightly, but was still a robust 46.8 per cent year-on-year, as semiconductors output grew 74.9 per cent thanks to strong demand for cellphones, personal computers and consumer electronic products.

The other sectors - precision engineering (33 per cent), general manufacturing (11 per cent ) and chemicals (7 per cent growth) - all saw their pace of growth slow by several percentage points too.

And transport engineering's output continued its year-on-year fall due to fewer ship conversion and repair jobs in the ship yards, which offset growth in the land and aerospace segments.

With six months of data now in, EDB said that the manufacturing economy expanded 41.6 per cent in the first half of 2010 from a year ago.

As signs of cooling off surface beneath the positive headline numbers, the second-half of 2010's 'tale of two halves' appears to have begun before the halfway mark, OCBC economist Selena Ling said.

'Are the headwinds coming from US and Europe, or China's slowing? It's not too clear at this stage, but the NODX numbers should show which countries' demand is facing growing resistance,' she said.

June's industrial production figures also back up other signs of slowdown like rising inventories seen in June's PMI and waning export momentum, said Citi economist Kit Wei Zheng.

HSBC economist Kim Song-yi thinks that though manufacturing will ease in coming months, the stretched labour market and wage pressures mean a tightening of monetary policy to control inflation risks is still a possibility.

Source: Business Times, 27 Jul 2010

Chinese developers eye S'pore property

2010-07-26T20:36:00.000+08:00

Cash-rich firms spot growth opportunity here as cooling steps take effect at home

CHINESE developers eager for a slice of the red-hot housing pie are nudging their way into Singapore's property scene.

Chinese developers bid for at least 10 out of the 15 residential land sites put up for tender in the Government Land Sales (GLS) programme for the first half of this year.

They have landed three plots and narrowly missed out with second-place bids on at least two other sites.

MCC Land and Qingjian Group are two of the most active, although lesser-known Ningbo Construction Group unsuccessfully bid for a private residential plot in Tampines Road in May.

Property experts say this might herald a growing trend as Chinese developers, cashed up and eager to mitigate cooling measures that could derail property prices in China, shift their focus to Singapore where prices are expected to keep rising.

Their aggressive bidding could also be due to their lack of a landbank compared with local developers, and that many of their initial bids had failed to top the tender, experts say.

Mr Colin Tan, research and consultancy director of Chesterton Suntec International, said: 'Singapore is preferred as it is seen as a stable and safe market.

'Chinese developers will probably expand their presence here and I won't be surprised if we see more mainland firms coming into the property market.'

DMG & Partners property analyst Brandon Lee said that as most of the Chinese firms started out in the construction business, progressing to property development was not surprising as the margins were much higher.

'There are also an increasing number of mainland Chinese buyers entering the market, making up about 15 per cent of total foreign buyers, so the Chinese developers might be hoping to target this segment,' he added.

MCC Land's first attempt at a GLS tender was in March, for an executive condo site near Buangkok MRT Station. It fell a fraction short, tendering 1.4 per cent below the top bid of $193.3 million.

But it won the day with a $127.8 million bid for a site at Yishun, also in March. Last month, the firm clinched a Sembawang Road/Canberra Drive site for $131.7 million.

MCC Land is part of the Chinese state-owned enterprise Metallurgical Corporation of China (MCC Group) - a Fortune 500 company listed on the Shanghai and Hong Kong bourses. It is involved in engineering, procurement and construction, mining and property development.

While MCC Land is a new entrant, MCC Group's local construction unit, China Jingye Engineering Corporation, has been doing business here for almost 14 years. It was the main contractor for Universal Studios at Resorts World Sentosa.

MCC Land managing director Tan Zhiyong said that it was a natural progression to branch out into property development as it expanded its footprint here.

Although the firm is mostly involved in the residential market, he does not rule out entering the commercial sector if the opportunity arises.

'We don't have a fixed goal in terms of what we want to accomplish... If a good opportunity arises, we will act but this also depends on how the market moves, the timing and the location of a site,' he said.

Mr Tan added that while he does not expect property prices here to increase as fast in the rest of the year as they did in the first half, he expects values to remain stable and so might bid for more sites.

The other main player - the Qingjian group - also began operations here as a contractor for HDB projects. It marked its first foray into property development in 2008 with Natura Loft - an HDB design, build and sell scheme in Bishan.

Qingdao Construction - part of the Qingjian Group - has since clinched a site next to Potong Pasir MRT station for $113.7 million. Its bid of $607 per sq ft per plot ratio was a record land price for the area and ahead of more established property players like Frasers Centrepoint, Far East Organization and Hong Leong Holdings.

Qingdao Construction director Zuo Haibin said Singapore's growing economy provided a stable investment platform. He hopes to at least double the size of the firm's development arm in the next year and has identified sites in the upcoming GLS programme the firm may bid for.

Source: Straits Times, 26 Jul 2010

$550 million upgrade for Hougang, Pasir Ris, Tampines

2010-07-26T20:33:00.000+08:00

New covered linkways, new windows and grilles in homes possible

SOME 54,000 households in Hougang, Tampines and Pasir Ris can look forward to new amenities in their neighbourhoods with upgrading works now under way.

The improvements could include new covered linkways, car porches and upgrading of children's playgrounds.

Residents may also get upgrades to their flats, such as new waterproofing for their bathroom floors, and new windows and grilles.

No target completion date has been given for the works but the Government has set aside an extra $550 million for the three HDB towns under the Main Upgrading, Interim Upgrading and Lift Upgrading programmes.

As long as the Government had the financial resources, it would continue to rejuvenate housing estates, said Deputy Prime Minister and adviser to Pasir Ris-Punggol GRC grassroots organisation Teo Chee Hean yesterday. He was speaking at the launch of a community roadshow in Tampines Central to cap HDB's 50th anniversary celebrations.

Tampines, Hougang and Pasir Ris are mature towns that were developed in the 1980s and early 1990s. Together with the newer towns of Sengkang and Punggol, they are home to 197,100 flats, about 22 per cent of the total number of HDB homes in Singapore.

Some $540 million has already been spent to improve amenities for more than 67,000 households in the three towns.

Of the extra $550 million, around $263 million will go towards estates in Tampines; $180 million to Hougang and $107 million to Pasir Ris.

Mr Teo, noting how the three housing estates have transformed over the years into modern and bustling towns, said commercial and other social facilities will also be upgraded to keep up with renewed residential areas.

For example, six sites in Tampines and Hougang have benefited from HDB's Revitalisation of Shops Scheme (ROS) to increase the vibrancy and competitiveness of shops in the heartland.

Under the scheme, HDB provides partial funding for shopkeepers to spruce up their shopfronts and carry out promotions to attract more customers. The scheme will be extended to seven more sites in the two estates.

Loyang Point shopping centre in Pasir Ris will also be revamped at the end of the year.

Long-time residents welcomed the improvements to their neighbourhoods and shopping areas.

Mr Lee Kam Mun, who has lived in Tampines Central since 1998, said residents have got a lot out of the upgrading programmes.

Said the 42-year-old terminal manager in the oil and gas industry: 'We have a nicer outlook in the estate. You come back and feel relaxed. There are also more common areas that encourage us to meet and make friends with neighbours.'

Source: Straits Times, 26 Jul 2010

Welcome to new look Serangoon North Village

2010-07-26T20:32:00.001+08:00

MERCHANTS of the former Serangoon North Neighbourhood Centre are giving the thumbs up to their newly upgraded shopfronts and walkways.

The area, known for its many pet shops, has been renamed Serangoon North Village under the Housing Board's Revitalisation of Shops scheme.

At a dinner marking the completion of the two-year $6-million project, Aljunied GRC MP Lim Hwee Hua said it was important to give new life to shops in the area.

'As you have more malls coming up, the shops experience competition. Therefore we want to ensure that they will always remain attractive to residents because they are actually more conveniently located,' said the Minister in the Prime Minister's Office.

Mrs Lim and fellow Aljunied GRC MPs - Foreign Minister George Yeo, Senior Minister of State (Foreign Affairs) Zainul Abidin Rasheed, Madam Cynthia Phua and Mr Yeo Guat Kwang - launched a sign with the area's new name located on top of Block 153 Serangoon North Avenue 1.

The revitalisation scheme upgrades the shopping environment and business operations of shops in town or neighbourhood centres. Works include flattening uneven ground, building walkways and creating spaces for residents to mingle.

The new Central Plaza between Blocks 151 and 152, for instance, has space for carnivals and performances. There is also a 'Pet Walk' promenade for pet shops.

'The grassy ground outside our shops used to be very uneven. It would also get muddy and smelly when it rained,' said Dr Edmond Tan, 51. He runs a veterinary surgery in the area. With the land flattened and walkways built, it has become more accessible to the elderly.

Serangoon North is one of three sites with such upgrading works completed this year. The others are Teck Whye Shopping Centre and Bedok Town Centre.

Dr Tan, who is first vice-president of the Serangoon North Merchants' Association, worked with the HDB and Aljunied Town Council to implement the scheme.

It was not easy carrying out the works, he admitted. The association took six months to persuade the 123 shops in the area to commit to the scheme.

Under the scheme, the HDB and town council foot half the bill, up to $10,000 for items directly benefiting shops such as awnings. Shop owners bear the rest of the cost.

Shop owners and residents also had to put up with the inconvenience of upgrading works.

For Madam Toh Ah Hong, fewer customers came to her incense shop once upgrading started.

'But business is picking up now, especially on weekends. It's cleaner and roomier,' said the 47-year-old.

Mrs Lim said the town council tried to dovetail the project with its regular upgrading works and the Lift Upgrading Programme. This minimised inconvenience for residents and shop owners.

Source: Straits Times, 26 Jul 2010

'Imbalance' in HDB resale market: Mah

2010-07-26T20:31:00.000+08:00

Record boost to supply should stabilise prices in about a year, he says

PRICES of HDB resale flats are high at present because of an 'imbalance' in supply and demand, which should be redressed by the record number of flats being released by the HDB this year.

The boost to supply should stabilise prices in about a year or so, said National Development Minister Mah Bow Tan yesterday, as he sought to address concerns over the cost of HDB resale flats, which has climbed steadily since 2008.

Speaking on the sidelines of a community event in Tampines, Mr Mah attributed the surge to strong economic growth and demand from first-time buyers, such as newly married couples, and owners looking to upgrade to bigger flats.

'I think at this point in time, there's still an imbalance,' he said. 'I hope that with HDB pushing out a record number of flats this year, this imbalance will be redressed over the medium term. I would expect that in another year or so, we should be able to stabilise everything.'

HDB launched almost 9,000 new build-to-order flats in the first half of the year, and will launch another 7,200 in the second half. The number is about 80 per cent more than for last year.

In addition, there are some 4,700 new flats under the design, build and sell scheme, in which HDB flats are built by private developers, and the executive condo (EC) housing scheme. In the pipeline are four more EC sites in Punggol, Pasir Ris, Bukit Panjang and Tampines, which should yield 1,900 units.

Resale prices for HDB flats rose for the eighth straight quarter between April and last month, surging 4.1 per cent from the previous quarter.

In the first half of this year, 17,598 resale applications were registered with HDB, compared to 16,630 for the same period last year and 14,121 in 2008.

The median cash over valuation (COV) - the cash amount paid upfront by a buyer over a flat's valuation by the HDB - also hit a record $30,000.

Mr Mah acknowledged this was 'equally a concern' as it made resale flats even less affordable, and urged first-time buyers to purchase their new home directly from the HDB instead.

He said: 'If you are a first-timer, then go for the build-to-order (BTO) market, where there is zero COV, where the prices are lower, where the flats are of newer design and so on.'

To newly married couples who say they cannot wait that long for a new flat, Mr Mah said the three-year waiting period was 'the norm for our standard, which is already higher than other cities'.

He added: 'If you want to, say, have a flat, zero waiting time, then obviously the price of the flats will be higher, and this is where the resale flat market comes in.

'That's why you have a disparity in price between resale flat and new flats. This cost difference reflects the time difference.'

Mr Mah said there were enough homes for first-time buyers and the increased number of flats being built would relieve the pressure on the resale market.

In the short-term, he said, it was not clear if prices would continue to rise.

'The economy for the first half was very strong, but all indications are that it may not be so smooth going in the second half; all indications are that there may be some slowdown. If that comes about, then obviously the demand for housing will also slow down,' he said.

PropNex chief executive Mohamed Ismail said the biggest group of people driving up the resale prices are owners of HDB flats who are motivated by the peak prices to sell.

'The majority of those who bought new four- and five-room HDB flats eight years ago, can probably make more than $100,000 cash profit now,' he said.

Newlyweds said getting a new flat from the HDB had its difficulties too.

Civil servant Jonathan Fong, 31, and wedding videographer Mylene Tong, 29, failed twice to get a new flat in the locations they wanted.

They eventually bought a three-room flat in Sin Ming Road in March for $237,000, with a COV of $29,000.

Source: Straits Times, 26 Jul 2010

HDB resale prices should stabilise in a year or so: Mah

2010-07-26T20:16:00.000+08:00

(SINGAPORE) Prices of resale flats should stabilise in a year or so as the Housing & Development Board (HDB) releases a record number of new flats into the market.

This was according to National Development Minister Mah Bow Tan, who spoke on the sidelines of HDB's 50th anniversary celebrations at Tampines yesterday.

Resale flat prices have been climbing in the last few quarters and they rose 4.1 per cent in Q2 from Q1 to a new high.

There is an 'imbalance' in the resale flat market, Mr Mah said. With the economy doing well, demand for resale flats from both first-time buyers and upgraders has been strong.

'I hope that with HDB pushing out a record number of flats, this imbalance will be addressed over the medium term,' he said. There should be stability 'maybe in another year or so'.

HDB will be launching 16,000 build-to-order (BTO) flats this year, 80 per cent more than in the previous year. Another 4,700 flats from executive condominium projects and the Design, Build and Sell scheme are potentially coming up.

It would be hard to say how resale flat prices will move in the short term, Mr Mah said. 'The economy for the first half was very strong, but all indications are that it may not be so smooth going in the second half.'

If the economy cools, 'the demand for housing will also slow down,' he said.

Accompanying the rise in resale flat prices was a hike in cash premiums which buyers pay. The median cash over valuation (COV) across all resale deals in Q2 was $30,000, up from Q1's $25,000.

Rising COVs are a concern but they are determined by demand and supply in the market and the government cannot intervene, Mr Mah said.

He advised first-time buyers to turn to the BTO market 'where there is zero COV, where the prices are lower, where the flats are of newer designs,' he said.

Source: Business Times, 26 Jul 2010

Consumer confidence in Q2 takes a tumble

2010-07-26T20:14:00.003+08:00

Singapore trails Vietnam but leads Malaysia, China, Indonesia, Thailand

(SINGAPORE) Consumers in Singapore remain among the most optimistic in the region - despite a drop in consumer confidence in the second quarter.

The Consumer Confidence Index of Singapore, as measured by InsightAsia, fell 12 points to 126 in Q2 after witnessing a strong upward trend since the lowest point of the recession. Singapore is still far above the neutral point of 100.

Consumers were thrilled when the economy emerged from the recession sooner than expected and are now becoming accustomed to positive economic circumstances.

InsightAsia, a market research group specialising in the Asia-Pacific region surveyed 10,800 people across six Asian markets.Although economic growth in Singapore continues to accelerate, consumers expressed lower confidence in economic circumstances. The downward correction of the Consumer Confidence Index is in line with other countries in the region that are also showing healthy growth figures. China, Malaysia and Vietnam also saw a decrease in consumer confidence - even though their economies are in good shape and have GDP growth forecasts of 5-10 per cent in 2010.

An unexpectedly swift recovery from the recession led to increasing consumer optimism, which then dropped slightly in Q2. Consumers in these countries remain confident, but their initial enthusiasm has waned somewhat.

Consumers in Singapore still feel that the economy is improving, though not as strongly as before. They have also moderated their expectations for future economic growth. Singaporeans maintain a high level of satisfaction with their financial well-being, but have moderated their optimism about the coming year.

Overall, Singaporean consumers still have a very positive view of economic circumstances, resulting in a Consumer Confidence Index of 126.

Singapore trails slightly behind Vietnam (128) but leads Malaysia (118), China (114), Indonesia (93) and Thailand (83); all countries that are recording positive growth figures.

Singapore's recovery from the recession continued into Q2. A record year-on-year GDP growth of 19.3 per cent outstrips the 16.9 per cent growth recorded in Q1 and far exceeds growth figures of other economies in the region.

This very strong growth was driven by exports and tourism. Exports increased particularly through pharmaceuticals and electronics, while new attractions drew more tourists to the island state.

The year-on-year growth figures are calculated against a low base, as the beginning of 2009 was the low point of the recession. Growth in the remaining quarters of 2010 will be calculated against higher base figures. Therefore GDP growth is expected to decelerate in the second half of 2010 and full-year growth is expected to register at 13-15 per cent.

The robust economic growth of China has benefited many other economies in the region. The Chinese government is taking measures to reduce the risks of overheating the economy. Lower demand in China will reduce the exports of other countries in Southeast Asia.

Along with a debt crisis in the EU and the hesitant recovery of the US economy, this may slow growth in South-east Asia in the second half of 2010. However, analysts are positive about growth prospects in the region. The IMF estimates regional economic growth for 2010 and 2011 of around 6 per cent.

The writer is head of Consumer Confidence Index at InsightAsia Research Group

Source: Business Times, 26 Jul 2010

Sales of landed homes picking up

2010-07-25T11:57:00.000+08:00

Surge in demand sees buyers paying higher prices, but rate of increase likely to slow

More buyers are picking up landed homes and paying higher prices amid the strong economic recovery, said a recent Savills Singapore study.

It found that 2,198 caveats were lodged for landed houses between January and June this year, which is more than 57 per cent of the 3,832 caveats lodged last year.

And the total value of these transactions reached about $7.2 billion, which is about 75 per cent of the value of what was sold last year, it said.

Savills noted that more homes priced $5 million and above were traded this year.

'The surge in demand could be that purchasers are seeing better value in landed homes, as condominium prices have soared beyond peak levels,' said its prestige homes and investment director Steven Ming.

Also, compared with prices of their non-landed counterparts, prices of landed homes were relatively stable during the recent economic downturn, he said.

Median landed home prices have increased by 6.2 per cent from $745 per sq ft (psf) in the first quarter to $791 psf in the second, according to data from Savills.

The rise over the past year has been 31.4 per cent, it said.

Last Friday, the Urban Redevelopment Authority released data showing that landed home prices are still climbing, but at a slower rate of 6.2 per cent in the second quarter this year, compared with 8.3 per cent in the first.

Prices of detached houses saw the highest rise of 6.8 per cent among the landed housing types, while terrace house prices rose by 5.6 per cent.

Two to three years ago, buyers could easily find a typical freehold landed home of around 1,600 to 1,800 sq ft for about $1.3 million to $1.5 million, said Colliers International's deputy managing director (agency and business services) and auctioneer, Ms Grace Ng.

Today, they must be prepared to pay a higher amount of $1.6 million to $1.8 million, she said.

However, there are still bargains to be found in the resale market if 'you spend time doing your homework', she said.

These are likely to be run-down houses that need a lot of work.

Or they could be old houses that were bought a few decades ago at relatively low prices, such that the owners may be happy to sell around today's valuation price instead of above it, she said.

Property consultants say the attraction of landed homes lies in the scarcity factor, as there is limited supply.

Even the recent floods won't affect landed home values - that is, in the long term.

'Floods won't affect values in the long term, but in the short term, buyers may turn away,' said Ms Ng.

For instance, in the Bukit Timah area, where only the main roads were flooded, homes remain attractive because of their proximity to schools and the city, she said.

Unless the floods become a common occurrence, they won't weigh down on prices, she added.

Landed home prices are likely to continue rising, though the rate of increase could slow further as price resistance has set in, said Ms Ng.

Savills senior manager of research and consultancy Christine Sun believes that more buyers are likely to enter the market as the economy continues to improve.

'Landed home prices will still increase, but unlikely at the 10 per cent rate that we saw around the middle of last year,' she said.

'We believe that price rises will hover around 5 per cent to 6 per cent per quarter for the rest of the year.'

Source: Sunday Times, 25 Jul 2010

No more 'House of Lims' after $137m sale

2010-07-25T11:56:00.000+08:00

In the biggest collective sale this year, an apartment block of 27 units has raised eyebrows for garnering 100 per cent 'yes' votes.

But more than 20 units there were actually owned by an extended family, the Lims, for decades.

At one point, three generations were living under one roof.

Meng Garden Apartments in Lloyd Road, off Killiney Road, has been sold to boutique developer TG Development (TGD) for $137 million.

The deal was sealed last Friday after the developer put down a 10 per cent deposit.

The majority of the apartments in the eight-storey block belonged to the 10 children of patriach Lim Siew Meng.

The former deputy managing director of local trading firm Lim Teck Lee bought the 35,639 sq ft plot of land from the Alkaff family before he died in 1976.

The Lims were living in a two-storey house, the original residence of the Alkaffs, in Lloyd Road before building Meng Garden in 1985.

Mr Alwi Alkaff, 82, said his father, Mr Syed Mohamed Alkaff, sold the house to the Lims as 'the Alkaff family was getting bigger and every member wanted his own house'.

The Lims declined to be interviewed.

TGD managing director Ong Boon Chuan told The Sunday Times that an upmarket development similar to those it developed in Sentosa Cove will be built there.

The freehold site is zoned for residential use. It has a 2.8 plot ratio and a 10-storey height control.

At about $1,380 per sq ft (psf) per plot ratio, it is 'a good deal', said Mr Ong. 'The land is squarish and easy to design, and it is near Somerset MRT.'

This is not the first time residents have put the property up for collective sale. In 2007, they asked for $1,488 psf per plot ratio, but there were no takers.

CB Richard Ellis brokered this collective sale. The tender, put up last month, was reported to have attracted six bidders, said The Business Times.

Age has taken its toll on the property. Pieces of discarded furniture were seen lining one end of the lift lobby.

The security guard house, near the lift lobby, looked dusty and reeked of stale cigarette smoke.

Property consultancy Cushman & Wakefield's managing director Donald Han said that an old development is like an old person whose health-care costs go up with age.

'In some cases, it is not worth repairing the water-proofing of floors or lifts,' said Mr Han.

In addition, a collective sale today can give home owners a 30 to 50 per cent premium over the selling price in the second-hand market, he said.

Source: Sunday Times, 25 Jul 2010

Rents rise for bigger HDB flats

2010-07-24T12:48:00.000+08:00

THE Housing Board (HDB) rental market continues to strengthen with larger units showing the biggest rental jump.

Overall median monthly rentals inched up in the second quarter, helped by the demand from those fleeing from high private property rents. Foreigners and locals who have sold their homes in a hot market are among those boosting HDB rents, experts say.

Overall, median rentals for two- and three-room flats were flat at $1,200 and $1,500 respectively. But four-room, five-room and executive flats saw median rental increases of between $50 and $100 a month from the previous quarter.

Four-room flat monthly rentals rose to $1,800 from $1,750, five-room flat rentals were $2,000 from $1,900 and executive flat rentals climbed to $2,100 from $2,000 in the previous quarter.

Median rentals for executive flats in Queenstown also passed the $3,000 mark for the first time since the fourth quarter of 2008, rising to $3,200. There were, however, fewer than 10 of such sublets.

Five-room flats median monthly rentals in the central region also hovered over the $3,000 benchmark for the second consecutive quarter at $3,150.

Executive flats in Jurong East saw one of the largest jumps, of $300, from $2,100 to $2,400, while areas such as Bukit Batok and Sengkang generally saw higher rentals across all flat types.

Property experts say these second quarter median rentals have hit the peak previously achieved in the second half of 2008. They expect further rise and new benchmarks to be set later this year.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said as private rentals rose steadily, some tenants were likely to look for cheaper alternatives.

'The rate of rental increase might have outpaced the rental budget and so some tenants might prefer an HDB flat in a better location,' he said.

HSR executive director (agency) Jeffrey Hong said that the strong demand is partly due to an influx of foreigners this year into sectors such as information technology, as companies have started hiring again.

Some Singaporeans who sold their property to cash in on high property prices have also decided to rent temporarily instead of buying immediately, he said.

Ms Hwa Hui-en, 24, a social worker, has been renting a four-room flat with four others near Ghim Moh for $2,000 a month since November last year.

She is worried her rent might rise when her lease ends in November as some of her friends have had to move out of rented homes due to higher asking rents.

'Rentals are quite costly... We're splitting the rent among five people and are sharing rooms now. If we don't, it will probably take up a huge portion of our salary, maybe even one quarter of it.'

HDB said subletting deals rose about 15 per cent from 6,606 in the first quarter to 7,595 in the second - taking total approved sublet units to 30,500.

Source: Straits Times, 24 Jul 2010

Private home sales slower, but prices up

2010-07-24T12:45:00.000+08:00

Prices hit new high, could rise further with economic recovery

SALES of private homes slowed towards the end of the second quarter but prices still kept heading north into record territory.

Prices rose 5.3 per cent in the second quarter - above the preliminary estimate of 5.2 per cent and not far from the first quarter rise of 5.6 per cent.

According to Urban Redevelopment Authority (URA) data released yesterday, prices are up 11.6 per cent since January and are expected to continue climbing although the pace may ease, said analysts.

Prices are now at record levels, eclipsing the 1996 peak, after shrugging off a dip in sales that began in May when Europe's debt crisis rocked global stock markets, observers said.

Rents were also rocketing - up 5.9 per cent in the second quarter to take the half-year rise to 10.9 per cent. Rents fell by 14.6 per cent last year.

'The continuing recovery in the economy facilitated the increased hiring of expatriate staff, which in turn, drove the rental market,' said Mr Li Hiaw Ho, CBRE Research's executive director.

Cushman and Wakefield managing director Donald Han added: 'In the second half of last year, prices went up more than 20 per cent but rents fell. So, there was some fear of a bubble forming.

'But prices are now moving in line with rent rises. As long as rents go up, the price rise should be supported.'

Non-landed home prices rose the most in suburban areas, up 5.7 per cent, from a 4.3 per cent increase in the first quarter.

City-fringe home prices were up 4.6 per cent while city-centre ones rose 5.4 per cent.

Prices of landed homes also continued to surge, climbing 6.2 per cent in the second quarter after jumping 8.3 per cent in the first quarter.

Luxury homes are the only sector yet to reach record heights, experts noted.

Yesterday's URA data also showed that 4,033 new homes were sold in the second quarter, down about 8 per cent from the first.

As at the second quarter, there were 61,831 private residential units in the pipeline. Of these, 32,630 units were still unsold. The URA said: 'This number is equivalent to about three years of supply based on the average take-up of about 11,300 units per year over the last three years.'

While some buyers hesitate, others have been snapping up property.

Copywriter Daryl Lee, 34, said: 'The last thing I want is to lock my cash up in a mortgage when all people are doing is chasing higher prices to pay higher asking prices.'

Another potential buyer Alex Wee, 37, said: 'On the one hand, things are pricey. But on the other hand, we're afraid that if we don't buy, we will miss the boat.'

Accounts executive Kris Lau, 33, who bought a small investment unit at a newly released project, 368 Thomson, after selling her HDB flat, said: 'It's a good time to cash out and upgrade.'

Jones Lang LaSalle's head of residential project sales, Mr David Neubronner, told The Straits Times: 'Prices... should take a breather. But given the current backdrop where our economic recovery is generating wealth, they are likely to continue to rise this year.

'Quite a lot of people are parking their money in property for the long term. In the worst-case scenario, I think prices may stay flat.'

Ngee Ann Polytechnic real estate lecturer Nicholas Mak believes private home prices will continue to rise this year and possibly into next year but at less than 5 per cent a quarter as sales slow.

The level of speculation now is within manageable levels, he felt.

URA data shows that sub-sales fell to 723 units in the second quarter, from 996 in the first.

Mr Li said the surprisingly strong economic growth in the second quarter will help keep market sentiment positive.

'However, as the Government is also anticipating a slowdown in the growth momentum for the rest of the year, the residential market is likely to move at a more moderate pace,' he said.

Sales of new homes may still reach 14,000 units this year - below last year's 14,688 units while home prices may rise by 12 to 15 per cent, he said.

Mr Mak is looking at a price rise of 16 to 21 per cent this year.

Meanwhile, office rents rose 1.1 per cent in the second quarter compared with 0.4 per cent in the first quarter.

Rents for shops and industrial properties rose by 0.5 per cent and 1.3 per cent respectively in the second quarter.

Source: Straits Times, 24 Jul 2010

Inflation rises slowest for low earners

2010-07-24T12:43:00.000+08:00

RISING prices, in the wake of Singapore's strong economic rebound, affected households across all income groups in the first six months of this year, according to figures released yesterday.

But cost increases were slowest for the lowest earners - those in the bottom 20 per cent by household income.

This is a departure from recent years when rising prices hit low-income households hardest. Figures from the Statistics Department show that the consumer price index (CPI) for them rose by 1.6 per cent over the same period a year ago.

By contrast, the rise was 2.1 per cent for the highest-earning households - the top 20 per cent of households.

The CPI increase for the 60 per cent of households in between these two segments was 1.9 per cent. The overall CPI for all households was 2.0 per cent in the first six months of the year.

A widely used index for inflation, the CPI assesses changes in the prices of a basket of goods and services - such as food, housing and transport - commonly bought by most households.

The Department of Statistics, which released the figures, said the CPI increase for the lowest 20 per cent income group was mainly due to higher electricity tariffs, service and conservancy charges and food prices among other things.

'The highest 20 per cent income group experienced a higher inflation rate compared with other income groups... on account of their relatively larger weights for cars and petrol, which registered significant price increases during this period,' it added.

A cut in certificate of entitlements this year has sent their prices up.

West Coast GRC MP Ho Geok Choo said one reason inflation was moderated for poorer families was due to the efforts of cooperatives like NTUC FairPrice in keeping prices relatively stable.

Such families spend a larger proportion of their income on basics like food.

But economist Tan Khee Giap of the Lee Kuan Yew School of Public Policy said there could be a return to the trend of the poorest being hit hardest if their wages do not surpass inflation as the economy picks up. 'One should not read too much into these figures yet,' he said.

Holland-Bukit Timah GRC MP Liang Eng Hwa, like Madam Ho, noted that as costs of other goods and services rise, the lower-income may feel the pinch.

For example, utility prices have risen, he noted.

In January, electricity prices rose 5.4 per cent to 22.87 cents per kilowatt hour (kwh), fuelled by rising oil prices. This worked out to a hike of $4.70 a month for a four-room flat.

Electricity prices went up further to 23.56 cents per kwh in April, and now stand at 24.13 cents per kwh.

Said Mr Liang: 'While inflation is not really a concern yet, it is something the Government must watch closely.'

In a separate statement, the Statistics Department said inflation for last month climbed less than expected.

Prices rose 2.7 per cent compared to the same month last year, below economists' forecast of a 3.5 per cent jump.

Almost all goods and services categories saw price inflation for the year to June, led by rising transport costs.

But when compared to May this year, the June prices dipped by 1 per cent.

This was due to lower car prices compared to May and petrol prices, service and conservancy charge rebates, and cheaper clothes and shoes during the Great Singapore Sale.

Still, economists expect inflation to pick up in the coming months, although Citigroup's Kit Wei Zheng believes the pace will moderate as economic growth eases in the second half of the year.

Most economists also believe the Monetary Authority of Singapore will continue its policy of a gradual appreciation of the Singapore dollar at its next review, rather than tighten policy to further counter inflation.

Source: Straits Times, 24 Jul 2010

Resale HDB flat prices hit new high

2010-07-24T12:41:00.000+08:00

Cash over valuation now $30,000 even as supply of new flats increases

RESALE prices for HDB flats have smashed records for the eighth straight quarter with a surge of 4.1 per cent in the April to June period.

Prices passed the 1996 peak back in 2008 and have not looked back since.

And the march shows no sign of letting up, with median cash over valuation (COV) at a record $30,000 in the second quarter.

This is 20 per cent ahead of the $25,000 in the January to March quarter.

COV is the cash paid upfront by a buyer over a flat's valuation, and is often an indication of demand levels.

The HDB figures out yesterday show resale prices are almost 18 per cent above the previous peak in the last quarter of 1996.

Meanwhile, the HDB said yesterday it launched almost 9,000 new flats in the first half - equal to last year's total supply - and will launch another 7,200 in the second half to meet demand.

It will launch 1,000 new flats in Jurong West and Bukit Panjang this month. The total home supply will be complemented by 4,700 new homes under HDB's design, build and sell scheme (DBSS) and recently sold executive condo sites.

Despite this, resale activity keeps growing. Transactions hit 9,114 in the second quarter, up about 7 per cent on the first.

Nearly all deals involved cash paid upfront. The percentage of resale transactions done above valuation increased to 96 per cent, up from 93 per cent in the previous quarter.

The pace being set by buyers and sellers has also prompted fresh concerns on whether the market is overheating.

In estates like Queenstown the median resale price for an executive flat was an eye-popping $781,500 in the second quarter and $685,500 in Bishan.

The median resale price for five-roomers was $682,500 in Marine Parade and $675,000 for Queenstown.

Associate Professor Sing Tien Foo of the National University of Singapore's real estate department noted that apart from the price index surpassing the 1996 peak, it has also increased by more than 60 per cent compared with 2003 prices.

He said that price increases appear to be supported by strong economic fundamentals for now, with demand coming from upgraders, downgraders, PRs and home buyers who cannot wait three years for new HDB flats.

As government policies on resale flats discourage speculation, this price growth is unlikely to be a housing bubble, observed ERA Asia-Pacific associate director Eugene Lim.

Prof Sing added: 'But if price rises continue unabated, we should be concerned. When deviations from fundamentals are too large, some corrections in prices could occur.'

Mr Lim noted that the robust resale market is having a spillover effect on private property as HDB owners can upgrade thanks to the relatively high prices they can get for their flats.

Values in the private property market rose 5.3 per cent in the second quarter over the first despite slowing sales.

But as private property prices inch up, some buyers in that market could turn to the HDB resale sector, adding to demand, said PropNex chief executive Mohamed Ismail.

Some analysts believe prices have reached a new era.

'Property prices move in cycles and prices will go up and down. But generally, it will move in an uptrend due to scarcity of land in Singapore,' said Mr Lim.

'Even if prices come down, I think it'll still be higher than five years ago. It is unlikely we will go back to that level.'

While property agents say home buyers - especially first-timers - are getting increasingly disgruntled about blazing resale prices, some estates are still selling at levels below the 1996 peak.

PropNex agent Steven Ng, who recently helped a couple in their 50s sell a five-room Bishan flat for $615,000 - $70,000 above valuation - said the sellers were happy as they bought it at less than half that amount more than 10 years ago.

'But some sellers in Bishan who bought at 1996 peak have still yet to see price levels at the price they paid,' he said.

Source: Straits Times, 24 Jul 2010

CapitaRetail China's net property income up 8.8%

2010-07-24T12:32:00.000+08:00

SHOPPERS in China kept up their pace of spending and helped CapitaRetail China Trust (CRCT) deliver robust results in the second quarter.

The property trust saw net property income rise 8.8 per cent year-on-year to 97.2 million yuan (S$19.7 million) as revenue increased at its busy malls and property expenses decreased.

Distribution per unit was up 6.7 per cent at 2.07 cents from 1.94 cents a year ago, while distributable income rose 7.3 per cent to $12.9 million. Payouts will be distributed on Sept 24.

Gross revenue rose 3.7 per cent to 145.1 million yuan year-on-year, but fell 2.8 per cent in Singapore dollars because of the local currency's rise against the yuan in the three months to June 30 compared with a year ago.

Mr Victor Liew, chairman of CapitaRetail China Trust Management, said resilient domestic consumption is still driving growth in China, whose economy is expected to grow 10.5 per cent this year.

'We continue to benefit from the Chinese government's stimulus measures to boost domestic consumption and maintain stable and sustainable economic growth,' he said.

CRCT said tenant sales grew 28.8 per cent while shopper traffic was up 14.4 per cent over levels last year. Occupancy rates are at 96.1 per cent.

The trust's portfolio consisted of eight retail mall properties in five cities worth 5.8 billion yuan as of June 30.

Net asset value per unit as of June 30 was $1.13. CRCT's units closed up one cent at $1.26 yesterday.

Separately, Ascott Residence Trust reported a 4 per cent rise in distribution per unit to 1.87 cents in the second quarter from 1.79 cents a year ago.

Distributable income was up 5 per cent at $11.6 million while revenue rose 3 per cent to $44.4 million. Payouts will be made on Aug 27.

Ascott Residence Trust Management's chief executive, Mr Chong Kee Hiong, said the rise in revenue was led mainly by a better performance in China and Singapore arising from higher occupancies and rental rates.

'The level of business activities in Singapore has increased in line with the strong economic growth, resulting in higher demand for serviced residences,' he said.

Ascott Reit's portfolio has a total asset value of $1.59 billion, comprising 38 properties with 3,644 units in 11 cities across seven countries.

Net asset value per unit as of June 30 was $1.38. Ascott Reit's units closed down one cent at $1.23 yesterday.

Source: Straits Times, 24 Jul 2010

Asia recovering well but risks ahead: GIC

2010-07-24T12:30:00.000+08:00

Turmoil in Europe, protectionist pressures may hurt world economy

ASIA is recovering well from the financial crisis but there are still risks to the world economy, including the turmoil in Europe and protectionist pressures in many countries, according to Dr Tony Tan, deputy chairman of the Government of Singapore Investment Corporation (GIC).

Dr Tan told the Swiss Re Forum Singapore yesterday that the global recovery is likely to continue into the next year but at a more moderate pace.

But he cautioned that the rebound is 'fragile' and 'negative shocks could push the global economy towards a recession sooner than expected'.

And while growth prospects are much better for Asia than for the developed world, Dr Tan does not see Asia 'aggressively challenging' the global order, which has benefited the region for decades.

'Asian countries, including China, generally share the view that a multilateral, rules-based international order is critical to their long-term growth and development,' said Dr Tan. 'Asia's rise therefore is not inevitably a zero-sum geopolitical game where the US and Europe must decline as Asian countries grow.'

Dr Tan flagged the turmoil in Europe, saying that growth there should be weaker at around 1 per cent.

According to some analysts, there are growing signs that Europe's sovereign debt crisis is feeding through into the

euro-area economy in the form of a sharp rise in unemployment and a slowdown in manufacturing recovery.

Dr Tan warned that 'protectionism also remains a risk despite the recovery, given high unemployment and what seems to be, for the first time in many years, increasing tensions between American and European businesses and the Chinese policy environment'.

Dr Tan's comments come at a time when investors are increasingly upbeat about Asia's growth outlook, but less bullish about the global economy.

Earlier this month, the Asian Development Bank raised its 2010 forecast for aggregate growth across Asia - embracing East Asia excluding Japan, South-east Asia, South and Central Asia as well as the Pacific island economies - from 7.5 per cent to 7.9 per cent.

Yet Citigroup forecast global growth to rise 3.7 per cent this year and 3.3 per cent next year, trimming its projections by 0.1 percentage points for each year.

Dr Tan said the post-crisis global economic and financial environment will be affected by three major trends.

The first is that the developed world will take a 'long time' to fully heal from the crisis.

The second is the increasing importance of the emerging economies, anchored by Brazil, Russia, India and China.

And the third major trend, as Dr Tan describes it, will be 'increased vulnerability' to negative events, and 'extreme reliance' on government policies for both support and far- reaching reforms over the next few years.

Dr Tan said: 'The challenge for policymakers in many developed economies will be to convince markets that they have credible plans to ensure sustainable public finances over the medium to long term, while minimising the negative short-term impact on growth.'

In the emerging economies, policy-makers will have to deal with rising inflation and possible asset price bubbles, he said.

Source: Straits Times, 24 Jul 2010

Tony Tan: global recession risk higher now

2010-07-24T11:47:00.000+08:00

Dangers to world economy include Europe's debt turmoil, deleveraging in the United States, and protectionist pressures

A FRAGILE economic recovery could see the world tip back into recession 'sooner than expected', says Tony Tan, deputy chairman of the Government of Singapore Investment Corp (GIC).

Dr Tan, also GIC's executive director and chairman of Singapore Press Holdings (SPH), told delegates at the Swiss Re Forum here yesterday that downside risks to the global economy have increased, highlighting three in particular: the debt turmoil in Europe, deleveraging in the United States, and protectionist pressures around the world.

'It will take a long time for the developed world to fully heal from this crisis,' Dr Tan said. 'The economic recovery, while real, is fragile and there is a risk that negative shocks could push the global economy towards a recession sooner than expected.'

Meanwhile, the developing economies will gain in economic importance and will expect more say on world affairs. 'The shift in economic power to the emerging world will likely increase geopolitical risks,' he said. 'Conflicts could also arise over access to natural resources.'

Investors, meanwhile, will have to place a larger proportion of their assets in emerging markets. 'Far from being a risky and perhaps optional part of their portfolios, emerging markets will become a core and unavoidable asset class in global portfolios,' he said.

But one major risk investors face is that the global recovery has so far been supported by extraordinarily benign government policies. 'Changes in policies or mistakes will thus have a significant impact on the global economic and financial environment,' Dr Tan said. 'A key challenge for policymakers is to properly time the withdrawal of unprecedented monetary and fiscal policies.'

However, governments will have to juggle exit policies with, in some cases, the pressing need to repair public finances. 'The challenge for policymakers in many developed economies will be to convince markets that they have credible plans to ensure sustainable public finances over the medium to long term, while minimising the negative short-term impact on growth,' Dr Tan said.

Asia meanwhile will have its own set of problems. 'Asia will increasingly face labour, natural resource and commodity constraints to its high-growth strategy.' As well, growth will have to depend on a more balanced economic model in that case, he said, which should boost Asian currencies and consumption. But policymakers will have to beware asset price bubbles, rising inflation and populist anger in the developed world that could lead to 'excessive regulation and protectionism', he warned.

Dr Tan said: 'Asia is at the cusp of the next stage in its development. There will likely be bumps along the way - perhaps a few crises - but if we learn the right lessons from history, especially those of the recent Great Crisis, Asia will innovate and adapt

Source: Business Times, 24 Jul 2010

Churches' mall deals in the clear

2010-07-24T11:46:00.000+08:00

New Creation and City Harvest don't flout new rules but will have to abide by usage curbs: URA

THE commercial investments of New Creation Church and City Harvest Church do not infringe the Urban Redevelopment Authority's (URA) new guidelines, it has been clarified. But plans for the one-north hub and Suntec Convention Centre will have to comply with restrictions on the use of commercial space for worship, prayer and preaching.

Guidelines made public on Tuesday stated that commercial premises 'cannot be owned by or exclusively leased to religious organisations', raising questions over City Harvest's minority stake in Suntec Singapore and plans to spend $310 million on a move there next year, as well as New Creation Church's joint venture via business arm Rock Productions with CapitaMalls Asia, to build a $1 billion lifestyle hub at one-north.

In response to a BT query, URA clarified that religious groups whose business units own commercial property do not contravene the guidelines, meant to provide clarity and keep commercial space secular.

These guidelines, the URA spokesman said, concern the limited and non-exclusive use of auditoriums, function halls, convention halls and cinemas within commercial and hotel developments for religious activities. 'It is in this context that such premises cannot be owned by, or exclusively leased to, religious organisations,' the spokesman said.

'The ownership of these premises can, however, be held by commercial entities of the religious organisations as these commercial entities also conduct other secular events at these premises,' URA added. For instance, New Creation's Rock Productions, which leases the Rock Auditorium in Suntec City from Suntec Reit, rents it out for events and meetings on weekdays.

However, both the one-north complex and Suntec Convention Centre are commercial developments, so the churches' plans to shift worship services there in future will have to comply with the new guidelines.

Each religious entity can use up to 10,000 square metres of a commercial development's space at any one time, for up to two days a week, while each commercial landlord cannot rent out more than 20,000 sq m or 20 per cent of a development's gross floor area, whichever is smaller.

Current leases to religious organisations at Suntec fall within these limits. New Creation's weekend services use The Rock Auditorium, which has a gross floor area of about 3,500 sq m, and a few other cinema halls and rooms.

Things are not as clear at the Singapore Expo, which reserved comment when contacted about compliance with the new guidelines. Currently, City Harvest rents Hall 8 (10,000 sq m) while Faith Community Baptist Church (FCBC) rents the Max Pavilion and Hall 9 (10,000 sq m each). The smaller Bethesda Community Church rents halls covering 844 sq m. The total floor space leased by these churches thus appears to exceed the 20,000 sq m limit.

But some in the property line point out that the guidelines only govern space used for religious activities - namely worship, prayer and preaching - and that the Expo's halls are easily partitioned. FCBC also said that Hall 9 is used largely as a foyer and holding area for the congregation before and after services.

In any case, URA said on Tuesday that it will 'exercise flexibility to allow some religious organisations sufficient time to meet the guidelines' so as to 'minimise disruption to their current activities'.

Source: Business Times, 24 Jul 2010

Broad-based growth in Q2 property prices

2010-07-24T11:43:00.002+08:00

Momentum of recovery in private residential rents also picked up

PRIVATE home prices generally rose at a slightly slower pace in Q2 than they did in Q1, but latest official numbers show a broad-based growth in property prices - with stronger quarter-on-quarter gains for office, shop and industrial properties, as well as HDB resale flat prices in Q2 than in the first quarter.

The momentum of recovery in private residential rents also picked up in the second quarter, supported by an acceleration in hiring of expats as Singapore's economy continues to expand.

'Sentiment among developers and market watchers probably moderated from the end of first quarter as a result of the eurozone's economic problems, but the recent spectacular official GDP growth forecast for Singapore has probably helped to restore some confidence,' said Real Estate Developers Association of Singapore CEO Steven Choo.

The Urban Redevelopment Authority's (URA) benchmark overall price index for private homes rose 5.3 per cent in the second quarter over the preceding quarter, close to the 5.6 per cent per cent hike in Q1.

The price index for office space increased 4.6 per cent quarter on quarter in Q2, a bigger gain than the 1.8 per cent quarter-on-quarter rise in Q1.

Likewise, the shop price index went up 3.9 per cent in Q2, following a 1.8 per cent pick-up in the first three months. URA's flatted factory and warehouse price indices rose 5.4 and 9.4 per cent in Q2. In Q1, each of these increased 1.5 per cent.

In the private housing market, prices of detached houses rose 6.8 per cent in Q2, slower than the 9.6 per cent increase in Q1. Semi-D and terrace houses appreciated 6 per cent and 5.6 per cent respectively in Q2 - compared with increases of 7.5 and 7.4 per cent in the first three months.

Non-landed home prices in Core Central Region (which includes the prime districts, Marina Bay and Sentosa Cove) climbed 5.4 per cent in Q2, higher than the 4.4 per cent growth in Q1. Likewise, the price index for Outside Central Region (where suburban condos are located) rose 5.7 per cent in Q2 after increasing 4.3 per cent in Q1.

However, in Rest of Central Region the pace of price gain slowed from 7.9 per cent in the first quarter to 4.6 per cent in Q2.

In the primary market, developers sold a total of 4,033 private homes in Q2, down 7.9 per cent from Q1. In the secondary market, strong buying momentum was also seen in the resale market, with 4,682 private homes changing hands in Q2, although this was 5.6 per cent lower than the first three months of the year. However, subsale volumes eased 27.4 per cent, from 996 deals in Q1 to 723 in Q2.

'Resales were strong in Q2 because prices are more reasonable for older, completed properties than new project launches. On the other hand, subsales (which are secondary-market deals involving projects that have yet to receive Certificate of Statutory Completion) come in waves. Those who bought homes from developers in the past few months are probably waiting for prices to rise further before they offload their units,' suggests a market watcher.

In the leasing market, URA's All Residential rental index rose 5.9 per cent in Q2 over the preceding quarter, compared with a 4.7 per cent quarter-on-quarter gain in Q1. The index has appreciated 10.9 per cent since end-2009.

Rents accelerated for both landed and non-landed private homes. Terrace houses led the landed segment, with rents rising 6.6 per cent in Q2, followed by semi-detached houses (up 5.6 per cent) and detached (up 4.6 per cent). For non-landed homes, rents in Core Central Region appreciated the most, by 6.4 per cent, followed by Outside Central Region (up 6.1 per cent) and Rest of Central Region (5.1 per cent).

However, the latest All Residential rental index is about 11.1 per cent below its peak in Q2 2008.

Jones Lang LaSalles' head of residential Jacqueline Wong said the latest official figures confirm feedback from the ground. Monthly rentals of four-bedroom apartments in high-end developments such as Grange Residences, Draycott 8 and Ardmore Park are hitting $16,000-$18,000 on average - an improvement from $14,000-$15,000 in the second half of last year.

'But we still haven't achieved the peak levels of $18,000-$22,000 seen in the late 2007 to mid-2008 period,' Ms Wong added. 'We're seeing rehiring of expats again but housing allowances are not as generous as before.'

Ms Wong is predicting flattish rents until the end of this year, citing new competition with the impending completion of The Orchard Residences and The Marq on Paterson Hill.

URA numbers show 4,379 private homes received Temporary Occupation Permit (TOP) in Q2, compared with 1,407 units in Q1. The surge in new completions pushed up the islandwide vacancy rate for private homes to 5.4 per cent at end-Q2, from 4.6 per cent at end-Q1. But this could ease again as owners or tenants move into the new homes.

Major residential projects completed in April-June 2010 include One Amber, Marina Bay Residences, Dakota Residences and The Arte.

With a further 4,958 units expected to receive TOP by year end, the full-year tally will be 10,744, slightly above last year's 10,488 units

Source: Business Times, 24 Jul 2010