Thursday, December 31, 2009

Singapore’s Q4 growth is 3.5%, and minus 2.1% for whole year: PM Lee

Singapore achieved 3.5 per cent growth in the fourth quarter of 2009 – after negative growth in the first and second quarters, and 0.6 per cent growth in the third quarter.

But for the whole year, growth is still negative at minus 2.1 per cent.

The Trade and Industry Ministry had forecast GDP growth for 2009 at minus 2.5 per cent to minus 2.0 per cent.

Charting out the goals for 2010 in his New Year Message, Prime Minister Lee Hsien Loong said the country must shift gears to grow by a qualitative improvement. And that would involve transforming the economy, developing skills, and growing talent – both locally and from abroad.

Prime Minister Lee said it has been a volatile year for the Singapore economy.

In the first quarter of 2009, trade plunged by a third and GDP fell 10 per cent.

But the country responded vigorously by focusing on keeping people in jobs, and helping those who lost their jobs to find new ones.

Today, the situation is brighter. The economy is growing again, and has recovered much of the ground since the recession began in 2008.

Mr Lee said that while the government continues to track short-term economic trends closely, it must also secure Singapore’s long-term position.

For this, companies must add value – by doing things more efficiently, restructuring businesses as conditions change, and venturing into new, promising areas.

Workers must up-skill, re-skill and multi-skill.

And now that job prospects have improved, Mr Lee cautioned that workers must not think this was no longer urgent.

The Economic Strategies Committee, set up in the middle of 2009, is reviewing the longer term strategies for growth, and will propose policies to achieve the country’s full potential.

It will publish its main recommendations soon, which the government will respond to in the coming Budget.

Mr Lee said Singapore must grow the economy and sustain good jobs, so that all citizens can share in the benefits.

However, he cautioned that in terms of total GDP, the economy is likely to expand more slowly than before.

Singapore must make up for this by expanding its external wing and focusing on raising per capita income, through up-skilling and economic upgrading.

In that way, Singa­pore can continue to prosper and every Singa­porean can look forward to a better life.

So Mr Lee urged Singaporeans to give of their best, and stay united – for a brighter future in the post-crisis world.

Mr Lee added that as Singapore transforms its economy, it must also deal with new long-term issues, and one of them is climate change.

He said: “Our lifestyles must change, for example by driving less and relying more on public transport. Buildings must become more energy efficient, for example through improved insulation and more efficient air conditioning.

“Industries, especially those with energy-intensive operations, must find ways to produce more output with less energy. Over time, our economic structure must evolve to require less energy inputs.”

Mr Lee wishes all Singaporeans a Very Happy New Year.

Source: Channel News Asia, 31 Dec 2009

Singapore’s economy seen as growing between 3 and 5% next year

Singapore’s gross domestic product climbed by 3.5 per cent in the fourth quarter of 2009, but growth for the full year is still negative at minus 2.1 per cent.

In his New Year message, Singapore Prime Minister Lee Hsien Loong said that next year could see 3 to 5 per cent growth.

And observers believe this could result in a move away from manufacturing as the key driver of Singapore’s economy.

After a difficult start to 2009, Singapore’s economy has ended the year on a more cheerful note.

In his New Year message, Mr Lee said that the fourth quarter of 2009 saw GDP climb 3.5 per cent.

However, GDP growth for the full year still stands at minus 2.1 percent.

Current estimates put 2010’s GDP growth at between 3 and 5 per cent, and observers expect manufacturing to play an increasingly smaller role in the economy next year.

Alvin Liew, economist, Standard Chartered Bank, said: “If we look at current trends themselves, and what happens in developed economies in the West, this is clearly not a sustainable picture. To keep a manufacturing base that high… But at the same time, as we move towards a more developed stage in economic development, we are expecting services to play a bigger and bigger role as the economy develops.”

Financial services are among those expected to see the most growth next year, while tourism-linked industries are also likely to improve once Singapore’s two integrated resorts open.

But observers are waiting to see how the global economy unwinds current support packages as this could pose a risk to growth.

Selena Ling, head, Treasury Research & Strategy, OCBC Bank, said: “A lot of the private demand in key economies like the US, and certain parts of the eurozone, and in Japan in particular, it is really relying on government stimulus to keep consumption spending going.

“So once that tails off, you may also see final demand tailing also. That will have implications for manufacturing, especially exports for Asia, including Singapore.”

The private sector has welcomed the return the growth. But business leaders said companies would need to work hard to maintain that growth next year. That is because manpower issues could become a concern as the fast-growing services sector seeks to fill its ranks.

Source: Channel News Asia, 31 Dec 2009

Target segment for smaller HDB flats may be shrinking, say housing analysts

The Housing and Development Board’s (HDB’s) latest Build-To-Order (BTO) exercise saw lukewarm demand for smaller units in non-central areas.

Housing analysts said this may be due to a shrinking target segment for smaller flats.

Singaporeans like to think big, especially when it comes to housing. But Singaporeans wanting a bigger house may not be the only reason for the low demand for smaller flats.

Applications for two-room units were only 44 per cent filled in Bukit Panjang and 63 per cent filled in Sembawang, while demand for three-room units was only one to two times the number of flats offered.

This contrasted sharply with four-room flats, which were six to seven times over-subscribed.

Analysts said the smaller flats sold through BTO exercises target a select group – low-income families. But this segment is facing the squeeze, with supply appearing to outstrip demand.

Nicholas Mak, lecturer, Real Estate, Ngee Ann Polytechnic said: “One possible reason could be the low-income ceiling that is imposed by HDB, which is only about S$2,000 for a two-room flat.

“Over time, Singaporeans’ income level has actually risen. So I think it is time that HDB might have to review this income ceiling level.”

Smaller flats are priced lower for greater affordability, with two-room units in Bukit Panjang and Sembawang selling below S$100,000.

But low-income families hit by the economic downturn may still be unable or reluctant to commit to a property.

Chris Koh, director, Dennis Wee Group said: “Because of the economic situation, many people started to become a bit more conservative and reserve, and possibly not everyone had the confidence that the market has completely turned to go in and buy a property.

“So for the low-income group, I will admit the timing could not have been right for them.”

Mr Koh added HDB may have overestimated the demand for smaller flats, and suggested that fewer of such units be built.

HDB said since it resumed the building of two-room flats in 2006, 76 per cent have been taken up.

Mr Koh said: “To be fair, there will always be a small group of low-income families who require small flats. What I propose is that we don’t build that many small flats. We cater to the group that needs small flats and not build that many.”

3,700 smaller flats were offered this year, compared to 1,164 in 2008.

HDB said that although the demand for two-room flats may be lower initially at launch, take-up rates improve when the flats are nearer completion.

For instance, when Punggol Vista was first launched in August 2007, the take-up rate was 20 per cent for two-room flats. As the project neared completion, the take-up rate improved to 95 per cent.

HDB is monitoring the situation and will adjust the supply to meet the needs of Singaporeans.

Source: Channel News Asia, 31 Dec 2009

Impact of Orchard Road’s new malls on older malls appears mixed

There is much to attract shoppers to Orchard Road this year-end shopping season. With three new malls open this year in the prime shopping district, retailers have pulled out all the stops to attract customers.

And while the new malls enjoy the novelty factor, the more established ones appear to be holding their own.

For instance, Palais Renaissance said it saw an initial drop in traffic of between 10 per cent and 20 per cent, after the new malls came up. However, it noted that shoppers are returning, thanks to its strong niche positioning.

Corinne Yap, deputy general manager, Leasing, City Developments (for Palais Renaissance) said: “Initially we had a fall in traffic, but we hear from the tenants that business is coming back because our customers are very different.

“They don’t really like shopping in a mass market situation. They like the hassle-free environment of a more quiet mall, more exclusive mall, which is more hassle free. You can get better level of services – more one to one.”

Going forward, Palais Renaissance is reducing its joint marketing activities with neighbouring malls. It is seeking to focus on its own promotions to target high-end customers.

The mall rewarded shoppers with vouchers and gifts to draw them in over Christmas. Over the next year, it plans to continue developing partnerships with credit cards, like the UOB Lady’s Card, and upmarket lifestyle magazines.

Meanwhile, other malls are targeting the families, especially the kids. Shopping centres like Centrepoint brought in popular children’s shows over the festive season.

Centrepoint is also enjoying a spillover effect from the two new malls across the road – 313@Somerset and Orchard Central. The mall believes it has a unique place along the prime shopping belt, which will help it attract new brands.

Wendy Low, general manager, Frasers Centrepoint Malls said: “Centrepoint has been around for the last 26 years and we are quite an icon.

“In terms of positioning, we have been attracting a lot of locals, especially those who grew up with us, as well as tourists. It is a must-visit destination for many tourists.”

With the new malls bringing new life into Orchard Road, industry watchers said the older malls can stay competitive by renovating to improve traffic flow, and to enhance the shopping experience for customers. And they can also capitalise on the familiarity they enjoy with shoppers.

Going into 2010, industry watchers said the competition will only get more intense, not just along Orchard Road. Shoppers will be spoilt for choice, with the new malls coming up at the integrated resorts.

Source: Channel News Asia, 31 Dec 2009

Economists predict 2% GDP contraction for 2009

Biomedical slump expected to dampen growth in Q4

(SINGAPORE) Economists expect stronger year-on- year (yoy) growth for the final quarter of 2009, although a slump in biomedical output could trigger a quarterly contraction.

The government will announce the Q4 GDP advance estimate next Monday. But Prime Minister Lee Hsien Loong is expected to give an indication of Singapore's 2009 economic performance and the outlook for 2010 in his annual New Year's Eve address today.

The median forecast of private sector economists polled by Reuters is for a Q4 seasonally adjusted, annualised 0.8 per cent contraction compared with Q3. Compared with Q4 last year, the median forecast is for 4.7 per cent growth.

For the full year, the economists' median forecast is a 2 per cent GDP contraction - the first since 2001. But this is at the upper end of the official government forecast, revised several times to the current 2-2.5 per cent contraction.

In Q3, GDP grew 14.2 per cent quarter-on-quarter (qoq) and 0.6 per cent yoy. 'After two surging quarters, the sequential pace of GDP expansion is unlikely to be sustained in Q4,' said Standard Chartered economist Alvin Liew. His estimate of a 15.1 per cent qoq contraction in Q4 GDP is the most bearish among those surveyed.

A key dampener is the blow biomedical output dealt to industrial production in October and November. Q4 forecasts from those polled range widely from minus 15.1 per cent to positive 2 per cent qoq, and 1.2 to 5.2 per cent yoy, possibly because some revised their numbers after news of the fall in November's factory output, while others had not.

But a recovery in manufacturing activity is still under way. Excluding biomedical output, manufacturing in October and November grew 5.7 per cent yoy, led by double-digit growth in electronics output.

'This reverses the pattern from previous quarters, where outsize jumps in biomedicals exaggerated the extent of the manufacturing or GDP jump,' said Citi economist Kit Wei Zheng. He expects Q4 GDP to contract 11.5 per cent qoq and grow 2.4 per cent yoy.

Other sectors of the economy are also expected to cushion Q4's decline in manufacturing.

Mr Kit expects 'decent though more modest construction growth' in Q4, supported by infrastructure projects like the Marina Coastal Expressway and the Circle Line. 'Final- stage construction of the two IRs (integrated resorts) also likely helped to sustain construction activity, alongside activity in the private residential market.'

David Cohen, director of Action Economics, reckons growth in services will balance out a fall in manufacturing. He expects Q4 GDP to remain unchanged from that in Q3, after seasonal adjustments.

Indicators of growth in the services sector include an 8.4 per cent spike in visitor arrivals in November and rising hotel occupancy rates. Trade-related services are also gaining momentum, going by the increased number of flights through Changi Airport, the volume of sea cargo handled and container throughput, Mr Kit noted.

Source: Business Times, 31 Dec 2009

Spanish house prices fall 7% y-o-y in Q3

Spanish house prices fell 7 per cent in the third quarter compared to a year earlier after a record drop of 7.7 per cent in the April to June period, National Statistics Institute data showed yesterday.

Third quarter house prices fell 0.9 per cent on a quarter-on-quarter basis compared with a 0.4 per cent drop in the second quarter, official data showed. The price of new homes fell 5.6 per cent year-on-year, while existing house prices fell 8.3 per cent, the INE reported.

Real estate values have been hit by sliding mortgage lending and house sales and prices are expected to have fallen by close to double digits in 2009, according to a poll conducted by Reuters in October.

Source: Business Times, 31 Dec 2009

Midtown Manhattan office rents fell 33%

Midtown Manhattan office rents fell 33 per cent in 2009 as New York’s financial industry cut staff and relinquished space, commercial property broker FirstService Williams said in a report.

Rents in the nation’s most expensive office district dropped to US$59.31 a square foot in the fourth quarter and are down almost 50 per cent when concessions including temporary free rent are included, the New York-based broker said on Tuesday. Financial companies occupy more New York office space than any other non-governmental employer. They cut 25,200 local jobs in the 12 months through November, helping push the city’s unemployment rate to 10 per cent, according to the New York State Department of Labor.

‘Employment is not going to trend up with any alacrity,’ FirstService Williams executive chairman Robert Freedman said in an interview. ‘We’re going to see a very, very modest uptick in demand’ for offices. The percentage of available space in Midtown climbed to 14.9 per cent from 11.9 per cent a year ago, FirstService Williams said. The rate applies to office space between 34th Street and Central Park in Manhattan.

The decline in neighbourhood rents showed signs of levelling off as more than one million square feet along Park Avenue, Fifth Avenue and Avenue of the Americas were leased in the fourth quarter, FirstService said. Landlords stopped increasing incentives to lure tenants, the broker said.

Downtown rents declined 22 per cent in 2009 to US$38.60 a square foot and availability jumped to 13 per cent from 10.5 per cent at the end of 2008. Most of the available space downtown was added in the fourth quarter.

Between 8 per cent and 10 per cent of downtown leases signed in 2009 were for financial tenants, according to FirstService’s preliminary numbers. About 30 per cent of the New York City office market is already occupied by the industry.

‘With the financial sector still a major driving force in the downtown market, recovery in lower Manhattan may be slower than expected,’ Mr Freedman said.

In Manhattan’s Midtown South area, roughly located between 34th and Canal streets, office availability climb to 11.7 per cent from 8.5 per cent at the end of last year. Asking rents averaged US$39.73 a square foot, down 28 per cent from a year ago.

Source: Business Times, 31 Dec 2009

Developers will gain from demand in 2010

Malaysian property players seen to ride on the sector’s buoyant recovery

Property developers will continue to emerge as key winners in 2010, driven by rising demand and improving economic outlook, according to an analyst at MIDF Research.

Moving into 2010, players would continue to ride on the sector’s buoyant recovery based on the improving number of property sales coupled with declining number of overhang units since the first quarter of 2009, the analyst, who declined to be named, told Bernama recently.

For 2009, it was an unanticipated recovery story as the sector had outperformed expectations in becoming one of the leading segments in the stock market.

Share price of property companies, which is measured by the KL Property Index, in fact outpaced the benchmark FBM KLCI.

However, the analyst pegged a ‘neutral’ outlook for the property sector in 2010.

‘Despite encouraging sales demand and improving economic sentiment, the fear of demand sustainability, upon the withdrawal of cheap credit, absence of attractive promotions and favourable regulations, may take its toll on the property sector,’ he said.

However, the growth driver in 2010 will be, among others, the favourable regulations, continuous governmental support, a thriving property market taking its cue from an improved economy and the ability to attract foreign direct investment flow.

‘Sales demand for residential properties are expected to remain buoyant as investors continue to deem it as one of the more liquid hedging asset.

‘Speculators are also taking advantage of the current market sentiment to lock in on gains,’ he said.

A survey across key property players revealed that none was slowing down their pace of project development.

Many were, in fact, taking advantage of the current discounted valuations to replenish land banks and were not holding back new launches.

The analyst said that key players have signalled that take-up rates of residential properties have remained strong between 80 per cent and 90 per cent in the last quarter.

‘Hence, we are confident residential property sales will remain buoyant, at least within the first half of 2010. We are estimating at least 25,000 new units to be launched over the next quarter,’ he said.

On the retail/shopping complex and office front, he expected continued oversupply of units, notably in the Klang Valley, as many have been under construction over the past two to three years.

Many corporations and businesses are also holding back relocation plans until the financial crisis is over.

Meanwhile, issues that may dampen the sector’s recovery include the re-introduction of the Real Property Gains Tax (RPGT), possible pullback in sales demand due to withdrawal of cheap credit, unanticipated rise in raw material prices thus raising average selling prices and delaying launches and approvals.

‘We do not expect any immediate impact from the reintroduction of the RPGT, and it was mainly to control the secondary sales market. On the flip side, it may discourage foreign investments in commercial properties,’ he said.

He said that the tax was introduced too soon as the economy was still on the verge of recovery but understood the need for it to curb another asset bubble.

He did not expect real estate investment trusts (Reits) to be a star performer in 2010 but expected some interest in this segment.

He said that the average rental yield for offices and commercial properties was on a downtrend in 2009, with rental for offices falling 1.9 per cent, year-on-year, and 1.35 per cent, year-to-date, within the Klang Valley.

However, the recovery in the property market coupled with an exemption from RPGT and stamp duty will see rising interest in Reits which currently yield an average return of between 8 and 9 per cent in Malaysia.

On the status of Malaysia’s property market, the analyst said that he did not expect any property bubble in the immediate term.

‘Appreciation of property prices have been modest so far as demand recovered slowly as investors’ confidence returns,’ he added.

Prices of properties nationwide declined 9.8 per cent year-to-date, due to the economic crisis, but gained 1.40 per cent year-on-year, due to renewed interest emerging in the second quarter of 2009.

‘Nevertheless, assuming the presence of cheap financing, attractive promotions and favourable regulations continue into 2010, coupled with new launches and delivery in 2010, property prices may face an upsurge,’ he said.

And, despite the Dubai’s debt crisis, he said that Malaysia would still be able to attract Middle Eastern investors who still reaped positive yields from investing in the country’s property market.

The main challenges in the property market will be demand fundamentals, whether it can be sustained, and from another point of view, what else can be offered by both property players and financial institutions to support the growing demand.

‘One would be cheap cost of fund (credit). Assuming overnight policy rates are raised back to pre-2006 days of 3.50 per cent, can demand be sustained? Secondly, assuming a second dip does occur, can the property segment take it in its stride?’ he said.

The analyst said that residential properties will continue to be favourites among investors who still demanded mid-to-high-end properties.

‘We noted in the second quarter that properties priced between RM250,000 (S$102,450) and RM500,000, and between RM500,000 and RM1 million were favourites and registered sustained growth,’ he said.

Residential properties have historically proven to be good hedge instruments with attractive capital appreciation, while commercial and office properties may see a dip in demand, against a backdrop of new launches, except for those Grade A offices located in suburban areas.

Demand for properties around Kuala Lumpur City Centre is recovering as prices within the vicinity improved in the third quarter with stable rental yields.

As for industrial properties, he said that the segment would move in line with the nation’s economy.

The analyst was also of the opinion that the property market needed a boost in the form of incentives, that included tax reduction for suburban developments, cheap credit, continuous efforts to draw foreign direct investments and for local small players to have joint-venture opportunities with state governments.

Source: Business Times, 31 Dec 2009

CapitaLand spreads cheer, does good with e-cards

PROPERTY group CapitaLand has come up with a unique way to spread the festive cheer: it is donating $2 to a children’s charity in Singapore for every electronic greeting card (e- card) sent from its website.

The ‘SEND For Hope’ campaign will benefit the Muhammadiyah Welfare Home.

‘In line with our efforts to be environment-friendly, CapitaLand has gone green this festive season with the use of electronic greeting cards specially designed by CapitaLand Hope Foundation (CHF),’ said Tan Bee Leng, GM of CapitaLand’s philanthropic arm CHF.

The e-card campaign has been an ‘overwhelming’ success so far, with about 19,000 cards sent by yesterday morning, raising some $38,000 for the charity.

The campaign reflects CHF’s focus on supporting the shelter, education and healthcare needs of underprivileged children in Singapore and overseas. ‘We hope the campaign will help raise awareness among the public about the need for the care and support of underprivileged children,’ said Ms Tan.

The Muhammadiyah Welfare Home is relocating to the former Min Xin Primary School in Bedok, as many of the facilities at its current premises are beyond repair. CHF’s donations will help cover costs of renovation, fixtures and fittings at the new place.

In view of the strong support and to encourage more donations, CapitaLand has decided to extend the e-card campaign over the weekend. The last day to send cards will be Monday, Jan 4. BT readers can send e-cards from

Source: Business Times, 31 Dec 2009

Asian property firms expect to raise bonus, pay

MANY Asian real estate companies expect to pay higher year-end bonuses and wage increases, according to a survey sponsored by the Asian Public Real Estate Association.

Thirty-four real estate companies and funds took part in the survey, which showed that the expected increase in base salary is 1.7 per cent on average.

Companies that expect to have done better this year reported a higher expected base salary increase of 4.3 per cent on average.

Last year, the average year-end salary increase provided among all survey participants was 1.2 per cent.

The trend is similar for bonuses. Across all survey participants, the average projected bonus increase is 8 per cent – a significant increase given the average projected bonus change last year was minus 17 per cent.

Companies that expect to have done better this year are projecting a bonus increase of 21 per cent, while those that expect to have done worse are projecting a 2 per cent cut in bonuses.

Looking at individual markets, on average across all survey respondents, employees in China and Singapore are expected to receive larger salary increases (2.7 and 3.1 per cent respectively) than those in Australia (0.5 per cent), Hong Kong (1.6 per cent), and Japan (1.5 per cent).

In terms of expected bonus increases, across all survey respondents, China again stands out with an average expected increase of 13 per cent, compared with Australia (4 per cent), Hong Kong (8 per cent), Japan (5 per cent) and Singapore (8 per cent).

The survey, carried out in early November, covered trends in cash compensation – including timing, compensation mix and year-on-year changes in cash compensation, as well as base salary changes and annual incentive or bonus payouts by financial performance, organisation level and geographic location.

Source: Business Times, 31 Dec 2009

Confirmed list for industrial land returns

Considerable interest expected in two sites on H1 list; MTI to also replenish reserve list which will have one new site and seven brought over from 2009

The government will bring back the confirmed list for industrial land sales in H1 next year, providing further evidence of an economy on the mend.

Market watchers have welcomed the move and expect to see considerable interest in sites on the upcoming list.

The Ministry of Trade and Industry (MTI) said yesterday that it will reinstate the confirmed list and replenish the reserve list ‘in view of the improved economic conditions, and to continue to meet demand for industrial land’.

The confirmed list will comprise two sites. One is a new 60-year leasehold parcel in Ubi Road 1, with a gross plot ratio of 2.5 and zoned for Business 1 development.

Details of this site could be released in June next year.

The other site, transferred from the H2 2009 reserve list, is in Tampines Industrial Ave 4. Details on the 30-year leasehold parcel could be out in March.

MTI launches sites on the confirmed list for tender based on a schedule. It suspended this arrangement for the whole of 2009 as the economy tanked and put a dampener on manufacturing.

The industrial property market also softened, with rents sliding and vacancies rising.

The Urban Redevelopment Authority’s industrial space rental index lost 8.5 points between Q1 and Q3 this year.

Demand for state industrial land started showing up some time in May. Three sites on the reserve list have been triggered for sale this year and developers competed intensely for them, reflecting a shift in sentiment.

The keen bidding got some market observers wondering if the confirmed list would make a comeback in H1 next year – which it will.

Knight Frank’s head of industrial business space Lim Kien Kim said that with the improving economic outlook, space requirement expectations will rise.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said that there is a need ‘to prepare for medium-term demand’, as plots released next year will probably not be ready for occupation until after 2011.

Unlike sites on the confirmed list, those on the reserve list are put up for sale only if interested parties submit applications and undertake to bid a minimum amount acceptable to the government.

The upcoming reserve list will have eight sites. There is a new one at Pioneer Road North and Soon Lee Road, which has a 30-year lease and could be made available in May next year.

There are also seven others carried over from the H2 2009 reserve list, spread across areas such as Woodlands, Kaki Bukit and Yishun.

Together, the 10 sites amount to 21.85 hectares.

Market watchers believe that there will be demand for sites on the confirmed list, especially the one in Tampines Industrial Ave 4. Tampines is a growing industrial area and has attracted high value-added industries, said Mr Lim.

Colliers International director (Industrial) Tan Boon Leong notes that the parcels on the confirmed list happen to be two of the largest in the land sales programme – the Tampines site is 5 ha and the Ubi site 3.39 ha.

He suggests that the government could be testing the market’s reaction to large sites, given the strong interest that developers have shown in state industrial land in the past few months.

Source: Business Times, 31 Dec 2009

Green Lodge condo up for en bloc sale

THE improving property market has prompted owners at Green Lodge Condominium in Toh Tuck Road to put their estate up for collective sale.

They want $135 million for the freehold estate in Toh Tuck Road, an asking price of $683 per sq ft per plot ratio, including development charge.

That will give owners about $1.55 million to $1.58 million per unit - about 40 per cent more than the open market price, said Mr Jeffrey Goh, head of investment sales at the estate's marketing agent, Newman & Goh.

Like other sales launched in the latter half of this year, the Green Lodge owners voted for the en bloc sale many months ago but have held off until the market looked more promising.

The majority agreed to sell their property as early as April but the market was very weak then, said Mr Goh.

Green Lodge condo sits on a site of 151,075 sq ft near the Toh Tuck campus of the Canadian International School.

With a plot ratio of 1.4, it can be redeveloped to about 211 units of boutique apartments of about 1,000 sq ft, said Mr Goh. The new development could sell for at least $1,250 per sq ft (psf) on average, he added.

Other residential developments in the vicinity include The Beverly - which was launched earlier this year at an average price of $750 psf - Signature Park and Goodluck Garden.

More owners are now working towards launching their properties for collective sale in the wake of the improving market.

There will be more collective sale launches in the first and second quarters of next year, Mr Goh said.

But the success rate is still up in the air as there remains a mismatch of price expectations between sellers and buyers, he said.

There have been several collective sale launches this year but only one of them - Dragon Mansion - was sold.

The tender for Green Lodge closes on Jan 13, a day before the close of another collective sale tender - Mayfair Gardens in Rifle Range Road.

Source, Straits Times 31 December 2009

2010 industrial land sales plan launched

THE Government launched its industrial land sales programme for the first half of 2010 yesterday with clear signs that it feels the market has turned.

The Ministry of Trade and Industry has reinstated two sites on the confirmed list and placed eight on the reserve list.
It had suspended the confirmed list earlier this year in the light of the downturn but yesterday's announcement reflects the recent turnaround in the property sector.

The total land area on the sales list is 21.85ha.

DTZ's head of South-east Asian research Chua Chor Hoon added: 'The Government's release of the two confirmed sites reflects that the property market is past the worst stage and is getting back on its feet.'

Confirmed sites are put up for tender regardless of a developer's prior expression of interest.

The confirmed sites are a 5ha lot at Tampines Industrial Avenue 4 and 3.39ha at Ubi Road 1.

Tender details for the Tampines site will be released in March while the Ubi Road details will be out in June.

The eight sites on the reserved list are in Pioneer Road North/Soon Lee Road, Woodlands Avenue 2, Kaki Bukit Avenue 4, Ubi Road 1/Ubi Avenue 4, Serangoon North Avenue 4, Toh Tuck Avenue and two parcels in Yishun Avenue 6.

Sale conditions for Pioneer Road North/Soon Lee Road will be out around May while details for the other sites are already available and applications can be submitted.

Sites on the reserve list will be triggered for tender only when an initial offer that meets the minimum purchase price is made.

Knight Frank's business space industrial director Lim Kien Kim said the launch is in line with growing expectations as the economy is improving.

Source, Straits Times 31 December 2009

Wednesday, December 30, 2009

Office rents down in 2009 and likely to keep falling in 2010, say analysts

Office rents in Singapore are down almost 50 per cent for the entire 2009 and observers said this is mainly due to the global economic crisis.

But the fall is not cause for undue concern as it follows a 90 per cent spike in rents in 2008.

However, analysts said there’s room for rents to fall further in 2010.

Singapore’s office rentals have suffered amid the global downturn as many companies with offices here either wound-up operations, or cut back on space needs.

Chua Chor Hoon, senior director, Research, DTZ Debenham Tie Leung (SEA), said: “I think it swung from extreme pessimism in the beginning of the year to hopeful optimism at the end of the year. In the beginning of the year, no one was looking at lease renewal or expanding, but towards the end of the year we see more activity coming in.”

Donald Han, managing director, Cushman & Wakefield, said: “It’s been pretty much a slide down the hill in terms of rents concerned, mainly because of the fact that after the global financial crisis, a lot of banks have started to retrench staff and give up premises.

“We have pretty much bad news in the first and second quarter where rents came down by as much as 40 per cent in the first half of 2009. The good news is we started to see an uptick in demand in the third quarter.”

However, rather than stop rents from falling further, the demand only helped slow down the pace of the decline.

At the beginning of the year, renting office space in Singapore in the prime areas would cost about S$16 per square foot. But that’s down to about S$7.90 now. The lowest rents have ever been is S$4.30 in 2003.

Analysts said that the fall this year isn’t as bad as it seems when taken in historical context.

Mr Han added: “In 2007, when the market went up at stratospheric levels, rents went up by 89 per cent in just one year. So to come down 55 per cent in 2009, versus an uptick of almost 90 per cent, we still have a balance of upside in that sense.”

At its peak, prices for some office buildings hit as high as S$21 per square foot.

And property watchers said rents are likely to continue falling before bottoming out at the end of 2010 at about S$6.

They said one reason for a continued fall is new supply coming on stream.

Mr Han added: “The biggest problem for office market is the supply element has been huge mainly because of Government Land Sales introduction in 2007. A lot will start to complete in 2010 and 2011.”

Mr Chua added: “The supply is substantially higher than historical average. There is more than two million square feet of new supply this year compared to historical average of 1.5m square feet. And we are going to have more than two million square feet of new supply over the next two years. That’s something that’s going to weigh down on the office sector.

DTZ added that the outlook for the office sector will depend largely on Singapore’s economic recovery as this will affect expansion plans for businesses.

It also added that it’s unlikely that the government can help as its main control method is to use supply via the government land sales programme.

However, any action is unlikely to be felt in the near term as office buildings usually take about four to five years to complete.

Source: Channel News Asia, 30 Dec 2009

Far East Organization sees strong demand for The Shore Residences

Far East Organization said it has seen strong demand for its latest project, The Shore Residences, since private previews started two weeks ago.

The 408-unit residential development is located in the Katong area.

Far East said over 70 units have been sold and prospective buyers have also registered their interest for units, which will be released at the official launch on January 21.

Among them, the one- and two-bedroom units were most popular.

According to Far East, almost all of the 84 one-bedroom units, priced from S$658,000 each, have been sold out.

The two-bedroom units, which make up the majority of the development, are priced from S$1.1 million.

The Shore Residences is expected to be ready in 2015.

Source: Channel News Asia, 30 Dec 2009

Global economy still fragile and scarred from aftermath

Economies began year on the brink of disaster before a modest H2 recovery

The global economy that was headed for an abyss at the start of 2009 now appears to be in recovery, but remains fragile and scarred by the worst crisis in decades.

The year began with major economies on the brink of disaster in what turned into the steepest global slump since the Great Depression, before a modest second-half comeback in most of the world.

US gross domestic product (GDP) sank at a horrific annual 6.4 per cent pace in the first quarter, dragged down by a housing market collapse that hammered the financial sector and the rest of the economy. Jobs were being lost at a pace of 700,000 per month.

The eurozone saw a 2.5 per cent GDP slide – a potential 10 per cent annualised drop – in the first quarter that was the worst on record and offered the prospect of economic meltdown. Japan’s economy was falling at a 14.2 per cent rate.

‘The world economy is facing a deep recession,’ the International Monetary Fund (IMF) warned in January.

A study by economists at the University of California and Trinity College of Dublin found that world trade fell faster and stock markets plunged further in the first year of this crisis than in 1929-30, and that the decline in manufacturing was as severe as the start of the Great Depression. ‘At the same time, the response of monetary and fiscal policies, not just in the United States but globally, was quicker and stronger this time,’ the economists wrote.

Governments launched stimulus programmes of hundreds of billions of dollars, and central banks cut rates to record lows – near zero in the US and Japan – while pumping trillions into the banking system to help restore credit flows.

Slowly, the efforts seem to have borne fruit. The main economies are growing, even if the pace is less than spectacular.

‘To date, the results are mixed,’ C Fred Bergsten, director of the Washington-based Peterson Institute for International Economics, said in a recent speech. Mr Bergsten said the interventions ‘appear to have arrested the precipitous downward slide and, in most cases, restored at least some positive momentum’.

Nariman Behravesh, chief economist at research firm IHS Global Insight, says central banks led by the Federal Reserve deserve credit for ‘unorthodox monetary policy’ including so-called quantitative easing, or pumping more money into the financial system, averting a global depression. ‘The difference between now and the Great Depression was that in the 1930s, the Fed allowed the money supply to shrink and wasn’t aggressive enough,’ Mr Behravesh said.

The US economy expanded at a 2.2 per cent pace in the third quarter after four quarters of contraction. Japan grew at a more moderate 1.3 per cent pace in July-September.

The 16-nation eurozone saw 0.4 per cent growth over the quarter, a sluggish annual pace, after five quarters of contraction.

China, which saw a slowdown but avoided recession, had third-quarter growth accelerating to 8.9 per cent in an expansion built on stimulus cash and bank lending.

Globally, the IMF projected in October that growth would be 3.1 per cent in 2010, after an estimated 1.1 per cent global contraction in 2009, the worst since World War II.

Morgan Stanley economist Joachim Fels and associates project 4 per cent global growth for 2010, but just 2 per cent in the advanced economies of the Group of 10. Mr Fels said that the economies will see ‘creditless recoveries’ where banks are reluctant to lend and predicted ‘a jobless G-10 recovery’ with unemployment still high in the United States, Europe and Japan.

Carl Weinberg, chief economist of High Frequency Economics, was less optimistic, saying an ongoing credit crunch particularly gave him ‘grave doubts about the capacity of any of (the top industrialised nations) to grow much in 2010, if at all.

‘We do not know of a single G-7 economy that will be able to grow next year without substantial incremental fiscal stimulus,’ he said.

Others argue that the global economic problems, instead of being solved, have been shifted by the government rescues, with the exit strategy unclear.

‘Toxic assets have basically been swept under the rug,’ says David Rosenberg, chief economist at Gluskin Sheff & Associates in Toronto.

‘Whatever bad assets have been resolved have almost entirely been placed on the books of governments and central banks, which now have their own particular set of risks, as we have witnessed very recently in places like Dubai, Mexico, Spain, Greece, UK, the Baltic states, not to mention at the state and local government level in the United States.’- AFP

‘We do not know of a single G-7 economy that will be able to grow next year without substantial incremental fiscal stimulus.’

- Carl Weinberg, chief economist of High Frequency Economics, expressing his doubts about the capacity of any of the top industrialised nations to grow much in 2010, if at all.

Source: Business Times, 30 Dec 2009

Moody’s upgrades AIMS-AMP Capital Reit

Re-rating follows recapitalisation exercise

MOODY’S Investors Service has upgraded AIMS-AMP Capital Industrial Reit’s corporate family rating to Ba2 from Caa1 following its recent recapitalisation exercise.

The industrial trust – which was formerly known as MacarthurCook Industrial Reit – underwent a change of name after a recent debt-and-equity-raising plan. The Reit placed out shares to new investor AMP Capital Holdings and existing sponsor AIMS Financial Group as well as other cornerstone investors. This was then followed by a rights issue and a new term loan.

Concluding a rating review that was started on Nov 9, Moody’s said that the rating outlook for the Reit is stable.

‘The upgrade reflects AIMS-AMP Capital Industrial Reit’s remarkably improved liquidity profile and capital structure following the successful completion of its recapitalisation plan and refinance of the maturing Singapore dollar loan,’ said Moody’s analyst Kaven Tsang.

The Reit has applied part of the proceeds from the issuances to complete its acquisition of a building (4A International Business Park) and will also acquire four new properties from AMP.

‘These new properties are cash flow generative and will to some extent support its income diversification and debt service coverage,’ Mr Tsang added.

In addition, its liquidity profile has improved substantially, without material refinancing needs in the near term, Moody’s noted. The Reit’s debt/capi-talisation leverage has fallen to 30 per cent, from 47 per cent as of Sept 2009. The Reit’s major borrowing, a new $175 million term loan, is only due in December 2012.

But Moody’s also noted that while new sponsor AMP’s ‘established market presence and solid track record’ could benefit AIMS-AMP Capital Industrial Reit as it pursues growth and seeks new funding, AMP still needs to establish a track record in managing the Reit’s business as planned.

Source: Business Times – 30 Dec 2009

From ‘deep winter’ to a ‘hot summer’

IT WAS the rally that should never have happened. The world was in recession, credit was being crunched, investors across the board were in a state of near panic, yet no one seemed to have told real estate buyers.

After a tentative few months early in the year, property found its feet and staged the sort of upswing normally associated with economic booms, not near-busts.

Indeed, this year saw a recovery of Singapore’s residential market, said Frasers Centrepoint chief executive Lim Ee Seng.

‘We expected 2009 to be a very bad year for us but it turned out to be a good year,’ said EL Development managing director Lim Yew Soon.

Jones Lang LaSalle’s head of research for South-east Asia, Dr Chua Yang Liang, agreed: ‘It’s been a remarkable year – with transaction and pricing outperforming expectations, driven by latent demand, low interest rates and primed by lower pricing.’

Sales and prices of new private homes picked up significantly from April, a turnaround from the first quarter when sellers were cutting prices just to offload their homes.

As the private homes market swung quickly from despondency at the start of the year to ‘unwarranted enthusiasm’ in the middle, this year turned out to be a ‘record-breaking’ one, said DTZ head of South-east Asia research Chua Chor Hoon.

Record quarterly and monthly highs were achieved for launches and sales of new private homes while some new launches outside the city area sold at record prices, said Ms Chua.

Centro Residences in Ang Mo Kio, for instance, sold for more than $1,100 per sq ft (psf) – a suburban record.

Resale landed homes in prime districts also hit record prices while resale mass market home prices rebounded within two quarters to reach 2007 peak levels, Ms Chua added.

The four seasons

‘ONE of the hot topics this year was climate change, and if you apply that to the property market, it went through the four seasons for the first time ever,’ said Knight Frank chairman Tan Tiong Cheng.

The market is now in a ‘mild winter’ state, after a hectic year with an unusually hot summer, he said.

It started the year in deep winter – with only 108 new homes sold in January – the worst monthly sale figure on record. The mood was clearly grim.

Then came spring and sales quickly started to rise in February, easily pushing past the 1,000-unit mark to reach 1,332 units. March was similarly positive at 1,220 units.

By the time summer rolled around, market sentiment had improved tremendously.

Despite the heat, buyers were queueing outside showflats, eagerly awaiting their turn to pick a mass market unit.

Showflats of newly released projects aimed at HDB upgraders were packed to the brim on preview days with investors, singles, couples and families – often with grandparents in tow.

With affordability a key issue, developers turned to producing smaller and smaller units to satisfy those looking for an ‘affordable’ total outlay; never mind that the psf price may be high.

EL Development’s Mr Lim said: ‘Developers had to react to the market very fast. We were lucky to switch to small units for Illuminaire fast. Otherwise, we won’t be able to sell it out and at the price we achieved.’

Sales of new homes kept rising each month, culminating in a monthly record of 2,772 units in July.

‘We were supposed to be in a recession. The Government was talking about job losses which hit the lower-income group,’ said Knight Frank managing director, residential services Peter Ow.

‘Given the bleak outlook at that point, the momentum was surprising. It shows that you can never underestimate the purchasing power of the upgraders.’

Considering that the 2006-07 boom was led by the high-end segment with foreigners buying up a storm, many doubted the ‘bottom-up’ recovery was for real.

But it kept going strong amid concerns that a property bubble might be developing.

Government made its move

THAT prompted the Government to step in with anti-speculative measures in September.

It took away the interest absorption scheme, which allows buyers to defer payment until the project is completed, and said it will push out more supply.

An Urban Redevelopment Authority sample survey of recently launched projects showed that the average take-up rate of the interest absorption scheme was about 20 per cent to 25 per cent.

Property experts said at the time that the measures were minor and meant to get buyers to think twice about committing.

The Government continued to warn of the possibility of the market overheating. What followed seemed to suggest the measures had worked to some degree.

Signs of speculation disappeared, launches slowed and buyers were no longer rushing into new showflats to check out the latest launch and commit their cash.

Sales of new private homes slipped to 600 units last month, the second-lowest monthly sales this year.

But Jones Lang LaSalle’s Dr Chua feels the market will not see the full effect of the measures until early next year as activity traditionally winds down towards Christmas.

Ngee Ann Polytechnic lecturer Nicholas Mak believes there is a slowdown because developers have more or less run out of mass market projects while the high-end segment has yet to take off.

Looking ahead

EXPERTS say the slowdown – what DTZ’s Ms Chua describes as a ‘quieter and more rational mode’ – is a good thing.

It is a precursor to next year’s trend when the market is generally expected to revert to normal in terms of sales and upward price movements.

The bet is on a pick-up in the high-end segment as it has yet to push near previous peaks, experts say. With the opening of the two integrated resorts, more foreigners are expected to enter the Singapore market.

Dr Chua believes the high-end segment is likely to outperform the mass market on two levels.

Firstly, buyers of high-end homes are not so dependent on interest rates, which have been one of the key drivers in the mass market.

‘I reckon there is an upside to the currently low interest rates as we go into the second half of 2010 and that is likely to keep mass market activity in check,’ he said.

‘Secondly, regional economies have been performing better than expected and we can expect some of the higher-income foreigners to return to the Singapore market by the second to third quarter of 2010.’

Dr Chua does not expect a buying surge but more moderate growth.

‘I would describe the period since the collapse of Lehman Brothers in the later half of 2008 as that of a landscape of rolling hills. And now as we ascend, no one can really see what lies behind the knoll,’ he said.

Source: Straits Times, 30 Dec 2009

Why singles need more help with housing

I REFER to last Wednesday's letter, 'HDB clears the air: Singles do get benefits'. How will current HDB 'benefits' help singles get their first affordable flat, when even married couples who benefit from pro-family policies have problems buying an affordable flat due to rising costs?

Prices of resale flats have increased by at least 30 to 100 per cent (depending on flat location and flat size) since 2004, but the grant to singles remains $11,000. Is this stationary amount enough to offset ever-increasing prices?

Forming a family with parents to get a subsidised new flat is often not an option as many factors restrict this. For example, ageing parents may not be willing to move to a new environment, or a smaller flat. Also, the chance of getting a flat this way is only 5 per cent since 95 per cent of chances go to married couples.

If the subsidy on a new two-room flat included in the selling price is for a family of two, I am sure all singles would be willing to pay $11,000 (the grant they get on a resale flat) on top of the selling price.

Have HDB's pro-family policies really worked in encouraging marriage and having children? Is it not time to re-examine these policies and make changes to ensure that all citizens share the fruits of growth?

Source, Straits Times 30 December 2009

103-year lease on freehold land

FLATS at Far East Organization's new project are being sold with a 103-year lease even though the project in Katong sits on freehold land.

The rare step means Far East will have to settle for lower prices for the units, but it will retain an interest in the site and reap further benefits when the neighbourhood is further transformed.

Sales at the 408-unit The Shore Residences, which is opposite Katong Shopping Centre, start on Friday, New Year's Day, but previews in recent weeks have already reaped contracts.

Far East's executive director and chief operating officer of property sales, Mr Chia Boon Kuah, pointed out that the project sits on land with huge redevelopment potential.

'The area has transformed and the pace of transformation is speeding up.'

An MRT station has been earmarked for nearby Marine Parade. There is also the Parkway Parade shopping centre, plenty of eating places in the area and the yet-to-be revamped Katong Mall.

Mr Chia also referred to the 'bigger picture' - Marina Bay, which will be only a 10-minute drive away.

While Far East cannot realise the full potential of the site now, by retaining the freehold title it will have the chance to participate eventually, he said.

Knight Frank chairman Tan Tiong Cheng told The Straits Times: 'Far East is a privately owned firm, so this move does allow the family to hold on to the site for the benefit of their future generations.'

Selling a lease term instead of the entire freehold tenure is relatively rare, although Far East has done it before.

It launched two cluster housing projects - Cabana and The Greenwood - on freehold land with 103-year leases.

The 119-unit Cabana is in Sunrise Terrace, near Yio Chu Kang MRT station, while the 54-unit The Greenwood is in Greenwood Avenue.

The 99-year leasehold Spring Grove condo, which sits on the former Grange Road residence of the American ambassador, is a similar case.

The United States government bought the land in 1950 on a freehold lease but sold it on a 99-year lease to City Developments in 1991. The plot reverts to the US government at the end of this century.

Not many developers are keen on the strategy for the simple reason that 99 years is a long wait and they would not be around to enjoy the fruits of their efforts, say property experts.

Far East could charge more for The Shore if it were sold as a freehold project but it is giving that premium up in exchange for the reversionary interest in the land, experts say.

Another expert said: 'There'll be en-bloc sale potential if the market is good but the trump card is held by Far East, instead of the Government.'

Far East can either grant a lease top-up, buy back the land, sell the freehold tenure or not act.

'When the owners want to do a collective sale in two or three decades' time, they will have to refer to the holder of the freehold title, which is Far East,' said Ngee Ann Polytechnic real estate lecturer Nicholas Mak.

'A lot will then depend on the top-up premium that Far East will ask for.'

The project's en-bloc potential is not an issue at the moment. Far East said it has sold 'more than 70 units' since it started previews about two weeks ago.

Most sales have been one-bedders from 592 to 732 sq ft and priced from $658,000 or $1,100 per sq ft (psf).

Prices for two-bedders, which are on higher floors, start from $1.1 million or $1,180 psf. The project also has three- and four-bedroom units. Prices will rise about 2 per cent at Friday's launch.

Mr Chia said the demand for the one- and two-bedders may be due to a lack of smaller flats in the area, as well as the rejuvenation of the Katong neighbourhood.

Far East bought the former Rose Garden site, which is where The Shore is, in 2006 for $169.8 million, or $423 psf of potential gross floor area.

Source, Straits Times 30 December 2009

Tuesday, December 29, 2009

Mandarin Gardens’ enbloc sales committee disbands

One condominium in the east has officially thrown in the towel for an enbloc sale – at least for now.

The 1080-unit Mandarin Gardens saw the disbanding of its two-year-old collective sales committee last week.

In a letter to residents, the main reasons cited were unfavourable market conditions and the moving in of new residents, whose views the committee felt should be heard.

The sales committee had been largely inactive since the beginning of the global financial crisis last year. Some members had also quit due to personal reasons or after selling off their unit.

Back at the height of the 2007 property boom, Mandarin Gardens was one of the many enbloc hopefuls.

This follows the similar fate of another sales committee at nearby seafront condominium Bayshore Park. The committee ceased to exist earlier this year after its formation was challenged by some residents.

Source: Channel News Asia, 29 Dec 2009

Economic recovery just a mirage on the horizon?

WHEN more accountants start worrying less about the economy, it may be a sign for the rest of the world to exhale too. Clouding the sunny horizon, however, are a few accountants who have chosen to hold their breath.

The fourth quarter Global Economic Conditions survey by the Association of Chartered Certified Accountants (ACCA) found 46 per cent of its members believe economic conditions are either about to improve or already have, an increase from 34 per cent who thought the same back in Q3.

A more telling sign of optimism is the number of respondents who now expect a recovery in less than 12 months - 18 per cent, compared with 13 per cent in the Q3 survey.

ACCA members in the Asia-Pacific region are among the most optimistic, with 60 per cent of the 441 respondents in the region believing global economic recovery is possible within 12 months or less.

'Unlike previous quarters, the latest survey records not only improving perceptions but fundamentally positive developments on the ground,' the report says.

But amid the cheer, there is also trepidation. A sizeable minority think the recovery will not come as readily as expected. And 11 per cent of them think the downturn will last three years or more.

For all the optimism, several key figures continue to flag. Thirty-seven per cent of respondents reported a scaling-down of investment in staff, while 33 per cent reported falling investment in capital projects.

These declines have been caused primarily by continued tight finance and fewer investment opportunities in the past three months, according to survey respondents.

Especially worrying for the rank and file, 17 per cent of respondents reported that their organisations or clients are making pre- emptive job cuts despite stable or rising revenue, up from 14 per cent in the Q3 survey.

As a harbinger of the expected slowdown in economic stimulus boosters, almost a third of respondents reckon government support for investment has decreased.

'While there are increasing numbers of finance professionals who are prepared to call the bottom of the recession, there is also an underlying sense of unease and concern about developments in the coming year,' said ACCA Singapore's country head Penelope Phoon.

'Many of our members are treating the recovery as a mirage - they can see it on the horizon, but it remains there, however much progress their organisations or their domestic economies might appear to be making.'

The survey, conducted throughout November, includes the responses of 1,700 ACCA members in 99 countries.

Source: Business Times, 29 Dec 2009

French hotels polish their stars

The new upgraded rating criteria will apply to 18,000 hotels across France

France, the world’s top tourism destination, is polishing up its hotel star ratings and introducing a new luxury five-star category to help travellers know what to expect.

The new rating criteria will apply to 18,000 hotels across France, many of which are showing off stars awarded under the previous ranking system that dates back to 1986.

The upgraded star system went into force at the weekend when details were published in the government gazette.

The most spectacular change is the new five-star category – already claimed by some 60 hotels such as the world-class Paris Ritz or the Hotel Negresco in Nice.

Industry leaders say the five-star category will help France face tough global competition at a time when the hotel business is struggling to recover from the global downturn.

‘The terms of reference were out of date,’ said Christine Pujol, president of the hotel owners’ main trade group Umih.

‘Customers did not know what to expect any more from a two-star hotel,’ added Genevieve Balher, president of the Synhorcat group representing the hospitality business.

A hotel ranked in 1986 may well have kept its stars without undergoing any renovation and there is no control over the ranking, she said.

Under the new criteria, stars will be attributed for a period of five years by accredited auditors instead of a government agency.

The prefect or state official for a department will however have the final word on granting stars.

The zero-star hotel is consigned to history under the new regulations, meaning that the lowest possible standard of comfort is now the one-star hotel.

A one-star room should be no smaller than nine square metres and have a shared bathroom with guests from no more than seven other rooms.

More stars means a bigger room and Internet access, for instance, is now a criteria for a three-star hotel.

‘Guests will know that the star ranking is a guarantee of cleanliness and furnishings that are in good condition,’ said Michele Le Poutre, who helped elaborate the new criteria.

But Mark Watkins, president of a committee pushing for more modern French hotels, said the new rating system was already out of sync with that of other international destinations.

‘En suite bathrooms are only compulsory for three-star hotels and you will have to go to a four-star to get international channels on television,’ he complained.

Mr Watkins said the new rating system would benefit mostly hotel chains and that independent owners will have a tougher time satisfying the criteria.

Industry officials estimate that up to 10 billion euros (S$20 billion) will be spent by hotel owners in the coming years for renovation work that will allow them to keep their stars.

France draws tens of millions of visitors each year to its tourist attractions, cultural sites and world-class restaurants, but the global downturn has hit the hotel sector hard.

Major chains like Accor, Europe’s biggest hotel group, have reported a plunge in sales as bookings slowed dramatically over the summer months with the loss of British and American tourists.

Under the new regulations, any hotel can choose to apply for the star rating, but there is a fee.

Source: Business Times, 29 Dec 2009

Kuwait’s KFH signs US$242m real estate deal in US

Kuwait Finance House (KFH), the country’s biggest Islamic lender, said it signed a US$242 million real estate deal in Chicago.

KFH owns 95 per cent of the project, while the remaining 5 per cent is owned by Prism Company, the lender said. ‘KFH will focus on income-producing assets with attractive yields and guaranteed occupancy levels,’ it said.

In August, the lender said it was tying up with US apartment building owner UDR Inc to buy high income property in the United States.

The joint venture seeks to acquire investments of up to US$450 million in major cities in the US.

Gulf Arab investors have been holding on to funds for months after the region was caught up in the global liquidity freeze late last year, but are now buying into Western real estate again to benefit from lower valuations.

Source: Business Times, 29 Dec 2009

Native Americans buy back thousands of hectares of land

The land where their ancestors lived are put in federal trust

Native American tribes tired of waiting for the US government to honour centuries-old treaties are buying back land where their ancestors lived and putting it in federal trust.

Native Americans say that the purchases will help protect their culture and way of life by preserving burial grounds and areas where sacred rituals are held. They also provide land for farming, timber and other efforts to make the tribes self-sustaining.

Tribes put more than 340,000 hectares – or roughly the equivalent of the state of Rhode Island – into trust from 1998 to 2007, according to information The Associated Press obtained from the federal Bureau of Indian Affairs under the Freedom of Information Act.

Those buying back land include the Winnebago, who have put more than 280 hectares in eastern Nebraska in federal trust in the past five years, and the Pawnee, who have 650 hectares of trust land in Oklahoma. Land held in federal trust is exempt from local and state laws and taxes, but subject to most federal laws.

Three tribes have bought land around Bear Butte in South Dakota’s Black Hills to keep it from developers eager to cater to the bikers who roar into Sturgis every year for a raucous road rally. About 17 tribes from the Dakotas, Nebraska, Wyoming, Montana and Oklahoma still use the mountain for religious ceremonies.

Emily White Hat, a member of South Dakota’s Rosebud Sioux, said that the struggle to protect the land is about ‘preservation of our culture, our way of life and our traditions’.

‘All of it is connected,’ Ms White Hat said. ‘With your land, you have that relationship to the culture.’

Other members of the Rosebud Sioux, such as president Rodney Bordeaux, believe the tribes shouldn’t have to buy the land back because it was illegally taken. But they also recognise that without such purchases, the land won’t be protected.

No one knows how much land the federal government promised Native American tribes in treaties dating to the late 1700s, said Gary Garrison, a spokesman for the federal Bureau of Indian Affairs. The government changed the terms of the treaties over the centuries to make property available to settlers and give rights-of-way to railways and telegraph companies.

President Barack Obama’s administration has proposed spending US$2 billion to buy back and consolidate tribal land broken up in previous generations. The programme would pay individual members for land interests divided among their relatives and return the land to tribal control. But it would not buy land from people outside the tribes.

Today, 562 federally recognised tribes have more than 22.3 million hectares held in trust, according to the bureau. Several states and local governments are fighting efforts to add to that number, saying that the federal government doesn’t have the authority to take land – and tax revenue – from states.

In New York, for example, the state and two counties filed a federal lawsuit in 2008 to block the US Department of Interior from putting about 5,260 hectares into trust for the Oneida Tribe. In September, a judge threw out their claims.

Putting land in trust creates a burden for local governments, because they must still provide services such as sewer and water even though they can’t collect taxes on the property, said Elaine Willman, a member of the Citizens Equal Rights Alliance and administrator for Hobart, a suburb of Green Bay, Wisconsin. Hobart relies mostly on property taxes to pay for police, water and other services, but the village of about 5,900 lost about a third of its land to a trust set up for the state’s Oneida Tribe, Ms Willman said.

So far, Hobart has been able to control spending and avoid cuts in services or raising taxes, Ms Willman said. Village leaders hope taxes on a planned 244-hectare commercial development will eventually help make up for the lost money.

The non-profit White Earth Land Recovery Project has bought back or been gifted hundreds of hectares in north-western Minnesota since it was created in the late 1980s. The White Earth tribe uses the land to harvest rice, farm and produce maple syrup.

Members have hope of one day being self-sustaining again.

Winona LaDuke, who started the White Earth project, said that buying property is expensive, but it’s the quickest and easiest way for tribes to regain control of their land.

Tribal membership has been growing thanks to higher birth rates, longer life spans and more relaxed qualifications for membership, and that has created a greater need for land for housing, community services and economic development.

‘If the tribes were to pursue return of the land in the courts, it would be years before any action could result in more tribal land . . . and the people simply cannot wait,’ said Cris Stainbrook, of the Little Canada, Minnesota-based Indian Land Tenure Foundation.

Some 30 to 40 tribes are making enough money from casinos to buy back land, but they also have to put money into social programmes, education and healthcare for their members, said Robert Miller, a professor at the Lewis & Clark Law School in Portland, Oregon, who specialises in tribal issues.

‘Tribes just have so many things on their plate,’ he said.

Some tribes, such as the Pawnee, have benefited from gifts of land. Gaylord and Judy Mickelsen donated a storefront in Dannebrog, Nebraska, that had been in Ms Mickelsen’s family for a century.

The couple was retiring to Mesquite, Nevada, in 2007, and Ms Mickelsen wanted to see the building preserved even though the town had seen better days.

The tribe has since set up a shop selling members’ artwork in the building on Main Street.

‘We were hoping the Pawnee could get a toehold here and get a new venture for the village of Dannebrog,’ Mr Mickelsen said.

Source: Business Times, 29 Dec 2009

UK house prices fall 1.9% y-o-y in Dec

The year-on-year fall in house prices in England and Wales eased to 1.9 per cent in December, the smallest annual drop since May 2008, property data company Hometrack said yesterday.

However, the monthly pace of house price rises suffered a seasonal slowdown to 0.1 per cent in December from November’s 0.2 per cent, and Hometrack forecast prices would drop a further one per cent in 2010 as a whole.

Mortgage lenders Halifax and Nationwide report prices have already risen by around 2 per cent in the year to November.

‘Unexpectedly buoyant demand and a chronic lack of housing for sale were the key drivers of the housing market in 2009,’ said Richard Donnell, director of research at Hometrack. ‘While a scarcity of housing for sale is set to remain an important feature of the market in 2010 it is the prospects for demand that will dictate the outlook for prices in the next 12 months,’ he added.

Estate agents surveyed by Hometrack reported a 41 per cent increase in registrations from prospective home buyers in 2009, while the supply of property rose by just 7 per cent.

Hometrack said this pattern was likely to continue in 2010, with a pace of home sales equivalent to the average household moving just once every 25 years – leading to volatile prices.

However, a probable rise in unemployment and growing concern about tax rises and spending cuts after an election due by June were likely to limit demand. ‘Against the backdrop of low sales volumes, equity-rich households could continue to put upward pressure on prices in localised markets in 2010. Yet a sustainable and broad-based recovery in the housing market needs a broader base of buyers,’ Mr Donnell said.

Source: Business Times, 29 Dec 2009

Taiwan property market may improve: survey

Two out of five Taiwanese companies expect the island’s property market to improve in the first quarter as the economy recovers, twice as many as those forecasting a decline, the government said.

Of the 141 companies surveyed between Nov 12 and Dec 7, 41 per cent said the real-estate market will improve, the interior ministry’s Architecture and Building Research Institute said in a statement yesterday. Twenty per cent of companies said they expected a deterioration.

The real-estate market is bolstered by record-low interest rates and signs Taiwan’s economy is emerging from a recession. Central bank governor Perng Fai-nan said last week the monetary authority will monitor property-price inflation closely.

Home prices may be under ‘huge pressure’ to decline because of oversupply, the government said in yesterday’s statement.

‘People need to be careful while being optimistic about the property market’ as about 12 per cent to 15 per cent of Taiwan’s residential units are vacant, noted Chang Chin-oh, director of the Taiwan Real Estate Research Centre at the National Chengchi University, which produced the survey. He spoke at a press conference in Taipei yesterday.

The central bank has left borrowing costs unchanged at their past four quarterly meetings to help pull the economy out of recession. The island’s gross domestic product (GDP) shrank the least in a year in the three months ended September, and may expand 4.39 per cent next year, according to the Cabinet’s statistics bureau.

Source: Business Times, 29 Dec 2009

Two HK waterfront sites miss targets in auction

Sino Land, K Wah paid HK$10.4b for 20,925 sqm plots

Sino Land Co and K Wah International Holdings Ltd together paid HK$10.4 billion (S$1.9 billion) for two waterfront sites in Hong Kong’s New Territories, falling short of estimates for the land auction.

Shares of Hong Kong property companies, the best-performing group this year on the Hang Seng Index, fell. Three analysts polled by Bloomberg News gave estimates that ranged between HK$11.4 billion and HK$13 billion for the 20,925 sqm (225,000 sq ft) plots in the Tai Po district, the largest properties offered since September 2007, according to Lands Department records.

‘Apart from Sino Land, which owns sites nearby and would benefit from paying a higher premium, other developers weren’t keen on pushing up the price,’ said Conita Hung, head of equity markets at Delta Asia Securities Ltd in Hong Kong.

Shortage of land and buying by overseas speculators has fuelled gains in home prices of as much as 30 per cent this year, sparking a public outcry over housing costs and prompting the central bank to warn of ’sharp corrections’ in asset prices should fund flows reverse.

‘This shows the developers are being more cautious,’ said Kevin Lai, an economist with Daiwa Institute of Research in Hong Kong. ‘A lot of this year’s economic recovery comes from short-term capital inflows and the money isn’t likely to be swimming around in the next 3-5 years.’

The Hang Seng Property Index fell after the close of the auction. The gauge, which had gained as much as 1.3 per cent before the sale began at 2.30pm, retreated as much 0.5 per cent. It has advanced 60 per cent this year, outpacing the 50 per cent added by the benchmark Hang Seng Index.

Sino Land, controlled by the family of chairman Robert Ng, added 0.5 per cent. It had gained as much as 2.2 per cent before the auction commenced. K Wah fell 1.7 per cent.

The auction result ’suggests that developers are not pushing too aggressively because of concerns that interest rates will begin to rise’, said Kenny Tang, an analyst at Redford Securities Co in Hong Kong.

Morgan Stanley forecasts yields on US 10-year treasuries will climb about 40 per cent next year, pushing interest rates on 30-year mortgages almost to their highest in a decade. Because Hong Kong’s dollar is pegged to the US currency, official interest rates track those in America.

The peg to the dollar has also meant that speculative money has flown into Hong Kong as a decline in the greenback has made asset prices relatively cheap. More than HK$640 billion flowed into Hong Kong since October last year, Hong Kong Monetary Authority chief executive Norman Chan said this month. Asset bubbles are the ‘No 1 threat’ to financial stability in Asia, he said.

Mr Chan’s comments followed those from Donald Tsang, the city’s chief executive, who said on Nov 13 that he was ’scared’ that money flowing into Asia because of low interest rates in the US could lead to another financial crisis in the region. Hong Kong’s economy has contracted for four straight quarters, year-on-year, even as property prices surged.

In October, the city raised down-payment requirements on mortgages for homes valued at more than HK$20 million to 40 per cent from 30 per cent of the purchase price to curtail speculation.

Developers say the government, one of the largest suppliers of building sites, should offer more land to help hold down prices.

Raymond Kwok, vice chairman of Hong Kong’s biggest developer Sun Hung Kai Properties Ltd, said Dec 3 that property prices in Hong Kong are still ‘reasonable’.

Hang Lung Properties Ltd chairman Ronnie Chan said Dec 4 that Hong Kong’s home market is a ‘good bet’, joining billionaire Lee Shau-kee in forecasting rising prices. Mr Lee is the chairman of Henderson Land Development Co.

Low mortgage costs, near-zero interest rates on savings deposits and buying by mainland Chinese pushed up existing home prices 28 per cent this year as of Dec 20, according to the Centa-City Leading Index, a weekly measure developed by Centaline Property Agency Ltd and the City University of Hong Kong.

Hong Kong home transactions almost tripled in November from a year earlier, figures from the Land Registry show, marking the eighth straight monthly gain.

Transactions of luxury homes, or those costing at least HK$10 million, jumped to 595 in November from 99 in the same month last year, according to the Land Registry.

Henderson Land said in October that it set a global record by selling an apartment for HK$88,000 per sq ft on a net area basis.

The first Tai Po site sold yesterday at HK$7,145 psf, according to Ricacorp Properties Ltd.

‘We’re satisfied with the result,’ said Chris Mills, assistant director of lands for the Hong Kong government. ‘The media has been talking up the value of the sites over the past few weeks to some quite major extent.’

Source: Business Times, 29 Dec 2009

KepLand’s 2nd Shenyang township

The 30.3 ha site will have 6,000 waterfront flats, commercial components

KEPPEL Land has embarked on a second township development in Shenyang, China, announcing yesterday the acquisition of a 30.3 hectare site for 884 million renminbi (S$182 million).

KepLand, through its Da Di Investment unit, will develop the site into a residential township with about 6,000 waterfront apartments supported by complementary commercial components.

The project will be aimed at the upper-middle market and the initial phase of 1,200 apartments is expected to be launched progressively from the second half of 2011.

The site is in Hunnan New District outside the Second Ring Road, a 20-minute drive from the city centre and a 25-minute drive from the Shenyang Taoxian International Airport, the main air gateway to north-east China. It has a 900-metre frontage along the Hun River and additional frontage along a tributary that leads into the main river.

‘Shenyang’s economy has continued to grow strongly and the outlook for its property market is promising,’ said KepLand International’s executive director and CEO Ang Wee Gee.

‘Choice waterfront sites are few and select in Shenyang. With its connectivity and proximity to Shenyang’s central business district, we are confident Keppel’s new site will be a coveted residential address.’

Shenyang is the capital of Liaoning province and a key economic, industrial, commercial and transport hub for north-east China. It is in a major growth area called the Bohai Economic Rim.

Mr Ang has said previously that residential prices in Shenyang have been increasing by an average of 10-15 per cent a year and this is a healthy and sustainable growth rate.

KepLand’s first township in Shenyang is on 34 ha in Shenbei New District. KepLand paid 464 million renminbi for this site. When the Hunnan New District project is completed, it will increase KepLand’s portfolio in China to more than 30,000 homes.

The transaction is not expected to have a significant impact on KepLand’s net tangible assets or earnings per share for the financial year ending Dec 31, 2009.

Source: Business Times, 29 Dec 2009

Mapletree buys $68m warehouse

The warehouse in Japan has a property yield of 7.26%

MAPLETREE Logistics Trust acquired its ninth piece of property – a warehouse – in Japan for about $68 million, announced its managers, Mapletree Logistics Trust Management Ltd (MLTM), yesterday.

The warehouse has a property yield of 7.26 per cent, higher than the implied property yield of its existing Japan portfolio of 4.5 per cent.

Based on the actual nine-month financial results for 2009, the proforma financial effect of the acquisition on the annualised distribution per unit is an additional 0.103 cents or 1.75 per cent, assuming a unit price of 69 cents.

The warehouse, which is located in Chiba on freehold land, is leased to a major Japanese multinational corporation.

‘We are very pleased with the acquisition of this property, which is located in a popular logistics hub for in-land distribution for the Kanto region,’ said Chua Tiow Chye, chief executive officer of MLTM.

‘We continue to find the Japan logistics market attractive due to its breadth and depth which is currently unmatched in Asia. We will continue to expand our portfolio in Japan by selectively acquiring yield-accretive logistics assets of good quality and location.’

The acquisition, which will be fully funded by debt, is expected to be completed in Q1 2010, and brings Mapletree’s Japan portfolio to about 43 billion yen in value.

In November, the trust launched a private placement of 115 million new units to raise up to $82 million in order to create debt headroom for the funding of the acquisition.

The private placement had been launched in order to finance two local acquisitions – a six-storey warehouse in the west of Singapore and a multi-storey warehouse in the east of Singapore, for about $43 million and $34 million, respectively.

These acquisitions are expected to be completed by the end of this month.

Mapletree’s latest logistics play in Japan comes on the back of an announcement by its sponsor , Mapletree Investments Pte Ltd, that it had signed a memorandum of understanding on a joint venture with Itochu Corporation to develop logistics facilities in Japan, earlier this month.

Source: Business Times, 29 Dec 2009

Two Dawson BTO projects see overwhelming demand

Some flats were 12 times over- subscribed at the close of applications

TWO highly anticipated public housing projects in Dawson estate have drawn overwhelming response, with some flats close to 12 times over-subscribed.

The 1,718 flats at SkyVille@Dawson and SkyTerrace@Dawson in Queenstown – offered by the Housing and Development Board (HDB) under the build-to-order (BTO) scheme – had received 10,098 applications as at 5pm yesterday.

Applications for the project ended yesterday.

‘As expected, there has been strong interest in the two Dawson projects, given their choice location,’ HDB noted in a statement.

SkyVille@Dawson and SkyTerrace@Dawson are near Singapore’s city centre and also close to Queenstown MRT station.

The five-room Dawson flats were the most popular, with 2,090 applications received for 176 available flats – about 11.9 times over-subscribed.

The 1,102 four-room flats attracted 6,015 applications while the 270 three-room flats drew 806 applications.

The 40 studio apartments available at the two projects also saw hot demand – 429 applications were received, making the studio apartments 10.7 times over-subscribed.

Paired units under HDB’s new multi-generational scheme also saw high demand. The scheme allows parents and married children to buy paired flats. HDB received 379 pairs of applications for the 65 pairs of flats available at SkyTerrace@Dawson.

Other than Dawson’s attractive location, the high prices of new private condominium apartments may have also pushed some buyers to these projects, noted Ngee Ann Polytechnic real estate lecturer Nicholas Mak.

Demand was also strong – albeit to a lesser degree – at the two other BTO projects launched by HDB. At Montreal Dale in Sembawang, 1,412 applications were received for 424 flats. And at Segar Grove in Bukit Panjang, 1,367 applications were received for 528 flats.

However, the two-room flats in both Sembawang and Bukit Panjang, and the three-room flats at Bukit Panjang were under-subscribed, which analysts said could be due to the low income ceiling that might exclude some potential buyers.

‘HDB may have to review the income ceiling because the salary levels of Singaporeans have increased over the years,’ said Mr Mak.

HDB said that the next BTO launch will be held on Jan 5. Buyers can look forward to another 1,300 flats in Choa Chu Kang and Hougang then. Added the agency: ‘HDB will continue to launch more BTO projects in 2010 if there is sustained demand for new flats.’

Source: Business Times, 29 Dec 2009

Bid for 99-year Sengkang residential site

Analysts expect 2-3 times the committed bid of $70m for site

A 99-YEAR leasehold residential site in Sengkang has been triggered for sale from the government’s reserve list.

The plot, at the junction of Sengkang West Avenue and Fernvale Link, will be launched for a public tender in about two weeks. It is being made available after an unnamed developer committed to bid at least $70 million, or $128 per sq ft of gross floor area. But analysts expect it to fetch two to three times that amount in the tender.

Under the reserve list system, a site is only put up for public tender once an application is received from a developer who commits to bid at or above a minimum price deemed acceptable to the government.

The Sengkang parcel is 182,973 sq ft and has a maximum allowable gross floor area of 548,920 sq ft. It is estimated that about 450 units of 1,200 sq ft can be built on the site.

Market watchers say that the triggering of the site – likely to be the last triggered sale in 2009 – shows that interest in residential plots is likely to continue to be strong in 2010.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak expects three to seven bids for the site, and reckons that the top few bids will be in the region of $260-$300 psf per plot ratio.

Peter Ow, Knight Frank’s executive director for residential, is more bullish – he expects the winning bid to be in the region of $370-$420 psf per plot ratio. He also feels that the site will receive ‘more than a few’ bids.

‘It is still an upgraders’ market and I think there is still demand from HDB upgraders for projects,’ he said.

At the nearby 625-unit The Quartz, the average resale price of units over the past six months was $714 psf. But The Quartz is in a more attractive location, Mr Ow said.

The latest site is in a relatively undeveloped area, so the number of bids will be smaller than in previous government tenders, analysts believe.

Earlier this month, a landed housing site at Jurong West put up for sale by the government drew a whopping 32 bids. The top bid for the 99-year leasehold parcel was $38.5 million or $254 psf of land area.

Source: Business Times, 29 Dec 2009

Carrefour goes to the heartland

FRENCH cheeses and exotic wines will soon be at the doorsteps of residents in the north, north-east and west of the island as supermarket chain Carrefour looks to expand to these neighbourhoods.

Known for introducing the hypermarket concept to Singapore in 1997, the French company is set to open eight new supermarkets and one hypermarket, all in the heartland, over the next three years.

Announcing its expansion plan yesterday, Carrefour’s assistant operations and merchandise director Siva Kumar Haridas said this was prompted by greater demand from customers who want its range closer to home.

Its two current hypermarkets are located downtown at Suntec City and Plaza Singapura in Orchard Road.

Carrefour is not the only player eager to go high-end in the heartland, as consumers develop a taste for finer foods.

Local chain FairPrice this month opened two upscale FairPrice Finest supermarkets – in Marine Parade and Tampines. Its first two Finest outlets are in Bukit Timah and Upper Thomson.

The Straits Times understands that FairPrice, Singapore’s biggest supermarket chain, is also planning to launch more of its regular supermarkets around the island in the coming year.

But Carrefour is confident the market’s appetite is big enough for both players.

‘I think there’re enough customers and space. Besides we have our strong range of imported Carrefour products,’ said Mr Haridas.

The big players’ moves to expand will likely tighten the noose around the necks of mum- and-pop store owners and wet market stallholders.

Another supermarket chain, Sheng Siong, made the news recently when it bought five private wet markets as part of its expansion plans.

The convenience of supermarkets and their extended operating hours have led to more shoppers filling their aisles.

A recent Nielsen study found fresh food spending fell by 9 per cent at wet markets last year, but rose 53 per cent at hypermarkets and 8 per cent at supermarkets.

This year is likely to have been fruitful for supermarkets as recession-conscious Singaporeans chose to cook at home instead of splashing out on restaurant meals.

Latest retail sales index figures, taken in October, show that supermarkets earned more in nearly every month this year, compared with last year.

And bolstered by these sales, supermarkets are now targeting more niche markets.

Following in the footsteps of competitors FairPrice, Giant and Cold Storage, Carrefour has created dedicated halal sections in its outlets.

Their butchery, fish and bakery departments have halal areas for Muslim customers, with foods certified by Muis, the Islamic Religious Council of Singapore.

As a result of rising demand among its shoppers, particularly Malay housewives, Carrefour has also raised its halal fresh produce by 30 per cent.

The chain now offers 12,000 types of halal produce and products.

Future outlets will have these halal sections too, said Mr Haridas.

The expansion will not stop there. He added that Carrefour convenience stores may be next on the cards.

In the meantime, Woodlands resident Maimunah Ismail is looking forward to more grocery shopping choices closer to home.

The 44-year-old customer relations officer said that for heartlanders who live far from downtown, ‘it’s inconvenient to travel so far when I want to buy promotional items or uncommon imported food’.

Source: Straits Times, 29 Dec 2009

Terrace prices are king among landed homes

For 4 years running their prices have been most resilient, Credo study finds

Landed home prices have largely continued to rise this year in the five most popular districts despite price fatigue setting in for condominiums and apartments.

A caveats analysis by Credo Real Estate, covering a four-year period from when the residential property market first stirred to life in 2006, shows that prices of terrace houses have been the most resilient over the past four years, rising by over 50 per cent in some areas.

More than semi-detached houses and bungalows, the average per square foot price of terrace houses has risen consistently between 2006 and 2009 in the five most popular districts.

The most sought-after landed housing location is District 19, followed by Districts 15, 28, 20 and 10.

Credo’s study does not include the Good Class Bungalow Areas (GCBAs) and Sentosa Cove (which are the more exclusive landed housing locations in Singapore), and strata landed homes. The latter are a hybrid housing form with shared condo-type facilities like swimming pool and tennis courts, and are usually built more intensively than conventional landed housing.

While terrace home prices have fared relatively better than semi-Ds and bungalows, landed home prices on the whole have also appreciated steadily between 2006 and 2009 in the five districts. ‘For most districts and sub-classifications of landed, we are at the all-time peak in terms of prices,’ says Credo’s managing director Karamjit Singh.

In most instances, price gains were achieved last year despite the general property downturn.

Agents attribute this resilience to the relatively limited supply and stock of landed homes.

‘There’s a very strong desire on the part of many Singaporean households to upgrade to landed property, which is regarded as an emotionally satisfying form of housing to own because you actually own something very tangible on the ground rather than in the air,’ says Credo’s Mr Singh.

The government’s promotion of larger families – with three or more children – has also set more parents thinking about the need for bigger homes with at least four bedrooms.

‘Many times you’ll find terrace houses offer better value than large apartments and condos. A 2,000 sq ft 4-plus-1, brand-new freehold condo in Katong might cost $2.4 million. But you can probably buy an intermediate terrace for about $2 million and have a bigger gross floor area of 2,500 sq ft, with saleable area inclusive of car porches possibly exceeding 3,000 sq ft. And you could have as many as five bedrooms,’ Mr Singh says.

He also points out that landed housing is an asset class that is predominantly bought and sold by Singaporeans rather than foreigners – which accounts for why landed ‘has always been like a steady ship, less volatile than high-end condos in particular’.

Knight Frank chairman Tan Tiong Cheng reckons, however, that new citizens could also be potential buyers. ‘A lot of new citizens also like landed homes, once they realise security is not an issue in Singapore,’ he said.

Terrace houses, which form the bulk of landed housing stock here, made up the lion’s share or nearly 60 per cent of the total 1,552 caveats lodged for landed homes in 2009 in the five hot spots.

In the most popular location of District 19 (which includes Serangoon Gardens and Yio Chu Kang), the average price of terrace houses has risen from $409 psf of land area in 2006 to $586 psf this year – an increase of 43.3 per cent.

In the second most sought after locale, District 15 (covering Katong, Opera Estate, Mountbatten and Joo Chiat), the average terrace home price has appreciated 51.8 per cent, from $475 psf in 2006 to $721 psf this year. Average terrace house prices in 2009 are at an all-time high in four of the five districts, and close to the record level in the fifth district.

Bucking the overall uptrend in bungalow and semi-detached home prices last year, the average detached home price in District 15 fell 23.1 per cent to $635 psf in 2008 from $826 psf in 2007. ‘District 15 detached houses benefited from that wave of buying we saw for luxury condos in 2007. But they also shared a similar fate when prices later fell in 2008,’ says Mr Singh.

District 28 includes Seletar Hills Estate, Luxus Hill and the Mimosa and Saraca areas; District 20 covers Jalan Pemimpin, Sembawang Hills Estate, Thomson Ridge Estate and Soo Chow Gardens; while District 10 includes the Bukit Timah and Holland Road areas.

The five hot spots account for 54.2 per cent of total caveats lodged this year for landed homes in Singapore, excluding GCBAs, Sentosa Cove and strata landed properties.

Overall, the 1,552 caveats lodged for landed homes in the five districts this year is about 65 per cent higher than last year’s figure, but still below the 2,516 caveats lodged in 2007.

More than 90 per cent of landed homes transacted this year in Singapore (excluding GCBAs, Sentosa Cove and strata landed homes) were in the secondary market – which is not surprising given the dearth of new project launches in the primary market.

For the year ahead, Knight Frank’s Mr Tan reckons the outlook for landed home prices remains strong, ‘just like the recovery in 2009 – and more so than condos’.

He reasoned: ‘Not only is supply limited but also static. It’s more difficult to create landed housing stock; when government sells land, it wants to maximise value especially if it’s near MRT stations. Hence the tendency to award higher plot ratios and these can’t be maximised by doing landed housing.’

Mr Singh, too, is upbeat about prospects for landed homes as long as the economy continues to grow. ‘Landed is dependent on Singaporeans at large feeling richer and confident about their earnings prospects. It has also got to do with the other forms of wealth creation taking place, like people becoming IPO-rich, or en bloc-rich,’ he says.

Source: Business Times, 29 Dec 2009