Singapore Property News Upfront

Property News Upfront - Dec 08

2009-01-27T21:17:00.000-08:00

Time to lower home prices
Property developers should consider this step to lure back buyers
WHEN a property boom here ends, the first casualty is usually home supply. Sure enough, the Government put a stop to new land sales early this month, as it did in the last two downturns, making it as good an indicator as any that a property slump had arrived. Developers have also been cutting supply throughout the year, pushing back en bloc redevelopments and putting some launches on hold indefinitely.

But though reducing supply is necessary to prevent the market from collapsing, it is clearly inadequate as a cure at this point. No land plots have changed hands for months, new launches have slowed to a trickle - and yet buyers are still not biting. Property ads have dried up and showflats are starting to resemble ghost towns. When sales came to a standstill this year, developers blamed the financial crisis and government policy actions, such as the removal of the deferred payment scheme. But house hunters pointed to just one reason: Home prices are still too high.

The economy has shrunk for the first time since 2001, mass retrenchments are on the cards, and monthly sales of new homes have plummeted so much that experts warn total sales this year could reach an 18-year low. Yet private home prices - at least according to the Urban Redevelopment Authority’s (URA) price index - have not dropped by much. Prices are already falling, pushed down by smaller developers squeezed for cash and individual home sellers anxious to offload their units.

A boutique condominium in the Novena area reportedly gave significant discounts - from over $1,300 psf down to just under $1,000 psf - after the financial crisis hit hard in October. At soon-to-be-completed developments such as City Square Residences in Kitchener Road, prices have fallen from a high of over $1,000 psf last year to less than $800 psf for some units in recent months. Lowering prices will bring buyers back into the market. Many have been waiting on the sidelines since early last year, when prices starting shooting up beyond their means. Evania, a 35-unit condo in Upper Paya Lebar, moved 15 units last month after dropping prices from nearly $900 psf in March to just above $600 psf. That’s a whopping 30% discount!
Source : Straits Times - 31 Dec 2008

For sale: 1,181 new HDB flats of all sizes
Flats in Choa Chu Kang, Punggol will be offered under built-to-order plan
THE Housing Board is bringing down the curtains on a busy year with one more sales exercise - this time for 1,181 flats in Choa Chu Kang and Punggol. It is offering everything from studio apartments to five-room flats, with prices ranging from $58,000 to $428,000.
The second project - Punggol Regalia - is at the junction of Punggol Field and Punggol Place and near the future Punggol Town Centre. It offers premium flats with 546 four-room and 183 five-room units, priced from $252,000 to $428,000 each. They are around $33,000 to $86,000 cheaper than similar resale flats nearby of about six years old, said the HDB. The HDB has said it will ramp up supply to around 4,000 units over the next two years to meet surging demand. Source : Straits Times - 31 Dec 2008

Medium- to long-term prospects for S’pore property sector still strong
Singapore’s commercial and residential property sectors will remain attractive to investors in the medium to long term. Property watchers told Channel NewsAsia that is because of Singapore’s status as an international financial hub.

2009 looks set to be a difficult year by all accounts, but market watchers said property investment fundamentals here remain strong. As global financial institutions cut costs, they are likely to move operations out of expensive cities in the US and Europe to Asian countries such as Singapore, where the cost of doing business is cheaper. For example, Singapore’s corporate tax rate is 18 per cent, compared to 29 per cent in the UK and 40 per cent in the US. And this could spur demand for office space in financial centres like Singapore, presenting investment opportunities for the commercial property sector.

Christopher Fossick, managing director, Southeast Asia, Jones Lang LaSalle, said: “Financial institutions are growing, in many cases from hundreds to thousands of jobs here in Singapore. The bigger these institutions become, the more real estate they need.” But there are opportunities in the residential market as well. The closing gap between debt servicing and rentals, as well as falling valuations in 2009, could see many investors looking for a good deal.

Eugene Lim, associate director, ERA Asia Pacific, said: “For example, those in district 9, 10, and 11, they tend to be more elastic, the prices. So when the economy is not doing too well, the prices come down quite a lot, especially amongst those who have, for example, bought from the developer and then now need to sell to raise cash flow. They are prepared to cut losses.” Observers said Singapore’s property market will offer rich pickings to investors who have their eyes on long-term returns.
Source : Channel NewsAsia - 30 Dec 2008

DTZ expects 2009 to echo property price plunge of 2008
Prime district property prices fall by 20%; similar decline seen in 2009
Prices of condominiums and apartments in the prime districts have fallen by more than 20 per cent in 2008 on a year-on-year basis, says DTZ. DTZ is also forecasting a further decline of 15-20 per cent for this segment of the market in 2009. Based on its preliminary analysis of official data, DTZ said that prices of non-landed freehold private homes in the prime districts fell by 14 per cent quarter-on-quarter (qoq) in the fourth quarter of 2008.

Overall average prime prices fell 21.6 per cent year-on-year (yoy) to $1,160 per square foot (psf), below the level of $1,200 psf registered in Q207. The fall in prices follows dismal developer sales in October and November with only 112 and 192 units sold in the primary market respectively, compared to the monthly average of 444 units sold in the first nine months of the year. DTZ said that based on caveats lodged, preliminary data from URA’s REALIS showed that the number of transactions in the year is only about 35 per cent of last year’s 38,100 units.

DTZ said that average monthly rents of prime non-landed homes decreased in Q408 by 9.4 per cent QoQ or 9.2 per cent yoy to $4.36 psf. Outside the prime districts, rents held up better with an increase of 2 per cent yoy, despite a fall of 1.2 per cent qoq.
The extent of price corrections is still uncertain but Nomura has already adjusted its forecasts. In March, it forecast average prices in the luxury sector to fall by 32.3 per cent from the 2007 peak over 2008-2010 - 16.9 per cent in 2008, 10.3 per cent in 2009 and 9.3 per cent in 2010. It now expects luxury prices to fall 43.8 per cent from the peak, and mass residential prices to fall 32.1 per cent as yields move out by an additional 25-50 basis-points.
Source : Business Times - 30 Dec 2008

Retail rents expected to fall in 2009
Retailers likely to be cautious in expansion, rents may undergo corrections to reflect the gloomy outlook
RENTS for prime retail space in Orchard Road could fall by as much as 13 per cent in 2009, while rentals at suburban malls are expected to ease by about 3 per cent, property analysts here said. Cuts in consumer spending will be the key threat to rental rates. But rents will also come under pressure from the 3.2 million square feet of new retail space expected to come onstream next year - close to half of which will be along Orchard Road.
Source : Business Times - 27 Dec 2008

Private properties looking attractive
What to look out for when hunting for that perfect condo or house
THE recession has resulted in a 25-per-cent fall in private- property prices from their market peak, and with prices expected to dip further next year, there may be opportunities to pick up some bargains. Here are 10 tips to keep firmly in mind.

1 CONSIDER LANDED
The executive director of HSR Property Group, Mr Eric Cheng, feels that if buyers are willing to fork out $1.2 million to $1.3million for a condominium, they should consider buying landed property instead. Due to land scarcity in Singapore, there is always more demand than supply for landed property, which is not the case with condos, said Mr Cheng.

2 INSTALMENT RESERVE
Mr Cheng said it is important to invest within your means. Have a reserve of at least one year’s worth of instalments in case of shocks, like a loss of income.

3 LEASING OR LIVING?
Mr Arvin Sylvester Lim, division director of Century 21 SHL Realty, said it is important to be sure if you plan to live in the property or rent it out. If you are making it your home, the equation is simple: Find something that you like and can afford. If you are looking to invest and rent out, do your research to see if there is good demand in an area, and if the rent will be enough to cover the instalment payment and still allow a profit.

4 DON’T WAIT TOO LONG
While one should hold back until one finds something ideal, Mr Lim does not encourage overspeculating on trends. “Buying a house is not like buying a car. The moment you drive the car…the value drops, but with property the value can go up or down,” he said. Even though prices are expected to fall further, “a home is a must”, Mr Lim said. He advises against pegging buying one to unpredictable market movements.

5 MAKE OFFERS FAST
Buyers who bought too many properties or can’t afford to keep up with payments, given the weak economy, will be selling off their investments now, said Mr Shannan Govindarajoo, marketing manager at ERA. He suggests you start looking and making reasonable offers as he thinks more buyers will be entering the market, which could mean prices for these “must-sell” properties may rise.

6 CHECK MASTER PLAN
Look at the Urban Redevelopment Authority’s master plan and invest where the Government is pumping in money, said Mr Govindarajoo. For instance, he thinks those interested in the Marina area should strike now, as prices are down by 40 per cent, compared to last year’s. Mr Lim said investing in property in that area will reap great returns when the integrated resort is ready as “a lot of the management staff will be living there, so rentals will be high”.

7 SHOP FOR A LOAN
Banks are now becoming more cautious with making home loans and how much they are willing to lend, said Mr Govindarajoo. He advised shopping around for a good home loan first, so that you do not commit yourself to a seller before knowing how much you have to work with.

8 PRICE VS VALUATION
Check the valuations of the property you are considering at different banks to make sure you’re getting a good deal, said Mr Govindarajoo.

9 OLDER CONDOS
Mr Parthiban Sadagopal, a Prop- Nex realtor, suggests buying a condo “between seven and 10 years old in the outskirts”, like Pasir Ris or Tampines. Judging from the trend seen after the 2003 recession, such condos are good buys for living in and investment, as you could hope to buy one at $400,000 to $500,000 now and sell it for up to $800,000 when the economy picks up. Renting it out could fetch $3,000 a month as well.

10 DISTRICT 15
Keep your sights on the East Coast area of District 15, said Mr Cheng, as prices there are unlikely to dip drastically. Good schools, malls and eateries add value, making it a good option for those who feel prime locations are too expensive. Meyer Road, Ceylon Road, Telok Kurau and Crane Road are some of the best places to buy a house, according to him. Mr Govindarajoo agrees, saying District 15 is “evergreen”.
Source : AsiaOne - 26 Dec 2009

Property market now shows classic signs of downturn
Analysis of Q3 caveats by DTZ points to new trends relating to subsales, foreign buying, HDB upgraders
THREE classic signs of a Singapore property downturn have emerged in the third quarter - a slide in subsales and foreign buying, but a bigger share of HDB upgraders in the private home buying pie.

Property consultancy DTZ’s analysis of caveats for private home purchases shows that total subsales of non-landed private homes fell 8 per cent to 473 units in Q3 from the previous quarter. The number of subsale purchases involving units priced at least $1,000 psf fell 24.2 per cent quarter-on-quarter to only 213 transactions, accounting for 45 per cent of overall subsales of non-landed private homes in Q3, against 54 per cent in Q2 2008.

The number of foreign buyers (including permanent residents) of private homes (both landed and non-landed) slid 6 per cent quarter-on-quarter to 903 in Q3. Also, these buyers made up 22 per cent of total private home deals in the quarter, down from 25 per cent in Q2.
DTZ senior director (research) Chua Chor Hoon said: ‘A large proportion of foreigners buy for investment. Hence when prices are falling, there is less interest. Furthermore, with economies and property markets slowing down all over the world, many of the foreigners have been affected back home and they may pull out their overseas investments.’

HDB dwellers tend to make up a bigger proportion of private home buyers during a property downturn. ‘Many of them are buying for owner occupation. Some may be sitting pretty on gains on their existing HDB flats which they bought directly from the HDB some years ago.
Source : Business Times - 2 Dec 2008

Property no longer a safe asset
Real estate used to be the ultimate all- weather asset class, with low correlation to volatile stocks and unexciting bonds. But in today’s debt-starved market, property is not the safe haven it once was.

Trusted property market tenets have been deformed by an acute shortage of debt and a worldwide souring in economic fundamentals, leaving the sector in a deep rut - awash with equity and rich with discounts but bereft of buyers. Before, property rental income could rise even if values fell and as one regional market sagged, another flourished. But now, property market misery is universal and many of the world’s biggest investors are standing on the sidelines.

‘Things are going to be a difficult for quite a while,’ Robert Houston, chairman and chief executive of of ING Real Estate Investment Management, told Reuters. ‘Everyone wants to know when the bottom of the market is. I have a good record at calling these things and all I’m prepared to say is that we haven’t reached it yet.’ Like the majority of its peers, ING has slowed the pace of its real estate investments in recent months, refusing to gamble capital when the only thing it feels sure of is that property prices worldwide will continue to fall.
Source : Business Times - 2 Dec 2008

Half of Marina Bay Sands retail space taken up
Singapore’s Marina Bay Sands integrated resort will unveil details of plans for its retail space after the Chinese New Year in January next year. Recent reports said its parent company, Las Vegas Sands, is facing financial difficulties. But the Singapore firm remains confident about prospects for its retail business. The S$5.4-billion Marina Bay Sands project is still being built. When completed, it will have 800,000 square feet of retail space which can house about 300 stores.

The resort said half of that space has already been taken up, and will feature over 30 brands that are new to Singapore. David Sylvester, vice president, Retail Development Asia, Las Vegas Sands, said: “We will have a lot of leading-edge retail… It will be a mixture of European, some American brands, some Japanese, some Korean.” Marina Bay Sands said it would start marketing campaigns to attract more retailers to lease shops at the resort from February next year. These efforts will include trade shows and talks in Europe.

However, there are currently no plans to adjust rentals to match the slowing economy, and Sands remains positive about the future. “Obviously, there have been a lot of concerns about the economic environment globally, but everybody has been very positive on the Marina Bay Sands because by the time we open, we are talking about end of 2009. We’ve got to think that things will turn around by then,” said Mr Sylvester.
Source : Channel NewsAsia - 4 Dec 2008

Life after DPS won’t be crippling for developers
Study shows they can weather even 20% default rate by buyers under scheme
A NEW report, which looks at the potential impact if buyers who bought homes under the deferred payment scheme (DPS) choose to walk away from their deals, concludes that developers are not likely to be too badly hit even under a 20 per cent default scenario. The report by DBS Group Research captured the impact of defaults in projects expected to get their Temporary Occupation Permit (TOP) in 2009 on developers’ earnings, operating cash flow, net gearing and interest cover. For this analysis, analyst Adrian Chua covered two default scenarios: 10 per cent and 20 per cent of all DPS units defaulting. Both scenarios assume the developers do not resell the default units within the year.

But among the developers, the smaller players would be more impacted in terms of proportional decline in earnings and interest cover, the report concludes. It investigated the impact of defaults on six developers - CapitaLand, City Developments, Ho Bee Investment, Keppel Land, UOL Group and Wing Tai. Developers dispute this view. Developers DBS Research spoke to have maintained the likelihood of default risk is low, given that speculation in 2006-07 did not reach the property bubble levels of 1995-96, the firm said in the note. The research note concluded that while a 20 per cent default is not likely to hurt developers too much, the effect of DPS defaults is just one of a few challenges facing the developers in 2009.
Source : Business Times - 4 Dec 2008

Waiting for the storm to hit…
Going by past recessions, it could take nine more months before prices fall
FOR first-time flat seekers like Mr Neo Tze Siang, the economic downturn was meant to provide some respite from HDB prices pushed skyhigh by the property boom last year. But despite the raft of job cuts and the gloomy economic forecasts trotted out, HDB prices are showing few signs of sliding. “We hear about private property prices falling substantially but the current prices of new HDB flats do not seem to reflect the market realities. When the tide goes down, you would expect all ships to move down. But it seems that new HDB flats are not part of the ocean,” lamented Mr Neo, a 28-year-old salesman.

According to industry players, the wait could be at least another nine months - if prices do come down at all - no thanks to the slew of foreigners and private property downgraders eyeing the HDB rental and resale markets respectively, which indirectly pushes up the prices of new HDB flats. Said Dennis Wee Group director Chris Koh: “Whenever you have a recession, the first to be hit would be the private property market. So, a lot of people will start downgrading from private homes to HDB flats.”

And in the first nine months of the year, HDB’s resale price index rose 12.4 per cent, rising by 4.2 per cent in the third quarter. Reiterating how HDB “followed the market and moved prices downwards” in the aftermath of the Asian financial crisis a decade ago, a HDB spokesperson reiterated that the Government “remains committed to ensure that HDB flats are affordable to the vast majority of our citizen families, especially young married couples and the lower-income households”. Source : Today - 4 Dec 2008

Eyes on demand as govt keeps land supply in check
Analysts hope for measures to boost buying, such as stamp duty rebates
THE government yesterday kept the lid on the supply of state land for development. All eyes in the market now are on what measures the state will come up with to stimulate property demand.

The Ministry of National Development (MND) has decided not to add any new sites to the Government Land Sales (GLS) Programme for first-half 2009. The slate for the first six months of next year - comprising entirely reserve list sites, as previously announced - consists of a total 38 sites. These 38 land parcels can potentially yield about 7,920 private homes, 512,000 sq metres gross floor area (GFA) of commercial space and 5,160 hotel rooms.

Giving an update on land supply in January-June 2009 from government agencies, outside the GLS Programme, MND said there will be no new supply of private homes and a reduced supply of commercial space. Welcoming the latest announcement from MND, a spokesman for the Real Estate Developers Association of Singapore said: ‘This further confirms to the market the authorities are mindful of market conditions at the moment and (we) do not need to add further uncertainties.’

JP Morgan analyst Chris Gee said: ‘It’s less of a supply side situation right now. The issue is what can be done to help stimulate demand. All eyes are turning to the Budget statement in January.’ He reckons temporary exemptions on stamp duty and property taxes could be possible measures.
Source : Business Times - 5 Dec 2008

Costs up, but S’pore far cheaper than rivals
WITH inflation and fluctuating exchange rates, Singapore has leapt 27 places up the global rankings of the world’s most expensive cities to live in. The consolation for the Republic is, its regional rivals have seen costs balloon far more astronomically. Will all this make Singapore a more attractive option for expatriates and international companies setting up base here?

Singapore International Chamber of Commerce chief executive Phillip Overmyer said multinational companies were now “trying to understand what would happen after the economic crisis”, and how to serve emerging markets after the turmoil dies down. “With the lower cost of living in Singapore, it will encourage companies to put its analysts here, such as market researchers and R&D personnel,” he said. “It would support companies to use Singapore as regional headquarters for Asia.”

The Singapore expat community, said Mr Overmyer, is different than it was ten years ago, when the expats held top positions in companies. “Increasingly, the expats tend to be here for the learning experience and in mid-level positions with less generous packages,” he said. “But if Singapore remains relatively less expensive, we would still be more attractive.”
Source : Today - 5 Dec 2008

URA plan draws strong interest
THE Master Plan 2008 - an ambitious blueprint setting out Singapore’s physical development for the next 10 to 15 years - has attracted plenty of attention from the public. Its exhibition received more than 200,000 visitors over the past six months, and about 300 submissions have been made - 80 per cent of them online - according to the Urban Redevelopment Authority (URA) yesterday.

It contains ambitious schemes to transform Jurong East, Kallang and Paya Lebar into sub-metropolitan hubs of offices, hotels, education and entertainment centres, parks and homes. Some of the feedback included calls for the allocation of space for activities in Paya Lebar Central. The Station Plaza in front of the Paya Lebar MRT station and the plaza space next to the civic centre at Geylang Serai were cited as possible venues.
Feedback on the Leisure Plan was generally positive, including comments from members of the public that they were excited about the 150km round-island route, added the URA. Suggestions were also made on ways to enhance Jurong Lake District to improve transport with people movers and river taxis.
Source : Straits Times - 6 Dec 2008

Best Asia-Pac property bets
TOKYO, Singapore and Hong Kong have emerged tops in the Asia-Pacific in a recent ranking of cities with the best property investment prospects for 2009. They were placed first, second and third respectively as investors shifted their attention from emerging cities to mature markets, the survey by America’s Urban Land Institute (ULI) and PricewaterhouseCoopers (PwC) showed. Shanghai, which was ranked first in last year’s survey, fell to fifth place this time around. Beijing fell from sixth to 12th place and Ho Chi Minh City from eighth to 13th. Survey respondents said 2009 is the time to be ‘picky about markets and partners’, ULI and PwC said in the report, which was released here yesterday.

In recent years, many investors who had been elbowed out of deals in major Asian cities by core funds or highly leveraged private equity players sought refuge in secondary locations or products in an effort to find value. In today’s environment, however, investors are again focusing on prime assets in major locations. At the same time, projects in secondary markets or even in less well-positioned prime areas are more likely to run into problems, especially as slowing growth lowers demand for commercial properties. Respondents were also asked to rate cities according to their riskiness. Tokyo, Singapore and Sydney were the three markets seen as least risky.

In Singapore, the strongest buy and hold recommendations were for the hotel sector - 65 per cent of respondents advised holding, 24 per cent recommended buying and only 9 per cent suggested selling. The residential rental sector was also a strong ‘hold’ (65 per cent). But 23 per cent recommended selling and only 11 per cent advised buying. Singapore’s office sector was rated a ‘hold’ by 54 per cent of respondents, while 23 per cent advised buying and 21 per cent recommended selling. For the industrial/distribution property sector, 52 per cent of respondents gave ‘hold’ recommendations, 34 per cent advised buying and 13 per cent said ’sell’.

The survey, based on 180 respondents ranging from global investors, property developers and brokers, looked at the investment and development prospects of 20 metropolitan markets in the Asia-Pacific region. ‘Asia shares the same liquidity crisis that the rest of the world is facing,’ said Stephen Blank, ULI’s senior resident fellow for finance. ‘Financial institutions - whether international or national, regional or local - are reluctant to extend credit as deleveraging reduces balance sheet lending capacity.’ And for Singapore, besides the credit squeeze, another problem is the seemingly generous pipeline of development projects which may be completed during a period of sagging interest from foreign business investors, said PwC tax partner David Sandison.
Source : Business Times - 6 Dec 2008

More than 70% of Park Central @ AMK sold
Mainboard-listed United Engineers has sold more than 70 per cent of its first public housing project, Park Central @ AMK, which is being developed by its subsidiary Greatearth Developments. All four-bedroom and penthouse units are sold out. The developer received more than 2,300 applications or four times the number of units available for sale when submissions closed in August. The 578-unit estate is the third Design, Build and Sell Scheme (DBSS) project in Singapore.
Source : Channel NewsAsia - 11 Dec 2008

S’pore expected to be first Southeast Asian country to recover
Singapore may be the worse-hit Southeast Asian country in the current economic crisis, but it could well be the first economy in the region to rebound, according to economic forecaster Thierry Apoteker. A jump in US consumer confidence in November is just one of the indicators that could signal signs of a global recovery next year. Consumer confidence index rose in November to 44.9, up from 38.8 in October which was the lowest on record. Coupled with signs of liquidity tensions loosening up, it is suggested that banks may start lending to corporations soon which could put the US on a recovery path.

“We have the initial tentative signs that this is taking place. The spreads between money market rates and the fed rates have declined substantially. Not yet to the normal zone but substantial, compared to the rates of 300 basis points that we have seen after the Lehman collapse,” said Dr Apoteker.

Increased spending in the US and Eurozone would translate to an increase in demand for exports from Asia. And while global trade numbers may pick up, Dr Apoteker expects a slower growth rate of between 4 and 5 per cent, as opposed to the almost 10 per cent growth in 2006. He added that he expects the US and Eurozone to see signs of recovery in the second quarter of 2009, with Asia following suit in the third quarter.

And although Singapore will be hit by slowing trade, its strong asset base and robust financial sector will boost its economic recovery. “What’s very interesting is that the other transmission mechanism – both on the asset market and the financing mechanism in Singapore – is pretty strong, much stronger than most. “We’ve done an exercise of mapping the banking systems of all the Asian countries to look at where the strengths and the weaknesses are, and you might be interested to know it is rated 1 to 64 in binary ranking. “Singapore is the only country, apart from Japan and Korea, to have a number one ranking. The financial background is very strong, so as a trading outpost you will be very badly affected, but you will be the first to recover after that.”
Source : Channel NewsAsia - 11 Dec 2008

High-end projects take a knock, suburban condos edge higher
High-end prices fall 12-28%, while mass market projects climb 1-7%: study
Fresh data on home transactions compiled by Credo Real Estate confirms that prices of high-end housing projects have fared far worse than suburban condo prices between second-half 2007 and second-half 2008. Credo’s study shows that average prices of high-end projects generally posted declines, ranging from 12 to 28 per cent during the period. In contrast, the average prices of units in selected projects in the mass market generally rose 1 to 7 per cent.

This is partly due to differing buyer profiles in the two segments. ‘Suburban condo buyers usually make their purchases for their own use and less as a tool for investment or speculation, unlike buyers in the high-end segment,’ Mr Singh says. ‘Prices are not a perfect science at the high-end due to the profile of the rich and foreign buyers who make up a good proportion of demand. They’re less price sensitive and the products are less homogeneous; if there’s something they like, even if it is priced at a premium, they’re quite happy to buy it,’ Mr Singh says.

Credo’s sample looked at Four Seasons Park condo, Ardmore Park and Cairnhill Crest in the Orchard Road belt, which showed average transacted prices fell 27, 12 and 17 per cent respectively in H2 2008 over H2 2007.

At Sentosa Cove, Credo’s sample basket comprised The Azure, The Berth and The Oceanfront condos. The declines were 22 per cent for The Azure and 28 per cent for The Oceanfront. In the city centre, the average price at Marina Bay Residences fell 17 per cent to $1,985 psf in H2 2008 with five deals done. At The Sail @ Marina Bay, the average price slipped 14 per cent to $1,811 psf, with 42 deals in H2 2008. In the mid-priced segment - defined as the low-$1,000 psf price range - One Amber, Sky@Eleven and The Tessarina - saw average transacted prices fall 19, 21 and 17 per cent respectively.

However, suburban Singapore demonstrated greater price resilience. Average transacted prices of eight of nine projects studied in the west, east and north posted 1 to 7 per cent gains in H2 2008 over H2 2007.
Source : Business Times - 11 Dec 2008

4-room flat sold for record $495,000
NEWSPAPER vendor Goh Wee Kiat, 48, refused to budge on his price when he put his four-room Housing Board (HDB) flat up for sale six months ago despite the softening property market. His persistence reaped dividends when the flat, in Marine Parade, was sold for a staggering $495,000 in late October. That is $65,000 above valuation. It was a record price paid for such a four-room flat in the area, and it came as a surprise to industry watchers, considering the quiet property market and bleak economic climate.

In September, another four-room flat in that same ‘lucky’ block located at Marine Terrace was sold for a then-high of $490,000. Both flats are about 33 years old. ‘I know that flat prices here are good because of the view and location. That was why I was quite stubborn about my price. And I dared to ask for a high price because my unit is also on a high floor.’These buyers are willing to pay a forward price, where they pay a premium, because they think the price of the flat will appreciate in the future.’
Source : The New Paper - 12 Dec 2008

Private residential launches on the up…
… as prices of high-end private properties move down
PRIVATE home launches and sales were up last month after a dismal October. The number of private residential units launched more than doubled from October’s 159 to 382, and units sold increased from 118 to 192, according to the data released by the Urban Redevelopment Authority (URA) yesterday. Analysts said the jump in units launched reflects developers clearing stock and testing sentiment.

“I wouldn’t jump to the conclusion that the holding power of developers is beginning to wane,” said Mr Karamjit Singh, managing director of Credo Real EstateGiven that financial markets were less volatile last month, he said developers could be launching units to “test the waters”, and to see how receptive the buyers are right now. “In the next three to four months, if banks are more eager to lend and developers lower their prices psf, this combination could spur the buyers back into the market,” said Mr Ku Swee Yong, director of marketing and business development from Savills Singapore.
Source : Today - 16 Dec 2008

Property News Upfront - Nov 08

2009-01-27T20:42:00.000-08:00

Launches of private homes in Oct drops almost 80% on month
Only 159 private homes were launched in October this year - the lowest in more than a year.
The slide of almost 80 per cent from the 767 units launched in September is due to poor economic conditions, and the technical recession that has hit Singapore. About 194 units launched in August 2008, during the traditionally slow market in the seventh lunar month.

The central region made up almost half the new launches in October, at 74 units. The number of
new homes sold in October also fell to 112 units from 373 a month ago.
Homebuyers stayed out of the market in October as confidence was shaken by financial turmoil and news of job cuts. And buyers were only willing to spend on properties that offered value for money. “Price is a factor in today’s market. Projects priced well in very good locations have a strong take up,” said the head of research and consultancy at Jones Lang LaSalle, Chua Yang Liang.

Analysts expect the housing market to stay weak. Dr Chua said: “This pendulum effect we see in
supply and demand will continue going into next few months as developers try to ascertain what the demand is. Buyers being sensitive to market news will continue to fluctuate in their behaviour.” Analysts also say new home sales could hit lows not seen since the 1997 Asian financial crisis. Source : Channel NewsAsia - 17 Nov 2008

Home loans harder to get as prices fall
Check if bank can meet unit’s valuation to avoid overpaying for the property. A couple of telling anecdotes illustrate the unexpected glitches that home buyers can face as property prices start to fall. A Spring Grove condominium unit owner was denied the chance to take advantage of lower interest rates by refinancing his devalued property without coughing up more hard-earned cash.

The owner had to make up the shortfall because the reduced value of the Grange Road unit meant the bank could not extend a large enough loan. Another buyer had to cancel his purchase recently after he learnt that banks’ valuation of the property was less than what he was supposed to pay.

Amid poor demand and falling prices, banks are sticking to lower property valuations in
anticipation of further price falls. ‘OCBC Bank engages independent, third-party valuers to determine the open market value of properties and there has been evidence of a fairly strong downward trend in property valuation,’ said its head of consumer secured lending Gregory Chan. Source : Sunday Times - 16 Nov 2008

About 50 homebuyers walked away from deals in October
But trend not likely to escalate as it was a month when bourses tanked
THE number of private homes returned to developers shot up last month on the back of a sharp dive in confidence due to the stockmarket crash.
Homebuyers returned 50-odd units to developers in October, compared with 10-plus units each in the preceding month and in October last year. The figures were estimated by BT from statistics on developers’ sales released by the Urban Redevelopment Authority (URA) yesterday. The figures exclude executive condos.
October also saw developers launching and selling the lowest number of private homes since URA started making monthly housing sales data available in June last year. Developers sold 112 private homes in October, down about 70 per cent from 376 units in the preceding month and 80 per cent below the 566 units sold in October last year. The 159 private homes developers launched last month was also 79 per cent lower than September and 75 per cent below that in the same year-ago period. Source : Business Times - 18 Nov 2008

Long term measures to help HDB mortgage defaulters
The Housing and Development Board (HDB) will continue to keep tabs on flat owners who default on their HDB mortgage payments. It stressed that long term measures to help these owners manage their mortgage payment is the best solution, and that compulsory acquisition of the flat is a last resort.

As of October 2008, some 33,000 flat owners owed HDB arrears of three months or more. They
make up less than 8 per cent of the 420,000 households with outstanding HDB loans. Giving this
update in Parliament on Tuesday, Parliamentary Secretary for National Development Mohamad
Maliki Osman said home owners should buy within their means.
But he recognised that there are some who are affected by the economic downturn and one option for them is to downgrade to a smaller unit. More 2 and 3-room HDB flats will be coming on stream next year to cope with the growing demand for smaller flats. Source : Channel NewsAsia - 18 Nov 2008

Retail rents flattens as consumer spending slows
The dip in consumer spending due to the economic downturn has caused concerns among many
retailers who are paying top dollar for retail space. Market watchers said they do not expect any
rental growth in the 4th quarter, but some retailers may be holding out for concessions.
Orchard Road, Singapore’s prime shopping district, is set to welcome four new malls next year -
ION Orchard, 313@Somerset, Orchard Central and The Mandarin Gallery.
The four-storey Mandarin Gallery will have 130,000 square feet of retail space, with rental rates ranging from S$12 to S$60 per square foot. About half of the space has been leased.

The landlord said it will find ways to help tenants cope with the tougher business climate, but it said cutting rents may not be best thing to do. OUE said it will try to woo shoppers to the mall with brands that are new to the Singapore market.
Many tenants along the shopping belt are locked in to their rental rates for up to three years, with the option to negotiate new deals thereafter. Analysts said high-end retailers tend to have the upper hand during such negotiations compared to mass market retailers.
“If the landlord feels that this tenant is important, if it’s a part of the mall’s image that he is trying to build up, he may be a bit more flexible in the rental negotiations. And it’s not just rentals, it could be other terms or incentives like rent-free periods,” said Nicholas Mak, director of Consultancy & Research at Knight Frank. Tan Huey Ying, director of Research & Advisory at Colliers International said: “It depends on when the economy is going to recover. But if the two integrated resorts were to proceed and open as scheduled, then I think there is some likelihood that the market may see a revival in the second half of 2010 or the first half of 2011.”
Source : Channel NewsAsia - 19 Nov 2008

Funds waiting to grab cheap Asian properties
They are raising funds for direct property investments in the region as values slide
AS property values in Asia slide, hedge funds, private equity funds and pension funds are waiting in the wings to swoop in on good buys, according to KPMG’s global head of real estate, Jonathan Thompson. ‘We’re aware that some (hedge funds and private equity funds) have been raising money for distressed situations,’ Mr Thompson told BT.
Investors have been on the lookout. Just last month, Merrill Lynch completed fundraising for its
Asian Real Estate Opportunity Fund, collecting some US$2.65 billion to invest in real estate assets and companies.

Reuters also reported on Wednesday that AMP Capital Investors is trying to raise up to S$2.9
billion for direct property investments in Asia. The Australian fund manager hopes to purchase
Japanese shopping malls at a bargain as falling sales hit retailers and credit tightening squeezes
landlords. Industrial buildings and offices beyond the main financial district in Singapore are other potential targets.

Pension funds are also showing more interest in Asian real estate, said Mr Thompson. According to him, these investors are drawn to growing economies with a structural shortage of properties. The economies would also have to be politically stable, with transparent and sound regulatory systems. ‘(Singapore and Australia) are the easiest countries to invest in,’ he said. Across Asia, Mr Thompson believed that ‘the fundamentals for real estate are better than they are in Europe or America’. But because of the global economic slowdown and tighter credit, property values in Asia will continue to fall. Source : Business Times - 22 Nov 2008

Private home rents may fall 15%
Selling prices of top-end units could drop by up to 22% in months ahead
PRIVATE home rents in Singapore are set to drop by up to 15 per cent next year, as the reality of a slowing economy hits home. Property consultants say landlords are expected to become more flexible, given factors such as ongoing job cuts. ‘The quarters ahead should, however, see a more entrenched rental decline as demand weakens in the face of a global economic slowdown,’ said the report.

Given that the full force of the financial crisis erupted in mid-September, the rental property market has yet to feel the full impact, Savills Singapore said. In terms of top-of-the-market rents, known as prime rents, it expects a fall of 7 to 13 per cent next year. Another consultancy, Knight Frank, is projecting a bigger fall of 10 to 15 per cent in average islandwide rents next year. ‘Some landlords are already cutting rents to retain tenants. We may see more aggressive cuts by landlords if more multinational companies cut their headcounts,’ said Knight Frank’s director of research and consultancy, Mr Nicholas Mak. Next year, landlords in prime areas will have to contend with even more competition as more condos are completed. ‘Those who have advertised for a few months are willing to lower their asking rents but many others continue to hold on to the same asking levels.’

A renovated 1,650 sq ft unit at Pinewood Gardens at Balmoral Park is now available at $6,000 a
month or $3.64 per sq ft - already lower than most other done deals at the development - but a
potential tenant is willing to take it at only $5,000 a month or $3.03 psf, she said.
Source : Straits Times 21 Nov 2008

Savills sees over 20% drop in luxury home prices
Announced forecast for period ending 2009 grimmest yet by any consultancy
Savills Singapore is predicting price drops of more than 20 per cent in the next five quarters for
high-end and super-luxury private homes. This would follow declines of 14.3 per cent and 12 per
cent respectively for these two segments in the first nine months of 2008 from the peak in Q4 last year.

The forecast is probably the grimmest announced by a property consultancy here - although some rival firms BT spoke to yesterday said that privately, they have similar estimates. Research analysts at stockbroking houses/banks have already been making downbeat pronouncements, predicting declines of about 30 per cent or more for luxury home prices byl end-2009.

In its report yesterday, Savills said that the high-end and super luxury segments are more vulnerable to the deteriorating global investment climate. The average capital value for high-end (non-landed) residential homes fell to $2,065 per square foot in Q3 2008, 4.6 per cent lower than the preceding quarter and 14.3 per cent below the Q4 2007 peak of $2,410 psf.
In the super luxury league, the average capital value slipped to $3,240.40 psf in Q3, down 5.2 per cent from the preceding quarter and 12 per cent lower than the Q4 2007 figure.

The fundamentals of the mid-tier and mass-market segments are stronger today than during the Asian Crisis downturn, partly due to Singapore’s more open immigration policy, Savills said.
However, Savills expects rental demand drivers to weaken in coming quarters. Savills’ residential leasing head Patrick Lai says: ‘The inflow of expats is expected to slow down, although we’re still seeing an influx of foreign talent into Singapore, particularly in the healthcare, pharmaceutical, R&D and logistics industries.’
Source : Business Times - 21 Nov 2008

REAL ESTATE AGENTS: Downgraders, bargain hunters are
main clients
THE real estate industry is keeping its head above water as a result of bargain hunters attracted to the falling prices and home owners downgrading to smaller, cheaper properties.
The higher number of sales transactions has translated to better pickings for property agents. Major agencies contacted say they have had better sales for lower-end housing in the last three months.

PropNex’s stable of 5,000 agents sold more than 400 condominium units in the price range of
$1,000 per sq ft or less in that period, up a quarter from the preceding three months.
Sales of HDB flats and low-end landed houses have also jumped 10 per cent.
HSR Property Group, the largest agency here with 8,500 agents, is selling about 2,500 flats and
low-end condo units a month - 5 per cent more than three months ago.
At Dennis Wee Properties, sales - particularly of three and four-room flats - are ‘going strong’.

Two recent launches from the housing board also saw brisk activity, with applicants outnumbering the number of available flats by more than 10 times.
The rise in number of transactions for lower-end units more than makes up for the fall in that for high-end properties, said industry experts, who cite an average 7 per cent drop for that sector.

The downturn has made for good times for agents.
The executive director of HSR Property Group Eric Cheng said in good times, new agents join the industry because they think it is easy to make a quick buck. The pie is split among more people. ‘But in a downturn, the number of agents falls and each tends to earn more,’ he added.

Mr Ryan Tan, 40, for example, has sold 12 properties this month, up from five last month. His
clients are moving from prime areas to the suburbs, with many saying they need the extra cash.
His clients would know what it is like to be in the shoes of teacher C.Y. Leow, 51, who sold her
five-room private apartment in Somerset two months ago after losing $150,000 in Minibond
investments - money that was to be her retirement nest egg. She and her family will move into a
five-room Bishan flat next month- a move that nets her about $750,000.
PropNex chief executive Mohamed Ismail said the business seems recession proof. ‘At the end of
the day, everyone needs a roof over their heads. An agent will always have a job in any market.’
Source : Straits Times - 24 Nov 2008

S’pore govt will not implement measures to stimulate property
sector
The Singapore government will not introduce measures to stimulate demand or prop up prices
artificially in the property sector.Speaking at an industry event on Wednesday, National
Development Minister Mah Bow Tan said such efforts are not sustainable.
Developers are feeling the heat from the economic downturn, credit crunch and poor consumer
confidence, and many new project launches have been shelved. To boost property demand, some
developers hope the government could relax some of its policies, such as reviving the Deferred
Payment Scheme, reducing the development charge rate and introducing property tax exemptions. Source : Channel NewsAsia - 26 Nov 2008

Buyers paying less cash for HDB resale flats
Some deals may be done at valuation but no drop in prices; big flats moving slowly
THE private home market is at a standstill and prices have fallen as the global financial crisis scares buyers away. Yet, the HDB resale flat market remains active and prices are still fairly strong. However, there are increasing signs that this segment of the market is no longer immune to the economic slowdown. ‘In view of the current sentiment, HDB resale flat valuations should stay flat going forward,’ said Mr Lim. ‘So if COV is coming down, prices will eventually come down.’

Prices, however, will not plunge as there is a large base of potential buyers, he said.
Within the HDB market, the segment for small flats will likely be busier than the one for bigger
flats. Already, property experts say the market for bigger flats - five-room flats and executive flats - have started to slow down. ‘In challenging times, homebuyers tend to spend less by falling back on what is deemed a safer and more affordable housing option’ than private homes, according to a recent ERA study.

It also noted that HDB resale flat sales volume was steady in 1997 when the Asian financial crisis
began. The following year, when retrenchments rose, sales volume actually shot up by 57 per cent to 49,618 units. ‘Many people were downgrading from private properties to HDB flats,’ explained Mr Lim. - MR EUGENE LIM, associate director of ERA Asia Pacific
Source : Sunday Times - 30 Nov 2008

News Update for October

2008-10-24T18:48:00.000-07:00

Weakening Property Market squeezes Rental
The leasing market has become the latest casualty of Singapore’s weakening property market, with both residential and office rents posting their first declines since 2004 in the third quarter of this year. According to Urban Redevelopment Authority figures released yesterday, rentals of private residential properties fell 0.9 per cent in the third quarter, compared to a 2.5 per cent rise in the second quarter. Office rents declined 0.8 per cent, swinging from a 6.3 per cent rise in the previous quarter.

Most analysts attributed falling residential rents to the double whammy of increased supply and weakening demand as the financial sector deals with the severe crisis. “Instead of increasing headcount, most multinationals are holding back and waiting, so fewer expatriates are coming in,” said ERA Asia Pacific’s assistant vice-president, Mr Eugene Lim. At the same time, developers are holding off developments of their enbloc sites due to the credit crunch and rising construction costs. They are instead renting out these units, resulting in a sudden surge in supply, added Mr Lim.

Additional supply from completed projects will accelerate rental declines in the coming quarters, said Mr Colin Tan, Chesterton Suntec International’s research head. But this may not necessarily be a bad thing for Singapore. “On a country level, Singapore will now be more competitive, since rentals had started off on the high side,” he said.

Meanwhile, HDB prices continued to show resilience amid the downturn, posting a 4.2-per-cent rise. That was a slight moderation from the 4.5-per-cent increase in the previous quarter, which PropNex chief Mohamed Ismail attributed to the overall drop in median cash-over-valuation (COV) to $19,000.

“It’s interesting to note that the bigger drops in median COV were for five-room flats and executive flats. This is evidence of buyers resisting paying out larger COV for larger properties in this bleak economy,” he said. Still, Chesterton’s Mr Tan finds the 4.2-per-cent hike “extremely disturbing” as it bucks the trend amid deteriorating fundamentals. “It must mean that there is a real shortage of resale flats. This can happen when there are more downgraders than anticipated and secondly, few sellers are upgrading to the private market, because of its affordability.”

Prices in the private residential property market fell 2.4 per cent, worse than the earlier flash estimates of 1.8 per cent. ERA’s Mr Lim noted that some investors hit by the recent stock market plunge have started to offload their properties in “fire sales” to raise cash, although any major price declines going forward depends on the extent of such scenarios and whether developers also start to lower prices. Overall, Knight Frank’s research head Nicholas Mak expects private residential prices this year to contract up to 3 per cent.
Source : Today - 25 Apr 2008

Capitaland holds back investment during Global Credit crisis
Capitaland, Singapore’s largest real-estate developer by assets, will hold back on investments until the global credit crisis shows signs of bottoming, said chief executive officer Liew Mun Leong. CapitaLand is evaluating opportunities to invest about $4 billion of cash and will wait for signs that the rout in financial markets is nearing an end, Mr Liew said. The developer has invested about half of the $9 billion it earned from asset sales over the last two years, he said.
“There are plenty of opportunities floating in front of us,” Mr Liew said. “As I see it now, it’s still not bottoming. You may think it’s cheap but tomorrow, it’ll be cheaper.”

The slowdown has weighed on Singapore housing prices, which fell in the third quarter for the first time in more than four years. “If the current financial crisis is prolonged, smaller companies may actually run into cash flow problems and it may make sense for them to form partnerships or be bought over by companies with stronger balance sheets,” said Mr Wilson Liew, an analyst at Kim Eng Securities, which has a “hold” rating on CapitaLand. “That could present some opportunities and CapitaLand has made some savvy investments in the past.”
Source : Today - 25 Apr 2008

Private properties price index drop 2.4% compared to Q2
The official private home price index slipped 2.4 per cent cent in the third quarter compared with the preceding quarter, according to latest data by Urban Redevelopment Authority (URA) on Friday. ‘Prices of private residential, office, and shop properties decreased by 2.4 per cent, 3.9 per cent and 0.3 per cent respectively in the Q3 2008 while the prices of industrial properties increased slightly by 0.9 per cent in the same period,’ URA said.

‘Rentals of private residential, office and shop properties decreased by 0.9 per cent, 0.8 per cent, and 0.6 per cent respectively in the 3rd Quarter 2008, while the rentals for industrial properties increased slightly by 0.1 per cent in the same period,’ URA said.

In the public housing segment, Housing & Development Board’s resale flat price index rose 4.2 per cent in Q3 over the preceding quarter, lower than the 4.5 per cent quarter-on-quarter gain seen in Q2. The total number of HDB resale applications registered rose by 4.5 per cent, from 7,763 cases in Q2 to 8,112 cases in Q3. The median Cash-Over-Valuation (COV) amount of all resale transactions in Q3 was $19,000 (US$12,646) - slightly lower than the $20,000 COV in Q2. Cases requiring COV constituted 89 per cent of all resale transactions in Q3, with 11 per cent of resale transactions conducted at or below valuation.

Overall median sublet rents for HDB flats rose slightly in Q3. However, subletting transactions fell about 4 per cent from about 4,120 cases in Q2 to about 3,960 cases in Q3. The total number of HDB flats approved for subletting rose to about 21,400 units, compared to about 20,200 units in Q2.
Source : Business Times - 24 Oct 2008

HDB price increases 4.2% as compared to Q2
Singapore’s Housing and Development Board (HDB) released data on Friday that showed prices of resale flats rising by 4.2 per cent in the third quarter, as compared to the previous quarter.
This was in line with estimates released earlier this month.

Sales volume also went up by about four per cent from 7,760 to 8,110 transactions.
HDB said the median Cash-Over-Valuation (COV) amount for all resale transactions for the quarter was S$19,000. This was S$1,000 lower than the median COV in the second quarter.
COV refers to the sum of cash that needs to be paid by a buyer over and above the market valuation of a flat.

HDB said 89 per cent of sales in the open market required COV, while 11 per cent of transactions were conducted at or below valuation.
Source : Channel NewsAsia - 24 Oct 2008

UN awarded Singapore top marks amongst World's cities!
The United Nations (UN) gave Singapore top marks in its latest report on the state of the world’s cities, and has said it is keen to deepen its collaboration with Singapore as a knowledge hub. The UN also called on cities to take on pro-growth policies that support the poor and strengthen infrastructure. It said all these can make a difference when it comes to sustainable living.

The UN said people’s consumption and lifestyle patterns, and not urbanization, are to blame for climate change. To solve the problem, cities need to use less fossil fuel, maximise recycling and have a well-planned transport network. Singapore, which set up an inter-ministerial committee on sustainable development in February, has been highlighted for its low per capita car ownership.

With its greening policy, Singapore has also been singled out as a country that absorbs more carbon dioxide than it emits. Another achievement is that Singapore is the only country with no slums. Director of Monitoring and Research at UN-HABITAT, Banji Oyelaran-Oyeyinka, said: “Obviously, (the) government has taken pro-active steps over a long period of time because it has to be sustained. “One of the problems you find in most countries is they actually start well, but you need constant investment, sustained effort (and) visionary leadership to sustain those kinds of actions.”

The latest UN report by UN-HABITAT, the agency working to boost the liveability of cities, studied 245 cities. The report is a lead-up to the UN World Urban Forum in Nanjing, China in November. It noted another worrying concern of rising sea levels, and Southeast Asia in particular is at the highest risk due to its low elevation.

Singapore has said in parliament in September that it has taken measures in terms of building requirements on reclaimed land and drainage infrastructure. A two-year study to understand the specific implications of climate change, including rising sea levels, is also expected to be ready in 2009.

Director of Centre for Liveable Cities, Andrew Tan, said: “Moving forward, I would say that having achieved the level of environmental quality we have in Singapore, there is still a need for us to maintain these efforts. “It’s necessary for Singaporeans to be proud of what they have achieved, but at the same time, to know that sustained efforts is required.”

The UN has lauded the 43-year-old city state as a model city. However, experts cautioned that as all cities progress, they will no longer be measured just by their level of economic, social and environmental progress. Cities like Singapore will also have to look at its inclusiveness and its quality of life. Related to this, the report said cultural assets too should be protected to nurture the soul of the city.
Source : Channel NewsAsia - 24 Oct 2008

Prime Retail rental prices dropping!
Retail landlords are headed for a rough patch as consumer spending weakens amid the economic downturn and with 3.4 million sq ft of new retail space scheduled for completion next year, property consultants say. Knight Frank’s head of retail Sherene Sng predicts that average rents for prime retail space in Orchard Road and at suburban malls could slip 5-15 per cent in 2009. ‘For super-prime retail space on Orchard Road, the decline, if any, will be capped at around 5-10 per cent at most, because there’s not that much super-prime space around and most of it is in malls that are very well managed,’ she said.

For full-year 2008, Ms Sng expects retail rents island-wide to be pretty much flat, increasing no more than 5 per cent. CB Richard Ellis said yesterday retail rents stagnated in the third quarter of this year, and trimmed its full-year 2008 forecast for prime Orchard Road rents.

It now expects Orchard Road rents to edge up 2-3 per cent in 2008, lower than a 3-5 per cent increase it predicted earlier this year. However, CBRE is maintaining its 3-5 per cent increase forecast for prime suburban mall rents in 2008, due to the captive market of HDB heartland shoppers these malls can count on, as well as limited new supply of retail space in the suburbs.
Some 41 per cent of the 3.4 million sq ft of new retail space slated for completion next year will be in the Orchard Road belt - coming from developments like ION Orchard, Orchard Central, 313@Somerset and Mandarin Gallery.

‘This will bump up total private Orchard Road retail stock some 36 per cent in just 2009 alone and undoubtedly raise concerns about space absorption, despite the fact that retail take-up tended to be somewhat supply-led in the past,’ CBRE said. The biggest contributor to new retail space on the island next year will be The Marina Bay Shoppes at Marina Bay Sands, with 800,000 sq ft of net lettable space, according to CB Richard Ellis. The Downtown Core region, where the development is located, will account for 24 per cent of new retail space being completed here next year.

Knight Frank’s Ms Sng says the big factor affecting retail rents next year will be not so much the completion of 3 million-plus sq ft of new space but a slowdown in sales as people tighten their belts and cut spending due to the economic downturn. ‘This will cause retailers to become more cautious and adopt a watch-and-wait attitude and hold back business plans,’ she said. ‘Some smaller retailers operating as sole proprietorships or partnerships may also be affected by the stockmarket crash. Of course, there will be some retailers that are still doing well - but they too will use the weaker economic climate to secure more attractive rents from landlords when they renew leases or open new stores.’

CBRE’s data shows that in Q3 2008, the average monthly prime retail rent in Orchard Road was $36.80 per sq ft, while the average super-prime rent there was $54.40 psf. The average prime retail rent in the suburbs was $29.30 psf. All three numbers were unchanged from Q2. CBRE’s director (retail services) Letty Lee declined to forecast retail rents going ahead. ‘A number of factors will determine the rate of rental change for the rest of this year and the next,’ she said.
‘The full impact of the financial meltdown on the job market is still unknown. In the meantime, consumers will remain cautious and may cut spending as a result.

‘The financial turmoil will also affect tourism, which will in turn affect consumer spending. Landlords may be pressured to reduce rents as a result. We are still assessing the situation and it is difficult to make a projection at this stage.’ Colliers International said in a report yesterday that while year-end festivities may provide some relief for retailers, consumer spending is likely to remain subdued given the poor economic outlook and the drop in foreign visitors.

Any retail rental growth is therefore expected to be minimal in the last quarter of the year. ‘As such, rents are projected to increase by up to 5 per cent for the whole of 2008,’ Colliers said.
Source : Business Times - 24 Oct 2008

Singapore GIC to invest in Australian GPT Group
The Government of Singapore Investment Corporation (GIC), through its real estate arm, will invest up to A$700 million (S$705 million) in Australian property trust GPT Group. While GPT Group is one of Australia’s largest and most established diversified listed property groups, it has been been hit hard by the current global financial crisis due to foreign currency exposure and the recent decline of the Australian dollar.

Reuters earlier reported that the group had been trying to sell almost a third of its A$14 billion in assets. It added that GPT Group struggled to sell off its Voyages Lodges chain of eco resorts and its US seniors housing business to shore up its balance sheet. In a statement released yesterday, GIC Real Estate president Seek Ngee Huat said: ‘We have always believed in the fundamentals of the Australian economy and its property sector. We see this partnership with GPT as a good fit, and an important part of our investment strategy in Australia.’

GIC RE already has a 2.2 per cent shareholding in GPT Group. GPT Group, which has seen its share price fall over 70 per cent this year, also released a statement yesterday saying that it is making an entitlement offer to raise a minimum of A$1.3 billion. It added that GIC RE would take up its pro rata entitlement as well as be issued with A$250 million in perpetual, exchangeable securities.

GIC RE also agreed to sub-underwrite 504 million securities of the retail entitlement offer. GPT Group will place additional securities to GIC RE such that GIC RE receives a minimum of 250 million securities through its sub-underwriting of the retail entitlement offer. In all, GIC RE is expected to invest between A$450 million and A$700 million in GPT Group and have a shareholding of between 12 and 18 per cent. GPT Group has said that the net proceeds from the entitlement offer will be used to repay debts and deleverage its balance sheet, with its business plan and debt maturities fully funded through January 2010.

The Sydney Morning Herald also reported yesterday that shareholders of the company were intending to launch a class action suit, alleging that GPT Group’s board provided misleading and deceptive earnings guidance - centring around statements made by GPT Group in July, when it released a statement to the Australian Stock Exchange, in which its forecast earnings for the 2008 calendar year were cut by 27 per cent.

Asked if GIC RE was concerned that GPT Group will require more recapitalisation, a spokeswoman for GIC RE said: ‘We believe that GPT has made a realistic assessment and its move for a recapitalisation will be able to strengthen its balance sheet.’ She added: ‘Moreover, our structure of convertible perpetual preferred securities and rights issue participation will provide sufficient downside protection and opportunities for upside in capital appreciation. There is also a reset provision should there be further dilution.’
Source : Business Times - 24 Oct 2008

Chief Justice: Lawyers shouldn't hold on to Client's money
Everyone should join Chief Justice Chan Sek Keong in applauding the Law Society’s agreeing that lawyers should discontinue the practice of holding clients’ money. In a speech made at a recent Law Society event, CJ Chan pointed to the overriding public interest that needed protecting. As ethical standards decline amid financial temptation, questions will persist and, if unanswered, will hasten erosion of public confidence in an essential class of professionals. Client losses, the majority relating to property transactions, have been scandalous enough for the society’s council, in CJ Chan’s words, to ‘have seen the light’. Six lawyers have fled with some $29 million in the last five years. Clients have found it difficult if not impossible to recover their money. Grants from the society’s compensation fund are an inadequate consolation.

The society has since 2004 inspected clients’ accounts and told small firms to submit accountants’ reports. Since July last year, the Legal Profession (Solicitors’ Accounts) Rules have required a second signatory for any withdrawal from a client’s account exceeding $30,000. The case of a lawyer who went missing with $6 million last November made a mockery of those safeguards. Neither has threat of punitive action against those caught stealing clients’ money, nor difficulty for those so disbarred to gain professional reinstatement, proved to be adequate deterrence. Similarly, fraud insurance presents problems, not least of which is the question of premiums. Who should pay: lawyers or clients and, anyway, wouldn’t that imply how untrustworthy lawyers are? So, eliminating the temptation has become a last resort, unfairly pejorative though the implications still may be for the vast majority who uphold professional ethics. It is as watertight a prophylactic measure as there can be, and promises to be much more effective than the piecemeal self-policing the profession has adopted.

As they take shape, details of the arrangement should ensure that clients incur neither more inconvenience nor higher service fees. Indeed, third-party fund custody should make it unequivocally justifiable for them to recover interest accrued on what is held. Small firms should stop citing practicality as an excuse for wanting to hang on to current practice. A secure Internet bank transfer from any account takes only a couple of days and mouse clicks to complete. Instead of increasing book-keeping costs, they should fall, if not disappear, if a third party takes over not only custodial but accounting responsibility. Lawyers will take a big step in reinforcing confidence as they embrace not only the principle but the mechanics of the new measure.
Source : Straits Times - 24 Oct 2008

Property stocks are cheap now!
Wheelock Properties (Singapore) CEO David Lawrence, in his private capacity, is currently investing in Singapore property counters. Although Wheelock is in the business of selling apartments, Mr Lawrence reckons that next year may be a better time to buy condos. Instead, his advice to investors looking for value is to buy property counters at the moment ‘because they are so cheap and can give you great returns over the next couple of years’, he said in a recent interview with BT.

‘The indirect market - which is property counters - is completely out of line with the physical market. So the real value at the moment - and it won’t be there for long - is the indirect market. Some of these shares have come down so much. They’re good companies. ‘It’s an arbitrage opportunity, because they’ve come down so much they bear no relationship to property prices. What’s probably going to happen is that stock prices will go up, property prices will come down a little. They will meet eventually but at the moment there is a big arbitrage opportunity for people,’ he added.

He acknowledged that it will be a tough couple of years for the local property market. ‘But then Singapore is going to be the big beneficiary of this crash, crisis, credit crunch, whatever you call it. Because there aren’t many places like this left to go. I have a lot of international friends - from Europe, India, China, USA - with lots of money who will be retiring or moving to Singapore.
‘When you look around, where else can you get good security, drug-free culture, government investing heavily in new businesses, a reasonable balance between financial services and manufacturing?’

Most importantly, Singapore has integrity in government and the banking and corporate sectors, as well as security. ‘If ever Singapore loses that integrity and security, then it’s finished. But I don’t think it will. It’s ingrained,’ says the 62-year-old, who became a Singapore citizen two years ago.

Singapore will also stand out in the race among global property investment destinations because of the strength of its judicial system, he argues. ‘For me, property investment is all about judiciary. There’s no point going into countries where they are very happy for you to lose money. As soon as you start making money, they want to cut it up. You get sued. It goes to a corrupt judiciary. You don’t make money. I am not interested. Now I think there’s lot of opportunity to invest in financial centres with good judiciaries.’

He takes issue with investment guru Marc Faber who suggests buying property in the countryside, not financial centres. ‘I totally disagree with that. If you buy in financial centres and you buy good-quality products from good developers, you will always be able to let the property. When markets get really bad, and property starts emptying out, people upgrade to the best, and Ardmore Park is a perfect example. . . And long-term, quality property is a good hedge against inflation.’ Ardmore Park is a condo Wheelock launched in 1996, around the height of the property bull run.

Given the current global financial crash, Mr Lawrence acknowledges that Singapore home prices will see a correction, without specifying the quantum of price declines. He does not think the slump will be as bad as the one during the 1997/98 Asian crisis. ‘I don’t think things will be that bad, particularly for good products, because fortunately we have a strong banking system here,’ says Mr Lawrence. ‘We have the Monetary Authority of Singapore and strong banks. They never allowed this crazy lending like they did in other countries. Most people can service their loans.’

Other plus points this time round are low interest rates and huge liquidity in the system, he adds. ‘There will be job losses. Some people might not be able to make their mortgage payments. I think most will, if they have not been speculating in too many properties.’ Wheelock recently collected 25 per cent of sales proceeds for The Cosmopolitan, its fully sold condo at River Valley/Kim Seng roads, when the project received Temporary Occupation Permit. ‘We had a 100 per cent payment on time. No problems,’ he reveals.

Mr Lawrence acknowledges that in the short term, some developers - new players and underfunded ones - will have to cut prices. ‘But the strong boys like (Kwek) Leng Beng and Ng Teng Fong (chairmen of Hong Leong Group and Far East Organization, respectively), these people are not going to cut prices. They’ve been here before. They’ll hold it through to the next cycle, which will come.’ For the Singapore office market, prime Grade A rents may ease about 10 per cent in the next 12 months, Mr Lawrence predicts. But this is ‘OK and reasonable’ given that rents had been getting out of hand previously. ‘But long term, the government has plenty of land to expand. I think as government policy, it’s very important to have reasonably priced office accommodation to expand the Singapore economy in the same way as the government always had reasonably priced industrial land and space to expand the industrial economy.’
Source : Business Times - 23 Oct 2008

Third-quarter showing of Sub-sales still strong but market will soften soon: Experts
Private home prices may have slid in the third quarter but the sub-sale market was still going strong. 96% of owners who resold an uncompleted home between July and last month pocketed profits from the deals, according to new data by property consultancy Savills Singapore. These transactions, officially known as sub-sales, occur when you buy a home and resell it before it is built. They are used as a proxy for property speculation because the owner resells the home without ever living in it.

Only 12 sub-sale transactions out of the 306 that Savills analysed in the quarter incurred a loss, amounting to just under $1 million of red ink. The rest made a total of $95.1 million in gains, Savills said. This continues the trend in the first half of the year, when 97 per cent of such deals turned in profits. But the profits seen in the third quarter were considerably narrower as home prices started softening more quickly.

Profitable sub-sellers made an average of $323,420 in the third quarter, but this was skewed upwards by a single large deal: a whopping $6.7 million profit from the sale of a 63rd-storey penthouse at The Sail @ Marina Bay. Excluding this sale, the average gain was $301,784 - almost 40 per cent lower than the average gain in the first half of the year. It works out to an average profit for each seller of about 30 per cent over the purchase price.

Still, ‘to be able to achieve such gains in a year when the property market has gone into a standstill is highly commendable’, said Mr Ku Swee Yong, director of business development and marketing at Savills Singapore. But in case would-be speculators become tempted by these gains, other consultants noted that the bulk of these deals probably occurred before the Sept 14 collapse of United States investment bank Lehman Brothers, which caused the financial crisis to take a sudden turn for the worse.

‘The real estate market typically lags behind the stock market by six months or more, so we will probably start to see the real effect early next year,’ said Mr Nicholas Mak, director of research and consultancy at Knight Frank. ‘These profitable sub-sale transactions took place before the market hit the skids. It is extremely risky to go and speculate in the market right now.’

Most sellers who made a profit in the third quarter had originally bought their units in the last two years and benefited from the sharp run-up in prices in the period, said Mr Ku. While values have weakened somewhat this year, they are still generally higher than in 2006. Sellers who held on to their units for a longer time before reselling them in the third quarter made more gains, Savills’ data showed. Even those who had bought a unit as late as this year and offloaded it in the third quarter made an average gain of $98,600.

If they had sold the unit in the first half of the year, however, they would probably have doubled their gain. The biggest profits of more than $1 million each were for units at The Sail @ Marina Bay, St Regis Residences and Cairnhill Residences. On the flip side, sub-sale losses for the quarter averaged $76,820 for each loss-making deal. A unit at Watermark Robertson Quay chalked up the biggest loss of $207,552, while units at Soleil @ Sinaran, 8 @ Mt Sophia and One Amber were also sold at losses of more than $100,000 each.

All the losses were for units that had been bought last year or this year, according to Savills’ data. Sub-sellers who had bought their units at the peak of property fever, between June and September last year, bled the most. ‘In any case, there are always desperate sale cases even during good times,’ Mr Ku noted. The Sail @ Marina Bay had the largest number of sub-sales in the quarter - 19 - with each deal netting its seller an average profit of $1.1 million. There was one loss, of $62,890, for a second-floor unit.

Other projects with more than 10 sub-sales included Parc Emily in Dhoby Ghaut, Park Infinia at Wee Nam, Riveredge in Tanjong Rhu and The Esta in Marine Parade. But the profits were not just confined to developments in the prime districts. At Casa Merah in Tanah Merah, 10 sub-sales yielded an average profit of $100,351, while Atrium Residences in Geylang saw four sub-sales with an average gain of $54,556.
Source : Straits Times - 22 Oct 2008

Developers may have to write down their assets and make provisions
Hurt by slowing sales, increasing difficulty in obtaining credit and under pressure to cut home prices, most developers here are expected to announce lower earnings during the current reporting season. Analysts do not have high hopes for the property sector. ‘We can expect to see some drop-off (in earnings) as the rate of launches has fallen off compared to 12 months ago,’ said Kim Eng Research analyst Wilson Liew. Keppel Land will report its earnings today.

On Friday last week, GuocoLand, which has been dogged by negative news all year, reported a net loss of $2.8 million for its first quarter ended Sept 30, compared with a net profit of $27.7 million a year earlier. It attributed the poor result mainly to an unrealised mark-to-market foreign exchange loss. The chief concern now is that tighter credit and declining capital values in all sectors may force companies to write down their assets and make provisions for land acquired at high prices. This happened during the crises of 1998 and 2001.

DBS Vickers analyst Adrian Chua, who recently downgraded six property stocks including CapitaLand, City Developments and Ho Bee Investment, said asset devaluation is a concern.
Deutsche Bank analysts Gregory Lui and Elaine Khoo similarly expect continued earnings downgrades on weak sales and average selling prices (ASPs) and the risk of provisions. ‘We believe CapitaLand and Allgreen face greater risk of land bank provisions this time around, followed by Wing Tai and City Developments,’ the analysts said. ‘Keppel Land has not bought anything in Singapore over the past two years, but offshore investments might be riskier.’
All developers except City Developments, which reflects investment properties at cost, also face the risk of revaluation losses against investment properties, analysts have said.

Another area of concern is overseas exposure, which could affect top lines. At GuocoLand, for example, group revenue fell 20 per cent to $153.1 million from a year ago due mainly to lower revenue recognised from development projects in China. Analysts are split on the effect of weak property markets abroad. Some say this will lead to falls in revenue, while others believe fundamentally sound developers are now being punished by investors for going overseas.
In an Oct 16 report, Goldman Sachs acknowledged that the real estate market outlook is deteriorating at home and overseas - in markets such as China and Vietnam - for Singapore developers. ‘However, we think the market has been too punitive on well-capitalised players with strong overseas operational track records such as CapitaLand and Keppel Land,’ said analysts Leslie Yee and Paul Lian.
Source : Business Times - 22 Oct 2008

FOR sale: Luxurious multi-million-dollar apartments with as much as 20 per cent discount.
Stock market losses have forced some property owners to resort to ‘fire sales’ for a quick return to liquidity. Units for The Sail which were going for $2,000 psf are now offered for $1,450 psf. And because the property market is almost flat, they have had to let go of their property at huge discounts. Property agent Henry Neo receives one SMS a day from different clients asking him to sell their homes. Mr Neo, who has been a property agent for close to 20 years, said: ‘The Asian financial crisis of 1997 and this crisis are real challenges. ‘It’s a tsunami of the stock market.’ Two or three of the 50 clients he is servicing now are what he calls ‘desperados’ - people who had their fingers burnt so badly in the stock market they need to sell their houses.

The situation is worse for those who opted for deferred payment schemes, said Mr Neo, because some are no longer eligible for loans, and cannot meet payments once the developers issue the Temporary Occupation Permit (TOP). ‘They have to get rid of their properties before TOP, so they would be giving even more discounts.’ Noting that the high-end property market seems to be hit the hardest, Mr Neo said: ‘My colleagues who specialise in high-end properties are not doing well. They do not have any transactions at all.’

Mr David Cheang, senior vice-president of the Resale Division at HSR Property Group, noted that two out of every 10 clients are affected by the stock market crash, and are selling their property investments to ‘get more liquidity’. A property agent who declined to give his full name said one of his clients had made such losses on the stock market that he was selling his 27th floor freehold apartment at the Twin Regency for a mere $1.05 million, though its market price is $1.3 million.

Last year, he had sold another unit, on the 29th floor of the same condominium, for $1.4 million.
It is the same story for Mr Felix Young, 35, a property agent specialising in high-end condominiums. Some of his clients are prepared to go as low as 20 per cent below their offer price. He had taken out an advertisement for five properties, all high-end condominium units in the city. Apartments at The Sail at Marina Bay, which were going for $2,000 psf are now being offered for sale at $1,450 psf, said Mr Young.

But even such a huge discount is failing to entice buyers, who are asking for $1,100 psf. That is because even with such discounts, the two-room apartment costs about $1.3 million. In the current climate, not many people would be able to shell out that kind of money because they could be sitting on huge paper losses in the stock market. Mr Young said: ‘Buyers have the sentiment that the property market will cool even more, and prices will drop further.’

And because of this, said Mr Young, there has been a significant drop in transactions - up to 70 per cent for high-end properties that people buy for investments. Most buyers also know developers’ launch price for the condominiums and are holding out until they can get a unit at that price. He said: ‘These days, when buyers call me, they ask me if I have any owners who are ‘bleeding’.’ Bleeding is a term that is used to describe owners who over-committed themselves financially and need to sell their properties in a hurry. Mr Young said: ‘Many of my clients’ bank loans are kicking in soon, so they need to release the properties quickly, before TOP. ‘They are stuck because they can neither sell their property, nor rent it out to cover their mortgages, as the rental market has slowed down a lot.’
Source : New Paper - 19 Oct 2008

Property News Weekly #2

2008-05-05T10:14:00.000-07:00

Credit Crisis over?
That's what Warren Buffet said in the Annual Meeting of his company but sees more pain for people with individual mortgages. The CEO of Berkshire Hathaway said the global credit crunch has eased for bankers, and the Federal Reserve probably averted more failures by helping to rescue Bear Stearns.

The worst of the crisis in Wall Street is over,’ he said last Saturday on Bloomberg Television. The billionaire was interviewed before the annual meeting of the company, which is based in Omaha, Nebraska. Listed as the world’s richest man by Forbes magazine, Warren said the Fed acted properly when it arranged a US$2.4 billion (S$3.3 billion) buyout in March of New York-based Bear Stearns by JPMorgan Chase.

He said he turned down the opportunity to buy the troubled investment bank because he lacked enough capital and time to craft a solution. More failures and wider panic may have resulted if the regulators had not halted the run on Bear Stearns, he added. ‘The worry was that there would be contagion; it was a very real worry,’ he said. ‘If Bear Stearns had gone, the next day, somebody else would have gone. It could’ve been a very, very, very chaotic situation.’

Mr Buffett said he was contacted in March before JPMorgan, the third-biggest United States bank by assets, agreed to buy Bear Stearns. The person calling him, whom he would not identify, was ’someone responsible’ and was not from the Fed or the Treasury. ‘As I understand it, Bear Stearns had US$65 billion due on Monday and I didn’t have US$65 billion,’ Mr Buffett said. ‘I couldn’t get my mind around that situation in the required time.’ New York-based JPMorgan was the right buyer for Bear Stearns, he added.

JPMorgan agreed in mid-March to acquire Bear Stearns, once the fifth-biggest US securities firm, after customers grew concerned about the company’s health and pulled out their money, leaving Bear Stearns short on cash. JPMorgan, which received financial support from the Fed, raised the purchase price a week later to US$10 a share from US$2 to mollify Bear Stearns shareholders who said they were not getting enough.In a question-and-answer session at the shareholder meeting, Mr Buffett said that from a risk perspective, some banks got ‘too big to manage’. Berkshire’s own investment in derivative contracts has recovered US$500 million to US$600 million of lost value since end-March.

Middle Eastern investors still "strong" on South-East Asia real estate market?
That's what Standard Chartered (Stanchart) Bank’s group head for origination and client coverage, Mr V. Shankar thinks so. Stanchart is well-positioned to become a leading player in this area. In the past year, it has advised on more than 40 per cent of the deal flow from Middle East to this region, which totalled US$8 billion (S$10.9 billion).
The figure was up from the US$987 million in the 12 months preceding, and Mr Shankar believes it will continue to rise in the years ahead.

‘The financial ties between the Middle East and Asia are strengthening by the day and we are seeing more East-East relationships being formed,’ he said in a recent interview. Oil and natural gas from the Middle East are vital for China, Japan and all the fast-growing markets in the Asia-Pacific region, which are fast ramping up their infrastructure. And the oil-generated capital and liquidity in the Middle East are fuelling a search for investments with high returns.’

Mr Shankar added that a recent report by McKinsey estimated that Gulf countries would have US$9 trillion to invest by 2020. Stanchart began boosting its presence in the Middle East three years ago and now has a team of 50 corporate advisers there. Mr Shankar, who is also a member of Stanchart’s group management committee, said this put the bank in an enviable position as Singapore’s business with the Gulf looks set to soar. ‘Between 2004 and 2006, total trade between Singapore and the Middle East shot up from US$20.9 billion to US$30.8 billion, an increase of 47 per cent. Currently, Singapore companies are working on more than $6 billion worth of projects in the Middle East.’

Looking ahead, Mr Shankar said the bank would leverage on its experience and capabilities in the region to shore up its position as a major player. ‘Stanchart is well-placed to seize future opportunities, thanks to our growing geographical reach and the scale and breadth of our products and capabilities. We have an established history in Singapore, having been in the market for 150 years, and we have been operating in the Middle East for more than 50 years. We feel we can act as a strong local bank in all the different markets for our clients.’

Small developers may feel the impact of the Credit Crunch
Given the current turmoil in the financial market, some of these small developers might face financing problems as they move to finalise deals, reports BNP Paribas. In fact, some may be forced to cancel the deals and walk away, it warned. The report by the French bank said that most of the collective sales done in the second half of last year were by small private developers, contractor- cum-developers and non-core developers.

They included Soilbuild, Hiap Hoe, Lian Beng, KSH Holdings, Koh Brothers, Popular Holdings, Aspial Corporation and Eastern Holdings. ‘In the near future, we are concerned that some smaller players that have secured big and expensive en bloc sites may walk away from the deals as securing financing is not easy at this time, especially for non-core developers,’ said the recent report.

Already, a small private firm, Bravo Building Construction, said to be backed by a one-time big property player, has bailed out of three collective sale deals. In all three deals, it has had to give up its deposit, which ranged from 1 per cent to 10 per cent of the sale price. The biggest of the three deals was the $516 million purchase of Tulip Garden, for which Bravo had to forfeit its $25.8 million deposit.

Is Government doing enough for Enbloc regulations?
Regardless of regulations and structured conditions, the current laws under the Building Maintenance and Strata Management Act and the Land Titles (Strata) Act (Amendment) are insufficient to patch all loopholes. How can anyone stop creativity in the name of monetary returns?

On April 27, Bayshore Park and Mandarin Gardens both held annual general meetings. These two estates, with more than 1,000 units each, sit on 1 million sq ft of land next to the sea. Both have got a collective sale initiative off the ground, with sale committees elected. With the support of pro-sale residents, voting powers are then used to control the rest of the estate, even though the votes represent only a minority of residents.

In Bayshore Park, the pro-sale group outvoted other residents on crucial issues and in selection of council members. Averaging 60 per cent of votes cast at the AGM, this roughly 20 per cent of residents (as only 30 per cent of owners were represented at the AGM) voted down a proposed increase in maintenance charges in line with current inflation, voted for a lower increase in the sinking fund, voted down crucial replacement of copper pipes in the common corridors and voted down any exploration of corridor upgrading. In addition, they voted for a reduction in council seats to nine, making sure four sale committee members were voted into the council, and ensured that four of the five previous council members retained had exhibited pro-sale inclinations. They made sure two previous council members who did not favour sale were not re-elected. I was one of the two.

At Mandarin Gardens, in a similar vein, the pro-sale camp mustered enough proxy forms to control 65 per cent of the votes in the AGM. They defeated a motion to reduce water ponding of walkways and lift lobbies to improve safety, and passed a resolution to reduce management council (MC) expenditure limits from $300,000 to $50,000 making it almost impossible for the MC to function. Consequently, the incumbent council refused to stand for re-election. Even more devastating, the pro-sale camp fielded no candidates for council. Hence, no council was elected. The law was not broken at either AGM. Just a creative twist to the ending.

Mapletree - Singapore's Temasek property asset management sets to grow even bigger
Mapletree Investments’ total asset size, comprising assets under management as well as on its own balance sheet, has nearly doubled to around $10.5 billion - inclusive of the recently announced acquisition of a $1.7 billion portfolio from JTC Corp - from $5.6 billion a year ago. In a year’s time, it could grow further to $15 billion-$20 billion, Mapletree Investments CEO Hiew Yoon Khong told BT in a recent interview.

The increase will come largely from new private funds the fully-owned unit of Temasek Holdings is starting, including the US$1.5 billion-US$2.0 billion Mapletree India-China Fund (MICF) focusing on development and opportunistic redevelopment of real estate in the two mega markets. ‘This fund will invest in office, retail and residential property,’ Mr Hiew said. The first closing, which has just been completed, has raised US$600 million, contributed equally by Mapletree and an international institutional investor that has declined to be named.

The fund’s second closing, slated for July, will also see Mapletree and the investor putting in US$200 million each, with another US$500 million to US$1 billion to be subscribed by third-party investors. MICF has secured two seed investments in China. One is a residential and retail development named Future City in Xi’an’s Beilin District. The project has a total development value of $196 million and will span almost 1.56 million sq ft in gross floor area. Future City will have four residential towers and a nearly 400,000 sq ft mall to be named VivoCity Xi’an. Construction began in March last year and the development is slated for completion by July 2010. The targeted opening date for the mall is October 2010.

The second seed investment for MICF is an existing office block in Beijing’s Central Business District with a gross floor area of around 400,000 sq ft and an investment value of about $165 million. Upon completion of the acquisition in June 2008, an anchor tenant will lease 35 per cent of net lettable area. ‘We expect to seal a third investment in China soon for MICF - a retail and serviced apartment development in Guangzhou,’ said the 46-year-old former investment banker. As for India, the fund has identified two investments in Bangalore - an office and residential project, and a pure office development.

Over the next 12 months, Mapletree also expects to start sequel funds to the Malaysia-focused CIMB Mapletree Real Estate Fund (CMREF) and the Mapletree Industrial Fund (MIF). The latter has so far bought some $300 million of non-warehouse industrial properties in Singapore, Malaysia and China. ‘For CMREF 2, we are targeting to raise about RM1 billion (S$430 million); CMREF 1’s RM500 million is almost fully invested,’ Mr Hiew said. The group has held back plans to float more real estate investment trusts or Reits in Singapore because of unfavourable financial market conditions. One of these is the Mapletree Commercial Trust, which will hold about $3 billion of Mapletree’s Singapore assets in the HarbourFront and Alexandra Road areas. ‘With the deferment, we’ve been focusing on growing the net income of the initial assets planned for the commercial trust and working on building a strong pipeline of assets for possible acquisition by the trust,’ Mr Hiew said. ‘We’ll launch the trust when the market stabilises, hopefully before the end of the year,’ he added.

The centrepiece of the trust will be VivoCity, valued at about $2 billion. Other assets are likely to include nightspot St James Power Station, HarbourFront Centre, PSA Building and Merrill Lynch HarbourFront, which is slated for completion in the third quarter of this year. The future acquisition pipeline for the trust includes two projects currently under construction - Mapletree Anson, a 19-storey Grade A building at Anson Road/Enggor Street slated for completion in Q3 2009, and Mapletree Business City, which which is expected to be ready in the second half of 2010.
The latter project is being built on the site of the former Alexandra Distripark (Blocks 1-3) and on an adjacent plot at Alexandra Terrace. ‘This will be a modern business campus with about 1.7 million sq ft net lettable area (NLA) comprising an office block and three business park blocks with amenities like a 350-seat auditorium, big function rooms. We’ll have a foyer for cocktails, gym with lap pool, even a childcare centre and convenience store, plus roughly 1,100 carpark lots,’ Mr Hiew said. The development will also have a foodcourt and al fresco-style restaurants.
So far, two tenants, including a financial institution, have leased a total of about 200,000 sq ft. Mapletree Business City will be integrated with Mapletree’s adjacent properties - The Comtech and PSA Building - to form the group’s Alexandra Precinct assets. PSA Building will be directly connected to Labrador MRT Station under the Circle Line opening in 2010.

As for Mapletree Anson, with about 325,000 sq ft NLA, about 40,000 sq ft has been leased so far. ‘The building’s completion in Q3 2009 will be ahead of the completion of the first phase of Marina Bay Financial Centre,’ Mr Hiew noted. Plans to float Embassy Reit here - in partnership with India’s Embassy Group - have also been put on the backburner as structuring issues relating to changes in Indian laws on foreign funding and consequential tax issues are being ironed out first. The proposed Reit will hold business parks in Bangalore.

Property News Weekly #1

2008-04-26T07:46:00.000-07:00

Developers holding back some launches? Why?

Buyers are scarce, investors have vanished. Developers have no confidence of selling at the prices they would love to. Conclusion? Just delay some projects that are ready for market. That's not a problem for most developers as they are extremely well positioned, financially.

The number of homes that could be launched for sale immediately, but have been held back, has increased to 10,239 in the first quarter of 2008, an increase of 44.2 per cent over the 7,099 units in the fourth quarter of last year. This, perhaps, is a reflection of the standoff between developers and buyers.

The Urban Redevelopment Authority’s (URA) indicated that there were 2,526 homes launched, but unsold at the end of the Q1 of 2008, an increase of 22.4% over the previous quarter. PropertyBingo Data Consultant Danny Lim commented; ‘The peak in June 2007 will never be repeated in a long while. There were more than 4700 private transactions, excluding option tradings. In March 2008, we only had less than 800. That's a huge drop in activities and sentiment. It's impossible for the developers to maintain their optimism in setting high margins. However, the mass market will still see some demand for any projects marketing below the $1000psf psychological barrier.’ The 405-unit Waterfront Waves is a good example. Selling at $800 psf, they sold more than 100 units.

According to URA, prices of private residential property increased by 3.7% in Q1 2008 compared to 6.8% in the previous quarter. A few units from existing projects were known to have been sold at above $3,300 psf in Q1 2008, with several units in Marina Collection sold at above $2,600 psf. However, price increases do not mean high demand. As noted by Danny, there were many properties still asking for higher prices as compared to 2007. The Sail, for example, recorded an average of 250-300 sellers but only 5 sold in March.

URA said that the last time the flash estimate of the change in private residential property price index (PPI) was revised downwards by more than 0.5% points was in Q4 2001, when it was pegged downwards by 1.4 percentage points. Take-up rate for Outside Central Region was only 38% whereas the Core Central Region and Rest of Central Region reported healthier take-up rate of 89% and 71% respectively.

The disappearance of speculators from the market may have also dampened sales, as reflected by the lower number of subsales at just 346 transactions, down from 649 in the previous quarter. Subsale prices, however, remained stable, suggesting that panic selling for the time being at least is unlikely. But agents handling projects commented that sellers are less resilent on their asking prices.

URA projects that 56,501 units are expected to be completed between Q2 2008 and 2011, of which 29,685 units are already under construction. The fact remains that developers are able to control their "releases" of units and projects to the market, thus preventing an avalanche of panic selling. Developers can easily cut down supplies during a period of low buying sentiment and maintain their asking prices for a long time.

"This, effectively, helps resellers to maintain reasonable asking prices and not a huge discount. However, for properties fully sold by developers, the players are the resellers." said Danny. At least for now, we don't expect panic selling.

Singapore Property News Summary 02

2008-01-16T08:48:00.000-08:00

US sub-par growth in US will slow down Singapore
Standard Chartered Bank sees challenges for the Singapore economy this year. It says growth may be weighed down by the sub-par growth in the US economy, as well as a sharp slowdown in other developed economies. The British lender has cut its growth projections for Singapore's economy from 5.7 percent to 4.5 percent. This is at the low end of the government's official 4.5 to 6.5 percent range. Cargo ships will still chug along this year, taking Singapore products overseas. But Standard Chartered says easing global demand will see exports slow down further, with spillover effects on sectors linked to trade, such as logistics.

The last time the US economy stagnated in 2001, Singapore went into a recession. However, things may not be as bad this time. Tai Hui, Regional Economic Research Head, Southeast Asia, Standard Chartered, says: "Compared to 2001 when the Singapore economy did go into a recession, the factors are much more positive now. "You have consumption pattern positive, investment sentiment remaining strong. The domestic demand side of the story this time is much more favourable for the Singapore economy, and that's one reason why we expect the growth to moderate and not plunge." Singapore's key growth drivers include the services and construction sectors.

StanChart also expects inflation to hit around 4 percent for the full year, most of it to come in the first half. Tai Hui says: "I think food prices and energy prices will be some of the external factors pushing inflation higher in Singapore. Domestic demand is again very robust. That could give retailers more room to price themselves for profit. Property prices again will be a positive factor driving inflation higher." Also expected to be higher is the Singapore dollar when compared to its US counterpart, which may temper imported inflation. However, StanChart sees other domestic prices pressures like rentals and wages. But it believes there may be some government measures to moderate the increases.

Marina Bay Suites - invulnerable to slow market?
Marina Bay Suites is seeing strong demand despite uncertainty in the market, according to its marketing agents. Both CB Richard Ellis and DTZ Debenham Tie Leung say they've received significant numbers of enquiries from both local and foreign buyers. What goes up may not necessarily come down, even in these uncertain times.

Demand for these luxury apartment units overlooking Marina Bay seems almost immune to external shocks. Ong Choon Fah, Executive Director and Regional Head, Consulting and Research, DTZ Debenham Tie Leung (SEA), said: "The top end of the market is like your blue chip stocks. When the market recovers they're the ones that run first, the price recovery is the fastest. But when the market comes down, a lot of them don't need to sell, so activity may come down but we find there's very good price support." Joseph Tan, Executive Director - Residential, CB Richard Ellis, said: "This is likely to be probably one of the last sites that has views of the Bay so in any property purchase situation, it's still location, location, location."

According to Raffles Quay Asset Management, the prevailing market rate for the Marina area is between S$3,000 and S$4,000 per square foot. And it remains bullish about the capital appreciation from residential units there. Kan Kum Wah, Marketing Head - Residential, Raffles Quay Asset Management, said: "You can see from the first phase of Marina Bay Residences, the price has moved between 25 percent and 75 percent as of today, and we believe that based on the current strong economy, we'll be growing in tandem or even outperform." Each unit in Marina Bay Suites comes with its own private lift lobby and there are just four units per floor. The apartments range from 1,600 to 2,700 square feet in area each. The development also includes three penthouse units, ranging from 4,700 to over 8,100 square feet each. Selected buyer previews for all 221 units will be held later this month.

For more resale value around Marina Bay, check out asking prices of units at www.PropertyBingo.com

Leedon Heights owners may get a breather for extended stay
Property developer GuocoLand is considering allowing former owners of Leedon Heights condominium in District 10 to continue staying on in their units for a limited period of time. This is a goodwill gesture at the request of some residents of the development who want more time to find replacement units. The 23-year-old Leedon Heights, off Farrer Road, was sold to GuocoLand in a collective sale last year for S$835 million.

Together with a S$40 million development charge, the price works out to S$1,062 per square foot per plot ratio. Some owners said they had asked for more time to vacate their units while they looked for replacement units. Karamjit Singh, Credo's managing director, said: "Well, most developers prefer to get on with their demolition construction so as to be able to market their projects. Usually, contractually, owners are allowed up to six months (to vacate their units). "Recently, what some developers with large projects have done is to build showflats within the large land areas at an obscure corner that allows existing occupants to stay on in the units while the new projects are being marketed." This appears to be what GuocoLand may do as well.

Responding to queries from Channel NewsAsia, GuocoLand said it believes that the land parcel is large enough for it to undertake its marketing initiatives for the new development, without inconveniencing the residents. As such, it is considering the request to allow Leedon Heights residents to remain in their homes for a limited period. Leedon Heights sits on a land area of about 48,500 square metres with a plot ratio of 1.6, which can accommodate buildings of up to 12 storeys. Nicholas Mak, director of Knight Frank, said: "It's very unusual for developers to lease back to their owners, after the collective sale.

The reason is because the developers are buying the site only for redevelopment. "For developers to do that - I think that has happened before, during the Asian financial crises - it would usually mean that the developer feels that the market, the primary sales market, is rather weak and is not ready to support the kind of selling price that they have in mind." According to the Urban Redevelopment Authority (URA), there were almost 65,400 private residential units in the pipeline last September. Of these, 41,600 are slated to be completed between this year and 2010.

S$929.5m payout to Ascott owners
CapitaLand Ltd. offered at least S$929.5 million ($648 million) to buy out minority owners of Ascott Group Ltd., after shares in Asia's biggest operator of serviced apartments fell 40 percent over the past eight months. CapitaLand, which owns 67 percent of Ascott, will pay S$1.73 a share to take the company private, the Singapore-based developer said in a statement to the stock exchange.

That values the unit at S$2.78 billion, 43 percent higher than its market worth Jan. 4 before the stock was suspended yesterday. ``Ascott was a severely undervalued stock,'' said Wilson Liew, an analyst with Kim Eng Securities Pte in Singapore. ``Going by the business model of CapitaLand, it does make sense as it allows them greater ease to carry out transactions such as sales of assets.''

CapitaLand, Southeast Asia's largest developer, more than tripled profit in the first nine months of last year as Singapore property values rose and the company built more houses in China. Ascott, Singapore's second-worst performing property stock in 2007, suffered a drop in net income as development costs rose.

Buying Ascott, the biggest operator of serviced apartments in Asia and Europe, will let CapitaLand strengthen ties between the companies' fund and property trust businesses, the developer said in the statement. Ascott, which was suspended yesterday, climbed 3.4 percent to S$1.21 in Singapore on Jan. 4. The shares dropped 18 percent in 2007, a year when the Singapore Property Equities Index advanced 9.3 percent.

CapitaLand, which was also halted from trading, gained 1.1 percent last year and last closed at S$6.25, valuing the developer at S$17.5 billion. ``There's an underlying tone that suggests CapitaLand is very bullish on the hospitality sector,'' Liew said. ``Going into 2008 and 2009, tourism figures in Singapore as well as internationally are expected to remain strong.'' DBS Bank Ltd. is advising CapitaLand on its bid, which also includes an offer to buy stock options for 17.1 million new shares in Ascott. CapitaLand will pay for the purchase through bank borrowings and internal funds, the developer said.

CapitaLand had S$2 billion of cash as of Dec. 31 and will be able to fund the takeover, brokerage DBS Vickers said in a research note today. The developer also agreed to borrow S$600 million for the deal, DBS Vickers said. ``If privatized, cost efficiency would result from greater sharing of services and resources with CapitaLand's other unlisted strategic business units,'' the company said. ``CapitaLand and Ascott will be able to fully integrate their fund and REIT management businesses to increase operational benefits and cost savings.''

Ascott has more than 19,500 rooms in serviced-residence units in 23 countries, including fast-growing economies China, India and Russia. The apartment manager posted a S$34.1 million profit in the third quarter of last year. CapitaLand, which is also one of Singapore's biggest landlords of retail and office space, reported 2007 third-quarter net income of S$563.9 million. Ascott Group sold shares in its first property trust, Ascott Residence Trust, in 2006. CapitaLand will not be making an offer for Ascott Residence.

Are China Property Bonds attractive?
Bonds of China's Agile Property Holdings Ltd. yield 7.17 percentage points more than U.S. Treasuries, double the premium in July and 1.79 percentage points more than the debt of Los Angeles-based KB Home, which has the same credit ratings. Agile, a housing developer in the southern province of Guangdong, and Country Garden Holdings Co., China's most-profitable builder, canceled debt sales in November when borrowing costs climbed. As China's government attempts to cool property prices with limits on lending, developers are in a land grab. Li, who made his fortune in Hong Kong real estate, Chinese billionaire Xu Rongmao, who owns Shimao Property Holdings Ltd., and hundreds of local developers boosted investment 29 percent in the first eight months of 2007, the National Bureau of Statistics said.

``If the government decides to impose further restrictions, most if not all of the developers will go bankrupt, depending on the severity of the restrictions,'' said Eugene Kim, chief investment officer of Hong Kong-based Tribridge Investment Partners Ltd., a $200 million hedge fund. ``That makes us very selective in terms of which bonds we buy and the spreads we require to compensate for risk.'' Kim said he has trades set up that would profit from a decline in prices. New York-based Merrill Lynch & Co., the world's biggest brokerage, rates China property companies ``underweight,'' meaning investors should own a smaller percentage of the debt than contained in benchmark indexes.
Home prices in Shenzhen, a city north of Hong Kong, were 18.6 percent higher in November than a year earlier, according to a National Development and Reform Commission survey. They rose 14.9 percent in the capital city of Beijing and 16.4 percent in Beihai, in Guangxi province. The People's Bank of China last month raised its benchmark one-year lending rate to a nine-year high and increased reserve requirements to the most since at least 1998. The government increased the minimum down payments on apartments to 40 percent from 30 percent in September.
Signs of a shift are already emerging. The nation's largest publicly traded developer, Shenzhen-based China Vanke Co., sold property worth 4.23 billion yuan ($582 million) in November, 18 percent less than in October.

Chinese developers are among the most vulnerable of any group in Asia to downgrades because a slowdown in home sales would deplete cash, said Clara Lau, an analyst at Moody's Investors Service in Hong Kong. ``They have been growing aggressively, with the view that if they don't buy now, it will be more expensive for them later'' to acquire land, Lau said. Standard & Poor's cut the credit ratings of Greentown China Holdings Ltd., the largest builder in Zhejiang province, one level to BB- on Dec. 3 due to ``increasingly aggressive land acquisitions.'' Its $400 million of 9 percent bonds yield 11.2 percent, up from 9.6 percent in November.

The risk of Shimao and Agile defaulting on their debt rose to a record today, credit-default swaps show. The cost of protecting the bonds of Shimao and Agile against default increased by as much as 80 basis points, the contracts' biggest rise, to 560 basis points and 650 basis points, respectively, at 5:13 p.m. in Hong Kong, according to BNP Paribas SA. Each basis point, or 0.01 percentage point, on a contract protecting $10 million of debt from default for five years adds $1,000 to the annual cost.

Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on a company's ability to repay debt. They pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. Bond sales by developers rated at least BB, or one to three levels below investment grade, may rise 10-fold to more than $15 billion, Todd Schubert, a Singapore-based credit analyst at Deutsche Bank AG, said in a Dec. 7 report. Developers issued $1.4 billion of dollar-denominated debt in 2007, compared with about $5.5 billion from their U.S. counterparts, according to data compiled by Bloomberg.

``Each company knows that the window of opportunity is small and they want to be the one to fit through the window,'' Schubert said in the report. Agile pulled a $400 million debt sale in November after its borrowing costs surged to a record. The spread on the company's $400 million of 9 percent debentures due September 2013 widened to 7.17 percentage points from 3.23 percentage points on July 2. That caused the value of the bonds to fall 10 percent.

The premium on $250 million of 5.75 percent notes maturing February 2014 by KB Home, the fifth-largest U.S. homebuilder, rose to 5.38 percentage points from 2.41 percentage points, representing a loss of 5.9 percent. Agile and KB are rated BB by S&P. After reaching a peak of 1.389 million in July 2005, sales of new homes in the U.S. fell to an annual pace of 647,000 in November, a 12-year low, as discounts failed to lure buyers and mounting foreclosures swelled the glut of unsold properties, according to the Commerce Department.

Higher borrowing costs haven't stopped developers betting China's economy, which expanded 11.5 percent in the quarter ended September from a year earlier, will continue to support the housing market. ``Demand in China is huge,'' said Met Luk, a deputy general manager of Agile. ``Together with improvement in the economy, a lot of people are looking for a better living environment.'' Agile said it will add at least 2 million square meters (21.5 million square feet) of land this year. Country Garden Holdings Co., based in Foshan, Guangdong, tripled its land for development to 51.9 million square meters between April and August, according to an Oct. 29 Moody's report.

Cheung Kong Holdings Ltd., the property company controlled by Li, added at least 3 million square meters in the first half of last year, more than triple the acquisitions in all of 2006, its annual report shows. Li hasn't relied on debt to fund purchases in China. ``2008 will be a good year for investing in the property market in China,'' Justin Chiu, executive director of Cheung Kong, Hong Kong's second-biggest developer by market value, said in an e-mail.
China real estate investments by Cheung Kong and Hutchison Whampoa Ltd., Li's largest company, were at a ``historic high'' of more than HK$10 billion ($1.3 billion), and ``would rise,'' Li said in 2006. His net worth is estimated at $23 billion by Forbes magazine. The 79-year-old has a history of overcoming long odds to succeed. Li closed an unprofitable U.K. mobile phone operator called Rabbit in 1993. He returned a year later to start Orange Plc, which he sold in 1999 at a $15 billion profit.

Developers such as Cheung Kong and Sun Hung Kai Properties Ltd., Hong Kong's biggest, ``have been relatively prudent,'' said Hugh Young, a managing director at Aberdeen Asset Management Asia Ltd. in Singapore who oversees $50 billion. ``I don't think they just close their eyes and plunge all their money in China.'' Bondholders, wary that developers are too optimistic, say what happened in the U.S. last year and Japan in the 1990s may be repeated in China.

More than 100 U.S. mortgage lenders were shuttered, scaled back or sold in 2007 as the rate of foreclosures rose to the highest on record and home sales tumbled, according to data compiled by Bloomberg. In 1998, the Japanese government had to put 13.4 trillion yen ($122 billion) into public works as the fallout from a real estate slump lingered. In China, a housing slump may trigger more defaults because banking laws are still being written and a consumer credit rating system doesn't exist, said Yi Xianrong, a finance specialist at the government-backed Chinese Academy of Social Sciences research institute in Beijing. China's National Audit Office said in June it uncovered irregularities involving 15.6 billion yuan of loans in the 2005 results of three of the nation's largest banks. ``We will not know how big this problem is as long as property prices continue to rise,'' Yi said.

What's up for Vietnam's real estate market?
Singaporean businesses are showing their interest in the real estate market in Viet Nam, considering this to be a promising market. “As the political situation is stable and the economy has experienced growth for many consecutive years, the Vietnamese people are getting richer and their demand for housing is high. I suppose this is a potential market,” said Edwin Yu Kwok Kam, Director of the IMC Industrial and Property Investment Company. Edwin said at the Investment Opportunities in Viet Nam forum, which opened in Ha Noi on January 9, that the demand for housing will continue rising in Viet Nam where the property market is in short of supply.

Statistics released at the forum indicated an imbalance between the demand and the supply of apartment and office for rent. In the Ha Noi capital city, almost all apartment and office building projects report an occupancy rate of more than 95 percent. According to the real estate service provider, CB Richard Ellis (CBRE), Ha Noi has 4,924 hotel rooms rated at 3 - 5 stars and the figure remains modest as compared with 20,000 hotels in Bangkok .

Ho Jiann Ching, business development manager from the Ayala International Holdings Ltd. said he has seen a big opportunity in Viet Nam and believed that once entering the market, foreign businesses would be successful. Singapore now ranks second among foreign investors in Viet Nam , with 500 projects, capitalised at 9.7 billion USD.
Dang Dung – Vice President of the Ha Noi Association of Young Entrepreneurs (HAYE)– said almost all Singaporean projects are invested by multi-national groups. Small Singaporean firms, which have capital ranging between 1 and 10 million USD, are yet to come to Viet Nam.

UK property market predicted to continue falling
The UK commercial property market, battered throughout 2007 by falling values, is set to suffer more bad news this week with the publication of the UK annual property index from consultants IPD. Experts who follow the much-anticipated index are confidently predicting that it will show a slump of 15pc in the capital value of UK property from June, when values peaked, including a 4pc to 5pc fall in December alone, revealing that the second half of 2007 was one of the worst in recent memory.

Taking 2007 as a whole, capital values are thought to have slumped 10pc. The pain being felt by property investors has been reflected in the falling share prices of leading UK property companies such as British Land and Land Securities, which have dropped 45pc and 36pc respectively over the past 12 months. The only relief has come from a 5pc uplift in rental income over the 12-month period, which will mean the total return from property in 2007 - capital value plus rental income - will see a fall of 5pc.

However, although last year proved bad news for investors, this year is set to be worse. Paul Bacon, the chief executive of Cushman & Wakefield, the leading property advisers, said: "The big story is that since June capital values have fallen 15pc but for how long is that going to continue? We will see another 10pc fall in the first three to six months of this year. "We had a very, very significant sell-off in the last quarter. At the moment a lot of people are saying, 'This is a buying opportunity, this is the moment to start seriously looking.' " The sell-off in the property sector was highlighted last week when it emerged that the Government of Singapore Investment Corporation had amassed a 3pc stake in British Land.

URA releases flash 4th Quarter 2007 Private Residential Property Price Index
The Urban Redevelopment Authority (URA) released today the flash estimate of the price index of private residential property for 4th Quarter 2007. Based on the estimated price index of private residential property, prices rose from 160.0 points in the 3rd Quarter 2007 to 170.5 points in the 4th Quarter 2007. This represents an increase of 6.6%, compared with the 8.3% increase in the previous quarter (see Annex A)1. For the year 2007 as a whole, the price index rose 31.0%.

URA also released today the flash estimates of the price changes in the three geographical regions for 4th Quarter 2007. Prices of non-landed private residential properties increased by 7.0% in Core Central Region, 7.3% in Rest of Central Region and 7.5% in Outside Central Region in the quarter (see Annex B). In comparison, for 3rd Quarter 2007, prices of non-landed private residential properties increased by 8.3% in Core Central Region, 7.9% in Rest of Central Region and 7.9% in Outside Central Region.

The flash estimates are compiled based on transaction prices given in caveats lodged during the first ten weeks of the quarter supplemented by information on the number of new units sold. The statistics will be updated four weeks later when URA releases the full 4th Quarter 2007 real estate statistics, when more data on the caveats lodged and the take-up of new projects are captured. Past data have shown that the difference between the quarterly price changes indicated by the flash estimate and the actual price changes could be significant when the change is small. The public is advised to interpret the flash estimates with caution.

The Government will continue to monitor prices closely and release relevant price sensitive information in a timely manner. On the supply side, as at 3rd Quarter 2007, there are about 65,400 private residential units in the pipeline, of which about 41,600 new private housing units are expected to be completed between 2008 and 2010. About 38,000 units of the supply in the pipeline (or 58%) have not been sold by developers yet. This does not take into account new sites that will be made available for development through the Government Land Sales (GLS) programme. Prospective home-buyers are advised to take into consideration the ample pipeline supply of private housing, as well as the potential supply from GLS sites, when making decisions on property purchase.

Just a reminder on 2007 3rd Qtr release
Supply in the Pipeline
As at the end of 3rd Quarter 2007, there was a total supply of 65,406 uncompleted units of private housing from projects in the pipeline5 , about 16.4% higher than the 56,182 units as at the end of the previous quarter (see Annex F). Of these 65,406 units, 38,013 units were still unsold. These comprised 1,897 units that had been launched for sale by developers and 6,546 units which had the pre-requisite conditions for sale and could be launched for sale immediately. The remaining 29,570 units with planning approvals did not have the pre-requisite conditions for sale.

However, the pre-requisite approvals for sale, ie sale license from the Controller of Housing and Building Plan approval from the Building and Construction Authority (BCA) could be obtained quite quickly and these units could be made available for sale quite soon, if the developers choose to do so6 (see Annex C-1).

Of the 65,406 units, about 44,484 units are expected to be completed between the 4th Quarter of 2007 and 20107 . Construction has commenced for almost all the units scheduled for completion up to 2008. About 48% of the units that are expected to be completed in 2009 and 2010 are already under construction, while the remaining units not under construction yet can be completed as scheduled8. Details of the supply in the pipeline in the 3 locations are given in Annex C-2.

In addition, more supply will also come from the sites made available by the Government in the 2H2007 Government Land Sales (GLS) Programme, which can yield about 8,000 new units. When sold, the supply from these sites can be made available for sale within the next one year or so. The Government will also make additional supply available in the 1H2008 GLS Programme if necessary.

Apart from the additional supply from GLS sites, there will also be additional supply from new private residential developments on private land which will be coming in for planning approval, including those on sites where the existing developments have been sold en-bloc. This will further increase the number of units that can be made available for sale in the next few years.

Singapore Property News Summary 01

2008-01-03T07:59:00.000-08:00

Why Sub-Prime crisis will remain a crisis till somebody owns up
US homeowner Christopher Aultman stopped writing mortgage cheques. And Charles Prince of Citigroup paid. Some of the US$16.6 billion that Mr Prince's bank estimates it lost on wrong-way sub-prime bets flowed to investors who for the first time were able to wager that US mortgages would collapse. The sub-prime derivatives market created in 2005 by a group of Wall Street bankers made that payday possible.

The derivatives were based on sub-prime mortgages, given to borrowers with bad or incomplete credit. Securities firms packaged and sold that debt in structured financial products where the risk was hidden by investment-grade ratings and the values proved impossible to calculate.

'These structured products were crazy profitable for Wall Street until they blew up,' says Randall Dodd, senior financial sector analyst for the International Monetary Fund in Washington. 'Ultimately it's about excessive risk-taking and greed.' The risks were amplified by the derivatives, contracts whose values are derived from packages of home loans and are used to hedge risk or for speculation. The vehicles allowed investors to bet against particular pools of mortgages.

The magnified losses caused by derivatives made it possible for a small number of defaulting sub-prime borrowers to freeze world credit markets. That's what happened in July after payments in the first quarter stopped on 13.8 per cent of sub-prime mortgages representing 4.8 per cent of total US borrowers. The defaults caused demand for sub-prime securities to dry up. Uncertainty over the value of the financial products spread to investment funds globally. Corporate lending stopped because no one knew what collateral was worth. By Aug 10, the Federal Reserve and the European Central Bank were forced to inject a combined US$275 billion into the banking system to keep money flowing.

The hedging offered by derivatives made investors feel invulnerable, says Paul Kasriel, chief economist at Northern Trust Co in Chicago. 'Derivatives don't reduce risk, they shift risk,' Mr Kasriel says. 'The development of the derivatives market enabled investors to shift risk at a lower cost, and that encouraged them to take on more risk.' From 2001 to 2006, as US home prices rose 50 per cent nationally, owning the debt and guessing that borrowers would keep current paid off. Since July 2006, however, when housing supply began to outstrip demand and the number of late payments started to rise, the short position, or wagering against the performance of mortgages, has prevailed.

Many of those responsible for the economic upheaval caused by sub-prime derivatives have also been its victims.
Mortgage salesmen peddled loans 'based on the borrowers' ability to refinance rather than the borrowers' ability to repay,' said David Einhorn, co-founder of Greenlight Capital LLC in New York and a former director of New Century Financial Corp, the second-biggest sub-prime lender in 2006, at an investors conference in October. If the borrowers defaulted, the mortgage salesmen still got their commissions. Now many of them are jobless and broke. Daniel Sadek, who says his Costa Mesa, California, sub-prime lender Quick Loan Funding catered to borrowers with credit scores as low as 420 out of 850, had to close shop in August when Citigroup cut the company's US$400 million credit line. 'I'm surprised they went under,' says borrower Kathy Cleeves of Tenino, Washington. 'They made a fortune off us.'

Borrowers bought houses and took out equity loans they couldn't afford. That didn't matter. As home prices kept rising they could always refinance. Now many of them face foreclosure. Mr Aultman, a Union Pacific Railroad mechanic with an average credit score of 465, took US$21,000 in cash out of a 2005 refinance with Quick Loan Funding. The payments on his house in Victorville, California, adjusted to US$2,650 this month, almost double what he was paying for the fixed-rate mortgage he had before the refinance. He was planning to refinance again before he discovered that he couldn't qualify.

Bankers bought loans to turn into securities that gave them the highest yield. If the borrowers defaulted, the bankers still got their fees. Now the losses are piling up. The biggest securities firms worldwide are collectively expected to write down about US$89 billion in subprime-related losses in the second half of 2007.

Citigroup, the biggest US bank, said that it will write down as much as US$11 billion in assets on top of US$5.6 billion already announced. It was one of a 'group of five' Wall Street firms that created the sub-prime derivatives market. Morgan Stanley, the second-biggest US securities firm, wrote down US$9.4 billion in mortgage-related investments this week. 'Our assumptions included what at the time was deemed to be a worst-case scenario,' chief financial officer Colm Kelleher said on Dec 19. 'History has proven that that worst- case scenario was not the worst case.' Bear Stearns Cos announced a US$1.9 billion writedown on mortgage losses on Dec 20, sending the New York-based firm to its first quarterly loss since it went public in 1985.

Merrill Lynch & Co, the world's largest brokerage, and UBS AG, Europe's biggest bank by assets, dismissed their chief executives after they reported a combined US$11.4 billion in sub-prime-related losses in the third quarter. Merrill may post an additional US$8.6 billion in losses for the fourth quarter, David Trone, an analyst at Fox-Pitt Kelton Cochrane Caronia Waller, said. 'Derivatives led a lot of people to believe that risk was being dispersed in a way that made things safer, but the risk remained after people thought they'd moved it off their balance sheets,' says Bose George, a mortgage industry analyst at Keefe, Bruyette & Woods Inc in New York.

Investors didn't know what they were buying, says Sylvain Raynes, a principal in New York-based R&R Consulting Inc and co-author of the book The Analysis of Structured Securities. It didn't matter if a certain number of borrowers defaulted because the returns on some parts of the financial instruments were as much as 3 percentage points higher than 10- year Treasury yields. Now the losses are spreading. Florida schools and cities pulled almost half their deposits from a US$27 billion state investment pool linked to sub-prime mortgages.

A hospital management company in suburban Melbourne, Australia, lost a quarter of its portfolio in July on sub-prime-linked investments. Japan's 36 banks booked combined losses of 244 billion yen (S$3.12 billion) in the fiscal first half on sub-prime-related assets, according to the Financial Services Agency. Sumitomo Trust & Banking Co, Japan's fifth-largest bank by market value, says that fiscal first-half profit fell 41 per cent on higher provisions for bad loans. Eight towns in northern Norway, including Hattfjelldal, a village where reindeer outnumber the 1,500 residents, lost a combined 350 million kroner (S$91.3 million) on securities containing sub-prime mortgages. 'We are a stoic people, used to fighting against the forces of nature, so we'll manage,' says Hattfjelldal mayor Asgeir Almaas. 'We won't let this break us.'

Information about investments in derivatives, such as so-called synthetic collateralised debt obligations, was voluminous and available. A lot of it was also unread. 'These documents are not bedtime reading,' Gerald Corrigan, managing director in charge of risk management at Goldman Sachs, told a UK parliament committee. 'You have to work at it.' The three biggest ratings companies - Moody's Investors Service, Standard & Poor's and Fitch Ratings - were forced to lower ratings on a record number of CDOs last month, according to a Morgan Stanley report, as sub-prime-backed securities deteriorated.

S&P says that it downgraded 16 per cent of sub-prime vehicles issued in 2005 and 29 percent of the 2006 vintage. By comparison, the company says it upgraded 0.07 per cent of its 2005 securities and 0.08 per cent of 2006.
Those who bet against the mortgage industry fared better. J Kyle Bass of Hayman Capital Partners in Dallas hired private investigators to help him sniff out the worst lenders. He says that he turned a US$110 million stake into about US$600 million. Deutsche Bank AG's writedowns on sub-prime losses were 2.16 billion euros (S$4.52 billion) - less than they would have been if not for the offsetting short trades of Greg Lippmann, the bank's global head of asset-backed securities trading.

Goldman Sachs avoided the losses other banks suffered by betting that US homeowners would walk away from their debts. John Paulson of New York-based Paulson & Co made similar bets. One of his hedge funds returned 436 per cent in the first nine months of 2007, based on data compiled by Bloomberg. 'The people who dug deep and analysed the underlying collateral of the securities made a lot of money betting against them,' says Girish Reddy, former co-head of equity derivatives at Goldman Sachs and managing partner of Prisma Capital Partners LP in Jersey City, New Jersey.

Nobody paid more dearly than Savannah Nesbit. The six-year-old and her family lost their house in Boston's Dorchester neighbourhood last month after failing to pay a sub-prime mortgage that adjusts higher every six months.
Savannah got her first bicycle for her birthday in August, pink with streamers dangling from the handlebars. She decorated the present from her grandmother with stickers of Dora the Explorer, her favourite animated character. When sheriff's deputies emptied the house and changed the locks, they left Savannah's bike behind. 'She cries about that bike every night, and she wants me to buy her another one, but I can't afford it right now because I have my own financial problems,' says Savannah's grandmother, Anne Marie Wynter, whose home is also in foreclosure.

Sadek's Quick Loan Funding had 700 employees at its 2005 peak. Now Sadek is making payments on three residential properties he mortgaged in a failed attempt to keep his firm afloat. He also owns a restaurant in Newport Beach, California. 'I'm under water,' he says, puffing on a Marlboro Light. 'I'm trying to sell everything, and nothing is being sold.' His attempts to bankroll a film career for his former fiancee, soap opera actress Nadia Bjorlin, came to naught. Last month, Bjorlin returned to her role as Chloe Lane on Days of Our Lives. Mr Aultman, the railroad mechanic, teeters on the brink of foreclosure. He has been trying to modify his loan terms with Countrywide Financial Corp, which now owns his mortgage. 'It's scary, very scary,' Mr Aultman says. 'Sometimes I'll walk through the house and touch the walls and say to myself, 'This is mine.' Moody's, S&P and Fitch continue to be arbiters of the quality of securities, though their reputations have suffered.

The Connecticut attorney general is investigating the three companies, including whether they rank debt against issuers' wishes and then demand payment, whether they threaten to downgrade debt unless they win a contract to rate all of an issuer's securities, and the practice of offering ratings discounts in return for exclusive contracts.
The Securities and Exchange Commission and two other states, New York and Ohio, have launched separate investigations of the ratings companies. Moody's also faces a shareholder lawsuit.

Deutsche Bank recently began meetings to create a new index on another security, Alt-A mortgage bonds. It will allow hedging against defaults by Alt-A borrowers, who have prime credit and get mortgages without verifying their incomes. Investors will also be able to wager that Alt-A homeowners will quit making payments, potentially turning losses into more and bigger paydays.

Foreign Worker's Dorm is no longer a low-down asset
Morgan Stanley has expanded its Singapore real estate investment portfolio to include an unusual asset class - foreign workers' dormitories. An entity understood to be linked to the US bank recently bought three dormitories from JTC Corp for $153 million and is said to have teamed up with a local party to purchase more such properties from the private sector, sources say. 'It may seem an unglamorous property type but the yields can be very attractive and Morgan Stanley has clearly sensed a business opportunity in an area that other foreign funds and property investment groups may not have spotted yet,' a source says. Morgan Stanley is said to be targeting dormitories whose tenants include blue-chip companies that lease space in these facilities for their foreign workers.

Traditionally, most institutional investors go for income-generating commercial properties like offices and retail, as well as industrial (specifically logistics and warehousing). And then serviced apartments started featuring in their portfolios. In Asia, these investors have started to look at non-traditional assets that offer higher yields as well as (residential) property development, because of yield compression for the traditional asset classes they used to focus on. 'Yields on these segments have fallen as more and more investments chase limited assets. You now have superannuation funds from Australia, Reits, and sovereign wealth funds, private equity...,' Mrs Ong says. She suggests that student housing is another sector that foreign funds may target. 'Studies have shown this to be quite a stable source of income. In places like the US and Europe, anything with P&L (income flow) can be Reited or be attractive to institutional investors - like senior housing, nursing homes, self-storage facilities, even prisons,' Mrs Ong notes.

The three dormitories that Morgan Stanley has purchased from JTC are Kian Teck Dormitory in Jurong, Tampines Dormitory and Woodlands Dormitory. Kian Teck Dormitory has 411 units with two types of units - one that can house six to 12 persons per unit, and another for seven to 14 persons per unit. Morgan Stanley unit Avery Strategic Investments bagged the properties following a public tender that closed earlier this year. It was the highest of eight bidders for the dormitories. The sale was completed in the fourth quarter. There are currently over 20 other major dormitories for housing foreign workers in Singapore. Dormitory rentals have been on the rise, especially in the past 12 months. 'There's a shortage of dorms islandwide mainly because of the construction boom. That's why some property investors are starting to look at these facilities,' an industry observer says.

Some industry watchers suggest that property yields for dormitory investors could be around 20 per cent or even higher. 'It depends to a large extent on the length of the balance lease term on the land - the shorter the remaining lease, the higher the return a potential investor will seek. There's a whole range of land leases for dormitories in the market - freehold, 60 years, 30 years and some even as short as 3 + 3 years,' an industry observer explains.

Boom Boom attracts new players
The property boom over the past two years has drawn many new players who are looking to reap the high returns that property development has to offer. Six companies made their maiden property purchases this year, data compiled by property firm CB Richard Ellis (CBRE) show. Among them are companies that have made a name for themselves in other businesses, such as construction company KSH Holdings and brokerage firm Kim Eng Holdings. Others are lesser known, like Duchess Development which was formed by two stockbrokers.

In addition, three other companies - BBR Holdings, Popular Holdings and Eastern Holdings - first made their appearance in 2006 with land purchases. This year, they have gone on to snap up more sites. 'When the market is good, it draws in players who may not have been active before,' said CBRE executive director Jeremy Lake. He noted that many of the new entrants are construction companies that might have decided to take on development risks, after watching their developer clients reap big profits. During a property boom, such risks are lessened. 'If you get your timing right in property, the profits can be substantial,' Mr Lake said.

Experts said that the same trend was seen during the last property boom, which lasted from 1993 to 1996. Companies that did not look at property development in the past are now beginning to do so because of the fatter margins. One example is SuperBowl, which teamed up with its parent company Hiap Hoe to buy two sites for a total of $211.3 million. SuperBowl's managing director Teo Ho Beng told BT that while the company will continue to focus on its core leisure and entertainment business, it will also increase its exposure to property development where the margins are better.

Similarly, KSH Holdings sees good opportunities in property development. The company's chairman and managing director Choo Chee Onn said that his company invested in residential sites this year because the opportunities opened up at the right time. 'Going forward, we will buy more sites if the right opportunities arise,' Mr Choo said in an interview. The company spent $180.8 million on two residential sites this year. The first site, which KSH acquired in June with three other partners, was the construction company's first purchase of a land parcel.

Other companies branching out from their traditional core businesses for the first time this year include electrical and mechanical engineering firm Tee International. However, new developers and developers looking at boutique projects still account for only a small chunk of total purchases in 2007. CBRE's data shows that the bulk of sites sold this year went to big players such as companies linked to banker Wee Cho Yaw (UOL Group, Kheng Leong, United Industrial Corp and Singapore Land), Malaysian tycoon Quek Leng Chan's GuocoLand and property giant CapitaLand.

New and boutique developers together bought some $2.4 billion worth of land sites in 2007, which account for about 5 per cent of total investment sales so far this year. In 2006, such developers accounted for about 4 per cent of all investment sales, while in 2005, the figure was about 3 per cent. However, property analysts warned that these new entrants are by no means guaranteed success. For starters, most bought sites in the more central areas of Singapore, where the price gain is expected to moderate this year even as construction costs are set to keep climbing, leading to a drop in margins. 'For the high-end residential segment, there is now risk of a potential correction,' said OCBC Investment Research analyst Winston Liew.

New developers might not have the resources to keep construction costs down unless they are contractors themselves, experts said. Next year, established developers who have carved out niches are likely to do best, analysts said. 'Going into 2008, we look for developers with specific niches and themes to outperform the sector as a whole,' said CIMB property analyst Donald Chua. The research firm believed that listed smaller-cap developers are likely to trade at a discount to target valuations in 2008. OCBC's Mr Liew advocated being defensive when choosing property developer stocks. 'We prefer developers that are domestic focused with substantial pre-sold projects, opportunities to unlock value from investment properties and finally offering valuation upside,' he said.

$2500psf for United House office? You bet!
The strata office market is still running hot. A first-storey freehold office unit at United House, behind Le Meridien Singapore Hotel in Orchard Road, went for $2,497 per square foot of strata area at a Colliers International auction last week. The last transacted price in the development was $1,601 psf for a 710 sq ft unit on the fifth level in April this year.

However, the highest unit price for a strata office unit here appears to be $3,050 psf, at The Central, a 99-year leasehold development above Clarke Quay MRT Station. Developer Far East Organization is said to have sold the entire 21st level of one wing of its V-shape, 25-storey office tower for $40.7 million several months ago. The space comprises units #21-89 to #21-99, adding up to a total strata area of 13,337 sq ft. BT understands the buyer is a shipping company.

The $3,050 psf surpassed the previous record, set in the same building, when Far East sold the entire 24th level in the same wing for $2,850 psf, also this year. While The Central's mall has already opened, its office tower, and small office, home office (Soho) block are expected to be ready in the first half of next year.

In the Orchard Road area, unit #01-01 of United House was auctioned by Colliers on Dec 19 for $7.5 million. The road-fronting unit - with a strata area of 3,003 sq ft - is subdivided into two smaller units that have been leased out at a total monthly rent of $13,260, with the last lease expiring in October 2008. This presents an opportunity for the property's new owner - understood to be a low-profile Singapore investment company - to enjoy a higher yield when the lease is renewed or a new tenant found. Grace Ng, Colliers deputy managing director (agency and business services) and auctioneer, attributes the unit's appeal not just to current demand for offices but to United House's potential for a collective sale.

The strata office market in other parts of Singapore also continues to buzz. At Suntec City, units on the 23rd and 27th floors have changed hands at prices ranging from $2,250 psf to $2,313 psf lately, according to caveats captured by SISV Services' Realink system. At International Plaza in Anson Road - another favourite for strata office investors - a unit on the 30th floor was sold for $1,586 psf in October. Nearby, at Shenton House, a couple of adjoining units on the 15th storey changed hands last month at about $1,500 psf. A 10th floor unit at High Street Plaza was sold for $1,714 psf a few weeks ago.

Good Class Bungalow is better class by 40%
The demand for gracious bungalow living is chugging along quite nicely. In fact, average prices of Good Class Bungalows (GCBs) are expected to appreciate by about 10 to 15 per cent next year. This appears even more impressive if you consider that this year, they have already climbed by nearly 40 per cent to $710 per square foot of land area.

The expected appreciation could propel the total value of GCB transactions to increase slightly in 2008, although the number of transactions may be slightly lower, Savills Singapore director (Prestige Homes) Steven Ming predicts.
The first 11 months of this year saw a total of 96 GCB transactions adding up to $1.28 billion. The value is an all-time record and has surpassed slightly the $1.24 billion achieved for the whole of last year. However, the number of GCB transactions from January to November this year is still shy of the 118 for the whole of 2006, according to an analysis by Savills Singapore based on caveats data from Urban Redevelopment Authority's Realis system. 'I don't expect the number of GCB transactions to increase next year, because prices have gone up quite rapidly in the past 12 to 15 months. The GCB market is generally restricted to Singaporeans and Permanents Residents with special approval to buy landed homes.

'Some of these potential buyers may have bought GCBs at much lower prices in the past and may take time to adjust to higher prevailing prices now. But having said that, there's been a lot of wealth creation over the past few years as seen in the reasonable number of record prices being set,' Mr Ming said. Credo Real Estate managing director Karamjit Singh, too, predicts moderate price upside for GCBs for next year, despite forecasting overall flat property prices. 'GCB values will benefit from the enormous wealth created from the economic boom, and the influx of high networth individuals who become permanent residents (PRs), while supply remains scarce,' he adds.

While demand-supply fundamentals remain sound next year for Singapore's real estate sector as a whole, including GCBs, the crucial factor is how the currently-shaky sentiment pans out, Mr Singh said. Record prices were set for two adjacent bungalows at Nassim Road in the past few months - 32G Nassim Road, which was sold for just under $20 million or $1,504 psf of land in September, followed by 32H Nassim Road in October at an even higher $1,899 psf.

Raffles Education founder and chairman Chew Hua Seng is believed to have picked up 32H Nassim Road, for which he paid $25.5 million. Mr Chew is said to own a few other bungalows nearby. The prices achieved for 32G and 32H Nassim Road surpassed the previous record for GCBs, of $1,308 psf set only in August this year, when Hong Kong group Wharf (Holdings) sold Glencaird, a conservation bungalow at 15 White House Park, for $28.8 million.

However, market watchers highlight that for the 32G and 32H Nassim Road transactions, each property's land area is just slightly over 1,200 sq metres - lower than the minimum 1,400 sq metres (or 15,070 sq ft) plot size stipulated under Urban Redevelopment Authority guidelines for GCBs. Savills' Mr Ming argues nonetheless that these two properties will be bound by GCB regulations if they were to be redeveloped. This means that they cannot be more than two storeys high, their built-up area is limited to 35 per cent of the total land area, and the plots cannot be subdivided further.

The year has also seen quite a few GCBs being flipped. 21 Cluny Hill was bought for $15 million in January and changed hands again for $20.2 million in June. 46 Mount Echo Park was sold for $10 million in January and again for $12.8 million in March. 'Some savvy bungalow investors with deep pockets, saw value in investing in freehold GCBs earlier this year, when their prices were lagging quite a bit behind those of 99-year bungalows on Sentosa Cove. The gap has since narrowed and these investors have been able to offload their GCB investment for a handsome profit,' Mr Ming said.

Over at Sentosa Cove, seafronting bungalow sites have fetched as much as $1,696 psf this year. These are vacant sites sold by the precinct's master developer, Sentosa Cove Pte Ltd, to buyers to build their dream homes on them.
The supply of completed bungalows for sale in the upscale waterfront housing locale is still limited, but Savills' director of business development and marketing Ku Swee Yong says that owners are asking for $1,800 psf to $2,400 psf depending on the direction they face. 'The main reason for higher bungalow values on Sentosa Cove than in mainland Singapore is because of expedited approval for foreign buyers of landed property on Sentosa Cove. This has been a great draw for those who want to be PRs in Singapore and park a fraction of their wealth here,' Mr Ku said.

Stars of 2008 - the mid-tier & Mass Market will shine
Next year could be the year of the mid-tier and mass market sectors with prices expected to rise between 8 and 15 per cent. Whether this will happen depends largely on en bloc millionaires, the return of HDB upgraders, the resilience of the Singapore economy, and the possibility of more developers stemming supply and landbanking their redevelopment sites. CBRE Research executive director Li Hiaw Ho expects 10,000-13,000 new homes to be sold, 'with more activity seen in the mid-tier and mass market'.

The number falls short of the estimated total number of 15,000 units sold in 2007. But Mr Li said that, in the event of a downturn, developers who can hold will push back their launches until the market turns around. 'This is possible because most of the collective sale sites are on freehold tenure,' he added. Mr Li also noted that while about 67 per cent of the development sites sold in 2006 were in the prime districts of District 9, 10 and 11, this fell to 49 per cent in 2007. 'More sites outside the prime districts were acquired via the collective sale route in 2007, compared to 2006 when there was more supply in prime areas, and when prices were more affordable,' he added.

Based on total sites sold, CBRE estimates that there could be about 14,000 units ready for launch outside the prime districts next year. This includes a potential 1,600-unit 99-year leasehold condo built by Frasers Centrepoint and Far East Organization in Tampines, and a 630-unit 99-year leasehold condo by Sim Lian Land in Bishan. Savills Singapore director of marketing and business development Ku Swee Yong reckons that of the new launches, the majority would be mid-tier. 'There are not enough launch-ready mass market sites of significant size,' said Mr Ku.
He believes that there could be more mass market sites in the Government Land Sales (GLS) Programme, with prices for the mass market gaining 30-50 per cent, and mid-tier prices rising 20-40 per cent.

Apart from a rising number of new citizens and PRs (permanent residents), Mr Ku expects an influx of integrated resorts-related foreign manpower in the second half of 2008. 'The high-end will be replenished with the re-construction of en bloc sites but the mass market housing for junior level expats and foreign talent will have to come from GLS sites,' he added. Colliers International director of research and consultancy Tay Huey Ying also expects buyers hoping to reap rental returns to make up a significant portion of the mass market.

However, Ms Tay believes that the mass market and mid-tier sectors will no longer be quite as easy to define.
With many developers improving their product to try and price their projects at benchmark levels, Ms Tay says, there is a noticeable blurring of tiers as the higher-end of each tier encroaches into the lower-end of the next tier. 'As such, it would be more appropriate to segmentise the residential property market into seven tiers, namely, mass, upper-mass, mid-tier, upper mid-tier, high-end, luxury and super luxury,' she explained. Colliers' target prices for the mass and upper-mass market developments are below $750 psf, and between $750 and $1,100 psf respectively.
Projected prices for the mid-tier market are from $900 to $1,800 psf, and upper mid-tier market, from $1,800 to $2,500 psf. At these prices, HDB upgraders could be priced out of the private market.

Resale HDB prices are rising with cash-over-valuation now as high as $150,000. Although this is for very select units, sellers are nevertheless holding out for higher resale prices. ERA Singapore assistant vice-president Eugene Lim, for one, does not expect resale volume in 2008 to top the estimated 30,000 units sold in 2007. PropNex CEO Mohamed Ismail reckons that resale prices will rise 10-15 per cent in 2008. In spite of this, he believes interest on mortgages, stamp duty and legal fees will still leave about 10 per cent of HDB sellers in negative equity if they sell now.

Highlighting a recent trend, Mr Mohamed notes that 5-room flats in areas such as Bishan, Bukit Merah, Bukit Timah, Central, Clementi, Kallang, Marina Parade, Queenstown and Toa Payoh commanded cash-over-valuation of $50,000 and above in Q307. He added that buyers were mainly private property downgraders or en bloc millionaires who are also finding private property too expensive.

Sales likely to flatten over last quarter
The number of private homes sold by developers inched up 4.7 per cent to 593 units in November, up from 566 units in October. The Urban Redevelopment Authority (URA) also revealed monthly property market data of transacted benchmark prices as well as median prices. During the month, a significant number of transactions were seen at Amber Residences, which sold 85 units at the median price of $1,392 psf, and Casa Fortuna which sold 103 units at $1,009 psf. CBRE Research executive director Li Hiaw Ho also noted that 20 units at 8 Napier were sold at a median price of $3,557 psf and pointed out that these were likely to have been made by a single buyer.

On the performance in November, Mr Li said: 'Overall, prices are firming. Sales volume and prices in December should remain at the same levels as October and November.' Indeed, developers told BT that launch prices are being maintained even though buyers are now a bit more 'cautious'. UIC Ltd's 192-unit Park Natura, across from Bukit Batok Nature Park, saw 56 units sold in the month at a median price of $945 psf. The price was slightly lower than the October median price of $1,022 but UIC group general manager Vito Koh explained that this was because units sold in November included those with private enclosed spaces like roof terraces. Mr Koh said that the withdrawal of the Deferred Payment Scheme (DPS) have made buyers more cautious but added that he believes developers are not lowering prices to move units. 'Prices are not coming down, but they are not going up either,' he said.

A comparison of the median price of Amber Residence ($1,392 psf) and the reported average selling price ($1,650 psf) does appear to show that prices may have softened a little. According to the URA data, 68 units were sold in the $1,000-$1,500 psf bracket with 16 units sold in the $1,500-$2,000 psf bracket. One unit was sold at between $2,000-$2,500 psf. Jones Lang LaSalle head of research and consultancy Chua Yang Liang noted that launches declined significantly in the Core Central Region (CCR) by 43 per cent from the 166 in October to only 95 in November. 'The take-up or demand further reflects this softer market with 130 units absorbed - a marginal drop of 4 per cent month-on-month (MoM),' he said.

Similarly, demand in the Outside Central Region (OCR) also weakened with a 33 per cent MoM decline or only 173 units absorbed compared to 259 in October. Dr Chua pointed out that this was on the back of a larger supply of 221 units or a 28 per cent increase in the number of units launched. 'The decline in demand in OCR is a likely result of the removal of the DPS,' he explained.

In contrast, the demand in Rest of Central Region (RCR) remained strong. In November, the take-up increased by 57 per cent MoM. Most of the transactions in the RCR were in District 15. 'Take-up in this segment is largely driven by foreign occupiers that has spilled over from the CCR,' Dr Chua added. According to the URA data, there are over 4,000 units in 70 developments with pre-requisites for sale as at end-November. This includes mass-market offerings at Bedok Resevoir as well as high-end developments at Cairnhill.

While developers are not 'panicking' at the possibility of a slowdown in the economy, Cushman & Wakefield managing director Donald Han believes more will be 'repositioning' their launches and going directly to foreign buyers in the Middle East and North Asia. Mr Han, who expects the total volume of transactions in Q4 2007 to be below 2,000 units, added: 'Some developers were already marketing their high-end products at the recent Mipim exhibition in Hong Kong to reach an international market.'

It is a strategy that appears to be working. Savills Singapore director of marketing and business development Ku Swee Yong said he was pleasantly surprised at some of the benchmark prices reached in the high-end sector, with the highest price for the 40-unit Sui Generis at Balmoral Crescent increasing from $2,578 in October to $2,713 psf in November. Six units were transacted in November and the median price rose from $2,406 to $2,474 psf. Saying that he believes that this end of the market would continue to be driven by international high net worth individuals, he revealed: 'We had a client who insisted on being first in queue for The Ritz Carlton Residence.' The client later set a new benchmark price of $4,515 psf for the Cairnhill area.

Singapore Property News Upfront 29

2007-08-30T08:33:00.000-07:00

At an average of $500ppr, will the revamped DC rates dampen redevelopment?
The government yesterday announced what is possibly the sharpest hikes in development charge (DC) rates, which are payable for enhancing the use of some sites or building bigger projects on them. The Ministry of National Development (MND) cited the rise in market values as the reason for the increases.

On average, the DC rate for non-landed residential use was raised by 58 per cent and that for commercial use by 42 per cent. The average DC rate was also increased 23 per cent for hotel use, 11 per cent for landed residential use, and 2 per cent for industrial or warehouse use. But the escalations were much bigger in certain locations - as high as 112.1 per cent for non-landed residential use in the Everton/Spottiswoode Park vicinity and 104.5 per cent for commercial use in the Maxwell Road/Telok Ayer St and Anson Road areas, based on Jones Lang LaSalle's analysis.
The latest increases, which take effect today, are in addition to the 40 per cent across-the-board appreciation in DC rates announced on July 18 arising from a change in formula for computing DC. While yesterday's increases look steep, they did not surprise most market watchers given the substantial appreciation in land values over the past six months.

As to whether the latest hikes will further slow en bloc sales, which have decelerated lately as developers become more cautious about land-banking amid the stock market rout and credit tightening fears, property agents offered a range of views. Credo Real Estate's managing director Karamjit Singh estimates that probably only about 20 to 30 per cent of all collective sale sites have substantial DC components amounting to 10 per cent or more of total land value. 'For many of these sites with high DC component, the increase may have been anticipated and priced in, so things can move on. For those that haven't, their progress for an en bloc sale could be affected if owners are unwilling to lower their price expectations.'

Jones Lang LaSalle's regional director and head of investments Lui Seng Fatt too said: 'Despite the stellar increases in DC rates, the impact of the DC hike on en bloc residential developments remains marginal on most sites, especially freehold sites. Some leasehold sites with substantial DC components, however, may feel the heat.' CB Richard Ellis executive director Li Hiaw Ho said the hikes will to 'a small extent, slow down collective sales'. 'Coupled with homeowners' expectations of high prices for their properties, developers might not be as aggressive in acquiring sites,' he added.

Colliers International's director for research and consultancy Tay Huey Ying said two rounds of DC hikes in July and September, and global credit tightening, will likely lead to more cautious bidding by developers and more realistic price expectations by sellers. Ms Tay said that increases in land prices may not be as phenomenal in the coming six months compared with the past six months. 'But demand for development land should stay healthy as the end-market for residential property is expected to remain healthy on the back of strong economic prospects,' she added.
Analysts noted that in any case, the supply of collective sale sites will slow due to impending changes to en bloc sale rules requiring more safeguards and procedures. DC is specified according to use groups and is listed by 118 geographical sectors or locations across Singapore. The 112% hike in non-landed residential DC rates in the Everton/Spottiswoode Park area was attributed by most analysts to the Spottiswoode Apartment and Oakswood Heights collective sales in April and June at $732 psf per plot ratio and $740 psf ppr respectively - more than twice the land value of $307 psf ppr implied by the July '07 DC rate for the location.

And the DC rate hikes of 107.5 per cent each in the Newton/Surrey/Lincoln roads and River Valley/Jalan Mutiara areas were attributed to the collective sales of Lincoln Lodge for $1,449 psf ppr, and Bishopswalk for $1,544 psf ppr respectively, which are about three times the $492 psf ppr land value implied by the July '07 DC rate for the locations.
The Maxwell Road and Anson Road areas topped the increases for commercial use with gains of 104.5 per cent each, likely due to prices achieved at two recent state tenders for commercial sites at Anson Road. The same two locations also recorded the biggest increases in hotel use rates, at 66.7 per cent each, and again, this was probably due to two hotel sites at Gopeng Street and Tras Street sold by the state at significantly higher land values than implied by July DC rates.

As for industrial DC rates, the highest increase of 15.8 per cent was for the Pasir Panjang/Science Park area, followed by 11.1 per cent hikes in 15 other locations including Henderson Industrial Park, Bukit Merah View, Redhill and Hoy Fatt Rd/Alexandra Road, according to JLL's analysis.
Source: Business Times, 1 Sept 2007
Posted by Property Wizkid

Buying office building: Chevron House leads the pack at $2,780psf. That’s $730m for 81 yrs lease!
CapitaLand and its partners have sold stakes in Chevron House (formerly known as Caltex House) at Raffles Place in a deal that valued the leasehold office block at $730 million or $2,780 per square foot of net lettable area. This sets a new record for an entire office building, surpassing the $2,650 psf set earlier this year for the freehold 1 Finlayson Green. Chevron House stands on a site with a remaining lease of about 81 years.

Market watchers are wondering if a new record price will soon be achieved, possibly for Hitachi Tower next to Chevron House and in which CapitaLand also has a 50 per cent stake. The 999-year leasehold Hitachi Tower, which faces Collyer Quay, was earlier reported to have attracted a top bid of $3,200 psf of net lettable area, following an expression of interest exercise.

However, industry talk now is that negotiations with the top bidder may have met with some hitches - although it is suggested that this does not necessarily mean the deal is off. 'It could just mean that negotiations may now be open with the other bidders,' one observer said. When contacted, a CapitaLand spokeswoman said: 'The owners of Hitachi Tower are negotiating with several parties to divest their interests, and we will make the appropriate announcement if any definitive agreement has been signed.' CapitaLand owns Hitachi Tower jointly with National University of Singapore.

The property giant declined to identify the party to whom it and its partners have sold their stakes in Chevron House. But it is believed to be a foreign fund. 'Globally, in the real estate investment market, it is the international funds that are buying, because that's where the capital is being raised. And you have a whole variety of investors - including private equity, savings (including pensions), professional investment groups,' an industry player said. Jones Lang LaSalle is understood to have brokered the sale of Chevron House.

CapitaLand owns a 50 per cent stake in Chevron House, with IP Property Fund Asia and NTUC Income Insurance Co-operative each holding 25 per cent. The three parties own their stakes in Chevron House through Savu Properties Ltd and under yesterday's deal, are selling their stakes in this company. The completion date of the sale is Sept 24. 'Upon completion, CapitaLand will recognise in its group consolidated accounts a gain of approximately $150.8 million,' the group said yesterday.

The average prime office capital value rose 117 per cent year-on-year in the second quarter of this year to $2,500 psf, while average monthly Grade A office rental value in Q2 this year was $13.10 psf, up 92.6 per cent from the same period last year, according to CB Richard Ellis data.
Source: Business Times, 31 Aug 2007
Posted by Property Wizkid

Soilbuild pays $6.5m DC for Meyer Road site
SOILBUILD Group Holdings has bought the freehold Margate Mansion off Meyer Road for $58 million through a collective sale. The deal reflects a unit land price of $882 psf per plot ratio including an estimated $6.5 million development charge (DC) based on July 18, 2007 DC rates. Provisional permission for a new development has not been obtained, so the $6.5 million estimated DC quantum has not been locked in.

Soilbuild will have to pay DC based on Sept 1, 2007 rates, which most market watchers say will shoot up in tandem with sharp gains in residential land values over the past six months. Asked why Soilbuild announced a deal just a day before the latest DC rates are announced, the group's executive director Low Soon Sim said: 'We have factored in a 20 per cent rise in DC rates for the area come Sept 1, and we see the potential of the area. This is a District 15 site located in the much sought-after Meyer Road residential enclave.'

Margate Mansion's collective sale, which is subject to approval by the Strata Titles Board, was brokered by CB Richard Ellis. The 34,804 sq ft site has a 2.1 plot ratio - the ratio of maximum potential gross floor area to land area. Assuming an average size of 1,500 sq ft per unit, the site can be redeveloped into a new project up to 24 storeys high, with a total of 48 units, Soilbuild said in a statement yesterday. The project may be launched towards the end of next year.

Separately, the Urban Redevelopment Authority launched a tender yesterday for a 5.13-hectare industrial site in Sin Ming Lane. The land has a 2.5 plot ratio and is being sold on 60-year leasehold tenure. Colliers International director (industrial) Tan Boon Leong reckons the top bid is likely to be in the $60 psf per plot ratio range. This would translate to a breakeven cost of $230-250 psf for the completed development.

'If a developer wants to maximise profit, he will build a ramp-up development,' Mr Tan said. The site is zoned for Business 1 use and can be used for clean and light industrial use. It is within the established Sin Ming Industrial Estate. The tender for the site, which is on the confirmed list of the Government Industrial Land Sale Programme, closes on Oct 24.
Source: Business Times, 31 Aug 2007
Posted by Property Wizkid

The eagerly awaited Alexandra condo site is now up for tender
The Urban Redevelopment Authority yesterday asked for tenders for a 99-year leasehold residential plot at Alexandra Road, close to the Redhill MRT station and opposite the Metropolitan, after receiving a minimum bid price that triggered the launch from the Reserve List. The site occupies some 8,559 square metres with a gross plot ratio of 4.9, which can generate a maximum permissible gross floor area of 41,939 square metres. It is zoned for development of condominium or serviced apartments. Property consultancies said the site could be developed into a 40-storey condominium.

Knight Frank managing director Tan Tiong Cheng said that he expects the project to have some 380 units averaging 1,200 square feet in size, given that its height and plot ratio are similar to those of the Metropolitan - a joint project between CapitaLand and Lippo Group. Mr Tan reckons that bids for the site could have been in the region of $400 per square feet per plot ratio (psf ppr) or a lump sum of $180 million and expects the units to fetch average prices of $950-1,000 psf when they are put on the market, given that units in the nearby Metropolitan are fetching some $924 psf in resale prices in the third quarter. CB Richard Ellis executive director Li Hiaw Ho estimates that the site could have drawn bids in a higher range of $650-750 psf ppr. 'This will translate to an average selling price of between $1,200 psf and $1,300 psf, which could be attainable in the second half of 2008,' he said, expecting strong demand to come from upgraders and investors who are looking to rent out the units given its proximity to the city and amenities.

In comparison, the Metropolitan site was purchased by the developers at $350 psf ppr in November 2005. Based on the strong demand seen in Metropolitan where all 382 units were sold within six months, market watchers said that they expect the Alexandra site to draw strong interest from developers given that it is located at the fringe of the established Tanglin housing district which is within a five to 10 minute drive to Orchard Road, the Central Business District, Marina Bay, and the southern waterfront area.

Yesterday, the Housing & Development Board invited tenders for the sale of a commercial site at Toa Payoh Lorong 6, under the Confirmed List of the Government Land Sales Programme. The 99-year leasehold site has a land area of 1,396.8 square metres with maximum allowable gross floor area of 4,190.4 square metres, and is located near the HDB Hub. Its tender will close on Oct 16 and the project is expected to be completed by 66 months from the date of tender acceptance.

Mr Li from CBRE estimates that the site could yield about 34,000 square feet of net lettable area of commercial space and can be developed for a variety of uses including retail, F&B, office and entertainment facilities such as cinemas, bowling alleys and fitness centres. 'It is likely that the successful bidder would devote 100 per cent of the maximum gross floor area for retail use, so as to tap on the large population catchment within the Toa Payoh housing estate as well as workers and visitors at HDB Hub,' he added. 'We expect bids to range between $600 and $700 psf ppr. Assuming that the mall is able to fetch a monthly rent of about $7-9 psf per month, this would provide the developer with a stabilised yield of about 5.5-6 per cent.'
Source: Business Times, 30 August 2007
Posted by Property Wizkid

LaSalle offers $237.2m for office plot next to International Plaza
LASALLE Investment Management (LIM) was the top bidder yesterday for a 99-year leasehold commercial plot next to International Plaza, with a bid of $237.2 million or $941 psf of potential gross floor area. LIM, which bid on behalf of its LaSalle Asia Opportunity III Fund, is planning a 20-storey office development with about 200,000 sq ft net lettable area. 'It'll be a Grade A, 'Gold Standard' building,' said LIM regional director Andrew Heithersay.

LIM managing director (Asia Pacific) Ian Mackie said: 'We may or may not take a joint venture partner for the development.' The office development, near Tanjong Pagar MRT station, will target occupiers looking for cheaper accommodation close to downtown, he added. The project may be completed around late 2009.

LIM's top bid for the 27,281 sq ft plot was 7.8 per cent lower than the $1,021 psf per plot ratio that Mapletree Investments paid for a bigger site across the road last month. The price was lower as the latest site is 'inferior in shape and size, resulting in an office development with a much smaller floor plate of around 12,000 sq ft - compared with 22,000 sq ft for the earlier site - as well as lower efficiency', said an analyst.

A Mapletree unit was the second highest bidder at yesterday's tender, at $800 psf ppr - 15 per cent below LIM's price. The only other bidder, Wing Tai, offered $634 psf ppr. CB Richard Ellis estimates that LIM's bid reflects a break-even cost of $1,700-1,800 psf. 'This would provide the successful bidder with a stabilised yield of around 4.5 to 5.0 per cent, based on a gross monthly rent of $9 to $10 psf,' it said.

However, industry sources suggest LIM is looking at a $13 psf average monthly rent. The Anson Road site will be the maiden Singapore investment for the LaSalle Asia Opportunity III Fund, which is planning to make about US$12 billion worth of acquisitions over the next three to four years. 'Singapore remains one of our primary target markets. We're interested in all sectors - office, retail, industrial, residential and hotel,' Mr Heithersay said.

Earlier acquisitions here by LIM for its other funds include the collective sale of Rainbow Gardens at Toh Tuck Road, and Swissotel Merchant Court hotel, as well as stakes in two hotels opening next year - Crowne Plaza Changi Airport and Ibis Bencoolen Street. LIM, part of the Jones Lang LaSalle group and a leading real estate money management firm, yesterday also announced an A$738 million (S$926 million) acquisition, on behalf of Asia Property Fund, of a 50 per cent stake in the Westfield Doncaster mall development in Melbourne.
Source: Business Times, 29 Aug 2007
Posted by Property Wizkid

5 Days cooling off period in case you change your mind – that’s what the Law says for en bloc sellers
Proposed changes to the law will make the en bloc sale process more transparent and include safeguards to ensure that the various stakeholders get a fair deal. Sales committees will have to be properly formed and elected. Collective sales agreements (CSAs) will be witnessed by lawyers who can clarify doubts and explain terms and liabilities. Even after they sign, potential sellers will have a five-day 'cooling-off period' during which they can change their minds. Even the definition of majority consent has been tweaked.

In the immediate future the changes, which are expected to become law in early October, could serve as a catalyst to speed up the signing of CSAs, says CB Richard Ellis executive director Jeremy Lake. 'Otherwise it appears that everything may have to be unwound and the process restarted under the new law,' he added. But in the longer term, the pace at which en bloc sites have been galloping into the market may slow. This is largely because new rules and procedures - including how sales committees conduct their business - mean it could take a longer time to launch a site for sale. However, the pace of collective sale deals sealed will still depend largely on market conditions, reckons Credo Real Estate managing director Karamjit Singh, who welcomed the spirit of the changes that promote greater transparency.

Law firm Rodyk & Davidson's partner Norman Ho said lawyers' fees for collective sales, usually $3,000 to $4,000 per unit, could double or triple because of the extra work involved - primarily because lawyers will now be required to witness signatures and certify the monthly updates on the consent level. 'This will also aggravate the current shortage of en bloc sale lawyers,' Mr Ho reckons.

Agreeing, Credo's Mr Singh said requiring lawyers to witness signatures will 'create a bottleneck in the process'. Like many in the industry, Mr Ho questioned the need to get lawyers to witness signatures, especially since a cooling-off period is also being introduced. A key amendment is an additional requirement for the definition of majority consent for en bloc sale, to be based on the area of the units in the development.

The existing condition, that requires consent from owners controlling at least 80 or 90 per cent of a development's share value - depending on whether it is more than 10 years old or less, respectively - will still apply. But a second condition will now require consent from owners of units that form 80 or 90 per cent of area in the development - again depending on its age.

This is different from the Ministry of Law's earlier proposal in March, which had sought to peg the second condition of consent on 80 or 90 per cent of the number of units owned in the development. Feedback showed that basing the second requirement on area will mitigate bias against residential owners in a mixed development - who typically have lower share values. At the same time, the requirement would not work against commercial unit owners, especially those whose units have much larger floor areas.

Another big section in the Land Titles (Strata) (Amendment) Bill tabled for first reading in Parliament yesterday by Deputy Prime Minister and Law Minister Prof S Jayakumar governs the formation, composition, constitution and proceedings of en bloc sales committees. A sales committee will have to be elected by more than 50 per cent of owners present at a general meeting of the management corporation before signing of the CSA may begin. Eligibility criteria of committee members are listed and the sales committee will have to convene general meetings to consider key issues such as the appointment of the property consultant and lawyer, apportionment of sales proceeds and the terms and conditions of the CSA.

The sales committee will also have to provide monthly updates - instead of every eight-weekly currently - of the consent level, to keep owners better informed. Every launch for sale must be through a public exercise like a tender or auction. However, the sales committee can engage in follow-up negotiations with any bidder, especially if the tender/auction fails to achieve the desired price. But a sale by private treaty must be concluded within 10 weeks of the close of the tender/auction. Otherwise, the tender will have to be relaunched for sales efforts to resume. Credo's Mr Singh welcomed the 10-week deadline, saying it 'instils discipline as the market has shown itself to be very dynamic'. 'In fast-moving markets, private treaty negotiations do not give you comfort that you are dealing with the best buyer. But a tender does, because you are inviting more participants to the negotiating process rather than limiting yourself to one or two,' he added.

A MinLaw spokesperson said: 'The proposed amendments to the Land Titles (Strata) Act are to provide additional safeguards and to ensure more transparency for all owners, that is, the minority and majority owners, but in a way that does not make it unduly onerous to bring about an en bloc sale.'
Source: Business Times, 28 Aug 2007
Posted by Property Wizkid

Amendment to Land Titles (Strata) Act extended for en bloc sale by majority consent to five more developments
A proposed amendment to the Land Titles (Strata) Act will extend en bloc sale by majority consent to five developments not covered by current legislation - Goldhill Plaza, Goldhill Shopping Centre, Katong Plaza, Roxy Square Shopping Centre and Bukit Timah Shopping Centre.

Strata title certificates were issued for the projects but the original landowner/developer retained the title certificates and instead gave long leases - at least 850 years - to buyers of units. Owners of such units can only do an en bloc sale with unanimous consent - and the approval of the original developer, who owns the reversionary interest in the property.

But the ministry of law proposes to allow them to proceed with an en bloc sale by majority consent. And the original developer's consent will not be required, because if the Strata Titles Board approves an en bloc sale, he will lose all rights to the land.
Source: Business Times, 28 Aug 2007
Posted by Property Wizkid

S'pore still cheaper than HK & Tokyo but can we compare?
Despite rising property costs and wages, Singapore remains cheaper than regional global cities such as Hong Kong and Tokyo, Trade and Industry Minister Lim Hng Kiang has said. He quoted studies which showed that Singapore remains cheaper than other global cities in the region. A survey on global office market rentals by consultants CB Richard Ellis showed that Singapore was 30 per cent cheaper than Hong Kong, and 50 to 60 per cent cheaper than Tokyo.

Mr Lim cautioned however: "'We have to maintain vigilance over our costs, as excessive cost increases will dampen our growth prospects." He was speaking in Parliament yesterday and addressing MPs' concerns about the impact of rising business costs on the Republic's economic competitiveness. Citing as examples London and New York, which are thriving hubs despite their high costs, Mr Lim said "competitiveness is more than offering low costs alone", but also about value creation. This empowers Singapore with attributes that economies in the region cannot easily replicate, such as its livability. Mr Lim also pointed out that in the past three years, the consumer price index has increased at an annual rate of 1 per cent, while overall unit labour cost actually declined at an annual average rate of 2.2 per cent. "However, in recent quarters, we have seen increases in property prices and rentals, as well as wages," he added. He cited recent moves to release land for temporary office space as well as provide more public flats for rental.

The Ministry of National Development (MND) also released additional information on property prices and rents 'to allow the public and businesses to make more informed decisions on property purchases and rentals'. The Government is also looking at ways to help more Singaporeans capitalize on the strong employment market and rejoin the workforce. Addressing media reports of "sky-high" office rentals, Mr Lim said although the median prime office rent in the second quarter was $9.50 per sq ft per month, the median rent in other locations, accounting for about 80 per cent of office space here, was less than half of that.
Source: Asia One, 27 August 2007
Posted by Property Wizkid

Singapore Property News Upfront 28

2007-08-21T04:23:00.000-07:00

As usual, Property Developers top list of Singapore super rich
The property boom, while churning out millionaires by the dozen, has also sprinkled its gold-dust on the billionaires driving the market. Riding the wave, property tycoon Ng Teng Fong, with an estimated net worth of US$6.7 billion, has topped the Forbes Asia 2007 Singapore Rich List, nudging the Khoo family down to second place.

The Khoo family's fortune swelled 14 per cent to US$5.7 billion, but this was nowhere near enough to keep pace with Mr Ng, who controls Far East Organization and Yeo Hiap Seng. From an estimated wealth of US$4.9 billion last year, his fortune grew a staggering 36 per cent, placing him firmly at the top of the table. United Overseas Bank's Wee Cho Yaw and his family came in third with an estimated wealth of US$3.3 billion - a drop from last year's US$3.4 billion.

Occupying fourth spot was China-born property developer Zhong Sheng Jian - now a Singapore citizen - whose wealth was estimated at US$2.5 billion. Kwek Leng Beng of Hong Leong Group is at number five since Forbes Asia divided up his extended family's holdings - an exercise that enabled his cousins Kwek Leng Kee and Kwek Leng Peck, who also have stakes in the group, to make this year's list.

The collective net worth of Singapore's 40 wealthiest increased about 14 per cent to US$32 billion. The top 10 on the list alone have a combined worth of nearly US$23 billion, constituting an impressive 72 per cent of the US$32 billion that the wealthiest 40 are said to possess. According to Forbes Asia, the net collective wealth of Singapore's 40 richest could easily dwarf that of their other South-east Asian counterparts.

The 2007 list was dominated by those in real estate, shipping and palm oil - a clear reflection of Singapore's booming industries - while those in the banking sector saw a slight decrease in fortune in the wake of the recent worldwide downturn in mortgages. The list also boasted a significant number of entrepreneurs. 'If you read through the list, you'll see there are a lot of very highly qualified and successful entrepreneurs here. All these individuals have been very entrepreneurial in finding ways to make money in different industries,' said Mr Justin Doebele, contributing editor of Forbes Asia and project editor, Forbes Asia Rich Lists.

Some 19 of the top 40 saw a growth in their net worth this year, while eight saw a dip in fortunes and one was unchanged. Twelve on the list were newcomers. Among them is fourth-placed Mr Zhong, who has a 71.4 per cent stake in Yanlord Land Group. He attributed his substantial fortune to being able to 'understand the phase that the economy is in at any particular time'.

Founder and CEO of main-board listed Chemoil Corporation, an established supplier of marine bunker fuels, Robert Chandran has a net worth of US$490 million, which placed him at number 14. The Mumbai native, who pursued his masters degree in Manila and made his first fortune in the United States, moved to Singapore recently where he opted for citizenship. He, too, was not on the list last year.

Another new addition to the list, at number 36, is Christina Ong, wife of Malaysian tycoon Ong Beng Seng. Ms Ong is the managing director of Club 21, which owns Ishop and a share in luxury brand Mulberry. The two other women on the list are Olivia Lum, founder of water treatment firm Hyflux, and Margaret Lien, who inherited wealth from late banker husband Lien Ying Chow.

Forbes calculated various fortunes using stock prices and exchange rates as at August 10, 2007. Privately-held wealth was 'estimated'. Mr Doebele said that the spillover effects of the sub-prime mortgage crisis in the US wouldn't change the order of the listings. 'We're looking over a 12-month period so if they drop 10 per cent less over two weeks, that's not going to wipe out the entire gains they've made,' he said.

The cut off for the 2007 list was also upped to US$100 million, nearly double last year's minimum net worth of US$55 million. Still, number 40, chairman and CEO of Creative Technology Sim Wong Hoo, whose wealth was estimated at US$105 million, made the cut with a cool US$5 million to spare.
Source: Business Times, 24 Aug 2007
Posted by Property Wizkid

CapitaLand wants One George Street
Ergo's 50% stake in office building may be priced at $2,500 psf or more. CapitaLand will gain full ownership of One George Street if negotiations to buy German insurer Ergo's 50 per cent stake in the 23-storey award-winning office building are successful. BT understands that the Singapore-listed property company is in talks to buy Ergo's half-stake for about $2,500 per square foot of net lettable area - or higher. At $2,500 psf, the building would be priced at just over $1.1 billion and the half-share CapitaLand would buy from Ergo would be worth about $560 million. CapitaLand and Ergo, a member of Munich Re Group, own roughly equal stakes in the property through their equally owned Eureka Office Fund.

One George Street, completed in late 2004, was a redevelopment of the former Pidemco Centre in South Bridge Road. It was one of three assets that CapitaLand pumped into the $875 million Eureka Office Fund in 2001. The other two were stakes in The Adelphi and Temasek Tower.
Earlier this year, CapitaLand and Eureka sold their stakes in Temasek Tower to Macquarie Global Property Advisors Group for $1.04 billion or $1,550 psf. Temasek Tower is on a site with about 74 years of the original 99-year lease remaining. CapitaLand Group CEO Liew Mun Leong revealed later that the group's listed CapitaCommercial Trust (CCT) made an offer for Temasek Tower but it was less than Macquarie's.

As for CapitaLand's decision to buy the rest of One George Street, a market watcher said: 'Maybe they see greater upside there because it was developed on a fresh 99-year lease, boasts big floor plates of about 30,000 sq ft and is closer to the Raffles Place area.' Analysts reckon CapitaLand may be seeking full ownership of One George Street with a view to injecting it into CCT when it generates sufficient yields as leases are renewed at higher rates. Agreeing, another industry observer said One George Street recently received a tenancy offer for a 4,000 sq ft space at a whopping $16.50 psf a month, but this was rejected by the owners, who may be eyeing even more. 'When the present leases at One George Street were signed, the office market was weak,' an analyst said. But there is upside now as leases are renewed and new leases signed, given the surge in office rents over the past two years.

Major tenants at One George Street include the Royal Bank of Scotland, Legg Mason, hedge fund manager Tudor, Man Financial and Lloyds. At CapitaLand's recent Q2 results briefing, Mr Liew said 'the Singapore office sector will remain a core holding' for the group but that it will reconstitute its portfolio by selling some office assets and investing in new developments. One George Street has almost 450,000 sq ft of net lettable area and has won awards for its architecture and landscaping. It has four skyrise gardens, the biggest of which is on the fifth floor and accessible to the public.

As for The Adelphi in the City Hall area, the Eureka fund initially had full ownership of the 999-year leasehold property but later sold some units, leaving it with 62 per cent of share values, according to a report in February this year. There are plans for a collective sale of The Adelphi, which will provide Eureka an exit. The fund is expected to be wound up once the last of its three assets has been divested.
Source: Business Times, 23 Aug 2007
Posted by Property Wizkid

Capitaland partners Azure City to develop condo in Vietnam
CapitaLand is taking a 75% stake in a joint venture company to develop a high-rise condominium project in Vietnam's Ho Chi Minh City. The Singapore-based property developer will pay US$32 million (S$49 million) for the stake. Its partner, Azure City, a Vietnamese infrastructure and property firm, will hold the balance.

CapitaLand plans to build a 25-storey high-rise development that will yield 1,200 apartments over the next three to four years. The first phase of the development will be ready for launch towards the end of 2008. This will be CapitaLand's fourth residential project in Ho Chi Minh City. The latest project will double the Singapore developer's residential pipeline in Vietnam to 2,800 homes.
Source: ChannelNewsAsia, 22 Aug 2007
Posted by Property Wizkid

What happens when Development Charges go up to 60%?
Average development charge (DC) rates could go up 18-60 per cent for non-landed residential use, 10-25 per cent for commercial use and 10-40 per cent for hotel use come Sept 1, property consultants said. The forecast increases - due to rising land values - would be on top of last month's effective 40 per cent across-the-board increase in DC rates under a change in the formula for calculating them. According to Jones Lang LaSalle regional director and head of investments Lui Seng Fatt: 'The Chief Valuer is most unlikely to let the earlier 40 per cent hike, which was more a policy realignment by the state to get a larger share of the appreciation in land value, influence his decision on the quantums of revision for the Sept 1 DC table, since the rates are meant to reflect the market conditions.' Agreeing, Colliers International director for research and consultancy Tay Huey Ying said: 'We expect the government to maintain the aggressiveness in the upward adjustment of DC rates as seen in the last (March 1) revision. It is unlikely to be deterred by the resulting large hike in DC rates that this dual exercise will cause.'

A surprise change in the DC formula on July 18 creams off 70 per cent of the enhancement in land value arising from higher use or plot ratio, up from 50 per cent. But while this effectively raised DC rates 40 per cent across the board, the July review was based on land values in the March 1 DC table. In other words, the July 18 move was independent of the regular six-monthly DC rates reviews on March 1 and Sept 1 each year, which are based on market value.
DC, which may be payable when a site's use is enhanced or when it is built on more intensively, is specified according to use - such as non-landed residential, landed residential, commercial and hotel, and listed by 118 geographical sectors or locations across Singapore. With recent transacted land values significantly above imputed values based on current DC rates for many locations and use groups, there is room for the Chief Valuer to impose steep increases in the Sept 1 revision, market watchers reckon. They say some developers have been waiting for this before they finalise decisions on acquiring collective sale sites that have a significant DC component. But according to CB Richard Ellis executive director Li Hiaw Ho: 'Even without any revision in the DC rates, developers are likely to take a step back from acquiring sites through collective sales because of the high prices set by owners.

'In addition, the possibility of losing deals because of strong opposition by minority owners is a dampener for developers. Therefore, the rate of collective sales may slow in the coming months.' Citing other factors, Colliers's Ms Tay said: 'Developers are taking a cautious stance not only due to the impending DC rate revision but also because of the volatility of the stock market and possible credit tightening.' According to her, higher DC rates by themselves would not necessarily lead to a slower collective sales market or put a stop to land price escalation. Rather, this depends more on whether developers are confident they can pass on higher costs to buyers, she said. Jones Lang LaSalle expects DC rates for non-landed residential use to escalate 45-60 per cent islandwide on the back of collective sale transactions. Mr Lui predicts a 45-50 per cent rise in DC rates for District 9 locations, where deals such as The Ardmore and Char Yong Gardens have been done at 80 per cent and 92 per cent above land values implied by the current July 2007 DC rates.

The East Coast and Telok Blangah areas are likely to see higher non-landed residential DC rates to the tune of about 35-45 per cent and 25-30 per cent respectively, Mr Lui said. Colliers's Ms Tay expects the average non-landed residential DC rate to rise 18-25 per cent but reckons bigger jumps of 40-50 per cent are likely in Sinaran Drive, Telok Blangah, Bedok/St Patrick's Road and Upper Paya Lebar/Geylang. This is because transactions in these fringe areas since March have been done at prices that were 143-195 per cent above the land values implied by the current July 2007 DC rates.

As for landed residential use, JLL expects an average islandwide increase of 20-30 per cent, with the East Coast posting about 25-30 per cent, District 11 about 40-50 per cent and Sentosa some 20-30 per cent. For commercial use, JLL expects DC rates to go up 20-25 per cent islandwide, while Colliers predicts the increase will average 10-15 per cent. 'We expect DC rates for the Collyer Quay/Marina Bay locations to see the biggest adjustments to the tune of 40 to 50 per cent,' said Ms Tay. 'This is because the $1,540 psf per plot ratio transacted price achieved for the 60-year leasehold Collyer Quay commercial site in October 2006, in the previous review period, still reflects a 220 per cent premium on the land value inferred from the current DC rate for commercial use in this location.'

CBRE's Mr Li expects the biggest jump in commercial use DC rates - about 40 per cent or more - to be for the Shenton Way and Tanjong Pagar micro-markets, where sites and many buildings were transacted in the past two quarters. 'The recent award of Tampines P15 site at the Tampines Regional Centre for $622 per square foot per plot ratio in May could also result in an upward revision of the commercial DC rate for this location,' he said. 'The implied land value based on the DC rate for this sector is about $334 psf ppr.' Colliers expects DC rates for industrial use to remain unchanged for all locations as there has been no clear increase in land prices, while DC rates for hotel use could rise 10-15 per cent on average. JLL forecasts hotel DC rates will rise by an average of 35-40 per cent, given the recent sale of two hotel sites by the state in Tanjong Pagar at prices exceeding their DC rate-implied land values by about 80 per cent. CBRE's Mr Li said that a rise in hotel DC rates come Sept 1 can be expected because the booming tourism market has boosted interest in hotel investment.
Source: Business Times, 21 Aug 2007
Posted by Property Wizkid

Reverse Mortgage may be a good solution for elderly
Property industry players said a new initiative to help older Singaporeans monetise their flats is expected to be popular because it is a viable alternative to the reverse mortgage scheme. The new initiative, announced by Prime Minister Lee Hsien Loong during his National Day Rally speech, is targeted at those aged 62 and above, living in two or three-room flats, and who have only made use of the government's housing subsidy once.

The Housing and Development Board (HDB) will shorten the lease of their flat to 30 years and pay them the value of the lease foregone in cash, through an upfront lump sum and monthly payments for the rest of their lives. They can also stay in their own flats for the remaining 30 years. Property industry players said this move would help many older flat owners derive income from their most valuable assets – their homes. Mohamed Ismail, CEO of PropNex, said: "This scheme really helps people to unlock and monetise their assets. A lot of Singaporeans are asset rich and some of them may have challenges as far as their cash situation is concerned. And currently, there are not many solutions available." Under current schemes, these home owners are allowed to sublet their units, but this would entail a loss of privacy.

A reverse mortgage scheme for HDB flats – introduced in March last year – also drew little interest, with just ten people signing up so far. Assistant Vice President of ERA Realty, Eugene Lim, said: "Previously, the government was trying to implement reverse mortgage, but this was not very well-received especially by the senior citizens. "Number one, they found it difficult to understand, and number two, they didn't have a very good feeling about mortgaging their house which is already paid for." Property watchers said the new scheme could potentially boost demand for three-room flats, which are comparatively scarce in the HDB resale market. "Three-room flats provide a very basic, essential need. And with these things in place, I do think – depending on the outcome of the package – three-rooms will be in better demand," said Mr Mohamed Ismail. The government is also studying other arrangements should a flat owner outlive the 30-year lease period.
Source: ChannelNewsAsia, 20 Aug 2007
Posted by Property Wizkid

Singapore Property News Upfront 27

2007-08-09T12:33:00.000-07:00

More properties sold for $4,000 psf in July
Developers managed to sell 72 homes for more than $4,000 per square foot last month - four-and-a-half times the 16 homes they sold at this price in June, latest figures show but prices are much lower at some projects in other market segments. According to Knight Frank's analysis of official data released yesterday, the big jump came as a result of the launch of Scotts Square by Wheelock Properties (Singapore). Sixty-four of the total 150 units in the project sold by the developer in July were in the above $4,000 to $4,500 psf price band, while the other 86 units were sold in the above $3,500 to $4,000 psf range.

The median price for the 150 units sold at Scotts Square was $3,959 psf, with the lowest price being $3,638 psf and the highest $4,428 psf, according to the Urban Redevelopment Authority's (URA) data on the number of homes in uncompleted projects launched and sold by developers in July. Other projects that saw primary market sales at above $4,000 psf last month include The Orchard Residences, The Marq On Paterson Hill and Cliveden at Grange. 'These were the same developments that contributed to the number of units that were sold above $4,000 psf in June,' Knight Frank said.

The median price for the 25 units sold by City Developments for Cliveden in July was $3,729 psf, with the range of prices being $3,265 psf to $4,162 psf. SC Global sold two units at The Marq in July, at $4,908 psf and $4,978 psf.
The Orchard Residences saw six primary market transactions last month at prices ranging from $2,808 psf to $4,577 psf, with a median price of $4,047 psf. Soon Su Lin, chief executive of Orchard Turn Developments, the project's developer, confirmed that the company has sold a penthouse for $5,500 psf - a new record for a condo in Singapore - but that the transaction was registered only in early August.

Examples of projects with primary market transactions at median prices above $3,000 psf in July include The Lumos at Leonie Hill, Parkview Eclat at Grange Road and Paterson Suites at Paterson Road/Lengkok Angsa. The URA data also showed there were some projects with transactions at much lower prices in other segments of the real estate market. GuocoLand sold 19 units at The Quartz in Buangkok at a median price of $648 psf, with the actual prices ranging from $554 to $749 psf.

Five homes at Suffolk Premier were sold at $481 to $753 psf and six units at La Casa in Woodlands fetched $506-561 psf. Far East Organization sold 13 units at The Lakeshore near Boon Lay MRT Station at $684-866 psf. Brisbane Development sold six cluster landed homes at the freehold Illoura project at Old Holland Road at $970 to $1,175 psf while Clydesbuilt Capital found buyers for two freehold strata-titled detached homes at Lornie 18 at $1,150 psf each. Grensburg Investment sold 65 units at Fontaine Parry at Poh Huat Road at $591-994 psf.

United Engineers sold 365 homes at The Rochester in the one-north precinct at $905 to $1,680 psf.
CapitaLand sold 55 units at The Seafront On Meyer at $1,364-$2,182 psf. Knight Frank's analysis shows that developers sold a total of 1,378 uncompleted homes in July, up nearly 20 per cent from the figure for June. The total number of uncompleted homes launched in July increased 15.7 per cent to 1,315 units over the same period.
Source: Business Times, 16 August 2007
Posted by Property Wizkid

Soleil @ Sinaran condo units 37% sold
Frasers Centrepoint says it has sold 37 per cent of the 417-unit condo, Soleil @ Sinaran near Novena MRT Station, at staff and VIP previews last week. The average price is understood to be around the $1,400 to $1,500 psf range. The average price for the 99-year leasehold project is understood to be somewhere in the $1,400 psf to $1,500 psf range. Frasers Centrepoint declined to comment on the pricing yesterday, ahead of a soft launch tomorrow for those who have indicated interest in the project.

BT understands the project is being marketed by Savills Singapore and Knight Frank. The condo has two 36-storey blocks including units with one, two, three and four bedrooms. Some of the two-bedders come with lofts. The project's four penthouses will each have five bedrooms.

'Soleil @ Sinaran will feature a flagship partnership with Aramsa Spas under which residents will be able to enjoy private spa treatments at their doorstep,' Frasers Centrepoint announced. The condos, designed by Architects 61, will feature spa cabanas as well as entertainment pavilions where parties can be held in a poolside setting.

The entire 20th floor will be dedicated to a sky terrace with an outdoor and indoor gym and a sky garden. Soleil is being developed on a site that Frasers Centrepoint clinched at a state tender that closed in July last year. Its top bid of $238 million worked out to a unit land price of $507 per square foot of potential gross floor area.
Source: Business Times, 15 August 2007
Posted by Property Wizkid

Hitachi Tower, Chevron House attract record bids
The office market continues to sizzle, with an expression of interest for Hitachi Tower at Collyer Quay said to have resulted in a top indicative bid of over $3,200 per sq ft based on existing net lettable area, sources say. Offer of over $3,200 psf for Hitachi Tower will mark new high.

The figure is a record for office space, surpassing the figure of about $2,650 psf set earlier this year for 1 Finlayson Green. Shortlisted bidders for the 999-year leasehold Hitachi Tower are now likely to conduct due diligence before finalising their offers, observers reckon. Bids are believed to have been received mostly from overseas parties. The 37-storey building has about 280,000 sq ft net lettable area. So assuming a top bid of say $3,200 psf, the price would work out to around $900 million.

CapitaLand owns 50 per cent of Hitachi Tower and National University of Singapore the other half. A similar exercise is said to be going on for Chevron House next door, which is believed to have attracted a top bid of about $2,800 psf.
The 99-year leasehold Chevron House - formerly known as Caltex House - is owned by CapitaLand (50 per cent), IP Property Fund Asia (25 per cent) and NTUC Income Insurance Co-operative (25 per cent). The former Pidemco, now part of Capitaland, bought the two buildings from entities linked to Ong Beng Seng in 1999.

The spread in top bids between Chevron House and Hitachi Tower is due to the difference in tenure and the orientation of the properties. Also, some leases at Chevron House are believed to have caps on rental increases, which limits the ability of the building's owner to take advantage of booming office rentals. More office blocks continue to be offered for sale. Colliers International yesterday launched a tender for The Globe at Cecil Street, with an indicative price of $100 million.

The property, being offered for sale by owner Prosper Realty, is being pitched for its redevelopment potential. The $100 million price tag reflects a unit land price of $1,178 psf of potential gross floor area, including two payments the buyer will have to make to the state - an estimated $12.5 million differential premium to build a bigger project on the site and a premium of $9.6 million to top up the 9,080 sq ft site's lease to 99 years from the remaining 75 years.

Under Master Plan 2003, the site is zoned for commercial use with an 11.2-plus plot ratio. Colliers says the successful buyer can apply for additional gross floor area (GFA) of up to 2 per cent. This will boost the plot ratio to around 11.42, allowing a 30-storey office block with 103,694 sq ft of GFA. Colliers has also been marketing Keck Seng Tower in Cecil Street. The tender closed last week, attracting three bids above $200 million or $1,700 psf based on the existing net lettable area. The property is on a 17,322 sq ft site with a lease balance of 72 years.

Yesterday Colliers launched a tender exercise for Cassia View, a 20-storey freehold apartment block in Guillemard Road completed about eight years ago. Owner Melody Development is offering the property - comprising 68 apartments and four penthouses - with vacant possession. The indicative pricing is $80 million or close to $900 psf based on the total strata floor area of 89,361 sq ft. 'The buyer could refurbish the property into a serviced residence or hostel. The location is popular among expats and travellers looking for affordable accommodation,' Colliers executive director (investment sales) Ho Eng Joo says. The tenders for Cassia View and The Globe close on Sept 12.
Source: Business Times, 15 August 2007
Posted by Property Wizkid

HK's Hillcrest Capital makes foray into S'pore
It is expected to launch luxury project on Anderson Road next month. HK based property developer Hillcrest Capital will make its maiden move into Singapore with 21 Anderson, a luxury residential development on Anderson Road. The project, which is expected to be launched early next month, will have 34 units spread over 10 floors. 'We are very bullish on the property market in Singapore,' Hillcrest's managing director Lyon Lau told BT.

The company bought the Anderson Road site in February this year from Habitat Properties for about $112 million. This is thought to have worked out to $1,519 per square foot (psf) based on a total strata area of about 73,710 square feet. In an unusual move, Hillcrest decided not to tear down the old apartment block on the site. Instead, it is keeping the main structure but changing the building's facade, layout and interior design and increasing the floor area. This means it can have 21 Anderson ready for occupation as soon as mid-2008. Usually, developers take two or three years to demolish and rebuild a project. 'We will have a time-to-market advantage,' Mr Lau said. He expects the project to attract interest from people who have sold their homes in collective sales and need replacement properties quickly. Prices at 21 Anderson will be 'competitive', Mr Lau said. Units could go for about $3,000 psf, BT understands.

Hillcrest is looking for other projects in Singapore - residential developments in the prime districts and commercial buildings. At 21 Anderson - designed by local firm Eco.id Architects and Design Consultancy - each unit will have its own balcony and lift and will be equipped with designer furnishing and appliances.
Source: Business Times, 14 August 2007
Posted by Property Wizkid

Hong Leong sells about 60 units of Aalto
Hong Leong Group is said to have sold close to 60 units at its freehold Aalto condo on the former Eastern Mansion site on Meyer Road. The project is priced at around $1,950 per square foot (psf) on average, and so far the development has been marketed mostly overseas - in Indonesia and Hong Kong. Former apartment owners of Eastern Mansion have also bought some units in Aalto, which will have 196 apartments in two 27-storey blocks.

So far, slightly more than 100 units have been released, according to industry sources. The 60 or so units sold vary widely in pricing, from around $1,400 psf to $2,200 psf. Market watchers note the pricing is broadly in line with that of CapitaLand's The Seafront On Meyer launched earlier this year. Caveats have ben lodged for CapitaLand's condo at prices ranging from $1,190-1,950 psf, although industry sources say some units have lately been transacted at above $2,000 psf. Aalto has three and four-bedroom apartments.

Hong Leong is also expected to develop another condo along Meyer Road, on a site it bought earlier this year from Della Suantio Lee, wife of Lee Seng Gee of the Lee Foundation. The group bought Eastern Mansion in a collective sale and an adjoining site at a combined unit land price of about $410 psf per plot ratio in 2005.
Source: Business Times, 14 August 2007
Posted by Property Wizkid

Ong Beng Seng and family buy condo block
Hotel Properties managing director Ong Beng Seng and his family members have bought an entire block of 180 apartments at Costa del Sol on Bayshore Road, for about $200.77 million or $820 per square foot, BT understands. They pay over $200m for 180 units at Costa del Sol in Bayshore area.

The units were sold by the 99-year leasehold project's developer, Japura Development Pte Ltd, a unit of Hong Kong tycoon Li Ka-shing's Cheung Kong Holdings. The 906-unit condo is now fully sold, concluding a 10-year episode for Japura. It bought the site for the condo in early 1997. The shareholders in the entities that bought Costa del Sol's final block are said to include Mr Ong, his wife Christina, her brother David Fu and his wife. Mr Ong's brother, Beng Huat, also has a small stake.

The deal is said to have been driven by Mr Fu. All the 180 units in Block 70 boast unobstructed views of East Coast Park and the sea. They were sold for between $700 psf and $950 psf. The 180 apartments have a combined floor area of nearly 245,000 sq ft. 'The apartments are leased, which means the Ongs and Fus can enjoy immediate rental return on their investment; plus they can look forward to reaping capital appreciation in the not-too-distant future as this segment of the market has not gone up much,' said a seasoned market watcher.

Going by two recent deals in two other blocks in the development - $844 psf for a low-floor apartment and $1,108 psf for a higher-floor unit - the Ong/Fu consortium seems to be already in the money on its investment. The sale of the 180 apartments means that Japura has now fully sold the 906-unit condo, seven long years after it began marketing the project in May 2000. Japura's initial average price was $765 psf but by February 2005, it had trimmed this to $650 psf for a relaunch of about 600 available units then. The project, comprising seven 30-storey blocks, received Temporary Occupation Permit between 2003 and 2004.

Japura paid $683 million or $456 psf of potential gross floor area for the 427,300 sq ft site in January 1997, before the Asian financial crisis hit. Its bid was considered aggressive then, at least 30 per cent above market expectations. The second highest bid in that tender was $351 psf per plot ratio, made by a joint venture between Pidemco Land (now part of CapitaLand) and Malayan Credit (now known as MCL Land).
Source: Business Times, 11 August 2007
Posted by Property Wizkid

Fortune believed to have sold M21 en bloc
Residential project's buyer believed to be a fund representing US, UK investors IN the latest en bloc sale of a new residential project, Fortune Development group is believed to have sold its entire M21 freehold apartment development at Mandalay Road to a group of overseas investors for around $100 million or an average $1,400 per square foot (psf).

M21's showflat was opened for a briefing for sales agents and a small party was held there on Aug 2, but before the weekend was out potential home buyers were told that the whole project had been sold, BT understands. The buyer is believed to be a fund representing US and UK investors. Savills, the project's sole marketing agent, declined to comment on the deal when contacted by BT. The M21 development will be 17 storeys high when it is completed around late-2009 and will have a total of 61 units. These comprise one, two, three and four bedders - all with study rooms/family rooms - and three penthouses. Market watchers reckon the new owner is probably planning to sell the apartments individually in the sub-sale market to ride on the current firm market.

BT understands that in May, Novena Capital (whose shareholders include Fission Development) sold all 24 freehold apartments in its Novelis project at Sinaran Drive near Novena MRT to a Middle Eastern-registered company, for about $25 million or $1,500 psf on average. And the Middle Eastern party is offering the units for sale at about $1,650-$1,700 psf in the sub-sale market. It is understood to have sold four units so far. Last week, Keppel Corp and Keppel Land sold two villa apartment blocks in their Reflections at Keppel Bay condo to the Al-Nibras Islamic Real Estate Fund - a joint venture between Kuwait Finance House and Amanah Raya Berhad - for about $286 million. The 56 waterfront homes in the two blocks were believed to have been sold for $2,000-$2,500 psf. Market watchers note that bulk purchases of apartments by investors have been gathering pace this year, with a view to selling the units for a quick gain and/or renting out the units (particularly for completed developments). In June, seven units at the completed JC Draycott were sold at one go, for $1,825 psf. In late March, Thai tycoon Charoen Sirivadhanabhakdi bought 47 of the 48 apartments at Hoi Hup's Suites @ Cairnhill for $205 million or about $2,550 psf.

Individuals shopping for homes may be miffed if they are denied a chance to buy a unit in a new project directly from a developer because the developer has sold a whole stack of units or even the whole project to bulk buyers. Such individual buyers may then have to buy their dream homes in these projects from these bulk purchasers in the subsale market - at higher prices. However, market watchers say that from the developers' standpoint, the appeal of bulk purchases is that they reduce the risks to developers if an investor is willing to take a chunk of units in a project.

In addition, with the current buoyant property market, developers don't have to give any extra discount to bulk buyers. 'From a developer's viewpoint, it makes no difference whether they sell 50 units to 50 individual buyers or one buyer. The price is the same these days. The bulk buyer, or en bloc buyer, must accept the fact that because of the state of the market, it is difficult to get discounts on bulk purchases,' explains CB Richard Ellis executive director (residential) Joseph Tan.
Source: Business Times, 9 August 2007
Posted by Property Wizkid

70% of The Parc Condo taken up in one week
A JOINT venture between Chip Eng Seng and Lehman Brothers has sold about 70 per cent of their 659-unit freehold project, The Parc Condominium, at West Coast Walk, over the past week. The developers began selling the project on Aug 1 at an initial average price in the low-$800 psf range but this had increased to the high-$800 psf range by yesterday evening, according to the project's sole marketing agent Savills Singapore.

As of 7pm yesterday, about 460 units had been sold and sales were still going on. The Parc Condo's pricing is slightly higher than that of the nearby Botannia condo, where units are going for just over $800 psf on average, up from the initial $700 psf when the project was released around March/April. The 493-unit condo, being developed by a City Developments-CapitaLand tie-up, is about 70 per cent sold. It is being built on a 956-year leasehold site.

Chip Eng Seng and Lehman Brothers are developing The Parc on the former Westpeak site. The acquisition cost of the site in April last year was $206.09 million, reflecting a unit land price of $348 psf of potential gross floor area inclusive of an estimated development charge of $21.5 million then. Savills said that most of those who have bought units in The Parc Condo over the past week are locals, while foreign buyers made up only a small number. 'The local buyers seem to be buying mostly for their own use; we're seeing a lot of young families. Some purchasers also picked up units for their children. Those who sold their Westpeak homes through the collective sale last year were given the first bite of selecting units,' a Savills spokesman added.

The development comprises seven 24-storey blocks. Units range from one bedders (plus study) to five bedders. There are nine five-bedroom apartments of 2,433 sq ft each. Penthouses come with either three or four bedrooms, the majority above 3,000 sq ft, inclusive of roof gardens. A typical three-bedroom apartment costs around $1.1 million.
Source: Business Times, 9 August 2007
Posted by Property Wizkid

Singapore Property News Upfront 26

2007-07-31T00:35:00.000-07:00

Will owners of Horizon Towers pay $1b to HPL & gang?
The Horizon Towers saga has taken a new twist, with the thwarted buyers of the Leonie Hill property moving to claim up to $1 billion from the sellers. After the Strata Titles Board (STB) threw out an application for a collective sale order on Friday last week, the buyers of the Leonie Hill development served notice on the sellers yesterday that they are in breach of contract.

Technically, each of the owners of the 173 units who signed off on the deal to sell Horizon Towers en bloc in February is now personally liable for up to $5.78 million. The move also puts the position of the minorities - the owners of the 37 units who opposed the en bloc sale - in doubt. While they are not being sued, the development means they are now no longer assured of keeping their homes.

Things appeared to be going their way when STB ruled on Friday that the collective sale could not go through because certain legal requirements had not been complied with. It is believed that insufficient notices were posted and some documents were not filed.

STB's decision effectively killed the en bloc sale as it stood because it meant the issue could not be resolved to meet the Aug 11 sale deadline. Minorities cheered the outcome - but now the tide could be turning the other way. Allen & Gledhill (A&G), acting for the buyers - Hotel Properties Limited (HPL), Morgan Stanley Real Estate and Qatar Investment Authority - has sent a letter to Tan Rajah & Cheah, representing the sellers.

A&G alleges the sellers are 'in clear breach of their obligation...to file a proper application to the STB which complied with the requirements of the Act'. It wants the sellers to extend the deadline for the completion of the sale by four months and file a fresh application to STB for a collective sale order, or appeal to the High Court to reconsider STB's decision. 'Our client's current estimation is that its loss, if the contract is terminated, is in the region of $800 million to $1 billion,' A&G said.

The buyers agreed to pay $500 million for Horizon Towers' two 99-year leasehold blocks.
The sellers now have until tomorrow to respond. Some 84 per cent of Horizon Towers owners backed the collective sale - more than the 80 per cent requirement - but STB's approval was still needed for the deal to go through.
Source: Business Times, 7 Aug 2007
Posted by Property Wizkid

The Rochester boasts of highest $1,600 psf
United Engineers has achieved an average price of $1,300 per square foot (psf) after discounts for The Rochester, a 99-year leasehold condo in the one-north precinct. All 366 units sold at $900 to $1,600 psf in benchmark price for District 5. The price - a new benchmark for District 5 - easily exceeds the $900 psf average achieved earlier this year for One North Residences just a stone's throw away.

Sales of The Rochester began on July 16 and all 366 units have been snapped up at prices ranging from $900 to $1,600 psf. UE staff bought about 13 per cent of the units and foreigners, excluding permanent residents, about 10 per cent. Foreigners - including Koreans, Japanese and Britons - bought seven of the nine penthouses. The average price per penthouse was about $6 million. The units were sold through an expression-of-interest exercise.

'We are extremely pleased to have set a new benchmark of $1,300 psf in average price for private property in District 5,' said UE Group's managing director and chief executive, Jackson Yap. The Rochester, designed by Paul Noritaka Tange of Tange Associates, is being developed by a wholly owned subsidiary of UE. The last time the group sold a private residential development in Singapore was more than a decade ago - UE Square at River Valley Road. In two or three months, UE hopes to launch a boutique condo at Balmoral Crescent, in a joint venture with Kajima Overseas Asia.

This freehold development, designed by award-winning SCDA Architects, will comprise about 40 large apartments. The current target price is $2,500 psf on average but this will be finalised closer to the launch, a UE spokesman said. The condo will be developed on the former Balmoral View site that Kajima and UE bought in August last year for $52 million or $733 psf of potential gross floor area including an estimated $7.9 million development charge. The 51,080 sq ft freehold site is zoned for residential use with a 1.6 plot ratio and a 12-storey height limit.
Source: Business Times, 7 Aug 2007
Posted by Property Wizkid

Pearlbank to cross $750m amidst a more cautious outlook?
Pearlbank Apartments in the Chinatown area has been launched for sale. Knight Frank expects at least $750 million for the site, assuming that the developer can retain the existing GFA in a new project. This reflects a unit land price of $1,445 per sq ft of potential gross floor area including an estimated $137 million the developer will have to pay the state to restore the lease on the 82,376 sq ft site to 99 years from a balance of about 62.

Pearlbank Apartments, next to Pearl's Hill City Park, was built on land sold in 1969 under the Third Urban Redevelopment Authority Sale of Sites programme. It was the first all-housing project built on a URA land parcel. The development has 280 apartments and eight commercial units. Knight Frank says owners representing more than 80 per cent of share values have signed the collective sale agreement. The project has an existing gross floor area (GFA) of 613,530 sq ft, equivalent to a 7.447 plot ratio - higher than the 7.2 designated for the site under Master Plan 2003.

Knight Frank's price expectation of 'at least $750 million' is based on the assumption that the developer can retain the existing GFA in a new project. 'Based on an average unit size of 1,200 sq ft, 500 new apartments can be built on the site,' the firm says. Because of the site's elevation, even lower-level units will have unblocked views of the city skyline, it adds. Developers have until Sept 18 to submit offers.

And on Friday last week, MCL Land said it had bought Dynasty Garden Court 1 in Sixth Avenue for $80 million or $1,160 per square foot of land area. The freehold site is designated for three-storey mixed landed housing. The collective sale was brokered by Credo Real Estate.

In the Killiney Road area, the Mitre Hotel and a two-storey outhouse that sit on freehold land of 39,972 sq ft are expected to fetch about $200 million, or close to $1,800 psf per plot ratio, including an estimated $700,000 development charge. Jones Lang LaSalle is marketing the property, which is being sold by public tender after a court order was made following a dispute among the Chiam family members who own it. The site is zoned for residential use with a 2.8 plot ratio - the ratio of maximum potential gross floor area to land area - and a 10-storey height limit. The tender closes on Sept 12.
Source: Business Times, 7 Aug 2007
Posted by Property Wizkid

How can US sub-prime trouble dampen demand here?
Stock markets around the region were savaged yesterday as the troubles which started in the US sub-prime mortgage market continued to spread. Singapore STI's 3.7% fall is sharpest among major markets in the Asia-Pacific. The Straits Times Index (STI) fell 127.05 points, or 3.7 per cent, to end at 3,308.99, the lowest since April 19.

In percentage terms, the plunge was the steepest among major stock indices in the Asia-Pacific region, and the STI's biggest one-day fall since Feb 28. Earlier in the day, the index was down as much as 4.1 per cent as the three Singapore-listed banking groups led losses in the blue chips.
The banks came under intense pressure as investors and analysts cast a spotlight on their exposure to sub-prime, or high-risk, property loans in the US through their investments in collateralised debt obligations or CDOs.

These are essentially portfolios of bonds or loans sliced into tranches that give investors in each tranche different rights to the cash flows earned on the underlying debt. By repackaging the debt, CDO issuers can create a wide variety of new securities, ranging from low-yielding, fixed income debt with the safest triple-A credit rating to riskier, equity-type instruments with higher but variable income.

The top-rated tranches in CDOs have been seen as particularly attractive investments in recent years by institutions and wealthy individuals seeking higher yields than those offered by government bonds without too much additional risk. In an unusual move, OCBC Bank issued a statement yesterday afternoon giving details of its CDO holdings and estimated exposure to US sub-prime mortgages (see CDO story, left). Its share price fell 5.2 per cent yesterday to $8.25.

OCBC's larger peers also saw sharp declines in their share prices. United Overseas Bank's share price fell the most, dropping 6.2 per cent to $19.70, while shares in DBS Group ended 4.6 per cent lower at $20.90 each. Since the stockmarket fallout from the US sub-prime market woes began last week, the STI has fallen 6.7 per cent.

Around the region, too, stocks took a battering. The market turmoil followed sharp losses in US equities on Friday amid a slew of bad news there, including massive layoffs by American Home Mortgage Investment - the 10th largest mortgage lender in the US - due to sub-prime mortgage losses, and an employment report showing weaker-than-expected jobs growth.

In Asia, large losses were not confined to stocks in the financial sector. 'Market concern has spread to the broader US economy from the sub-prime issue and investors are re-evaluating their bullish view of exporter stocks,' said Hiroshi Chano, who helps manage US$7.3 billion at Yasuda Asset Management Co in Tokyo, according to Bloomberg. 'Financial shares were also sold on speculation they will be affected.'

The Nikkei-225 index ended 0.4 per cent lower after falling as much as 1.8 per cent earlier in the day. China was the only major Asian market which rose yesterday, with the CSI 300 index finishing 2.3 per cent higher. Hong Kong's Hang Seng Index fell 2.7 per cent, while South Korea's Kospi index lost 1.2 per cent. In South-east Asia, the Kuala Lumpur Composite Index ended 3.3 per cent lower, while key indices in Thailand, Indonesia and the Philippines lost 2.6-3.6 per cent.
European stock markets also got off to a weak start. London's FTSE-100 index was down 0.7 per cent at 10am in the UK.
Source: Business Times, 7 Aug 2007
Posted by Property Wizkid

Foreign property investors feel the brunt of China's grip
China is tightening its grip once more on foreign investors in Chinese real estate, banning them from borrowing offshore in the latest effort to tame property prices and cool the economy. The new rule, set out in a circular from the State Administration of Foreign Exchange (Safe), could squeeze foreign investors who take advantage of lower interest rates outside China.

Some may find it especially difficult to fund projects as Beijing has told its banks to cut back on loans for the construction industry. The central bank ordered Chinese banks to stop lending for land purchases as far back as 2003. Property funds operating in China tend to borrow to fund at least 50 per cent of a project's value. The circular, which the currency regulator sent to its local branches in early July but has not yet published on its website, also increases red-tape for foreign property investors.

Investors seeking to bring capital into China to set up a real estate company must now go through a lengthy process of lodging documents with the Ministry of Commerce in Beijing - not just with local branches of the ministry. 'What we mean is very clear: First we are targeting foreign real estate firms that are illegally approved by local governments,' a Safe official said.

China has applied a raft of measures to rein in property investment, including interest rate rises and rules to discourage construction of luxury homes. Some steps have specifically targeted foreign investors, who account for less than 5 per cent of total investment in the property sector. Foreign investors must now secure land purchases before setting up joint ventures or wholly owned foreign enterprises in China.

However, funds such as those run by global players ING Real Estate, Morgan Stanley and others are pouring more money than ever into China to tap a middle class hunger for new homes and rising capital values. China's urban property inflation rose to 7.1 per cent in June from 6.4 per cent in May.
Source: Reuters, 7 Aug 2007
Posted by Property Wizkid

Ascendas bolsters its China funds by $1.4b
Singapore business-park developer Ascendas said on Tuesday that it was establishing two funds that would invest up to $1.4 billion ($924 million) in China. Ascendas, part of Singapore state-owned industrial landlord JTC Corp, said its China Industrial & Parks Fund would invest up to $600 million in warehouses and business parks while its China Commercial Fund would plough up to $800 million into commercial buildings in major Chinese cities.

'Investors in the two funds include a good mix of established Singapore and global institutional investors,' it said in a statement. Ascendas, which controls Singapore business-park trust Ascendas Real Estate Investment Trust , this month listed Ascendas India Trust , a property trust based on Indian business parks.
Source: Reuters, 7 Aug 2007
Posted by Property Wizkid

The Majestic expected to fetch in excess of $43m
Five adjoining projects in Mergui/ Thomson area up for collective saleCATHAY Realty has put The Majestic in the Chinatown area up for sale. And marketing agent Knight Franks expects to receive offers in excess of $43 million for the three-storey restored freehold conservation building.

Over in the Mergui/Thomson road area, Credo Real Estate is marketing five adjoining freehold projects for joint collective sale. The properties are Norfolk Court, Mergui Lodge, Northern Mansion, Mergui Court and The Mergui. 'The developments have land areas ranging from 10,061 sq ft to 18,524 sq ft,' said Credo Real Estate executive director Yong Choon Fah. 'But upon amalgamation with one another, along with some remnant state land (of about 20,000 sq ft) in between and adjoining them, the developer could potentially build on an aggregate land area of 93,355 sq ft.' Under Master Plan 2003, the site is zoned for residential development with a 2.8 plot ratio. Based on the height control for the site, the developer should be able to build up to 30 storeys, Credo reckons.

'The indicative price range for the five plots combined is between $115 million and $125 million,' MsYong said. 'Some $474,000 is payable as development charges (DC). Including DC and land premium for the state land, if an approval is granted for their alienation, the indicative price range reflects $488 psf per plot ratio to $526 psf ppr. Based on this range, the developer should be able to break even at about $800 psf to $850 psf (for a new project on the site). 'Norfolk Court comprises 20 units, Mergui Lodge nine units, Northern Mansion 18 units, Mergui Court 23 units and The Mergui 18 units. More than 80 per cent of the owners by share value in four of the five projects have agreed to the sale. At the last project, consent from two more owners is needed to cross the 80 per cent mark, said Credo. As a result, marketing is by way of an expression-of-interest exercise that closes on Sept 3.

The Majestic is being marketed through a tender that closes on Sept 13. The property has a gross floor area of 42,181 sq ft and a site area of 15,666 sq ft. It is suitable for use as shops and food outlets. The Majestic's rich and colourful history dates back to the 1920s. Eu Tong Sen, a wealthy tin miner and rubber planter from Perak, built it in 1927 on a whim for his wife, an opera fan. 'Then known as Tin Yin Moh Toi or Tin Yin Dance Stage, it attracted glamorous opera stars from China, who performed to capacity audiences,' said Knight Frank. 'Some of them came especially to perform and raise money for China's war against Japan.'
Source: Business Times, 2 August 2007
Posted by Property Wizkid

New accounting rule for Property firms
A new accounting rule has put frowns on the faces of some property companies here, as it could mean slimmer bottom lines for them from this financial year. From Jan 1 this year, companies have had to comply with a new accounting standard for their investment properties - broadly defined as properties held to earn rent or capital appreciation or both. But what some don't know is that there is a related tax element that is set to eat into earnings.

Property companies are expected to be the most affected, because they have extensive portfolios of investment property. The issue stems from this year's adoption of Financial Reporting Standard (FRS) 40. It says that companies who choose the fair value method of accounting for their investment properties will have to take any changes in the fair value of an investment property held to their profit and loss account. This is instead of taking the gain or loss to a revaluation reserve in the balance sheet, as previously allowed. This means, an upward revaluation of investment property will add to the bottom line, while a downward revaluation will whittle down earnings.

Companies are familiar with this new standard, but a debate is now raging about a related tax effect that comes with this new accounting treatment. Some accountants believe that, according to another standard already in place - FRS 12, on income taxes - companies should account for the tax that is payable on any increase in the fair value of investment property. The logic is that an increase in the fair value of the property represents an expected increase in the future rental stream and/or proceeds from the ultimate disposal of the property.

And with FRS 40 saying that revaluation gains should be taken to the income statement, some are arguing that it is only right that the deferred tax payable is also taken to the income statement. While there won't be any actual tax paid, the sum will be recognised as an expense in the books from this year on. The impact could be significant, with property prices soaring as much as they have this year - it will mean substantial revaluation gains for most property firms, and also substantial deferred tax provisions.

But property companies and some accountants don't agree with this treatment. CapitaLand's group chief financial officer, Olivier Lim, says: 'Where there is no expectation of a tax liability payable now or in future, it would be inappropriate to book a liability.' Some feel that since gains from the sale of properties are not taxed even when the property is sold - because there is no capital gains tax - the deferred tax shouldn't even be reflected in the accounts. Some accountants - and property companies like City Developments - also worry that the new suggested treatment would distort financial accounts unnaturally.
Source: Business Times, 2 August 2007
Posted by Property Wizkid

Government will not cool property market but will "keep a close eye"
The government does not seem inclined to roll out measures to cool the property market - at least in the near future. 'We prefer to let market forces work,' Minister of National Development (MND) Mah Bow Tan said yesterday. It was the government's clearest response yet to recent market talk that cooling measures could be in the works.

On the sidelines of MND's inaugural Joint Scholarship Presentation Ceremony yesterday, Mr Mah was asked if the government was likely to announce measures to cool the property market. He said: 'We will try to avoid interfering in the market if we can.' While the government is mindful of maintaining Singapore's price competitiveness, it prefers to do this by keeping supply ready and by keeping the market better informed.

To this end, the Urban Redevelopment Authority (URA) recently released median rentals for residential, office and retail sectors. Along with the new monthly data on developers' sales numbers and prices, the median rental data is expected to alleviate fears that property prices are spiralling out of control. Mr Mah added: 'The data shows that property is still affordable and not as high as the headline numbers in media reports.'

In the data that was released by URA last week, sub-sale numbers had also increased considerably from 749 in Q1 to 1,254 in Q2. But this is still sustainable. 'If you look at the numbers, it's a long distance from (the previous peak of) 1996,' Mr Mah pointed out.
It will not, however, be entirely laissez-faire as far as prices go.

One of the government's chief concerns now is maintaining price competitiveness with other Asian capitals like Hong Kong and Tokyo. Mr Mah said that the government was confident of 'moderating prices'. He added: 'We will push out supply (of land) if there is a need. The government will keep a close eye,' he stressed.

But again, Mr Mah tempered this comment by saying that the number of sites on the current Government Land Sales programme was adequate. There will be a supply crunch in the residential sector in the short term, Mr Mah said, and reiterated that the government would look at interim measures to alleviate this.

The Housing and Development Board (HDB) already said last week that it would offer about 120 flats selected for Selective En-bloc Redevelopment Scheme (Sers), but not redeveloped yet, to the public in the short term. If these prove popular, Mr Mah said that, 'there are a few thousand units under the Sers programme that are not ready for redevelopment yet'. DBS Vickers analyst Wallace Chu said he was 'comforted somewhat' by Mr Mah's comments. 'At least a direction is set,' he added.
Source: Business Times, 31 July 2007
Posted by Property Wizkid

Three CBD office projects given URA approval in Q2
A slew of projects were granted provisional permission in Q2, according to latest Urban Redevelopment Authority statistics. These include a business park development of 215,000 square foot gross floor area (GFA) for Eurochem Corporation at International Business Park (IBP) in Jurong East, and several new office projects in the CBD - including redevelopment of Afro-Asia Building on Robinson Road (which was once the headquarters of Nanyang Siang Pau), Asia Chambers at McCallum Street, and Marina House at Shenton Way.

Residential projects that received provisional permission in the April to June quarter of this year include a 316-unit condo by Tripartite Developers on Flora Road, off Old Tampines Road, and a 329-unit condo by Frasers Centrepoint unit FCL Land Pte Ltd on the freehold Far East Mansion site on Kim Yam Road. Another condo, with 300 units, on River Valley Road, by EC Investment Holding Pte Ltd, was also granted provisional permission in April. And as reported in June, Hong Fok has obtained provisional permission to develop 369 apartments on Beach Road under a redevelopment of part of The Concourse.

Eurochem's business park project at IBP is expected to have about 180,000 sq ft net lettable area. Eurochem is expected to occupy part of the space, while the rest could be leased out. Allowed uses include data processing and backroom offices of banks. The company will be developing this on a site that it bought from JTC Corp on an initial 30-year lease term with an option to renew for a further 22 years, BT understands. The three CBD office projects granted provisional permission by URA in Q2 can generate about 480,000 sq ft GFA of offices. Hong Leong Group obtained provisional permission to redevelop Marina House at Shenton Way into a new office project with about 199,455 sq ft GFA of offices. Afro-Asia Shipping Co Pte Ltd received URA's nod to tear down its Afro-Asia Building on Robinson Road (with an MPH store at street level) and redevelop the site into a new project with about 121,100 sq ft GFA offices and 1,399 sq ft of shop space.

Assuming redevelopment work begins early next year, the redeveloped building could be ready around early 2010. The current owner bought it in the late 1960s. The site has a land area of about 16,000 sq ft and has a remaining lease of about 45 to 46 years. Work on redeveloping Asia Chambers at McCallum Street is expected to begin in August. Owner TM Asia Insurance Singapore Ltd - part of the Tokio Marine & Nichido Fire Insurance Co group - will build a new 19-storey office project with about 161,000 sq ft GFA offices. The net lettable office space could be about 110,000 sq ft, of which around half or so is expected to be occupied by the group, which currently operates out of leased premises at Fuji Xerox Towers on Anson Road. Tokio Marine's project, which is slated for completion in late 2009, will see a chunk of the building's street level space devoted to public spaces with trees, other greenery and sitting areas to serve as a meeting point in the location.

URA also granted provisional permission for several hotel projects in Q2, such as a 355-room hotel on Clemenceau Avenue/Unity Street to be developed by Hong Kong's Park Hotel Group); and a 90-room facility at Fullerton Square granted to Sino Land subsidiary Precious Quay Pte Ltd. The latter project also includes about 26,700 sq ft GFA of retail space. In May this year, URA temporarily banned conversion of office use in the Central Area to other uses until December 2009 to curb further depletion of the existing office stock on the island. Even prior to that announcement, though, the trend had changed, with some owners of ageing CBD office blocks considering redeveloping their premises into office blocks, instead of the earlier trend of going for apartments, on the back of rising CBD office values.Nonetheless, the redevelopment of these properties into bigger new office projects will worsen the office crunch in the short term while they are being redeveloped, say market watchers.
Source: Business Times, 31 July 2007
Posted by Property Wizkid

Lucrative site next to AMK MRT likely to be bidded above $500 psf
A plum 99-year leasehold condo site opposite Ang Mo Kio MRT Station could fetch bids of over $500 per square foot (psf) of potential gross floor area, say market watchers. This is at least 65 per cent higher than the minimum offer price of $302 psf of potential gross floor area received by Housing & Development Board for the reserve list site.

The plot, right next to the AMK Hub, can be developed into a new condo with 337,408 sq ft maximum gross floor area, enough for a condo with about 280 to 300 apartments averaging 1,200 sq ft, according to Knight Frank director Nicholas Mak. He expects the site to fetch top bids of about $480 to $530 psf per plot ratio in the current bullish market, but given its prime suburban location, is not discounting bids of $550 psf ppr or even higher. 'This is one of the best residential sites in the second half 2007 Government Land Sales Programme. On a scale of 1 to 10, I would rate it 8 or 9,' Mr Mak says. Assuming the site sells for $510 psf ppr, the breakeven cost for a new condo works out to around $800 to $820 psf. If the developer wants a minimum 10 per cent profit margin, he would be eyeing an average selling price of around $900 psf. The developer can count on a huge pool of upgraders given that Ang Mo Kio is a mature HDB estate, Mr Mak reckons.

CB Richard Ellis executive director Li Hiaw Ho, who is predicting the winning bid to be above $400 psf ppr, and a selling price of around $800-900 psf for the new condo units that will be built on the site. 'This should be achievable if the residential market continues its current performance, by the time the project is ready for launch in mid-2008,' he added. CBRE said that in the June/July period, units at Grandeur 8 condo a short distance away changed hands at $570 to $620 psf in the secondary market, while over at Bishan 8 condo, apartments have changed hands at around $800 psf.
Source: Business Times, 31 July 2007
Posted by Property Wizkid

As expected, CapitaLand earns record profits
Singapore's biggest property company CapitaLand said Tuesday its second quarter net profit more than quadrupled to a record S$912.6 million (US$604.37 million) on the back of robust sales and valuation gains in its business portfolio.

The Singapore property developer, also ranked the largest in Southeast Asia, said for the six months to June it earned a record net profit of S$1.5 billion, up more than five times the year-earlier S$286.7 million. "The exceptional performance was achieved on the back of fair value gains in respect of the investment properties portfolio, higher profits from development projects and higher portfolio gains," CapitaLand said in a statement.

Revenues were boosted by higher sales at its development projects in China and CapitaLand expects overseas markets to remain the drivers of future growth. "Going forward, the group's prospects will be underpinned by our expanding overseas geographic footprint, even as we seek opportunities in Singapore's firm property market," said president and chief executive Liew Mun Leong. "We will be focused as a major developer of residential, retail, commercial and integrated developments and rapidly extend our lead in the serviced residences business," he said. CapitaLand said overseas revenues accounted for almost 70 percent of total sales in the first half of the year, compared with nearly 65 percent in the same period in 2006. - AFP/ir
Source: Channel News Asia, 31 July 2007
Posted by Property Wizkid

CapitaLand Q2 net profit up near six-fold
CapitaLand , Southeast Asia's biggest developer, on Tuesday posted a nearly six-fold surge in second-quarter net profit on the back of strong home sales in Singapore and China. Like Singapore's other big property developers -- Keppel Land and City Developments -- CapitaLand has benefitted from a surge in prices in the city-state's real estate market.Office rents have risen 46 percent in the past 12 months in Singapore, beating increases in rival financial centres such as Tokyo and Hong Kong, while prices for private homes have risen to the highest level in nearly a decade.

The firm, partly owned by Singapore state investment firm Temasek Holdings , saw its net profit rise to its highest ever of S$912.6 million ($603.2 million) in the April-June quarter, up from a restated S$157.2 million in the same period a year ago. "The exceptional performance was achieved on the back of fair value gains in respect of the investment properties portfolio, higher profits from development projects and higher portfolio gains," it said in a statement.
Quarterly revenue rose 21 percent to S$935.6 million.

CapitaLand has in the past earned up to 80 percent of its profits abroad, but Singapore accounted for 69 percent of its pre-tax profit in the first half of 2007. The developer said divestment gains as well as higher fee income from its real estate investment trust (REIT) subsidiaries -- CapitaMall Trust , CapitaCommercial Trust and CapitaRetail China -- also contributed to its highest ever quarterly net profit. CapitaLand, which earned S$1.5 billion net profit in the first half, said its finance costs rose 32 percent in the second quarter mainly due to higher gross debt and rising interest rates. CapitaLand shares, which closed Monday at S$7.25, have risen 17 percent this year to outperform rival City Developments' 15 percent gain. Singapore's property stock index has risen 27.6 percent this year.
Source: Reuters, 31 July 2007
Posted by Property Wizkid

Singapore Property News Upfront 25

2007-07-30T09:32:00.000-07:00

Kepland sells its stake of One Raffles Quay for close to $1b
Keppel Land, Singapore's third biggest developer, said on Monday that it would sell its stake in office development One Raffles Quay to an affiliated property trust for $941.5 million (US$622 million). The developer owns a third of the 50-storey office building, which is co-owned by Hong Kong's Cheung Kong (Holdings) Holdings and Hongkong Land.

Keppel Land, partly owned by conglomerate Keppel Corp, said it had entered into a conditional sale agreement with K-Reit Asia for the sale, which is subject to shareholders' approval of both parties. Keppel Land has a 40 per cent stake in K-Reit Asia, which has a portfolio of four office buildings in Singapore.
Source: Reuters, 30 July 2007
Posted by Property Wizkid

Suntec Reit post higher gains for Q2, naturally
Suntec Real Estate Investment Trust (Suntec Reit) on Monday announced a distribution income of $30.0 million for its third financial quarter ended June 2007, 22.9 per cent higher than a year ago. Distribution per unit was 2.1 cents for Q3 FY2007, up 11.9 per cent from the previous period, said ARA Trust Management (ARA Suntec), the manager of the Reit.

Commenting on Suntec REIT's performance, Yeo See Kiat, chief executive officer of ARA Suntec, said, 'I'm pleased to report that Suntec Reit has achieved a very good growth for the office portfolio in this quarter. 'In addition, Suntec City Mall has also reached a new high in its committed average passing rent, to $10.23 psf per month as at 30 June 2007.'

Suntec Reit said its office portfolio continues to enjoy strong rental growth. Suntec office leases achieved strong renewal and replacement growth rates for the quarter, with leases secured at rates of between $9.00 - $10.50 psf per month. Park Mall office leases also achieved strong renewal and replacement growth in Q307.

The committed office occupancy at Suntec City and Park Mall increased to 99.4 per cent and 98.5 per cent respectively as at June 30, 2007. Rentals were boosted by asset enhancement projects. Suntec City Mall's new Fashion zone at Galleria achieved an average rent of $24 psf per month compared with $12.27 psf per month previously, with a committed occupancy of 73 per cent to date. This is expected to strengthen further in the next quarter, the Reit said.
Source: The Business Times, 30 July 2007
Posted by Property Wizkid

Higher loans widens Banks' risk
As the property boom chugs full steam ahead, banks' exposure to the sector has been steadily widening and their risks may be deepening, especially as a result of the prevalence of deferred payment schemes. As at end-June, housing and bridging loans as well as loans to the building and construction sector made up nearly half - a high of 47 per cent - of the more than $200 billion loan portfolio of commercial banks here, according to preliminary figures obtained from the Monetary Authority of Singapore (MAS).

This has been a steady increase from the 33 per cent from about a decade ago (end-1996) around the height of the last property boom, and the 42.5 per cent at the start of the current property boom at the end of 2002. In absolute terms, the housing and bridging loans were worth some $64 billion as at end-June, compared to about $63 billion six months ago. Loans to the building and construction sector stood at about $30 billion as at end-June, an increase of 21 per cent from a year ago, said MAS.

Not surprisingly, the run-up in property prices has led to an increase in housing and bridging loans (the consumer loans), but this rise has slowed dramatically from the early years of the current boom. Right after the current property boom started, housing and bridging loans surged 17 per cent between end-2002 and end-2003 to reach $52.2 billion. Since then, the increase has slowed to about 2 per cent for the first six months of the year and from end-2005 to the end of last year, the value of housing and bridging loans increased by only 2.2 per cent.

Housing and bridging loans' share of the total loans of commercial banks - while still the biggest - has also declined over the last couple of years. Their share of total loans, after building up over the years to a peak of 33.8 per cent at end-2005 has dipped over the last one-and-a-half years to about 32 per cent as at end-June this year.

What is perhaps more significant for the financial sector is that the loans to the building and construction sectors including loans made to developers have been expanding much faster over the past few years and have been taking up a bigger share of total loans extended by banks. Loans to developers have an added element of risk because of the deferred payment scheme which allows home buyers to pay only a fraction of the property's price upfront.

Loans to the building and construction industry, after contracting between 2004 to end-2005 as the construction industry went through the doldrums, surged 14.4 per cent to $26.3 billion as at end-2006. The further growth to $30 billion as at end-June this year represents a growth of 21 per cent from end-June 2006. 'As MAS has previously said, the use of the deferred payment scheme by property developers introduces additional risks to the developers, and to the banks which finance these developers, because property purchasers under this scheme are not subject to credit checks by developers. This is unlike property purchasers who apply for housing loans and are subject to credit assessment by banks. MAS expects banks to exercise prudence in their financing to the property developers and be fully cognizant of the additional risks from the use of deferred payment schemes,' a spokesperson from MAS told BT.

Last week, during the release of MAS' annual report, Heng Swee Keat, the authority's managing director had said that MAS is keeping a close eye on developments in the property boom. As Singapore's central bank and the regulator of the financial industry, MAS's concerns with regard to the property boom are how rising prices impact inflation and the risks posed to the stability of the financial system. Mr Heng had noted that the banking sector's exposure to the property and construction sectors is 'significant' and that housing and related loans have grown over the last few quarters. 'So for both of these reasons, we will be watching developments in the market very carefully.'

The Urban Redevelopment Authority (URA) price index for private homes, released on Friday, has risen 13.5 per cent for the first half of this year. URA figures also revealed that developers sold 9,385 uncompleted private home in the first six months of this year, less than a thousand units shy of the record 10,363 units sold through all of last year.
Source: The Business Times, 30 July 2007
Posted by Property Wizkid

Are Singaporeans in a speculative mood?
The prices are climbing but developers are poised to sell more private homes than ever before. There is also evidence to show that speculative activity has been accelerating by the quarter. The property mania that has gripped Singapore of late has been captured in hard, official numbers.

Developers sold 9,385 uncompleted private homes in the first six months of this year, less than a thousand units shy of the record 10,363 units sold through all of last year, according to latest official figures. Market watchers expect the eventual sales for 2007 to range between 14,000 and 18,000 units, assuming that the US sub-prime mortgage woes do not have a contagion effect here.

As expected, the prices have been rising fast. The Urban Redevelopment Authority's (URA) price index for private homes shot up 8.3 per cent in Q2 over the preceding quarter. This means that the index has risen 13.5 per cent for the first six months of this year. A straw poll of property consultants by BT suggested that the full-year price increase could come in between 23 and 30 per cent. So prices still have between 8 and 15 per cent to climb in the second half.
The downside risk remains from the correction in the US sub-prime market. 'Unless this spreads into global financial markets, the Singapore property market is unlikely to be affected in the immediate term,' Jones Lang LaSalle's head of research (South-east Asia) Chua Yang Liang says. 'Meanwhile, we are watching the market very closely,' he added.
To read other opinion, check out from the Singapore property portal;
http://www.propertybingo.com/News.aspx?newsid=57

One aspect that bears watching is the surging speculative activity. Subsales islandwide jumped 67.4 per cent to 1,254 units in Q2. More than half the subsale deals in Q2 were in the Core Central Region (CCR), which includes districts 9, 10, 11, Downtown Core (including Marina Bay) and Sentosa. Islandwide, subsale deals accounted for 9.7 per cent of the total private housing deals in Q2. During the same period last year, such deals made up just 2.6per cent of the pie. Still, the latest figures are way short of speculative fever that raged in Q21996, when 28 per cent of total private residential transactions involved subsale deals.

Knight Frank director Nicholas Mak reckons that the share of subsale deals will continue to grow gradually but is unlikely to reach the levels seen in 1996. 'Back then, the ease of getting 95 to 100 per cent bank financing for property purchases was a key reason fuelling speculative activity. Nowadays banks are more cautious,' he says. Going forward, subsale activity may find another engine. It may be driven not so much by the prospect of big, instant gains but by those who bought their homes on deferred payments and reach the point where they have to pay the bulk of their purchase price, says DTZ Debenham Tie Leung executive director Ong Choon Fah. 'So rather than fork out more money, they may just sell their units since the market has gone up so much in the last couple of years or so since they bought them,' Mrs Ong reckons.

Subsales involve projects that have yet to receive a Certificate of Statutory Completion, while resales, which are also secondary market transactions, cover completed developments. The total number of resales jumped 40.2 per cent quarter on quarter to 6,514 units in Q2. This brought total secondary market transactions in Q2 to 7,768 units, up 44 per cent from the preceding quarter and, according to Knight Frank, a level not seen before in the private property market.

Also interesting is the breakdown in the price index for non-landed homes by regions. In all three regions - CCR, Rest of Central Region (RCR) and Outside Central Region (OCR) - the price gains in Q2 over Q1 were higher for completed homes than for uncompleted ones, reversing the general trend seen for at least the past couple of years. 'The trend reversal seen this quarter across all markets is reflective of the urgent demand for completed residential properties for immediate occupation by those who have sold their homes through en bloc sales looking for replacement properties,' Colliers International director Tay Huey Ying said.

In tandem with URA's earlier flash estimate, non-landed homes in RCR (including places like Bukit Merah, Queenstown, Geylang, Toa Payoh and Katong) posted the biggest price gains in Q2, with an overall (both uncompleted and completed homes) increase of 8.1 per cent, followed by CCR (up 7.9 per cent ) and OCR - which covers suburban mass-market locations like Woodlands, Clementi, Jurong, Hougang, Tampines and Bedok - rising 7.2 per cent.

Ms Tay argues that the price recovery in this region can be attributed not just to a general filtering-down effect from the higher-priced tiers, but also to investors buying units in older developments with en bloc sale potential such as Neptune Court, Ivory Heights, Lakepoint Condominium and Clementi Park. DTZ's Mrs Ong reckons that the rate of price gains may moderate in the second-half. 'Developers who bought their sites through en bloc sales in 2006 and earlier, before the surge in land prices seen this year, can probably sell their new projects without setting benchmark prices. Developers are likely to be more sensitive in pricing their projects so aggressively until things are clearer.'
Source: The Business Times, 28 July 2007
Posted by Property Wizkid

HDB struts its stuff and climbs steadily
Shaking off years of stagnation, the HDB market gained momentum in the second quarter of 2007, as it saw a 'filter-down' effect from the red-hot private property market. Data released by the Housing Board yesterday showed that the number of HDB resale transactions in the second quarter climbed to 8,700 - up from the 6,300 in the first three months of the year.

HDB's resale price index also rose at a relatively faster clip from April to June, climbing some 3 per cent - up from 1.3 per cent in the first quarter. The index was boosted by the majority of flats fetching more than their market valuations. As much as 70 per cent of all resale HDB flats fetched more than their valuations in the second quarter, HDB said. The overall median cash-over-valuation (COV) was about $7,000. Analysts said that all the signs are pointing towards a recovery in the HDB market.

'Some 70 per cent of flats are selling above valuation - it seems that the market is seeing an upswing,' said Eugene Lim, ERA assistant vice-president. PropNex chief executive Mohamed Ismail welcomed the 'modest' increase as the HDB market has been lagging behind the private property market for the last few quarters. 'The current price index (108.0 points) is no match for the peak in 1996 (136.9 points), but is good news for most HDB owners,' he said.

Market watchers said that the increase in HDB resale prices was largely expected as the market is seeing a 'filter-down' effect caused by rapidly rising private home prices. 'Home buyers who are priced out of the private property market will be looking at the larger flat types like the 5-room and executive flats,' said ERA's Mr Lim. 'They, in turn, will push those who are priced out of buying larger flats into buying smaller flats like the 4-room units.'

Official data shows that private home prices have climbed 13.5 per cent since the start of the year. Property analysts said that one reason for the heightened demand is the recent slew of en bloc sales in the private property market. En bloc sellers have been snapping up HDB flats as replacement private homes get more expensive.

HDB's data identified Bishan, Bukit Merah, Bukit Timah and Marine Parade as four HDB resale 'hot spots' where buyers are willing to fork out significantly more COV for their flats. These areas, which are closer to town, might be more popular with en bloc sellers used to living near the city centre, analysts said. With the release of the new data yesterday, the Housing Board also upped the ante by giving median rental figures for HDB flats for the first time ever.
To check out the latest HDB flats on offer, you may visit www.PropertyBingo.com

The data was released to counter recent reports that certain flats were being sub-let at very high rents. Such cases, HDB said, were very few and confined to flats with 'special attributes'. While HDB flat rentals have risen, they remain affordable in most cases, data shows. Median rents range from $1,000 to $1,400 for a 4-room flat and $1,100 to $1,500 for a 5-room unit. Executive flats are going for anywhere between $1,100 and $1,900.

More HDB homeowners have jumped on the sub-letting bandwagon. The number of sub-letting approvals climbed to 3,600 in the second quarter, from 2,400 in the first quarter. For the full year, HDB resale prices could climb by 8-10 per cent, analysts said. Resale volume for the whole year is expected to come to 30,000-33,000.
Source: The Business Times, 28 July 2007
Posted by Property Wizkid

URA offers some insight to the bouyant rental market
Some say that rentals for private homes islandwide have never risen so much from one quarter to another over the past decade. Not surprisingly, it was the Core Central Region (CCR) - which includes prime districts 9, 10, 11, Downtown Core (including Marina Bay) and Sentosa - that posted the biggest increase in rents for condos and private apartments in Q2 over the preceding quarter. They rose 12 per cent.

But the buoyant demand for housing in the prime areas continued to filter down to the rest of the market in Q2, as reflected in a 10 per cent rise in URA's rental increase for the Rest of Central Region (RCR) and a 9.4 per cent hike in the Outside Central Region (OCR). OCR covers suburban mass-market locations like Woodlands, Clementi, Jurong, Hougang, Tampines and Bedok, while RCR includes areas like Bukit Merah, Queenstown, Geylang, Toa Payoh and Katong.

Knight Frank said that, based on its research, rentals for properties in the East Coast, Thomson and Bishan areas grew by a strong 10 to 12 per cent quarter-on-quarter in Q2 this year, matching the rental growth seen in the CCR. 'Noticeably, more foreign companies and expatriates are becoming more concerned with rising housing rentals and costs. Nonetheless, their top priority is to be able to enrol their children in international schools here, where the supply of teachers and space for students is far more inelastic when compared to rental properties,' Knight Frank director (research & consultancy) Nicholas Mak said.
To check out the latest offer for rental properties, go to http://www.propertybingo.com/FindPte.aspx

URA's 12 per cent rental index hike for the CCR in Q2 was much higher than a 7.6 per cent gain registered in Q1. CB Richard Ellis executive director Li Hiaw Ho said: 'The slew of en-bloc sales in the past two years being concentrated in the CCR has led to a shortage of apartments for rent in the region, as reflected in this region leading the pack in terms of the increase in the rental index for non-landed properties in Q2. 'This uptrend is expected to continue as developments which have been collectively sold give way to redevelopment. Some of the major en-bloc sales in the prime area in Q2 include Leedon Heights, Himiko Court, Elmira Heights and Fairways Condominium.'

URA's overall rental index for private homes in Q2 was up 10.4 per cent from the preceding quarter, and 31.2 per cent higher year-on-year. 'This is the highest quarter-on-quarter, and year-on-year growth since URA made rental data available to the public. Nonetheless, as of Q2 2007, private residential property rentals are still about 21.4 per cent lower than the all-time high in Q1 1996,' said Knight Frank's Mr Mak.
Source: The Business Times, 28 July 2007
Posted by Property Wizkid

$2b for Beach Road site
A state tender for the former NCO Club/Beach Road camp grounds yesterday drew seven bids with market watchers estimating bids could have topped the $2 billion mark or $1,250 psf of potential gross floor area. The all-in development cost for the 99-year leasehold project is expected to be in the $3 billion region, analysts estimate.

Urban Redevelopment Authority revealed the bidders, but not their bid prices, under yesterday's two-envelope system tender, where bidders had to submit concept proposals and tender prices separately. The tender attracted big names familiar with the local market such as CapitaLand, City Developments, Pontiac Land, Overseas Union Enterprise (OUE), Keppel Land and Cheung Kong Holdings.

And some of them have teamed up with heavyweight overseas partners like Dubai's Istithmar (part of Dubai World group) and a unit of US-based Elad Properties (these two teamed up with CityDev). Morgan Stanley is believed to have partnered Pontiac. OUE, controlled by Indonesia's Lippo Group and Malaysian tycoon Ananda Krishnan, is expected to rope in partners like Austria's Raiffeisen Zentralbank (RZB).

Billion Rise Ltd (believed to be linked to Li Ka-shing's Cheung Kong Holdings) partnered Keppel Land to put in two bids. OUE is also believed to have placed two bids, one through Beach Development and the other through Nicoll Development. Such a strategy, of placing two bids, presumably gives the bidders an opportunity to present alternative concepts, whether at the same or different prices, and hopefully boost their chances of success.

Under the two-envelope system, the concept proposals will first be evaluated against a set of prestated criteria (including overall design concept, quality of architectural design, adaptive reuse of conservation buildings, and composition and placement of uses). Only proposals that substantially satisfy the evaluation criteria will be shortlisted. At the second stage, the tender price envelopes of these shortlisted bidders will be opened and the site awarded to the highest of these bidders, provided this top bid meets the government's reserve price.

Market watchers reckon the majority of bids at yesterday's tender would be in the $1,000 to $1,200 psf per plot ratio range which works out to around $1.6 billion to $1.9 billion for the 99-year site which can have a maximum gross floor area of nearly 1.6 million sq ft. Construction costs, fees and interest could amount to a further $900 million to $1 billion, bringing the likely all-in investment to about $2.5 billion to $3 billion.

The site can be developed into a project with nearly 1.6 million sq ft gross floor area, of which a minimum 40 per cent is for office use, and at least 30 per cent for hotel rooms. The rest can be for complementary retail and residential use. The development will entail the conservation and restoration of the former NCO Club building and three blocks of the former Beach Road camp. The new towers in the building can be up to 45 storeys high.

Market watchers reckon that some of the schemes could possibly entail a high-rise tower with hotel rooms on the lower floors and apartments on the upper floors, seen in places like New York but novel in Singapore. The release of the Beach Road site is part of the government's strategy to alleviate the shortage of office space.

JP Morgan real estate analyst Chris Gee said: 'The office rental market is the most volatile of all the investment property segments in Singapore.' He noted that even before the close of yesterday's tender, the URA had made known its plans to offer four other sites in the CBD which can be substantially developed into offices - two at Anson Road and two near the One Shenton condo project. The tender for the first of the Anson Road plots closed on Monday and was yesterday awarded to highest bidder Mapletree Investments at $1,021 psf per plot ratio.
The tender for the second Anson Road plot closes next month. The tender for a plot directly behind One Shenton closes in September, while that for the next-door site will be launched by the end of this month.
Source: The Business Times, 26 July 2007
Posted by Property Wizkid

New York City apartments still climbing despite US housing worries
New York City apartment prices climbed 16 per cent in the second quarter as the country's most expensive urban market sidestepped declines in the rest of the US. The median price of co-operative apartments and condominiums rose to US$525,000 from US$452,000 a year ago, the Real Estate Board of New York said. Manhattan had the highest median at US$790,000. 'While everyone knows the Manhattan market continues to be strong, the boroughs outside Manhattan are bucking the trend in the rest of the country,' said board president Steven Spinola.

New York prices are rising even as the rest of the country posts declines or modest gains. The median price of a US condo fell 0.4 per cent in May to US$228,200 and the median for previously owned homes rose 1.8 per cent to US$223,700, according to the Chicago-based National Association of Realtors. The trade group has cut its 2007 forecast seven times this year and now predicts prices will drop 1.4 per cent in the US this year.

The average price per square foot for co-operative units, which make up about two-thirds of New York City's owner-occupied apartment stock, rose 5.8 per cent to US$708 in the second quarter, the real estate board said. For condos, the average price per foot increased 8.1 per cent to US$877.

In co-ops, residents hold shares in a corporation that owns the building and occupy their apartment under a proprietary lease. Such properties are losing the escalating price war with condominiums, which allow owners to have title to their property and have fewer financial restrictions. Single-family homes and those with two or three apartments such as brownstones and townhouses sold for about US$550,000 in the quarter, a 7 per cent increase. The board represents more than 12,000 commercial and residential property owners, builders, brokers, architects and other real estate professionals.
Source: Bloomberg, 26 July 2007
Posted by Property Wizkid

Bukit Timah City Towers double its asking price to $450m
City Towers on Bukit Timah Road is for sale by tender with an indicative price of $458.7 million, almost double the price indicated just three months ago. An expression-of-interest exercise was held in April by marketing agents Knight Frank. Senior manager (investment sales) Steven Tan said it drew about five bids.

At the time, only 75 per cent of the owners had agreed to proceed with a collective sale. 'The owners believe the new indicative price is reflective of market prices,' said Mr Tan. The minimum 80 per cent approval from owners to sell has now been obtained. The development is on 104,535 sq ft of freehold land, which is zoned for residential use at a plot ratio of 2.1, with a height restriction of 24 storeys.

Mr Tan says the successful developer can build an estimated 183 units of average 1,200 sq ft each. Together with an estimated development charge of about $2.2 million, the indicative price reflects a land value of $2,100 per square foot per plot ratio. As the current development is close to the maximum gross floor area, the development charge is only slightly more than the estimated $1.7 million it would have been three months ago before the rates were revised.

The break-even price is estimated at $2,870 psf, and Mr Tan expects the new units to sell for at least $3,000 psf. On East Coast Road, Savills Singapore is marketing 48 strata-titled commercial units at EastGate, a 52-unit freehold development, for sale en bloc by expression of interest. 'All 48 units are currently near full occupancy and are generating good cash flows from its rental collections,' said Steven Ming, director (investment sales) of Savills Singapore. The freehold property has an indicative price of $80.3 million or $1,350 psf, based on current net lettable area.

'Investors and buyers have begun to look at opportunities beyond the traditional CBD locations for good commercial buildings that could still present good upside potential in terms of both rental rates and capital value appreciation,' said Mr Ming. Potential average rentals are expected to be $5 psf.
Source: The Business Times, 25 July 2007
Posted by Property Wizkid

Singapore Property News Upfront 24

2007-07-24T13:09:00.000-07:00

25% price premium paid for a East Coast en bloc
St Patrick's View sold to TG Development for $79 million. St Patrick's View, off Telok Kurau Road, has been sold en bloc to TG Development Pte Ltd (TGD) for $79 million, 25% higher than the indicated price when the collective sale was launched three months ago. On its bullish bid, TGD managing director Ong Boon Chuan said: 'The prices for Districts 9, 10 and 11 are quite high but there is room for more upside in the outskirts.'

Giving a contrarian view, Mr Ong also said that while higher asking prices for en bloc sites may lead to resistance from developers, it also means there will be 'less supply in the market'. Marketed by Colliers International, executive director (Investment Sales) Ho Eng Joo added: 'The benchmark price of St Patrick's View reflects developers' continued confidence and optimism in the East Coast area, as demand for new residential projects still remains strong.'

At $79 million, the price works out to $682 per sq ft per plot ratio (psf ppr), including an estimated development charge of $302,318 for the 83,013 sq ft site. Mr Ong said that TGD plans to build a five-storey development of about 100 units with unit sizes of between 1,000 sq ft and 1,400 sq ft. The launch is targeted for mid-2008. The breakeven cost is estimated at around $1,000 psf, which means new units have to be sold in excess of this.

Over in Kembangan, Savills Singapore is marketing the launch of the 32-unit D'Oasia by Monfort Land at about $910 psf. To date, more than 50 per cent of the apartments have been sold during a recent private preview. The development is expected to be completed by Dec 30, 2010. Savills is also marketing the collective sale of Trendale Tower on Cairnhill Road. The indicative price of $180 million is 12.5 per cent higher than it was three months ago when it was put up for sale through an expression-of-interest exercise. The latest price works out to about $2,477 psf ppr with the breakeven estimated at between $3,100 and $3,200 psf. Savills director of investment sales Steven Ming said: 'It is reasonable to project a selling price of a new project on this site at between $3,500 and $3,600 psf.' The 21,709 sq ft site has a plot ratio of 2.8 and can yield about 36 units of 2,000 sq ft condominium apartments.

In the Clementi area, GRE Realty is marketing the sale of Park West Condominium through the expression-of-interest mode. So far, 75 per cent of owners have agreed to the sale.
The indicative price for the 633,638 sq ft site is $620 million to $660 million, inclusive of development charge of about $115 million. GRE Realty estimated that the breakeven price would be around $750-$780 psf.
Source : The Business Times, 26 July 2007
Posted by Property Wizkid

$2b Bids for Beach Road site expected, what else?
A state tender for the former NCO Club/Beach Road camp grounds yesterday drew seven bids with market watchers estimating bids could have topped the $2 billion mark or $1,250 psf of potential gross floor area. The all-in development cost for the 99-year leasehold project is expected to be in the $3 billion region, analysts estimate. The development cost for the future 99-year leasehold project could hit $3b

Urban Redevelopment Authority revealed the bidders, but not their bid prices, under yesterday's two-envelope system tender, where bidders had to submit concept proposals and tender prices separately. The tender attracted big names familiar with the local market such as CapitaLand, City Developments, Pontiac Land, Overseas Union Enterprise (OUE), Keppel Land and Cheung Kong Holdings. And some of them have teamed up with heavyweight overseas partners like Dubai's Istithmar (part of Dubai World group) and a unit of US-based Elad Properties (these two teamed up with CityDev). Morgan Stanley is believed to have partnered Pontiac. OUE, controlled by Indonesia's Lippo Group and Malaysian tycoon Ananda Krishnan, is expected to rope in partners like Austria's Raiffeisen Zentralbank (RZB).

Billion Rise Ltd (believed to be linked to Li Ka-shing's Cheung Kong Holdings) partnered Keppel Land to put in two bids. OUE is also believed to have placed two bids, one through Beach Development and the other through Nicoll Development. Such a strategy, of placing two bids, presumably gives the bidders an opportunity to present alternative concepts, whether at the same or different prices, and hopefully boost their chances of success.

Under the two-envelope system, the concept proposals will first be evaluated against a set of prestated criteria (including overall design concept, quality of architectural design, adaptive reuse of conservation buildings, and composition and placement of uses). Only proposals that substantially satisfy the evaluation criteria will be shortlisted. At the second stage, the tender price envelopes of these shortlisted bidders will be opened and the site awarded to the highest of these bidders, provided this top bid meets the government's reserve price.

Market watchers reckon the majority of bids at yesterday's tender would be in the $1,000 to $1,200 psf per plot ratio range which works out to around $1.6 billion to $1.9 billion for the 99-year site which can have a maximum gross floor area of nearly 1.6 million sq ft. Construction costs, fees and interest could amount to a further $900 million to $1 billion, bringing the likely all-in investment to about $2.5 billion to $3 billion. The site can be developed into a project with nearly 1.6 million sq ft gross floor area, of which a minimum 40 per cent is for office use, and at least 30 per cent for hotel rooms. The rest can be for complementary retail and residential use.

The development will entail the conservation and restoration of the former NCO Club building and three blocks of the former Beach Road camp. The new towers in the building can be up to 45 storeys high. Market watchers reckon that some of the schemes could possibly entail a high-rise tower with hotel rooms on the lower floors and apartments on the upper floors, seen in places like New York but novel in Singapore. The release of the Beach Road site is part of the government's strategy to alleviate the shortage of office space.

JP Morgan real estate analyst Chris Gee said: 'The office rental market is the most volatile of all the investment property segments in Singapore.' He noted that even before the close of yesterday's tender, the URA had made known its plans to offer four other sites in the CBD which can be substantially developed into offices - two at Anson Road and two near the One Shenton condo project. The tender for the first of the Anson Road plots closed on Monday and was yesterday awarded to highest bidder Mapletree Investments at $1,021 psf per plot ratio. The tender for the second Anson Road plot closes next month. The tender for a plot directly behind One Shenton closes in September, while that for the next-door site will be launched by the end of this month.
Source : The Business Times, 26 July 2007
Posted by Property Wizkid

Jobs growth & foreign inflow will put a crunch on residential supply
The property supply crunch is likely to get worse despite government assurances that supply over the next few years is sufficient, Citigroup says in a report released yesterday. The report comes just a week after the investment bank advocated a shift from property to bank stocks, amid what it termed 'policy uncertainty'. Since mid-May the government has announced measures to tackle the surge in the property market - especially the rise in office rents. This has undermined the performance of property stocks, Citigroup said in a July20 report.

In yesterday's report, Citigroup analysts Chua Hak Bin and Lim Jit Soon say a supply crunch can be expected because the number of units completed from 2007 to 2010 will likely fall short of the Urban Redevelopment Authority's projection of 42,200. 'Completion rates have been consistently over-estimated in the past,' the analysts say. 'Units under construction provide better guidance and suggest a potential shortfall. Shortage of construction materials and workers implies that risk of delays has risen.' Units under construction far lag completion estimates, with only 25,100 to be built from 2007-2010, according to Citigroup. Specifically, just 4,573 units are under construction in 2007 plus a further 6,633 in 2008. Jobs growth and the foreign worker inflow continue to overwhelm available residential units, Citigroup says. Jobs growth in 2007 is keeping pace with the 176,000 jobs generated in 2006, of which about half were taken up by foreigners.

'Accommodating the current flow of foreign workers looks near impossible with the current supply stock and pipeline,' the bank's report says. 'The lack of any slack also shows in completed but unsold units, which reached a new low of 567 at the end of the first quarter of 2007.' En bloc sales will exacerbate the residential supply squeeze, Citigroup reckons. And it sees a risk of more policy measures.

'The government will likely favour supply side responses, including more land supply, more HDB flats and further relaxation of measures on rental of HDB properties,' it says. 'But demand-side measures cannot be ruled out if price increases continue to accelerate and speculation begins to test the comfort zone of the authorities.' Anticipating dampening policies, Citigroup last week called for a shift from property counters to banks. But it remains positive about the fundamentals for property because demand and supply dynamics continue to favour rental and capital growth for both the office and residential sectors. Still, policy uncertainty has affected the share prices of some property stocks, the report said. Banks, which are beneficiaries of the property upturn because of property loans, are better proxies for the property boom, it said. 'With reasonable valuations and steady earnings growth, banks provide exposure to the reflation theme without the downside from policy uncertainty.' Source : The Business Times, 24 July 2007

Posted by Property Wizkid

Will Expression-of-interest sparks off more interest?
Credo Real Estate will market two prime properties for collective sale through expression-of-interest (EOI) exercises - and it could just prove to be the faster way to get a sale done. Each of the properties - The Hillpark off Dunearn Road and Chateau Eliza at Mount Elizabeth - has less than 80 per cent of owners' approval for sale at the indicative prices, so the process of a collective sale cannot officially proceed. However, by launching an EOI exercise, owners who are undecided may be swayed by bids from interested developers, even though the bids will not be legally binding offers. But as Credo's managing director Karamjit Singh notes: 'It can be faster because you can secure a bid at an earlier threshold.'

The Hillpark sits on 77,646 sq ft of land and is zoned for two-storey bungalows. The indicative asking price is $106 million to $110 million, which works out at $1,365 to $1,416 per square foot. Chateau Eliza sits on a 17,997 sq ft site and has a designated plot ratio of 2.8. The height limit is 36 storeys and the indicative price is $120 million or $2,223 per square foot per plot ratio. Both developments have achieved around 70 per cent of owners' approval for collective sale, an important consideration when proceeding with an EOI.

Giving an idea of how EOI can work, Credo's executive director Tan Hong Boon revealed that for a recent collective sale deal it brokered through an EOI - Watten Heights off Dunearn Road - Credo received 16 bids. One was high enough to convince undecided owners to agree to sell quickly.

An Offer to Purchase was then drawn up with the highest bidder and the collective sale was done within days, without having to proceed with a public tender.
Source : The Business Times, 24 July 2007
Posted by Property Wizkid

Should we rejoice for Singapore being the world's hottest property market?
Singapore has emerged as the world's "hottest" property market this year, with Japan and China also among the top favourites of real estate investors, an international consultancy said Thursday. Capital values of prime property in the city-state soared 50 percent in the first six months of 2007, Jones Lang LaSalle said in a press statement.

Globally, the value of property bought or sold for investment totalled a record $382 billion in the first half, up 16.6 percent from the year before, it said. Global real estate investment expanded for the 16th consecutive quarter, with the Americas, Europe and the Asia Pacific seeing record volumes, it added. Property investment in the Asia Pacific jumped 12 percent to $55 billion, mainly bolstered by cross-border investments, the consultancy said.

"Japan, China and Singapore represented the strongest real estate markets in the region," it said. "Singapore became 2007's hottest global market, with prime capital values increasing by 50 percent (in the first half) fueled by astounding rental growth and yield compression." Singapore's property market is heating up after years of weakness following a regional financial crisis in 1997. A strong domestic economy and efforts by the wealthy island-nation to raise its competitiveness, including a decision to build two massive casino resorts, have helped perk up the property market.

Stuart Crow, head of Asia capital markets at Jones Lang LaSalle, said Asia remains attractive to investors due to its strong economies, improved liquidity through real estate investment trusts and better transparency. "Cross border investment is at an all-time high, yet is likely to increase further in the next 12 months, particularly in the most sought after markets of Japan, Singapore, India and China," Crow said. In the Americas, total investment was up 32 percent to $170.7 billion and investment in Europe climbed 4.0 percent to $156.6 billion, with the UK, Germany and France accounting for more than two thirds of the volume, it said.
Source : Turkish Daily News, 21 July 2007

Posted by Property Wizkid

Singapore Property News Upfront 23

2007-07-19T03:34:00.000-07:00

Are we proud to win "the world's hottest property market" title?

Singapore has emerged as the world's 'hottest' property market this year, with Japan and China also among the top favourites of real estate investors, an international consultancy said on Thursday. Capital values of prime property in the city-state soared 50 per cent in the first six months of 2007, Jones Lang LaSalle said in a press statement.

Globally, the value of property bought or sold for investment totalled a record US$382 billion in the first half, up 16.6 per cent from the year before, it said. Global real estate investment expanded for the 16th consecutive quarter, with the Americas, Europe and the Asia Pacific seeing record volumes, it added.

Property investment in the Asia Pacific jumped 12 per cent to US$55 billion, mainly bolstered by cross-border investments, the consultancy said. 'Japan, China and Singapore represented the strongest real estate markets in the region,' it said. 'Singapore became 2007's hottest global market, with prime capital values increasing by 50 per cent (in the first half) fueled by astounding rental growth and yield compression.' Singapore's property market is heating up after years of weakness following a regional financial crisis in 1997.

A strong domestic economy and efforts by the island-nation to raise its competitiveness, including a decision to build two massive integrated resorts, have helped perk up the property market. Stuart Crow, head of Asia capital markets at Jones Lang LaSalle, said Asia remains attractive to investors due to its strong economies, improved liquidity through real estate investment trusts and better transparency. 'Cross border investment is at an all-time high, yet is likely to increase further in the next 12 months, particularly in the most sought after markets of Japan, Singapore, India and China,' he said.

In the Americas, total investment was up 32 per cent to US$170.7 billion and investment in Europe climbed 4.0 per cent to US$156.6 billion, with the UK, Germany and France accounting for more than two thirds of the volume, it said. -- AFP

Source: The Business Times, 19 July 2007
Posted by Property Wizkid

Government up the development charges to stem the En Bloc sales fever
Tax payable to enhance use of sites to be raised from 50% to 70%
The Government sprung a surprise on property developers yesterday by dramatically ramping up a tax payable to enhance the use of a site. The move triggered a selldown of property shares on the Singapore Exchange. Developers pay the tax - called a development charge - if they want to enhance the value of a site by building a bigger project, for example.

The rise in the land's value was taxed at 50 per cent, but will now be levied at 70 per cent, similar to what it was in 1985. The same rate will also apply to fees paid to rewind a site's lease back to 99 years. For example, a site that rises in value by $2 million will now be taxed $1.4 million, compared to $1 million previously.

Its broader effect will be to make certain sites more costly, and perhaps take some heat out of a roaring property market that has seen record prices across many housing types. Analyst David Lum from Daiwa Institute of Research said the move is 'another piece of evidence that the Government might be a little uncomfortable with the rapid appreciation in certain segments of the market'.

An immediate casualty could be the buoyant en bloc market, which has seen developers pay huge sums for estates over the past 12 months. And by stemming en bloc sales, which reduce housing stock in the short-term, the hike may even take pressure off rents. Developers will have to recrunch their numbers now - and hopeful owners might have to lower expectations of a bumper en bloc bonanza.

Sing Holdings said yesterday that with the change, it expects the land cost for acquiring Hillcourt Apartments to rise by about 1.2 per cent - from $1,444 per sq ft of potential gross floor area to $1,461. 'The rate revision will add a few percentage points to the total costs of some developments,' said a Savills Singapore director, Mr Ku Swee Yong, who felt the impact on developers will not be great.

Knight Frank's head of research and consultancy, Mr Nicholas Mak, agreed: 'There was a knee-jerk reaction, but it's not going to derail the property boom.' Still, property shares took a hit yesterday. Giants such as CapitaLand and City Developments fell by around 2 per cent or more, while the sector index plunged 2.7 per cent. The rate rise is a double whammy for some firms. Development charges are reviewed every six months, with new rates due on Sept 1.

These charges are designed to mirror property values and are almost certain to rise, given the surging market, thus adding more costs to developers over and above yesterday's rise.
Yesterday's change took immediate effect. It will hit developments that have yet to receive provisional permission to enhance land value, or those granted an extension to their provisional permission from yesterday. This means developers which have done deals over the past two to three months could be hit, said Credo Real Estate managing director Karamjit Singh.

Source: The Straits Times, 19 July 2007
Posted by Property Wizkid

How are the HDB flats doing?
The long dormant public housing market has bounced back with a vengeance, although some areas remain sluggish. New figures from property agencies show that prices of flats sold in Queenstown, for example, shot up by 11.8 per cent on average in the second quarter over the first quarter. Another hot spot was the Kallang/Whampoa area, which was in second place with a 10.2 per cent rise.

As many as eight Housing and Development Board (HDB) estates registered quarterly price rises of 5 per cent or more on average. Prices in Ang Mo Kio, Serangoon and Marine Parade grew by about 7 to 9 per cent. One 116 sq m sea-view flat in Marine Parade sold at a record of $695,000 for the area.

Property agency PropNex's chief executive Mohamed Ismail said the strong upswing in prices was not surprising as many buyers, cash-rich from recent collective sales, were paying premium prices for HDB flats in prime locations, or with good views. Other estates such as Clementi, Bukit Merah, Jurong East and Bishan also posted a healthy growth of about 4 to 6 per cent.
One executive flat in Queenstown sold for $628,000, well above the average of $559,000 for the area.

These figures were released to The Straits Times yesterday by two of the largest property agencies ERA Singapore and PropNex. Both claimed to have a 30 to 40 per cent share of the HDB market. The agencies say they give a clearer picture of recent HDB price movements.
This follows HDB's unexpected move on Monday to disclose average resale prices and the average cash-over-valuation (COV) - the sum paid over market valuation - of flats by region on its website.

Property experts expressed misgivings over the HDB figures, which were grouped according to five clusters of towns, instead of individual towns. 'The figures may not be the true reflection of what the current market is willing to pay for specific estates,' said Mr Ismail. For example, the overall average COV for the West region is $7,400, but in Clementi, the current average market price is $20,000 over valuation, he said.

The property agencies' figures show that some areas are still sluggish. One group of estates, which includes Bedok, the Central area and Geylang, had slower growth at about 1 to 3 per cent. Prices at other towns such as Bukit Batok, Pasir Ris and Yishun hardly moved. Mr Ismail said this was probably because the 'excitement and price awakening' of the second quarter had not reached the outskirts yet. He expects prices in most HDB towns to move upwards in the third quarter.

One effect of the new statistics released from the agencies and HDB is that they serve as a reality check for sellers currently demanding unreasonably high prices due to 'headline' sales reported in some areas recently, analysts say. A five-room flat in Bukit Merah, for example, sold for a mind-boggling $720,000 recently. But the average price for such flats is far lower at $467,000.

ERA assistant vice-president Eugene Lim said sales volumes could have been higher if not for flat-owners looking to 'catch on the initial euphoria'. Buyers and sellers are now beginning to digest the deluge of information. But 'it will take a few weeks for the dust to settle', and for the market to see the real effects, said Mr Lim. An HDB spokesman said yesterday that it is monitoring the market very closely, and will assess the need to provide such data on a regular basis.

Source: The Straits Times, 19 July 2007
Posted by Property Wizkid

What's the hype on Condos built on columns?
The upcoming Frasers Centrepoint Homes condo Soleil@Sinaran is the latest to reflect the trend for soaring buildings raised high on columns. Architects 61, which also designed The Cosmopolitan in the River Valley area, said that by elevating the 417-unit Soleil@Sinaran, 'the privacy of the units is enhanced to greater heights'.

Considerations in the design of Soleil@Sinaran included a high plot ratio of 3.5, a height restriction of about 40 storeys and high-density living. The architects also felt that adjacent mid-rise private flats and Novena Square commercial development had large footprints and, therefore, views were minimised. Architects 61 said: 'Privacy of the lowest level of units is further enhanced by locating it as high from the ground as possible.'

Like The Cosmopolitan - and many other new condominiums - Soleil@Sinaran will rise from above street level. But will columns be the only thing visible from street level? Asked about the impact on the streetscape from buildings raised on columns, the Urban Redevelopment Authority said: 'Generally, in certain areas within the city centre, urban design guidelines are put in place where the context requires buildings to relate to the street and their surrounding developments.'In the case of The Cosmopolitan, it is located in a residential area where the relation of the building to the street is not as critical. Hence the guidelines do not specifically require the building to do so.'

For Soleil@Sinaran, raising the building has allowed Architects 61 to free more space for landscaping that will include lagoons, pool lounges, entertainment pavilions with spa alcoves and spa pavilions to create a 'green podium'. 'The landscaping extends into the depth of the tower footprint,' the architects said. 'Trees grown within the covered first-storey terrace provide a human scale to the tower rising above, 'dissolving' the boundary between the inside and the outside. It is this landscaped podium that provides the human scale at street level.' Soleil@Sinaran is expected to be launched mid-August. Prices have not be fixed yet.

Source: The Business Times, 19 July 2007
Posted by Property Wizkid

Napier tags $4k-$4.5k psf for its 46 units. Any takers?
Two new projects have been put on the market - 8napier on the former Eng Lok Mansion site near Botanic Gardens, and The Rochester in the one-north precinct.

Prices at the 46-unit 8napier range from $4,000 to $4,500 per sq ft for apartments, and for now, the plan is to limit sales to just 10 to 12 apartments in the freehold development. 'We may sell another dozen or so apartments when our showflat is ready on site in a few months' time. But we plan to keep the rest of the project, including the six penthouses, for sale after the project is completed, which will probably be around end-2009,' Mark Wee, director of Napier Properties, said when contacted by BT yesterday.The company, controlled by Mr Wee and former Parkway boss Tony Tan, is currently previewing the project at its office on the 21st floor of Ngee Ann City Tower A.

The 10-storey 8napier has 40 apartments (either three- or four-bedder units) and six penthouses. All the penthouses are duplex units, ranging in size from more than 4,000 sq ft to nearly 6,000 sq ft. They are expected to be sold by auction. The smallest three-bedder apartment in the project is just over 2,000 sq ft and is priced at about $8 million. 'All the units come fully loaded with top-notch lighting, sound system and kitchen equipment, bathroom fittings and the like, so that our buyers do not have to do any renovations as we are fitting the units to the highest standard currently available in the Singapore market. This should minimise the hassle of moving in,' Mr Wee said. He declined to say how many units have been sold so far but buyers are understood to be a mix of foreigners and Singaporeans.

United Engineers is believed to have priced The Rochester apartments in the $1,000 to $1,200 per sq ft range. UE could not provide the average price yesterday when contacted by BT. The 99-year leasehold project is opposite One North Residences, which was sold earlier this year at an average price of around $900-950 per sq ft, market watchers said.

The Rochester has a total of 368 residential units, including eight penthouses, in a 36-storey block. The project is part of a mixed development that also includes a 100,000 sq ft mall and hotel. The entire project is slated for completion around 2009-10. The residential component comprises one, two, and three-bedroom apartments and penthouses. Some of the one-bedders are duplexes. UE began selling the units yesterday, according to its spokesman.

Source: The Business Times, 17 July 2007
Posted by Property Wizkid

Singapore Property News Upfront 22

2007-07-16T00:47:00.000-07:00

Two way investments
More super-wealthy South-east Asian individuals, including Singaporeans, are looking to invest in UK properties, especially in London. But the flows are not just going one way; more British investors too have become interested in Singapore real estate, say two senior private bankers with SG Private Banking, part of the Societe Generale Group.

‘Over the past one year we have seen - if you consider only the more serious expressions of interest from our clients in South-east Asia in this market (UK) - a jump of at least 20 per cent,’ said Don Percival, director of private banking with SG Hambros, which is SG Private Banking’s UK arm.

The property boom in this part of the world has heightened the interest that wealthy Asians have traditionally had in acquiring real estate as an asset class, and the UK is one of the most popular destinations for that purpose, Mr Percival told BT. The UK property market holds several attractions for foreign investors. Not only does it offer investors non-domicile tax status, it also offers a stable economic and political environment. Furthermore, the market has been booming as growing demand exceeds limited supply, with property values in central London growing some 33 per cent last year.

There’s also a historical connection for investors from South-east Asia, as a result of British colonialism. Said Nikita Rossinsky, managing director (Southeast Asia) of SG Private Banking: ‘There is an amazing amount of interest right now (in UK property). And part of it is historically motivated. There’s an affinity with the UK especially in this part of the world. Investors from Singapore, Malaysia, Brunei - when they look overseas, they look at the UK.’

Typically, these high-net-worth clients are looking to diversify their portfolio by investing in the UK. Many of them, in fact, may already have an exposure to the UK property market, but are looking to rebalance their portfolio. Said Mr Percival: ‘We’ve seen more Singapore clients who already have portfolios in London.’ Added Mr Rossinsky: ‘And it’s not just money going from Singapore to London. We have also seen clients who have multiple properties there, who then leverage these properties to help them invest in their business here. So the money goes out and then comes back here.’

The Singapore real estate market itself has also become a draw for foreign investors, such as those from the UK, who are drawn by recent developments here and the stable regulatory and social environment. ‘People feel comfortable investing here; it’s a centre of global excellence,’ said Mr Rossinsky. ‘And we have seen the interest in London as well…Singapore is marketing itself as ‘the Switzerland of Asia’ and I have made introductions to our teams here for accounts and trusts to be set up,’ said Mr Percival.

The two senior bankers were speaking to BT after a private seminar held by SG Private Banking for about 50 of its South-east Asian clients last week. The seminar was held in response to more queries from clients on investing in UK property. It drew double the number of participants it had planned for. About 60-70 per cent of the guests were flown in from Malaysia, Brunei, Indonesia and the Philippines.

A lot of times, a client’s property investment decisions are also influenced by lifestyle factors, as the investor may also be looking to stay in the property he buys, said Mr Percival. What his bank then does for these clients - upon introduction by their local SG Private Banking relationship managers in Asia - is to adopt a holistic approach in helping them make the best property investment decisions.

Other than offering lending services, the bank also provides advice in efficient tax planning, and estate and success planning. It also introduces them to independent specialists in property acquisition, education and immigration, said Mr Percival.

Source: The Business Times, 16 July 2007
Posted by Property Wizkid

Boom or Bust - that's the Question
Will the financial and property markets continue to boom, or do investors need to be more cautious? When, if at all, should the authorities step in? Sanjay Prabhakaran Director, South-east Asia Baxter Healthcare (Asia) Pte Ltd. I believe the current financial and property boom will be sustained for a few more years at least. However, the factors that will determine the growth potential of the financial and property sectors will differ.

Singapore has successfully expanded and diversified its financial markets over the past several years. Whether or not the ongoing bull run will continue depends partly on the government’s ability to adjust national policies in response to (or in anticipation of) developments elsewhere. Such tweaks could, for example, be designed to reduce the dependence on the US economy, or to increase our trade surpluses and foreign exchange reserves.

In addition, the current financial boom differs from earlier bull runs in that there is a greater spread of wealth within the investment community. In other words, there are more investors keen on gaining exposure in the markets of their choice. The financial services providers should continue to lower the barriers to investment and make new asset classes available to retail investors, to facilitate the goal of wealth creation.

On the property front, the government has been successful in attracting high-net-worth individuals to Singapore, as well as developing new growth engines - such as biotechnology and healthcare - for the local economy. These should ensure that the residential and rental markets for mid- to high-end properties stay robust. Then again, the government should never allow the market to overheat or the high-net-worth individuals could relocate elsewhere.

What’s fuelling the markets?
Charles Reed CEO interTouch
THE boom in the property market is about the same as it was just before the Asian financial crisis almost a decade ago. But the recent Reuters Real Estate Summit in Singapore highlighted that with rentals peaking, investors are not yet done with the lucrative property market, which still holds huge potential. Investors, and now more speculators, are certainly not yet done, but is there still huge potential?
With booming Asian economies, property investment in the region is escalating and with more developers trying to get a piece of the pie, funding in this sector shows no sign of slowing down.
There is demand among the growing middle classes in China, India and in other Asian cities, to invest in their own property markets, thus fuelling the industry further. I find it hard to believe that the growing middle classes in China or India can afford the current runaway prices! What is fuelling the Singapore property sector and the stock market at the moment is the excessive liquidity in the market from the newly-minted millionaires created by the collective sales fever. Overnight, thousands of people suddenly find themselves with millions of dollars of cash to play with.
Needless to say, the authorities need to observe developments quite closely as policy and regulations are invaluable. However, there is no need to step in as yet as competition is important for the industry to fully reach its potential. The way forward is greater liberalisation and openness from industry regulators to attract healthier competition.

Derek Goh Executive Chairman/Group CEO Serial System Ltd
Economic cycles are part and parcel of the system that the world economies operate in. These are economic forces (micro and macro) that influence the daily lives of every individual. The financial and property markets are booming because of the bigger appetite of fast growing economies like China, India and Japan. Though each economic cycle lasts an average of 10 to 12 years, the asset bubble is not going to burst just yet.
Government intervention in the markets is unnecessary as the Asian economies are now more resilient and able to withstand bigger swings. Businesses are not expecting any downturn in the next 12-18 months as major events on the horizon are stabilisers for the global economy, namely, the Beijing Olympics in August 2008 and the US presidential election in December 2008.
Beyond 2008, there is less certainty, as the US economy is losing momentum and China’s trade surplus would be too huge for the US balance of trade. Potential trade wars may be triggered by an aggressive new US president then.
For 2007 and 2008 overall, the Singapore economy will not be greatly shaken by any financial or property tsunami.

Tan Kok Leong Principal TKL Consulting
THE current property and financial market boom should probably be viewed as the upswing of a business cycle, in the wake of globalisation and technological changes. It is a feature of capitalism at work. The outlook for the introduction and spread of technologies remains favourable while relatively low interest rates favour investment, purchase of homes and consumer durables.
The financial crisis 10 years ago was probably caused by volatile short-term capital flows which attacked weaknesses in foreign reserves, the international exchange rate system and capital markets simultaneously. Future problems, perhaps, are likely to be caused more by disorderly unwinding of global imbalances.

A word of caution
Alfred Wong Managing Director/Architect WongPartnership
There is definitely a feeling of euphoria in Singapore. The rate at which residential property prices are rising does not reflect the increase in the earning power of Singaporeans. This is, of course, with the exception of those in the finance and real estate sectors. However, judging by car sales at the car show on July 8 when $31 million worth of cars were sold, it would appear that the average Singaporean is riding on a wave of positive expectations from the integrated resorts and the projected population growth.
I think that many investors do not remember the lessons of the last Asian crisis. I also expect the authorities to step in if the situation approaches a critical point.

Sam Yap S G Executive Chairman Cherie Hearts Group
The property market is currently overheating from speculative pressure, with prices soaring to levels not backed by economic fundamentals. This is sustained by easy credit from banks to speculators and property developers. Once the bubble bursts, a potentially destructive impact could be unleashed on our economy, with home buyers, property developers and banks being the likely victims.
The steps taken by the government to ease the pressure, while encouraging, are insufficient. More proactive measures, such as releasing more land for residential and commercial development and stricter guidelines on bank lending may be needed. Urgent action is required for a soft landing.

Annie Yap CEO The GMP Group
Compared with a decade ago, we can confidently say that in terms of business or leisure, Singapore can appeal to almost anyone today. Financially speaking, with greater collaboration with China, India and the Middle East, Singapore’s financial environment is more diversified than ever. Having our eggs in more baskets means we are more resilient and stable. With upcoming developments in the works, we will see Singapore attract interest from an increased breadth and depth of investors.
But we cannot let lofty enthusiasm become dangerous. Over-speculation can jeopardise Singapore’s plans for growth. Therefore, regulatory bodies should take up the role of observers, engaging in soft policing to calm over-excitement before sectors overheat. That way, markets operate smarter without compromising their autonomy. For example, the use of media in encouraging balanced discussions about the property market has helped in making the sector and the general public pause to take stock.

Lars Ronning President, North & South-east Asia, India, Australia & New Zealand Tandberg
As financial and property markets continue to boom, caution should be exercised to establish that the current situation is a true reflection of economic growth and not just a result of speculative buying by over-zealous investors.
Amid the air of optimism and euphoria, the authorities need to prevent such inflationary pressures from increasing the cost of doing business here and eroding Singapore’s attractiveness as a business hub to foreign and local investors.

Tan Ser Giam Chairman Eastern Navigation Pte Ltd
Singaore's financial market is flush with funds and this will continue to push the stock market higher, barring unforeseen events. The property market will likewise be strong, although the risk of the government stepping in to cool the market remains high. There are rumblings from businesses about rising rentals adding to the cost of doing business. One of the things to watch is the US economy. If it goes into recession, all bets on the stock and property markets are off.

Joel G. Momberger Managing Director Informatica SEA Pte Ltd
As a small open economy, Singapore is extremely vulnerable to external developments, especially in the surrounding region. While it has withstood the Asian financial crisis 10 years ago and even maintained a relatively favourable economic performance, its close links with the regional economies suggest it will not get away completely unscathed should anything untoward happen.
However, Singapore’s track record of prudent fiscal and monetary policies has been a great asset and this will help reassure investors of its commitment to consolidate its position as a financial centre for the region.

On government intervention
Lim Soon Hock Managing Director Plan-B ICAG Pte Ltd
WHAT goes up must come down, and this applies to both the financial and property markets, as has been proven in the past. Astute investors will watch the cycle very carefully to look for early signals of correction and downturn.
The wild card amid the optimism and euphoria is the US dollar. Should the US dollar depreciate sharply, there will be shock waves throughout the global economic system. While countries in Europe and Asia may benefit from the weakening of the US dollar, it will only be temporary; the US being the economic engine and technology innovator of the world will import less, because it will cost more. This will have adverse repercussions on the economies of these countries, and as a consequence, on the financial and property markets.
Our authorities should only step in where necessary to prevent a crisis. For example, to prevent an over-strengthening of the Singapore dollar, or property prices escalating beyond the means of the man in the street. I am confident the government will do everything possible to ensure that the gap between the rich and the poor will not be left to widen without timely intervention.

Wee Piew CEO HG Metal Manufacturing Ltd
There are a lot of positives going for the Singapore economy, which has been posting strong growth in the last couple of years. In the coming years, we are likely to see continued growth in the services sector - like financial services and tourism - with the opening of the integrated resorts.
Hence, the current boom in property and financial services is not without fundamentals. There is definitely more capital flowing into Singapore to take advantage of its growth in the coming years. As such, I do not see an asset bubble at this point in time. After all, the property market has only just been on an uptrend in the past year or so while a property boom typically lasts for a few years.
However, if the recent sharp rise continues next year - especially if it spreads to mass market residential property and the HDB market - then I think the authorities should consider taking some steps to ensure more supply of land for developers. On the other hand, I think stricter measures like those imposed in 1996 should be avoided as it is better left to the market to find a price equilibrium.

Eric Hoh Vice-President, Asia South Region Symantec
It is heartening to see how Singapore has accelerated in terms of economic growth which comes amid a thriving stock market, a strong economy and a property boom. Singapore is likely to continue on its economic upswing with the much anticipated launch of the integrated resorts and hosting of the Formula 1 Grand Prix race.
As many continue to leverage on the increasing attractiveness of Singapore as a global city, I feel that the property and financial boom will continue in the short to medium term. For now, I agree with Senior Minister Goh Chok Tong that we should not be overly concerned and let the market find its own level.

Ng Kong Yeam Group Executive Chairman Sino-America Tours Corporation Pte Ltd
Booms and busts will always occur, if one reads economic and financial history. In 1985, property prices in Singapore were very low, nothwithstanding efforts by developers to promote sales. Ten years later, in 1995, prices shot up. Then in 1997, the property and stock markets fell due to the Asian financial crisis.
Supply and demand dictate the rise and fall of prices of stocks and properties. Expensive goods are sold based on wants rather than needs. In my view, the boom in Singapore will last two more years, and then a bust will begin to take place. In the US, the housing bust has already started. Investors should figure out for themselves when they should be cautious. Authorities cannot possibly regulate the rise and fall of prices.

Wong Teek Son Executive Chairman and CEO Riverstone Holdings Ltd
There is a tripartite relationship between businesses, authorities and investors for the market to continue to boom.
Businesses need to build credible operating models to withstand the economic fluctuations. Riverstone, for example, builds its foundations on value propositions by customising products to fit every customer’s needs, leading to long-term relationships.
Investors need to examine their options carefully when making their investment decision. Singapore has a good corporate governance structure and investors have data available for them to make educated decisions. The authorities need to continuously work with the market to ensure that information is transparent, adequate and responsibly reported, and leave the decision making to the open market.

For more insights from PropertyBingo, you may check out the following:
http://www.propertybingo.com/News.aspx?newsid=58

Source: The Business Times, 16 July 2007
Posted by Property Wizkid

A $2b insight from the "Remisier King", Peter Lim
Peter Lim, the man formerly known as the ‘Remisier King’ and who is estimated to be worth more than $2 billion today, reckons the stock market still has two good years to go. But he is getting concerned about the property market. ‘The market won’t collapse for the next two, three years. It’s all sentiment-driven. People are making more money, and so long as people are spending, we are OK. But one has got to start to think how to exit at the end of 2-3 years - 2009, before the casino starts operating,’ he said.

Mr Lim is, of course, well known as an influential stockbroker and deal-maker in the Singapore and Malaysian markets in the early 1990s. That was also when he made his millions, but quit at his peak to take care of divorce proceedings. Despite being out of the industry, it was in the last few years that his fortunes took a leap forward, thanks to the booming stock market. He was recently in the news for agreeing to put $150 million into Rowsley for its reverse takeover of a China solar company.

In a near four-hour interview with BT to talk about his market views and investment philosophy, Mr Lim said a lot of the big companies listed on the Singapore Exchange (SGX) today have a global presence. Like Keppel Corp, for instance; it can’t fulfil all the orders for its oil rigs. So even if there is a shift in investor sentiment and the market corrects severely, investors can still ride out the whole cycle, said Mr Lim - barring a global recession, of course.

The danger, he said, is in the small-cap sector. ‘Some of these stocks have gone up a lot. Much of the potential has been priced in. If this potential is cut short by any unexpected unfortunate event, they will come down like a rock.’ Small-cap stocks run up fast because of their small float. But when the sentiment turns, everyone is a seller, he said.

As for the property market, Mr Lim thinks prices have gone up too fast. The sharp increase has taken everyone by surprise, even the government. ‘Actually, it’s quite simple. Singapore is small. You get a small bucket, and pour a lot of water, it’ll overflow. This is what’s happening. I think the demand just comes together at the same time. I don’t think it’s sustainable.’

Demand is so strong that people are knocking down buildings, and that’s curtailing supply even more. But the thing is, the buildings knocked down will have three times more apartments when they get rebuilt a few years down the road. ‘When the supply comes out, property prices will drop,’ he said. Comparisons have been drawn between Singapore and London. ‘But you tell me: how many en bloc (redevelopments) do they have in London? No en blocs means no additional supply.’ he said.

Mr Lim is worried about the impact of high rentals on businesses - office rentals have gone up by 200-300 per cent in the last few years. ‘Costs are going to bloat . . . most businesses’ margins are going to be eaten up by costs.’ At the moment, many individuals and companies are making money from asset inflation, he said. ‘You hope that this asset inflation becomes an income, becomes regular. But I don’t think so. These are all situational. But it will go one day.

‘I’m not a pessimist, but this is how I see it. That’s why at the end of a bull market, you see a new generation coming up. Because all the old ones die. Now and then, you see one of those who stays - then he becomes a legend. And if you observe those legends, most of the time, they spend their time scolding people: ‘don’t gear, don’t gamble’. And that exactly was the message that he kept harping on during the interview.

More insights from PropertyBing. Check the following:
http://www.propertybingo.com/News.aspx?newsid=57

‘A lot of people get it wrong. When the bull market is here, they build debts. Bull market is the time to build cash. Because today’s market turns very quickly. When the market turns, you cannot sell, especially for the property market. You can only sell when things are going up.
‘So I always tell my friends: ‘Make sure you stay alive. The market won’t die, so there’s always a next time.’

By BT’s estimates, Mr Lim is worth in excess of $2 billion. He has just under 5 per cent in Wilmar International. Based on the company’s current market capitalisation of $22 billion on SGX, that stake alone is worth $1.11 billion. He has about 11 per cent in FJ Benjamin, and that’s worth $52.6 million. Meanwhile, his 25 per cent stake in Rowsley has a market value of $37 million. So his Singapore equities alone are worth $1.2 billion. On top of that, he has some Australian mining stocks bought in the 1970s and ’80s.

Mr Lim says 50 per cent of his portfolio is now in equities, another 10 per cent in properties and the remaining 40 per cent in cash. The cash is from the dividends he received, which he has not reapplied to the market. So all in, he’s worth more than $2.4 billion. The 54-year-old believes that the fortune he has today is pre-destined. ‘This size - substantially, it’s your destiny. If today I have $10 million, I’d say over 90 per cent is due to my hard work. But getting it right is not $1 billion. Maybe it’s $100 million. How that $100 million becomes $1 billion, you know it’s because somebody likes you. You must believe it’s somehow a path that’s been drawn.’

The bulk of his net worth is in Wilmar, in which he was asked to pump in under $10 million in the early 1990s. By the second half of the decade, he had totally written off that investment. That was when the Indonesian currency fell from 2,500 rupiah against the US dollar (the exchange rate he invested in Wilmar), to 16,000 rupiah, and president Suharto was ousted. There were riots in Indonesia. There was no way of cashing out the assets. But in a few years, things stabilised in Indonesia and the pieces began to come together for Wilmar. Its China operations began to pick up, businessman Robert Kuok decided to inject his Malaysian palm oil operations into Wilmar and palm oil prices started to go through the roof because of the scramble to produce biofuels. ‘My Indonesian partner was asking me the other day: ‘How the hell did we make so much money?’

‘Up to a point after people tell you a story and a vision, don’t write it off. Sometimes it comes true. You just make sure that if it doesn’t come true, you don’t get hurt too much,’ he said.
The most important factor to consider when investing in a company is the person running it; you look at whether the person is honest, and whether he or she is master of their trade.
‘It works. It’s a tested method of assessing companies,’ Mr Lim said.

Wilmar is not his only lucky break. He escaped the Asian crisis as he had quit the broking profession in 1996 to prepare for his divorce proceedings. And he spent the next six months liquidating most of his stock positions. So when the crisis hit, he was mostly in cash. He was also not in the market during the dotcom bubble as the hearing on the division of matrimonial assets dragged on until 2001. He thanks his lucky stars for having avoided the Asian financial crisis, but thinks he would not have been caught in the insanity of the dotcom bubble.

Nowadays, Mr Lim spends his time dispensing advice to deal-makers in the industry - and sends them a bill of $300,000 or more for it. He still gets a thrill out of structuring deals, which he says is similar to a chess game. He described the recent Rowsley deal to acquire a solar energy company in China as ‘beautiful’, as one which allows existing shareholders to ‘lock in the upside, but hedge the downside’. He’s also having to cope with the problems of having too much money. He worries if his children, a 15-year-old girl and 13-year-old boy, will be spoilt by his wealth. He reckons he may give the bulk of his money to charity eventually.

But going by the four-hour lunches that he takes - with Imperial Treasure at Great World City being his Canteen No 1 and Kuriya his Canteen No 2 - and sometimes squeezing in a game of tennis or two before dinner, the money problem can’t be all that bad.

His views on . . .
Cutting deals
Maybe it’s in the blood. It’s quite exciting to pitch a deal, to make sure that you don’t catch me. It’s like a chess game: you make this move, the next one I make. I don’t want to get checkmate.
Wealth
Money is a funny thing. When you don’t have it, you want it. But when you have it, you have a lot of problems. I believe that if I’d had no money, I wouldn’t have had my divorce. Things wouldn’t be good, but it wouldn’t end up in a divorce.
Growing old
Once you are old, every year makes a lot of difference. Your lease gets shorter, there’s no extension. You go, you go.
Death
Some of my school mates have passed away. So once you start to see all these things, your perspective on life becomes more measured, more considered.
Making money
It’s very difficult to make money from trading. People who get rich are those who buy a company, build it, run it. Most of the traders, they come, they make money, because they have this gambling instinct. They take the money and spend it. The minute they lose money, they got no money to pay up.
The next downturn
Today’s bull run can get cut short by a number of things. Just like our recent experience with Sars, or a bomb drops on the wrong person’s head. Like anything else, the least expected thing can happen at the wrong time. I got a feeling the next downturn will be very severe.

Source: The Business Times, 16 July 2007
Posted by Property Wizkid

Home rental - downgrading for many
The boomtime in Singapore’s property market is hitting one group of house-hunters hard: singles. Across the private market, property agents said prices in the past three months have gone up by as much as 40 per cent, with rents at some locations even doubling. These singles, usually professionals in their 20s to 40s, now face the prospect of downgrading from their current rented homes, sharing with others, or moving back in with their parents in order to reduce living costs.

In the first quarter of this year, Urban Redevelopment Authority (URA) figures revealed that private residential property rents rose 7.6 per cent from the previous quarter, compared with a 5.3 per cent increase in the last quarter of last year. Second-quarter figures are expected at the end of this month.

Recent trends show that these private property tenants have downgraded to renting Housing Board (HDB) flats - or pooling together resources to purchase flats in either the private or HDB resale market, said Mr Eric Cheng, the senior division director of property agency PropNex. According to PropNex’s surveys, singles account for 16 to 17 per cent of total property transactions - but this has since risen by 2 to 3 percentage points in the last three months.

Mr Dennis Yong, the president of real estate company HSR Group, also noted that the rentals of private studio apartments, which used to be around $1,100 a month, are climbing upwards of $2,000. As a result, many tenants have downgraded and the take-up rate of HDB flats has been ‘crazy’, he said. ‘You advertise in the morning and it’s snapped up in the afternoon.’

Flight steward Joe Tan, for example, said he was forced to move out of his two-room, 960 sq ft apartment at Bayshore Park last month when his monthly rent was raised from $1,600 to $2,800 at the end of his lease. Unable to afford the new rent, the 36-year-old has opted to rent a smaller HDB flat in Tampines for $1,100 a month. He is thinking of buying a property.
Another local, Mr Kevin Lim, 35, a freelance media producer, said that he was now looking for an affordable flat after his landlord raised the rent for his private apartment in Novena from $1,800 to $3,500.

Mr Tan said the increase was unreasonable for the standard of his flat. ‘There are no affordable private flats for us any more, unless we move out to the sticks,’ he said. Knight Frank director of research and consultancy Nicholas Mak said the rental squeeze was due to demand surpassing supply, which has been aggravated by a massive reduction in flats as a result of the recent collective sales frenzy. With property values going up, landlords expect higher returns, he said.
The increasing number of expatriates working in Singapore, many of whom have a higher income because of relocation packages, also exerts pressure on the market.

While HSR’s Mr Yong said the rental hikes have also affected the outskirts, Mr Mak felt that affordable flats were still available further away from the city. He expects the demand to ease after 2009, when more residential projects will be completed. ‘Then, there will be a real test of the sustainability of current rental market prices,’ he said.

Source: The Straits Times, 16 July 2007
Posted by Property Wizkid

Government may get up to $4b in stamp duties for 2007
With the property market setting new records each month, government revenues from stamp duty look set to reach new highs this year. Property deals in the first five months of this year have yielded more than $1.7 billion in stamp duty. At this rate, the government coffers could get a $4 billion boost for the entire year.

The takings for the first five months of this year have already surpassed the $1.3 billion for all of last year, the latest official statistics showed. And this is just 7.7 per cent shy of the record $1.8 billion in 1996, the last property market peak. But with the pace of transactions hotting up over the past few months, some analysts are predicting that the stamp duty collected could rise even more.

‘If the property market continues as it is now - and we are only starting to see it pick up - we are looking at somewhere in the order of $4 billion to $5 billion in stamp duty,’ said Mr Song Seng Wun, economist and research head at stockbroking house CIMB-GK.

Stamp duty is a tax on commercial and legal documents used in certain transactions. The bulk of it comes from property purchases. Stamp duty ranges from 1 per cent to 3 per cent of the purchase price. The latest surge in stamp duty is largely due to the jump in property prices and transactions. ‘Stamp duty reflects increased economic activities everywhere, but the main contributor has certainly been the property market,’ said Mr Song.

Mr Nicholas Mak, director of research and consultancy at property firm Knight Frank, also sees a surge in stamp duty, though he is slightly less bullish than Mr Song. He expects a record 33,000 private homes to be sold this year. The average value of each home is also likely to be higher than in the past, he noted.

This would increase stamp duty, as it is calculated as a percentage of a property’s price. Based on this, he projects tax takings of about $3.2 billion. A recent tweak in stamp duty rules may also contribute to the boost. In December, the Government stopped deferring stamp duty payments on property sales - a practice started in 1998 that allowed buyers to put off paying it for up to a few years.

Now, property buyers have to cough up stamp duty within 14 days of agreeing to buy. But those who bought properties before December still enjoy deferments. This means that the stamp duty takings so far this year come not only from new property sales in the first five months, but also from deferred sales in past years, bumping up the figure.

Economists say stamp duty is set to become the third biggest contributor to government operating revenue this year, from being one of the smallest in the past. It is projected to surpass customs and excise duties, motor vehicle taxes, property taxes and betting taxes. Since 2000, it has consistently fallen behind all four categories.

Analysts also noted that with the bumper take from stamp duty, as well as projected higher takings from the goods and services tax and income tax, government revenues are likely to surpass the $32 billion collected last year.

Source: The Straits Times, 16 July 2007
Posted by Property Wizkid

Singapore Property News Upfront 21

2007-07-13T02:47:00.000-07:00

Greener pastures for JLL & DTZ Directors
In the red-hot property market, some property consultancies are seeing departures from their investment sales departments. Lim Song Hai and Quek Soh Hoon, national director and local director respectively at Jones Lang LaSalle’s (JLL) investments department, have quit the firm. Over at DTZ Debenham Tie Leung, Anthony Seah, associate director (investment advisory services), is leaving. Mr Seah is heading for property fund manager Develica Asia-Pacific, where he will be investment director. Develica last month bought 1 Finlayson Green for just under $231 million. Mr Lim left JLL at the end of last month and is now said to be taking a break before deciding on his next career move.

Market watchers expect him to stay in the investment sales business but perhaps focus more on the regional business instead of the Singapore market. Ms Quek is still serving her notice at JLL; her last day will be July 19. JLL’s regional director and head of investments Lui Seng Fatt described the departures as ‘part of the attrition and the organic growth process’. He said that following the two departures, the investments department will have a total of 12 staff, including associate director Stella Hoh and senior manager David Batchelor, and may see some internal promotions.

He said: ‘We are setting up a new team to focus on institutional transactions serving clients who are primarily property funds seeking office, commercial and retail property acquisitions in Singapore.‘ So far we have four members in this team and may recruit more. These are mostly people with investment banking-type experience and who can talk the financial lingo that funds speak in.’ The current 12-member investments team will focus more on collective sales, development sites and sales of completed residential projects.

For potential enbloc sales projects, you may check out:
http://www.propertybingo.com/FindPte.aspx

Market watchers note that JLL has been garnering a bigger share of brokering office investment sales deals lately, such as SGX Centre, SIA Building, Parakou Building and 78 Shenton Way, following the arrival of its new managing director (South-east Asia) Chris Fossick, who was one of Singapore’s top office leasing dealmakers during his days at CB Richard Ellis here.

Last month, BT reported the departure of DTZ’s director (investment advisory services) Tang Wei Leng to join Wachovia group of United States. DTZ’s auction director Shaun Poh has assumed Ms Tang’s former responsibilities as head of investment advisory services for both Singapore and South-east Asia.

Source: The Business Times, 12 July 2007
Posted by Property Wizkid

Dubai World to expand US & Asia markets
Dubai World, the investment holding firm of the Dubai government, said its real estate arm is looking to expand in the United States and Asia and is set to make an acquisition soon.
‘We like the market in Singapore and we’re evaluating opportunities here. We are looking at China, Vietnam, Thailand,’ Dubai World Chairman Sultan Ahmed Bin Sulayem told Reuters on the sidelines of a press briefing on Thursday.

Dubai World’s real estate firm, Nakheel Group — the developer of three palm-frond shaped islands off Dubai’s coast — recently said it would launch an international arm to pursue projects outside of Dubai. In December last year, it sold the world’s largest Islamic bond, raising US$3.52 billion.Asked what the timeframe was for Nakheel’s next acquisition, Mr Sulayem said he hopes ‘that it can come within the next few months,’ adding these would be in Asia and the US.

Dubai World holds a multi-billion dollar portfolio that includes British ports operator P&O and has been taking on considerable debt to fund its acquisitions for its various businesses. The investment firm’s private equity arm, Istithmar, has also been buying up US property aggressively. Last year, it bought a 73 per cent stake in the Mandarin Oriental New York, acquired retailer Loehmann’s, the Knickerbocker Hotel in New York, and office block 280 Park Avenue in April.

Istithmar and Nakheel have also said that they plan to develop tourist resorts and real estate projects in African nations including Kenya and Mozambique to tap rising leisure demand. Istithmar recently made an US$825 million offer for New York luxury retailer Barneys in June, but its bid could be scuppered by Japan’s Fast Retailing , which later offered US$900 million. In November 2005, Dubai Ports World, the investment firm’s port operator and the world’s third-largest container port operator, said it was planning an initial public offering (IPO) within two years. Its holding company issued a US$3.5 billion Islamic bond, or sukuk, convertible into shares in any IPO.

Mr Sulayem was in Singapore to finalise the acquisition of Singapore shipyard firm Pan-United Marine by Dubai Drydocks World, the global maritime arm of Dubai World.
Dubai Drydocks said in a statement that it has received acceptances of approximately 84.8 per cent of shares in Pan-United Marine.

Source: The Business Times, 12 July 2007
Posted by Property Wizkid

Will Malaysia lift cement cap?
Malaysia’s developers said a government move to remove a cap on cement prices will boost construction costs and compel them to increase property prices by about 10 per cent. ‘The price increase is an additional burden on the property industry at a time when the building and property industry is challenged by softening market demand,’ the Real Estate and Housing Developers Association said in a memorandum to the trade ministry.

Shares of cement suppliers, including Lafarge Malayan Cement Bhd, surged after Malaysia decided last month to lift the price cap on cement, a governmentcontrolled item. The selling price of cement will be fixed every four months under an automatic pricing mechanism from Jan 1 instead of being set by the government, Deputy Prime Minister Najib Razak said then.

The price mechanism would affect ongoing projects, including 597,242 houses being built nationwide, the association said. ‘In extreme cases, contractors’ inability to absorb such financial burden may lead to project abandonment,’ it said. The association represents more than 800 developers responsible for about 80per cent of the total real estate built in Malaysia. They include SP Setia Bhd, Malaysia’s biggest developer, Sunrise Bhd and Mah Sing Group Bhd.

Source: The Business Times, 12 July 2007
Posted by Property Wizkid

Mapletree buys 2 industrial properties in Malaysia
Mapletree Investments says its wholly owned subsidiary, Mapletree Industrial Fund Management Pte Ltd (MIFM), will buy two industrial properties in Malaysia for a total of RM171.5 million (S$75.7 million) - the first regional acquisitions for Mapletree Industrial Fund. MIFM will buy the first property, in Johor Technology Park, for RM80 million and the second property, at Technology Park Malaysia in Kuala Lumpur, for RM91.5 million.

Both deals have been structured on a sale and leaseback arrangement, with the Malaysian vendors - Classic Advantage Sdn Bhd and Iris Technologies (M) Sdn Bhd respectively - taking long leases on the properties. ‘These acquisitions are an important part of our strategy to expand our investments beyond Singapore for Mapletree Investment Fund,’ said Mapletree chief executive officer, Hiew Yoon Khong. ‘These acquisitions will help us gain a foothold in Malaysia. We will continue to look for quality industrial properties here and across Asia to invest in and grow Mapletree Investment Fund into a truly pan-Asian industrial fund.’

MIFM CEO Phua Kok Kim said: ‘The property at the Johor Technology Park benefits from its proximity to the University Technology Malaysia campus and the Standards and Industrial Research Institute of Malaysia as synergies and innovations from these two institutions would complement the manufacturing industries located in the Johor Technology Park. The property at the Technology Park Malaysia is also a strategic acquisition for us as it is located within one of Malaysia’s most advanced and comprehensive centres for research and development of ICT and knowledge-based industries,’ Mr Phua added.

Source: The Business Times, 12 July 2007
Posted by Property Wizkid

China’s largest real estate agency E-House plans US IPO
E-House (China) Holdings Ltd, China’s largest real estate agency, may raise US$150 million in a US initial public offering), according to a filing with the Securities and Exchange Commission (SEC). The Shanghai-based company, which operates in 20 Chinese cities through more than 1,800 salespeople, is raising capital to open new stores, upgrade its information system, increase marketing and fund possible acquisitions. The filing on Tuesday did not disclose the number of American depositary receipts to be sold or their pricing.

New property sales in China increased by an average of 38 per cent a year between 2001 and 2005 as the government encouraged home ownership. The floor area of new properties sold in the country grew 25 per cent a year in the same period, according to E-House’s filing. The seven-year-old company sold 54 million sq ft of new properties with a combined value of almost 42 billion yuan (S$8.4 billion) between 2001 and 2006, the document said.

E-House, China’s largest real estate agency and consulting company by the number of transactions, the value of deals, floor area sold and sales network, had US$56 million of sales last year, a 45 per cent increase from 2005, the document said. It derived 81.6per cent of that from primary agency services, 6.9 per cent from secondary brokerage services and 11.5 per cent from consulting and information services. Net income jumped 62per cent to US$18.1 million, or $0.27 per share, the share sale document said.

Credit Suisse and Merrill Lynch & Co are arranging the share sale. E-House plans to trade on the New York Stock Exchange, the document said. China Renaissance Capital Investment LP, a Credit Suisse fund venture co-founded by Mark Qiu, former chief financial officer of CNOOC Ltd, invested in E-House before the IPO.

Source: The Business Times, 12 July 2007
Posted by Property Wizkid

Morgan Stanley pays $1.58b for S Korea's office
Morgan Stanley set a record for real estate purchases in South Korea with its agreement to buy Daewoo Engineering & Construction Co’s Seoul head office for 960 billion won (S$1.58 billion), brokers said. The Government of Singapore Investment Corp (GIC) set the previous record in December 2004 by paying about 880 billion won to buy Star Tower in Seoul from Dallas-based Lone Star Funds, said Steven Craig, from Jones Lang LaSalle Inc, the world’s second-largest commercial real estate broker.

The purchase extends a global acquisition spree in which Morgan Stanley has bought offices, hotels and residences. Morgan Stanley, the biggest real estate investor among Wall Street banks, is buying into a market where demand for office space is likely to outstrip supply for the next three years, driving up rents. ‘Rent escalation for office buildings in Seoul has been 3 per cent to 5 per cent per annum for more than five years, and we expect it to continue,’ said Sean Kim, associate director of Colliers International’s Korea office, in a telephone interview.

The price per square metre paid for the Daewoo building is about 75 per cent higher than that paid for the Star Tower, according to local real estate brokers. At 23 storeys and 132,560 square metres, the Daewoo building is roughly half the size of the 45-storey Star Tower, which has 212,500 square metres. Morgan Stanley is paying about 24 million won per pyung, compared with the 13.7 million won per pyung that GIC Real Estate paid for Star Tower, said Mr Craig at Jones Lang LaSalle. One pyung equals 3.3 square metres.

‘One wonders what Star Tower would go for if it came back onto the market today,’ Mr Craig, a Seoul-based member of Jones Lang LaSalle’s investment sales department, said via e-mail. ‘With market vacancy touching 1.3 per cent, it would definitely be a lot more than US$1 billion.’
Mr Craig said the price Morgan Stanley is paying excludes a reserve for capital expenditures to refurbish the Daewoo building. ‘It will be a very substantial number because a very large renovation programme is required,’ he said.

Morgan Stanley spokeswoman Alyson D’Ambrisi didn’t immediately respond to a request for comment placed after regular New York business hours. Lay Choon Mah, a spokeswoman for GIC Real Estate, declined to comment. JPMorgan Chase & Co arranged the transaction for seller Daewoo Engineering.

Source: The Business Times, 12 July 2007
Posted by Property Wizkid

US high-end properties still hot while the rest is not.
Given that the real estate market is supposed to be in free fall, some strange things have been happening recently in Mill Valley. It is one of the expensive suburbs of San Francisco just over the Golden Gate Bridge, and much of the housing market there seems to be doing just fine. One three-bedroom house sold for US$1.4 million last month without ever being officially put on the market. The seller accepted a pre-emptive bid - US$20,000 above the asking price - from somebody who had heard that the house was about to be listed for sale.

‘The homes that are having a hard time selling are the average-priced homes,’ said Vanessa Justice, a real estate agent with Pacific Union GMAC in the Bay Area, where the median house price is about US$750,000. For upper-end homes, she said, ‘it’s actually pretty crazy right now’.

It has been a while since real estate agents used the word ‘crazy’ in a positive way, but Ms Justice is onto something here: The high end of the market is surviving the slump much better than any other segment. Even as foreclosures keep rising and overall sales continue to plummet, more expensive homes have staged a bit of a comeback in recent months. They’re spending less time languishing on the market than others, and their prices appear to be holding up better.

This split in the market helps explain why the sales of Manhattan apartments, some of the priciest homes in the country, have remained fairly strong. The national trend has gone largely unnoticed, though, because neither the federal government nor the National Association of Realtors - the main sources of housing data - report statistics for different price segments.
But after just about every home sale, documents must be filed with a local government office. A research firm called DataQuick Information Systems gathers these records, and a New York Times analysis of them shows that the story of today’s real estate market is really two different stories.

In the Boston area, for instance, the number of homes selling for at least US$1 million plummeted to 619 in the first five months of 2006, from 773 in the period in 2005, according to DataQuick. But the number jumped to 711 in the first five months of this year.

In the New York region, sales at the top end - that is, homes in the most expensive 5 per cent of the market - have also been rising, while they have been falling in the middle and bottom of the market. The same is true in the San Jose, California; Seattle; Denver; and Houston areas. In San Francisco, Los Angeles, Phoenix and Miami, high-end sales are down but not by nearly as much as sales in other price segments.

Separate statistics from the California Association of Realtors also show million-dollar-plus homes to be selling better than others in that state. The high-end market is far from booming, to be sure. Many houses would still sell for less today than they would have a year ago. But the market has stayed strong enough to catch a lot of buyers and sellers off guard. They keep hearing about a real estate meltdown and then finding a different reality when they go to make a deal.

A three-bedroom apartment around the corner from the Guggenheim Museum, on 88th Street near Fifth Avenue in Manhattan, was recently put on the market for US$2.8 million, and the first bid came in slightly lower than that. Ten days - and nine bids - later, the seller accepted an offer about US$500,000 above the asking price.

In Brookline, Massachusetts, near Coolidge Corner, a big Victorian house went on the market for US$1.4 million this spring - just as it had in 2006, without selling. ‘I thought it was still overpriced,’ said Chobee Hoy, the seller’s real estate agent. Yet the house ended up selling for about US$30,000 more than the asking price.

There seem to be three main causes of the split in the market. The first is that affluent families continue to do better than others, thanks to healthy income gains and a rising stock market. ‘To some extent, it is the rich getting richer,’ Andrew LePage, an analyst at DataQuick, explained. ‘The folks who don’t rely solely on a weekly or monthly paycheque seem to be doing better.’

The upper-end of the market has also been helped by an influx of well-off foreign investors whose buying power has grown with the recent decline of the dollar. Hard as this may be for an American to imagine, New York, San Francisco or Miami can now seem like a bargain, compared with London, Moscow or Sydney. Jason Haber, an agent with Prudential Douglas Elliman in Manhattan, said he had recently taught himself how to convert square feet into square metres - you divide by 10.8 - because of all of the international buyers traipsing through New York apartments.

Finally, both the recent rise in interest rates and the problems in the mortgage market have had a much bigger effect on low-income and middle-class buyers than affluent ones. It has become harder to get a subprime mortgage, while the uptick in interest rates this year has added about US$100 to the monthly payment on an average fixed-rate 30-year mortgage.

As Mark Zandi, chief economist of Moody’s Economy.com, summed up the market: ‘The low end is getting creamed. The middle is struggling. The high end is running on its own dynamic.’ It’s tempting to conclude, then, that the top of the housing market has somehow become bubble-proof. And some real estate agents will doubtless make this pitch to buyers who are on the fence. But it is almost certainly wrong.

In fact, the very top of the housing market - the sprawling vacation homes and 10,000-square-foot mansions - seems to be doing considerably worse than merely expensive homes. Ines Hegedus-Garcia, an agent in Miami, recently looked at sales volumes there and found the market for homes that cost US$1.2 million to US$2.5 million to be holding up decently. The situation was much worse for those priced above US$2.5 million. There are also a couple of areas, like Washington and San Diego, where the high-end of the market, broadly defined, is already doing about as badly as everything else. So perhaps the recent comeback won’t last long in other cities.

Remember, it’s not as if the wealthy are immune to irrational exuberance. Just think back to the 1990s - or the 1920s. Any asset can end up becoming overvalued. Right now, though, there is a bit more of a rational explanation for home values at the high-end of the market.

Source: The Business Times, 12 July 2007
Posted by Property Wizkid

Singapore Property News Upfront 20

2007-07-06T03:24:00.000-07:00

$1.6m for each Pender Court owner
Pender Court, off West Coast Highway and near the Caribbean and Reflections at Keppel Bay condos, has been sold for $80 million or about $872 psf of potential gross floor area. No development charge (DC) is payable. The unit land price for Pender Court surpasses the last collective sale transaction in the location - that of Fairways Condo which was sold in May for about $785 psf per plot ratio, inclusive of DC and the cost of buying an adjoining piece of state land.

Cushman & Wakefield brokered the collective sale of Pender Court through a private treaty deal inked earlier this week. The 65,480 sq ft freehold site is designated for residential use with a 1.4 plot ratio (ratio of maximum potential gross floor area to land area) and a five-storey maximum height under Master Plan 2003. The buyer is Bravo Building Construction, which plans to redevelop the freehold plot into an 80-unit condo slated for launch in the second quarter next year. ‘We should easily be able to sell at an average price of $1,800 psf,’ Bravo director Jenny Tan told BT. She reckons Bravo’s breakeven cost for the project will be around $1,200 psf.
‘The site has excellent ‘feng shui’, with the front facing the sea and having Mount Faber as its backdrop. We’re looking for an architectural firm to design a resort-style boutique condo on this site,’ Mrs Tan added.

Bravo, a five-year-old outfit involved in the construction and property development business, has bought some 15 sites in Singapore since September last year. The sites are predominantly residential plots purchased through collective sales and are mostly located in the eastern part of the island. Most of the sites have land areas of 30,000 to 45,000 sq ft. These include Castle Court at Changi Road, Regent Court in Serangoon and Koon Seng House in the Still Road area. The gross development value of the group’s Singapore residential landbank is around $800 million. ‘We will start launching residential projects from November this year,’ Mrs Tan said.
First off will be an 80-unit condo on the Koon Seng House site, and a residential and small office, home office (Soho) project on the Castle Court plot.

Mrs Tan reveals that Bravo was the party that earlier this week sold eight freehold semi-detached houses along Mountbatten Road to Lian Beng Group for $42 million. The eight houses can be redeveloped into a condominium. Mrs Tan also said that Bravo was the highest tenderer in a Singapore Land Authority tender to lease the former CPIB Building at 150 Cantonment Road on a monthly rental offer of $1.88 psf of gross floor area. ‘If we are awarded this building, we can fit it out as high-tech offices in about three months. We could have about 45,000 sq ft net lettable area of office space,’ Mrs Tan said. Pender Court’s collective sale is subject to approval from the Strata Titles Board. Owners of the existing 48 apartments will each receive over $1.6 million, according to Cushman & Wakefield.

Source: The Business Times, 06 July 2007
Posted by Property Wizkid

Government releases more land for Little India
The Urban Redevelopment Authority (URA) yesterday launched a ‘white site’ at the junction of Race Course Road and Rangoon Road for sale by public tender. Experts believe the 1.36 ha could fetch as much as $280 million.The 99-year leasehold site, which is directly above the Farrer Park MRT Station in Little India, has a 4.2 plot ratio, which means it can generate a maximum gross floor area (GFA) of about 57,225 sq m.

‘Judging by the nearby City Square Residences, the site could fetch $400-$450 per square foot per plot ratio,’ said Lui Seng Fatt, regional director at Jones Lang LaSalle. This works out to $246.4-$277.2 million. The land parcel is zoned white, which means that it can be put to a range of uses including hotel, retail, dining, entertainment, office and residential. The site, however, comes with a URA requirement that at least 40 per cent of its maximum GFA to be allocated for hotel use.

‘The minimum quantum of hotel use will provide opportunities to meet the demand for hotel accommodation in this area given its location near the historic district of Little India, which is popular with tourists and locals,’ the URA said. The successful bidder can then choose to develop the remaining 60 per cent of GFA for additional hotel and/or residential, commercial or hospital uses, the government body added. Allowing hospital use will help meet increased interest in private hospital developments, the URA said.

The land parcel is one of the ten sites that were transferred from the reserve list to the confirmed List of the Government Land Sales Programme for the second half of 2007. The site was first offered in August last year, but saw no takers. The URA then decided to open up the plot to hospital development. Even then, a developer will be most likely to use the remaining 60 per cent GFA for residential and commercial space rather than hospital development, observers said. ‘Residential and commercial use will probably prevail because it provides better opportunities for that area,’ Mr Lui said.

Source: The Business Times, 06 July 2007
Posted by Property Wizkid

Construction boom? Cost boom too!
The construction sector may be hitting the high notes but the simple truth is that one can’t get building materials for a song. Their price has climbed with the boom in the industry.While the cost of concreting sand came under the microscope earlier this year, a detailed study has revealed that, away from the headlines, the cost of other key materials like structural steel, clay bricks and ready mix concrete has also been going up.

Bundling the numbers together, construction cost consultancy Rider Levett Bucknall (RLB) has estimated that costs for Q1 2007 - captured by its in-house Tender Price Index (TPI) - were 15 per cent higher year-on-year (YOY). The index registers changes in the cost of both, materials and labour. Labour costs, incidentally, have risen 15-20 per cent over the past six months.
RLB, formerly Rider Hunt Levett & Bailey, noted the ‘considerable pressure on construction resources, given the current volume of construction demand as well as the anticipated demand over the second half of 2007.’ In fact, it estimates that the previous construction demand peak of $24.4 billion achieved in 1997, ‘will be tested and possibly surpassed based on a projection of current trends’.

The costs have climbed, in part, on account of Indonesia’s decision in February to ban the export of sand. Even though concreting sand comprises only a small portion of the overall construction costs, the move also caused some disruption in aggregate supply, it noted. Other materials also became dearer. The cost of structural steel, for example, has risen by 17.8 per cent. The price of copper, meanwhile, has fluctuated sharply, rising by almost 80 per cent over two years before registering a YOY decrease of 1 per cent in May 2007.

RLB says the prices of many materials are largely determined by the global commodities market which may react to speculation, foreign exchange fluctuations and geopolitical factors. Such gyrations, however, make life difficult for contractors who hope to tender for construction contracts. A recent Goldman Sachs report, which was bullish on the industry in general highlighted certain investment risks, including execution risks, given the very tight project schedules and capacity, and the possibility of default of main contractors.

So far, at least one redevelopment project - Safra Toa Payoh - has been put on hold due to rising costs. The government’s e-procurement portal, GeBiz, also revealed recently that the Housing and Development Board did not award at least four recent public tenders for building contracts. One industry player claimed that this was on account of the prices quoted. Nevertheless, industry players are confident that, given the overall climate, they can weather the rising costs. Property developer United Engineers Group, which also has construction capabilities, believes the outlook will be positive for the next two to three years.

United Engineers group managing director and CEO Jackson Yap added: ‘In a booming property market where property prices are steadily rising, there would still be sufficient or additional margins to buffer against rising costs.’ Woh Hup director Eugene Yong said: ‘There’s uncertainty, but that’s the normal situation. That has not changed. The uncertainty is whether you have correctly priced in the risks,’ he said. The concern, he added, was not with new projects: ‘It’s existing contracts that are the issue.’

The construction boom has given contractors more bargaining power. UE’s Mr Yap says: ‘(Contractors) are able to bargain for more margins from developers as there is currently a shortage for contracting resources. However, due to this shortage in contracting resources, projects will also take a longer time to complete.’ Mr Yap also points out that construction materials are just one component of construction cost. The industry faces other challenges too.
Labour resources are tight particularly for supervisors and project managers, and dormitories and transportation resources for workers are also a constraint, he said. Equipment like cranes and piling machines is also witnessing shortage, and therefore sale and rental prices have also gone up.

Other developers are monitoring prices closely. A spokesman for CapitaLand said: ‘We will continue to review the impact of the increase in materials costs on a case by case basis with the respective consultants and contractors.’ If the rising construction costs have not been met by much alarm, it is probably because the returns from construction and property development are high. Knight Frank director, research and consultancy, Nicholas Mak notes that the prices for new developments have risen faster than the construction costs.

Indeed, the latest official figures reveal that overall private home prices rose 20.6 per cent YOY with the high-end sector rising even higher. When compared to an estimated 2 per cent increase in development cost due to price hikes in sand and granite, increases in construction cost do seem negligible. Mr Mak added: ‘In a booming property market, there is a lot more opportunity to pass on increases in construction costs to buyers.’

Source: The Business Times, 06 July 2007
Posted by Property Wizkid

Showdown at Minton Rise
It was just another day at the Strata Titles Boards (STB) - two groups of residents, lawyers in tow, shouting, arguing, pleading over the proposed sale of their Minton Rise condominium block.
It was the usual standoff: Some residents wanted the sale of the 342-unit development in Hougang to go through, others said no.

Two hours and much raised emotions later, nothing was resolved despite five board members trying to mediate between the factions. The case will now go to a hearing next month. Such showdowns are becoming more common these days. Business has never been brisker for the STB, which has the thankless task of untangling property disputes amid a booming collective sale market that promises untold riches to some but stirs up intense resentment in others.
Often, getting the 80 per cent backing for a collective sale is just the start of the wrangling. The majority owners must still file for an STB order - which binds all owners to the sale - to seal the deal.

This is the point when owners who voted against the sale can file to halt the process. They can cite various grounds such as claiming that they will suffer a financial loss, that the sale proceeds are insufficient to redeem their mortgage or that there was a lack of good faith during the sale process. In such a charged atmosphere of Singapore’s property market, it is no surprise that the STB has received 122 objections against collective sales this year - almost double last year’s 68.
This is on top of the 66 applications for collective sale orders and the more mundane disputes such as water leaks that it must deal with.

STB president Tan Lian Ker, who joined the board when it was set up in 1988, used to turn up for sessions three to four times a month. ‘Now, I come in every other day,’ said Mr Tan, a lawyer in his ‘civilian’ life. Two more deputy presidents and 10 additional members are expected to be added to the 30-member board to help with the workload. Their $100 cheque received for each case heard is also expected to increase.

The members, appointed by the Law Minister, are drawn from various professions, including accountants, architects, engineers, lawyers and land surveyors. All are volunteers but some are struggling to keep up with the increased workload and their day jobs. ‘I was supposed to come up with a book on adjudication education, but I’ll have to put it on hold,’ said Dr Philip Chan, one of the STB’s three deputy presidents.

He spends two days a week teaching at the School of Design and Environment at the National University of Singapore and three days hearing STB cases. When a case comes before the board, a panel of three or five members will convene to hear arguments. Collective sale cases - which have supplanted disputes over water leaks as the main complaint received by STB in the past two years - require five members to hear arguments, given their complexity.

Members with a conflict of interest - family links to the disputed sale, for example - cannot take part. An average case might take two to three mediation sessions lasting about two hours each, but about one in five disputes has to go to court when a settlement proves out of reach. In less-contentious cases such as the recent sale of Phoenix Court at Killiney Road, which had only one objector, judgments can be made in under an hour.

But the hearing over the collective sale order for the Dragon Court condominium in Holland Road four years ago started at noon and dragged on until 10pm before weary members could pass judgment. Emotions run high as well, said Dr Chan, with the parties crying or raising their voices. When the row involves big money, especially collective sales, mediation gets complicated as more people are involved.

Things became so heated at a hearing last September - when an 80-year-old woman tried to block the sale of Eng Lok Mansion over the objections of her 62 neighbours - that fans had to be brought into the room even though it was air-conditioned. More recently, when Gillman Heights residents took their case to the STB, so many people turned up that a bigger room was needed at the Maxwell Road offices and security guards were brought in for ‘crowd control’. Sometimes things can get downright ugly.

Mr Edwin Choo, an architect and an STB member for more than 10 years, has seen minority owners treating mediation sessions as ‘fishing grounds’ for information - minor points such as documents that were not dated or not signed in the presence of a witness - to use against the majority owners in court, when the information shared during mediation is strictly confidential.
In a water leakage dispute, an owner tried to wring money out of his neighbour by renovating his bathroom for $30,000 - way over the usual repair cost of $1,000 - knowing that his lower-unit neighbour had to pay half the cost.

While the disputes may appear petty - such as water leaks - members say there is no issue that is too ‘trivial’. ‘Imagine if you have to put a bucket in your bathroom to collect water from a leakage every night, or worry if your false ceiling may get too wet and collapse on you,’ said Mr Tang Tuck Kim, an STB member and surveyor. Despite the workload and low pay, many of the members have stayed on way beyond their two-year terms. ‘To me, it is a form of national service,’ said Mr Tang.

Growing numbers
The board has received 122 objections against collective sales this year - almost double last year’s 68. This is on top of the 66 applications for collective sale orders and the more mundane disputes such as water leaks that it must deal with. An average case might take two to three mediation sessions lasting about two hours each, but about one in five disputes has to go to court when a settlement proves out of reach.

The members of the board, appointed by the Law Minister, are drawn from various professions, including accountants, architects, engineers, lawyers and land surveyors.

Source: The Straits Times, 06 July 2007
Posted by Property Wizkid

Developer heaves signs of relief on Horizon Towers
The Strata Titles Boards (STB) will try to untangle the contentious Horizon Towers collective sale later this month - and before the deal is aborted by a closure deadline. A ruling on Wednesday set the hearing dates for July 27 to Aug 2, confirming a move outlined in a report in The Straits Times two weeks ago.

The initial hearing was set for September but that was after the six-month deadline - the $500 million deal was struck on Feb 12 and must be sealed by Aug 11. A deadline miss could have killed the deal or tied it up in a lengthy process involving the sales committee. Bringing forward the hearing to late this month - after a series of legal arguments was put to the STB recently by lawyers representing various parties - has eased those fears.

They included Senior Counsels Jimmy Yim, C.R.Rajah and K.Shanmugam and senior lawyers from Tan Kok Quan & Partners and Harry Elias Partnership. The two blocks at Leonie Hill have been pledged to be sold en bloc for $500 million to Hotel Properties (HPL), Morgan Stanley Real Estate and Qatar Investment Authority, the investment arm of the Emirate of Qatar.

The deal was backed by 84 per cent of the owners - above the 80 per cent requirement - but it still needs STB approval. Rebellious owners have a range of objections, including price. They also wanted the sales committee to be replaced, but an extraordinary general meeting called for the purpose did not produce the result. It is understood that some of the members have since resigned, including the chairman.

Some owners had wanted the sales committee members out because they were unhappy at the way the deal went through last January without getting back to the owners over the $500 million offer price. They pointed out that the price was set in April last year but the property was sold nine months later when real estate values had surged - so much so that neighbouring Grangeford Apartments sold for far more than the amount that Horizon Towers commanded.
The parties who never agreed to the sale will get their say at the hearing later this month, but there are concerns that the mediation process may drag on longer than the allocated dates and brush up against the Aug 11 deadline.

‘There are those who originally agreed to the sale having second thoughts and this may lead to problems,’ said a source.

Source: The Straits Times, 06 July 2007
Posted by Property Wizkid

New lease of life for Old buildings
A growing number of old buildings belonging to the state have been sold - or, more commonly, put out on short leases - to companies or organisations, which have renovated them and put them to new uses. Formerly schools, hospitals or army barracks, the buildings are finding new life as hostels, education centres and business addresses.

10, Hyderabad Road
Formerly: Institute of Dental Health, Now: S.P. Jain Education Centre
History: The pre-war structure dates back to the 1930s, including parts gazetted for conservation.
Cost of renovation: ‘A few million.’

Command House at 17, Kheam Hock Road
Formerly: The home of the Admiral of the Fleet of the Royal Navy. More recently, the home of late Singapore president Ong Teng Cheong. Built in 1938. Now: UBS Wealth Management Campus-Asia Pacific
History: Previous occupants include the Imperial Japanese Army and World War II hero Lord Louis Mountbatten. Now being studied for gazette as a National Monument.
Cost of renovation: Undisclosed

2, Orchard Boulevard
Formerly: The home of the the Singapore Anti-Narcotics Association (Sana), Now: The ninth branch of EtonHouse Preschool
History: Pre-1920s colonial building is conserved. Formerly called the Woodstock Home, it was also used by Sana.
Cost of renovation: $1million

22, Dempsey Road
Formerly: The Quartermasters’ Store, Now: Bar and restaurant nightspot Oosh
History: Tanglin Village was known as Tanglin Barracks and was an army camp for the British troops. Also used by the Singapore Armed Forces.
Cost of renovation: $6million

369, Tanjong Katong Road
Formerly: Tanjong Katong Technical School, Now: Katong Hostel
History: Built and founded in 1956 as Tanjong Katong Technical School. It started as a plot of swampy marsh next to the Tanjong Katong River.
Cost of renovation: $5 million

Sale, rental schemes
THIS is how state properties are sold or rented:
Sale
On a lease of 10 to 99 years by Public tender: For example, Lim Chu Kang agri-tainment sites; or Auction
Rental
Usually on a lease for three to nine years by Public tender; Auction or Direct allocation: For example, the Economic Development Board’s Global Schoolhouse programme;

The Ideas Tender Scheme: Launched by the Singapore Land Authority (SLA) in August 2005, this allows entrepreneurs to suggest innovative re-use ideas for a building, instead of being hemmed in by the pre-approved uses specified by the SLA; or

The Rent Direct Scheme: Launched in March 2005, this allows businesses to make direct offers to the SLA. Leases are awarded on a first-come-first-served basis, which enables entrepreneurs to launch their start-ups fast.

Source: The Straits Times, 06 July 2007
Posted by Property Wizkid

What can Roger buy for $22m in Singapore?
Mr Jim Rogers is back in Singapore for a third stint, as he continues his search for a new home in a Mandarin-speaking city for his family. The investment guru, who spent several weeks here last year and in 2005, says Singapore is still high on his list. He has eliminated Hong Kong, Shanghai and Beijing on pollution concerns.

‘Singapore is an easy place to live in as it has the best health-care and education systems in the world,’ he told the media yesterday. He will visit three other Chinese cities - Dalian, Hangzhou and Qingdao - before making a decision in a few months’ time. Mr Rogers, 63, has put his New York home on the market for US$15 million (S$22.9 million) but has not sold it yet despite receiving several offers.

He does not speak Mandarin and his wife is only starting to pick up the language but he wants his family to move to a Mandarin-speaking nation for their daughter’s sake. The three have been Singapore permanent residents for 18 months. He said he wants his four-year-old - Happy or Le Le as she is called in Mandarin - to grow up steeped in Mandarin, as he believes China will be the great power of the 21st century. In that regard, Singapore loses out to Chinese cities as it is ‘not Chinese enough’ for his daughter, he admits.

He said his daughter, who speaks Mandarin as fluently as a native, is the best Mandarin speaker in her kindergarten class in Singapore. ‘We hired a Chinese-speaking nanny to take care of her from birth, and insisted that the nanny speaks only Mandarin to the girl.’ Happy Rogers, who has her own Swiss bank account, will soon have a Singapore bank account too, Mr Rogers said.
Asked if he might consider buying a property amid soaring prices if he decides to settle in Singapore in future, he said he is unlikely to buy immediately.

Instead, he said his family will rent for six months to a year if and when they decide to move to Singapore. ‘Prices may go up by then, but we want to make sure we find the right place.’

Source: The Straits Times, 06 July 2007
Posted by Property Wizkid

5R HDB to cost $645k in Boon Keng.
Any suckers, er, sorry.. I mean.. takers?
The article, ‘40-storey condo-like blocks for Boon Keng’ (ST, June 21), stated that it would work out to about $645,000 for a 1,290 sq ft five-room flat, and that a 29th-storey five-room flat in Kim Tian Place was sold for a record $720,000. The property market is all the rage nowadays, with almost-weekly media reports of record prices.

The current less than two-year-old bull market may need to be reflected upon, in view of the fact that we went through an almost decade-long bear market from 1996. At its worst, the private-property index was down by about 40 per cent. Even with all the euphoria now, we should not forget that the market is still about 20 per cent below its peak in 1996.

If we compare Singapore with the United States, ours is one of the longest property bear markets in history, as we are still under water. The worst housing bust in US history took place during the Great Depression when ‘the average price of a home fell 24 per cent from 1929 to 1933′ (’When does a housing slump become a bust?’; International Herald Tribune, June 17).
Singapore’s decade-long bear market, which is still recovering, may pale in comparison. When a market is 20 per cent down, it would take another 25 per cent jump before it breaks even to the 1996 level. When will this happen - after 12, 13 years or longer?

Practically every week in my volunteer work doing financial counselling of bankrupts, I meet people who have lost their homes and CPF and have been made bankrupt by the mortgagee.
How many Singaporeans have lost their homes, CPF, and maybe made bankrupt too through buying property? - Leong Sze Hian

Source: The Straits Times, 06 July 2007
Posted by Property Wizkid

Which do you prefer - buy stocks or property?
Having made a living as a fund manager and trader for the past 25 years, I have seen the general investing public hurt numerous times when they invest aggressively near the peak of a bubble, whether in stocks or property.Retail investors should adopt a very long-term horizon to benefit from the stock and property markets.

The starting point of major stock investment or purchasing a property for investment is important. Always try to start major investments during a recession, a global market crisis, a banking crisis or when nobody is interested in stocks, like during the Sars period. The art of investing can be broken down into three quantitative variables of time, price and size. Investors should pick a ‘terrible’ environment/time when prices are distressed and commit big (but definitely without leverage).

The opposite is also true. In a very bullish, ‘good’ environment/time with high prices everywhere, investors should reduce the size of investments and ensure that whatever is outstanding is getting smaller and smaller. Forget about wanting to liquidate all investments at the top of the market. It is an impossible task.

The basic idea is to invest aggressively (without leverage) near the bottom and get out when markets are euphoric, like now, even if they could go higher and carry on longer. Global imbalances are currently at an extreme, making the environment ripe for a market crisis like Oct 19, 1987. Markets (individual share and property) will go up and down over a long period of time, although the general stock index hides this truth as new, strong shares always replace old, declining shares over the years, giving you a misguided view that the index always heads much higher over time.

As Singapore markets become globalised with much foreign participation, Singaporeans would do well to be patient and courageous by investing near the bottom of the down cycle and selling to foreigners near the top of the up cycle and repeating this process. If you have missed the huge bull market, that’s just too bad. Now is not the time to jump in aggressively as the risks are increasing exponentially.

Bull and bear markets always repeat themselves, just like summer and winter. Be very patient and do your homework. You do not need to be a genius to make money in the markets. You need common sense, discipline and a clear long-term workable plan, without which the markets are like a hot fire and will burn fingers. - Chua Soon Hock

Source: The Straits Times, 06 July 2007
Posted by Property Wizkid

Who gets money is a matter of contract?
I refer to recent letters to the Forum concerning interest on stakeholders’ monies.As a matter of law, if there is no agreement otherwise among buyer, seller and stakeholder, the interest earned on the stake belongs to the stakeholder.

In collective sales, it is good practice for the lawyer to draw the issue of interest specifically to the attention of the sales committee at the time of entering into the collective-sale agreement. Ultimately, it is a matter of contract. The lawyer’s role as stakeholder is, in fact, a valuable additional service involving responsibilities to both seller and buyer and, notwithstanding the existence of alternatives such as a bank guarantee, remains the most popular mechanism.
Philip JeyaretnamPresidentThe Law Society of Singapore

Source: The Straits Times, 06 July 2007
Posted by Property Wizkid

To En bloc or "disen" bloc? That is the question.
There was a time, not so long ago, that the lines were neatly drawn in en-bloc sales. On one side, the majority of residents, their signatures already on a collective sale agreement (CSA) and waiting to cash in; on the other, a minority bloc with objections.

Not any more. In a growing number of estates, some residents from the majority group are gunning for the same goal as the minority — to scupper the deal. The reason? What were once sweet deals have turned sour, as juicier sales elsewhere are announced with each passing week.
Some majority residents at several estates are finding ways to challenge the legality of their CSAs. Under the law, a majority can only be formed if there is at least 80 per cent of support within the estate.

Take Gillman Heights, a privatised HUDC estate with 608 units in Telok Blangah. About 20 residents, out of the 532 who had signed the CSA, are now opposing the deal. Their main contention is over a compensation fund set aside for minority residents who may receive less than the purchase price of their apartments.

One resident, Mr Jerry Lum, is trying to rally those in the majority to challenge the legality of the CSA as the final figure for the compensation fund was inserted after residents had signed the agreement. According to the estate’s sale committee chairman Robert Wiener, the agreement provided for a formula to calculate the amount of compensation — a mechanism which one lawyer told Today is becoming commonplace — and that residents were alerted about the fund. But Mr Lum is disputing this last point. He said: “I’ll fight this all the way.”

The Strata Titles Board (STB) said it was “inappropriate” to comment on the case as the Gillman Heights application for sale approval is still pending. However, as the STB’s purview is to hear objections of only minority owners, Mr Lum and his neighbours have appealed in writing to the Ministry of Law to intervene.

Besides Mr Lum’s group, another group of majority residents in the estate have changed their minds and declined to approve an extension to the CSA after a $548-million deal with CapitaLand was struck in February. Circulars posted in the estate indicate unhappiness about how the once-blockbuster deal — CapitaLand is paying $19 million above the reserve price — now stacks up against recent en-bloc deals.

For example, CapitaLand recently paid $1.3 billion for Farrer Court, another privatised HUDC estate, which equates to about $2.15 million each for owners of the 618 units there. In comparison, Gillman Heights residents are getting $363 per square foot of potential gross floor area, or about $870,000 to $950,000 per apartment.

“Never, never just sit back and allow others (to) sell your home on the cheap,” one circular stated. One former management council member said the “tension” in the estate has become “a pain”. At Phoenix Court in River Valley — a single block of 47 apartments with only one minority resident — some majority residents were also against an extension to their CSA … but to no avail. The STB last week approved the sale to Hiap Hoe for $88.1 million. Sources said some disgruntled owners are still seeking legal advice.

At Horizon Towers on Leonie Hill — one of the first estates caught out by the fast-moving market when neighbouring estate Grangeford Apartments fetched more than double the former’s price (psf) — some majority residents had been hoping the deal would expire before approval is given. Their deadline is Aug 11. But with the STB hearing brought forward to between July 27 and Aug 2, some residents have engaged lawyers to scrutinise the legality of the CSA in the first place.

More interestingly, at Minton Rise in Hougang, minority residents have secured a higher valuation for their estate than the collective sale price. Some of their majority neighbours are now up in arms about receiving around $100,000 less than they could have. Kheng Leong, a privately-owned property group controlled by the family of banker Wee Cho Yaw, paid $209 million for the estate in January, $31 million less than the latest valuation.

Some majority residents are now trying to call for an extraordinary general meeting to grill the sales committee about the entire en-bloc process. “People used to think an en-bloc exercise equals a windfall, but some people now realise the compensation they receive cannot afford them an equivalent property, resulting in a downgrade,” said lawyer Chia Boon Teck, who represents Minton’s minority.

Bernard & Rada Law Corporation associate director M Kumaran, who oversees his firm’s en-bloc cases, has also noticed the growing incidence of backtracking majority residents. “If the market had remained steady, the people involved in these sales would never have looked back at the sales process. With the sudden realisation that so much money can be made, they discover what they may honestly believe to be flaws in the process,” he said.

But Mr Kumaran warned that majority residents walk a thin line between legitimate objections and obstructing the performance of a contract they had, after all, consented to. It remains to be seen whether this new trend of the majority rejecting the very CSA they had signed will continue. Mr Nicholas Mak, head of research at Knight Frank, told Today that the jury is still out on whether property prices will keep on heading north.

“There are signs this can continue … But the market is cyclical. If prices were to stagnate, that would slow down the en-bloc sale momentum,” he said. In the words of the former management council member from the Gillman Heights sale: “If the market had gone south, we’d all have been heroes. People need to have a sense of realism.”

Source: Today, 06 July 2007
Posted by Property Wizkid

Property boom may spell bust for the uninitiated
Unmanageable mortgages can break up a family. Letter from Gilbert Goh Keow Wah. I refer to the article “Time to play it cool” (July 5). It is timely that the Government has stepped in to cool down the current property fever that is gripping the nation.

Today, the situation is not unlike what it was in 1995 and 1996, when people bought up residences and prices bordered on the ridiculous. People were queueing up, not to view the houses, but just to hand over cheques for the downpayment! Then, Housing Board executive flats in the Bishan and Toa Payoh areas were sold for close to $700,000. Today, those home-buyers have seen prices plummet and they stand to lose about $200,000 if they were to sell their homes at current valuations.

Worse, during the Asian financial crisis of 1997 and 1998, many lost their hard-earned Central Provident Fund savings when they were forced to sell off properties because they could not meet the payments. Some property developers also went bust during that time. I urge Singaporeans to exercise caution. Like equities, property prices do fall when the economy takes a dip. If possible, look for a place that is within your means and always have a mortgage plan in which repayments do not exceed one quarter of your combined household salary. Anything more would be a burden if you were to be retrenched or have your monthly salary reduced for some reason.

A friend of mine had to sell off his private property when both he and his wife were retrenched within a month of each other. They got into financial difficulty and ended up getting divorced. Both were professionals and their situation has been etched in my memory. It was painful for me to see a happy family fall apart over the burden of a huge mortgage loan. As Singapore goes into another economic upswing, let us be mindful of committing to loans.

Always be prudent and frugal, as financial difficulties can affect the harmony of a family.
It is better to have a happy family living under a simple roof, than one living in a big house laced with potential financial woes.

Source: Today, 06 July 2007
Posted by Property Wizkid