Singapore Property News Upfront 25

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.
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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.
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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

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

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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
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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

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Singapore Property News Upfront 23

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
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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
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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
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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
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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
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Singapore Property News Upfront 22

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
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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.

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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.

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‘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

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.

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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