Eyeing the mid-end segment, it will redevelop Balestier site for $80 million
(SINGAPORE) Industrial property developer Global Orion is making its first foray into the local private residential market with a freehold project at Balestier.
It is eyeing the mid-end segment, and hopes to establish itself by offering 'affordable luxury'.
Global Orion's director Satia Narjadin shared these plans with BT. The firm sealed the first collective sale of the year when it bought an industrial building at 6 Jalan Ampas in February, and it will be redeveloping the site into a new condominium.
The firm expects to invest a total of around $80 million in the yet unnamed project, which could have about 100 units. The launch is expected to take place in the first quarter of next year, and prices will be in line with those of new projects in the area.
According to caveats lodged with the authorities in June, units of upcoming developments nearby changed hands at $1,029-$1,506 psf.
Global Orion 'wants to be here for the long haul' and it is designing its first residential project in Singapore carefully, Mr Narjadin said. For starters, it is not keen to offer shoebox units - the smallest one at this development will measure at least 500 sq ft.
The firm also wants its projects to be both functional and aesthetically pleasing. 'I don't want to have to shield my eyes when I go past some of my projects,' he quipped.
Global Orion was incorporated in 2006 and is a family business. Mr Narjadin's father started out in the building materials industry more than 40 years ago, and the family has been developing residential and commercial projects as and when opportunities arose, in a few markets such as Indonesia and Australia.
It was on entering the Singapore market that the family decided to set up a vehicle to focus on property development.
Global Orion chose to get its feet wet in the industrial property sector. Compared with residential projects, industrial ones tend to involve fewer regulatory issues, and there are fewer details to take care of, Mr Narjadin said.
Entering the industrial sector was a way to 'get to know how things work, before we can confidently say ok, we're ready to do a residential project the right way,' he explained.
Global Orion has four industrial developments under its belt - the latest being Meissa at Pasir Panjang. It will launch the freehold 58-unit project in the third quarter.
The seven-storey building will be suitable for light industrial firms, and units range from 969-3,595 sq ft in size. Prices are likely to be around $700 per sq ft.
While Global Orion is using the industrial sector as a stepping stone to the residential sector, it will not be neglecting the former. The firm aims to have a balanced portfolio of projects, Mr Narjadin said.
Source: Business Times, 5 Aug 2010
Showing posts with label Developer News. Show all posts
Showing posts with label Developer News. Show all posts
Thursday, August 5, 2010
Time to finish project on state land shortened
Project completion period cut to 5 years to make supply keep up with demand
THE government is cutting the amount of time that developers have to build private residential projects on state land by a year, to ensure that there would be enough homes to meet demand.
It announced this yesterday evening, as it put up three more sites from the confirmed list for tender. They can potentially yield 1,260 units.
All government land sale sites come with a project completion period (PCP) to make sure that developers finish work within a reasonable period of time. The PCP is measured from the date the site is awarded to the date the project obtains Temporary Occupation Permit.
The authorities are reducing the PCP for private residential sale sites to five years from six years, 'to further ensure more timely supply of private housing to meet demand'. The shorter PCP will apply to sites released for sale from today.
The PCP for executive condominium (EC) sale sites will remain at four years. The Urban Redevelopment Authority (URA) told BT that projects might meet unexpected delays in construction and there will not be sufficient buffer if the PCP for EC sites is cut further.
Market watchers supported the move, although they did not think there would be a significant impact on the market.
DTZ executive director (consulting) Ong Choon Fah said that most developers do want to build their projects as soon as possible to avoid holding costs and unknown market risks ahead. It would also be disadvantageous for them to hold on to 99-year leasehold sites for too long.
Nevertheless, the shorter PCP 'will give developers an additional impetus' to complete their projects, she said.
Cushman & Wakefield managing director Donald Han felt that the government made a prudent move. It is sending a signal to developers, that they should make their projects available quickly to help maintain stability in the property market, he said.
Going by information from URA, the shorter PCP is unlikely to affect most developers. URA said that based on development trends in the last eight years, the completion period for private residential sale sites was about four years on average. Also, none of the private residential projects on sale sites exceeded their stipulated PCP last year.
The shorter PCP will apply to two of the three latest sites up for sale starting today. One is a land parcel at Hougang Avenue 7. The 1.56 hectare site has a maximum permissable gross floor area (GFA) of 471,083 sq ft and can be developed into a 395-unit condominium project. Its tender will close on Sept 17.
The second is a 2-ha plot at the junction of Pasir Ris Drive 3 and 4. It has a maximum permissable GFA of 452,086 sq ft and can yield about 380 condominium units. Its tender will close on Sept 30.
The new PCP rule will not apply to an EC site at Punggol Drive/Punggol East up for sale. It is near the Kadaloor LRT station, and has a site area of 1.57 ha and a maximum allowable GFA of 574,577 sq ft. The site can accommodate about 485 units, and its tender will close on Sept 23.
More sites will be rolled out this month. URA will launch another plot from the confirmed list at Petir Road for sale; four sites from the reserve list will be made available for application.
Source: Business Times, 5 Aug 2010
THE government is cutting the amount of time that developers have to build private residential projects on state land by a year, to ensure that there would be enough homes to meet demand.
It announced this yesterday evening, as it put up three more sites from the confirmed list for tender. They can potentially yield 1,260 units.
All government land sale sites come with a project completion period (PCP) to make sure that developers finish work within a reasonable period of time. The PCP is measured from the date the site is awarded to the date the project obtains Temporary Occupation Permit.
The authorities are reducing the PCP for private residential sale sites to five years from six years, 'to further ensure more timely supply of private housing to meet demand'. The shorter PCP will apply to sites released for sale from today.
The PCP for executive condominium (EC) sale sites will remain at four years. The Urban Redevelopment Authority (URA) told BT that projects might meet unexpected delays in construction and there will not be sufficient buffer if the PCP for EC sites is cut further.
Market watchers supported the move, although they did not think there would be a significant impact on the market.
DTZ executive director (consulting) Ong Choon Fah said that most developers do want to build their projects as soon as possible to avoid holding costs and unknown market risks ahead. It would also be disadvantageous for them to hold on to 99-year leasehold sites for too long.
Nevertheless, the shorter PCP 'will give developers an additional impetus' to complete their projects, she said.
Cushman & Wakefield managing director Donald Han felt that the government made a prudent move. It is sending a signal to developers, that they should make their projects available quickly to help maintain stability in the property market, he said.
Going by information from URA, the shorter PCP is unlikely to affect most developers. URA said that based on development trends in the last eight years, the completion period for private residential sale sites was about four years on average. Also, none of the private residential projects on sale sites exceeded their stipulated PCP last year.
The shorter PCP will apply to two of the three latest sites up for sale starting today. One is a land parcel at Hougang Avenue 7. The 1.56 hectare site has a maximum permissable gross floor area (GFA) of 471,083 sq ft and can be developed into a 395-unit condominium project. Its tender will close on Sept 17.
The second is a 2-ha plot at the junction of Pasir Ris Drive 3 and 4. It has a maximum permissable GFA of 452,086 sq ft and can yield about 380 condominium units. Its tender will close on Sept 30.
The new PCP rule will not apply to an EC site at Punggol Drive/Punggol East up for sale. It is near the Kadaloor LRT station, and has a site area of 1.57 ha and a maximum allowable GFA of 574,577 sq ft. The site can accommodate about 485 units, and its tender will close on Sept 23.
More sites will be rolled out this month. URA will launch another plot from the confirmed list at Petir Road for sale; four sites from the reserve list will be made available for application.
Source: Business Times, 5 Aug 2010
Monday, August 2, 2010
Ascott unveils its expansion plans
Group to expand its portfolio by over 50% in next five yrs
CAPITALAND'S service residence arm, The Ascott Limited, is expanding its portfolio by more than 50 per cent in the next five years.
The division hopes to contribute more significantly to CapitaLand as it grows - perhaps accounting for as much as 20 per cent of group earnings in future.
Ascott chief executive Lim Ming Yan shared these plans for 'transformational change' with the media, in conjunction with the launch of the group's project - Ascott Huai Hai Road Shanghai. The 278-unit property near the Xintiandi entertainment district is owned by Hong Kong-listed real estate group Lai Fung Holdings.
Ascott now has some 26,000 service residence apartments in its portfolio and it aims to raise this number to 40,000 by 2015.
The target is achievable looking at Ascott's rate of growth, Mr Lim said. This year, the firm will be rolling out about 3,100 apartments. Of these, some 1,600 units across seven properties will be ready in the second half, in countries such as China and Indonesia.
Much of the envisioned growth will come from China. Ascott has just won contracts to manage four Ascott-branded properties in Ningbo, Hangzhou, Suzhou and Guangzhou. The biggest among these will be Ascott Guangzhou IFC, with 314 units, due to open next year.
South-east Asia is likely to be the next fastest growing market for Ascott. For instance, Mr Lim is positive about Singapore's service apartment sector as the country develops as a regional business centre.
Occupancy rates for Ascott's properties in Singapore exceed 90 per cent, and 'we are constantly on the lookout for new opportunities', he said.
India and Europe are also on Ascott's radar. It could enter Italy, Switzerland, Turkey and the east European countries.
While merely taking on more management contracts is a fast way to grow, Ascott will continue to focus more on buying and running properties.
It owns and manages about 67 per cent of its portfolio, and is prepared to invest in key gateway cities, Mr Lim said.
Ascott could obtain capital for growth from private equity funds, such as the Ascott China Fund. It could also sell assets to Ascott Residence Trust for funds to re-invest.
Mr Lim did not say how much the entire portfolio expansion would cost.
But he disclosed that Ascott will invest $50 million to refurbish more than 10 of its properties in Asia and Europe over the next 12 months. This is on top of around $20 million it has put in to renovate some properties such as Somerset Liang Court.
As Ascott grows, it 'can and should be a significant part of CapitaLand', Mr Lim said. On average, it has accounted for some 10 per cent of the group's earnings in the last few years, but it would be possible and 'more meaningful' to raise this to up to 20 per cent, he added.
Source: Business Times, 2 Aug 2010
CAPITALAND'S service residence arm, The Ascott Limited, is expanding its portfolio by more than 50 per cent in the next five years.
The division hopes to contribute more significantly to CapitaLand as it grows - perhaps accounting for as much as 20 per cent of group earnings in future.
Ascott chief executive Lim Ming Yan shared these plans for 'transformational change' with the media, in conjunction with the launch of the group's project - Ascott Huai Hai Road Shanghai. The 278-unit property near the Xintiandi entertainment district is owned by Hong Kong-listed real estate group Lai Fung Holdings.
Ascott now has some 26,000 service residence apartments in its portfolio and it aims to raise this number to 40,000 by 2015.
The target is achievable looking at Ascott's rate of growth, Mr Lim said. This year, the firm will be rolling out about 3,100 apartments. Of these, some 1,600 units across seven properties will be ready in the second half, in countries such as China and Indonesia.
Much of the envisioned growth will come from China. Ascott has just won contracts to manage four Ascott-branded properties in Ningbo, Hangzhou, Suzhou and Guangzhou. The biggest among these will be Ascott Guangzhou IFC, with 314 units, due to open next year.
South-east Asia is likely to be the next fastest growing market for Ascott. For instance, Mr Lim is positive about Singapore's service apartment sector as the country develops as a regional business centre.
Occupancy rates for Ascott's properties in Singapore exceed 90 per cent, and 'we are constantly on the lookout for new opportunities', he said.
India and Europe are also on Ascott's radar. It could enter Italy, Switzerland, Turkey and the east European countries.
While merely taking on more management contracts is a fast way to grow, Ascott will continue to focus more on buying and running properties.
It owns and manages about 67 per cent of its portfolio, and is prepared to invest in key gateway cities, Mr Lim said.
Ascott could obtain capital for growth from private equity funds, such as the Ascott China Fund. It could also sell assets to Ascott Residence Trust for funds to re-invest.
Mr Lim did not say how much the entire portfolio expansion would cost.
But he disclosed that Ascott will invest $50 million to refurbish more than 10 of its properties in Asia and Europe over the next 12 months. This is on top of around $20 million it has put in to renovate some properties such as Somerset Liang Court.
As Ascott grows, it 'can and should be a significant part of CapitaLand', Mr Lim said. On average, it has accounted for some 10 per cent of the group's earnings in the last few years, but it would be possible and 'more meaningful' to raise this to up to 20 per cent, he added.
Source: Business Times, 2 Aug 2010
Thursday, July 29, 2010
Developer sentiment still positive for H2: survey
But Q2 consensus as indicated by net balances weaker than in Q1 poll
MORE respondents polled for Real Estate Developers' Association of Singapore's (Redas's) and NUS Department of Real Estate's (DRE's) Q2 2010 survey were still positive rather than negative on the overall performance of the prime and suburban residential markets over the next six months. However, the consensus as indicated by the net balances was weaker compared with the Q1 survey.
A net balance of +32 per cent of respondents in Q2 said that they expect better future market performance (over the next six months) in the prime residential sector, down from a +54 per cent net balance in Q1.
Likewise, the net balance of respondents who indicated better future market performance for the suburban private housing sector also slipped from +38 per cent to +27 per cent.
For an assessment of current market performance (now compared with six months ago), the net balance also declined from +79 per cent to +43 per cent for the prime residential sector. In the suburban housing segment, the net balance for current performance fell from +69 to +47 per cent.
Net balance is defined as the difference between the proportion of respondents who have selected positive options (such as 'Better') and the proportion of respondents who have selected the negative options (such as 'Worse').
The respondents who selected the neutral option (such as 'Same') are omitted from the calculation. A '+' sign in the score denotes a net positive sentiment (optimism) and a '-' sign indicates net negative sentiment (pessimism). The derived net balance scores are not weighted by the size of the respondents' business.
Market watchers said the survey findings tallied with ground feedback. Generally, sentiment for the private housing market was less upbeat in Q2 as the sovereign debt problems in European economies unfolded. Some potential buyers also felt priced out of the market after rapid price increases and took a break during the World Cup and June school holiday season.
On the other hand, the outlook for the Singapore office sector improved in April-June as net office take-up continued to increase against the backdrop of the Republic's economic recovery.
Reflecting this, the survey shows net balance of +63 per cent in Q2 for future performance of the office sector, an improvement from the Q1 figure of +43 per cent. A lower percentage of developers in Q2 expect stronger interest in land sales - both the Government Land Sales (GLS) Programme and private sector en-bloc sales market - over the coming half year compared with those polled in Q1.
About half of the developers in the latest survey said that the level of interest for both sources of land will remain unchanged in the next half year.
Only about 27 per cent of developers surveyed in Q2 expect more interest in the GLS Programme in the next half year, down from 71 per per cent in Q1.
Similarly, in Q2, 31 per cent of developers forecast a higher interest level in the en bloc sales market, down from 61 per cent in the preceding quarter. Of developers polled in April-June, about 24 per cent and 15 per cent foresee lower interest in GLS and en bloc sales respectively in the next half year.
Developers were also asked to identify the potential risks that may adversely impact market sentiment in the next six months.
In the second quarter, about 73 per cent and 63 per cent view a global economic slowdown or decline and an increase in supply of new development land respectively as the key threats - significantly higher than the 56 per cent and 44 per cent recorded in the previous quarter.
Other major risk factors listed by developers in the latest Q2 survey include rising interest rates (49 per cent of developer respondents) and excessive supply of new property launches (54 per cent).
Notably, about 49 per cent of the developer respondents were concerned with government intervention to cool the market over the next six months, significantly lower than the 81 per cent registered in Q1 this year.
Following government measures to cool the market in September last year and February and the record GLS programme for second half 2010 announced in May, the market probably read that the danger of further cooling measures has receded for now, say market watchers.
Among development cost concerns over the coming half year, developers said that their biggest worry is rising land prices, building materials cost and labour cost, with 90, 76 and 73 per cent respectively of developers polled expressing a moderate to high level of concern.
Interestingly, the percentage of developers who are 'very concerned' about escalating land cost fell from 83 per cent in Q1 to 35 per cent in Q2. 'This could be due to the unexpected or suddenness of the spike in land bid prices seen at state tenders in Q1. In contrast, the 'shock effect' probably lessened as more tenders closed in the second quarter. However, I must emphasise that rising land cost is a very major issue for the development business,' says Redas CEO Steven Choo.
Source: Business Times, 29 Jul 2010
MORE respondents polled for Real Estate Developers' Association of Singapore's (Redas's) and NUS Department of Real Estate's (DRE's) Q2 2010 survey were still positive rather than negative on the overall performance of the prime and suburban residential markets over the next six months. However, the consensus as indicated by the net balances was weaker compared with the Q1 survey.
A net balance of +32 per cent of respondents in Q2 said that they expect better future market performance (over the next six months) in the prime residential sector, down from a +54 per cent net balance in Q1.
Likewise, the net balance of respondents who indicated better future market performance for the suburban private housing sector also slipped from +38 per cent to +27 per cent.
For an assessment of current market performance (now compared with six months ago), the net balance also declined from +79 per cent to +43 per cent for the prime residential sector. In the suburban housing segment, the net balance for current performance fell from +69 to +47 per cent.
Net balance is defined as the difference between the proportion of respondents who have selected positive options (such as 'Better') and the proportion of respondents who have selected the negative options (such as 'Worse').
The respondents who selected the neutral option (such as 'Same') are omitted from the calculation. A '+' sign in the score denotes a net positive sentiment (optimism) and a '-' sign indicates net negative sentiment (pessimism). The derived net balance scores are not weighted by the size of the respondents' business.
Market watchers said the survey findings tallied with ground feedback. Generally, sentiment for the private housing market was less upbeat in Q2 as the sovereign debt problems in European economies unfolded. Some potential buyers also felt priced out of the market after rapid price increases and took a break during the World Cup and June school holiday season.
On the other hand, the outlook for the Singapore office sector improved in April-June as net office take-up continued to increase against the backdrop of the Republic's economic recovery.
Reflecting this, the survey shows net balance of +63 per cent in Q2 for future performance of the office sector, an improvement from the Q1 figure of +43 per cent. A lower percentage of developers in Q2 expect stronger interest in land sales - both the Government Land Sales (GLS) Programme and private sector en-bloc sales market - over the coming half year compared with those polled in Q1.
About half of the developers in the latest survey said that the level of interest for both sources of land will remain unchanged in the next half year.
Only about 27 per cent of developers surveyed in Q2 expect more interest in the GLS Programme in the next half year, down from 71 per per cent in Q1.
Similarly, in Q2, 31 per cent of developers forecast a higher interest level in the en bloc sales market, down from 61 per cent in the preceding quarter. Of developers polled in April-June, about 24 per cent and 15 per cent foresee lower interest in GLS and en bloc sales respectively in the next half year.
Developers were also asked to identify the potential risks that may adversely impact market sentiment in the next six months.
In the second quarter, about 73 per cent and 63 per cent view a global economic slowdown or decline and an increase in supply of new development land respectively as the key threats - significantly higher than the 56 per cent and 44 per cent recorded in the previous quarter.
Other major risk factors listed by developers in the latest Q2 survey include rising interest rates (49 per cent of developer respondents) and excessive supply of new property launches (54 per cent).
Notably, about 49 per cent of the developer respondents were concerned with government intervention to cool the market over the next six months, significantly lower than the 81 per cent registered in Q1 this year.
Following government measures to cool the market in September last year and February and the record GLS programme for second half 2010 announced in May, the market probably read that the danger of further cooling measures has receded for now, say market watchers.
Among development cost concerns over the coming half year, developers said that their biggest worry is rising land prices, building materials cost and labour cost, with 90, 76 and 73 per cent respectively of developers polled expressing a moderate to high level of concern.
Interestingly, the percentage of developers who are 'very concerned' about escalating land cost fell from 83 per cent in Q1 to 35 per cent in Q2. 'This could be due to the unexpected or suddenness of the spike in land bid prices seen at state tenders in Q1. In contrast, the 'shock effect' probably lessened as more tenders closed in the second quarter. However, I must emphasise that rising land cost is a very major issue for the development business,' says Redas CEO Steven Choo.
Source: Business Times, 29 Jul 2010
Wednesday, July 21, 2010
KepLand Q2 net up 20% to $70m
The bottom line improved despite a 19% fall in revenue to $202.8m
KEPPEL Land plans to launch the first phase of a residential project next to Lakeside MRT station by the end of the year.
The development will have around 630 units, comprising one- to four- bedders. It will be on a 99- year leasehold site which the group won recently in a state tender.
Keppel Land said this yesterday as it released results for the second quarter ended June 30.
Net profit was $70.1 million, up 20 per cent year- on-year, driven by stronger performances across the property trading, property investment and fund management divisions.
The bottom line improved despite a 19 per cent fall in revenue to $202.8 million. Q2 earnings per share dipped 2 per cent to 4.9 cents.
For the first half, Keppel Land's net profit was $134.7 million, increasing 42 per cent from a year ago.
Revenue dropped 9 per cent to $361.6 million. H1 earnings per share rose 15 per cent to 9.4 cents.
Keppel Land has been launching projects in the last few months and will continue to do so.
In Singapore, it held a second preview of Marina Bay Suites in Q2 and sold about 40 units. It also sold 77 units at Reflections at Keppel Bay in H1.
According to caveats lodged with the Urban Redevelopment Authority in June, five units at Marina Bay Suites changed hands at $2,261-2,680 psf.
In China, Keppel Land sold around 1,200 units in H1, mainly from townships in second-tier cities such as The Botanica in Chengdu.
Although the Chinese government has imposed measures to cool the property market, 'we are still seeing resilience of demand for residential properties especially in middle-income homes in the second tier cities and suburban areas of first tier cities', said Keppel Land CEO Kevin Wong at a briefing yesterday.
Apart from launching units at the Lakeside project, Keppel Land will also release the remaining 90 units at Marina Bay Suites and 384 units at Reflections at Keppel Bay.
The group is not too worried about the recent slowdown in new private home sales.
'We don't have that many units left, and ours are in locations of choice,' said its chief financial officer Lim Kei Hin.
For high-end property, there is also room for prices to rise further as they have not reached pre-crisis levels, he added.
In China, Keppel Land will launch the 1,680-unit Seasons Park at Tianjin Eco-City. It also plans to roll out 260 units from 8 Park Avenue in Shanghai.
In the meantime, Keppel Land will be keeping an eye out for residential, commercial and mixed-use sites, said its CEO Mr Wong.
'We will continue to look for opportunities to build up our land bank in Singapore, whether it is through government land sales or private transactions.'
Keppel Land gained 10 cents yesterday to close at $4.21.
Source: Business Times, 21 Jul 2010
KEPPEL Land plans to launch the first phase of a residential project next to Lakeside MRT station by the end of the year.
The development will have around 630 units, comprising one- to four- bedders. It will be on a 99- year leasehold site which the group won recently in a state tender.
Keppel Land said this yesterday as it released results for the second quarter ended June 30.
Net profit was $70.1 million, up 20 per cent year- on-year, driven by stronger performances across the property trading, property investment and fund management divisions.
The bottom line improved despite a 19 per cent fall in revenue to $202.8 million. Q2 earnings per share dipped 2 per cent to 4.9 cents.
For the first half, Keppel Land's net profit was $134.7 million, increasing 42 per cent from a year ago.
Revenue dropped 9 per cent to $361.6 million. H1 earnings per share rose 15 per cent to 9.4 cents.
Keppel Land has been launching projects in the last few months and will continue to do so.
In Singapore, it held a second preview of Marina Bay Suites in Q2 and sold about 40 units. It also sold 77 units at Reflections at Keppel Bay in H1.
According to caveats lodged with the Urban Redevelopment Authority in June, five units at Marina Bay Suites changed hands at $2,261-2,680 psf.
In China, Keppel Land sold around 1,200 units in H1, mainly from townships in second-tier cities such as The Botanica in Chengdu.
Although the Chinese government has imposed measures to cool the property market, 'we are still seeing resilience of demand for residential properties especially in middle-income homes in the second tier cities and suburban areas of first tier cities', said Keppel Land CEO Kevin Wong at a briefing yesterday.
Apart from launching units at the Lakeside project, Keppel Land will also release the remaining 90 units at Marina Bay Suites and 384 units at Reflections at Keppel Bay.
The group is not too worried about the recent slowdown in new private home sales.
'We don't have that many units left, and ours are in locations of choice,' said its chief financial officer Lim Kei Hin.
For high-end property, there is also room for prices to rise further as they have not reached pre-crisis levels, he added.
In China, Keppel Land will launch the 1,680-unit Seasons Park at Tianjin Eco-City. It also plans to roll out 260 units from 8 Park Avenue in Shanghai.
In the meantime, Keppel Land will be keeping an eye out for residential, commercial and mixed-use sites, said its CEO Mr Wong.
'We will continue to look for opportunities to build up our land bank in Singapore, whether it is through government land sales or private transactions.'
Keppel Land gained 10 cents yesterday to close at $4.21.
Source: Business Times, 21 Jul 2010
Tuesday, July 6, 2010
CapitaLand's S'pore residential business CEO resigns
This marks the 5th departure of a senior exec at the group in last 2 years
PROPERTY giant CapitaLand yesterday announced the resignation of Patricia Chia as CEO of its Singapore residential business 'to spend more time with her family'.
Her job will be taken over by Wong Heang Fine, who will concurrently continue in his present role of developing CapitaLand's business in the Gulf Cooperation Council (GCC) region.
Ms Chia's resignation marks at least the fifth departure of a senior executive from the group in the past two years.
The departure train began to take off in September 2008, with the shocking announcement of the resignation of Pua Seck Guan, who was CEO of CapitaLand Retail and chief executive of CapitaMall Trust Management Ltd. The day after his resignation was announced, CapitaMall Trust lost over $300 million of its market capitalisation. Mr Pua now heads international operations at Indian real estate giant DLF and is based in Singapore; he has also set up his own property fund management outfit, Perennial Real Estate.
Then in December 2008, CapitaLand announced that its chief corporate officer Tham Kui Seng, was leaving, 'to pursue personal interest'.
In June last year, the company announced that its chief investment officer Kee Teck Koon, was retiring. However, Mr Kee was recently named chairman of CapitaMalls Malaysia Reit Management Sdn Bhd, the manager of the soon-to-be-listed CapitaMalls Malaysia Trust.
In April this year, it was announced that CapitaLand Financial CEO Lui Chong Chee, would exit the company on June 1 to pursue his personal interests. Mr Lui, however, remains as chairman of CapitaLand's Australian unit Australand.
Messrs Kee and Tham were members of CapitaLand Group president and CEO Liew Mun Leong's 'inner kitchen cabinet' as he terms his inner circle. Market watchers note that another member in that league to have parted ways earlier was Hiew Yoon Khong. He was CEO of CapitaLand Commercial and CapitaLand Financial when he left the group in 2003. He is now CEO of Mapletree Investments, a fully owned real estate subsidiary of Temasek Holdings.
In its statement yesterday announcing Ms Chia's departure, Mr Liew said: 'Patricia has worked with me in various capacities over the years. She joined Pidemco Land in 1996 and, given her excellent execution skills, she has played a key role in establishing CapitaLand Residential Singapore as a leading developer in Singapore today. She has now requested to step down to spend more time with her family and I have acceded to her request.'
CapitaLand was formed in 2000 out of a merger between Pidemco Land and DBS Land.
Ms Chia is 55.
Her successor, Mr Wong, 52, holds degrees in mechanical engineering, and engineering production and management.
'Heang Fine, with his track record in the areas of engineering and construction globally, will bring a new perspective to the Singapore residential business as we enter the next phase of growth,' Mr Liew said.
Mr Wong joined the CapitaLand Group in 2006. He had previously been president and CEO of SembCorp Engineers and Constructors and prior to that, held the same post at Cathay Organisation Holdings.
Source: Business Times, 6 Jul 2010
PROPERTY giant CapitaLand yesterday announced the resignation of Patricia Chia as CEO of its Singapore residential business 'to spend more time with her family'.
Her job will be taken over by Wong Heang Fine, who will concurrently continue in his present role of developing CapitaLand's business in the Gulf Cooperation Council (GCC) region.
Ms Chia's resignation marks at least the fifth departure of a senior executive from the group in the past two years.
The departure train began to take off in September 2008, with the shocking announcement of the resignation of Pua Seck Guan, who was CEO of CapitaLand Retail and chief executive of CapitaMall Trust Management Ltd. The day after his resignation was announced, CapitaMall Trust lost over $300 million of its market capitalisation. Mr Pua now heads international operations at Indian real estate giant DLF and is based in Singapore; he has also set up his own property fund management outfit, Perennial Real Estate.
Then in December 2008, CapitaLand announced that its chief corporate officer Tham Kui Seng, was leaving, 'to pursue personal interest'.
In June last year, the company announced that its chief investment officer Kee Teck Koon, was retiring. However, Mr Kee was recently named chairman of CapitaMalls Malaysia Reit Management Sdn Bhd, the manager of the soon-to-be-listed CapitaMalls Malaysia Trust.
In April this year, it was announced that CapitaLand Financial CEO Lui Chong Chee, would exit the company on June 1 to pursue his personal interests. Mr Lui, however, remains as chairman of CapitaLand's Australian unit Australand.
Messrs Kee and Tham were members of CapitaLand Group president and CEO Liew Mun Leong's 'inner kitchen cabinet' as he terms his inner circle. Market watchers note that another member in that league to have parted ways earlier was Hiew Yoon Khong. He was CEO of CapitaLand Commercial and CapitaLand Financial when he left the group in 2003. He is now CEO of Mapletree Investments, a fully owned real estate subsidiary of Temasek Holdings.
In its statement yesterday announcing Ms Chia's departure, Mr Liew said: 'Patricia has worked with me in various capacities over the years. She joined Pidemco Land in 1996 and, given her excellent execution skills, she has played a key role in establishing CapitaLand Residential Singapore as a leading developer in Singapore today. She has now requested to step down to spend more time with her family and I have acceded to her request.'
CapitaLand was formed in 2000 out of a merger between Pidemco Land and DBS Land.
Ms Chia is 55.
Her successor, Mr Wong, 52, holds degrees in mechanical engineering, and engineering production and management.
'Heang Fine, with his track record in the areas of engineering and construction globally, will bring a new perspective to the Singapore residential business as we enter the next phase of growth,' Mr Liew said.
Mr Wong joined the CapitaLand Group in 2006. He had previously been president and CEO of SembCorp Engineers and Constructors and prior to that, held the same post at Cathay Organisation Holdings.
Source: Business Times, 6 Jul 2010
Monday, July 5, 2010
CapitaLand defies jitters
THERE are worries that CapitaLand's huge exposure to the China property market will be its Achilles heel if the mainland economy suffers a hard landing.
Shanghai stocks tumbled 6.7 per cent last week, due to jitters over the Agricultural Bank of China's coming initial public offering.
There are also concerns that a drop in China's purchasing managers' index last month might flag slowing growth in the country's manufacturing sector.
But so far, CapitaLand seems to be riding high in China.
Swiss bank UBS, for example, noted in a report last week that the property giant 'remains well positioned to deliver net asset value growth', as the challenging China market is likely to favour well-capitalised and diversified groups with the ability to execute on large-scale opportunities.
The investment bank also believes that CapitaLand may benefit from any appreciation in the yuan, as 'around 40 per cent of its revalued net asset value is exposed to China'.
Besides trading in CapitaLand shares, there are other means to gain exposure to the counter.
Macquarie Bank issues covered warrants on CapitaLand, which offers traders options to buy into the shares over a period of time.
The bank also has a call warrant where traders can exchange two warrants and pay an exercise price of $3.50 to get one CapitaLand share. It matures on Sept 1.
Bearish investors have the option to 'short' CapitaLand by trading Macquarie put warrants on the counter. One put derivative gives traders the option to sell CapitaLand at $3.50 by using two put warrants. It expires on Dec 2.
Source: Straits Times, 5 Jul 2010
Shanghai stocks tumbled 6.7 per cent last week, due to jitters over the Agricultural Bank of China's coming initial public offering.
There are also concerns that a drop in China's purchasing managers' index last month might flag slowing growth in the country's manufacturing sector.
But so far, CapitaLand seems to be riding high in China.
Swiss bank UBS, for example, noted in a report last week that the property giant 'remains well positioned to deliver net asset value growth', as the challenging China market is likely to favour well-capitalised and diversified groups with the ability to execute on large-scale opportunities.
The investment bank also believes that CapitaLand may benefit from any appreciation in the yuan, as 'around 40 per cent of its revalued net asset value is exposed to China'.
Besides trading in CapitaLand shares, there are other means to gain exposure to the counter.
Macquarie Bank issues covered warrants on CapitaLand, which offers traders options to buy into the shares over a period of time.
The bank also has a call warrant where traders can exchange two warrants and pay an exercise price of $3.50 to get one CapitaLand share. It matures on Sept 1.
Bearish investors have the option to 'short' CapitaLand by trading Macquarie put warrants on the counter. One put derivative gives traders the option to sell CapitaLand at $3.50 by using two put warrants. It expires on Dec 2.
Source: Straits Times, 5 Jul 2010
Thursday, July 1, 2010
Far East Organization launches ultra luxury development arm
Market players believe more home hunters and investors are going up-market.
To tap opportunities in this segment, developer Far East Organization has launched a series of luxurious apartments under a brand called Inessence.
Industry figures show that some 240 ultra high-end homes were sold in the first half of this year, and observers said there is more upside ahead.
Living it up at Boulevard Vue will come with a big price tag.
An apartment here costs about S$3,700 per square foot, and that is just the starting price.
About one-third of the project has been snapped up, with the penthouse sold for about S$34 million recently.
Boulevard Vue is among four bespoke residences under the Inessence brand.
Its developer Far East Organization said the properties are all located in the Orchard Road area.
So far, about six-in-10 of the available units are taken up by foreigners.
Chia Boon Kuah, executive director, Far East Organization, said: “With the increase in interest in Singapore, especially from the Chinese, from Malaysians, from Indonesians, and we expect also the Indians to be arriving and buying such luxury properties…with these people, with the new money and the new customers coming to Singapore, we believe these products will be taken up.”
According to recent studies by Cap Gemini and Merrill Lynch, global wealth increased by about 19 per cent to US$39 trillion to close in on the pre-crisis peaks of 2007. The Asia Pacific led the growth in wealth, outpacing Europe for the first time.
Observers said foreigners are also attracted to properties in Singapore because they are relatively cheaper.
The peak price for luxury homes was about S$4,500 per square foot in 2008.
Donald Han, managing director, Cushman & Wakefield, said: “If you look at the ultra high end pricing wise, it is hovering about 18 to 20 per cent off from peak of the residential market, which is defined as the first quarter of 2008.
“There is a lot for the ultra high-end market to pick up, and values are deemed quite compelling to some of our neighbouring cities like Hong Kong, Shanghai or even Beijing, which is all pretty toppish – at market peaks in that sense.”
In the first half of this year, some 240 luxury apartments were sold in Singapore, at a total value of S$1.4 billion.
And Far East Organization believes there is room for growth, as sales are still below the peaks in 2007 when 1,000 units were sold that year, at a total value of S$6.4 billion.
Source: Channel News Asia, 30 Jun 2010
To tap opportunities in this segment, developer Far East Organization has launched a series of luxurious apartments under a brand called Inessence.
Industry figures show that some 240 ultra high-end homes were sold in the first half of this year, and observers said there is more upside ahead.
Living it up at Boulevard Vue will come with a big price tag.
An apartment here costs about S$3,700 per square foot, and that is just the starting price.
About one-third of the project has been snapped up, with the penthouse sold for about S$34 million recently.
Boulevard Vue is among four bespoke residences under the Inessence brand.
Its developer Far East Organization said the properties are all located in the Orchard Road area.
So far, about six-in-10 of the available units are taken up by foreigners.
Chia Boon Kuah, executive director, Far East Organization, said: “With the increase in interest in Singapore, especially from the Chinese, from Malaysians, from Indonesians, and we expect also the Indians to be arriving and buying such luxury properties…with these people, with the new money and the new customers coming to Singapore, we believe these products will be taken up.”
According to recent studies by Cap Gemini and Merrill Lynch, global wealth increased by about 19 per cent to US$39 trillion to close in on the pre-crisis peaks of 2007. The Asia Pacific led the growth in wealth, outpacing Europe for the first time.
Observers said foreigners are also attracted to properties in Singapore because they are relatively cheaper.
The peak price for luxury homes was about S$4,500 per square foot in 2008.
Donald Han, managing director, Cushman & Wakefield, said: “If you look at the ultra high end pricing wise, it is hovering about 18 to 20 per cent off from peak of the residential market, which is defined as the first quarter of 2008.
“There is a lot for the ultra high-end market to pick up, and values are deemed quite compelling to some of our neighbouring cities like Hong Kong, Shanghai or even Beijing, which is all pretty toppish – at market peaks in that sense.”
In the first half of this year, some 240 luxury apartments were sold in Singapore, at a total value of S$1.4 billion.
And Far East Organization believes there is room for growth, as sales are still below the peaks in 2007 when 1,000 units were sold that year, at a total value of S$6.4 billion.
Source: Channel News Asia, 30 Jun 2010
Saturday, June 26, 2010
F&N buys Sydney site for $98m
FRASER and Neave (F&N) property arm Frasers Centrepoint has bought a residential site in Sydney, Australia, for A$82.5 million (S$97.8 million).
There are plans to turn the 13.7-hectare plot into a community comprising almost 800 homes, a childcare centre, sports facilities and other amenities.
The site is located in the suburbs on the border of Ryde and Putney, 12km north-west of Sydney's central business district.
Frasers Centrepoint CEO Lim Ee Seng described the deal as 'strategic'. It boosts the company's land bank in Australasia to 9 million sq ft from around 8 million sq ft.
The project will also 'strengthen the Frasers brand as we continue to make further inroads into Australasia', he said. The company is planning and developing more than 5,800 homes in Australia and New Zealand.
The Sydney site is part of an 18-ha plot owned by Sydney's Royal Rehabilitation Centre, which provides rehab services for people suffering temporary or permanent disability. Royal Rehab decided to sell part of the land to Frasers Centrepoint to fund a new rehabilitation, disability and research centre.
The New South Wales government has approved the concept plan for the site. The project will include houses, town houses and apartments. Roads, traffic calming devices and other infrastructure will also be built.
Frasers Centrepoint will set aside 2.3 ha of open space for community use. It will also join hands with Royal Rehab in a multi-million dollar project to develop publicly available community facilities such as a childcare centre, a meeting room and sports and recreation amenities.
Frasers Centrepoint's Australasian unit will start preparing submissions to the authorities for infrastructure plans and the first stage of residential construction. Work on the public parks will start this year.
F&N shares lost six cents to close at $5.20 yesterday. In a note on Wednesday, CIMB analyst Donald Chua kept his 'outperform' call on the counter, citing successful overseas property sales as one of several possible price catalysts.
Source: Business Times, 26 Jun 2010
There are plans to turn the 13.7-hectare plot into a community comprising almost 800 homes, a childcare centre, sports facilities and other amenities.
The site is located in the suburbs on the border of Ryde and Putney, 12km north-west of Sydney's central business district.
Frasers Centrepoint CEO Lim Ee Seng described the deal as 'strategic'. It boosts the company's land bank in Australasia to 9 million sq ft from around 8 million sq ft.
The project will also 'strengthen the Frasers brand as we continue to make further inroads into Australasia', he said. The company is planning and developing more than 5,800 homes in Australia and New Zealand.
The Sydney site is part of an 18-ha plot owned by Sydney's Royal Rehabilitation Centre, which provides rehab services for people suffering temporary or permanent disability. Royal Rehab decided to sell part of the land to Frasers Centrepoint to fund a new rehabilitation, disability and research centre.
The New South Wales government has approved the concept plan for the site. The project will include houses, town houses and apartments. Roads, traffic calming devices and other infrastructure will also be built.
Frasers Centrepoint will set aside 2.3 ha of open space for community use. It will also join hands with Royal Rehab in a multi-million dollar project to develop publicly available community facilities such as a childcare centre, a meeting room and sports and recreation amenities.
Frasers Centrepoint's Australasian unit will start preparing submissions to the authorities for infrastructure plans and the first stage of residential construction. Work on the public parks will start this year.
F&N shares lost six cents to close at $5.20 yesterday. In a note on Wednesday, CIMB analyst Donald Chua kept his 'outperform' call on the counter, citing successful overseas property sales as one of several possible price catalysts.
Source: Business Times, 26 Jun 2010
Wednesday, June 23, 2010
Funding rethink for developers after crisis
THE global financial crisis made CapitaLand rethink its strategy for funding expansion, the property group's chief investment officer Wen Khai Meng said yesterday.
CapitaLand learned that it cannot count on just the capital markets for finance after those markets froze during the crisis, Mr Wen said.
So the developer is now looking at alternative forms of funds - especially private equity - for its growth needs, he said.
Speaking during a panel discussion at the Real Estate Investment World Asia conference on the lessons that real estate developers picked up from the crisis, he also said that it brought home the need to diversify - geographically and among its various business units.
CapitaLand will continue to maintain a good balance among its various income streams - income from property trading, which involves building and selling homes, as well as recurring income from its investment assets and fund management activities, he said.
Other developers echoed the view that the crisis made them re-evaluate their financing needs.
'The lesson we took out of that (the crisis) is to make sure we have sufficient liquidity and sufficient reserves,' said Thio Gim Hock, chief executive of Overseas Union Enterprise (OUE). When the crisis hit, OUE often had to go back to the table to negotiate bank loans as it delayed property launches and construction work. Banks were eventually willing to offer fresh loans after considering the new time frame - but at much higher interest rates.
And so like CapitaLand, OUE is looking to diversify its sources of funding. Mr Thio said that the company is now looking beyond bank loans, to instruments such as convertible bonds. OUE this month scrapped plans to issue up to $200 million dollars of convertible bonds, citing market conditions.
The local hotel and property group is also looking to diversify its income base. Mr Thio said that it would like to get as much as 60 per cent of its income from investment assets eventually.
Most representatives on the panel also admitted that they missed opportunities during the financial crisis. 'We were hoping to pick up some bargains, but before we knew it, it (the crisis) was all over,' said Mr Wen.
Mr Thio said he identified some good opportunities during the crunch but could not secure finance to take advantage of them.
Donald Choi, managing director of Hong Kong's Nan Fung Development, who was also a panellist, similarly said that his company should have been more aggressive, as the window of opportunity was very short.
Source: Business Times, 23 Jun 2010
CapitaLand learned that it cannot count on just the capital markets for finance after those markets froze during the crisis, Mr Wen said.
So the developer is now looking at alternative forms of funds - especially private equity - for its growth needs, he said.
Speaking during a panel discussion at the Real Estate Investment World Asia conference on the lessons that real estate developers picked up from the crisis, he also said that it brought home the need to diversify - geographically and among its various business units.
CapitaLand will continue to maintain a good balance among its various income streams - income from property trading, which involves building and selling homes, as well as recurring income from its investment assets and fund management activities, he said.
Other developers echoed the view that the crisis made them re-evaluate their financing needs.
'The lesson we took out of that (the crisis) is to make sure we have sufficient liquidity and sufficient reserves,' said Thio Gim Hock, chief executive of Overseas Union Enterprise (OUE). When the crisis hit, OUE often had to go back to the table to negotiate bank loans as it delayed property launches and construction work. Banks were eventually willing to offer fresh loans after considering the new time frame - but at much higher interest rates.
And so like CapitaLand, OUE is looking to diversify its sources of funding. Mr Thio said that the company is now looking beyond bank loans, to instruments such as convertible bonds. OUE this month scrapped plans to issue up to $200 million dollars of convertible bonds, citing market conditions.
The local hotel and property group is also looking to diversify its income base. Mr Thio said that it would like to get as much as 60 per cent of its income from investment assets eventually.
Most representatives on the panel also admitted that they missed opportunities during the financial crisis. 'We were hoping to pick up some bargains, but before we knew it, it (the crisis) was all over,' said Mr Wen.
Mr Thio said he identified some good opportunities during the crunch but could not secure finance to take advantage of them.
Donald Choi, managing director of Hong Kong's Nan Fung Development, who was also a panellist, similarly said that his company should have been more aggressive, as the window of opportunity was very short.
Source: Business Times, 23 Jun 2010
Monday, June 14, 2010
Going green pays off for developers
Eco-friendly projects awarded more floor space under BCA scheme
(SINGAPORE) Going green has its rewards, and some developers have got them in the form of additional floor space for their projects.
The Building and Construction Authority (BCA) told BT that it has received 37 applications for a scheme that grants eco-friendly buildings more gross floor area (GFA).
The agency has approved some of these requests, from companies such as City Developments (CDL), Soilbuild Group, Ascendas and Parkway Holdings.
BCA and the Urban Redevelopment Authority launched the Green Mark GFA Incentive Scheme in April last year to encourage private developers to go green.
If buildings meet certain Green Mark standards, owners can apply for additional GFA beyond the master plan gross plot ratio control. Developments with the Platinum rating can receive up to 2 per cent more GFA (capped at 5,000 sq m), while those with the Gold Plus rating are eligible for up to one per cent more (capped at 2,500 sq m).
The bonus GFA is not entirely free though - developers still have to pay a development charge or differential premium for the space.
Nevertheless, some developers have found it worthwhile to sign up for the GFA incentive scheme. BCA said that of the 37 applications, 10 were for residential projects, six for commercial developments and the remaining 21 for mixed-use and other types of buildings.
Changi City, developed jointly by Ascendas and Frasers Centrepoint, is a project which received bonus GFA. The developers decided to aim for a Green Mark Gold Plus rating partly because of the incentive scheme, said Ascendas Land (Singapore) CEO Tan Yew Chin.
A few other developers were already eyeing the Platinum or Gold Plus rating before the scheme existed. For instance, Soilbuild had drawn up plans for Solaris at one-north with the Platinum rating in mind and 'during the course of the design, the Green Mark GFA Incentive Scheme was introduced', it said.
CDL told BT that environmental sustainability has always been high on its agenda. Its residential project Cube 8 at Thomson Road, which won the Green Mark Platinum award, qualified for 377 sq m of bonus GFA from the scheme. CDL was able to build three more apartments, bringing the total number of units to 177.
Even a healthcare service provider is riding on the green trend. Parkway got an additional 1,447 sq m of GFA at Parkway Novena Hospital, which is likely to receive the Platinum rating. The extra space will go towards 'better diagnostic and treatment facilities', a Parkway spokesman said.
Cushman & Wakefield managing director Donald Han supports the incentive scheme, noting that buildings meeting Green Mark standards would cost developers relatively more to build.
The green movement in Singapore is still in an 'infancy' stage compared with other countries such as the United States and Australia, he said. 'But, we're getting there.
Source: Business Times, 14 Jun 2010
(SINGAPORE) Going green has its rewards, and some developers have got them in the form of additional floor space for their projects.
The Building and Construction Authority (BCA) told BT that it has received 37 applications for a scheme that grants eco-friendly buildings more gross floor area (GFA).
The agency has approved some of these requests, from companies such as City Developments (CDL), Soilbuild Group, Ascendas and Parkway Holdings.
BCA and the Urban Redevelopment Authority launched the Green Mark GFA Incentive Scheme in April last year to encourage private developers to go green.
If buildings meet certain Green Mark standards, owners can apply for additional GFA beyond the master plan gross plot ratio control. Developments with the Platinum rating can receive up to 2 per cent more GFA (capped at 5,000 sq m), while those with the Gold Plus rating are eligible for up to one per cent more (capped at 2,500 sq m).
The bonus GFA is not entirely free though - developers still have to pay a development charge or differential premium for the space.
Nevertheless, some developers have found it worthwhile to sign up for the GFA incentive scheme. BCA said that of the 37 applications, 10 were for residential projects, six for commercial developments and the remaining 21 for mixed-use and other types of buildings.
Changi City, developed jointly by Ascendas and Frasers Centrepoint, is a project which received bonus GFA. The developers decided to aim for a Green Mark Gold Plus rating partly because of the incentive scheme, said Ascendas Land (Singapore) CEO Tan Yew Chin.
A few other developers were already eyeing the Platinum or Gold Plus rating before the scheme existed. For instance, Soilbuild had drawn up plans for Solaris at one-north with the Platinum rating in mind and 'during the course of the design, the Green Mark GFA Incentive Scheme was introduced', it said.
CDL told BT that environmental sustainability has always been high on its agenda. Its residential project Cube 8 at Thomson Road, which won the Green Mark Platinum award, qualified for 377 sq m of bonus GFA from the scheme. CDL was able to build three more apartments, bringing the total number of units to 177.
Even a healthcare service provider is riding on the green trend. Parkway got an additional 1,447 sq m of GFA at Parkway Novena Hospital, which is likely to receive the Platinum rating. The extra space will go towards 'better diagnostic and treatment facilities', a Parkway spokesman said.
Cushman & Wakefield managing director Donald Han supports the incentive scheme, noting that buildings meeting Green Mark standards would cost developers relatively more to build.
The green movement in Singapore is still in an 'infancy' stage compared with other countries such as the United States and Australia, he said. 'But, we're getting there.
Source: Business Times, 14 Jun 2010
Monday, June 7, 2010
CapitaLand to double real estate investments in Vietnam
Southeast Asia’s largest property developer, CapitaLand, is doubling its real estate investments in Vietnam to up to US$2.5 billion over the next three to five years.
It is aiming to build affordable homes and shopping malls in major Vietnamese cities like Hanoi and Ho Chi Minh City, said CapitaLand’s CEO Liew Mun Leong on the sidelines of an event in Hanoi.
CapitaLand now spends about US$1.2 billion in real estate developments in Vietnam.
Mr Liew is in Hanoi where he witnessed the signing of an MOU between CapitaLand Vietnam and The Academy of Managers for Construction and Cities. The academy comes under Vietnam’s Ministry of Construction.
The MOU will enable both sides to exchange information and knowledge about infrastructure developments. It will also facilitate joint training and exchange programmes like study tours and site visits.
Building housing for the common citizens of Vietnam is CapitaLand’s key aim for the near future. It says a typical two-room apartment, occupying up to 70 square metres, will have basic facilities like toilets.
CapitaLand is targeting those between the lower 30 percent and 50 percent of the population in Hanoi and Ho Chi Minh for its new affordable housing projects.
This group of Vietnamese would have a monthly household income of about US$2,000, and CapitaLand says that currently there is insufficient housing to meet their needs. So the company believes that its new developments would help to plug that gap.
Mr Liew said: “In the case of Vietnam, we think that, from our experience, they have savings, but they need a home. So, we’ll build something which their savings can afford to buy.
“I checked with my own colleagues who work with us. They think that about US$1,000 per square metre – which is roughly a US$100 per square foot or S$140 per square foot – (is affordable). It’s like HDB (flats) in the early 70s. That sort of things is something that we’re pegging to.”
“We have roughly about 4,000 apartments to build. What we want to do is to increase this rapidly,” added Mr Liew.
“500,000 people need housing every year. That translates to about 120,000 homes to be built. And what is the supply? The supply today is only about 18,000 homes. I think this is a very good opportunity for us. So we will be aggressively chasing this prospect of building this housing that common people can buy.”
CapitaLand says it may also introduce suburban shopping malls, like Singapore’s Bugis Junction, in Vietnam.
Mr Liew said shopping malls are practically non-existent in Hanoi.
Such malls are good for Vietnam, he said. They can help to stimulate the economy through increased local consumption.
Mr Liew said: “Vietnam is progressing to the next stage of urbanisation. Our vision is to build shopping malls, firstly for what we call necessity shopping.
“It’s not ION in Singapore, it’s not Takashimaya. It’s Tampines Mall, IMM, Bugis Junction, maybe, that sort of shopping mall where they can buy their basic necessity plus a few things (like) Zara, Uniqlo or Muji, Watsons, that sort of images.
“Not ION, no Prada and LV. I believe that people migrate to these consumption progressively. If I do a shopping mall that does Prada and LV, I’m taking a high risk.
“But if I’m building a shopping mall that can sell basic necessity plus a few things that they can afford, then I think I’m addressing the needs of the population.”
CapitaLand also wants to introduce mixed developments in Vietnam. These would be similar to its Raffles City integrated developments, which house offices, shopping malls and residences.
But office space is something which CapitaLand is not keen on building in Vietnam yet. Mr Liew said there is currently an oversupply of office space in cities like Ho Chi Minh.
Source: Channel News Asia, 7 Jun 2010
It is aiming to build affordable homes and shopping malls in major Vietnamese cities like Hanoi and Ho Chi Minh City, said CapitaLand’s CEO Liew Mun Leong on the sidelines of an event in Hanoi.
CapitaLand now spends about US$1.2 billion in real estate developments in Vietnam.
Mr Liew is in Hanoi where he witnessed the signing of an MOU between CapitaLand Vietnam and The Academy of Managers for Construction and Cities. The academy comes under Vietnam’s Ministry of Construction.
The MOU will enable both sides to exchange information and knowledge about infrastructure developments. It will also facilitate joint training and exchange programmes like study tours and site visits.
Building housing for the common citizens of Vietnam is CapitaLand’s key aim for the near future. It says a typical two-room apartment, occupying up to 70 square metres, will have basic facilities like toilets.
CapitaLand is targeting those between the lower 30 percent and 50 percent of the population in Hanoi and Ho Chi Minh for its new affordable housing projects.
This group of Vietnamese would have a monthly household income of about US$2,000, and CapitaLand says that currently there is insufficient housing to meet their needs. So the company believes that its new developments would help to plug that gap.
Mr Liew said: “In the case of Vietnam, we think that, from our experience, they have savings, but they need a home. So, we’ll build something which their savings can afford to buy.
“I checked with my own colleagues who work with us. They think that about US$1,000 per square metre – which is roughly a US$100 per square foot or S$140 per square foot – (is affordable). It’s like HDB (flats) in the early 70s. That sort of things is something that we’re pegging to.”
“We have roughly about 4,000 apartments to build. What we want to do is to increase this rapidly,” added Mr Liew.
“500,000 people need housing every year. That translates to about 120,000 homes to be built. And what is the supply? The supply today is only about 18,000 homes. I think this is a very good opportunity for us. So we will be aggressively chasing this prospect of building this housing that common people can buy.”
CapitaLand says it may also introduce suburban shopping malls, like Singapore’s Bugis Junction, in Vietnam.
Mr Liew said shopping malls are practically non-existent in Hanoi.
Such malls are good for Vietnam, he said. They can help to stimulate the economy through increased local consumption.
Mr Liew said: “Vietnam is progressing to the next stage of urbanisation. Our vision is to build shopping malls, firstly for what we call necessity shopping.
“It’s not ION in Singapore, it’s not Takashimaya. It’s Tampines Mall, IMM, Bugis Junction, maybe, that sort of shopping mall where they can buy their basic necessity plus a few things (like) Zara, Uniqlo or Muji, Watsons, that sort of images.
“Not ION, no Prada and LV. I believe that people migrate to these consumption progressively. If I do a shopping mall that does Prada and LV, I’m taking a high risk.
“But if I’m building a shopping mall that can sell basic necessity plus a few things that they can afford, then I think I’m addressing the needs of the population.”
CapitaLand also wants to introduce mixed developments in Vietnam. These would be similar to its Raffles City integrated developments, which house offices, shopping malls and residences.
But office space is something which CapitaLand is not keen on building in Vietnam yet. Mr Liew said there is currently an oversupply of office space in cities like Ho Chi Minh.
Source: Channel News Asia, 7 Jun 2010
Thursday, June 3, 2010
Developers’ bullish bids
Property developers are still bidding aggressively for land despite the Government’s announcement of more land sales in the second half of this year.
As the tender closed for the residential site at Upper Serangoon yesterday, a top bid of $113.7 million had been submitted by China based developer Qingdao Construction.
That translates to $607 per square foot (psf) – the second highest recorded for a 99-year leasehold land parcel sold by the Government for non-landed housing in the Rest of Central Region, said Ms Tay Huey Ying, Director for Research and Advisory of Colliers International.
It is second to Wing Tai Land and Greatearth Developments’ joint bid of $639 per square foot per plot ratio for the site on Alexandra Road and Tiong Bahru Road back in pre-crisis December 2007, said Ms Tay.
The Urban Redevelopment Authority received 15 bids for the 4,971.8 sq m site which it launched in April, from the Confirmed List of the Government Land Sales Programme. The site can yield a maximum gross floor area of some 17,402 sq m.
The second highest bid of $110.6 million came from Malaysia-based SP Setia International.
The lowest bid price was $60.1 million, which came from Kingston Development, a unit of Hong Leong Holdings.
“Given the ample supply of residential sites that the Government will make available in the second half of 2010, the response of 15 bids to this tender is above market expectations and the quantum of the top few bids are bullish,” said Mr Li Hiaw Ho, executive director, CBRE Research.
Market observers attributed the strong bid turnout to the land’s size and its proximity to the Potong Pasir MRT station.
“The small land area enables bidders to bid at bullish unit land price while still keeping the quantum price within an affordable level,” said Ms Tay.
The top bid reflects a breakeven price of between $850 psf and $1,000 psf and selling price of between $1,000 psf and $1,200 psf for a new project on the site.
Industry experts said the bidding war shows developers remain bullish on the property market. However, some also argue that the market is behaving irrationally.
“Developers are bidding higher because they have the liquidity and would rather invest the funds for a smaller margin than let them be idle. But this also means that they will have to sell higher,” said Mr Colin Tan, consultancy director, Chesterton Suntec International Research.
“Meanwhile, buyers also seem willing to buy the property at the higher price. However, it remains to be seen if the wage increase can support these sentiments.”
The bids come on the heels of a series of record-breaking number of bids for tenders over the last two months. The Simei Street 3 site, the Tampines Road site and the land site at Boon Lay Way and Lakeside Drive drew 18, 16 and 14 bids respectively.
Source: Today, 3 Jun 2010
As the tender closed for the residential site at Upper Serangoon yesterday, a top bid of $113.7 million had been submitted by China based developer Qingdao Construction.
That translates to $607 per square foot (psf) – the second highest recorded for a 99-year leasehold land parcel sold by the Government for non-landed housing in the Rest of Central Region, said Ms Tay Huey Ying, Director for Research and Advisory of Colliers International.
It is second to Wing Tai Land and Greatearth Developments’ joint bid of $639 per square foot per plot ratio for the site on Alexandra Road and Tiong Bahru Road back in pre-crisis December 2007, said Ms Tay.
The Urban Redevelopment Authority received 15 bids for the 4,971.8 sq m site which it launched in April, from the Confirmed List of the Government Land Sales Programme. The site can yield a maximum gross floor area of some 17,402 sq m.
The second highest bid of $110.6 million came from Malaysia-based SP Setia International.
The lowest bid price was $60.1 million, which came from Kingston Development, a unit of Hong Leong Holdings.
“Given the ample supply of residential sites that the Government will make available in the second half of 2010, the response of 15 bids to this tender is above market expectations and the quantum of the top few bids are bullish,” said Mr Li Hiaw Ho, executive director, CBRE Research.
Market observers attributed the strong bid turnout to the land’s size and its proximity to the Potong Pasir MRT station.
“The small land area enables bidders to bid at bullish unit land price while still keeping the quantum price within an affordable level,” said Ms Tay.
The top bid reflects a breakeven price of between $850 psf and $1,000 psf and selling price of between $1,000 psf and $1,200 psf for a new project on the site.
Industry experts said the bidding war shows developers remain bullish on the property market. However, some also argue that the market is behaving irrationally.
“Developers are bidding higher because they have the liquidity and would rather invest the funds for a smaller margin than let them be idle. But this also means that they will have to sell higher,” said Mr Colin Tan, consultancy director, Chesterton Suntec International Research.
“Meanwhile, buyers also seem willing to buy the property at the higher price. However, it remains to be seen if the wage increase can support these sentiments.”
The bids come on the heels of a series of record-breaking number of bids for tenders over the last two months. The Simei Street 3 site, the Tampines Road site and the land site at Boon Lay Way and Lakeside Drive drew 18, 16 and 14 bids respectively.
Source: Today, 3 Jun 2010
KepLand uses rights proceeds for Lakeside site
KEPPEL Land said in an update yesterday that it has used another $75.8 million of the proceeds from its rights issue last year, which netted the developer a total of $700.6 million.
KepLand, the property arm of Keppel Corporation, has now used $666.6 million of the proceeds from the rights issue.
The latest amount will be used to fund a quarter of the cost of a 99-year leasehold residential plot near Lakeside MRT Station, which KepLand won in a government land tender last month. The property group put in the top bid of $303 million - or $499 per sq ft per plot ratio - for the site, trumping 13 other bidders.
KepLand has said that it plans to develop a condominium with about 550 units - ranging from 500 sq ft to 1,400 sq ft - on the land parcel, which marked the developer's first acquisition of a pure residential site in Singapore in six years.
The units will be in one-bedroom to four-bedroom configurations as well as penthouses. The project is expected to be launch ready by the end of this year and completed at the end of 2013, KepLand said last month.
KepLand shares gained 2 cents to close at $3.46 yesterday.
Source: Busines times, 3 Jun 2010
KepLand, the property arm of Keppel Corporation, has now used $666.6 million of the proceeds from the rights issue.
The latest amount will be used to fund a quarter of the cost of a 99-year leasehold residential plot near Lakeside MRT Station, which KepLand won in a government land tender last month. The property group put in the top bid of $303 million - or $499 per sq ft per plot ratio - for the site, trumping 13 other bidders.
KepLand has said that it plans to develop a condominium with about 550 units - ranging from 500 sq ft to 1,400 sq ft - on the land parcel, which marked the developer's first acquisition of a pure residential site in Singapore in six years.
The units will be in one-bedroom to four-bedroom configurations as well as penthouses. The project is expected to be launch ready by the end of this year and completed at the end of 2013, KepLand said last month.
KepLand shares gained 2 cents to close at $3.46 yesterday.
Source: Busines times, 3 Jun 2010
S'pore developers tread softly amid China curbs
As tighter measures kick in, they will monitor situation before new launches
(SINGAPORE) Even as China developers continue to delay home sales, their Singapore-listed counterparts are ploughing ahead with their Chinese project launches.
But some Singapore developers concede that they will be monitoring the market closely before fixing future launches. They also expect demand from homebuyers to soften over the rest of the year as the impact of China's recent tightening measures kick in.
Already, property signings in Beijing slumped nearly 70 per cent to 3,357 in May from April, the Shanghai Securities News reported on Tuesday citing data from bjfdc.gov.cn. In Shanghai, China's financial centre, transactions may have dropped about 70 per cent to 2,550 signings, and in the industrial city of Shenzhen, sales fell 62 per cent, the paper reported.
But the five developers BT contacted said that they have yet to see a significant drop-off in home sales.
CapitaLand, which has a pipeline of around 20,000 units in China, said that it sold over 200 homes in April and May. It remains 'on track' to launch three new residential projects in the second half of the year, a spokesman said.
Keppel Land also said that there is no change in the launch schedule of its projects, which are mostly townships, for this year.
'We target to launch another 3,400 homes across different cities in China this year, although we will monitor the market closely and adjust our sale launches accordingly,' said a Keppel Land spokesman.
Sales for Keppel Land's China properties have been 'encouraging'. The developer said it sold over 900 homes in its townships in April and May.
China-based Yanlord Land also said that it remains 'on track' with its delivery and development schedule. And GuocoLand, which has a 1,176-unit residential project in Tianjin in its portfolio, is now monitoring the market before fixing a launch date.
For now, most property groups are bracing themselves for a short-term fall in transaction volumes.
'The market remains volatile owing to concerns over new and potential government tightening measures,' said a spokesman for Yanlord Land. 'Many homebuyers have adopted a more cautious approach towards purchases, and this may lead to near-term softening of demand over the next 3-6 months.'
Said Ho Bee Investment's executive director Ong Chong Hua: 'The tightening measures are expected to continue to cool the market in terms of volume as well as capital values for the rest of the year.'
But the measures are healthy as they will prevent a bubble from forming and create a more sustainable and healthy residential market, Mr Ong added: 'In the mid to longer term, we are very confident about the residential market as it is underpinned by the shortage of homes to house a huge population base which has become more affluent through the last decade of rapid economic growth.'
Ho Bee's projects in China are still in the early stages of design and development, and so there are no launches planned yet.
Keppel Land also expects buying volume to taper down in the short term.
China has in recent weeks announced several measures to cool the property market as it tries to peel back a stimulus plan and a US$1.4 trillion lending binge that revived economic growth while raising the risk of asset bubbles.
Its government has restricted pre-sales by developers, curbed loans for third-home purchases, raised minimum mortgage rates and tightened downpayment requirements for second-home purchases.
Source: Business Times, 3 Jun 2010
(SINGAPORE) Even as China developers continue to delay home sales, their Singapore-listed counterparts are ploughing ahead with their Chinese project launches.
But some Singapore developers concede that they will be monitoring the market closely before fixing future launches. They also expect demand from homebuyers to soften over the rest of the year as the impact of China's recent tightening measures kick in.
Already, property signings in Beijing slumped nearly 70 per cent to 3,357 in May from April, the Shanghai Securities News reported on Tuesday citing data from bjfdc.gov.cn. In Shanghai, China's financial centre, transactions may have dropped about 70 per cent to 2,550 signings, and in the industrial city of Shenzhen, sales fell 62 per cent, the paper reported.
But the five developers BT contacted said that they have yet to see a significant drop-off in home sales.
CapitaLand, which has a pipeline of around 20,000 units in China, said that it sold over 200 homes in April and May. It remains 'on track' to launch three new residential projects in the second half of the year, a spokesman said.
Keppel Land also said that there is no change in the launch schedule of its projects, which are mostly townships, for this year.
'We target to launch another 3,400 homes across different cities in China this year, although we will monitor the market closely and adjust our sale launches accordingly,' said a Keppel Land spokesman.
Sales for Keppel Land's China properties have been 'encouraging'. The developer said it sold over 900 homes in its townships in April and May.
China-based Yanlord Land also said that it remains 'on track' with its delivery and development schedule. And GuocoLand, which has a 1,176-unit residential project in Tianjin in its portfolio, is now monitoring the market before fixing a launch date.
For now, most property groups are bracing themselves for a short-term fall in transaction volumes.
'The market remains volatile owing to concerns over new and potential government tightening measures,' said a spokesman for Yanlord Land. 'Many homebuyers have adopted a more cautious approach towards purchases, and this may lead to near-term softening of demand over the next 3-6 months.'
Said Ho Bee Investment's executive director Ong Chong Hua: 'The tightening measures are expected to continue to cool the market in terms of volume as well as capital values for the rest of the year.'
But the measures are healthy as they will prevent a bubble from forming and create a more sustainable and healthy residential market, Mr Ong added: 'In the mid to longer term, we are very confident about the residential market as it is underpinned by the shortage of homes to house a huge population base which has become more affluent through the last decade of rapid economic growth.'
Ho Bee's projects in China are still in the early stages of design and development, and so there are no launches planned yet.
Keppel Land also expects buying volume to taper down in the short term.
China has in recent weeks announced several measures to cool the property market as it tries to peel back a stimulus plan and a US$1.4 trillion lending binge that revived economic growth while raising the risk of asset bubbles.
Its government has restricted pre-sales by developers, curbed loans for third-home purchases, raised minimum mortgage rates and tightened downpayment requirements for second-home purchases.
Source: Business Times, 3 Jun 2010
Monday, May 31, 2010
Sim Lian to sell property to Sabana REIT for S$46.3m
Developer Sim Lian Group, through its subsidiary Geo-Tele, has offered to sell its property at 9 Tai Seng Drive to Sabana Investment Partners (SIP) for S$46.3 million.
The construction and property company said the offer price represents a premium of 78 per cent over the book value and presents an attractive opportunity for it to dispose of the asset.
The firm will require the approval of JTC Corporation, which issued the property to Sim Lian, in order to sell the property.
The property will be purchased by SIP’s REIT manager, Sabana Real Estate Investment Management, which plans to list its units through a proposed initial public offering on the SGX.
Since this is an Islamic-based REIT, approval will also be needed from a Sharia’a Council to ensure future businesses on the property are Sharia-compliant.
Sim Lian subsidiary, Geo-Tele will also be required to provide rental income support of S$6.3 million for a period of 5 years from the date of completion.
Sim Lian said the group stands to gain S$13.3 million upon disposal of the property.
The proceeds from the sale will help the company deploy its financial resources more efficiently.
Source: Channel News Asia, 31 May 2010
The construction and property company said the offer price represents a premium of 78 per cent over the book value and presents an attractive opportunity for it to dispose of the asset.
The firm will require the approval of JTC Corporation, which issued the property to Sim Lian, in order to sell the property.
The property will be purchased by SIP’s REIT manager, Sabana Real Estate Investment Management, which plans to list its units through a proposed initial public offering on the SGX.
Since this is an Islamic-based REIT, approval will also be needed from a Sharia’a Council to ensure future businesses on the property are Sharia-compliant.
Sim Lian subsidiary, Geo-Tele will also be required to provide rental income support of S$6.3 million for a period of 5 years from the date of completion.
Sim Lian said the group stands to gain S$13.3 million upon disposal of the property.
The proceeds from the sale will help the company deploy its financial resources more efficiently.
Source: Channel News Asia, 31 May 2010
Sim Lian to sell property to Sabana REIT for S$46.3m
Developer Sim Lian Group, through its subsidiary Geo-Tele, has offered to sell its property at 9 Tai Seng Drive to Sabana Investment Partners (SIP) for S$46.3 million.
The construction and property company said the offer price represents a premium of 78 per cent over the book value and presents an attractive opportunity for it to dispose of the asset.
The firm will require the approval of JTC Corporation, which issued the property to Sim Lian, in order to sell the property.
The property will be purchased by SIP’s REIT manager, Sabana Real Estate Investment Management, which plans to list its units through a proposed initial public offering on the SGX.
Since this is an Islamic-based REIT, approval will also be needed from a Sharia’a Council to ensure future businesses on the property are Sharia-compliant.
Sim Lian subsidiary, Geo-Tele will also be required to provide rental income support of S$6.3 million for a period of 5 years from the date of completion.
Sim Lian said the group stands to gain S$13.3 million upon disposal of the property.
The proceeds from the sale will help the company deploy its financial resources more efficiently.
Source: Channel News Asia, 31 May 2010
The construction and property company said the offer price represents a premium of 78 per cent over the book value and presents an attractive opportunity for it to dispose of the asset.
The firm will require the approval of JTC Corporation, which issued the property to Sim Lian, in order to sell the property.
The property will be purchased by SIP’s REIT manager, Sabana Real Estate Investment Management, which plans to list its units through a proposed initial public offering on the SGX.
Since this is an Islamic-based REIT, approval will also be needed from a Sharia’a Council to ensure future businesses on the property are Sharia-compliant.
Sim Lian subsidiary, Geo-Tele will also be required to provide rental income support of S$6.3 million for a period of 5 years from the date of completion.
Sim Lian said the group stands to gain S$13.3 million upon disposal of the property.
The proceeds from the sale will help the company deploy its financial resources more efficiently.
Source: Channel News Asia, 31 May 2010
Thursday, May 27, 2010
China developers target residential segment in Singapore
Developers from China are looking to break into the Singapore property sector by building mass market and mid-tier residential homes.
Observers said the new entrants want to diversify from their home market, while seeking opportunities in Singapore’s growing property sector.
Since late 2007, China-based developers have been trying to cut themselves a slice of the pie.
While they account for no more than 5 per cent of the market, market watchers said they have been gunning for land.
“The success rate has been quite low for them – about 20 per cent of the bids turn into a successful construction project for them. Nonetheless, of all the bids they have put in, about 13 or 45 per cent of those bids, are in the top three running order, so they are quite aggressive on that front,” said Chua Yang Liang, head of Research (SEA) at Jones Lang LaSalle.
Market watchers said China developers are most active in bidding for mass market residential sites – the market they are most familiar with.
And some with deep pockets bid aggressively – such as China Sonangol Land buying the Parisian site at Paterson Road in October last year for some S$283 million.
While margins for China developers are lower, at around 20 per cent compared to the 30 per cent they can find in their home market, observers said they are willing to sacrifice a little for diversification.
But analysts also warn that China players may not stick around if the market turns down.
“When you go into a market like Singapore where there are a lot of local players, that margin could slow down to some 10-12 percent. At some point in time, they might find that there might not be good opportunities here in Singapore,” said Donald Han, MD of Cushman & Wakefield.
Some observers said that more developers from China could mean more buyers from China.
Developers coming from the mainland could bring with them client lists for investors looking to buy into Singapore property.
Source: Channel News Asia, 27 May 2010
Observers said the new entrants want to diversify from their home market, while seeking opportunities in Singapore’s growing property sector.
Since late 2007, China-based developers have been trying to cut themselves a slice of the pie.
While they account for no more than 5 per cent of the market, market watchers said they have been gunning for land.
“The success rate has been quite low for them – about 20 per cent of the bids turn into a successful construction project for them. Nonetheless, of all the bids they have put in, about 13 or 45 per cent of those bids, are in the top three running order, so they are quite aggressive on that front,” said Chua Yang Liang, head of Research (SEA) at Jones Lang LaSalle.
Market watchers said China developers are most active in bidding for mass market residential sites – the market they are most familiar with.
And some with deep pockets bid aggressively – such as China Sonangol Land buying the Parisian site at Paterson Road in October last year for some S$283 million.
While margins for China developers are lower, at around 20 per cent compared to the 30 per cent they can find in their home market, observers said they are willing to sacrifice a little for diversification.
But analysts also warn that China players may not stick around if the market turns down.
“When you go into a market like Singapore where there are a lot of local players, that margin could slow down to some 10-12 percent. At some point in time, they might find that there might not be good opportunities here in Singapore,” said Donald Han, MD of Cushman & Wakefield.
Some observers said that more developers from China could mean more buyers from China.
Developers coming from the mainland could bring with them client lists for investors looking to buy into Singapore property.
Source: Channel News Asia, 27 May 2010
Tuesday, May 25, 2010
Property stocks stay firm despite land injection
News seen as positive for some developers who are low on landbanks
(SINGAPORE) Property stocks defied market expectations and stayed firm yesterday, the first day of trading after the government said that it will release a record supply of land for private homes in the second half of this year.
The FTSE ST real estate holding and development index gained one per cent to close at 639.59 points yesterday, shaking off the Ministry of National Development's announcement last Friday that it will offer 27 residential sites for sale in its H2 2010 land sales programme.
Analysts were expecting developer stocks to pull back on news that a total of 13,905 units can be built on the 27 sites - which will dramatically increase the supply of land for private homes and hence bring down home prices.
But share prices of major property groups stayed flat or rose slightly for the most part yesterday - in line with the rest of the market. CapitaLand gained 0.9 per cent to close at $3.54; City Developments rose 0.8 per cent to close at $10.20 and Keppel Land rose 2 per cent to end at $3.53.
An analyst with a foreign bank here said that the news is 'not necessarily negative' for developers, many of whom are running low on their landbanks.
In fact, the shortage of land sites was pushing some developers to over-bid and over-pay for the more attractive sites, he said. And if the trend had continued, developers here could have been driven into paying ever-increasing prices for land sites and then ended up having to make provisions for these sites when the current property bull run ends.
But analysts agreed that one outcome from the large supply of land in the second half of the year will be a reduction of land prices for suburban plots. Many of the 27 residential sites offered by the government are in the 'outside central region', a proxy for suburban mass market locations.
'With so many sites available, developers are likely to be more selective and prudent in their bids for the available sites. We believe the most immediate impact would be lower land prices,' said Citigroup analyst Wendy Koh.
Echoed DMG & Partners Research analyst Brandon Lee: 'In view of the increased supply, we expect land prices for upcoming tenders to immediately taper off from the recent $450-$500 per square foot (psf) range to $350-$400 psf, a range which implies a more affordable selling price of $800-$850 psf (as compared to the present $900-$950 psf) - assuming a modest profit before tax margin of 10 per cent.'
The number of bids for each government land tender should also 'normalise' to 6 to 8 from the current 10 to 15, Mr Lee said.
But given that there is still some time before the sites will reach the public as new residential projects for sale, the mass market could still remain strong given the tight supply of HDB flats and the record-low mortgage rates, Ms Koh added.
And analysts also continued to be bullish on the high-end and luxury segments of the private property market, where the supply of land still remains scarce.
Source: Business Times, 25 May 2010
(SINGAPORE) Property stocks defied market expectations and stayed firm yesterday, the first day of trading after the government said that it will release a record supply of land for private homes in the second half of this year.
The FTSE ST real estate holding and development index gained one per cent to close at 639.59 points yesterday, shaking off the Ministry of National Development's announcement last Friday that it will offer 27 residential sites for sale in its H2 2010 land sales programme.
Analysts were expecting developer stocks to pull back on news that a total of 13,905 units can be built on the 27 sites - which will dramatically increase the supply of land for private homes and hence bring down home prices.
But share prices of major property groups stayed flat or rose slightly for the most part yesterday - in line with the rest of the market. CapitaLand gained 0.9 per cent to close at $3.54; City Developments rose 0.8 per cent to close at $10.20 and Keppel Land rose 2 per cent to end at $3.53.
An analyst with a foreign bank here said that the news is 'not necessarily negative' for developers, many of whom are running low on their landbanks.
In fact, the shortage of land sites was pushing some developers to over-bid and over-pay for the more attractive sites, he said. And if the trend had continued, developers here could have been driven into paying ever-increasing prices for land sites and then ended up having to make provisions for these sites when the current property bull run ends.
But analysts agreed that one outcome from the large supply of land in the second half of the year will be a reduction of land prices for suburban plots. Many of the 27 residential sites offered by the government are in the 'outside central region', a proxy for suburban mass market locations.
'With so many sites available, developers are likely to be more selective and prudent in their bids for the available sites. We believe the most immediate impact would be lower land prices,' said Citigroup analyst Wendy Koh.
Echoed DMG & Partners Research analyst Brandon Lee: 'In view of the increased supply, we expect land prices for upcoming tenders to immediately taper off from the recent $450-$500 per square foot (psf) range to $350-$400 psf, a range which implies a more affordable selling price of $800-$850 psf (as compared to the present $900-$950 psf) - assuming a modest profit before tax margin of 10 per cent.'
The number of bids for each government land tender should also 'normalise' to 6 to 8 from the current 10 to 15, Mr Lee said.
But given that there is still some time before the sites will reach the public as new residential projects for sale, the mass market could still remain strong given the tight supply of HDB flats and the record-low mortgage rates, Ms Koh added.
And analysts also continued to be bullish on the high-end and luxury segments of the private property market, where the supply of land still remains scarce.
Source: Business Times, 25 May 2010
Monday, May 24, 2010
Smaller developers rise above giants
Some are outbidding big boys to top up their fast-depleting land banks
SMALL to mid-sized property developers are punching above their weight amid the aggressive jostling among industry players to replenish depleting land banks.
As the property market keeps sizzling, with a near-record 2,207 private homes sold last month, the rush to buy new residential sites has intensified with both higher-than-expected bid prices and a staggering number of developers' bids.
Yet, despite the fierce competition, the supposedly smaller fry have outdone the big boys. Chip Eng Seng's CEL Development, Fragrance Properties and Sim Lian Land are some which have outbid their larger competitors in recent government land tenders.
They have also shown their muscle in collective land sales, snagging most of the six en bloc sites that have been sold so far this year such as Culford Gardens in Siglap and Changi Complex.
Out of nine awarded tenders by the Government Land Sales (GLS) programme in the first half of this year for residential development, smaller developers have managed to clinch at least a respectable one-third of the pie, elbowing out bigger names such as Frasers Centrepoint and Far East Organization.
CEL, for example, emerged the top bidder out of a total of 18 with a much higher-than-expected bid of $152.69 million for a well-positioned 99-year leasehold site in Simei Street 3. This was 3 per cent higher than Frasers Centrepoint's bid of $148 million. Other bidders included Far East, MCL Land and Keppel Land.
Sim Lian Land also topped seven others - including a venture between heavyweights Frasers Centrepoint and Far East - to lodge the highest bid of $302 million for a residential site at the junction of Tampines Avenue 1 and Avenue 10.
Analysts say that while the boom in the property market caught both larger and smaller developers by surprise, the latter's typically smaller land banks meant they would soon be running low.
UOB Kay Hian senior investment analyst Vikrant Pandey said: 'Those hungry for land are bidding the most aggressively and it seems that, relative to larger developers, smaller developers have seen their land banks deplete much faster.'
Most of the en bloc sales sealed this year were also of smaller sites suitable for smaller scale residential projects that small to mid-sized developers - generally without the deep pockets of bigger developers - go for.
DMG & Partners Securities property analyst Brandon Lee said this 'aggressive bidding' by smaller developers indicated their confidence in at least a 10 per cent increase in home prices in the next seven to 12 months.
Larger developers such as Far East and Hong Leong were 'relatively more equipped', with larger land banks under their belts, while the smaller developers have been less successful in acquiring land over the past year, he said.
He said some smaller developers like Sim Lian and Chip Eng Seng had tried in vain for about eight months before succeeding in land tenders recently.
'(But) for the larger developers, the tender exercises helped to replenish the majority of what they cleared last year as some, notably Far East, Hong Leong and City Developments, have already managed to acquire about two to three sites since July last year,' Mr Lee added.
Some small to mid-cap players such as Allgreen Properties, Ho Bee Investment and GuocoLand have yet to secure new sites since the second half of last year.
Colliers International research and advisory director Tay Huey Ying said larger developers had already bid aggressively for land last year, while the smaller players might be less heavily committed and thus able to bid more.
'Private sector land might not be as forthcoming this time around... The process is also less straightforward than acquiring land from the GLS programme so smaller developers might be starting to divert their attention to bigger sites.'
Ngee Ann Polytechnic real estate lecturer Nicholas Mak added that recent bids might also suggest that as these firms gathered experience, they were also starting to graduate to larger sites.
He said that some of the smaller developers - construction firms that have made forays into property development - have an added incentive in tendering for development sites since both segments would benefit. The construction cost can also be managed more effectively.
'After the completion of the two integrated resorts, they might also be looking for new jobs to make sure that they continue to have a profit and revenue stream,' he said.
Despite these high bids, however, banks are usually willing to offer loans of up to 60 per cent to 70 per cent of the bid price, DMG's Mr Lee said. He does not expect financing to be an issue.
UOB's Mr Pandey added: 'Liquidity is still strong and banks are still more than willing to lend.'
Source: Straits Times, 24 May 2010
SMALL to mid-sized property developers are punching above their weight amid the aggressive jostling among industry players to replenish depleting land banks.
As the property market keeps sizzling, with a near-record 2,207 private homes sold last month, the rush to buy new residential sites has intensified with both higher-than-expected bid prices and a staggering number of developers' bids.
Yet, despite the fierce competition, the supposedly smaller fry have outdone the big boys. Chip Eng Seng's CEL Development, Fragrance Properties and Sim Lian Land are some which have outbid their larger competitors in recent government land tenders.
They have also shown their muscle in collective land sales, snagging most of the six en bloc sites that have been sold so far this year such as Culford Gardens in Siglap and Changi Complex.
Out of nine awarded tenders by the Government Land Sales (GLS) programme in the first half of this year for residential development, smaller developers have managed to clinch at least a respectable one-third of the pie, elbowing out bigger names such as Frasers Centrepoint and Far East Organization.
CEL, for example, emerged the top bidder out of a total of 18 with a much higher-than-expected bid of $152.69 million for a well-positioned 99-year leasehold site in Simei Street 3. This was 3 per cent higher than Frasers Centrepoint's bid of $148 million. Other bidders included Far East, MCL Land and Keppel Land.
Sim Lian Land also topped seven others - including a venture between heavyweights Frasers Centrepoint and Far East - to lodge the highest bid of $302 million for a residential site at the junction of Tampines Avenue 1 and Avenue 10.
Analysts say that while the boom in the property market caught both larger and smaller developers by surprise, the latter's typically smaller land banks meant they would soon be running low.
UOB Kay Hian senior investment analyst Vikrant Pandey said: 'Those hungry for land are bidding the most aggressively and it seems that, relative to larger developers, smaller developers have seen their land banks deplete much faster.'
Most of the en bloc sales sealed this year were also of smaller sites suitable for smaller scale residential projects that small to mid-sized developers - generally without the deep pockets of bigger developers - go for.
DMG & Partners Securities property analyst Brandon Lee said this 'aggressive bidding' by smaller developers indicated their confidence in at least a 10 per cent increase in home prices in the next seven to 12 months.
Larger developers such as Far East and Hong Leong were 'relatively more equipped', with larger land banks under their belts, while the smaller developers have been less successful in acquiring land over the past year, he said.
He said some smaller developers like Sim Lian and Chip Eng Seng had tried in vain for about eight months before succeeding in land tenders recently.
'(But) for the larger developers, the tender exercises helped to replenish the majority of what they cleared last year as some, notably Far East, Hong Leong and City Developments, have already managed to acquire about two to three sites since July last year,' Mr Lee added.
Some small to mid-cap players such as Allgreen Properties, Ho Bee Investment and GuocoLand have yet to secure new sites since the second half of last year.
Colliers International research and advisory director Tay Huey Ying said larger developers had already bid aggressively for land last year, while the smaller players might be less heavily committed and thus able to bid more.
'Private sector land might not be as forthcoming this time around... The process is also less straightforward than acquiring land from the GLS programme so smaller developers might be starting to divert their attention to bigger sites.'
Ngee Ann Polytechnic real estate lecturer Nicholas Mak added that recent bids might also suggest that as these firms gathered experience, they were also starting to graduate to larger sites.
He said that some of the smaller developers - construction firms that have made forays into property development - have an added incentive in tendering for development sites since both segments would benefit. The construction cost can also be managed more effectively.
'After the completion of the two integrated resorts, they might also be looking for new jobs to make sure that they continue to have a profit and revenue stream,' he said.
Despite these high bids, however, banks are usually willing to offer loans of up to 60 per cent to 70 per cent of the bid price, DMG's Mr Lee said. He does not expect financing to be an issue.
UOB's Mr Pandey added: 'Liquidity is still strong and banks are still more than willing to lend.'
Source: Straits Times, 24 May 2010
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