Sunday, February 28, 2010

HDB may tweak rules to curb property speculators

Frustrated buyers have pointed their fingers at permanent residents and private property speculators for pushing up HDB resale flat prices to record levels.

They claim the speculators snap up resale flats and then rent them out illegally or sell them quickly but legally after the stipulated one-year period.

A week ago, National Development Minister Mah Bow Tan said the Government is looking into ’something’ regarding measures for the HDB market.

Property experts reckoned the Government could extend the minimum occupation period for those who bought their flats with bank loans as well as make checks to ensure owners are not flouting the rules.

Under HDB rules, those who buy resale flats without housing grants can sell their flats after 21/2 years if they take a loan from HDB, or one year if they take a bank loan.

They can rent out the entire flat only if they have lived in it for at least three years.

Buyers who take up housing grants for their purchases can sell only after a minimum occupation period of five years.

‘Speculation is not an issue right now. But it may become an issue if buyers are sure that prices will continue to rise for the next year,’ said the managing director of C&H Realty, Mr Albert Lu.

ERA Asia-Pacific associate director Eugene Lim said the Government has already started to rein in the sizzling HDB resale market with the lowering of the loan-to-value limit (LTV) for housing loans taken from banks.

This means buyers can borrow less than before – at up to 80 per cent of the property’s valuation instead of 90 per cent previously.

This will likely affect deals for the high-value resale flats involving cash-over-valuation (COV) of anywhere from $50,000 to $90,000, as buyers will now have to fork out more down payment, in addition to the cash, said Mr Lim.

COV is the amount over and above the flat’s valuation that is payable only in cash.

There are not many other things the Government can look at, as it will not want to affect genuine demand, property experts said.

While the lower LTV limit will have an impact, it won’t be big, said Mr Chris Koh, director of Dennis Wee Properties.

‘It is the 5 per cent cash down payment and the COV that the buyers find challenging to come up with,’ he said.

An industry observer suggested that the Government may raise the first-time applicant’s housing grant to buy resale flats.

The Government can also extend the minimum occupation period for those who bought resale flats with bank loans to as long as 21/2 years, though this may not go down well with the banks as this may increase their risk exposure, property pundits said.

‘The banks may not agree to extending the period, but this area needs to be looked into so that people will not look at flats as a quick one-year turnaround investment,’ said Mr Koh.

Mr Lu suggested that the Government ban private property owners from buying resale flats if their sole intention is to rent them out.

HDB flats are in demand as the well-located ones can easily command a rental yield of 7 per cent to 8 per cent.

HDB, he said, can conduct regular checks to see that the private property owners are living in their flats instead of renting them out during the minimum three-year occupation period.

‘This, however, does not solve the problem of private property owners renting out their HDB flats legally after the minimum three-year occupation period,’ Mr Lu said.

HDB owners can buy private property but they must continue to live in their flats.

However, those who have obtained prior approval from HDB to sublet their flats can live in the private property.

Some property experts suggest going back to the days when flats could not be easily rented out.

‘One possible measure is to revert to the old system of allowing HDB flats to be rented out only if the owner has valid reasons such as being posted overseas to work,’ said Mr Lu.

Mr Koh added that HDB flats should not be seen as a short-term investment as this changes the whole concept of government housing.

~ Extend minimum occupation period for those who buy HDB flats with a bank loan
~ Check to ensure that owners are not flouting occupation rules
~ Raise first-time applicant’s housing grant to buy resale flats
~ Ban private property owners from buying resale flats to use as rental property
~ Revert to old system where HDB flats may be rented out only for valid reasons

Source: Sunday Times, 28 Feb 2010

Anatomy of a good home buy

I am no expert when it comes to investing in property, but as I have invested in numerous properties over the last decade, I have gained some valuable experience.

I made money from some and lost money from others. Some say you need luck to make money in real estate, but I believe there are some fundamentals that one can use as a guide to make as infallible a decision as possible.

1 Good location

In property selection, particularly for investment purposes, the key is location. For owner-occupied properties, location may be less significant as individuals have different preferences. Some like

quieter locations away from commercial activities while others choose to be close to specific amenities.

Proximity and accessibility to schools, transport lines, shopping centres, factories and specific suburbs are some important factors to consider.

Even for an owner-occupied property, it is important to consider how other people would view the location should you decide to sell it one day. In short, try to be as objective as possible when it comes to location.

2 Good site

Is the property in a good site? Is it next to an MRT station, bus stop, monsoon drain or power cables? Or is it at a T-junction? There is nothing technically wrong with T-junctions, but some people believe it obstructs the flow of good luck in one’s life.

Is the site prone to flash floods and so on? Many people like to live near MRT stations, but some foreigners prefer to avoid the constant noise of the trains. They may prefer quieter areas.

When choosing the site of the property, consider the points that will appeal to your potential buyers in the future.

3 Good layout

Do you like the layout of the apartment or house? Many people prefer their living rooms to feel spacious. Are there many angles and nooks in the house? Some people may consider them bad fengshui.

A more practical consideration is whether the living room and bedrooms are irregularly shaped, with lots of unusable space. A good, clean layout will save you the time, effort and money that you otherwise would have to spend on redesigning around oddly shaped and oddly positioned living areas.

4 Good address

Securing a good address without paying a premium for it is like a windfall. It may not matter much to you now but a good address, such as a nice sounding road name or an auspicious sounding unit number like #08-08, may attract more interest and demand in the property and also a higher price when it is time to sell.

5 Good history

Many potential buyers like to know the background of the property they are buying. Who are the current owners? Why are they selling? Who built the property and how old is it? Is the property owner-occupied or rented out? These things matter in the making of personal and economic decisions.

If the property is for investment, then the purchaser should look into two other areas:

6 Good rental yield

What is the expected rental yield for the property? Is this an acceptable level for you? What is the median rent for properties in that area?

7 Good potential for capital appreciation

What is the median price for property prices in that area? What is the highest and lowest price for properties in that area over the last three, five and 10 years?

The writer is managing director of mortgage consultant Global Creatif Financial. The views expressed are her own.

Lucky numbers

Securing a good address without paying a premium for it is like a windfall…A good address, such as an auspicious unit number, may attract more interest and a higher price when it is time to sell.

Source: Sunday Times, 28 Feb 2010

Fresh curbs not stopping property buyers

They came, they saw, they bought.

As of yesterday, more than 300 of about 350 units in The Estuary condominium that were released for sale have been snapped up.

The MCL Land project in Yishun is the first major property launch since measures were announced by the Government last week to curb speculation.

These were: stamp duty to be paid if the buyer sells the property within a year, and lending institutions allowed to lend only up to 80 per cent of the property’s value, not 90 per cent.

Yesterday, more than 80 pairs of shoes were seen outside The Estuary’s showflat when The Sunday Times visited at 1.30pm.

The number increased steadily to more than 100 pairs by 2pm as people came to check out the 99-year leasehold condo.

Most were families with young children or young couples, lured by the condo’s proximity to Lower Seletar Reservoir and attractive prices of about $750 per sq ft.

Inside, all the 15 tables set aside for prospective buyers were filled most of the afternoon.

Sales of the 350 released units began last week. The project has 608 units – comprising one-, two-, three- and four-bedroom types.

‘It’s been encouraging so far despite the measures,’ said an MCL Land staff member, noting that demand was evenly distributed across the various apartment types.

‘At first, there was more interest in the one-bedroom units but when the measures were announced, this died off a little.’

One- and two-bedroom units have usually been popular among speculators at launches over the past year. They make up nearly 40 per cent of units in The Estuary, which is near Khatib MRT station.

Small apartments have been targets for speculators because the lump-sum outlay is relatively more affordable.

The Government’s measures to curb excesses have come at the right time, said Madam Angie Ng who bought a three-bedroom unit at The Estuary for about $930,000 yesterday.

‘I’m relieved actually. We were waiting for this launch and then the measures came. That’ll help curb speculators and prices won’t be jacked up,’ she said.

Madam Ng, 36, who works in the banking industry, is married with two children and lives in a five-room flat in Yishun.

Property agents said The Estuary’s relatively distant location from the city also meant it might not be as attractive for speculators.

The prices were the key lure for the buyers, about 70 per cent of whom live nearby in Woodlands and Marsiling.

‘For upcoming projects in Singapore, the prices are at least $900 psf,’ said ERA agent Shayne Lim, 34, noting that prices have even reached $1,200 psf in Ang Mo Kio.

‘And there hasn’t been a new condo in the Yishun area for over 10 years,’ she said of the good buying response.

People in the real estate sector will also be monitoring sales at another condo – Vision@West Coast – which is set to be launched soon.

Located on West Coast Highway, the 99-year leasehold development has 281 apartments and 14 strata houses. Sizes start at about 800 sq ft for a two-bedroom unit and rise to 5,000 sq ft for the strata houses.

‘Demand should be strong as the location also boasts sea views,’ predicted property agent Jimmy Tan.

The asking price for the project, he added, could be around $1,100 psf.

Source: Sunday Times, 28 Feb 2010

‘Residences’ expert@work in naming a condo

What’s the name of your condo?

If you bought a unit in the 1980s, you probably live in a project with words like ‘palm’, ‘garden’ or ‘park’ in the name.

In more recent times, it became fashionable to incorporate auspicious numbers, like Scotts 28 and 8@Woodleigh.

Now, many developers have plumped for Residences.

Examples include Residences Botanique in Serangoon, Kovan Residences in Upper Serangoon, The Shore Residences in Katong, Vista Residences in Balestier, Holland Residences in the Holland Road area and Tembeling Residence in the East Coast area.

A spokesman for the Street and Building Names Board said that of the 25 to 30 condominium names it approved in 2008 and last year, names with terms like ‘residences’, ’suites’ and ‘@’ were most popular.

New property player Ferrell Asset Management opted for Ferrell Residences for its first condo in Bukit Timah, saying thatthe word ‘residences’ evokes ‘a very personal and intimate feeling towards the development’.

Ho Bee’s general manager of marketing and business development, Mr Chong Hock Chang, shares a similar view. ‘The word conjures a very homely image,’ he said. The firm’s projects include Orange Grove Residences and Dakota Residences.

For developer TG Group, there is a more mundane reason for naming its 102-unit development in the East Coast, St Patrick’s Residences.

It conforms to the residential zoning of the area, and differentiates itself from industrial or commercial zones, said its head of corporate affairs, Mr Lowell Loh.

Frasers Centrepoint Homes, which is launching Residences Botanique this weekend, also drew attention to the word Botanique.

It reflects the wide array of plants and landscaping of the resort-style condo, said a spokesman.

Far East Organization said it tries to express what makes a development unique via the condo’s name.

Its The Shore Residences is so named because its ‘large waterscape with mini beaches and coconut trees’ aims to recapture the old Katong ambience with a long shoreline.

But do names really matter with buyers? Apparently not, it seems. Mrs Debora Neo, 44, who lives in Rivervale Crest condo in Sengkang, said price and location matter more.

Proximity to schools is also crucial, said the mother of two teenage children.

As for the use of ‘residences’, she said it reminded her not of a home or condominium, but of serviced apartments for foreigners here for a short stay.

Source: Sunday Times, 28 Feb 2010

Don’t be chained to loan woes

It must be tempting to splash out a bit now that the worst of the recession – and the belt-tightening that it forced on us – is over.

After all, some firms have started restoring pay cuts to employees and year-end bonuses have been paid.

With the mood improving, the urge to snap up that big-ticket item with cash or a loan is getting stronger.

Using cash is one thing, but excessive borrowing can lead to financial trouble.

‘Loans can help us to purchase high-value items or essentials that we do not have the savings or the full amount for at the moment – but it should be something we can afford in the long run,’ said GE Money Singapore’s president and chief executive, Mr Rahul Gupta.

And the same principle should apply, whether for a home loan, a car loan, a home renovation loan, one for education, or even one for a holiday.

‘Consumers need to ensure that loans taken are well within their means,’ said Mr Gupta.

Here are eight things to consider when taking out a loan:

1 A need or a want?

Before taking a loan, ask yourself if the item or service is meant to satisfy a need or a want.

Ms Tan Huey Min, assistant director at Credit Counselling Singapore, suggests that if it is a ‘want’ – not necessary and just for consumption – perhaps it would be better to save for it rather than to pay a ‘premium’ price (that is, the interest cost of borrowing). For instance, don’t borrow to pay for a vacation or a new kitchen appliance.

Take time to consider if there is an alternative to borrowing now or borrow a smaller amount instead. Better still, don’t buy it at all if it is unnecessary.

However, if the purchase is for investment purposes, then perhaps it is okay to get a loan. This could be for renovations that add value to your home, or enhancing your future income earning ability via training and education.

2 Interest cost of borrowing

Consumers should be aware of the type of interest rate that is stated in the loan agreement or marketing material.

And when considering loan options, compare like with like, said Mr Gupta.

Some loans use the annual percentage rate (APR), which reflects the actual interest cost of borrowing, while others refer to the simple interest rate. Shop around for the lowest APR.

The simple interest rate is calculated by applying a flat rate on the original principal amount for the entire loan tenure.

The APR is interest calculated based on the declining principal balance over the tenure of the loan.

As the borrower makes monthly repayments, the principal is reduced every month, so the interest payable on the principal also reduces each month.

Sometimes a loan comes with a zero per cent interest cost if it’s paid via a credit card. Make sure you pay off the debt before the interest starts to build up. If you miss a payment, you may be automatically bumped up to the highest annual interest rate of 24 per cent.

3 Current debt service ratio

Before taking the loan, calculate your debt service ratio. It is the percentage of your monthly income needed to service long-term liabilities.

It provides a useful guide to how much of your take-home pay – that is gross pay less 20 per cent employee CPF contribution and personal income taxes – is used to pay debts.

Debt payments are monthly expenses like mortgage, car loans, personal loans or even credit card debts. A healthy debt servicing ratio – debt divided by income – should be 35 per cent or less.

To put it another way, out of every $1,000 of after-tax and CPF income, you should spend $350 or less on debt repayments.

Ms Tan cautions that if the consumer already has a high amount of outstanding debt to service, it is best to pay down existing debt first before incurring more.

And even if your debt service ratio is less than 35 per cent, it is prudent to consider if you have surplus funds to take on another loan repayment after paying monthly living expenses.

Make sure you know your cash inflow and outflow before taking on another loan.

4 Loan tenure

It is worth considering the optimal loan tenure as it affects monthly repayments and interest paid.

Generally a longer loan tenure means smaller monthly repayments but a shorter loan tenure may lead to lower interest paid, says GE Money.

For example, Mr Mark Tan takes a $10,000 loan for a period of five years at an APR of 18per cent per annum (pa).

His monthly repayment is $254 so the total interest he will pay over the five-year loan tenure is $5,236, over and above the $10,000 loan amount.

If he takes a loan period of three years at an APR of 18 per cent pa, his monthly repayment will be $362 but the total interest paid over three years will be $3,015.

So to minimise the interest payable, a shorter loan tenure may be an option, but the repayments will be higher.

Some financial experts suggest you make the highest repayments you can manage so that you clear the debt in the shortest possible time.

When deciding on a loan tenure, consider your monthly commitments and take the appropriate loan tenure based on your monthly cash flow.

5 Early payment options

Not all loans allow customers to settle early, so read and understand the terms and conditions of the loan before signing up.

An early settlement fee is usually imposed if a loan is paid off early.

For example, if you redeem your GE Money personal loan before the full term expires, an early redemption fee of 3 per cent to 5 per cent of the outstanding amount at the time will apply.

Home loan customers are urged to look beyond interest rates and consider factors such as the lock-in period and penalty fees.

Another potential cost is the loan cancellation fee. An investor who buys a property on speculation and then applies for a loan might be hit with a cancellation fee if the property is sold before the loan is disbursed.

Cancellation fees can range between 0.75per cent and 1.5per cent of the loan amount, and can be quite substantial. For example, if the loan amount is $1million, the cancellation fee works out to $15,000.

6 Late payment fees

Most loans stipulate late payment fees. These are over and above the interest charged for late payment, so go through the terms and conditions of loan agreements thoroughly to ensure you understand them clearly.

Pay special attention to fees incurred for late payment.

For instance, credit cards typically charge a one-time administrative fee of $50 to $80 for late payment. This is besides the 24per cent interest charged on the sum that is rolled over.

So keep track of the payment dates and remember to pay before the due date. Try to have fewer loans or credit facilities and avoid having multiple sources of credit. In order not to incur interest and penalty fees, pay your outstanding credit in full.

7 Payment flexibility

Avoid defaulting on loan repayments as it will hurt your credit history. However, a typical loan tenure is for at least a year, and sometimes it is hard to predict what will happen so far into the future.

You might hit cash flow difficulties at some point, so it is worth looking for loans that offer some payment flexibility and provide rewards for prompt payment.

For example, Mr Gupta says that GE Money’s James personal loan, which caters to people earning $30,000 and above, offers several flexible payment options. They include allowing customers to defer two payments a year, paying only the interest component or paying higher or lower instalments at the start, or end of their loans.

Such features offer flexibility in managing your cash flow, particularly during unforeseen circumstances. GE Money customers are also rewarded for prompt payment by having part of their interest component, or their last instalment amount of the loan, waived.

For those who can’t meet their monthly payments, experts suggest that they approach their lender first for assistance to restructure a loan. Financial institutions will usually review such requests on a case by case basis. A responsible lender will work with its customers to provide a solution.

8 Other loan terms and conditions

Make sure you understand the key fees and charges stipulated by a loan agreement. This makes you aware of what to expect when a loan is taken and reduces any surprises after it has commenced.

If you are acting as a guarantor for a loan, be clear about the terms and conditions of the agreement, especially those related to your obligations as a guarantor.

Ms Tan says: ‘In the eyes of the creditor, the guarantor is the ’same’ as the borrower, meaning, both the borrower and the guarantor are jointly and severely liable for the loan.’

This means that even if you are willing to act as a guarantor, you should also consider your own ability to make repayments in case the principal borrower fails to repay.

She recalled a case in which a person (let’s call him John) became a guarantor for a stranger (Jim), who wanted to buy a car, in return for a fee.

When Jim defaulted on his car loan, the car financier pursued legal action against both people.

Jim could not repay and became a bankrupt. In the end, John assumed the balance of the loan, which was $30,000, after the car was sold and makes regular payment to avoid being made a bankrupt by the car financier.

Source: Sunday Times, 28 Feb 2010

Copthorne Orchid to go ahead with condo plans

Tenants had heard it before: The Copthorne Orchid Hotel would be torn down for a condominium.

So there was a sense of deja vu when they learnt from reading The Straits Times last Monday that the 440-room hotel in Dunearn Road would go.

In 2005, City Developments Ltd (CDL) had said it planned to turn the hotel’s site into a condominium. But that did not happen.

CDL owns hotelier Millennium & Copthorne (M&C), which operates the Copthorne Orchid Hotel.

But its latest announcement seems to be for real. A CDL spokesman told The Sunday Times it wants to launch the condominium project as early as this July.

The property developer has not decided on a firm date to put the 150 units of the project on sale as it ‘had just obtained provisional permission to redevelop’.

Depending on how well the condominium sells and existing tenancy obligations, the building may be torn down only next year or later.

M&C held back its plans in 2005 ‘as there was a projected shortage of hotel rooms’, its spokesman said.

But its recent announcement was not good news to its tenants – one of which has been leasing space in the hotel for 35 years.

Madam Anne Lee, 52, owner of Anne Salon, was upset that the hotel withheld such important information as she renewed her lease just three months ago.

‘They must tell us so we can start looking for another landlord,’ said Madam Lee, who has been running her salon there since 1975.

Nice Express, which operates its Singapore-Kuala Lumpur express bus service from the hotel, was also not informed about the plans.

Mr Charles Lawrence, 56, operations and sales supervisor at Nice’s Singapore office, said: ‘I do not know whether to move or stay.’

This comes at a bad time for Nice as it spent $100,000 last year to renovate its office at the hotel.

When asked why tenants were not informed, an M&C spokesman said: ‘We have not sent out any notices as there is no firm date yet.

‘The terms of the tenancy agreement contain a three-month notice clause. We have sufficient time on hand to serve proper and timely notice to all our tenants.’

Source: Sunday Times, 28 Feb 2010

Saturday, February 27, 2010

Missing lawyer squirrelled away more than $10m

RUNAWAY lawyer Zulkifli Mohd Amin had moved more than $10 million out of his firm’s client’s account over a 10-month period in 2007, a sum larger than the $6 million previously thought.

These details emerged in a 56-page report by a disciplinary tribunal comprising retired Judge of Appeal L.P. Thean and lawyer Tan Chuan Thye.

The tribunal, appointed in August last year by the Chief Justice to formally investigate the case, found Zulkifli guilty of a total of 211 charges of misconduct.

Zulkifli was one of three partners of the now-defunct firm of Sadique Marican and ZM Amin.

He is not around to face the music, but his partners, Mr Mohd Sadique

Ibrahim Marican and Mr Anand Kumar Toofani Beldar, will have to face a Court of Three Judges for breaching accounting rules and failing to safeguard clients’ money.

Out of the 211 charges against Zulkifli, 208 are related to unauthorised withdrawals of funds from the account used to hold clients’ money.

The remaining charges were for failing to ensure that the client’s account was not overdrawn and failing to keep the books in order.

The accounts of the firm were managed by Zulkifli.

The other partners have each been found guilty of three charges of failing to keep the books in order and failing to supervise transactions involving clients’ money.

In November 2007, Mr Sadique and Mr Anand told the Law Society that Zulkifli was missing and they suspected him of misappropriating money from the firm.

The firm’s accounts were inspected.

Among other things, it was found that the firm had been issuing cash cheques after May 15, 2007 even though it was no longer allowed to do so under the rules.

Fund transfers were made and cash cheques were issued without supporting documents.

Although Mr Sadique’s signature appears on some forms and cheques, a handwriting expert has concluded that they were forged.

The 211 charges form the most serious of three separate disciplinary proceedings against Zulkifli. The tribunal has found that the case is serious enough to be referred to the Court of Three Judges, which has the power to suspend or strike lawyers off the rolls.

On Tuesday, another of the three cases, involving Zulkifli’s inaction in a conveyancing transaction that caused his clients to lose out on a property deal, was brought before the Court of Three Judges by the Law Society seeking to disbar Zulkifli.

This drew criticism from the judges, who questioned why the society brought up less serious charges when it was well-known that Zulkifli had done worse. The court asked for more details about his other disciplinary proceedings.

Yesterday, it emerged that Zulkifli was found guilty earlier this month of the 211 charges. Both cases will be dealt with together by the court.

The third case is pending.

According to sources, the less serious complaint was made in November 2007 and the disciplinary tribunal, in its report in October last year, said the matter should be brought to the Court of Three Judges.

By law, the society had a one-month deadline to make the application.

It is understood that the society had considered deferring the less serious case, but as it was unsure how long it would take to investigate the 211 charges, it decided to go ahead with the less serious case.

Source: Straits Times, 27 Feb 2010

Downtown Taipei land sold at record prices

TAIWAN’S government has sold land in downtown Taipei at record prices, indicating demand for premium housing units amid improving ties with China, the island’s biggest property broker said.

A 401 square metre site fetched NT$731 million (S$32 million) at an auction yesterday, after NT$789 million for 384 sq m sold on Jan 28, data from the National Property Administration website showed. These were the highest prices for residential land in Taipei, said Stanley Su, a senior researcher at Sinyi Realty Co.

‘These prices indicate optimism for the high-end market,’ Mr Su said. ‘There’s demand, as China-based businessmen and overseas Chinese may be coming back amid strengthening cross-strait relations.’

China and Taiwan plan a trade agreement to reduce import tariffs. The government of President Ma Ying-jeou, who was elected in March 2008 on a platform of improving relations with the island’s biggest trading partner, has eased restrictions on investments between banks, brokerages and insurers on the two sides, as well as transportation links.

Revenue from government land auctions last year totalled NT$10.8 billion, according to the Ministry of Finance.

Prices of residential property in the Taipei metropolitan area rose 20 per cent last year after banks cut mortgage rates to the lowest since records began, according to Sinyi Realty.

The central bank has held its key interest rate at a record low of 1.25 per cent in the past 12 months to help boost the economy. Gross domestic product in Taiwan expanded at the fastest pace in five years in the fourth quarter.

Taiwan and China have been ruled separately since Chiang Kai-shek’s Kuomintang, or Nationalists, fled to the island after being defeated by Mao Zedong’s Communists in 1949. China regards Taiwan as part of its territory.

Source: Business Times, 27 Feb 2010

DC rates take striking hike in scenic Sentosa

RWS effect reflected in higher land values on island while interesting trend emerges in CBD

SENTOSA has seen a big jump in development charge (DC) rates, reflecting higher land values on the island following this month’s opening of Resorts World Sentosa (RWS).

On average, the government is raising DC rates (payable for intensifying or enhancing the use of some sites) about 12 per cent for landed residential use from March 1; but in Sentosa, they will climb 17.3 per cent. For non-landed residential use, Sentosa saw a 10 per cent hike in DC rates compared to the average rise of about 8 per cent. And while DC rates for commercial use will be cut roughly 2 per cent on average against the backdrop of weak office rentals, Sentosa is the only location where they will be raised – to the tune of 12.5 per cent.

It is also the only location where the government increased the hotel-use DC rate; the hike was 12.2 per cent. In all other locations, the DC rate for hotel use (which also covers hospitals) was left untouched.

DC rates – which are revised on March 1 and Sept 1 each year – are specified by use groups across 118 geographical sectors throughout Singapore. The review is conducted by the Ministry of National Development in consultation with the Chief Valuer, who takes into account current market values.

Some analysts pointed to an interesting trend emerging in the Central Business District. DC rates for commercial use in the CBD fell further while non-landed residential rates rose and actually surpassed the commercial rates. This could mean paying a higher DC for those who redevelop old CBD office blocks into apartments and could impact such conversions, especially in the case of 99- year leasehold sites as their owners would also want a lease top- up, says DTZ’s South- east Asia research head Chua Chor Hoon.

Jones Lang LaSalle’s SE Asia research head Chua Yang Liang goes a step further, predicting that the new trend could have an ‘unexpected effect of encouraging the redevelopment of existing older office stock into the same office use and discouraging conversions to residential’. Jones Lang LaSalle’s (JLL) analysis showed that DC rates for non-landed residential use were raised for 116 geographical sectors and left unchanged for the remaining two areas.

The biggest hike of 15.4 per cent was seen in three sectors: 91 (which covers the Mountbatten, Meyer and Broadrick areas); 98 (Tampines, Bedok Reservoir, Bedok North, Kembangan); and 101 (Paya Lebar Way/Eunos/Sims Avenue).

This was followed by Sector 76 (Everton/Spottiswoode Park) with a 14.5 per cent increase. Market watchers attribute this to last October’s en bloc sale of Dragon Mansion at a land price about 68 per cent above the land value implied by the prevailing Sept 1, 2009 DC rate for the location.

Also, the geographical sectors covering Serangoon Ave 3, Upper Thomson Rd and Sengkang West Avenue – where residential sites have been sold at bullish prices at state tenders in the past six months – were raised 12.5 per cent, 10.5 per cent and 9.1 per cent respectively.

Colliers International executive director (investment sales) Ho Eng Joo said that overall, the growth in non-landed residential DC rates may hamper developers’ landbanking plans, especially for collective sales sites that require DC payment.

Credo Real Estate managing director Karamjit Singh, however, said yesterday: ‘Three quarters of the en bloc projects our company is working on don’t involve any DC payment. As for the rest, DC as a component of the entire land cost is not very high and hence the increase in DC rates will have minimal impact on the en bloc sale exercise.’

For landed residential use too, charges were raised in 116 sectors and left unchanged in the other two.

Besides Sentosa, other areas with the biggest hikes include Holland/Dunearn Rd/Sixth Avenue (up 17.1 per cent) as well as the Good Class Bungalow areas of Botanic Gardens/Gallop Rd/Tyersall and Ridout/Peirce Hill/Swettenham Road (each up 16.9 per cent), JLL’s analysis shows.

Commercial DC rates were trimmed between 3.2 and 13.3 per cent in 23 sectors. The biggest chop was in the Cecil St/Robinson Road area. There were also cuts in other parts of the financial district, such as Marina Bay, Raffles Place and Fullerton Road, as well as in the Thomson/Moulmein, Newton Circus, Bugis and Tanglin/Cuscaden areas.

Source: Business Times, 27 Feb 2010

Review law on en bloc sales

IF MONDAY’S advice to treasure our homes and not use them to make a quick buck is to be heeded (‘Homes are for keeps, not speculation: PM’), the Government should review the law permitting collective property sales.

Such sales exercises invite speculation in the private property market at the expense of a home owner’s security.

I have not lived in peace for the past three years because my neighbours voted to go en bloc. The main argument of the pro-collective sale lobby had nothing to do with urban renewal. It was about reaping a windfall.

The bid at my condominium, Green Lodge in Toh Tuck Road, fell through last month, but there is nothing to stop my neighbours from trying again.

I dissented because I treasure my home for the reasons implied in Monday’s report: It gives me peace, familiarity and stability in the twilight of my life; and it is my nest egg which I do not wish taken away from me by others’ temptation to make a fast buck.

But how can I take good care of my treasured asset if I have no control over it?

The power to sell my home lies not in me but in 80 per cent of my neighbours. And that is why the law must be changed.

Tan Keng Ann

Source: Straits Times, 27 Feb 2010

Another Yishun industrial site up for tender

Knight Frank sees interest in plot near ITE East (Yishun) due to recent strong take-up in Woodlands

FOR the second time in a week, the government will be putting an industrial site in Yishun up for tender.

According to the Urban Redevelopment Authority (URA) yesterday, a developer triggered the sale of a 60-year leasehold site at Yishun Avenue 6 (Parcel 8). The developer – which was not identified – committed to pay at least $11.5 million, or around $30 per sq ft per plot ratio (psf ppr), for the land.

The 1.43 ha plot on the reserve list has been available for sale since November 2007. It is zoned for Business 1 use and has a maximum permissable gross plot ratio of 2.5.

This parcel is across the road from ITE East (Yishun) and is near Yishun Industrial Park and Yishun MRT station. It also seems to be adjacent to another site – at Yishun Avenue 6 (Parcel 1) – which was similarly triggered for sale on Tuesday. For the latter, a developer also committed to pay at least $11.5 million.

Knight Frank’s head of industrial business space Lim Kien Kim believes that there will be interest in Parcel 8. This is because industrial space end-users have been looking for land in the northern part of the island, he said.

He added that industrial space in Woodlands has recently seen strong take-up, and this could encourage developers to bid for the site.

Mr Lim felt that offers could reasonably be expected to come in at around $35 psf ppr, or $13.4 million. But he pointed out that with buoyant sentiment in the market, higher bids are possible.

URA will launch the public tender for the site in about two weeks.

Demand for industrial plots has been strong in the last few months. In December, a 30-year leasehold site at Pioneer Road North/Soon Lee Drive drew eight bids, with the highest coming in at $19.4 million, or $48 psf ppr.

Source: Business Times, 27 Feb 2010

China property price gains unsustainable, says S&P

China’s property market will probably go through a “more meaningful correction” this year because the price gains in 2009 aren’t sustainable, according to Mr Christopher Lee, corporate ratings director at Standard and Poor’s.

The outlook for the Chinese market is “neutral” for this year, Mr Bei Fu, an associate director of corporate ratings at S&P, said during a conference call with Mr Lee on Thursday.

“The middle of this year could be a potential turning point for many developers,” Mr Fu said. “A combination of slower demand, higher supply and various government initiatives will dampen market sentiment.”

China’s property prices surged 9.5 per cent in January, the most in 21 months, as total new loans surged to 1.39 trillion yuan ($287 billion), more than in the previous three months combined.

The China Banking Regulatory Commission ordered banks last month to “strictly” follow property lending policies.

Investors tend to “sit on the sidelines” in anticipation of more tightening measures to curb property price gains this year, Mr Lee said.

Gradual and Cautious

Beijing will scrap some home-purchase incentives after the jump in prices, reducing the scope of a housing sales-tax exemption and enforcing a 40-per-cent down-payment requirement for second homes, the capital’s Municipal Commission of Housing and Urban-Rural Development said earlier this week.

The People’s Bank of China raised the reserve requirement by 50 basis points for the second time this year on Feb 12 to slow bank lending. The hike came into effect on Thursday.

The central bank said in its quarterly report that it wanted to gradually normalise monetary conditions from a “crisis mode” after gross domestic product grew 10.7 per cent in the fourth quarter, the fastest pace in two years.

“Policy introduction this year will be in a gradual and cautious manner,” Mr Fu said.

“Stability will be the focus.”

The Chinese government will increase supply of subsidised public housing this year to provide affordable accommodation for people with lower incomes, and there will be a “surprise” in the number of available luxury homes by the middle of this year, when projects started one year ago are completed, leading to stronger competition among developers, she said.

Industry Consolidation

“Bigger and stronger property players will do even better as they have the scale and financial resources to grow, and smaller companies will find the market condition more challenging,” Mr Fu said. “We expect to see more merger and acquisition activities in the sector.”

China Overseas Land & Investment, a developer with a BBB- credit rating from S&P, the highest among 11 Chinese developers the ratings company analysed, will benefit from industry consolidation this year, S&P said. China Overseas, which is owned by the nation’s construction ministry, is poised for a “possible upgrade,” the report said.

Companies rated B+ and below, including Greentown China Holdings and Shanghai Zendai Property, may become potential acquisition targets, according to the report.

Source: Today, 27 Feb 2010

Residential development charges up

THE improved property market has prompted the Government to raise the fees developers pay to enhance the use of residential sites.

The fee – called a development charge (DC) – closely reflects recent land and property values as it is adjusted every six months.

A developer pays a DC if he wants to intensify the use of a site, for instance, by redeveloping an existing project into a bigger one.

Rising values – and developers bidding aggressively for suburban residential land – have forced the Government’s hand, although the increases were mostly within expectations.

From next Monday, the DC will go up by about 12 per cent on average for landed homes and around 8 per cent for non-landed properties. But the rate for commercial sites has dipped given the muted market.

The new rates highlight the rapid rebound in residential property. The DC for landed homes had not been revised for two years, while the non-landed rate was down 2 per cent six months ago.

Experts say the higher charges will add to developers’ costs and could affect collective or en bloc sales and the conversion of office buildings to residential use.

The DC rises vary across the island.

While the average rise for landed properties is 12 per cent, the DC will jump by around 17 per cent in the prime areas of Tanglin, Holland and Bukit Timah, the HDB towns of Hougang, Toa Payoh and Ang Mo Kio, and Sentosa.

The DC for Sentosa rose the most – by 17.3 per cent – this round, supported by the recent strong transaction volume in that area, said Jones Lang LaSalle.

The largest rise in the non-landed homes sector will be a hike of 15 per cent in the mass-market areas of Mountbatten and Katong, as well as in Paya Lebar, Eunos, Bedok North, Simei and Tampines.

The central areas of Spottiswoode Park and Cantonment, Orchard Road and Sentosa Island also saw double-digit rises, because of surging prices and some recent land acquisition activity.

‘Overall, the rise in non-landed residential (development charge) rates is expected to add to developers’ land banking costs – particularly for collective sale sites that require payment (of the charge),’ said Colliers International’s executive director of investment sales, Mr Ho Eng Joo.

This may hamper or derail their land banking plans, he added.

It is a different story in the commercial sector, where DCs will go down 2 per cent on average, with the exception of booming Sentosa, where the rate will go up by 13 per cent.

Rates will fall by up to 13.3 per cent around Raffles Quay and Shenton Way.

The dip for commercial property will be welcomed. The office sector has been subdued, land sales during the review period have been muted and the business environment is still uncertain despite signs of recovery, said Colliers International.

The Central Business District (CBD) will also see the completion of about 2.2million sq ft of office space this year, raising the real threat of a damaging oversupply.

‘A cut in DC rates in these locations will hence provide the necessary stabilising effect to the market, amid daunting concerns about the potential supply,’ said Mr Ho.

Consultants also noted that the fall in commercial DC rates in the CBD will be met with a rise in residential rates.

‘This would affect the conversion of office buildings to residential uses in the CBD, especially those on leasehold land as they would also have to top up the lease,’ said DTZ’s head of South-east Asia research, Ms Chua Chor Hoon.

There are a number of players that are keen to convert and they will have to recalculate their sums as the DC rates have increased, said Mr Ho.

Sentosa is the only area of the country that registered a rise – of 12 per cent – in the DC for the hotel and hospital sector, which will remain untouched everywhere else.

Sentosa is paying the price of the integrated resort, which has pushed up values and, hence, the DC increases in the landed residential, commercial and hotel/hospital sectors, said Ms Chua.

The National Development Ministry sets the rates every March and September in consultation with the Chief Valuer.

Source: Straits Times, 27 Feb 2010

Housing in S’pore still affordable

HOUSING is a perennial hot topic of discussion, especially in Singapore where it touches almost every segment of society – from the low to middle income in public housing to the middle and higher income aspiring to upgrade to private property.

The recent spikes in both public and private housing prices have added fuel to the debate on affordability. Analysts and experts have attributed the price increase to a rise in demand, especially from foreigners and permanent residents.

What is clear is that housing demand changes constantly, which means that government policies seeking to offer decent and affordable homes have to keep changing too.

The International Housing Conference last month, organised by the Housing and Development Board (HDB) to mark its 50th anniversary, gave the housing authorities a platform to share ideas and strategies.

Even with the best of intentions, it is often hard to give people equal access to affordable housing because of uncertainty about the number who need it as well as an inelastic housing supply.

This commentary aims to compare the housing situation in Singapore, Hong Kong, London and Sydney.

As with most countries, Singapore’s housing provision system is rooted in its historical and political background. During the initial years of independence, the Government adopted a subsidised rent system to resolve an urgent housing shortage.

However, by 1964, it was decided that home ownership was a better strategy as it was thought that citizens would be more likely to sink their roots in the country if they owned a stake in it. This marks the first deviation from public housing systems in countries with a strong welfare focus, such as the United Kingdom and the Netherlands. By the late 1970s, when many welfare countries were starting to revamp their public housing systems due to economic reasons, public home ownership was thriving in Singapore because of the development of the resale market for public housing.

Over the last few decades, the HDB has become the dominant housing provider, accounting for the homes of 82 per cent of the population. Table 1 shows the key differences between the housing systems in four major cities, including Singapore. It provides a broad picture of the composition of public and private housing and the proportion of rental and ownership for each category.

Table 1 makes two key points: One, these cities differ from Singapore in that most of their housing is provided by the private sector. This is also the case in most countries.

Two, only Singapore has a significant proportion of ownership when it comes to public sector housing. In fact, public housing in London and Sydney is solely rental, while Hong Kong has 35 per cent public housing ownership as compared with more than 95 per cent here.

Clearly, housing systems in different countries are shaped by their respective history, economy and the cultural and social needs of their people. Each system has its own merits and limitations; what matters is whether it can offer decent and affordable housing. We assess these two criteria in terms of living space, ratio of income to housing price as well as housing options. Table 2 compares the population density, ratio of median housing price to median annual household income and the average living space per person in Singapore, Hong Kong and London.

Table 2 shows that it is not meaningful to rate housing systems based on one factor alone. Take population density, for example. While Singapore scores the highest of the three, much of Hong Kong’s land area is unbuildable because of the terrain, which means that the living space per person in the territory is less than half of that in Singapore. In fact, living space per person in Singapore compares favourably to that in London, where land supply is not a constraint.

In terms of affordability, Singapore has achieved a lower housing price to income ratio. On the whole, the figures reveal that the housing system here does deliver comfortable and affordable housing to the majority of Singaporeans.

As for housing options, some countries offer greater diversity. In London, for example, if a family is unable to buy or rent a good home from the open market, a range of affordable options is available, including public housing from the local authorities at a subsidised rent. There is also the possibility of buying a home through shared ownership, a part-buy, part-rent scheme from one of the independent, non-profit associations providing low-cost housing.

In Singapore, the HDB has diversified its housing types over the years through design, construction and technology. For example, besides the bulk of build-to-order flats, it also engages private developers to build public housing under the Design, Build and Sell Scheme.

While housing systems vary from country to country, what is important is the ease with which people can live in quality homes, defined as housing with water, sewerage and electricity.

In Singapore, all this – together with estate maintenance and neighbourhood amenities – has been achieved by the HDB over a relatively short history of 50 years.

Perhaps the success has also raised expectations. Each spike in house prices – fluctuations in prices will likely increase, given Singapore’s open economy and rapidly changing global economic climate – will heighten the anxiety of potential buyers, despite the empirical evidence that housing in Singapore is still very much affordable by any standard.

The writers are from the Department of Real Estate, National University of Singapore.

In terms of affordability, Singapore has achieved a lower housing price to income ratio. On the whole, the figures reveal that the housing system here does deliver comfortable and affordable housing to the majority of Singaporeans.

Source: Straits Times, 27 Feb 2010

Friday, February 26, 2010

Economy shrank but employment up in 2009

LAST year was a paradox for Singapore's economy - for the first time ever, the economy shrank but employment grew.

Economic growth for 2009 came in at -2 per cent after taking a beating from the global financial crisis but job numbers grew 1.3 per cent, the Ministry of Trade and Industry (MTI) said yesterday.

This was due to two factors - job support schemes such as Jobs Credit and the Skills Programme for Upgrading and Resilience, and the labour-intensive construction sector.

The sector added 13,000 jobs last year when employment was at its bleakest, thanks to civil engineering works and a boom in the private property market. This was in stark contrast to previous recessions, which usually coincided with a property bust.

Initial forecasts had tipped that jobs would take a tumble since employment typically lags two to three quarters behind economic growth.

When the recession began in the second quarter of 2008, total employment followed the formula by falling in the first quarter of last year.

But a sharp rebound began in the third quarter and by December, employment had pushed past pre-crisis levels.

'Compared to previous recessions, the peak-to-trough decline in employment during the 2008/2009 recession was uncharacteristically small and the turnaround unusually fast,' said MTI.

Even though previous recessions in 1984/1985 and 2001 were of the same duration or shorter, the declines in employment then stretched for more than two years and resulted in more than 135,000 and 79,900 jobs lost respectively, it said.

Employment has recovered faster here than in other developed economies such as the United States, Britain and Japan.

Source: Straits Times, 20 Feb 2010

Developers put home launches on fast track

DEVELOPERS will be bringing forward their property launches over the next few months to satisfy strong demand from homebuyers, said Real Estate Developers’ Association of Singapore (Redas) president Simon Cheong yesterday.

But Mr Cheong, who was speaking at Redas’ spring festival lunch, warned that many developers are now facing depleting land banks following brisk home sales in recent months. Developers, he said, were surprised at the speed of the recovery in the property market.

Property groups including Allgreen Properties, CapitaLand, City Developments, Frasers Centrepoint, MCL Land and UOL Group are all looking to launch projects over the next few months.

‘Redas’ members are committed to fast track supply to satisfy demand to minimise excessive speculation in the property market,’ said Mr Cheong. ‘Hopefully when demand is satisfied, there will be less pressure for future anti-speculative measures.’

Property groups here appear to have shrugged off the measures introduced by the government last Friday to cool the market.

The government said that a seller’s stamp duty will be levied on those who buy a residential property and sell it within a year. Currently, stamp duty is levied only for the purchase of a property and not its sale. Also, the loan-to-value limit on housing loans will be lowered from 90 per cent to 80 per cent.

Developers said that while volumes might contract in the short term, demand for private homes is expected to hold up well this year. Sales of new private homes by developers rose to 1,476 units in January – three times as high as the previous month and the highest level since August last year.

‘Sentiment will initially see a knee-jerk reaction and be affected, but over time, people will realise … that the interest rate environment is still very low,’ said City Developments executive chairman Kwek Leng Beng at the group’s results briefing earlier in the day. ‘If you don’t buy today, by the time you want to buy, the prices could have gone up a lot more.’

City Developments group will roll out five projects with around 1,600 units this year – The Residences at W Singapore Sentosa Cove and one residential project each at Chestnut Avenue, Thomson Road, Pasir Ris and in the Dunearn Road area.

Other market players shared similar sentiments. Frasers Centrepoint CEO Lim Ee Seng believes that the most recent anti-speculation rules are unlikely to disturb the property market much.

Frasers Centrepoint will officially launch its 81-unit Residences Botanique along Sirat Road tomorrow. It also has two launches planned for Q2 – a 393-unit project on the former Flamingo Valley Site along Siglap Road and phase three of its Waterfront Collection along Bedok Reservoir.

The buzz in private home sales continued this week – even after the newest anti-speculation measures were announced.

At MCL Land’s preview of its Yishun condo The Estuary yesterday, most of the 200 units launched were snapped up at an average price of $750 per square foot. MCL Land will roll out another 120-150 units in the project over the coming weekend – with selective price increases – said chief executive Koh Teck Chuan.

‘So far, the impact (of the government measures) is not noticeable,’ said Mr Koh. But units and projects that are more popular with investors could see a drop-off in demand, he added. MCL Land will also preview its 65-unit D’Mira at Boon Teck Road in mid-March.

UOL Group also intends to launch two projects in April or May – a 616-unit development at Dakota Crescent and a 172-unit project on the former Rainbow Gardens site at Toh Tuck Road.

But depleting land banks were a concern, Mr Cheong said. Redas ‘is now looking forward to more sites in the confirmed list for developers to replenish their land banks’, he said.

‘We believe the long-term solution to a sustainable and stable market is still adequate supply,’ Mr Cheong noted.

One developer told BT that it is important for his counterparts and himself to have enough in their land banks. But ‘at the same time, we don’t want the government to flood the market and over-supply,’ he said.

He added: ‘The best thing for the government to do – which is something very difficult and I don’t envy them – is to try to sell just enough so that the market will not catch fire, and not sell too much so that the market will go under.’

Source: Business Times, 26 Feb 2010

Developers ‘limited by land bank’

PROPERTY developers say they are eager to bring forward project launches to ride the buoyant market but are being held back by their limited land bank.

They were caught by surprise at the rapid market recovery, they say.

‘Many of us are now caught with a depleting land bank,’ the Real Estate Developers’ Association of Singapore (Redas) president Simon Cheong said.

‘We believe the long-term solution to a sustainable and stable market is still adequate supply,’ he added.

Credo Real Estate’s deputy managing director Tan Hong Boon summed up the mood: ‘You never know what will happen. While the going is still good, developers will want to launch quickly. This is particularly so for mass market projects.

The Government recently stepped up the supply of development sites after a lull, and believes supply is adequate.

Yesterday, a 3.02ha site at Hougang Avenue 2 was offered to developers. If interest is adequate, a tender will proceed.

Another reserve list site will be offered by May, on top of confirmed list sites, which are tendered without precondition.

The comments by Mr Cheong and Mr Tan at the Redas Chinese New Year lunch at Capella Singapore yesterday came a week after market cooling measures.

The Government imposed a duty sellers must pay if they sell within a year of purchase. It also capped bank loans at 80 per cent of a sale price, from 90 per cent.

Mr Cheong said developers want land supply fast-tracked to satisfy buyer demand to minimise speculation to ease the pressure for more anti-speculative steps.

‘Given the unexpected return of an active property market, developers over the next few months would also be actively bidding for more land,’ he said.

Redas members look forward to more confirmed list sites to replenish land banks, he said. They are looking to Government land, given limited sources of private land. A developer who declined to be named said private land owners were asking for the sky ’so we can’t buy’.

Mr Cheong said developers would rather have this problem than the bleak effects of last year’s meltdown in the banking system. ‘Managing upside is always easier than managing downside.’

The anti-speculative steps were a timely reminder, said Frasers Centrepoint chief executive Lim Ee Seng at the lunch. ‘Exceptional jumps in prices are not good for us.’ Still, he said: ‘No matter how high it gets, it will still obey the law of gravity.’

An anonymous developer said the measures had hurt sentiment a little. ‘If there are 100 buyers, maybe 10 will change their minds. I expect volume to moderate a bit.’

Still, so far the measures appear to have had little or no impact on recent sales. ‘The market is still hot,’ said an industry observer. The 608-unit The Estuary in Yishun, whose preview opened on Wednesday, has sold over 200 units.

The average price for the 99-year leasehold condo is $750 per sq ft, with units facing the Lower Seletar reservoir costing around $800 psf on average.

Separately, City Developments boss Kwek Leng Beng said at a results briefing for CDL yesterday that sentiment would remain strong among genuine buyers, despite the government measures.

Mr Cheong addressed guest of honour Finance Minister Tharman Shanmugaratnam, saying developers were disappointed at being left out of the Budget.

But they were happy at the productivity push given the long-term gains. Redas called this ‘a deferred payment hongbao’.

Looming launches include the 151-unit Seascape in Sentosa Cove and Cheung Kong Holdings’ 295-unit The Vision. Far East Organization and Frasers Centrepoint plan to release Waterfront Gold in Bedok Reservoir soon. Allgreen may launch RV Residences in River Valley and unsold units at Cascadia in Bukit Timah.

Source: Straits Times, 26 Feb 2010

Eco-park to be a hotbed of ideas, jobs, business

Singapore’s first eco-business park is expected to create 20,000 jobs and draw some $2.5 billion worth of investments in buildings by its 2030 completion.

CleanTech Park (CTP) will be an ‘epi-centre’ for research, innovation and commercialisation of clean technology from both the public and private sectors, JTC Corporation and the Economic Development Board (EDB) said yesterday as they unveiled the masterplan for the 50-hectare Nanyang Avenue site.

A key initiative of the $1 billion Singapore Sustainable Blueprint announced last year, CleanTech Park is to be ‘emblematic of how businesses can achieve both economic vibrancy and environmental sustainability; function in harmony and nature,’ JTC chief executive Manohar Khiatani said.

At a macro level, CleanTech Park fleshes out the Economic Strategies Committee’s vision of Singapore as a ‘living lab’ for global companies to test-bed and commercialise green solutions, especially for urban and tropical settings. It will also be a significant leg-up for the cleantech industry which EDB sees as a key growth cluster and expects to contribute $3.4 billion to GDP and employ 18,000 people by 2015.

EDB deputy managing director Tan Choon Sian said: ‘We do believe that there will be strong interest from companies, with increased interest in eco- friendly spaces and environmental sustainability.’

CTP broadens the range of options that EDB can offer to the investors it seeks to bring into Singapore too, he said.

While it is a first for Asia, CTP offers a unique proposition even when compared to global parks of similar orientation, EDB director for cleantech Goh Chee Kiong said. ‘First, we have the full continuum of cleantech activities from upstream R&D to commercialisation and test-bedding. Second, we can develop and test-bed solutions for the tropical climate while most innovations are now developed in and for temperate climates,’ he said.

The first of CTP’s three phases of development over the next 20 years kicks off with infrastructural works in July. The park’s total infrastructure investment will be $52 million.

JTC intends to develop the site in an environmentally sustainable manner. Green strategies such as stormwater management, green walkways and sky trellises between buildings, solar panels, conservation zones and green construction methods will thus feature strongly.

By the end of Phase 1 in 2018, about 250 local and foreign SMEs and MNCs are expected to be housed on an initial 17 hectares of land within the park.

Other than pure-play cleantech firms, JTC also hopes to draw eco-friendly product and service sellers, or businesses with a strong green identity. Its first anchor tenant will be neighbouring Nanyang Technological University, which will help seed R&D activities at the park and is expected to catalyse collaborations between industry and academia. NTU already has tie-ups with companies such as Japanese water technology firm Toray.

Mr Khiatani stressed that while ecology and environmental sustainability is the park’s distinguishing mark, commercial viability remains key. The park’s one million square metres of space will thus be ‘priced competitively’, he said.

Colliers International industrial director Tan Boon Leong suggested that government agencies could lead the way to ’show that there are substantial benefits and savings to be had’, while CB Richard Ellis director of industrial and logistics services Bernard Goh thinks a premium of 10 to 20 per cent will be attractive though tax incentives may be needed if costs range 40-50 per cent above other business parks.

Industry players were excited about CTP’s potential to transform the young cleantech sector here.

Edwin Khew, chairman of the Sustainable Energy Association of Singapore which represents 140 companies, said: ‘This creates a centre of excellence, a very attractive place to generate business. Investors can meet tech providers, carbon management companies, project managers – all in a single place. ‘On top of that, our technologies can be test-bedded, showcased and demonstrated as entire systems in the park itself.’

Member companies are being encouraged to take out small offices in CTP.

Ron Mahabir, managing director of Asia Cleantech Capital, a private equity firm focused on cleantech, said that he would consider CTP for several companies in his firms’ portfolio such as Zeco Systems and Annex Power.

Source: Business Times, 26 Feb 2010

CDL generates $1b cash from operating activities in ‘09

City Developments Ltd (CDL), which yesterday posted its second-highest full-year net profit, is getting ready for at least five Singapore residential property launches this year.

Fourth-quarter net earnings jumped 76.7 per cent year on year to $176.7 million on the back of strong contribution from property development. Pre-tax profit from this segment rose 107.2 per cent for the fourth quarter and 14.2 per cent for the full year.

As a result, property development accounted for 70.7 per cent of Q409 group pre-tax profit; for full-year 2009, its contribution came to 65.5 per cent.

For Q409, the group booked profits from Cliveden at Grange, The Arte, One Shenton, Shelford Suites, The Solitaire, Tribeca and Wilkie Studio. Profits were also booked from joint venture projects such as Livia and The Oceanfront @ Sentosa Cove.

The group also highlighted that profits from the Volari at Balmoral and Hundred Trees condos, which are nearly completely sold, have yet to be booked as these projects are in the early phase of construction. The same goes for The Gale, a joint venture project.

CDL is targeting to launch The Residences at W Singapore Sentosa Cove next month. In April, it hopes to release a 429-unit condo at Chestnut Avenue and a 158-unit condo on the former Concorde Residences site on Thomson Road, followed by a condo in Pasir Ris (next to Livia) in June. In July or August, the group plans to launch a condo with about 150 units on the Copthorne Orchid Hotel site in the Dunearn Road area, owned by its London-listed hotel arm Millennium & Copthorne Hotels (M&C). The projects will be launched in phases.

CDL executive chairman Kwek Leng Beng highlighted that two overseas hotels in M&C’s portfolio – Millennium Seoul Hilton and The Tara in Kensington, London – could also be redeveloped into condos at the right time.

CDL’s current landbank can potentially yield about 7.1 million square foot of gross floor area.

For the year ended Dec 31, 2009, group net profit edged up 2.1 per cent to $593.4 million, the second best showing since the group’s inception in 1963. Its best bottom line, of about $725 million, was achieved for FY2007. CDL’s latest full-year turnover of $3.27 billion (an 11.1 per cent increase from the preceding year) was its highest ever.

The group sold a total of 1,508 residential units with sales revenue of $1.87 billion (including joint venture share) last year – a marked jump from the 368 units sold for a total $348 million in 2008.

CDL generated about $1 billion cash from operating activities before tax last year (2008: $516.6 million) – a feat accomplished without resorting to any equity fund raising.

The group’s board is recommending a final ordinary dividend of eight cents per share, up from 7.5 cents per share for 2008.

The group is conserving some of its cash for acquisition possibilities, especially in the West, where attractively priced deals are available.

Looking ahead, CDL expects cashflow this year to be healthy as it has pre-sold residential developments and with quite a number of its projects likely to be completed this year – including The Solitaire (which has already received Temporary Occupation Permit), Tribeca, The Oceanfront @ Sentosa Cove, Wilkie Studio and The Arte.

CDL’s gearing ratio, without taking into account fair value gains on investment properties as is the group’s accounting practice, dipped from 48 per cent at end-2008 to 40 per cent at end-2009.

It it had taken into account such gains, its gearing ratio would have fallen from 32 per cent to 27 per cent over the same period. The group managed to trim net borrowings by 10 per cent last year to $3.05 billion and achieved lower average interest rate on borrowings of 2.2-2.5 per cent, compared with 2.6-3.7 per cent for 2008.

Its interest cover ratio also increased from 11 times for FY2008 to 14.5 times for FY2009.

Net asset value per share rose from $5.97 at end-2008 to $6.57 at end-2009.

During yesterday’s results briefing, Mr Kwek also questioned accounting conventions these days that allow companies to book upward revaluations on investment properties as profits as well as to recognise profit on exceptional items such as one-off divestments.

Core earnings, which are a business’ recurring income, should be focused on instead, he argues.

‘Why do you want to add in ‘exceptional profit’, or what we used to term as ‘extraordinary profit’ to your normal profit and say: ‘My goodness, I got very good profit; I should ask my board to give me a big bonus!’?’

Source: Business Times, 26 Feb 2010

Yanlord net jumps 44% in FY09 despite poor Q4

YANLORD Land Group’s net profit dropped 16 per cent to $118.4 million for the fourth quarter ended Dec 31, 2009, as revenue and gross profit margins plummeted.

But for the full year, net profit jumped 44 per cent to $325.4 million as strong demand for its residential projects in the first nine months lifted sales and prices.

Q4 revenue dived 48 per cent year-on-year to $214.1 million with gross profit margin plunging 23.9 percentage points to 38.4 per cent due mainly to the change in product mix. Yanlord attributed this to a decline in gross floor area delivered and lower average selling prices (ASPs) because of lower proportion of high-margin projects sold compared to the fourth quarter of 2008.

Its revenue for the year surged 59 per cent to $1.6 billion as the gross floor area delivered rose 33.5 per cent while ASPs grew 13.7 per cent to 19,658 yuan per square metre (psm). Q4 earnings per share fell to 6.09 cents from 7.67 cents a year ago.

As at end-2009, the group’s total pre-contracted sales amounted to $1.2 billion.

Fair value loss on investment properties, however, widened to $120.69 million in 2009 from $81.22 million in 2008.

As at Dec 31, 2009, cash and bank balances were substantially higher at $1.36 billion, up from about $0.4 billion a year earlier. Yanlord attributed this to prudent financial policies and strong performance.

The group said its directors are confident of the company’s performance relative to the industry trend for the next reporting period and the next 12 months.

Yanlord has proposed a first and final dividend of 1.68 Singapore cents per share, representing a payout ratio of about 10 per cent.

Yanlord’s chairman and chief executive Zhong Sheng Jian said the group remains confident of the long-term prospects of China’s real estate sector despite near-term uncertainties arising from regulatory policies.

‘We will continue to focus on our business strategies and comparative advantages in the development of quality residential apartments in prime locations within high-growth PRC cities,’ he said.

Last December, the group obtained a three- year US$400 million term loan facility and will use this to refinance the outstanding amount of a US$200 million facility it obtained in 2007 and for general corporate purposes, including acquiring new land.

This year, the group has already launched new batches of apartment units in Yanlord Riverside Plaza (Phase 1) in Tianjin and Yanlord Riverside City (Phase 3) in Shanghai. These projects have recorded new highs in ASPs, rising 32.2 per cent to 53,033 yuan psm in Shanghai and 27.4 per cent to 23,241 yuan psm in Tianjin.

Yanlord said it will continue to launch new batches of its projects this quarter in Shanghai, Suzhou, Tianjin and Zhuhai.

Yanlord shares ended trading yesterday at $1.77, one cent down.

Source: Business Times, 26 Feb 2010

South Beach to start building by 2011

The consortium that owns the South Beach site now plans to begin construction ‘by next year’ – since most of the mega projects including the two integrated resorts are nearing completion and ‘contractors will be hungry’ for business by then.

This will enable the consortium to award construction contracts at lower cost, reckons Kwek Leng Beng, executive chairman of City Developments Ltd (CDL), a member of the consortium.

In August last year, he had indicated that construction was likely to begin around the third quarter of this year. CDL teamed up with Dubai World and El-Ad Group to buy the 99-year leasehold site for $1.69 billion at a Singapore government tender in 2007.

In June last year, a new party entered the picture when Hong Kong developer Nan Fung, along with CDL, subscribed for five-year secured convertible notes under a refinancing exercise for the site’s land loan.

CDL also announced yesterday that South Beach Consortium Pte Ltd has appointed a new CEO, Aloysius Lee, to replace Paul Gately, who has left.

Mr Lee, who came on board late last year, was formerly managing director (commercial) of Shui On Development Limited and executive director of Shui On Land, where his duties included overseeing the branding and operations of Shanghai Xintiandi.

The South Beach consortium has also hired special structural engineering consultants from the UK to assist in lowering costs by ‘value engineering’ to maximise the asset’s value. The plan is to develop South Beach into a retail, office, hotel and residential project. Mr Kwek also reiterated that the consortium is studying how to tap synergies between South Beach and next door Suntec City convention centre as well as Marina Bay Sands and Resorts World Sentosa.

Last year, Mr Kwek indicated that Nan Fung and CDL would probably be the ones to pump in further money. El-Ad and Dubai World are likely to be passive investors who may then see their share in the project diluted.

Yesterday, he said that a meeting will be held among South Beach investors sometime next week to discuss contribution for the project’s further development.

‘In terms of financing, we have not discussed and we cannot presume the two partners have no money, their shares will be diluted. Our verbal understanding with Nan Fung is that both of us will put in more money . . .

‘I am not concerned whether there’s shortage of money to build. I’m more concerned (whether we) can we build something that can be very exciting, everyone falls in love with, (and comes) knocking at my door: ‘Can I buy this?’

Based on a recent external valuation for the year ended Dec 31, 2009, no impairment charge is required for the South Beach development.

Source: Business Times, 26 Feb 2010

In firefighters we trust (but not property agents)

WHO would you trust more? A fireman, or a real estate agent?

Thought so.

So did 760 Singapore residents who took part in an online poll conducted by Reader’s Digest magazine on the most trusted professionals in the country.

Conducted last October, the poll gave them two lists of 55 individuals and 40 professions and asked them to rate their trustworthiness on a scale of one to 10.

The results show that the people who are trusted most tend to have the most vital job of all – saving lives. Hence, besides firefighters, jobs in the medical industry dominate the top 10 places.

Doctors are second, surgeons fifth, paramedics seventh, followed by nurses, pharmacists and dentists. Judges, teachers and pilots round out the top 10. Not far behind are police officers in 11th place.

At the other end of the scale are those who deal with money, or wield influence.

Real estate agents brought up the rear. Just ahead of them, at 39th, were politicians. Financial planners were only slightly more to be trusted, at 38th.

But Mr Jeff Foo, president of the Institute of Estate Agents, was stoic about the results: ‘I’m not surprised. It’s partly due to our poor reputation and also because we are not regulated, with no entry requirements.’

That does not explain the politicians. With Singaporeans reputed to have so much faith in the Government, why the poor showing?

Mr Michael Palmer, MP for Pasir Ris-Punggol GRC, said: ‘From what I see on the ground, I don’t get a sense that people distrust us. Perhaps it’s because those surveyed responded not on trust but with their disagreement with the Government and its policies.’

But perhaps there is no need for any chest-beating. In any survey of this type, people tend to trust those they have to rely on most, said Ms Dora Cheok, editor of Reader’s Digest Asia.

Agreeing, organisational behaviour expert Donald Ferrin, an associate professor at the Singapore Management University, said: ‘Research has shown that when you are dependent on someone, you have a defence mechanism to want to trust someone, or it can make your life difficult.’

So it is only human, and probably why Singapore’s top 10 is almost identical to those from Malaysia and the Philippines.

Still, it does not take anything away from the quality of Singapore’s civil defence force and health-care professions, said Ms Cheok.

The three countries are among seven that participated in the first such poll done by the magazine in Asia. In Singapore, those surveyed were at least 20 years old, had at least secondary school education, and a minimum annual household income of $49,500.

As for lawyers who are ranked 32nd, Mr Palmer – who is also a lawyer – said the media could be to blame. ‘The only time you see us mentioned in the media is when a lawyer has been dishonest. Which is why we try to stay out of the papers!’

And what of those whom he blamed for lawyers’ poor showing? Journalists were placed 30th in the list, ahead of hawkers, taxi-drivers and bankers, but behind farmers, musicians and hairdressers.

Source: Straits Times, 26 Feb 2010

Property tax boon may be short-lived

I REFER to the revision of the property tax rate on owner occupied properties which has the effect of reducing by $240 the property tax currently paid by the majority of homeowners, based on exemption of tax on the first $6,000 of annual value (AV) which at present attracts tax at 4 per cent.

The benefit of the rate change, alas, may not last long if the IRAS starts revaluing the AV on the grounds that the property market has been unusually strong of late and likewise for rentals. If AV increases by $6,000, there goes the $240.

In revising AV, it should be borne in mind that to the owner occupant, even a doubling of notional rental makes no difference in terms of income.

Denis Distant

Source: Business Times, 26 Feb 2010

Allgreen 2009 profit more than doubles

ALLGREEN Properties posted a more than doubling in full-year net profit, helped by firmer sales and a higher provision write-back.

The property developer said net profit for the year ended Dec 31, 2009 stood at $163 million, up from 2008’s $67.4 million. This translates to earnings of 10.23 cents per share, against 2008’s 4.24 cents.

It has also proposed a first and final dividend of four cents per share.

Revenue – which came mainly from the sales of development and investment properties – surged 75.5 per cent to $621 million.

Sales from the company’s development properties segment more than doubled to $468 million in 2009 from $186 million the preceding year. This was after recognising income from projects such as The Cascadia at Bukit Timah Road, Cairnhill Residences at Cairnhill Circle and Blossoms@Woodleigh.

Revenue growth from its investment properties was nearly flat, falling 0.44 per cent to $111 million, impacted by reduced room rates and lower occupancy at Traders Hotel. This was offset by higher occupancies and rental rates at Tanglin Mall and Great World City’s retail space. Allgreen registered a 62.2 per cent decrease in ‘other operating expenses’ to $17.4 million. It said there was no need to make provisions for a ‘diminution in value of development properties’.

It had made about $24.6 million in provisions for a lowered value for development properties a year ago. The year 2009 also saw a $66.3 million write-back of provision for diminution in value of development properties. As the write-back is a non-taxable income, it resulted in a lower effective tax rate for 2009.

The developer posted a fair value loss of about $6.09 million, reversing from a gain of $8.35 million a year ago, due to lower valuation of Great World City’s office space. Updating on its recent launch, the developer said thus far it has sold 74 units of its 83-unit Holland Residences, which was launched on Jan 25.

‘Brisk sales at good prices in these early days of 2010 suggest the market remains buoyant against the backdrop of improving economies locally and internationally,’ the firm said in its financial statement.

Allgreen shares closed flat at $1.12 yesterday.

Source: Business Times, 26 Feb 2010

SC Global gets boost from AVJ consolidation

SC Global Developments saw a near eight-fold jump in fourth-quarter net profit to $33.2 million – from just $4.2 million a year ago – as it consolidated the results of new subsidiary AV Jennings Ltd (AVJ).

Group revenue for the quarter ended Dec 31, 2009, rose almost ten-fold to $274.5 million from $28 million in Q4 2008.

In December 2008, SC Global increased its stake in AVJ to 50.03 per cent and, as a result, AVJ became a subsidiary. The inclusion of revenue from AVJ pushed up the developer’s topline for Q4.

Turnover also included progressive revenue recognition of the group’s Singapore development projects – including The Marq on Paterson Hill, Hilltops and Martin No. 38 – based on progress of construction. In addition, revenue was also recognised from its development project in China, Kairong International Gardens in Shenyang.

Earnings per share for Q4 2009 rose to 8.36 cents from 1.07 cents a year ago.

For the full 2009 financial year, SC Global’s net profit rose by 28 per cent to $56.9 million from $44.5 million in 2008. This was mainly due to higher profit recognition from the group’s Singapore development projects and the return to profitability for AVJ.

Revenue for 2009 hit a record $804.7 million, a significant 524 per cent increase from $129.1 million in 2008. The group’s net debt to equity ratio fell to 2.18 times at end-2009 from 2.84 times at end-2008. It proposed a final dividend of 1.5 cents per ordinary share.

‘Despite the challenging conditions in 2009 brought by the global financial crisis, the group posted its highest year of revenue and net profit since its inception as a real estate developer in 2000,’ said chief executive Simon Cheong.

SC Global will continue to sell units in projects it has already launched over the year, Mr Cheong said. ‘We are very positive about the high-end market in Singapore given the forecasted growth of 4.5-6.5 per cent in the economy.’ SC Global, which holds a land bank of over 1.1 million square feet of developable gross floor area in the prime areas of Orchard Road and Sentosa Cove in Singapore, is well-positioned as the market continues to improve, Mr Cheong added.

Source: Business Times, 26 Feb 2010

Bountiful year for two local developers

LOCAL developers SC Global Developments and Allgreen Properties have both posted impressive full-year profits on the back of the rebounding real estate market.

SC Global’s net profit last year improved by 28 per cent to $56.9 million – a record for the group since its inception as a developer in 2000.

It said higher profit recognition from its local development projects and the return to profitability of its subsidiary AVJ contributed to its strong performance.

Revenue hit $804.7 million for the 12 months to Dec 31, an impressive 524 per cent increase from $129.1 million the year before.

Full-year earnings per share was 14.39 cents, up from 11.27 cents a year earlier, while net asset value per share rose to $1.21 cents as of Dec 31, from 88 cents.

The group, which develops high-end luxury residences, is recommending a dividend of 1.5 cents a share. There was no dividend in 2008.

SC Global’s shares fell three cents yesterday to $1.73.

Chairman and chief executive Simon Cheong is optimistic about prospects.

‘The group holds a valuable landbank of over 1.1 million sq ft of developable gross floor area in the prime areas of Orchard Road and Sentosa Cove, which positions the group well as the market continues to improve,’ he said.

Allgreen also shone with a 141 per cent increase in full-year profit from $67.4 million in 2008 to $162.7 million last year.

Revenue for the 12 months to Dec 31 increased 75 per cent to $620.8 million, due mainly to higher sales at projects such as One Devonshire in June last year.

Higher occupancies and rental rates in its investment properties like Tanglin Mall also boosted its performance although they were offset by the weaker hotel and serviced apartment sector because of lower occupancy and room rates.

Earnings per share for the year was 10.23 cents, up from 4.24 cents a year earlier, while net asset value per share rose to $1.48 as of Dec 31, from $1.41.

The group is recommending a dividend of four cents a share, from two cents the previous year.

Allgreen’s shares remained unchanged yesterday at $1.12.

Source: Straits Times, 26 Feb 2010

Hougang reserve list site open for application

PROPERTY developers looking to boost their residential landbanks can get their cheques ready for a new piece of state land.

The Urban Redevelopment Authority (URA) said yesterday that a 99-year leasehold site at Hougang Ave 2 is open for applications from interested developers.

URA had introduced six new residential sites to the reserve list under the H1 2010 government land sales programme. This 3.02 ha plot at Hougang is the first of them to be released.

The site can house a low density condominium or landed housing development. For condominium units or flats, the maximum gross floor area is 455,152 sq ft.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said that the site could yield 380-400 units in a non-landed project, or 140-150 houses in a landed development.

The plot is located within a private residential estate and is near Hougang HDB town. It is also near the Hougang and Kovan MRT stations.

Property consultants expect developers to show keen interest in the land parcel. DTZ executive director Ong Choon Fah observed that it sits within an established landed housing estate, and residents there could form a pool of potential buyers.

For instance, young people may be interested in condominium units there so that they can live near their parents, she said.

Mr Mak believes that a developer who plans for a non-landed project on the site could have a higher chance of winning the tender. This is because non-landed projects can be sold for a higher price on a per sq ft (psf) basis, and the developer would be able to bid more aggressively.

He expects the site to attract some four to eight bids if it is triggered for sale, and the higher bids could range from $159-$193 million, which works out to $350-$425 psf per plot ratio.

Nearby, two units at Kovan Residences were sold at $754-$890 psf last month, going by caveats lodged.

URA will make the remaining five new residential sites on the reserve list available soon. It will release one at Stirling Road and another at Hougang Avenue 7 next month. One site in April and two in May will also be available.

In addition, the government will be releasing another four sites on the confirmed list – two in March and two in April.

Together, sites on the reserve and confirmed lists can supply 10,550 units – the highest number in the history of the government land sales programme.

Source: Business Times, 26 Feb 2010

Property measures: Keep them guessing

IF THERE was a party in the property market going on after the Chinese New Year, the Government would have been the party pooper. Barely a week into the new year, it introduced measures to cool the febrile-prone property market. A new seller’s stamp duty was introduced, together with a reduction in the loan-to-value limit for home loans, from 90 per cent to 80 per cent. The measures came just five months after the Government implemented moves to kill innovative interest absorption home loan schemes.

For property prices to go up is patently reasonable. After all, the property market is now seeing ample liquidity, low interest rates and growing consumer confidence buoyed by a recovering economy. That said, however, the speed at which the market is heating up is puzzling. In January, property developers sold 1,476 units – a figure treble that of the preceding month. Prices have increased at a faster rate compared to rebounds from the troughs of previous property cycles. Mortgage lending has also increased steadily by about 12 per cent year-on-year through the whole of last year. Market watchers can only surmise that the strong demand could be coming from either pent-up demand or buyers flush with cash from collective sales.

Typically, official measures to cool the market are inevitably late, given that they occur after the fact. But thankfully, they do not come so late as to fail to pre-empt any speculative bubble. In essence, the Government is doing what it has been adept at doing – precision targeting to put a brake on speculative demand before it spirals out of control. The stamp duty will hit short-term speculators, while the bank loan limit will affect buyers at the margins.

The most powerful weapon in the Government market-cooling arsenal, however, is not the series of measures already announced, but those yet to be. This is one of the oldest tricks in the book, be it in fields as diverse as nuclear strategy, politics or an endeavour as earthy as property: to receive pain in one big dose is bad; to get the same pain in small but discrete instalments is worse, but to have no certainty as to when the dose will come is the worst. As one industry watcher noted, if the Government can enact the measures so fast and without warning, it can do something ‘faster and more painful’ if prices continue to head north. Here, in essence, is the nub of the Government’s pre-emptive strategy that will keep property developers and speculators awake at night: keep them guessing.

Source: Straits Times, 26 Feb 2010

CDL plans to start $2.5b mega project next year

CITY Developments (CDL) is aiming to start building its landmark $2.5 billion South Beach project in Beach Road next year, said its boss Kwek Leng Beng yesterday.

Mr Kwek gave an update on the project – shelved in late 2008, owing to high construction costs, then slated for a start this year – as he unveiled a far- better-than-expected 77 per cent surge in fourth quarter net profits for CDL.

He brushed aside financial worries over the mega project, which is set to boast offices, luxury hotels, retail space and residences when completed in 2016.

CDL bought the site in 2007 jointly with Dubai World and El-Ad Group, which have since been hit by debt woes.

Mr Kwek, the executive chairman, said: ‘We cannot presume that the two partners have no money. If the two partners have no money, then their share will be diluted,’ he said, of the Dubai partners.

Hong Kong’s Nan Fung group emerged as a new investor in the project last June under a refinancing exercise.

‘The verbal understanding with Nan Fung is that both of us will put in more money if so required,’ Mr Kwek said.

CDL’s net profit for the three months ended Dec 31 shot up 77 per cent to $176.7 million, as the group booked profits in projects such as Cliveden at Grange, The Arte and One Shenton.

That beat the average estimate of six analysts polled by Dow Jones Newswires of $129 million. Fourth quarter revenue rose 28.6 per cent to $922.4 million.

‘The global economic recovery is better than expected,’ he said, adding that prospects were good for the residential, hospitality and commercial sectors.

Full-year earnings rose 2.1 per cent to $593.4 million, on the back of better income from strong property prices.

Last year also marked the group’s highest ever revenue of $3.27 billion, up 11.1 per cent, and second highest profit since its inception in 1963. It expects to stay profitable over the next 12 months.

Mr Kwek said that the firm will continue to focus on the local market, capitalising on its land bank and experience – but said China is promising.

‘That is not to say that we will never go abroad… But why would we want to go in a big way at the moment when I still believe that we can make a lot of money in Singapore. We know Singapore best, can read the trends better and are here most of the time,’ he said.

CDL expects sentiment among genuine buyers to remain strong despite recent government measures to cool speculation in the property market.

Full-year earnings per share were 63.8 cents, up from 62.5 cents a year earlier. Net asset value per share rose to $6.57 as at Dec 31, from $5.97.

The group is recommending a dividend of eight cents a share, up from 7.5 cents the previous year. CDL shares rose two cents yesterday to close at $10.34.

OCBC Investment Research analyst Foo Sze Ming said he expects CDL to deliver strong earnings this year, underpinned by its sold residential projects last year – The Gale, Volari and Hundred Trees – that have yet to book in profits.

Source: Straits Times, 26 Feb 2010