Lushhome :: Real Estate & Property Information, Singapore

We have moved....

2008-06-09T05:49:00.000-07:00

visit us at www.lushhomemedia.com for the latest =)

Parc Seabreeze

2008-05-10T00:11:00.000-07:00

Preview by appointment...

Address: 532 Joo Chiat Road
Tenure: Freehold
Expected Completion: Mar 2012
Site Area: 58,750 sqft
Description: 20 storey in one tower block
Total Units: 94

Unit Types:
3 bedrooms ~ 1314-1398 sqft
4 bedrooms ~ 1625-1647 sqft
3+1 penthouse ~ 2347 sqft
4+1 penthouse ~ 3004 sqft

Facilities: Basement Carpark (103 lots), Landscape Deck, Sky Terrace, Children Play Area, Lap Pools, Social Pool, Children Pool, Spa Pool, Dining Pavilion, BBQ Pits, Gymnasium, Aqua Gym, Sauna and Steam Room

Location:

Excellent transportation linkages like PIE, ECP (10-15 mins to CDB, Marina Bay Integrated Resort, Suntec Shopping belt, Raffles City, Changi Airport)
Easy access to abundant of amenities, i.e. supermarts, wet markets, banks, food centres
Close proximity to excellent schools like CHIJ (Katong) Primary, Tanjong Katong Primary, Chatsworth Intl Sch, Victoria Jr College, Ngee Ann Pri School, St Patrick School
Excellent recreational facilities (East Coast Park, Chinese Swimming Club, Parkland Golf Driving range, Marina Bay Driving Rang & Golf Course)

Email lushhome@gmail.com for more information or appointment.

GIC says world could be facing worst recession in 30 years

2008-04-21T10:49:00.000-07:00

The world could be facing its worst recession in 30 years, said Deputy Chairman and Executive Director of the Government of Singapore Investment Corp (GIC) Dr Tony Tan.

He shared this view with over 500 GIC staff at a conference on Monday.

"The financial contagion has now spread beyond US shores, increasing the likelihood of a global financial crisis and recession. We could be facing a recession which is longer, deeper and wider than any recession that we have encountered in the last 30 years," he said.

Dr Tan added that this could be mitigated if timely actions are taken by policymakers around the world, boosting both markets and investor sentiment.

If this does not happen within the next three to four months, it will be up to the markets to work out current problems, and this is expected to be a long, painful and drawn-out process.

He said: "What is clear is that the financial and investment markets will be extremely nervous and volatile over the next one or two years."

While that means GIC's multi-billion-dollar investments in UBS and Citigroup remain shaky in the short term, Dr Tan pointed out that these are long-term investments and they are expected to give good returns when markets stabilise and economic conditions return to normal levels.

GIC invested US$10.8 billion in UBS in December last year and US$6.88 billion in Citigroup this January.

At the staff conference, GIC also unveiled three new group committees – the Group Management Committee, the Group Investment Committee, and the Group Risk Committee.

The Group Management Committee, chaired by GIC's Group Managing Director Lim Siong Guan, will address and discuss organisational issues of the group.

The Group Investment Committee will be chaired by Group Chief Investment Officer Ng Kok Song. It will develop and implement asset allocation policies and investment strategies at the group level. It will also review risk and performance of asset classes regularly.

Chief Risk Officer Sung Cheng Chih will chair the Group Risk Committee which will oversee and guide the development and implementation of risk management policies.

These committees will report to an executive committee chaired by Dr Tan.

"This management structure enables GIC to have the group-wide oversight on our business operations, investments and risks while giving sufficient autonomy to our investment subsidiaries so that they can respond in a timely fashion to changes in investment circumstances," said Dr Tan.

Analysts said this is a natural move as companies around the world brace themselves for a rocky ride ahead.

GIC's investments are closely watched as the fund is seen as one of the largest sovereign wealth funds in the world.

It is estimated to have some US$330 billion in assets under management, behind Abu Dhabi Investment Authority and Norway's Government Pension Fund.

Source : Channel NewsAsia - 21 Apr 2008

K-REIT Asia's Q1 distributable income up 166% to S$11.4m on-year

2008-04-21T10:47:00.000-07:00

K-REIT Asia has booked a first quarter distributable income of S$11.4 million, up 166 per cent from the same period a year ago.

The jump was mainly due to contributions from its one-third interest in One Raffles Quay, which was acquired in December 2007.

K-REIT said it saw strong rental and occupancy rates.

The company is hoping to raise almost S$552 million through a rights issue in March. Proceeds of the rights issue will be used to repay the loan for its stake in One Raffles Quay.

For the first quarter ended March, K-REIT Asia will distribute S$0.046 per unit.

K-REIT Asia's portfolio includes Prudential Tower, Keppel Towers, GE Tower, Bugis Junction Towers and one-third interest in One Raffles Quay, which were worth a total of S$2.1 billion as of December 2007. - CNA/ac

Source : Channel NewsAsia - 21 Apr 2008

KepLand secures option to develop residential site in Vietnam

2008-04-21T10:43:00.000-07:00

Property developer Keppel Land has secured an option to develop a residential site in Vietnam's Ho Chi Minh City.

The project is estimated to cost US$390 million.

Keppel Land signed the agreement through its wholly-owned subsidiary Earlsbay Investments.

Under the deal, the Singapore developer will hold a 60 percent stake, while local property developer Hong Quang takes on the remaining interest.

The project is expected to be launched next year and is targeted at the upper middle market.

The development is expected to yield 1,500 luxury apartments.

Keppel Land is one of the largest real estate investors in Vietnam.

Its portfolio there ranges from office developments and residential properties to serviced apartments. - CNA/ms

Source : Channel NewsAsia - 21 Apr 2008

CapitaLand, Abu Dhabi's Mubadala join hands to develop properties

2008-04-21T10:40:00.000-07:00

Property developer CapitaLand is joining hands with Mubadala Development to invest in the property sector in Abu Dhabi.

The two partners have launched a joint venture company called Capitala. They are pumping in US$300 million into the joint venture.

Mubadala Development will hold a 51 percent stake, with CapitaLand holding the remaining 49 percent.

Capitala will develop mainly residential properties in Abu Dhabi.

Its flagship project, with a total project cost of US$4 billion to US$5 billion, is a mixed-use integrated development surrounding the Zayed Sports City Stadium.

Mubadala Development is a wholly-owned investment firm of the Abu Dhabi government. - CNA/ms

Source : Channel NewsAsia - 21 Apr 2008

Marina at Keppel Bay wins Best Asian New Marina award

2008-04-17T09:18:00.000-07:00

It scored for its pontoon system, wave attenuator, service standards

Marina at Keppel Bay has beaten seven other new marinas in the region to win the Best Asian New Marina/Yacht Club award at the Christofle Asia Boating Awards in Shanghai.

Twenty judges - industry experts from Thailand, Malaysia, Hong Kong, China, India and Singapore - assessed entrants on such criteria as staff service, facilities, pontoons and other dock equipment and location. Assessments were carried out on site and included meeting boaters at marinas to get their views.

Features that gained points for Keppel included its pontoon system built by US-based Bellingham Marine Industries, which incorporates a pump-out system for waste and a wave attenuator to dampen the effect of wake. The marina also scored well for service standards - it is the only marina in South-east Asia where all staff undergo a management course.

The marina beat the only other new marina launched in Singapore last year, Sentosa Cove's One Degree 15 Marina Club, as well as new developments in Dubai and China.

Among established marinas, Malaysia's Royal Langkawi Yacht Club took the top prize. Other awards included Best Asia-based Charter Company, which went to Simpson Marine and Best Asian Maritime Capital which went to Qingdao. Altogether, 21 awards were given.

Accepting its award, Marina at Keppel Bay's chief marina officer Francis Olsen said: 'Our guiding principle is simple - to offer best-in-class services as we strive to become Asia's waterfront lifestyle destination of choice. This award will spur us to work harder and lend strength to our efforts to put Singapore on the world's prime waterfront playground map.'

Although brand new, the marina has already staged a number of flagship events including hosting the 10-yacht Clipper fleet for their stopover in Singapore on the Clipper 07/08 round the World Yacht Race. It will also host South-east Asia's biggest boat show, Boat Asia 2008, next week.

The annual Christofle Asia Boating Awards is widely known as the region's premier event for recognising the efforts of boat builders, marinas, clubs and individuals in creating a diverse and exciting boating community. It has also become a must-attend event for Asia's jet set.

'This is the chance for Asia to celebrate its achievement as a growing centre of luxury boating that will rival places like the Caribbean and the Mediterranean in the near future,' said Olivier Burlot, managing director of Blu Inc Media. The awards are sponsored by Christofle and organised by Blu Inc Media, publisher of Asia-Pacific Boating and China Boating magazines.

Source : Business Times - 17 Apr 2008

US housing starts hit 17-year low while consumer prices stay mild

2008-04-17T09:15:00.000-07:00

Inflation data seen giving Fed scope to cut interest rates

The number of US housing projects started last month fell to the lowest in 17 years, while consumer prices moved up a bit less than expected, leaving the Federal Reserve some room to lower interest rates to ward off a housing-led slowdown.

While the slide in the housing sector continued, industrial production unexpectedly rebounded as utilities raised output due to colder weather, making up for weak manufacturing growth.

The Commerce Department yesterday said that housing starts dropped 11.9 per cent in March to an annual rate of 947,000 units, the slowest pace since March 1991 and well below the 1.02 million expected by economists.

'These housing starts suggest that the pace of decline is intensifying, which is the last thing the US economy needs right now,' said Stephen Malyon, senior currency strategist at Scotia Capital in Toronto.

Building permits fell 5.8 per cent to their lowest since April 1991, when the economy was in recession.

Separately, the Labor Department said consumer prices rose 0.3 per cent last month, slightly less than expected, after a flat reading in February. Stripping out food and energy, core prices, which also held steady in February, moved up an even milder 0.2 per cent, restrained by a big drop in the cost of clothing.

US stock prices shot higher and US government bond prices moved lower as investors saw the price data as leaving more room for the US central bank to keep cutting interest rates to try to spur a slowing economy. The US dollar lost ground on the prospect of more rate cuts, with the euro reaching a record high.

The Fed has lowered benchmark borrowing costs by three percentage points since mid-September, trying to ward off spreading weakness from the deep housing downturn and a related drying up of credit.

The report on consumer prices showed rising energy prices continuing to exert upward pressure on overall inflation.

Energy prices shot up 1.9 per cent in March. The cost of petrol, which hit record highs last month, rose 1.3 per cent.

While financial markets initially greeted the consumer price data as providing greater scope for the Fed to lower interest rates, not everyone agreed. Over the past year, consumer prices have risen a sharp 4 per cent on the back of surging energy costs.

'In spite of a benign core reading, the overall increase will persuade the Fed to be less aggressive in easing rates,' said Richard DeKaser, chief economist at National City Corp in Cleveland.

Separately, the Fed said output at the nation's mines, factories and utilities rose 0.3 per cent in March after a downwardly revised drop of 0.7 per cent in February. Wall Street economists had forecast a 0.1 per cent decline after February's previously reported 0.5 per cent fall.

Utility output climbed 1.9 per cent after a 3.6 per cent drop in February, while manufacturing production rose 0.1 per cent after a 0.5 per cent fall.

'Factory output was held down by a large decline in the output of motor vehicles and parts. A shortage of motor vehicle parts that resulted from a strike at a parts manufacturer idled a number of motor vehicle assembly plants,' the Fed said in the report, referring to the seven-week-old walkout at American Axle & Manufacturing Holdings that lay behind a 5.4 per cent fall in motor vehicle output. Excluding motor vehicles, factory production rose 0.4 per cent.

The capacity utilisation rate, a gauge of how busy the nation's industry was, edged higher to 80.5 per cent from 80.3 per cent, still well below levels that would be considered inflationary. -- Reuters

Source : Business Times - 17 Apr 2008

Property sales total S$8.4b in Q1, up 1% quarter-on-quarter

2008-04-17T09:09:00.000-07:00

Investment sales level in the Singapore property market in the first quarter of 2008 was similar to that in the fourth quarter of 2007 despite deepening concerns regarding the US economy.

A report by DTZ Debenham Tie Leung said a total of S$8.4 billion worth of transactions was concluded, a slight increase of one per cent quarter-on-quarter.

The office sector was the best performer with S$3.4 billion in sales, up 134 per cent against the previous quarter.

The office sector was supported by en bloc transactions which saw several major buildings, like One George Street, Hitachi Tower, Singapore Power Building and One Philip Street, being transacted.

The industrial sector also saw increasing interest. Investments in industrial properties rose 31 per cent quarter-on-quarter to S$690.5 million, mainly in en bloc deals purchased by REITs.

However, residential sales fell to S$2.2 billion, down 45 per cent from the last quarter.

DTZ said sales activity in the private residential market slowed significantly in the first quarter due to weakened market sentiments. It added that developers and buyers were taking a wait-and-see attitude.

Preliminary figures showed there were only about 2,000 private residential transactions recorded through caveats in the first two months of 2008.

According to DTZ, there were only 795 developer sales in the first quarter of this year, reflecting a 46 per cent quarter-on-quarter decline. This was the second lowest quarter of developer sales since the SARS-stricken period, which was the first quarter of 2003.

DTZ added that rents have increased marginally due to tight supply. Monthly rents of prime condominiums increased 2.1 per cent quarter-on-quarter to average S$4.90 per square foot.

For non-prime districts, monthly rents of condominiums increased by an average of 2.5 per cent quarter-on-quarter to S$2.10 per square foot.

DTZ said rental increases of private residential properties are likely to moderate due to budget constraints and the slower influx of expatriates. - CNA/vm

Source : Channel NewsAsia - 17 Apr 2008

Landmarks plans Indonesia's first casinos in Bintan

2008-04-17T08:52:00.000-07:00

Malaysia's Landmarks Bhd, backed by Asia's largest gambling company, hopes to build Indonesia's first legalised casinos in a US$3.1 billion resort project to compete with Las Vegas Sands Corp in Singapore.

The 'objective is to develop a new destination for Indonesia', chief operating officer Lim Boon Soon said in an interview in Kuala Lumpur.

The gaming element 'will accelerate the whole integrated development in Bintan', an island in Indonesia.

The planned casinos in Bintan will compete with gaming resorts that Las Vegas Sands and Genting Bhd, Landmarks's biggest shareholder, are racing to build in Singapore, which is a 55-minute ferry ride away.

The regulated gambling market in the Asia-Pacific region will probably expand 16 per cent a year to US$30.3 billion in 2011, according to PricewaterhouseCoopers LLP.

'It could work, though the execution risks are there,' said Keith Wee, an analyst at OSK Research Sdn. With casinos in Malaysia as well as Singapore, 'competition will be tough'. Singapore plans to double the number of overseas visitors to 17 million annually and triple tourism receipts to S$30 billion by 2015. The island-nation ended a four-decade ban on casinos in 2005 amid surging gambling revenue in the Chinese city of Macau.

Landmarks aims to capture the spillover from Singapore, targeting about three million visitors a year to Bintan, eight times more than the 370,000 tourists now, Mr Lim said.

Bintan, the largest island in the Riau archipelago of Indonesia in the South China Sea, is being developed into one of Asia's biggest holiday resorts by the governments of Indonesia and Singapore and a group of companies.

Resorts there include the Banyan Tree Bintan, Bintan Lagoon Resort and Club Med Ria. Occupancy rates for resorts in Bintan climbed to 61.4 per cent last year from 54.9 per cent in 2006, according to the website of Bintan Resorts International Pte, the marketing consultant for resorts in Bintan. There are more than 1,300 hotel rooms in the island, it said.

Landmarks' project, which will be valued at S$4.2 billion, will have as many as five resorts, condominiums, villas, health spas and water canals, Mr Lim said in an interview on Tuesday. 'Five years down the road, having a casino won't be special.'

The casinos may be opposed by local politicians. 'The plan to build casinos uses a newly issued regional regulation,' said Ferry Mursidan Baldan, a member of the Indonesian Parliament's domestic and regional affairs commission. 'This is a problem' because 'the national law says that gambling is banned'. Should gambling be legalised in Bintan, 'then other regions would follow suit', he said. 'This we don't want to happen.'

Landmarks will build the resorts over eight years at a development cost of S$2 billion. The company plans to sell five so-called integrated resort lots of about 25 hectares each to investors, Mr Lim said. Each of them comes with a 'casino offering', he added. -- Bloomberg

Source : Business Times - 17 Apr 2008

KSH Holdings clinches S$126.8m deal to build condo at Sentosa Cove

2008-04-17T08:34:00.000-07:00

Construction and property developer KSH Holdings has secured a S$126.8 million contract to build a condominium development at Singapore's Sentosa Cove.

The contract is the first of its kind to be awarded by Lippo Marina Collection for the construction of a luxury housing development at the site.

This will be the group's fifth high-end luxury residential property project at Sentosa cove. The deal will bring KSH holdings order book to S$770 million.

In the last four months, project contracts for the developer have added up to some S$354.4 million, in comparison to a total of S$510 million for 2007.

Work on the site is to begin this month and the project is expected to be completed by December 2010. - CNA /ls

Source : Channel NewsAsia - 17 Apr 2008

PM Lee positive about proposal to link up S'pore, JB urban rails

2008-04-17T07:59:00.000-07:00

Prime Minister Lee Hsien Loong has responded positively to a suggestion by Johor's Chief Minister Abdul Ghani Othman to link up the urban rails of Singapore and Johor Bahru.

The issue was discussed when visiting Malaysian Foreign Minister Rais Yatim called on Mr Lee at the Istana on Thursday morning, said Foreign Minister George Yeo at a joint news conference with his Malaysian counterpart later in the day.

The proposal will now be discussed by a joint ministerial committee which is looking into the Iskandar Malaysia project. This committee was set up after PM Lee and his Malaysian counterpart, Mr Abdullah Badawi, had their first retreat in Langkawi last year.

Singapore is the first stop in a series of introductory visits by the new Malaysian foreign minister, and this signals the special relationship between the two neighbours.

Dr Rais said: "Between Malaysia and Singapore, there is only a one-way street and that is to forge ahead together for a future within ASEAN and to share the good fortunes of what the world will offer.

"No one will come to us and help us except ourselves. Therefore, the commonality between the two nations should be at the top of priority lists and the differences – whatever they are – should be left to be scored later."

Among the issues discussed between the Singapore and Malaysian foreign ministers is how to further integrate the economies of both countries and to enhance connectivity across the causeway.

The IDR is one of the cooperation projects which both foreign ministers hope would enhance bilateral ties between Singapore and Malaysia. The project's joint ministerial committee is already in place to look into various proposals.

Mr Yeo said: "Last year, the two prime ministers had their retreat in Langkawi which was very successful, and we are hoping that Singapore can host the next retreat sometime in the near future."

He added that the International Court of Justice is likely to release its ruling on the disputed island of Pedra Branca next month, and both foreign ministers have agreed that they would congratulate whichever country that emerges victorious.

"Whatever the decision, we would accept it and it will not affect bilateral relations. The lighthouse would continue to provide valuable facilities to all navigators, so nothing should change. This is the common position we take," said Mr Yeo.

Dr Rais said: "What is committed through the rule of law, through international arrangement, we must respect. If we do not do that, then being neighbourly is not substantive enough."

On the current political situation in Malaysia, Dr Rais stressed that the question of leadership change is not on the agenda at all.

He said: "These are what we call political airings or political elements in the thoughts of certain sectors in the party as well as outside the party... more so in the opposition.

"The litmus test would be at the (UMNO) general assembly, which would be held in December, and I am most confident that Datuk Seri Abdullah will be the winning element for us all and the Barisan (Nasional) will continue to be a strong and prospective true government for Malaysia."

Dr Rais is also confident that Malaysia's relationship with Singapore will continue to improve going forward.

On Thursday afternoon, the Malaysian foreign minister also called on Senior Minister Goh Chok Tong at the Istana and had a friendly exchange of views on recent developments in Malaysia and the state of bilateral relations.

The two leaders reaffirmed the importance of having good neighbourly relations between the two countries.

Source : Channel NewsAsia - 17 Apr 2008

Sino-Singapore Tianjin eco-city to be ready in 10 to 15 years

2008-04-17T07:47:00.000-07:00

The mega eco-city project in Tianjin, which is jointly planned by China and Singapore, will be completed in 10 to 15 years.

But a glimpse of the whole city can be seen in as early as three years when a start-up area is completed, according to National Development Minister Mah Bow Tan, who is leading the Singapore team in the project.

This urban development will not take place at the expense of the environment as buildings in the Sino-Singapore Tianjin eco-city will be energy efficient.

Ninety percent of its over 300,000 residents will also be making 'green trips' by walking, cycling or using public transport to reduce carbon emissions.

Moreover, green technologies will be adopted to ensure effective and efficient recycling of refuse, sewage and wastewater.

The eco-city is located just 40 kilometres from Tianjin city and 150 kilometres from Beijing.

Mr Mah said Singapore hopes to incorporate some of its experience in environment-friendly practices to the eco-city. At the same time, Singapore wants to glean some lessons from the joint project.

The minister said: "Some of the ideas are derived from what we are already doing here. For example, we are specifying that all the buildings in the eco-city will be 'Green Marked'. We will take some of the Green Mark (certified) buildings, adapt it to the rules in China and implement a Green Mark in China.

"But in the process of doing it, I'm sure we will adapt and improve, and marry the best practices from both sides. I would expect that we will take the improved version and bring it back to Singapore. That's why I say that it's an interactive process - we are learning from each other."

Mr Mah said successful features in the eco-city will be implemented in new developments such as those in Jurong.

The eco-city will be built based on a concept very much like Singapore's town centres, so the new city will have educational institutions, medical centres, commercial and residential areas within walking distances.

A total of 20 percent of its residential area will also be allocated for public housing.

Singapore plans to share its expertise in wastewater management, urban planning and transportation as well.

"At the end of the day, there will be a clear Singapore imprint in this... it will reflect a lot of the experiences we have gathered in Singapore over many, many years," said Mr Mah.

The first development, which is expected to be ready in three years' time, is an area that covers over three square kilometres in the south of the eco-city. Facilities in this area include a business park and a university.

The masterplan for the eco-city will be released for public consultation in Tianjin sometime next week. But before that, work has already started on detailed plans for the start-up area.

When completed, the eco-city is expected to be a model for other cities in China, as well as other parts of the world.

It is the second joint project by the Singapore and Chinese governments after the Suzhou Industrial Park.

The Chinese government has identified the project as the third most important development in China after the Pearl River Delta and the Yangtze River Delta projects.

Source : Channel NewsAsia - 17 Apr 2008

HDB gets 5,700 applications for 490 flats in April sale

2008-04-17T07:44:00.000-07:00

The Housing and Development Board's (HDB) April sale of four-room and bigger flats closed on Wednesday, with 5,700 applications for the 490 flats offered.

These flats are located in various towns such as Bukit Batok, Bukit Panjang, Choa Chu Kang, Jurong East, Jurong West, Sembawang, Woodlands and Yishun.

HDB said the take-up rates for its Bi-monthly Sales Exercise are high because the flats offered are completed or nearing completion.

However, it noted that while there is a high number of applications for its unsold stock, a significant number of applicants under the Built-To-Order (BTO) scheme does not end up purchasing a flat.

For instance, there were 1,284 applications received for 698 4-room flats offered under the September 2007 BTO project at Coral Spring in Sengkang. However, more than 200 flats remained unsold after all the applicants in this project were invited to select a unit.

So HDB is currently reviewing the flat application system, following feedback that non-serious applicants are crowding out those with more pressing housing needs.

HDB flats are now mainly sold through the BTO system, where projects are built only when a majority of units are booked. As these BTO flats take about three years to be complete, buyers are advised to plan ahead for their housing needs.

Couples who are planning to get married are encouraged to take advantage of HDB’s Fiance-fiancée Scheme to book their BTO flats early, to reduce the waiting time for a new flat upon marriage.

From April to September, HDB plans to offer 5,000 new BTO flats in towns such as Punggol, Sengkang, Woodlands and Bukit Panjang. The next two BTO launches will be in Punggol and Sengkang at the end of April.

HDB has also advised urgent buyers to consider resale flats in the open market where eligible first-time buyers can apply for the S$30,000 CPF Housing Grant.

First-timers who buy a resale flat to stay with or near their parents are also entitled to a higher grant of S$40,000. - CNA/vm

Source : Channel NewsAsia - 17 Apr 2008

Private home sales leapt 80% in March from February

2008-04-15T09:23:00.000-07:00

There are signs the property market in Singapore might be making an about-turn following its muted start to the year.

Figures released by the Urban Redevelopment Authority (URA) show that the number of private homes sold in March leapt 80 per cent from the month before, signalling improved buyer sentiment.

And developers were even more positive. They launched more than 600 units for sale in March - about 85 per cent more than the month before, and the highest in seven months.

Analysts said they expect to see more units being placed on sale in the months to come.

Donald Han, Managing Director of Cushman & Wakefield, Singapore, said: “Moving forward we expect more launches taking place in the second quarter of this year. While there are generally not a slew of new launches, a lot of developers have re-launched their projects. Re-launched in the sense (they) have started to price properties at more realistic levels.

“Early part of year, it's not too effective to start pricing there. But now we are well into 2008. There are developers who are certainly using pricing to attract more positive sentiment to lure the buyers out."

Still, developers have some way to go before the property market even begins to resemble that of its heydays last year.

A closer look at the numbers show that most of the increase in sales came from the high-end market where sales jumped 80 per cent, compared to a 31 per cent hop in suburban region sales.

For now, it seems that mass market buyers will still be holding back in hope of better deals to come.

Analysts are also quick to note that the ratio of launches to sales in March still remain at February levels at 47.5 per cent to 46.4 per cent.

Nicholas Mak, Director of Knight Frank, said: "At first glance, it seems like sales figures in March have improved over February. The numbers moved back to about the same level as in January or December. But on closer analysis we find that the take-up has weakened. Typically about 70 to 90 per cent of units launched are sold. Right now that figure has fallen to about 50 per cent, same as February."

But overall, analysts said the private home market data for March should still put a smile on the faces of those in the industry, given the current economic climate due to the bad news from the US and its ensuing ripple effect worldwide. - CNA/vm

Source : Channel NewsAsia - 15 Apr 2008

More controls to keep real estate agents in line

2008-04-15T09:18:00.000-07:00

Real estate agents may be accredited under a new scheme, if the Ministry of Finance (MOF) gives the go-ahead.

Two industry watchdogs - the Institute of Estate Agents (IEA) and Consumers Association of Singapore (CASE) - are joining hands to start a new accreditation scheme and they plan to submit a proposal to MOF in the middle of the year.

They believe compulsory guidelines will help improve the professionalism of the real estate industry.

James Chua had planned to buy a 4-room HDB flat, in the Admiralty area, valued at about S$260,000. He was willing to pay only S$12,000 in cash over valuation (COV).

But he was told that another buyer had already made a similar offer, and that was when his agent came up with a "suggestion".

"She (property agent) said if (I am) willing to pay S$10,000 COV and S$2,000 commission to the selling agent, then (I) can still buy the flat. I was taken a back. Isn't that not representing the best interests of the seller? I find that highly unethical and lacking integrity. I said I won't do it but my buying agent said if you are still paying S$12,000, then what's the big deal. That was when I started to suspect that they are in this deal together," said Chua.

Chua had since bought another flat through a new agent. But he had reported the incident to the Inland Revenue Authority, which is the licensing body for real estate agencies. Chua hopes more can be done to better regulate the industry.

Last year, over 1,000 complaints were filed against property agents.

The IEA said this is about 40 percent more than 2006, partly due to the property boom.

Said Jeff Foo, president of the Institute of Estate Agents: "All these years, we hear consumers complaining about unethical agents, agents not knowing their job. And at the end of the day, nothing is done about it. The agents get away with it scot-free, because they are not regulated.

"The best thing is to legislate. If taxi drivers and security guards are all licensed, why not real estate agents? Real estate agents deal with about the largest investment of some consumers."

IEA said it can only take disciplinary action against agents who are its members. If found guilty, rogue agents will be blacklisted and will not be able to work for another real estate agency.

It estimated that there are some 30,000 real estate agents in Singapore, and only 1,500 of them are IEA members.

Under the new proposed accreditation scheme, new agents must be trained under the National Skills Recognition System (NSRS).

NSRS is a national framework for establishing work performance standards and certifying skills acquisition, implemented by the Singapore Workforce Development Agency.

Existing agents are expected to upgrade themselves and pass the Common Examination of House Agents. There will also be provisions to punish errant property agents.

For now, the onus is on consumers to do their homework. They can run a check on their agents on IEA's Central Registry System, or ask to see the agent's Practicing Certificate.

From May, agents will have to submit the checklist to HDB, together with the resale application. This is to ensure all procedures are transparent. - CNA /ls

Source : Channel NewsAsia - 15 Apr 2008

Malaysia's UEM Land, Singapore firms in talks

2008-04-15T08:47:00.000-07:00

Malaysian state property developer UEM Land is in talks with Singapore real estate firms about joint projects in a US$105 billion industrial and tourism zone in Malaysia's south.

Malaysia unveiled a blueprint in 2006 to transform the southern tip of Johor state into a regional economic zone for industry, logistics, trade and leisure.

'We are in various stages of discussion with Singapore interests,' UEM Land managing director Wan Abdullah Wan Ibrahim told Reuters in an interview on the sidelines of a real estate event in Singapore.

He said that the involvement of Singapore firms - in particular those linked to the government - would boost investor confidence in the Iskandar Malaysia project, just a few minutes drive across the narrow causeway linking the two countries.

Singapore developers that are part-owned by state investors Temasek include CapitaLand and Keppel Land.

UEM Land is the flagship property company of the UEM Group, formerly called United Engineers Malaysia, which is in turn owned by Malaysia's state investment company Khazanah Nasional.

Under a revamp of the group announced earlier this year, UEM will list on the Malaysian stock exchange in September by taking over the listing status of UEM World, which last year reported a 4-fold rise in net profit to RM939 million (US$297 million).

Mr Wan Abdullah said UEM Land aimed to be a regional developer with projects in neighbouring countries by 2010 but its immediate priority was to develop its 9,713-ha Nusajaya development in the Iskandar region.

'There are opportunities today but the board feels we should not divert our attention...but we definitely have the desire to be a global developer.'

Malaysia announced in 2006 plans to set aside 2,200sq-km of land in Johor for a special economic zone that would provide residents and companies in neighbouring Singapore with land for leisure and industry.

Covering an area three times the size of Singapore, Iskandar has attracted Middle Eastern investors including Dubai World as well as multinational companies such as General Electric.

UEM is overseeing the development of a 9,712ha site within the development. -- REUTERS

Source : Business Times - 15 Apr 2008

Malaysia's IDR attracts major Middle East, Singapore investors

2008-04-15T08:43:00.000-07:00

Singapore investors have been snapping up the properties within the Iskandar Development Region (IDR) in the Malaysian state of Johor, according to Malaysian property firm UEM Land.

UEM said Singapore investors have so far accounted for 95% of the industrial properties sold on the 24,000-acre plot of land in Nusajaya. The developer said the majority of industrial property interest has come from small and medium businesses.

Singapore investors also make up for 50% of residential sales there.

UEM Land said it is currently in further discussions with Singapore firms for larger joint projects in the IDR, to keep ahead of competition.

"It's not just one man's dream; it's founded on very strong foundations, one of which is Singapore. How do we complement Singapore? At the end of the day, these two governments need to collaborate. Because if we don't, India and China will make us irrelevant in the future, so we've got to collaborate," said Wan Abdullah Wan Ibrahim, MD of UEM Land.

The 24,000-acre plot of land, just a 10-minute drive over the Second Link Bridge from Singapore, Is set to accommodate some 500,000 people when completed in 2025, up from the current 75,000 already there.

Since its launch early last year, 128 acres of industrial land has already been sold and UEM is aiming to sell a further 180 acres this year.

The largest investment to date came from Middle Eastern company Limitless, who is in a joint venture with UEM to pump some S$100 million to develop a 111-acre plot of land.

The developer is looking to spread its wings and gain further investment from overseas, but has noted some concerns.

"We notice that the prime concern, especially coming out of Singapore, is safety and security. So we decided that we need to address the concern," said UEM Land's MD.

To address the issue of security, UEM will be collaborating with General Electric to create a security masterplan. - CNA /ls

Source : Channel NewsAsia - 15 Apr 2008

Stronger Sing$ may weigh down interest rates

2008-04-15T08:39:00.000-07:00

Inflows may increase, but stronger currency could hurt exports - SIOW LI SEN

Amid the clouds of uncertainty hanging over some sectors, there is good news for home loan borrowers. Interest rates are poised to fall to levels last seen in 2003 following the move to let the Singapore dollar appreciate strongly in an effort to fight imported inflation.

The Monetary Authority of Singapore (MAS) will be busier than ever - intervening in the banking system to mop up some of the extra liquidity in order to moderate the pressure on interest rates.

Low interest rates might negate some of MAS's anti-inflationary measures by helping fuel domestic growth. But economists say MAS will stick to its guns of using the exchange rate as a tool to fight inflation given Singapore's open economy.

Last week, data showed that the economy grew a stronger than expected 7.2 per cent in the first quarter against 5.4 per cent in Q4, 2007. Inflation rose to a 26-year high of 6.6 per cent.

Analysts expect the three-month Sibor to fall to between 0.75 and 1.00 per cent by the fourth quarter of this year as capital flows are attracted here by a rising Singapore dollar.

The record low for three-month Sibor was 0.56 per cent reached in August 2003, when the US Federal Funds rate was at one per cent, said Citigroup economist Kit Wei Zheng.

Since last Thursday when the MAS decided to reset the Singapore dollar higher, the key three-month Sibor, which is the interbank interest rate, has fallen some 19 basis points to 1.25 per cent.

'Foreigners are betting the Singdollar will appreciate ... the band re-centring would reinforce the market perception that MAS wants the exchange rate to appreciate and increase investor expectations of returns on Singapore dollar assets,' said Mr Kit. This would exert downward pressure on short-term interest rates.

The Singapore dollar is now expected to rally to $1.31 by the end of the year against the US dollar. It was $1.36 yesterday.

It is not clear if MAS's move last week will ease inflation significantly given the persistently high commodity prices, record rents and higher transportation charges.

But the more immediate impact of a stronger local dollar could weaken the demand for exports and hurt the profits of foreign companies operating here, given that their costs are in local currency terms, said some economists.

'There will be a slowdown in exports, likewise for foreign companies, their profit margins will be impacted,' said Mr Kit.

United Overseas Bank's Suan Teck Kin thinks there would be a margin rise in inflows by investors to pick up some gains on the appreciating Singapore dollar, but 'overall, we might not see a wholesale rush of capital inflows'.

'This is because from a foreign investor's point of view, currency return is only one component of total return,' said Mr Suan. 'So if an investor believes there is more upside to the equity/ bond/property market and the upside is better than other parts of the region, then the capital will follow.'

Still, the market is bracing for more MAS interventions and sterilisations.

'Investors should expect the MAS to continue sterilising aggressively, so as to moderate the fall in domestic interest rates as a result of its forex interventions,' said Mr Kit.

MAS has been sterilising in unprecedented amounts.

In February, data showed that MAS sterilised or removed about US$8 billion from the banking system, the second largest amount since May 2006 when it was over US$9 billion, said Mr Kit.

This means that Singapore's reserves will continue its climb to record levels.

At the end of March, spot reserves reached S$245 billion, up S$18.8 billion from October, he said.

'Our reserves are always climbing, the same for many Asian countries,' he said.

Source : Business Times - 15 Apr 2008

Katana II: Katana launching second KL project

2008-04-15T08:32:00.000-07:00

Katana II tagged at RM1,600-1,900 psf, double price of first project in 2005

BOUTIQUE firm Katana Developments, which is linked to Oriental Holdings chairman Loh Cheng Yean, will launch its second residential project in Kuala Lumpur at RM1,600-1,900 (S$687-815) per square foot.

This represents an increase of about 100 per cent over its first KL development in 2005.

Katana director Sherman Lim said: 'High-end properties in Kuala Lumpur have easily more than doubled since 2005.'

Pointing out the crucial difference between developing property in Singapore and Malaysia, Mr Lim said that in Singapore, land costs typically accounts for up to 70 per cent of the investment costs while in Kuala Lumpur, it might be as little as 20 per cent.

This is why location alone is not the only distinguishing factor in a Kuala Lumpur property.

'You can have two properties side-by-side and yet they could be very different, depending on the design and construction,' added Mr Lim.

For Katana II, the developer engaged award-winning Singaporean firm W Architects to undertake the design. This is in line with the company's credo of, 'doing something more design-driven'.

Located in Kuala Lumpur's 'embassy row', Katana II will have 40 units, comprising a mix of townhouses, triplexes, duplexes and lofts. Of these, there will be six penthouses with private lap pools.

Another award-winning Singapore firm, SCDA Architects, designed the 30-unit Katana Residences, which is now fully taken up after the developer sold the remaining 10 units it held for investment last year for RM1,400-1,700 psf.

Meanwhile, in the pipeline is The Boulevard Katana in Penang, expected to be launched in the third quarter of the year.

Source : Business Times - 15 Apr 2008

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KL property: The view from Kuala Lumpur

2008-04-15T08:20:00.000-07:00

PAULINE NG looks at real estate developments in the vicinity of the iconic Petronas Twin Towers

LIKE a beacon, the gleaming twin iconic towers beckon to the hordes of tourists that flock there daily for a snapshot of what many consider to be the symbol of Malaysia.

But tourists are not the only ones wanting a piece of the Petronas Twin Towers. In the past five to six years, demand for properties in the vicinity of the Kuala Lumpur City Centre (KLCC) has increased so much that thousands of high-end residential units have been built or are in the pipeline to meet the demand.

In 1995, before the Petronas Twin Towers came into being, the KLCC area had only six developments and some 928 units of high-end service residences, according to statistics by CH Williams Talhar & Wong. By last year, assuming the 3,000 plus units planned were completed, the number would have ballooned to 27 developments and some 8,000 plus units. Over the next three years, its data shows that an additional 6,000-plus units are expected to come into the market, so that by end-2010, there could be slightly more than 15,000 service residences in the KLCC vicinity.

If Malaysia is looking at a real estate bubble - as some fear it could be, especially if the US sub-prime problems spread - could Kuala Lumpur's hottest address get pricked?

Zerin Properties chief executive Previndran Singhe believes some of the developments that are not well branded could unfortunately become pie in the sky.

But to the still bullish, the latest land acquisition in the area will be further proof that there is indeed still more upside.

Conglomerate YTL Group, which set tongues wagging in Singapore with its successful if somewhat hefty tender for the en bloc purchase of Westwood Apartments on Orchard Boulevard for S$435 million cash, showed it was also prepared to set new benchmarks in Kuala Lumpur.

In the first week of April, reports emerged that it had acquired a plot of land measuring slightly less than an acre on Jalan Stonor in the KLCC area for RM85 million (S$36.6 million) or some RM2,000 psf, beating the previous benchmark of about RM1,500 psf.

Affin Securities said that this shows the excitement over the high-end property market is still present despite concerns over the looming US economic recession and recent election setback suffered by the ruling Barisan Nasional.

'We believe this segment is still attractive given the continued interest by foreign investors, especially Middle Eastern, in strategically located and concept-driven projects in the Klang Valley, Penang and southern Johor,' its property analyst, Alex Goh, said in a client note.

Mr Singhe agrees. He expects the next price benchmark for the KLCC area to hover around the RM2,500 to RM3,000 psf mark, with the 'really good' ones - such as the under-construction Four Seasons hotel-cum-apartment complex by Ong Beng Seng - fetching as much as RM3,500 psf.

Work has begun on the two towers - a 62-storey apartment and a 38-storey hotel - which would be built with CapitaLand on the prime location next to the KLCC Twin Towers. Believed to be launched at an average of RM2,000 psf initially, the units at the prestigious development are said to be selling at RM3,000 psf now.

Premium projects

Another development that is expected to begin construction sometime in the middle of the year but is already generating interest is Kwek Leng Beng's 42-storey Millenium Residences. Although a bit further from the Twin Towers, it is situated on Jalan Bukit Bintang next to Pavilion KL, the swanky new mall in the city. The agent has begun accepting registrations of interest, but said that the price has not been firmed yet. Some agents think it is unlikely to sell for under RM1,800 psf.

These unique, quality developments are far and few between - others are said to include KLCC Properties' The Binjai and stockbroking tycoon Chua Ma Yu's OneKL.

Mr Chua's daughter, Carmen, is convinced that Grade A, international-standard structures are the way forward. The driving force behind the construction of OneKL, she is of the view that the KLCC area is already congested and, with thousands of units in the pipeline, likely to face oversupply. For investors, the similarity of these units - 'all perfect substitutes for each other' - is unlikely to result in significant capital appreciation or a sustainable rental yield, she has observed, 'compared to if you buy a project that truly stands out'.

Most buyers, however, may not have the financial firepower to invest in these premium developments. For them, that land prices continue to soar owing to scarcity in the area is a point of comfort and a reason to be optimistic that real estate prices can be sustained.

Land prices in the KLCC area were around the RM600 psf mark three to four years ago before the upswing in the property cycle. However, only 28 per cent of chief executives polled by CH Williams in an opinion survey believe non-landed residential properties are at the peak of the property cycle, although the survey was general and did not focus on the KLCC area only.

Zerin's Mr Singhe maintains that the KLCC area would only reach its 'market equilibrium' in three years. 'The YTL purchase says a lot,' he observed, and scoffed at suggestions that the recent general election results had spooked investors. 'I have seen transactions increase a week after the GE.'

Real estate was a long-term investment, he said, adding at a property talk in early April in Singapore that he was overwhelmed by the interest. 'The number of people interested in Malaysian property is amazing,' he said, adding that even successful Singaporean developers were making a beeline for Malaysia 'because they feel the market has not peaked yet, and the country with its bigger population is still in a growth cycle'.

He believes that the area can absorb the additional units but stressed the need for improved infrastructure such as better public transport.

Traffic congestion and flooding remain perennial problems, and, if anything, could worsen with more residential and commercial developments taking place in the city. The bad news is that few see the situation getting better anytime soon despite previous talk by the authorities to encourage city living so that Kuala Lumpur is busy 24/7 instead of during working hours only.

Foreigners account for about one third of new units purchased, and property consultants have pointed out that quite a number are happy not to rent out their apartments but to keep them for occasional use and to hold on for capital appreciation. This could ease some of the pressure on rental yields which are bound to ease when more units come on-stream.

Source : Business Times - 15 Apr 2008

MPCB to build hub for trade in IDR

2008-04-15T05:30:00.000-07:00

PROPERTY developer Malaysia Pacific Corporation Berhad (MPCB) is planning a giant retail and wholesale trading hub as part of its flagship development LakeHill Resort City in Johor's Iskandar Development Region (IDR).

IDR is a special economic zone aimed at garnering both domestic and foreign investment.

Bill Ch'ng, CEO of MPCB, told BT last week that its Asia-Pacific Trade & Expo City (Aptec) would be a 'platform for greater regional collaboration, bringing about greater socio-economic benefits'.

He also said that it would create a strategic partnership between Singapore and Malaysia - one that could, among other things, tap the mass consumer market of Asia-Pacific's 800 million population.

At 4 million sq ft, Aptec aims to be the largest trade, expo and wholesale distribution centre in the region. It is projected to create over 50,000 jobs directly as well as an additional 200,000- plus jobs in supporting industries.

Costing RM1.2 billion (S$517 million) to build, Aptec is slated for completion within three years once plans for construction have been given the green light.

Besides housing a wide variety of products from India, China and the Asean countries, it will also boast an entertainment and tourism complex.

Aptec will be part of the 196 hectare LakeHill Resort City, an integrated resort town that will hold about 12,000 residential units, a shopping mall, office suites as well as a heritage and cultural village.

Taking into account the property market here, young Singaporeans may want to look across the Causeway for more affordable properties, suggested Mr Ch'ng, especially with the recent relaxing of certain Malaysian laws such as long-stay visas.

To be developed at a cost of some RM3 billion, LakeHill Resort City is expected to generate an estimated gross development value of RM6.3 billion over 8-10 years.

Source : Business Times - 15 Apr 2008

This year's hot real estate destinations in India

2008-04-15T05:19:00.000-07:00

For investment, emerging localities are preferable to established and often saturated ones any time - ANUJ PURI

IN Indian real estate today, the only constant is change. Hot destinations of the last year are not assuredly the best options this year, and the next year brings its unique set of emerging investment destinations with it.

The reason for this state of flux is that the real estate boom is causing many of the country's metros and even some of the previously popular Tier II towns to saturate at an incredible pace.

Property prices there skyrocket beyond the reach of middle-income home buyers, causing them to look a little further afield each year. Investors observe these migration trends, analyse the magnitude and scope of activity, and identify one or the other new town as the next destination.

Information technology (IT) companies, which are now the primary drivers in the Indian real estate market, are not dependent on central business locations.

The crux of the whole outsourcing boom is that it makes more sense for foreign-based companies to offload back-office functions and even research processes to India than to undertake these in their home countries.

However, what would necessarily be a CBD-based business function in, say, the US, can be a non-CBD-dependent function in India.

After all, both the sellers and final buyers of IT-based products and services are based abroad anyway. This means that IT/ITES (information technology enabled services) companies can operate from anywhere in India, as long as there is access to skilled manpower and necessary resources.

The fact that such companies can benefit from the advantage of cheaper real estate prices in smaller towns has led to the Tier II/III city boom. IT/ITES companies catalyse every other sector of real estate wherever they go, so the retail, residential and infrastructure sectors soon start perking up in those localities.

A fundamental real estate investment mantra is that emerging localities are preferable to established and often saturated ones. Established areas eventually reach a peak in terms of appreciation potential, after which the growth rate either slows down or stagnates.

Moreover, there is little scope for new market drivers such as malls to find a place in saturated localities - meanwhile, prices remain high.

This is not the best of scenarios from an investment point of view, since optimal investment requires low entry levels and appreciable growth within a realistic time-frame. Therefore, as one or the other destination reaches its peak potential on all these counts, new ones come into the limelight.

It follows that in 2008, we will be looking at an entirely new set of hotspots in the Indian real estate market.

A few of these are given below, along with some vital statistics and the basic reasons for their emerging high profiles on the Indian property landscape.

Vizag - Andhra Pradesh

Vizag's growth drivers are availability of land at cheaper cost vis-a-vis Hyderabad, relatively lower cost of skilled manpower (as well as lower attrition rates), improving infrastructure, and considerable demand. The market also has less competition and project costs are lower, leading to increased margins.

Meanwhile, overall purchasing power in Vizag is high. The upcoming commercial and retail destinations in Vizag are Dwarakanagar, Seethamadhara, Gajuwaka, Rushikonda, Anakapalli, Bheemili and Paarwada.

For residential investment, the best areas now are Madhurawada, Pendurthy, Parawada, Bheemunipatnam and the areas towards the Anakapalli Corridor.

Property rates:

 Seethammadhara (1,400-3,000 rupees per square foot)
 Murali Nagar (1,400-2,200 rupees psf)
 Beach Road, MVP colony (2,800- 3,500 rupees psf)
 Siripuram (2,500-3,200 rupees psf)
 Parwada (1,200-2,000 rupees psf)

Vadodara - Gujarat

Vadodara definitely ranks high among the emerging investment destinations.

The prime residential areas are Alkapuri, Race Course Road, Old Padra Road, Jetalpur, Akota and Fatehganj.

Property rates:

 Old Padra Rd (1,200-1,500 rupees psf)
 Alkapuri (1,900-2,300 rupees psf)
 Race Course Road (1,500-1,800 rupees psf)
 Fatehganj (1,300-1,700 rupees psf)

Dehradun - Uttrakhand

Dehradun is seeing a gradual but definite boom associated with the rise of malls in the region. Land rates are rising and there is considerable infrastructure development. Another driver is the growth of the IT sector in the region.

The State Industrial Development Corporation of Uttaranchal is setting up a high-tech software park on more than 1,000 hectares of land in Dehradun. Chatrata Road, Mussoorie Bypass and Sahastradhara Road are the best locations for small to medium-sized investments.

Here, investors can expect between 10 and 12 per cent appreciation over the next three years.
Indore - Madhya Pradesh

Indore's real estate star is on the rise, and offers good investment opportunities in projects with low entry cost that are located in an area with good appreciation potential.

Property rates:

 Vijay Nagar (3,000-10,000 rupees psf)
 Bypass, AB Road (3,000-10,000 rupees psf)
 Rau (600-1,200 rupees psf)
 Gulmohur Colony (3,500-6,500 rupees psf)
 Green Park Colony (800-3,500 rupees psf)

Nashik - Maharashtra

Nashik is displaying an increasingly buoyant industrial scenario, with considerable growth expected in the IT/ITES industry.

Overall infrastructure and connectivity to Mumbai and other regional towns is improving rapidly, lending increased credibility to Nashik's real estate market. It is the vertex of the Pune-Mumbai-Nashik Urban Golden Triangle.

The upcoming suburbs of Anandwalli (Gangapur Road), Indiranagar, Untwadi, Aadgaon (off Mumbai-Agra Road) and along Pathardi Link Road bear watching.

Property rates:

 Gangapur Road (1,200-1,900 rupees psf)
 Mumbai Agra Road (800-1,600 rupees psf)
 Agra Road (600-1,000 rupees psf)

Guwahati - Assam

The capital city of Assam has witnessed a population growth of over 40 per cent over the last 10 years. This extensive population growth has been responsible for a quiet revolution in Guwahati's real estate market.

There is an upsurge in the retail sector, and outskirt locations such as Khanapara, Zoo-Narengi Road, Basistha and Beltola are emerging as the new residential destinations.

Current rates are between 1,800 and 2,500 rupees psf. The upcoming Games Village at Sarusajai will add a new flavour to the residential market along NH-37.

Chandigarh - Union Territory

Though there has been a lot of speculation in Punjab's real estate market, this joint capital of Punjab and Haryana states is among the emerging cities that are seeing very encouraging real estate trends.

Chandigarh is India's first planned city, and it conforms perfectly to the key parameters by which we judge a city's growth - property market, people, physical infrastructure, social infrastructure, and business environment.

Chandigarh scores high on these counts, especially in terms of the potential of its property market. Its boom derives from the rapid development taking place on its outskirts.

Some of these areas are:

 Panchkula (2,500-3,000 rupees psf)
 Mohali (1,500-2,500 rupees psf)
 Dera Bassi (1,300-2,000 rupees psf); and
 Zirakpur (2,700-3,200 rupees psf).

The writer is chairman and country head, Jones Lang LaSalle Meghraj

Source : Business Times - 15 Apr 2008

Betting on retail assets

2008-04-15T04:50:00.000-07:00

Asia's retail and hospitality sectors are expected to benefit from strong growth in intra-regional travel, reports UMA SHANKARI

DEVELOPERS are investing in the retail and hospitality sectors in Singapore and the rest of Asia in a big way, banking on an expected surge in retail spending and tourism.

Consumer spending in the region is supported by rising income levels that are translating into retail sales and the development of the shopping scene into something closer to that in the US and Europe. One clear sign of positive retail sentiment is that many international and luxury brands are expanding into major retail hubs across Asia, CB Richard Ellis (CBRE) points out.

Some of the world's biggest names, including Bulgari and Giorgio Armani, unveiled flagship stores in Tokyo in the fourth quarter of 2007 - despite Japan's overall sluggish economic recovery.

The rise in retail spending in Asia is also driven by growing intra-regional tourism, industry players say.

Asia continues to benefit from its position as the world's second-most visited region after Europe, achieving record growth in terms of hotel occupancy and average room rates in 2007.

South Asia and South-east Asia in particular enjoyed double-digit growth in revenue per available room, with South Asia seeing a 40.4 per cent increase and South-east Asia seeing 16.9 per cent growth, according to data from industry body, the Pacific Asia Travel Association (Pata).

Cushman & Wakefield (C&W) noted in a recent report: 'Inter-regional in-bound visitors are expected to continue in the medium-term, but the greatest growth will be intra-regional through the continuing expansion of road and air routes throughout Asia, including budget airlines, as well as the enhanced capacity of the new aircraft - the A380 and B787.'

Intra-Asia travel is expected to be especially strong on two routes - Hong Kong traffic into Japan is expected to grow 17 per cent from 2007 to 2009, while the number of visitors from the Chinese mainland to Singapore is expected to grow 16 per cent in the same period.

In view of all this, it is perhaps not surprising that investors and developers are forking out big bucks for retail and hospitality property such as hotels, serviced apartments and malls, as well as assets such as retail and hotel-based real estate investment trusts (Reits).

The interest in retail assets is driven by expectations of a broad-based increase in rents and capital values in Singapore, brought on by increased retail spending.

Singapore's retail sector was especially active in 2007, with retail sales totalling some $23.8 billion - 7.1 per cent higher than in 2006. This year, retail sales are expected to grow about 5-10 per cent and demand for retail space is expected to remain strong.

In a recent report, Credit Suisse said it expects retail growth here to be supported by benign economic indicators, high population growth, increasing household income, tourism growth and other 'feel-good' factors.

'This is expected to drive rentals up 5-10 per cent, translating into 10 per cent rental revenue growth for suburban malls and 20 per cent for central malls in 2008 given strong reversions,' Credit Suisse analysts Shirley Wong and Leng Chye Teo said.

The research team recently initiated coverage of three Singapore-listed retail Reits: CapitaMall Trust, Frasers Centrepoint Trust and Macquarie Meag Prime Reit, with 'outperform' calls on the first two and a 'neutral' call on the third.

CBRE said similarly that retail rents are likely to increase in 2008, albeit at a more moderate rate due to an abundance of choice for retailers as a significant amount of new space comes on stream. 'We expect both Orchard Road and suburban mall rents to increase 3-5 per cent in 2008, down from our earlier estimate of 4-7 per cent for Orchard Road and 3-6 per cent for suburban malls,' CBRE said.

However, the retail sector here will have to grapple with downside risks such as rising inflation, the trickle- down impact of the US sub-prime mortgage crisis and lacklustre global stock markets, property analysts say.

The outlook for the hospitality sector is a bit more bullish. In particular, Singapore, which enjoyed record growth in terms of both occupancy and room rates in 2007, is expected to see more corporate and meetings, incentives, conventions & exhibitions (MICE) travellers. Industry players believe this segment will continue to grow even if leisure tourism were to slow.

Hoteliers here have told BT they expect room rates to shoot up another 25-40 per cent this year, driven by the Formula One Grand Prix race and the tight supply of hotel rooms. Room rates rose 15-25 per cent in 2007.

One new trend that is expected to shake up both the retail and hospitality sectors across Asia is the arrival of gaming in a big way.

Right now, roulette wheels are spinning and jackpot machines are whirring in casinos across a dozen Asian countries, C&W noted in a report.

Investment in casinos is continuing apace in Macau - thought by many to be Asia's gambling capital - where there are currently more than 20 casino complexes. Singapore is about to open its own two integrated resorts, while Japan is moving closer to an overhaul of its strict gambling laws - which could see luxury casino complexes opening in Tokyo and on the southern island of Okinawa by 2012. Other countries reportedly considering lifting bans on casinos include Taiwan, Thailand and Indonesia.

Said C&W: 'Governments may not always be totally happy with the idea of their citizens gambling, or tourists pouring in for slot machines and blackjack, but Macau's US$7.2 billion in gaming income, US$15 billion in investment in just five years, 68.7 per cent surge in construction investment, an 80 per cent rise in property transactions, large-scale convention centre and hotel construction, thousands of new jobs and 19 per cent per annum retail sales growth are mighty powerful inducements - and most (governments) seem to think these are numbers worth betting on.'

Source : Business Times - 15 Apr 2008

Recycling in construction sites

2008-04-15T04:44:00.000-07:00

MATTHEW PHAN looks at what the building industry is doing to conserve water, energy and other resources

THE property market may have slowed, but the construction industry is still going at breakneck pace, with several national projects and plenty of private sector developments in the pipeline.

This is good for the economy, but perhaps less so for the environment - construction uses a lot of resources, such as concrete, steel, energy and water. How can builders mitigate this?

Water

Let's start with water. Builders typically buy Newater from PUB, and the cost can run to several hundred thousand dollars per project, according to Pek Lian Guan, director at Tiong Seng Contractors.

This is 'not high as a proportion of the total building cost' but is 'still a fair amount in absolute numbers', says Mr Pek.

Tiong Seng experimented with on-site water treatment and recycling in 2005 while working on City Developments' Parc Emily condominium.

It ended up saving 21 swimming pools of water, says Mr Pek. This is about half of what it would have used otherwise, according to the PUB, which handed Tiong Seng one of its inaugural Watermark awards last year.

At sites, Tiong Seng sets up a temporary drainage system to collect used water and rainwater, channelling the flows to a holding area, where the water is treated using a portable membrane-based plant.

Clean or treated water is used for plastering, or recycled for washing. Rainwater is also treated before being discharged.

Tiong Seng spent $120,000 on the Cleansea plant, supplied by waste-water treatment specialist Hydroxyl, and another $80,000 for on-site piping and collection systems.

Hydroxyl's plants are used in industrial facilities, but 'I met them and asked whether they could be used for construction sites', says Mr Pek. 'They custom-made a prototype for us to do an on-site trial run.'

Housed in a 3m by 3m container, the plant is easily transported by crane from site to site, Mr Pek says. But the on-site piping may not be re-usable as it gets damaged during the two-year construction process.

Tiong Seng also implements 'earth control measures', such as covering exposed soil with protective sheets to protect it from erosion, which is a common problem at construction sites, says Mr Pek.

Typically, erosion can lead to muddy, silty run-off with Total Suspended Solids (TSS) levels in excess of 200, compared with less than 50 for clear drinking water, he explains.

In comparison, water from the Cleansea plant achieves TSS levels of under 10. Ironically, Tiong Seng has to train its workers not to drink the plant's output, as the water is clear but may still contain biological contaminants.

Water conservation is another major area.

The level of use depends on the type and stage of construction, but there are typically two aspects of water use on a site, according to Simon Lee, executive director of The Singapore Contractors Association.

First, water is used in the wet works, or the concreting, plastering, testing for waterproofing and piping system, and while laying foundations. Second, water is used for site housekeeping, cleaning and washing, and at ancillary facilities like offices, living quarters or cookhouses.
On the whole, contractors manage resources by controlling their use, minimising waste and recycling where possible, says Mr Lee.

For example, it is normal practice to re-cycle water for the washing bay. Recycling makes 'economic sense' and 'has always been practised by the prudent contractors', though their input is 'mainly in the construction processes and temporary works', he says.

Prefabrication

In fact, sustainable construction starts at the design stage when the architects are thinking about what materials to use and how to put them together.

By using pre-fabricated components, or drywalls made partially of recycled material, builders can save water, energy and other resources.

Pre-casting, or offsite fabrication, means that not just beams and walls, but entire rooms, can be built in a factory, then transported to the construction site, where cranes fit them into buildings like Lego blocks.

'Pre-fab takes place under controlled conditions, which minimises waste and ensures quality,' says Vivien Heng, director at RSP Architects Planners & Engineers. 'There is no need to worry about assembly on site. It saves time and manpower, and the site is safer, neater and less noisy because there are fewer things happening', she says.

On the Tribeca project for City Developments, RSP is working with the contractor to use only pre-fabricated bathroom units (PBUs). 'A PBU comes to the site like a box - everything is sealed. You just need to connect the pipes', says Ms Heng.

Such units can also be designed using drywalls.

Made of gypsum, drywalls are used to finish the interior construction of walls or ceilings. They require no wet plaster, and can take just one or two days to install, compared to a week for masonry.

Although they weigh more than 85 per cent less than brick walls, drywalls can be insulated to achieve the same level of noise protection, according to the Building and Construction Authority (BCA).

Steel

As for structural frames, BCA has been encouraging builders to replace concrete with steel.

The latter requires no sand and has a very high strength-to-weight ratio, which allows for more flexible designs.

When connected by fasterners, steel frames are stronger than traditional systems, which allows savings on foundations and the crane capacity needed on site, according to BCA.

Steel frames are also easier and quicker to set up - which saves time on the construction site - and are fully recyclable.

Environmentalists may counter, of course, that steel manufacture is extremely carbon intensive. According to the Green Building Handbook: A Guide to Building Products and their Impact on the Environment, published in 2000, about three tonnes of carbon dioxide are emitted per tonne of steel if made from iron ore, and 1.6 tonnes of carbon dioxide if the steel is recycled.

Still, as most buildings in Singapore are high-rise, concrete or steel are pretty much the only two viable options, says RSP's Ms Heng.

Recycled concrete

Sustainable construction also involves recycling materials - and a lot of what is demolished is reusable.

Virtually all the metal content, for example, from the structural steel to the metal doors of electrical rooms, is recyclable, according to Tang Kok Thye of ADDP Architects.

The other parts - crushed concrete, bricks, metal, ceramic tiles, wood and plastics - are termed Construction and Demolition (C&D) waste.

This is typically used for building temporary roads at construction sites or to lay the sub-base course - the deepest of four layers - of a road.

But local studies show that C&D waste can be processed into recycled concrete aggregate (RCA) and substituted for natural granite, according to an article by Ho Nyok Yong and Kelvin Lee of Samwoh Corp.

Writing in the first issue of BCA's Sustainable Architecture newsletter, out this year, they also describe how to recycle asphalt pavements and incinerator ash.

By using RCA in place of natural granite when building roads, or in non-structural pre-cast concrete components like road kerbs and drains, contractors can save about 30 per cent, they say.

Overall, though, sustainability begins and ends with environmental consciousness and a sense of responsibility to use limited resources wisely, says RSP's Ms Heng.

She describes how the contractor on the Tribeca project - which is located near the Grand Copthorne Waterfront Hotel - picked up some discarded carpets and used them as noise insulation for his power generators. 'It's an innovative, zero- cost solution stemming from awareness and a recycling mindset,' she says.

Source : Business Times - 15 Apr 2008

En bloc sales: Consider wider interests of society, not just economic payoffs

2008-04-15T04:42:00.000-07:00

I REFER to the report, 'Issues of cost, procedures bubble up in new en bloc rules' (BT, April 12), which mentioned that the Ministry of Law is planning to review the recently amended legislation governing en bloc sales.

I urge the government to take a more holistic approach in reviewing the whole issue of en bloc sales.

Rules are only as good as the institutions that enforce them. An important 'institution' involved in en bloc sales is the Strata Titles Board (STB).

The independence, competence, resources and procedures of the STB should be reviewed because it has a critical responsibility in reviewing and approving transactions involving up to billions of dollars.

It is important that the STB is made up of individuals who are both highly independent and competent. It is also important that the STB follow international best practices for arbitration and have proper procedures for dealing with possible conflicts of interests involving its members.

The STB must also be well-resourced and individuals who serve on it should be properly motivated to discharge their duties with due care and diligence. A robust STB, coupled with clear legislation, can do much to assure all parties that en bloc sales are a 'fair game'.

However, I would like to urge the government to go further than that. I hope that we do not approach en bloc rules purely from the perspective of urban renewal or economic development. En bloc sales should also not be driven primarily by the commercial interests of property developers, consultants, agents and advisers, but rather by the interests of those who are personally affected by en bloc sales, be they majority or minority owners, and the wider interests of society.

As we move towards a more caring society and recognise people with more diverse talents than just academic and business success, we should also take into account the wider societal and environmental impact of en bloc sales.

Can we have the moral authority to play a leadership role on the world stage, which is increasingly concerned with wider societal and environmental issues, if we disregard them in our own backyard?

What are the wider societal and environmental costs of tearing down perfectly good buildings and dislocating communities compared to the economic benefits?

We have gone a long way in terms of economic development, thanks in large part to good public governance. It is time that we look after not just our body but our soul as well.

Mak Yuen Teen

Source : Business Times - 15 Apr 2008

Govt tenders in FY 2008 projected to exceed $8b

2008-04-14T07:28:00.000-07:00

The government will be calling S$8 billion worth of tenders in its financial year 2008.

Of these, about S$5.8 billion will involve building and construction projects which are proceeding as planned. These include projects to improve traffic on the Central Expressway as well as the Gardens by the Bay projects which will keep the Marina Bay area development on schedule.

Other projects valued at S$3 billion have been deferred so as not to add to the tight construction capacity situation.

Another S$1.2 billion will go towards the purchase of goods and services, such as the supply of equipment, appliances and the operation of the automated toll system at the checkpoints.

Tenders in ICT projects are also expected to be worth at least an additional S$1 billion. The Infocomm Development Authority of Singapore (IDA) will announce further details on the upcoming ICT projects next month. - CNA/ir

Source : Channel NewsAsia - 14 Apr 2008

Property agents in race against en bloc clock

2008-04-09T07:57:00.000-07:00

Sites relaunched at lower prices as collective sales agreement deadlines loom

Property agents are expected to keep pushing out a steady stream of relaunched en bloc sales over the next few months, as they attempt a last hurrah before their collective sales agreements (CSAs) inked last year expire.

Asking prices for such sites this time round are about 10-20 per cent lower than last year. Agents hope developers will bite, given their strong participation in recent government land tenders.

‘Whatever collective sales that went into the market in the third or fourth quarter of last year and which are not yet sold, you can expect their CSAs to expire around mid-2008 or Q3 this year. So the current second quarter is pretty much the only window of opportunity for the sellers and agents to make a last try,’ a seasoned agent in the en bloc sales business says.

Data from Credo Real Estate show there were 14 en bloc sale sites launched in Q3 last year but which are still unsold, while another 30 launched in Q4 last year have yet to find takers. These include The Riverwalk, Elizabeth Towers, Cairnhill Mansion, Grange Heights, Chancery Court, Thomson View Condo, Villa delle Rose, Spanish Village, Estoril and Vista Park.

From the time the minimum 80 per cent consent level is secured for a CSA, agents have up to 12 months to find a buyer and submit an application to the Strata Titles Board for an order for the collective sale.

Says Colliers International executive director of investment sales Ho Eng Joo: ‘We can expect to see a rush on the part of owners and agents to take another shot at the market. If you don’t do that, the old CSA expires and any fresh attempt at an en bloc sale will fall under new rules that took effect last October - and these are a lot more onerous.’

Colliers yesterday relaunched Amber Glades along Amber Gardens with an indicative price of about $127 million or $1,140 psf per plot ratio, inclusive of development charges. This is about 15 per cent lower than the $1,345 psf ppr sought by Amber Glades’ owners in October last year.

In recent weeks, Landmark Tower in Chin Swee Road, Pinetree Condo in the Balmoral area and Royalville in Bukit Timah have also been relaunched at indicative prices ranging from 10-20 per cent below what they had been offered at in Q3 or Q4 last year.

Typically, these sites are being relaunched under the existing CSAs and based on the same reserve prices as last year. However, this time round, owners’ asking prices are closer to reserve prices, whereas last year, the asking prices may have been pegged at a significant premium to the reserve prices, market watchers say.

Some agents are also believed to be in discussion with owners who’ve signed a CSA to see if they are willing to sign a supplementary agreement to lower the reserve price.

Savills Singapore director Steven Ming says: ‘The initial asking prices were a bit lofty when the sites were launched last year. That was when the market was still exuberant. As the sub-prime crisis set in, confidence weakened and home sales slowed. Developers have had to factor this in when pricing their bids for en bloc sites.

‘They also have to take into account higher construction costs and with the ongoing credit squeeze, the opportunity cost for putting in more equity into the project.’

Knight Frank managing director Tan Tiong Cheng has this advice for en bloc sellers: ‘Developers are no longer prepared to pay the price owners had expected last year, but if you can still collect a premium from an en bloc sale than if you were to sell your unit on your own, why not adjust your pricing and collect the windfall? You may also be able to take advantage of a more subdued market to shop for a replacement property.’

Besides the pressure of looming CSA expiry dates, market watchers point to another factor in the impetus for the current wave of en bloc sale relaunches: the strong bidding at recent state tenders, for instance, for a reservoir-fronting condo site in Yishun and a ‘white’ site at Serangoon Central. ‘This has brought back a bit more confidence in the market,’ says Credo Real Estate managing director Karamjit Singh.

‘Property bigwigs like Mr Kwek Leng Beng and Mr Liew Mun Leong have also come out to say they remain confident about prospects for the Singapore property market, but that we need time for sub-prime to clear before we see activity coming back again. If there were a barometer to measure the mood of the day in the property market, April’s measure appears to be slightly better than March,” he says.

Source : Business Times - 9 Apr 2008

Prices of high-end condos starting to fall as sales dwindle

2008-04-09T07:54:00.000-07:00

Downward trend may continue for next few quarters, experts predict

HOME prices are starting to fall, as several high-end properties begin to feel the squeeze of retreating buyers.

Sales of Singapore’s most expensive condominiums - all the rage last year - have dwindled to just a trickle this year.

And with plunging sales, prices have also started to dip, although official figures have yet to reflect this trend.

Early signs of the slide lie in the handful of caveats filed involving many luxury projects in the first quarter. These showed prices fell from the previous quarter, in some cases by up to 20 per cent.

In Districts 9 to 11, Singapore’s creme de la creme of residential locations covering Orchard, Holland and Bukit Timah, average prices have fallen by about 30 per cent since the beginning of the year, according to caveats.

They dropped to an average of $1,564 per sq ft (psf) between January and March from $2,023 psf in the preceding three months.

In luxury island enclave Sentosa Cove, almost all condos posted drops in average psf prices, ranging from 2 per cent for the Marina Collection to 23 per cent for The Azure.

Property experts say this could be because luxury home buyers are now selecting only the most competitively priced properties.

‘Market activity is very slow now, so any transactions that do take place are likely to be from people who have found attractive buys,’ said Mrs Ong Choon Fah, the executive director at property firm DTZ Debenham Tie Leung.

She said high-end properties in the traditional prime districts were more dependent on investor buying, so they could be more affected by the current global credit crunch and weaker sentiment.

‘A lot of people who bought luxury homes are also ’specuvestors’, so they may be happy making just a small profit and selling quickly,’ Mrs Ong explained.

The Government estimated last week that private home prices continued to climb in the first three months of the year, albeit at a slower pace. They rose 4.2 per cent, down from 6.8 per cent in the previous three months.

In the priciest segment, the core central region, the price gain dropped to 4.4 per cent from 7.5 per cent in the previous quarter. This region covers Districts 9 to 11, the Marina Bay area and Sentosa.

Anecdotal evidence from property insiders and caveats lodged, however, showed that prices at many projects fell rather than rose this year. At Scotts Square in Scotts Road, only two units have been sold so far this year - at an average price of $3,700 psf, down from $4,000 psf for 42 units in last year’s fourth quarter.

Similarly, at The Oceanfront @ Sentosa Cove, the most recent deals were in February, where three units were sold at $1,720 to $1,751 psf. Just six months before that, 15 units were sold at an average price of $2,480 psf.

Other high-profile, pricey condos, such as the Marina Bay Residences and The Marq on Paterson Hill, have yet to see a single caveat lodged this year.

But the story is not all bad. The Orchard Residences, which holds the title of Singapore’s most expensive condo, has sold only one unit this year - but at $4,700 psf, higher than most of its other sales.

Other older condos in areas such as Cavenagh or Balmoral may also be trading at higher prices from their previously low base, pushing up the overall prices for the whole district, suggested Mr Ku Swee Yong, director of marketing and business development at Savills Singapore.

But he said the price index for high-end homes may be under pressure in the next two quarters, now that ‘everyone wants a bargain’.

‘You only need developers to start giving discounts or people starting to buy lower-

floor units instead of penthouses. That will push the index down and put pressure on prices.’

Source : Straits Times - 9 Apr 2008

JLL, Aussie firm in tie-up to manage malls

2008-04-09T07:51:00.000-07:00

JV will tap regional market with focus on China, India

JONES Lang LaSalle has teamed up with Australia’s Colonial First State Property Management to launch a retail property management venture, the first of its kind in Asia.

The 50:50 company, Sandalwood, will aim to tap into a growing market for retail malls in particular, with China and India being the prime areas of focus.

The Singapore-based firm will help developers and landlords in the development and management of shopping centres, with its existing ambit covering around 40 malls in the region. It will also provide consultancy and leasing services.

Between 2006 and 2012, an estimated 1,000 malls are being built in the region, according to Jones Lang LaSalle.

‘This is our most significant investment in our retail business in the region,’ Jones Lang LaSalle chief executive officer (Regional Business Lines & Corporate Solutions) John Forrest explained.

‘Retail is also quite a specialist thing. With shopping centres it’s much more of a living entity, and a key driver for why we wanted to bring in Colonial, with its depth of experience in managing malls.’

Colonial First State Property is one of Australia’s largest property development, management and leasing specialists, having undertaken more than 25 large shopping centre developments since it was launched in 1983.

It currently manages 36 centres on behalf of third party clients across Australia.

According to Mr Forrest, the joint venture will initially focus on Singapore, Hong Kong, China, Macau, Taiwan, Indonesia and India as its key markets.

No details were given on the capital that both firms have injected into the venture.

Around 740 staff from both the companies will move into Sandalwood. The venture officially launches on June 1.

One of Sandalwood’s first major projects will be a shopping mall in Ningbo, China. According to Mr Forrest, Singapore is a market where the joint venture would like to take on a major project that would become a flagship.

He also expects China and India to account for a large percentage of their project work, with retail space in these markets growing amid rising middle class incomes and potent spending power.

According to Jones Lang LaSalle’s latest Retailer Sentiment Survey, the region is experiencing robust growth and optimism.

In all, 76 per cent of respondents in the poll said that they anticipate higher growth in turnover in 2008. Nine out of 10 survey respondents said that they plan to expand their retail operations.

Cities such as Hong Kong have been enjoying a prolonged retail rebound on the heels of strong economic growth and consumer confidence.

January retail sales were more than 23 per cent higher than the same period a year ago, totalling HK$25.7 billion (S$4.5 billion).

However, economists are expecting more modest growth for the rest of the year as inflation begins to bite and consumers wait on the sidelines amid global economic uncertainty.

Although Hong Kong saw its gross domestic product grow by 6.3 per cent in 2007, the government has cited a slowdown in the US and Europe as a possible dampener, with growth this year expected to be in the region of 4 per cent.

Source : Business Times - 9 Apr 2008

Tapping the Asian market

2008-04-09T07:49:00.000-07:00

Private banks are realising there is huge potential for growth in Asia and are confident of a strong year ahead, writes GENEVIEVE CUA

MARKETS are down, writedowns from sub-prime losses aren’t over, and the US is grappling with what some pundits believe may be the worst economic downturn since the Great Depression. Still, private banks that look after the portfolios of Asia’s well-heeled are confident of a strong year ahead.

Merrill Lynch’s head of global wealth management (Asia-Pacific), Rahul Malhotra, expects a 30 to 40 per cent growth in assets this year, for example. That’s just about the pace of last year’s growth.

‘There is growth overall in the Asian economies even with what is happening in the US. Inherently we will see growth come through. People are still making and saving more money.

‘The types of investments clients may make could vary with the climate. In the past perhaps they invested directly in equities. Today there is more focus on fixed income.’

Tjun Tang, Boston Consulting Group vice-president and director, says the outlook remains bright, even if poor market performance may be a dampener. Wealth, he adds, is typically driven by three factors - economic growth, savings rates and a strong investment market.

‘What is interesting in Asia is that we still have strong growth fundamentally in the economies. So, entrepreneurs are still benefiting.’ Most Asians are also shielded from market losses, as they have a greater proportion of wealth in cash, relative to the wealthy in the US or in Europe.

Private bank penetration is also ‘quite low’. ‘In Asia ex-Japan, we’re seeing assets sitting in private banks of less than US$1 trillion. But household wealth across Asia comes to US$16 trillion. A lot of that may not make it to private banks, but many banks are growing by 20 to 30 per cent a year.’

Managing director of Calamander Capital Roman Scott, who used to head Boston Consulting’s wealth management practice, believes the wealth of non-Japan Asia will soon overtake that of Japan. Ten years ago, Japan dwarfed non-Japan Asia’s wealth. By his reckoning, major private banks in Asia have tripled assets under management over five years from US$200 billion to US$600 billion. That may well be underestimated as some banks are reluctant to furnish assets data.

How is a bank to get a larger share of clients’ wallets? Investment banking and corporate finance are one avenue, particularly in the context of Asian clients’ entrepreneurial profile. Credit Suisse managing director Marcel Kreis calls this segment of expertise ‘private investment banking’.

In Asia, entrepreneurs are highly represented among the wealthy, compared to other parts of the world, he says. ‘Almost every client is an entrepreneur, mostly first or second generation owners of businesses with their wealth tied to their business and to real estate.’

‘There are a number of banks that in theory can deliver the integrated bank to clients. In my mind, there are really only very few that can actually do this.’ He expects Credit Suisse’s Asian assets to expand by 20 to 30 per cent annually.

A second strategy is to simply be where the money is. This means setting up onshore centres in the most promising markets. UBS Wealth Management managing director Yeong Phick Fui says the management of domestic wealth is largely untapped. The latter comprises 90 per cent of the total wealth pool. UBS has earmarked a number of markets for domestic expansion, including Japan, Australia, Taiwan and China.

Citi Private Bank managing director and region head (Singapore, Malaysia and Brunei) Tan Su Shan says onshore commitment is a must especially in India and China. ‘(We are) committed to an ambitious onshore build-out in these two economic giants to capture market share.’

Yet another opportunity is to explore issues around inter-generational wealth transfer. Bank Julius Baer chief executive Wilfried Kofmehl says a study by PricewaterhouseCoopers has found that 80 per cent of Asian wealth will be transferred to the next generation in the coming years. ‘The transfer of wealth will have the most crucial impact on how we conduct our business here,’ he says.

That is why banks jostle for a share of mind among the wealthy’s children as well. Most banks now run ‘next generation’ programmes attended by clients’ children to discuss various issues including investments and business succession. Even relative newcomers to the Asian wealth scene are unfazed by the competition.

Lombard Odier Darier Hentsch (LODH), which boasts a two-century pedigree, set up an office here just this year. LODH deputy chief executive Richard Wee expects the bank’s Asian assets to reach US$2 billion within two years. He says the bank’s niche offering and a reputation so far untarnished by sub-prime exposure will offer an edge.

‘(Clients’) biggest concern is the retrenchment exercises of banks who are most affected by sub-prime losses, in particular the banks which emphasised market share rather than profitability as a growth objective. Turnover causes distress to our private clients.’

Meanwhile, finding good bankers surely remains one of the biggest and most stubborn challenges that banks face. Over the last couple of years, the frenetic drive for bankers saw compensation levels skyrocket.

Nick Hughes of Fox Partnership, which specialises in top level hires in wealth management, says: ‘Last year banks were quite reactive. It was a case of winning market share and paying to get bankers in with established books of assets under management.

‘Now people are showing more caution. Instead of bringing in five bankers, they may say - we’ll take two very good bankers who we know can produce results. Bankers are having to be very accountable this year. I don’t think it’s all doom and gloom. Some of the packages are still unbelievable. But they have to be very accountable.’

ABN Amro Private Banking Asia head Barend Janssens says: ‘(Banks) are looking for private bankers to generate at least US$5 million in revenue. Strong product knowledge and being able to generate revenue (but not to the point of product pushing) are skills in demand now. Clients are also more savvy.

‘Private bankers who listen to what their clients want, have their trust and exercise integrity will leap ahead as they are not product pushers but concentrate on creating value for the client.’

Source : Business Times - 9 Apr 2008

US home resales fall more than forecast

2008-04-09T07:47:00.000-07:00

Losses stemming from mortgage crisis may reach US$1 trillion, says IMF

The number of Americans signing contracts to buy previously owned homes declined more than forecast in February, indicating the US real-estate recession will extend into a third year.

The National Association of Realtors’ index of signed purchase agreements decreased 1.9 per cent to 84.6, the lowest reading since records began in 2001, the group said yesterday. The drop follows a revised 0.3 per cent increase in January.

Falling property values and stricter lending standards are prompting prospective buyers to delay purchases, a sign the housing slump hasn’t touched bottom. Mounting home foreclosures and related losses at financial firms may keep the Federal Reserve cutting interest rates to soften the downturn.

‘I think looking for a bottom in housing is a little premature given the fact we are just beginning to see the first wave of foreclosures,’ Drew Matus, a senior economist at Lehman Brothers Holdings Inc in New York, said in a Bloomberg Television interview. ‘Prices are likely to come down and we expect that to continue for some time.’

Economists had forecast the index would fall one per cent from an unchanged reading previously reported for January, according to the median of 29 estimates in a Bloomberg News survey.

Projections ranged from a decline of 1.5 per cent to a 1.5 per cent gain. Compared with a year earlier, the measure was down 21 per cent.

Stocks remained down following the report and Treasury securities were little changed. The Standard & Poor’s 500 index was down 0.5 per cent to 1,366.2 at 10.17am in New York.

The Fed was due to release minutes of its March 18 policy meeting at 2pm yesterday. In the first 11 weeks of this year, the central bank cut the benchmark lending rate two percentage points, the fastest drop in two decades. Analysts will be eager to see how officials viewed the unravelling of money markets that prompted them to pass new liquidity backstops.

Former Fed chairman Alan Greenspan said yesterday the drop in US home prices will probably end ‘well before’ early next year as the number of houses on the market diminishes, aiding an economic rebound.

The International Monetary Fund yesterday said financial losses stemming from the mortgage crisis may approach US$1 trillion, citing a ‘collective failure’ to predict the breadth of the crisis.

The Realtors forecast existing-home sales in 2008 would fall to 5.39 million compared with 5.65 million last year. Purchases of new homes will decline to 576,000 from 775,000 in 2007, the group said yesterday.

The pending figures are considered a leading indicator of resales because they track contract signings. The purchase data, due later this month, reflects closings, which typically occur one or two months later.

Sales of existing homes unexpectedly rose in February from a nine-year low, the Realtors group said on March 24. Purchases increased 2.9 per cent to an annual rate of 5.03 million.

Sales of existing homes are down 31 per cent from their September 2005 peak, while inventories are at a 9.6-month supply. The group has said a five to six-month supply reflects a balanced market.

The housing slump has hurt the economy in various ways. Declines in residential construction have reduced gross domestic product since early 2006 and now falling home prices are curbing consumer spending.

The drop in values reduces household wealth and limits the amount of equity owners can tap to boost spending. — Bloomberg

Source : Business Times - 9 Apr 2008

Fewer home loans taken up as property market cools further

2008-04-09T07:45:00.000-07:00

Mortgage default rate also falls but some banks see refinancing deals rise

The number of home loans taken up has fallen sharply in recent months as the property market continues to contract.

Only 4,200 new home loans were approved in January, up about 13 per cent on the 3,722 in December but down 21 per cent from the peak of 5,319 last August.

The Credit Bureau of Singapore figures also show that 2,544 second mortgages were taken up in January, a 31 per cent drop from the high of 3,698, also last August.

‘We expect the growth in new mortgages to slow further this year,’ said Credit Bureau general manager Mark Rowley.

Inquiries for new home loans have also dropped, down to 8,923 in February, the lowest since April 2006.

Mr Gregory Chan, OCBC Bank’s head of consumer secured lending, said: ‘We have observed that property buyers are becoming more cautious in their purchase decisions.’

United Overseas Bank’s (UOB’s) head of loans, Mr Kevin Lam, said that ‘in line with property sales transactions, our loan applications were slower in January and February’ but there was ‘a pick-up in market activity at the end of March’.

His counterpart at HSBC Singapore, Ms Alice Chia, said the bank has ’seen a reduction in applications for new home loans, which is reflective of sentiment towards the property market’.

But she pointed to one area where banks are getting increased business - more people are re-mortgaging their home to take advantage of the declining interest rate environment.

‘We have seen an increase in the number of refinancing applications over recent months,’ she said.

Maybank and OCBC have also encountered more home owners looking to refinance.

Ms Helen Neo, Maybank’s head of consumer banking in Singapore, said it launched financing packages in February ‘catering to customers seeking refinancing’ and has received ‘an encouraging response’.

However, Standard Chartered and UOB said they have not seen a significant increase in customers wanting to refinance.

The Credit Bureau figures also revealed certain more positive aspects of the mortgage market.

The number of delinquent account holders has fallen to 4,636, or just 1.63 per cent of total mortgage holders - the lowest in two years.

This allays concerns raised during the speculative frenzy last year that some buyers would overstretch by taking on loans they could not afford.

Mr Rowley said the lower delinquency rate is ‘a good sign’ that Singapore customers are creditworthy, even as loan amounts have risen steadily.

The increase in the number of home owners with significantly larger mortgages has also been striking.

There were 7,404 home owners with outstanding balances on their mortgages of over $1 million in January. This was an 81 per cent jump over February last year. This segment makes up almost 3 per cent of the total number of mortgage holders in Singapore.

Source : Straits Times - 9 Apr 2008

Cutback in bank lending puts US economy at risk

2008-04-09T07:42:00.000-07:00

Minimum capital ratio requirements limit banks’ ability to dish out loans
Bank holding companies including Citigroup and Bank of America have the thinnest safety cushion against losses in seven years.
The margin may erode further in coming weeks. Credit ratings on US$704 billion of bonds have been cut this year following the collapse of the US housing market.
Sheila Bair, chairman of the Federal Deposit Insurance Corp, said last week that the downgrades may compromise bank capital ratios enough that some of the largest institutions will no longer be considered well capitalised.
Falling below a regulatory benchmark that is intended to maintain a minimum level of capital to protect depositors against losses would subject banks to more scrutiny from regulators than they have ever experienced.
‘This is a nightmare for the country,’ said William Isaac, who was chairman of the FDIC from 1981 to 1985.
Banks will ‘raise what capital they can, then they’ll slow down their growth and stop lending, and what should be a mild recession becomes a much more serious one.’
The biggest danger to the economy is that to preserve their ratios, banks will cut off the flow of credit, causing a decline in loans to companies and consumers.
Banks have already raised US$136 billion in capital and cut dividends. More stock sales and payout reductions are likely to follow, says analyst Meredith Whitney at Oppenheimer & Co.
The credit crunch has already cost the world’s biggest financial companies about US$232 billion.
‘Banks have to maintain their ratios,’ said Dennis Santiago, chief executive officer of Institutional Risk Analytics, a Californian research firm that monitors banking statistics. ‘This is an institutional panic. At what point will consumers feel the panic? I don’t know.’
The banks need to shore up the ratio of the value of their common stock, preferred shares, retained earnings and loss reserves to the total of risk-adjusted assets, which are affected by credit ratings.
To be considered a ‘well capitalised bank’ by US regulators, an institution cannot have more than 10 times its capital in risk-weighted assets. More than 99 per cent of American banks qualify as well capitalised.
As a group, regulated banks had a total risk-based capital ratio of 12.79 per cent at the end of last year. The figure was the lowest since 2000, before the last US recession.
The holding companies for Citigroup, Bank of America and Wells Fargo have the lowest ratios in at least the five years that the Federal Reserve has been tracking the data.
Citigroup had stock, retained earnings and preferred shares in 2007 equal to 10.7 per cent of its risk- weighted assets. That’s down from 12.02 per cent in 2005.
Wells Fargo was at 10.68 per cent, down from 11.76 per cent, and Bank of America, 11.02 per cent, down from 11.08.
By contrast, the average ratio for the nation’s 66 biggest bank-holding companies was 11.63 per cent. JPMorgan Chase had a ratio of 12.57 per cent, up from 12.04 per cent.
Fed chairman Ben Bernanke described bank capital requirements in congressional testimony April 2 as ‘the nub of the problem’ and said US institutions had ‘hunkered down’ and were lending less.
‘The important thing to remember about capital ratios is that they are minimums,’ said Ralph Sharpe, a lawyer at Venable LLP in Washington, who was director of the Office of the Comptroller of the Currency’s enforcement and compliance division from 1984 to 1994.
‘In good times everybody looks good, but when the tide goes out, you see who is not wearing their bathing suit.’ - Bloomberg
Source : Business Times - 9 Apr 2008

Singapore likely to escape technical recession

2008-04-09T07:38:00.000-07:00

The Singapore economy probably rebounded in the first quarter, escaping a technical recession.

A Today strawpoll of seven private sector economists shows all those surveyed expect the Government to announce positive GDP growth, when it unveils flash GDP estimates for the first quarter tomorrow.

“But the question is: is there a sustainable demand in the pipeline?” said Mr Vishnu Varathan, an economist at research house Forecast. “There is no compelling reason to suggest that we are on a roll and it is going to get better as we go.”

Their median forecast for quarter-on-quarter growth came in at 11.7 per cent. This, thanks to a sharp swing in biomedical and electronics exports.

However, forecasts vary considerably - from a low of 5 per cent from OCBC Bank to a bullish 19 per cent by Citigroup.

If the first quarter figure had been negative, Singapore would technically be in recession having suffered two successive periods of quarter-on-quarter contractions.

On a year-on-year basis, economists surveyed had a median forecast of 6.3 per cent growth, with forecasts of 5.2 to 7.8 per cent.

However, many warn the worse is yet to come.

OCBC economist Selena Ling said: “We will feel the effects of recent developments in the second quarter. It all depends on how the US economy ends up, how much the credit fallout affects the financial services here.”

Despite the sub-prime crisis hitting financial markets worldwide, Ms Ling said there were no signs of bank loans growth and tourism slowing for now.

Economists were caught off guard in the final quarter of 2007, when the Government announced a surprise 4.8 per cent decline in GDP, due mainly to volatile pharmaceutical exports.

The Monetary Authority of Singapore will also be holding its twice-yearly policy review tomorrow.

Economists widely expect it to retain its current policy stance of allowing modest appreciation in the Singapore dollar, having slightly steepened its trading band since last October.

The currency has risen 4.2 per cent this year against the US dollar, the third best performer in Asia outside Japan during the period. This effectively lowers the cost of imports, but erodes the cost competitiveness of exports. - Cheow Xin Yi

Source : Today - 9 Apr 2008

Greenspan: US home prices may stabilise this year

2008-04-09T07:35:00.000-07:00

Former US Federal Reserve Chairman Alan Greenspan said the drop in American home prices will probably end “well before” early next year as the number of houses on the market diminishes, aiding an economic rebound.

“It will not be until early 2009 that we will be close to having eliminated most of this home inventory,” Mr Greenspan said yesterday. “But it is very likely that home prices will stabilise well before that.”

Mr Greenspan said the health of the United States housing market is tied to broader financial markets that rely on bundling mortgages to sell as securities.

His successor, Mr Ben Bernanke, and other Fed officials highlighted declining home prices as a major economic risk that may hurt household wealth and consumer spending.

“Once the markets start to stabilise, especially if the real economies don’t go into a severe recession we can expect a recovery to begin to take place,” Mr Greenspan, 82, said.

Mr Greenspan described the current credit crisis as the worst in at least 50 years, adding that the extent of damage stemming from the collapse of the sub-prime market would not be known for months.

“Have we reached a point where prices are stable? We cannot know that for a couple of months,” he said. “It looks as though we’re going to get a very large rate of liquidation, but not until the second half of this year.”

Source : Today - 9 Apr 2008

End of the free ride for US consumers

2008-04-09T07:33:00.000-07:00

Asian inflation and a weaker greenback are driving up US consumer prices

The free ride for American consumers is ending. For two generations, Americans have imported cheap goods from low-wage countries - first Japan and Korea, then China and now places like Vietnam and India.

But inflation in the developing world, especially Asia, is threatening this. And it is not just limited to China - where rising energy and labour costs have made exports to the United States more expensive - but also in countries with lower production costs.

“Inflation is the major threat to Asian countries,” said Mr Jong Wha Lee, head of the Asian Development Bank’s office of regional economic integration.

It is also a threat to Western consumers because Asian exporters, even in very poor countries, are passing on their rising costs.

Developing countries have experienced bouts of inflation. Some are famous for them, like Brazil, which experienced triple-digit inflation in the late ’80s and early ’90s. But two factors make this time different and promise to push prices higher in the US, just as the possibility of recession looms.

First, developing countries now produce nearly half of American imports. Second, inflation in these countries comes when many of their currencies are rising against the US dollar.

This puts US consumers in a double bind, paying at least some of producers’ higher costs for making their goods and higher prices on top of that because the dollar buys less in those countries.

Asian businessmen say they do not have a choice. “This is a tough time to do business,” said Mr Le Hoai Vu, sales manager for Quang Vinh Ceramic in north Vietnam.

The company has increased by up to 10 per cent prices for hand-painted vases because labour costs are rising 30 per cent a year.

Overall prices in Vietnam rose 19.4 per cent between March 2007 and March 2008.

In China, Foshan Shunde Augustus Bathroom Equipment is about to raise prices by 10 per cent for bathroom fixtures exported to North America.

“Rising inflation is a way of life in China these days, you see it everywhere,” said its international business supervisor Faye Kong.

The cost of American imports from less-industrialised countries as a group is rising. A Bureau of Labour Statistics index of average prices for imports of manufactured goods from such countries fell gradually through early 2004. But it is now rising briskly and was up 5.6 per cent in February from the same month last year.

This contributes to rising inflation in the US. In the 12 months through February 2008, the prices of goods in the US increased 4 per cent, according to the government’s consumer price index.

But so far, Asian exporters have passed along only a portion of their costs. The US dollar’s weakness is a cause of inflation in developing countries, especially those that barely let their currencies rise against the greenback to hold on to export markets.

Ms Teresa Gau, a fishmonger in Taipei, is charging up to a third more for fish and crabs than she did a year ago, as fishing boat owners charge more to cover higher diesel costs.

In Vietnam, Quang Vinh Ceramic’s fastest-rising expense is for blue ink for painting pottery. Imported from Belgium, the ink is priced in euros and has soared 80 per cent over the last year in Vietnamese dong.

Keeping the dong inexpensive in US- dollar terms has not only helped Vietnam increase exports by 24.1 per cent last year, but also lured a flood of investment. Bank loans rose more than 50 per cent last year, feeding a real estate frenzy that has not yet abated.

Brick kiln owners like Mr Le Thi Hop in Vietnam have responded by tripling prices in the last year. “Most people who buy my bricks say the price is crazy, but I say, ‘This is the market’.”- New York Times

Keith Bradsher

Source : Today - 9 Apr 2008

Applicant had choice of 400 flats in Punggol: HDB

2008-04-09T07:31:00.000-07:00

I REFER to the letter, ‘Applicants lose out in build-to-order project’ by Mr Lim Yong Chuan (Apr 1).

Our records show that Mr Lim had been successfully shortlisted for a new flat under the HDB’s Build-to-Order (BTO) Exercise for Treelodge@Punggol in March last year.

However, he did not select a flat despite having over 400 flats to choose from.

Jade Spring@Yishun was launched last December also under the BTO scheme. In view of the good response to this development, HDB expedited the design of the housing project adjacent to it. The launch of Jade Spring@Yishun Phase 2 was brought forward to last month so that unsuccessful applicants would have another opportunity to apply for a flat in the same vicinity.

Under the system, applicants have to submit a fresh application for each BTO exercise to indicate their interest in the project. The $10 application fee is to cover part of HDB’s administrative cost in processing the applications.

HDB has noted Mr Lim’s suggestion to carry over the flat selection queue for adjacent BTO projects launched in successive phases within 3 months. We thank the writer for his feedback.

Kee Lay Cheng (Ms)
Deputy Director (Marketing & Projects)
For Director (Estate Administration & Property)
Housing & Development Board

Source : Straits Times - 9 Apr 2008

Confirmed: Tulip Garden’s en bloc sale to Bravo rescinded

2008-04-09T07:25:00.000-07:00

IT’S official. Tulip Garden’s owners have rescinded the $516 million en bloc sale of the estate to a unit of Bravo Building Construction.

Lee & Lee partner Ow Yong Thian Soo, representing ‘Tulip Garden’ owners, confirmed that the firm yesterday sent a notice of rescission of the sale- and-purchase agreement for Tulip Garden to Bravo’s lawyers. ‘We also informed them that the sellers will be forfeiting the 5 per cent of the transaction price paid to them so far. And our clients reserve all rights,’ he said.

The notice of rescission was sent to Bravo after it failed to pay the second 5 per cent instalment by the deadline on April 7. Bravo had requested another extension of this deadline to June 7, as well as to extend the completion date of the transaction (which is when it would have had to pay up the remaining 90 per cent of the purchase price) from May 28 to Aug 7. Tulip Garden owners met over the weekend and most indicated they wanted to cancel the sale if Bravo missed the payment deadline on April 7.

Source : Business Times - 9 Apr 2008

$516m deal: Tulip Garden owners call off collective sale

2008-04-09T07:22:00.000-07:00

OWNERS at Tulip Garden have called off the $516 million collective sale of their 164-unit Holland Road condo, but they will keep the $25.8 million deposit.

Mr Ow Yong Thian Soo of Lee & Lee, who is representing the owners, told The Straits Times yesterday that a notice rescinding the sale was given to the intended buyer - a consortium led by Bravo Building Construction.

The owners also told Bravo that they would retain the 5 per cent deposit, a right allowed under the sale and purchase agreement.

They decided to cancel the sale after Bravo missed Monday’s deadline - which had already been extended from last month - to pay a further 5 per cent of the purchase price. The developer wanted even more time to pay and complete the sale.

The deposit will now be distributed proportionally. Owners who were due to receive $2.5 million to $4.2 million from the sale will now get 5 per cent of these sums once the estate pays expenses of possibly $1 million or more. These include half the conveyancing fees, half the fees of consultants Savills Singapore, plus litigation and administration costs.

Bravo bought Tulip Garden last July and was due to complete the sale late next month. It also has unfinished business at Pender Court, where it missed the $80 million collective sale completion date but has an extension until later this month.

Source : Straits Times - 9 Apr 2008

Was Bravo too ambitious?

2008-04-09T07:15:00.000-07:00

Analysts point to bad timing for developer in 3 en bloc attempts

ONE construction and property development firm, troubled by the cooling property market and credit crisis, has left three en bloc sellers’ hopes of a cash windfall in shambles - and some analysts wondering if it is a victim of circumstances, or a player that bit off more than it could chew.

Since April 1, Bravo Building Construction has made the news for rescinding the sale of Makeway View, and for delaying payments for the purchase of Tulip Garden (picture) and Pender Court.

Pender Court’s 48-unit owners are now waiting until April 29 to see if payment is made. If they do not see their cheques of over $1 million each by then, most would “take it that the sale is off”, a resident told Today.

Tulip Garden’s 164 unit owners also look certain to call off the sale, as they voted in a show of hands over the weekend not to give Bravo a longer time to pay.

Bravo has problems raising funds and is seeking an unconditional extension of time.

The company is likely to forfeit its first payment of $25 million, and owners would receive their share of about $125,000 each by this month, a Tulip Garden resident said.

Some market-watchers are sympathetic of Bravo’s plight - going ahead with en bloc purchases last year, seeking partners to come on board since November, and now facing trouble raising funds to pay the sellers.

“It’s unfortunate things didn’t work out. It was because of the timing and all the bad news in the financial markets,” said Mr Eugene Lim, assistant vice-president of ERA Singapore.

Noting that the property market has been relatively quiet since September after the boom earlier, analysts said Bravo may have “just missed the cycle”.

They said the company’s woes showed that dabbling in en bloc was not for everyone - especially not smaller, less experienced players.

Bravo, whose office is in Geylang Lorong 23, was set up in 2002. It ranked fourth in collective sale purchases last year, outbuying City Developments and Hotel Properties.

A lawyer dealing in collective sales found Bravo’s performance “very strange”, because compared to the big players such as United Overseas Land, CapitaLand and Guocoland, it was “nobody at all”.

Smaller companies would have problems securing funds from banks in the current credit crisis, he said.

While it is common for developers to make purchases before roping partners into the project, small players should secure partners before buying sites, said Mr Colin Tan, head of consultancy and research at Chesterton International.

For example, CapitaLand bought Gillman Heights last February, but later sold half its stake to Hotel Properties (HPL) and two private funds.

“It is common for one party to go in first, but for less experienced parties, they might over-reach,” said Mr Tan.

Meanwhile, residents at the Makeway View, Tulip Garden and Pender Court seem quite happy to stay put.

One Tulip Garden owner said the money forfeited by Bravo was some consolation for the “hassle we had to go through”.

Another owner said she gave up her car after moving to Tulip Garden seven years ago, and found its location hard to beat.

A Pender Court resident said she was happy to remain in her home of 22 years “where my children grew up”.

Makeway View resident Mark Devilliers, 31, who has been living there for over a year, did not know that its en bloc had fallen through.

Rejoicing when told of it by Today, he said it would be “sad if a nice building such as Makeway View went en bloc”.

Source : Today - 9 Apr 2008

Property investment sales up at S$8.36b in Q1 but still off 2007 peak

2008-04-09T07:12:00.000-07:00

Property investment sales rose nearly 3 percent to S$8.36 billion in the first quarter compared to the previous three months. But this was still 36.6 percent below the peak of S$13.2 billion worth of sales amassed in the third quarter last year.

This is according to latest figures from property consultants Colliers International.

Colliers said with the exception of the commercial and industrial sectors, all other key property sectors experienced a decline in sales volume in the first quarter of this year.

The commercial investment sales market gathered momentum in March, chalking up some S$3.2 billion worth of transactions, or 38.6 percent of total investment sales.

The industrial investment sales market registered S$731 million worth of sales, up 10 percent on quarter. The majority of industrial sales transactions came from REITs purchases.

Colliers’ Director for Research and Consultancy Tay Huey Ying said CapitaCommercial Trust’s acquisition of One George Street for S$1.165 billion was the most significant commercial transaction in the first quarter, in terms of absolute sale quantum.

By unit price, the most notable investment deal was the acquisition of the 999-year Hitachi Tower by Goldman Sachs at S$811 million.

Residential investment sales dropped about 36 percent in the first quarter to $2.3 billion, compared to the previous three months.

Colliers said sentiment in the collective sale market also weakened.

The private sector accounted for the bulk of the investment sales activity, raking in some S$5.6 billion, or 11 percent higher than the fourth quarter.

Colliers said the strong participation of developers at recent land tenders has demonstrated their continued confidence in the mid-term prospects of Singapore’s property market.

The consultancy expects the confidence to continue to underpin investment sales activities for the rest of this year. - CNA /ls

Source : Channel NewsAsia - 8 Apr 2008

Amber Glades on the block again, at $18m discount

2008-04-09T07:09:00.000-07:00

A day after the Royalville site off Sixth Avenue was relaunched at a much lower price, another en bloc site has been put back on the market at a significant discount from the heady prices its sellers were asking for less than six months ago.

The Amber Glades site on the East Coast is being relaunched today at an indicative price of $127 million, more than 12 per cent lower than the asking price of $145 million when it was first launched last October, according to its marketing agent Colliers International.

“Including an estimated development charge of $3.5 million, the price will work out to some $1,140 per sq ft per plot ratio,” said Mr Ho Eng Joo, executive director of investment sales at Colliers.

The 40,917 sq ft freehold residential site has a plot ratio of 2.8. Amber Glades, comprising two 10-storey residential blocks with a total of 63 units, currently stands on the land.

The site can be re-developed to accommodate a residential development comprising 88 units of 1,300 sq ft each, Colliers said.

Amenities can be found at the nearby Parkway Parade, Katong Shopping Centre and East Coast Park, while access to other parts of the island is available via East Coast Parkway and the new Kallang-Paya Lebar Expressway.

Source : Today - 9 Apr 2008

Freehold residential site Amber Glades relaunched for en bloc sale

2008-04-09T07:07:00.000-07:00

Colliers International will be relaunching the collective sale of Amber Glades, a freehold residential site at Amber Road.

The site has a gross plot ratio of 2.8 and consists of two 10-storey tower blocks with 63 units in total.

About 90 percent of the owners have agreed to the sale and are asking for about S$127 million. Including the estimated development charge of S$3.5 million, the price will work out to about S$1,140 per square foot per plot ratio. This is lower than the previous asking price of S$145 million six months ago.

Based on the 2003 Master Plan, the site is zoned for residential use with a gross plot ratio of 2.8. The new development can accommodate a residential development with up to 88 units at 1,300 square feet each.

The tender sale will close on April 23 at 3pm. - CNA /ls

Source : Channel NewsAsia - 8 Apr 2008

EM Services top bidder for Commonwealth flats

2008-04-09T07:04:00.000-07:00

EM Services Pte Ltd, a property management services company, yesterday emerged as the top bidder in a Housing & Development Board (HDB) tender to lease out 126 units of HDB flats at Commonwealth Drive.

EM Services offered $180,810 a month for a 3+3 years tenancy.

Its bid was 30.2 per cent higher than the next highest bid of $138,888 a month by Hean Nerng Holdings.

The tender, which HDB called on Feb 26, attracted 13 bids, with $37,800 a month being the lowest.

The three-room flats are located in Blocks 57, 61, and 67 to 73 of Commonwealth Drive.

Based on information on EM Services’ website, the company is a joint venture between HDB and Keppel Land Limited.

HDB is expected to make a decision in the next three weeks.

Source : Business Times - 9 Apr 2008

EM Services puts in top bid for interim housing at Commonwealth Dr

2008-04-09T07:03:00.001-07:00

Property leasing firm EM Services has put in the top bid of S$180,810 for nine blocks of HDB flats at Commonwealth Drive for interim housing.

Its bid was 30 percent more than the next highest offer of S$138,888 from Hean Nerng Holdings.

The tender by the Housing and Development Board attracted a total of 13 bids. The lowest came in at S$37,800 from a consortium led by B19 Technologies.

Under the tender rules, the winning bidder will be able to rent out 126 units of 3-room flats at Blocks 57, 61, 67 to 73 Commonwealth Drive.

The units, each measuring about 52 square metres, can be leased for three years with an option to renew for another three.

EM Services is a unit of the Housing and Development Board.

The winning bid is expected to be announced in about three weeks. - CNA /ls

Source : Channel NewsAsia - 8 Apr 2008

Hard Rock Hotel contract awarded

2008-04-09T06:57:00.000-07:00

GENTING International has awarded a $340 million contract to Singapore-listed Low Keng Huat (S) Ltd to build the Hard Rock Hotel at Resorts World at Sentosa (RWS).

The latest construction award brings the tally of construction contracts to over $1 billion.

The Hard Rock Hotel will be the first and only such hotel here. It is also one of six hotels at the $6 billion RWS development.

Expected to open in early 2010, the Hard Rock Hotel will have 360 keys (rooms), including nine suites and 351 rooms.

It will also have conference facilities, more than 20 meeting rooms and a large column-free ballroom with seating for 7,300 guests.

Michael Chin, executive vice-president of projects at RWS, said that Low Keng Huat was selected from a tender exercise which drew ’several bids’.

He added that the construction of the resort is entering a new phase in which the superstructures such as the hotels will be built.

‘Low Keng Huat’s proven track record and expertise in building construction and property development, especially in hospitality-related sectors, were the key factors in our selection,’ Mr Chin said.

One of the challenges in the construction of the Hard Rock Hotel will be the ballroom.

Low Keng Boon, managing director at Low Keng Huat, said the difficulty in constructing the ballroom lies in the fact that it is completely column-free, without the support of beams for a foundation.

With a floor area of 6,500 sq m and at a height of 11m, Mr Low explained that extremely large trusses will have to be specially manufactured to withstand the weight of the entire structure.

RWS will have some 1,800 rooms, spread across its six hotels of varying themes. Topping the list are Maxims Residences, Hotel Michael and the Hard Rock Hotel.

Source : Business Times - 9 Apr 2008

Construction of Singapore’s first Hard Rock Hotel to start in May

2008-04-09T06:55:00.001-07:00

Construction of Singapore’s first Hard Rock Hotel which will be located at the upcoming Resorts World at Sentosa will begin in May.

The 360-room hotel is one of six to be developed and fans and visitors will be grooving to it when the famous chain opens in 2010.

Together, the hotels will provide 1,800 rooms but this might still not be enough.

Elena Arabadjieva, Deputy Vice-President, Resort Marketing, Resorts World at Sentosa, said: “We have 15 million visitors projected for the first year of operation, out of which 60% will be from overseas. We will definitely have challenges accommodating all our guests. Therefore, we are working with the hotels on the island to forge out some partnership.

“In the years to come, we are looking at different opportunities, from block booking part of the properties and other forms of partnership.”

The S$346 million five-star hotel will include 20 conference rooms and they are expected to be in high demand especially, the massive ballroom which will have no columns.

This will be located at the basement of the Hard Rock Hotel and could take up to 7,300 people.

The Hard Rock Hotel chain has operations in the US and around the region, including Bali, Penang and Pattaya.

Resorts World has been promoting its wide range of offerings in trade shows overseas.

It’s expected to rev up its marketing activities in 2009 in Southeast and North Asia, Australia as well as Europe.

The Hard Rock Hotel is part of the S$6 billion resort development.

It’s also the first of six hotels to begin construction work after the building contract was awarded to Low Keng Huat Limited.

The construction firm edged out two other bidders to secure the deal.

Resorts World said Low Keng Huat was selected based on its proven track record and its expertise in building construction and property development, especially in the hospitality-related sectors.

This deal is the latest in a string of construction contracts amounting to over S$1 billion that have been awarded so far. - CNA/vm

Source : Channel NewsAsia - 8 Apr 2008

Farm resort in S’pore? It will be a reality soon

2008-04-09T06:51:00.000-07:00

GREENERY is all around and there is nary a tall building in sight. Gone is the buzz of heavy day-time traffic. Have a short rest in your air-conditioned villa, and take in the stretches of gardens and fruit trees that come into view. But there is no need to linger for too long, as there is much outside to indulge you in - a wellness spa, a farm produce market and even a corn plantation tour.

This may sound like a farm stay overseas, but rustic escapes like this will soon be possible in Singapore. Come September, what is hailed by the HLH Group as the country’s first agri-tainment getaway D’Kranji Farm Resort will be ready to welcome its first visitors.

The five-hectare Lim Chu Kang resort, already 60 per cent complete, will house 21 villas, 21 farming plots and retail kiosks, a wellness spa, seafood restaurant, beer garden, as well as a research and development (R&D) centre for corn plantations.

D’Kranji is a $10 million project undertaken by mainboard-listed HLH Group, the former PDC Corp which in 2006 adopted its present name to reflect its shift from electronics business to agricultural business.

Its three core areas now are agricultural plantation, agri-business and property development.

The foray into agri-tainment is a reflection of HLH’s restructuring efforts since 2006. The group, a commercial corn producer in Asia, is involved in the whole value chain of corn plantation, corn processing as well as the merchandising of agricultural products.

The resort is an offshoot of HLH’s efforts to develop its corn plantation business. According to CEO Tan Siang Hee at the media briefing yesterday, HLH began with the idea of setting up an R&D centre in Singapore to test different varieties of corn before growing them on a larger scale. Noting that people may be interested in visiting corn plantations, the concept then developed into the one we see today.

The resort also offers entrepreneurship opportunities by providing rental-free agri-retail kiosks to those interested in farming. Kiosk operators will receive a two-year operating permit, renewable subject to overall performance, and will pay a monthly management fee to HLH in return.

The resort aims to attract 500,000 visitors a year. HLH is in talks with eight tour group operators, and also has plans to work with community centres to bring visitors to the site.

Landscaping company Nyee Phoe Group also has plans to launch kampung-style chalets in Lim Chu Kang.

On the potential competition, Mr Tan said that the key was about ‘how we are going to strategise, how we are going to make our uniqueness stand out, and how we differentiate our products’. With similar players in the area, there would also be potential for Lim Chu Kang to develop as a lifestyle hub.

Shares of HLH closed trading unchanged at three cents yesterday.

Source : Business Times - 9 Apr 2008

Villas at this farm resort

2008-04-09T06:49:00.001-07:00

LIM Chu Kang looks all set for a change if the Singapore Land Authority’s plans work out for its first “agri-tainment” resort.

Developers of the farm resort hope to offer visitors a more unconventional experience when it opens its doors this August. Visitors will be able to find out how crops such as corn and coffee are grown and may even get to harvest their own vegetables.

In addition, the 5-hectare site - the equivalent of six football fields - will have 21 villas and a nearby spa, which each villa commanding up to $200 a night.

HLH Agri International is paying $880,000 for a 20-year lease, which it admits is “cheap”. It plans to sub-lease 21 plots to entrepreneurs and charge 10 per cent of their total earnings in management fees.

Dr Tan Siang Hee, chief executive officer of HLH Agri International, said: “We’re going to create the opportunity for people to have a storefront. They can be planting somewhere else and bringing in the product. Or, in another sense, they could be planting within the 700 square metres that we give them as a demonstration port.”

Each operator will be given a two-year permit that will be renewable subject to his or her overall performance. They will also have to submit a business plan specifying the crop type they will be planting.

Nearby farm owners said they did not feel threatened by the new venture and expect it to help renew interest in the industry.

Developers are aiming to draw 500,000 local and foreign visitors a year, with plans to increase that number to 650,000 by 2012.

Source : Today - 9 Apr 2008

Singapore’s first farm resort in Lim Chu Kang to offer villas

2008-04-09T06:46:00.000-07:00

Lim Chu Kang looks all set for a change if the Singapore Land Authority’s plans for the first agri-tainment resort work out.

Developers of the agri-tainment farm resort hope to offer visitors a more unconventional experience when it opens its doors in August 2008.

Visitors will be able to find out how crops like corn and coffee are grown and may even get the chance to harvest their own vegetables.

In addition, the five-hectare site, which is equal to the size of six football fields, will have 21 villas and a nearby spa. And the villas will be going for up to S$200 a night.

HLH Agri International is paying S$880,000 for a 20-year lease which it admits is ‘cheap’.

It plans to sub-lease 21 plots to entrepreneurs and will charge 10 per cent of their total earnings in management fees.

Dr Tan Siang Hee, CEO of HLH Agri International, said: “We’re going to create the opportunity for people to have a storefront. They can be planting from somewhere else and bringing in the product. Or in another sense, they could be planting within the 700 square metres that we give them as a demonstration port.”

HLH has refused to disclose other financial details.

Each operator will be given a two-year operating permit that will be renewable subject to the overall performance of the operator.

Interested operators will be able to operate rent-free and will only have to pay a minimum management fee.

Operators will need to submit a business plan specifying crop type.

Other nearby farm owners that Channel NewsAsia spoke with said they don’t feel threatened by the new resort farm and expect it to help renew interest in the industry.

Developers are aiming to draw 500,000 local and foreign visitors a year with plans to increase that number to 650,000 by 2012. - CNA/vm

Source : Channel NewsAsia - 8 Apr 2008

En bloc market suffers double whammy as investors look elsewhere

2008-04-09T06:42:00.000-07:00

En bloc sales have been slowing down over the past few months, but it’s not just due to the recent tightening of the rules governing such transactions.

Amid the global credit crunch, property watchers said foreign investments have pulled back, and the overall downturn is pushing developers to look at other moneymaking options.

But they also noted that fundamentals remain strong in Singapore, and the current slowdown is due more to external factors.

Collective sales saw strong demand a few months ago, but developers are now changing tack in the tighter credit environment.

Those on the buying end of en bloc sales are choosing to hang on to their properties longer, delaying new project launches. They are also getting picky about additions to their landbank.

“They’ve got plenty to choose from. The most straightforward possibility for developers to partake would be going to government sale of site programme. A lot are more configured toward mass market, lower mid-tier level where we’re seeing some activity in the end-market purchases,” said Donald Han, MD of Cushman & Wakefield (Singapore).

Many said the current slowdown is largely due to the external environment, rather than the fundamentals of Singapore.

“A lot of buying that resulted in last round of en bloc came from overseas funds… We are rather small, in terms of available of units or land, so an amount which may not make an impact in another country will have a big impact on us. (Funds) either coming in or out have got that exponential effect on the market in Singapore,” said Dr SK Phang, a lawyer.

So with tightening credit conditions worldwide causing a dip in foreign inflows, Singapore’s property market is taking a hit.

But analysts said many developers took home huge profits in the past two years, and will definitely be able to weather stormy skies for now.

While there is little to be done about the external environment, analysts said en bloc rules can be further tweaked to allow the process to be speeded up.

Said Dr Phang: “The long timeline has to be shortened; it’s too long, the whole en bloc process. The law allows you 12 months to get 80 percent. And after that, the law allows you 12 months to file the ST (strata title). And when you do, the STB (Strata Title Board) may take short of 4 months or a long time of a year.

“Of course not every case is that long but if you look at the historical maximum permissible time, you’re looking at something about 2 years plus. And that’s a long time to wait for the money. Given the volatile market conditions in Singapore, if it goes up, owners get concerned with replacement. If it goes down, developers (become) concerned. So we should try to manage the timeline and shorten it.”

The en bloc market saw more than a 100 deals valued at more than S$13 billion last year. - CNA /ls

Source : Channel NewsAsia - 8 Apr 2008

Sales process will be tweaked

2008-04-09T06:40:00.000-07:00

HDB is studying refinements to weed out non-serious applicants

I refer to the letters from Samuel Lee, “Oh, that elusive HDB flat” (March 28), and from Kalista Nisha, “Different families, different needs” (March 31).

We would like to clarify that the $10 fee payable for HDB sales exercises is to cover part of the Housing and Development Board’s (HDB) administrative cost in processing the applications. We agree with Kalista Nisha that the fee should be kept affordable.

While HDB has no intention of raising the fee, it is currently studying refinements to the sales process to weed out non-serious applicants or what Samuel Lee described as “people who apply just for fun”.

Samuel Lee suggested that HDB implement pricing guidelines for future Design, Build and Sell Scheme (DBSS) and Executive Condominium (EC) projects to ensure that the units are affordable. We would like to point out that in pricing DBSS and EC flats, the private developers would have taken the income ceiling criteria into account.

Only households earning up to $8,000 and $10,000 respectively are eligible to purchase new DBSS and EC units. Therefore, if private developers were to price their DBSS and EC units beyond the affordability of the target buyers, they risk not being able to sell these units.

HDB remains committed to keep public housing affordable to the vast majority of Singaporeans. Build-To-Order (BTO) flats sold by HDB will continue to be the mainstay of new flat supply. The DBSS was introduced as a niche scheme to cater to flat buyers who are prepared to pay more for a wider choice of flat features.

We would also like to clarify that DBSS flats are part of the overall public housing programme. Unlike ECs, DBSS developments will not be privatised after 10 years.

With regard to the Simei site for DBSS development, we are pleased to inform Samuel Lee that it has been released for tender on April 8. The tender launch was slightly delayed as more time than anticipated was needed to complete the necessary preparations.

Letter from Kee Lay Cheng
Deputy Director (Marketing and Projects) for Director (Estate Administration and Property)
Housing and Development Board

Source : Today - 9 Apr 2008

S’pore home prices make 2nd highest jump globally

2008-04-07T20:08:00.000-07:00

Bulgaria, with 33.7% surge, tops world index, beating S’pore’s 31.3% rise

THE average price of private housing in Singapore surged 31.3 per cent between Q4 2006 and Q4 2007 - the second-biggest jump in a world index topped by Bulgaria at 33.7 per cent.

Knight Frank tracks average prices worldwide via its Global House Index, which is based on an assessment of price changes in the mainstream housing markets of countries covered.

According to the index, Russia, Poland and Hong Kong, with respective hikes of 30, 22.4 and 22.3 per cent, ranked third, fourth and fifth.

However, price growth across the markets covered in the index fell year on year in the final quarter of 2007.

Knight Frank said price inflation globally during the year was 8.2 per cent, compared with 9.7 per cent the year before.

Knight Frank’s head of residential research Liam Bailey said that while property prices in Europe and America appear to be, ’suffering from the downturn in economic conditions’, prices in Asia and elsewhere, notably Singapore and Hong Kong, are performing well. Besides Singapore and Hong Kong, other Asian countries where home prices increased last year include China and Indonesia, which ranked 12th and 17th in the index with respective increases of 10.5 and 4.7 per cent. Knight Frank said prices in Singapore rose steadily for all types of property, especially apartments.

It said that in Hong Kong, almost half of the growth in prices happened in the last quarter of 2007 alone.

In China, home prices in 70 cities rose 10.5 per cent in 2007, with Shanghai’s 10.8 per cent growth marginally exceeding the national average.

Figures for December 2007 showed prices in Beijing fell as policies aimed at cooling speculative investment were introduced.

Shenzhen also saw a fall in prices towards the end of the year after credit was tightened in mid-2007.

Of Knight Frank’s list of top-30 countries with price movements, only five countries registered falls - the US, Germany, Latvia, Ireland and Estonia.

Underscoring the volatility of certain markets, Mr Bailey noted: ‘The most outstanding feature in this index in Europe is Bulgaria’s continued strong showing against the astonishing reversal of fortune witnessed in the three Baltic countries.’

Two of the three; Latvia and Estonia, suffered negative growth of -7.1 and -14.5 per cent, while prices in Lithuania grew only one per cent.’

He said that a year earlier, these countries saw respective price increases of 66.6, 23.8 and 23 per cent.

Source : Business Times - 8 Apr 2008

Home leases stagnant for 2 years, still looking soft

2008-04-07T20:00:00.000-07:00

Foreigners could be switching from leasing to buying property, says Savills Singapore

Residential leasing transactions have stagnated in the past two years after falling from a recent high of 33,874 in 2005.

According to an analysis of Urban Redevelopment Authority data by Savills Singapore, transactions were about 15 per cent lower at 28,928 in 2006 and 28,893 in 2007, versus 2005.

Savills Singapore director of marketing and business development Ku Swee Yong said that as leases are generally renewed on a two-year basis, the drop between 2005 and 2006 should imply a rise in 2008.

But figures for the first two months of this year indicate that residential leasing is not likely to pick up. Indeed, Savills’ analysis reveals only 3,495 transactions.

The lowest number of quarterly transactions since the start of 2000 was 4,024 in Q1 2003, while the high of 9,917 was recorded in Q3 2005.

Mr Ku, who reckons foreigners make up about 90 per cent of the leasing market here, said it will be important to watch the figures over the next few quarters.

He thinks fewer financial-sector expatriates may relocate here due to the global credit crunch.

But according to some foreign business associations, there has been no let-up in the influx of expatriates so far.

American Chamber of Commerce executive director Dom LaVigne said: ‘Due to the strong business conditions in Singapore and based on what we’ve heard from our members hiring more employees, we think that the number of American expats living here will continue to rise in the coming years. Two years ago, there were 14,000 Americans in Singapore. Today there are 15,000 Americans and more than 3,000 US businesses here.’

The number of British expatriates here has also increased over the past two years, with the British Chamber of Commerce (BCC) saying about 20,000 British nationals now live in Singapore.

BCC spokesman Roman Scott, who is also managing director of the Calamander Group, said: ‘Although everyone is moaning (about rents), it’s mourning the end of a particularly good deal, not complaining that the recent sharp rises are unfair.’

BCC, which tracks the cost of housing and offices, believes the rise in rents is a function of market forces and a ‘long-overdue cyclical correction from artificial lows’.

Pointing out that rents fell sharply 10 years ago, Mr Scott said: ‘Given that real wages and wealth have actually risen in those 10 years in Singapore, this means rents are still cheaper in real terms than the previous high 10 years back, and affordable compared with other global cities, particularly Hong Kong and Tokyo.’

Rents, however, have been increasing rapidly. Based on Savills’ basket of properties, rents for high-end homes increased about 30 per cent year on year in Q4 2007. Savills noted that a 2,885-sq-ft unit at Ardmore Park was recently leased for $20,000 a month or about $7 per square foot (psf) a month.

For high-end properties, Savills says the quarterly average rent is now $6.68 psf a month.

January saw a particularly low number of new leases, with just 1,474 transactions. District 10, the most popular district, suffered a 42.2 per cent drop to 203 transactions, compared with 351 a year earlier.

Other districts in the top five, including districts 15, 9, 14 and 16, saw transactions fall 39.2, 50, 19.8 and 43.2 per cent respectively.

A shrinking pool of leasing properties due to collective sales could have exacerbated the drop in numbers, especially in the prime districts. But as Savills’ Mr Ku points out, demand should have spilled over into other districts, keeping the overall number of transactions up.

He believes foreigners could be simply switching from leasing to buying property.

‘This was helped by the attractive low cost of mortgages in Singapore and also the favourable tax advantages foreigners from certain countries enjoy from owning properties in Singapore,’ he said. ‘We certainly saw many tenants convert from leasing to owning in 2006-2007, starting with a change in US Federal Tax on US nationals’ housing benefits overseas.’

A separate analysis of property data by Chesterton International seems to support this assertion.

Comparing data from 1995 - during the run-up to previous property market peak - and 2007, Chesterton’s head of research and consultancy Colin Tan notes that while the percentage of foreigners, including permanent residents (PRs), buying non-landed private property increased from 17.9 per cent in 1995 to 29 per cent in 2007, the percentage of acquisitions by PRs alone doubled from 6.7 per cent to 14.4 per cent.

The relevance of this, according to Mr Tan, is that PRs tend to buy for owner-occupation while foreigners are more likely to buy for investment.

He said: ‘In recent years we have seen many purchases by Indian and Chinese nationals who are buying for owner-occupation, not investment. These people eventually become citizens. I personally know a number of them.’

Source : Business Times - 8 Apr 2008

S’pore Grade A office rents continue to rise in Q1

2008-04-07T19:53:00.000-07:00

8.4% surge driven by banks with eye on private wealth management in Asia

OFFICE rents in Singapore continued to power ahead in the first quarter of this year, despite a slowdown in the US economy and possible fallout for Asia.

According to a Jones Lang LaSalle (JLL) report, the CBD core Grade A gross effective office rent now stands at $17.35 per sq ft per month - an increase of 8.4 per cent from $16 psf per month in Q4 2007.

JLL said: ‘Amid a slowdown in the US economy, the Singapore office market remains positive with sustained rental growth recorded island-wide.’

Chris Archibold, JLL’s national director and head of commercial markets, said he was ‘quite surprised’ by the 8.4 per cent increase in Grade A rents, especially as it represents almost half of JLL’s projected rental increase of around 18 per cent for full-year 2008.

JLL says demand for CBD core office space continues to be driven by the banks and financial institutions, ‘many of which have set their sights on the burgeoning private wealth management in Asia’.

CBD core Grade B office rents rose by a more sanguine 11.2 per cent to $13.80 psf per month in Q1 2008 from Q4 2007. Noting the rise, Mr Archibold said CBD core Grade B office rents are ‘catching up’.

‘While Singapore office rental growth in Q1 2008 is some cause for optimism in this uncertain market, the increase in rental value is largely a spillover from the previous quarters,’ he said.

‘The supply environment will remain in the landlord’s favour for a few more quarters before any significant increase in supply tilts the balance towards the occupiers.’

Supply of office space here remains tight.

According to a report by CB Richard Ellis (CBRE), the Grade A vacancy rate remained below one per cent in the first quarter of the year, even though at 0.6 per cent it was slightly higher than the 0.2 per cent rate in Q4 2007.

CBRE executive director (office services) Moray Armstrong said: ‘There is currently an excess of demand over available space and landlords will still be able to achieve high rents on rent and lease renewals due to the absence of alternatives for occupiers. Further rental advancement is likely in selected buildings that enjoy full occupancy.’

According to CBRE, prime rents averaged $16 psf per month while Grade A rents averaged $18.65 psf per month in Q1 this year, reflecting respective increases of 6.7 per cent and 8.7 per cent from the preceding quarter.

CBRE noted that the rate of increase in Q1 2008 moderated compared with the four quarterly increases in 2007.

It also estimates that 10.3 million sq ft of office space could be completed between 2008 and 2012, the bulk of which will come on stream in 2010 and 2011.

Mr Armstrong said: ‘The overall volume of confirmed office supply does not appear excessive, but we believe the government needs to be sensitive to the forces of demand and supply - prudence in future Government Land Sales programmes is required.’

Source : Business Times - 8 Apr 2008

Growth seen in Asia office rentals in ‘08

2008-04-07T19:46:00.000-07:00

But analysts say some cities, including S’pore, may see slowing rental growth, reports UMA SHANKARI

BUOYED by limited office supply in some cities and high GDP growth, all major office markets in Asia are expected to see rental growths in 2008, but the pace of growth will vary from city to city, property analysts say.

‘Across the board, we still see positive demand for office markets across Asia,’ said Megan Walters, director of research and business analytics for Asia Pacific at Cushman & Wakefield (C&W). ‘But obviously the problems in the financial markets in the US have not been played out yet, and we have yet to see how it will affect investment markets in the region.’

The firm expects all offices markets in key cities across Asia to record increasing rents in 2008. However, about half the cities profiled - Singapore, Beijing, Shanghai, Chengdu, New Delhi, Mumbai, Kuala Lumpur and Bangkok - are expected to see slowing rental growth. The other cities - Hong Kong, Tokyo, Seoul, Taipei, Bangalore and Ho Chi Minh City - are still seeing accelerating rental growths.

Industry players here will perhaps be most interested in what is happening in Singapore and Hong Kong - long been seen as rivals in the region as a centre for international office services. The slowing rental growth in Singapore will be welcomed by many on the back of fears that the Singapore office market was overheating.

Rents here have been pushed up over the last few years mainly by expansion in the financial services sector owing to factors such as domestic growth, economic restructuring that resulted in the expansion of the service industries as well as the influx of both regional and global jobs into the market.

Rentals are not just climbing - they are climbing at a pace faster than ever seen before. Industry veterans have expressed fears that this could make Singapore less competitive compared with Hong Kong, where rents are rising at a more sedate pace.

For example, data from C&W shows that rents at Raffles Place in Singapore’s Central Business District (CBD) have risen 100 per cent in the last year unlike Hong Kong’s more moderate 15 per cent. And according to some reports, it is now more expensive to take up office space in Singapore than in Hong Kong.

Data released by Jones Lang LaSalle (JLL) yesterday shows that CBD core Grade A gross effective office rent in Singapore for the small space category (less than 10,000 square feet) stands at $17.35 per square foot per month (psf pm), up 8.4 per cent quarter on quarter from the $16.00 psf pm seen in Q4 2007. This is marginally higher than the quarterly rental growth of 7.4 per cent registered in Q4 2007, JLL said.

‘In comparison with Hong Kong, the current gross effective rent of Grade A offices in Hong Kong Central - equivalent to Raffles Place in Singapore - stands at US$15.10 psf pm,’ said JLL’s report. ‘This is some 21 per cent higher than Singapore’s CBD core prime Grade A gross effective rental value of US$12.50 psf pm (or $17.35 psf pm).’

However, things should even out with more supply coming onstream in Singapore. Market watchers say that the rate of rental growth will slow and occupancy rates will fall this year. ‘The growth in rental values is expected to moderate this year after a record increase in 2007,’ said Cheng Siow Ying, DTZ Debenham Tie Leung’s executive director.

Chris Archibold, head of commercial leasing at JLL, similarly noted that the rapid rental increase seen in Q1 2008 is mainly due to spillover demand.

He said: ‘While Singapore office rental growth in Q1 2008 is some cause for optimism in this uncertain market condition, the increase in rental value is largely a spillover from the previous quarters.’

And a new report by DTZ says that islandwide office occupancy dipped in the first quarter of 2008, easing half a percentage point quarter on quarter to 97.1 per cent. The dip followed a 0.1 point drop in Q4 2007 from Q3.

The average occupancy of office buildings at Raffles Place dropped half a percentage point to 97.8 per cent in Q1, while that at Marina Centre rose 0.7 percentage point to 99.8 per cent.

DTZ attributed the slight dips in occupancy partly to two office buildings coming onstream. Together, The Central and VisionCrest Commercial added some 538,100 sq ft of new office space - raising islandwide office stock one per cent quarter on quarter to 56.6 million sq ft. Both buildings are not even fully leased yet.

Some occupiers are beginning to exercise caution in their medium-term leasing requirements, DTZ’s Ms Cheng said. Going forward, the demand for CBD core office space in Singapore is expected to continue to be strong on the back of more demand from banks and financial institutions, many of which have set their sights on the burgeoning private wealth management in Asia.

But there will be some moderation for both rents and capital values. ‘Although the financial and business sector is still expected to remain robust, the more modest economic growth projected will see companies limiting their expansion of office space requirements,’ Knight Frank noted in a recent note. ‘Some landlords would also be more accommodating of tenants in order to attract or retain these users of office space.’

And for the rest of Asia, a lot depends on how the sub-prime crisis in the US plays out, property analysts said. The region’s investment markets - including for the office sector - are expected to emerge from the credit crunch better than their US or European counterparts.

Source : Business Times - 8 Apr 2008

Tulip Garden sale off? How the deal went

2008-04-07T19:44:00.000-07:00

Condo owners likely to call off $516m en bloc deal after developer misses payment deadline

THE $516 million collective sale of Tulip Garden condominium near Holland Road seems to be dead in the water after the developer missed a payment deadline yesterday.

The condo owners appear poised to formally call off the deal and pocket a cool $25.8 million - the original 5 per cent deposit paid by developer Bravo Building Construction.

LOSS AND GAIN: Bravo will forfeit its $25.8 million deposit if the Tulip Garden sale is axed. Each owner could pocket over $100,000.

Bravo would forfeit the sum if the deal is scrapped. That would mean each of the 164 unit owners could pocket more than $100,000 on average.

The cancellation of a collective sale because of a cash crunch is a rare event. Bravo and its partners say they have had trouble raising the necessary funds.

Earlier this year, the $162.8 million collective sale of Makeway View in the Newton area was ditched by an associate of Bravo. The firm said a higher-than-expected development charge was the reason for backing out. A deposit of $1.63 million was reportedly forfeited.

Last Saturday, Tulip Garden owners held a meeting and indicated in an informal show of hands that they wanted to cancel the sale if Bravo missed the latest payment, also $25.8 million. This payment had already been delayed at Bravo's request from the middle of March.

By late yesterday, no payment had been made. Bravo was putting on a brave face but it was, in effect, accepting that the deal appeared to have been lost.

The developer had asked for more payment extensions - to make the next 5 per cent payment by June 7 and then complete the deal by Aug 7.

But based on last Saturday's meeting, the owners appear unlikely to agree.

Almost all the owners at the meeting indicated that they wished to call off the sale and keep the deposit if Bravo did not pay up by yesterday, according to the people present.

A Bravo spokesman said yesterday that the firm is now seeking an 'unconditional' extension of time.

'If these extensions are not obtained, the consortium will accept this costly missed opportunity to develop a stunning 350-unit condo with unmatched features in a prominent Holland Road corner,' she said. The condo is on the corner of Holland Road and Farrer Road.

Bravo inked a deal to buy the freehold site in July last year. It was due to have been completed late next month.

The Bravo spokesman said the firm has been seeking partners since November last year.

'The current turmoil in the financial and stock markets matched with sporadic bad news have caused unforeseen delays in securing ultimate approvals to commit funds,' said Bravo. It added that the Tulip Garden owners had consented to the sale earlier than anticipated.

'Coupled with the consortium's strategic decision to significantly increase equity to balance the current cautious lending by banks, the current deadlines for next payments have become too constricted and no longer practical,' it said.

Bravo added that it has tied up with two local and two foreign parties to buy Tulip Garden. But unless an extension is given, they will not be offering more money, said the spokesman.

She said that if Tulip Garden owners still want to attempt to sell en bloc, they may face an 'unwelcome lower bid price' given weaker market conditions.

Tulip Garden sold for about $1,018 per sq ft (psf), more than its earlier guide price of $900 psf in January last year. The development has 164 units comprising 96 flats, 66 maisonettes and two shophouses.

If the sale works out, flat owners stand to reap $2.5 million to $4.2 million while maisonette owners would receive about $3.4 million each. The shop units would get about $1.1 million each.

Amid last year's booming market, Bravo also made two other fairly large collective sale deals: Pender Court, off Telok Blangah Road, at $80 million in July last year, and Makeway View.

Bravo has postponed the completion of Pender Court's sale until late this month.

Given the slower market, more sellers are now open to lower prices. Yesterday, Royalville, a freehold mixed development off Sixth Avenue, was relaunched for sale en bloc at a lower indicative price of around $305 million.

It was offered for sale in a Nov 9 tender, which failed to attract bidders at its earlier guide price of $330 million to $350 million.

How the deal went

July 2007: Bravo Building Construction decides to buy Tulip Garden en bloc for $516 million. It later pays a 5 per cent deposit of $25.8 million.

February 2008: The Strata Titles Board approves the sale. The sale completion date is set for May 28.

March 13: Bravo is due to pay another $25.8 million, but asks for - and is granted - an extension of time until yesterday.

March 18: Bravo asks to extend the payment deadline from yesterday until May 5. It also asks to set back the sale completion date from May 28 to July 23.

March 24: Before agreement for its earlier requests can be given, Bravo asks for further extensions of time to pay by June 7, instead of yesterday, and to complete the sale by Aug 7, instead of May 28.

April 5: Owners indicate in an informal show of hands to cancel the sale and take the $25.8 million deposit if Bravo misses the payment deadline yesterday.

Source : Straits Times - 8 Apr 2008

Tulip Garden en bloc may be called off

2008-04-07T19:38:00.000-07:00

Buyer Bravo will ‘accept costly missed opportunity’ if it’s not granted payment extensions

The owners of Tulip Garden met over the weekend and BT understands that most of them have taken the view to rescind the $516 million collective sale to an associate company of Bravo Building Construction - if the second 5 per cent instalment due to them is not paid by the deadline of midnight yesterday.

BT understands the owners could not accede to the Bravo unit’s request for another extension to pay up the second 5 per cent instalment which was to have been paid yesterday, to June 7, as well as to extend the completion date of the transaction, which is when it would have to pay up the remaining 90 per cent of the purchase price, from May 28 to Aug 7.

However, Tulip Garden’s owners, through their lawyers, are understood to have informed Bravo yesterday that the payment deadline will not be extended and that they reserve their rights to rescind the sale.

A Bravo spokeswoman said yesterday the consortium buying Tulip Garden is seeking an ‘unconditional extension of time’ for making the two payments, that is, it is not prepared to make any further payment to the sellers in exchange for the extensions, until June 7.

If the sale is rescinded, Tulip Garden owners will keep the $25.8 million or 5 per cent of the purchase price they had been paid so far, BT understands.

‘If these extensions are not obtained, the consortium will accept this costly missed opportunity to develop a stunning 350-unit condo with unmatched features in a prominent Holland Road corner,’ Bravo said in a statement.

Bravo has a minority stake in the consortium buying Tulip Garden. The en bloc sale of Tulip Garden was approved by Strata Titles Board in February.

In its statement, Bravo said that it and its majority consortium partners for the purchase of Tulip Garden intend to complete the purchase. Bravo did not identify the consortium partners. ‘Since December 2007, major foreign institutional investors and a few local investors have expressed strong interest to form the consortium. The current turmoil in financial and stock markets matched with sporadic bad news have caused unforeseen delays in securing ultimate approvals to commit funds,’ Bravo said in its statement.

Bravo also indicated that approval for Tulip Garden’s sale from Strata Titles Board in February came earlier than anticipated. ‘Coupled with the consortium’s strategic decision to significantly increase equity to balance the current cautious lending by banks, the current deadlines for next payments have become too constricted and no longer practical,’ it added.

BT understands that Tulip Garden owners declined to further extend the completion date of the sale of Tulip Garden as the STB had already given its order for the sale, binding all owners to a sale, and the sales committee does not have the powers to vary the completion date of the sale beyond the originally agreed May 28. The date was based on three months from receiving the STB order for sale, as stipulated in the sale and purchase agreement for Tulip Garden inked last year.

Assuming Tulip Garden’s sale is rescinded, it may be a while before the prime District 10 site is back on the en bloc bandwagon. If owners wish to do a fresh en bloc sale, they would have to do it under revised collective sales rules that took effect in October last year and which are more stringent.

The $516 million deal for the property worked out to a unit land price of $1,018 psf per plot ratio. No development charge is payable.

Last month, the $162.8 million collective sale of Makeway View in the Newton area to another associate of Bravo was rescinded. BT reported that one per cent of purchase price paid by Bravo so far was forfeited.

Source : Business Times - 8 Apr 2008

Simei site for condo-like HDB flats

2008-04-07T19:36:00.000-07:00

MORE condo-style Housing Board flats will soon be offered to home buyers looking to live in Singapore’s east side.

The HDB yesterday released a plum 181,108 sq ft site in Simei Road for tender - the fifth under its Design, Build and Sell Scheme (DBSS), which is open to private developers.

The 99-year site has a gross floor area of about 380,327 sq ft - enough for 360 homes.

Market watchers said developers will be keen on the plot due to its attractive location in a mature, established HDB estate just 10 minutes’ walk from Simei MRT station.

Knight Frank director of research and consultancy Nicholas Mak said the site, which could have residential blocks going up to 15 storeys, was likely to attract bids from medium-size developers and construction companies. He projected offers ranging from $49 million to $76 million, or $130 to $200 per sq ft per plot ratio.

The new site tender comes after National Development Minister Mah Bow Tan said recently that HDB will cater to buyers with different aspirations by providing a range of housing options. But the minister also stressed that standard flats built by HDB will continue to be the main stock of new supply.

A further two DBSS sites - in Toa Payoh and Bedok - are expected to be released soon. These and the Simei site could mean up to 1,500 new public condo-like flats coming on to the market.

That figure is 4,000 if flats earmarked for the four sites already released - Tampines, Boon Keng, Ang Mo Kio and Bishan - are included.

Flats at City View @Boon Keng, comprising three- to five-room units, were offered at between $349,000 and $727,000 - about $520 psf. The Simei tender closes at noon on June 3.

Source : Straits Times - 8 Apr 2008

HDB launches fifth DBSS site at Simei

2008-04-07T19:32:00.000-07:00

THE Housing and Development Board (HDB) has launched a fifth Design, Build and Sell Scheme (DBSS) site at Simei Road for sale.

According to Nicholas Mak, director of consultancy and research at Knight Frank, the site may fetch between $49 million and $76 million, or $130 to $200 per square foot per plot ratio (psf ppr), and is likely to attract bidders such as medium-sized developers and construction companies.

The Simei site is the first to be offered under the scheme this year and has a site area of 16,825.5 square metres, with an allowable gross floor area of 35,333.55 sq m.

Property consultants considered the site attractive as it is located in a mature estate with comprehensive facilities. The site is a short walk from Simei MRT station and East Point Mall, and is also close to schools such as Anglican High School.

Director of marketing and business development at Savills Singapore, Ku Swee Yong, noted: ‘Demand should be strong with recent announcements by the MNCs and foreign banks that they are pushing backroom services into Changi’s office and industrial parks.’

He estimated that the Simei site may fetch between $57 million and $60 million, or $150 to $160 psf ppr.

On the supply side, Mr Mak pointed out: ‘As there has not been any major launch for a mass-market residential project in the Simei and Tampines areas, flats in the DBSS development at Simei Road will be more appealing to purchasers.’

He expected the site to take about 320 to 360 units.

The tender will close on June 3 at noon.

Under the DBSS, private developers undertake the design, construction and sale of public housing. Flats sold under the scheme come with a 99-year lease and buyers have to meet HDB eligibility conditions similar to those set for HDB-developed flats.

HDB awarded the fourth DBSS site in Bishan to Qingdao Construction Group in February, which put in a bid of $135.9 million or $237 psf ppr.

HDB plans to launch another two DBSS sites in Toa Payoh and Bedok.

Source : Business Times - 8 Apr 2008

Don’t blame ‘house lust’ for US property funk

2008-04-07T19:28:00.000-07:00

DID McMansion fever cause the US housing bust? Now that the home crisis finger-pointing season is in full swing, it’s a good time to take a look at how ‘house lust’, as author Daniel McGinn calls it, affected the property market.

McGinn, who recently published a book on the topic, points to a convergence of personal economics and good old-fashioned status-seeking as one of the root causes of the crisis. More likely, it went much deeper, as a combination of the American Dream and a mass amnesia of economic reality took hold.

Identifying ‘primary drivers’ for what caused house lust, McGinn cites the revolution in home finance. Many homebuyers, whose only qualification for a mortgage was a human pulse, qualified for large loans. As rates dropped in the last decade, homeowners also operated like ‘mini-CFOs, deciding just how much of their wealth to keep in their houses’, he writes.

Millions figured if home prices were going to keep climbing at double-digit levels, whatever they pulled out of their homes in refinancing or home-equity loans would be replaced by appreciation.

As we know now, that didn’t happen and far too many homeowners ended up with more debt and almost no equity.

Those that took the equity-gain bet with little or no downpayment are looking at a losing hand as home prices and sales continue to fall in most US markets. Even Manhattan apartment sales, which were until recently immune from the slump, dipped 34 per cent in the first quarter - the most in 18 years.

Slide in equity

The massive vacuuming of home equity has been huge in recent years and is a far cry from the way Americans saved after World War II.

Home equity fell to about 48 per cent of total household real-estate holdings in the fourth quarter of 2007, the lowest level since the Federal Reserve began keeping records in 1951.

Americans used to store equity in their homes like a well-stocked larder. In 1952, American homeowners maintained more than 80 per cent of the value of their homes in equity, according to Michael Rizzo, a senior economist at the American Institute for Economic Research, based in Great Barrington, Massachusetts.

Homeowners have ‘taken on larger debt to buy their homes and increasingly spend down their equity via home-equity loans’, Rizzo says.

A generation or two ago, McGinn says, ‘the average family took out a 30-year mortgage, which they intended to pay off one day. There were no home-equity lines of credit, refinancing was unusual and whatever wealth a homeowner built up in the house stayed there until it was sold. No more.’ During the housing boom, homeowners became speculators, making double wagers on the bond market maintaining or providing low rates and properties delivering guaranteed appreciation.

This Las Vegas attitude towards homeownership was aided and abetted by the built-in cultural bias that homeownership was a solid investment, not a gamble. Is the irony lost that the state with the highest foreclosure rate through February was Nevada? Not only was home gambling legal in Nevada, it was permitted in every state as mortgage brokers, banks and Wall Street got in on the action.

Hypnotised by the dual mantras ‘buy as much house as you can afford’ and ‘your home is your retirement plan’, Americans were sold on the home-as-investment mythology.

Home investors also stopped or slowed their investing in non-real-estate assets as the nation’s savings rate turned negative in 2005. Why squirrel away money in stocks or bonds when your house is a veritable cash machine? Since financing was cheap and popular optimism irrational, the participants in the boom felt like they were on a run at the craps table. So they upped the ante by buying bigger houses.

The average new-home size is more than 2,500 square feet, according to the National Association of Homebuilders, a Washington-based trade group.

That compares with 1,600 square feet in 1973. The number of single-family homes with three bathrooms or more has doubled in that period.

Almost 40 per cent of new homes have at least four bedrooms, compared with less than 25 per cent in 1973. Twice as many houses have three bathrooms or more compared with 1987.

Status was a powerful force in the building of ever-larger homes. Those who wanted to make their neighbours envious leveraged up to build three- and four-car garages, master suites and commercial-quality kitchens that would make Wolfgang Puck jealous.

Moving up into fancier digs didn’t get the housing market into its current morass, though.

Homes aren’t investments

Since McGinn focused on the nation’s physical obsession with home amenities, I was disappointed he didn’t explore more of the economic maladies. The long-term reality is that homeownership in non-bubble times is unlikely to beat inflation once you subtract maintenance, taxes and financing costs.

Yale economist Robert Shiller estimates that homes gained an average of 0.4 per cent annually from 1890 to 2004.

With the exception of rental properties, residential real estate produces no earnings or dividends. It doesn’t split like profitable stocks. The cost of ownership always goes up. If this is a love affair gone sour, then a new focus on building equity and the laws of supply and demand will make for a quicker housing rebound. — Bloomberg

John F Wasik, author of ‘The Merchant of Power’, is a Bloomberg News columnist. The opinions expressed are his own

Source : Business Times - 8 Apr 2008

US dollar rebounds despite weak data

2008-04-07T19:26:00.000-07:00

The dollar rebounded in Asian trade yesterday as some traders looked beyond recent gloomy US data, betting on a recovery in the world’s largest economy later in the year, dealers said.

The dollar stood at 102.44 yen in Tokyo afternoon trade, up from 101.45 yen in New York on Friday. The euro slipped to US$1.5668 from US$1.5736 but rose slightly to 160.51 yen from 159.60.

The US currency clawed back after falling on Friday in response to news that the US economy lost 80,000 jobs last month, the biggest drop in five years. The decline was much worse than the 50,000 losses in non-farm payrolls that most economists had been anticipating.

‘But the market was already factoring in recession in the United States,’ said Shigeru Nakane, senior strategist at Resona Bank. ‘All in all, we are starting to see receding pessimism for the US economy. Things should not get much worse than they are now.’

‘We expect the housing market to remain weak, but people are starting to think that the overall US economy should not deteriorate much further,’ he said.

Wall Street managed to hold up relatively well in the face of the weak data, gaining support from hopes of further US interest rate cuts. Traders said the weak US jobs report raised the odds that the Federal Reserve would continue its rate-cutting campaign. ‘Traders responded by pricing more Fed easing which hurt the dollar,’ noted NAB Capital currency strategist John Kyriakopoulos. ‘Still, US stocks recovered from an initial post-payrolls decline to end flat on the day, so investor risk-appetite did not appear to suffer a large blow.’

Some economists said they expect the central bank to unleash fresh rate cuts later this month following the release of the March jobs report.

Against regional currencies, the US dollar slipped to S$1.3817 in late Asian trade from S$1.3844 on Friday, to NT$30.40 from NT$30.418, and to 9,220.00 Indonesian rupiah from 9,225.00. It also fell to 32.63 Thai baht from 31.65, and to 41.65 Philippine pesos from 41.72, but firmed to 974.00 South Korean won from 973.85. — AFP

Source : Business Times - 8 Apr 2008

When doing good may worsen the home crisis

2008-04-07T19:21:00.000-07:00

IN AMERICAN politics, it is imperative to be seen as ‘doing good’. The present housing crisis is a case in point, as Congress now seems increasingly intent on aiding millions of homeowners who can’t easily pay their mortgages and may face foreclosure. This sort of rescue looks good, even though it is a bad idea and might perversely delay the housing recovery.

Estimates of defaults in 2008 run up to two million. If realised, that would be roughly twice the 2006 level and about 2.7 per cent of the nation’s 75 million owner-occupied homes. It would be the highest rate since World War II but well below much higher rates during the Great Depression, says economist Kenneth Snowden of the University of North Carolina at Greensboro.

The best-known congressional proposal comes from Barney Frank, chairman of the House Financial Services Committee. It would authorise the Federal Housing Administration (FHA) to guarantee US$300 billion of new home loans to strapped homeowners, allowing them to refinance their existing mortgages at lower rates and lower outstanding amounts. Under it, homeowners who borrowed from Jan 1, 2005, to July 1, 2007, would be eligible for new loans if their monthly payments of interest and principal exceeded 40 per cent of their income.

Existing lenders would have to take a sizeable writedown to qualify for having their loans repaid by the government. The FHA would pay the existing lender no more than 85 per cent of the property’s present appraised value; the FHA would then charge the homeowner for a loan at 90 per cent of the appraised value. The extra 5 per cent is a cushion against losses. (Example: A US$200,000 home with a 100 per cent mortgage has already declined by 10 per cent to US$180,000. The FHA loan repays the existing lender 85 per cent of that, about US$153,000. The existing homeowner’s new loan is at 90 per cent of that, or US$162,000.)

Everyone wins from this arrangement, say its supporters. Homeowners stay in their houses. Neighbourhoods don’t suffer the potential blight of numerous foreclosures. Housing prices don’t go into a free fall, depressed by an avalanche of foreclosures. Although lenders take a loss, the losses are lower than they would be if homes went into foreclosure. That’s a costly and lengthy process that could involve losses of 50 per cent or more.

The Frank proposal and others like it put politicians on the barricades, trying to protect needy homeowners. The imagery is flattering. But there are two glaring problems: one moral, the other economic.

About 50 million homeowners have mortgages. Who wouldn’t like the government to cut their monthly payments by 20 or 30 per cent? But the Frank plan reserves that privilege for an estimated 1-2 million homeowners who are the weakest and most careless borrowers. With the FHA now authorised to lend up to US$729,750 in high-cost areas, some beneficiaries could be fairly wealthy. By contrast, people who made larger down payments or kept their monthly payments at manageable levels would be made relatively worse off.

Government punishes prudence and rewards irresponsibility. Inevitably, there would be resentment and pressures to extend relief to other ‘needy’ homeowners.

The justification is to prevent an uncontrolled collapse of home prices that would inflict more losses on lenders and postpone a revival in home buying and building. This gets the economics backwards. From 2000 to 2006, home prices rose by 50 per cent or more by various measures. Housing affordability deteriorated, with home buying sustained only by a parallel deterioration of lending standards. With credit standards now tightened, home prices should fall to bring buyers back into the market and to reassure lenders that they’re not lending on inflated properties.

If rescuing distressed homeowners delays this process, the aid and comfort that government gives some individuals will be offset by the adverse effects on would-be homebuyers and overall housing construction.

Of course, there are other ways for the economy to come to terms with today’s high housing prices: a general inflation, or mass subsidies for home buying. Neither is desirable. None of this means lenders and borrowers shouldn’t voluntarily agree to loan modifications that serve the interests of both. Foreclosure is a bad place for most creditors or debtors. Although the process is messy, promising to lubricate it with massive government assistance may retard it as both wait to see if they can get a better deal from Washington, which would then assume the risk for future losses. — The Washington Post Writers Group

Source : Business Times - 8 Apr 2008

Royalville back with lower en bloc price tag

2008-04-07T19:16:00.000-07:00

New asking price of $1,106 psf per plot ratio is 10-15% less than before

ANOTHER en bloc sale property is back on the market with a lower asking price.

Royalville in Bukit Timah, off Sixth Avenue, has been relaunched - this time with a 10-15 per cent lower asking price than in October last year.

However, the property is still being launched based on last year’s collective sale agreement signed under the old rules and the reserve price is believed to be the same.

Last year, Royalville’s asking price was $330-350 million, which worked out to $1,235 to $1,305 per square foot (psf) of potential gross floor area, including development charges (DC) at the time.

This time, the 174,176 sq ft freehold Royalville site is being packaged with an 8,420 sq ft adjoining drainage reserve being sold by the Official Receiver.

The two properties, which are being marketed by Credo Real Estate, have a combined asking price of about $305 million.

This reflects a unit land price of $1,106 psf per plot ratio inclusive of $6 million DC for the two sites.

The site can be developed into a new condominium with about 140 units of an average size of 2,000 sq ft each.

Based on a land price of $1,106 psf ppr, the breakeven cost for a new condo on the site should be about $1,700 psf, Credo said.

‘New residential developments nearby such as Duchess Residences are transacting in the price range of above $2,000 psf,’ it added.

Last week, Jones Lang LaSalle relaunched Pinetree Condominium located in the Balmoral area at an indicative price of about $1,700 psf ppr, about 20 per cent lower than the previous indicative price of $2,100 psf ppr seven months ago.

Source : Business Times - 8 Apr 2008

Royalville: For sale again, but cheaper

2008-04-07T19:11:00.000-07:00

In what could be another sign of the cooling en bloc market, a site off Sixth Avenue has been put back on the market at a discount, after it did not attract a single bidder at first go.

The reserve price for Royalville has been cut to $305 million - down 13 per cent from the minimum $350 million asked last October.

This new price works out to $1,106 per square foot (psf) per plot ratio after development charges. Credo Real Estate, which is managing the sale, says developers should now be able to break even at $1,700 psf. Other new developments in the area, like Duchess Residences, have been selling for above $2,000 psf.

Credo executive director Tan Hong Boon said: “With the reputable schools nearby, the new development should be popular among expatriates and families with school-going children.”

Royalville currently comprises 93 residential units and 11 shops. It can be redeveloped into a five-storey complex holding 140 apartments of around 2,000 sq ft each.

A record $12.5 billion worth of collective sales were transacted last year, but the market appears to be cooling, with some failing to attract bidders.

Other unsuccessful tenders have included Dunearn Gardens, Cavenagh Gardens, The Village, Amber Glades, Grange Heights, Thomson View Condominium and, most recently, Makeway View.

Source : Today - 8 Apr 2008

Financial transparency: Controlling the private ‘locusts’

2008-04-07T19:07:00.000-07:00

THE full repercussions of the financial crisis triggered by bad mortgages in the United States are still unclear. But the unforeseen effects already include a demand for greater transparency in financial markets and better regulation.

One part of the financial markets not subject to the disclosure rules that apply to banks is hedge and private equity funds. Once small, the five biggest private equity deals now involve more money than the annual budgets of Russia and India. Assets in private equity and hedge funds stand at US$3 trillion (S$4.1 trillion) today and are expected to reach US$10 trillion by the end of 2010. The funds rely heavily on investment from pension funds, and on money borrowed from banks and other non-private sources.

Indeed, these private funds account for about two-thirds of all new debt. In short, they are a major challenge to financial stability. Unless regulated, they are likely to contribute to future crises.

The big private equity funds have proven to be a menace to healthy companies and to the European Union’s Lisbon Agenda, which aims to make Europe the world’s most competitive economy. Typically, they take over companies with borrowed money - often more than 80 per cent of the price. These ‘leveraged buy-outs’ leave the company saddled with debt and interest payments. A once profitable and healthy firm is milked for short-term profits, benefiting neither workers nor the real economy.

In Denmark, telecommunications company TDC was taken over by a group of private equity firms in 2005, with 80 per cent of the purchase financed by borrowing. The company’s debt-to-asset ratio leapt from 18 per cent to 90 per cent as company reserves for long-term development - essential in the telecoms industry - were used to service the loan.

These funds are also largely tax-exempt, often because they are registered offshore, although they operate from the world’s major onshore financial centres. One fund manager admitted that he paid less tax than his cleaning lady. In the US, it has been calculated that the funds cost between US$2 billion and US$3 billion in lost tax revenues - an amount three times that of the EU’s budget for humanitarian aid.

Trade unions in Britain, Germany, Canada and elsewhere have long pointed to the damage caused by leveraged buy-outs. So have such senior politicians as former German vice-chancellor Franz Mï¿½ntefering, who described private equity funds as ‘locusts’, as well as leading Democrats in the US Congress. The European Parliament’s Socialist Group, Britain’s House of Commons and the Australian Parliament have all investigated these private funds.

At the EU’s autumn summit, British Prime Minister Gordon Brown, German Chancellor Angela Merkel and French President Nicolas Sarkozy agreed in a joint statement that more transparency is needed in financial markets. In a separate move, Mr Brown promised to close any legal loopholes that enable hedge fund managers to exempt themselves from paying taxes.

Both the private equity and hedge fund industries reacted by publishing voluntary codes of conduct. Mr Paul Marshall, a hedge fund chairman, told the Financial Times that he hoped voluntary action by the industry ‘will take the pressure off’. At least that was transparent.

Nobody wants to demonise or unnecessarily restrict private equity and hedge funds. Venture capital’s investment in innovative and high-risk new companies highlights their potentially useful role. But this accounts for only a minor part (5 per cent) of the private equity industry. Given that the largest part of the industry (60 per cent) is based on leveraged buy-outs and extreme debt, it seems only reasonable to demand that they honour the transparency and tax rules accepted by everyone else.

Ultimately, private funds should be regulated globally. We can enact measures in each EU member state, but coordinated action by the EU and the US would be a realistic start. Private funds cannot operate without these two giant markets, and would have to comply with their requirements. The will to act exists in the EU. The White House’s current occupant is a more formidable obstacle to reform, but change is coming.

Even so, ensuring transparency and disclosure cannot fully address heavily debt-laden leveraged buy-outs, which would still be objectionable. There is a need to set a limit on the amount of debt that a company can accumulate, and change acquisition and merger legislation to include leverage. There is also a need to protect pension savings, which are now heavily invested in private equity. In short, we need a proper supervisory system for financial services.

There is still a lot of talking to do. Serious discussions are needed to reach EU-wide and inter-governmental agreements, and to encourage the US to move in the same direction. But, for the sake of our pensions, our savings, our jobs and our welfare states, the sooner change comes, the better.

By Poul Nyrup Rasmussen, president of the Party of European Socialists and a former Danish prime minister.

Source : Straits Times - 8 Apr 2008

U.S. financial crisis: Why the Fed rushed to the rescue

2008-04-07T18:59:00.000-07:00

Timothy Geithner, president and chief executive officer of the Federal Reserve Bank of New York, testified before the US Senate Banking Committee last week on the US financial crisis. Below is an excerpt of his testimony.

THE intensity of the crisis we now face in United States and global financial markets is a function of the size and character of the financial boom that preceded it.

This was a period of rapid financial innovation - particularly in credit risk transfer instruments such as credit derivatives and securitised and structured products. There was considerable growth in leverage, greater reliance on ratings on structured credit products and a marked deterioration in underwriting standards.

The innovation in financial products was accompanied by a dramatic increase in the amount of financial intermediation occurring outside the core banking system. The importance of securities broker-dealers, hedge funds and mutual funds in the financial system rose steadily. Off-balance-sheet vehicles of various forms proliferated, and increased concentrations of longer-dated assets were held in funding vehicles with substantial liquidity risk.

The deterioration in the US housing market last summer precipitated a sharp rise in uncertainty about the value of securitised assets. Demand for these assets contracted dramatically and the securitisation market for mortgages and other credit assets stopped working. This increased funding pressures for a diverse mix of financial institutions. Uncertainty about the magnitude and the level of losses for financial institutions fuelled concern about credit risk in exposure to those institutions.

Part of the dynamic at work was that banks were forced to provide financing for - or take over - the assets in a range of structured investment vehicles and conduits financed by asset-backed commercial paper. As some investors attempted to liquidate their holdings of these assets, many of the traditional providers of unsecured funding to banks pulled back from their counterparties in anticipation of the potential withdrawals of funds by their own investors.

Market participants’ willingness to provide term funding even against high-quality collateral declined dramatically. As a result, the cost of unsecured term funding rose precipitously and the volume shrunk. Banks were funding themselves at shorter and shorter maturities. As unsecured term funding markets deteriorated, the premium on liquid marketable collateral - such as Treasury securities - rose considerably.

Even with the dramatic actions by the Federal Reserve and other central banks to address these liquidity pressures, the strains in financial markets persisted. In many respects, conditions worsened in February and last month.

Credit spreads on financial institutions widened, equity prices declined and market functioning deteriorated. By the early part of last month, the threat of a disorderly adjustment was growing.

What we were observing in US and global financial markets was similar to the classic pattern in financial crises. Asset price declines - triggered by concern about the outlook for economic performance - led to a reduction in the willingness to bear risk and to margin calls.

Borrowers needed to sell assets to meet the calls; some highly leveraged firms were unable to meet their obligations and their counterparties responded by liquidating the collateral they held. This put downward pressure on asset prices and increased price volatility.

Dealers raised margins further to compensate for heightened volatility and reduced liquidity. This, in turn, put more pressure on other leveraged investors. A self-reinforcing downward spiral of higher haircuts forced sales, lower prices, higher volatility and still lower prices.

This dynamic poses a number of risks to the functioning of the financial system. It reduces the effectiveness of monetary policy, as the widening in spreads and risk premiums worked to offset part of the reduction in the Fed funds rate. Contagion spreads, transmitting waves of distress to other markets, from sub-prime to prime mortgages and even to agency mortgage-backed securities, to commercial mortgage-backed securities and to corporate bonds and loans. In the current situation, effects were felt in the municipal and student loan markets.

The most important risk is systemic: If this dynamic continues unabated, the result would be a greater probability of widespread insolvencies, severe and protracted damage to the financial system and, ultimately, to the economy as a whole. This is not theoretical risk, and it is not something that the market can solve on its own. It carries the risk of significant damage to economic activity.

Absent a forceful policy response, the consequences would be lower incomes for working families; higher borrowing costs for housing, education and the expenses of everyday life; lower value of retirement savings; and rising unemployment.

I believe that the Federal Reserve System’s response has helped reduce the risk of systemic damage to the financial system, and thereby helped mitigate a potential source of downside risk to growth. This in turn has helped mitigate the risks to the broader economy.

It is important to recognise that a substantial adjustment, recognition of losses and reduction in risk have already taken place. And a range of different prices of financial assets now reflects a very cautious view of the future.

The severity of the pressures in markets evident over the last few months is in part a reflection of the speed and force with which markets and institutions in our financial system adapt to fundamental changes in the outlook. This capacity to adjust and adapt is one of the great strengths of our system.

Nevertheless, we still face a number of challenges ahead. The seeds of this crisis took a long time to build up, and they will take some time to work through.

Source : Straits Times - 8 Apr 2008

Jurong ‘Lake District’ should be eco-friendly

2008-04-07T18:56:00.000-07:00

I REFER to last Saturday’s article, ‘Jurong’s massive make-over’, in which Jurong is slated to be developed into a regional business hub, to be dubbed ‘Jurong Lake District’.

I applaud the Government for yet another effort to decentralise business centres so commuting time will be reduced. At the same time, I appeal to the planning authorities to use this opportunity to infuse sustainable concepts into this project.

We hear of Singapore co-operating with China to build eco-cities. And we know many landscape and architectural planners no longer have the criterion of aesthetics as their key focus. Designing a city that is liveable, lively and ‘alive’, so it can exist sustainably by adopting environment-friendly eco-principles, is now a calling for these planners.

We have seen the price of oil rocket. And we have read how consumers’ tastes in public projects have changed to allow projects that are socially and environmentally responsible. Many would thus agree that cost savings will be higher if the Jurong Lake District is intelligently designed from the beginning to be sustainable, rather than introducing corrective measures when pressure to do so, for what-ever reason, is applied.

Let’s walk the talk about building eco-cities here. No doubt it is a huge challenge, but if planners cannot do it now, then they won’t know how to do it in the near future - when sustainability becomes an absolute necessity.

Poh Wei Leong

Source : Straits Times - 8 Apr 2008

S$300m warehouse store Big Box to open in Jurong East by 2009

2008-04-07T18:52:00.000-07:00

A S$300 million warehouse store will be open in Jurong East in the last quarter of 2009. The company behind the Big Box project, TT International, said the Jurong warehouse will be its flagship store.

Sitting on a 5.6-hectare site near the Jurong East MRT station, the outlet will be as big as 27 football fields put together with a total gross floor area of 120,000 square metres.

About 30 per cent of the space (34,000 square metres) will be set aside for retail, and the rest will be used for warehousing and offices.

The mega store will house a wide range of consumer electronics products, furniture and a hypermarket. It will also provide renovation and interior design services.

TT International said being mega will translate into savings for consumers.

Director of TT International Julia Tong-Sng explained: “We are an international trader, importer and distributor, so we have the advantage in costing.”

When completed, the Big Box outlet is expected to generate over 600 jobs, which the company said will mostly go to Singaporeans.

TT International added that it hopes to tap into the pool of people living in Jurong, including housewives and semi-retired individuals, to overcome the problem of manpower shortage.

Up to three million people are expected to visit the store each year. TT International said it plans to organise exhibitions and cultural shows to draw the crowds in.

The company also aims to work with SPRING Singapore and retail institutions to help HDB shops around the area level up.

Ms Tong-Sng said: “We intend to organise, at least twice a year, (an event) to provide free space for the HDB shop owners… to display their products and make some sales, so that they can also participate in this kind of big-box concept. At the same time, we will also work with SPRING to provide training.”

TT International, which has operations worldwide, also hopes to bring the concept of big-box store to Vietnam and Cambodia. - CNA/ac

Source : Channel NewsAsia - 7 Apr 2008

Analysts say private home sales have peaked

2008-04-07T10:24:00.000-07:00

Sales of private properties have been sliding amid a standoff between buyers and sellers, say market watchers.

In February, sales for new launches were only one tenth of the record numbers seen in August last year.

Analysts also say that residential property prices may have finally peaked, although the fundamentals still support long-term growth.

URA's latest flash estimates showed private home prices rose 4.2 percent in the first quarter this year, much slower than the 6.8 percent pace in the last quarter of 2007.

Last year, property launches drew a crowd despite the extravagant price tags. But now, the market is paying for it in more ways than one. Prices are coming off their highs, leaving some buyers with significant losses.

Chesterton's head of research & consultancy, Colin Tan, said: "What has happened over 2007 is that prices have risen quite rapidly....Part of the reason prices have gone up (is) because people are valuing properties not for the moment but maybe 2, 3 years down the road. In that sense, prices have raced ahead of fundamentals."

Seen in that light, a correction was perhaps waiting to happen. Right now, few are willing to pay a premium for homes, and fewer still are willing to sell for less.

Chesterton's Colin Tan said: "There's a standoff between buyers and sellers. The question now is, of course, (for) how long can the sellers hang on. It all depends on the economy. If things get a lot more worse, you may find that some investors may have to give up their properties and so prices will start to correct."

"For the short term, home prices in high-end (places), especially districts 9, 10, 11 will remain flat or go through turbulence because they have gone up sharply. Some homes, which have gone up to $4,000 psf, will need the rest of market to catch up before they find further support," said Knight Frank's director, Nicholas Mak.

While URA flash estimates showed private property prices increased 4.2 per cent in the first quarter, the rise was only for a handful of properties.

Chesterton's Colin Tan said: "I'd say the market is healthier if prices only rose 2 per cent and on a stronger sales volume, like 5 or 6 times the current volume."

Still, the longer-term outlook appears to be positive.

Knight Frank's Nicholas Mak said: "(Sales) volumes could remain thin for another six or nine months, but I think that after that.....market prices and rentals will start to grow at a gradual pace. The Singapore property market has all the factors necessary for it to continue to grow."

Residential property prices grew by over 30 per cent last year. Analysts said the pace is too fast to be sustainable. A more palatable rate, they said, is 10 per cent. - CNA/ir

Source : Channel NewsAsia - 7 Apr 2008

Royalville condo relaunched for sale by tender

2008-04-07T10:23:00.000-07:00

The owners of Royalville, a freehold mixed development along Bukit Timah Road, are giving the collective sale market another try.

They have relaunched the property for sale by tender, with an asking price of S$305 million. Including a development charge of S$6 million, this works out to a land rate of about S$1,106 per square foot of gross floor area.

Royalville is made up of 93 residential units and 11 shop units. Some 85 per cent of the owners had agreed to the collective sale before new laws on such sales took effect in October 2007.

Royalville has a land area of 174,176 square feet. Based on the 2003 Master Plan, the site is zoned for residential use, with a gross plot ratio of 1.4. The new development can be up to five storeys high.

The winning developer may incorporate an adjoining drainage reserve of about 8,420 square feet into the site, enlarging the land area to 182,596 square feet.

The drainage reserve is currently under the charge of the official receiver who has also appointed Credo Real Estate to act in the sale.

The new development on site could accommodate a condominium project with a gross floor area of 281,198 square feet. This will yield 140 apartment units with an average size of 2,000 square feet each.

The tender closes on 9 May. - CNA/vm

Source : Channel NewsAsia - 7 Apr 2008

Owners say enbloc sale of Tulip Garden has been called off

2008-04-07T10:17:00.001-07:00

The enbloc sale of Tulip Garden, a freehold development in District 10, appears to be off.

Tulip Garden was sold in July 2007 in a collective sale valued at S$516 million. The property is along the prime Holland Road and Farrer Road area.

Channel NewsAsia understands that owners are now waiting to hear more details from the developer.

Bravo Building Construction bought Tulip Garden at more than S$1,000 per square foot and the sale was scheduled to be completed by May.

However, earlier reports stated that Bravo Building Construction was delaying the completion date and there was some talk that it was trying to arrange for alternative financing.

Some owners of Tulip Garden have already received their share of the deposit for the sale.

According to earlier reports, Bravo Building Construction has called off another enbloc sale - that of Makeway View in the Newton area and is also said to be delaying the completion date of the sale of Pender Court off West Coast Highway. - CNA/vm

Source : Channel NewsAsia - 7 Apr 2008

HDB to sell Simei site under Design, Build and Sell Scheme

2008-04-07T07:05:00.000-07:00

The Housing and Development Board (HDB) has launched the sale of a new site in Simei under its Design, Build and Sell Scheme (DBSS).

Analysts said the plot of land near the Simei MRT station should attract medium-sized developers and construction companies to bid between S$49 million and S$76 million.

With an area of over 16,000 square metres, an estimated 320 to 360 units can be built there.

A higher portion of bigger flats is expected to be built at the site, and analysts said they anticipate a healthy demand from new families and HDB upgraders.

This is the fifth plot of land offered under the DBSS.

One attraction of the site is the presence of many schools nearby, including Griffiths Primary School, Anglican High School, Tampines Junior College and Temasek Polytechnic.

Developers who are interested in the site have until 3 June to submit their tender.

Other recent developments under the DBSS include City View @ Boon Keng, which costs S$520 per square foot on average. - CNA/ac

Source : Channel NewsAsia - 7 Apr 2008

Lobby group to fight higher taxes on US expats

2008-04-07T00:36:00.000-07:00

A UNITED States tax policy is affecting American expatriates working in Singapore and elsewhere so badly that a group of American chambers in the region has headed to Washington to campaign for a change.

The unhappiness among American expats and companies in Singapore stems from a 2006 tax law that has resulted in higher taxes for those who work outside the United States.

There are about 15,000 Americans working in Singapore. In 2006, US investments in the Republic grew to US$60.4 billion (S$83.6 billion).

Unlike citizens of most countries, Americans are taxed based on their worldwide income.

Last week, the Asia-Pacific Council of American Chambers of Commerce, a group of various US chambers in the region, launched in Washington a coalition representing Americans working abroad.

The Alliance for a Competitive Tax Policy seeks to eliminate what it sees as the unfair taxation of American expats that has resulted in the biggest tax increase for them in 30 years.

Senator Jim DeMint from South Carolina and Representative Gregory Meeks from New York are sponsors of this legislation. They were joined by the president of Amcham Korea, Ms Tami Overby, and representatives from several Washington-based business associations.

Ms Kristin Paulson, the chairman of the Asia-Pacific council, said: 'The changes in the tax law that Congress passed in 2006 have increased the tax burden on Americans working abroad by as much as US$25,000. This is simply unfair and discourages Americans from taking jobs outside the United States.'

According to Amcham Singapore, about four million Americans worldwide are affected.

'These tax law changes are detrimental to America's global competitiveness, and it is more expensive to hire Americans relative to hiring Europeans or Australians than previously.'

What the 2006 revision to the tax law did was to push many Americans working abroad into a higher tax bracket, even though their salaries and benefits remained the same.

The income tax deduction for housing costs was capped at a lower level. High tax rates were levied on payments made by employers, even though these were payments to reflect the higher cost of living overseas.

Simplistically, under the previous regime, a housing benefit of US$12,000 was taxed and additional housing costs were tax-free. The 2006 tax bill reversed the situation, giving a mere US$12,000 in tax-free housing benefits and taxing the rest. That hit expats hard in places like Hong Kong and Singapore, where housing costs are relatively higher.

Previous lobbying has seen the tax-free amount rise to about US$56,000 now for expats in Singapore. This is still untenable for many of them.

Take a standard American family who gets about $120,000 a year for housing. Deducting the tax-free amount of US$56,000 means that about $40,000 is still taxable. At the top rate of 38 per cent, an expat needs to shell out an additional $14,000 in taxes.

Mr Landis Hicks, a former chairman of Amcham Singapore, told The Straits Times: 'The realisation of the impact of the law has really hit home over the last year or so since the tax bills arrived.

'There is mounting concern among the American business community that the number of Americans severely affected by the cost of the tax will rise.'

'We are very concerned for the long term, that this will reduce the number of Americans working outside the US. We are trying to bring awareness to lawmakers of the serious impact on American competitiveness that the tax has.'

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'This is simply unfair and discourages Americans from taking jobs outside the United States.' - MS PAULSON, chairman of a group of US chambers in the Asia-Pacific, on the effects of a 2006 tax law on Americans working outside the US

Court ‘made use of’: Lawyers’ intent queried

2008-04-07T00:27:00.000-07:00

THE Court of Three Judges is deliberating over how three lawyers should be taken to task for their roles in making a court wrongly pay out $4.27million.

In hearing the matter last Thursday, Chief Justice Chan Sek Keong said it was clear the court had been 'made use of'.

The question though, said the CJ, was the intent of the three lawyers - Ms Nor'ain Abu Bakar, Ms Ruby Tan and MrPeter Chua.

In 2005, Justice V.K. Rajah had a disciplinary committee look into their conduct. He also referred the case to the Attorney-General's Chambers.

The lawyers' passports were impounded by commercial crime investigators but have since been returned. No criminal charges were filed.

Still, the disciplinary committee found the case serious enough to be referred to the Court of Three Judges, which hears cases on errant lawyers and has the power to suspend or strike lawyers off the rolls.

Ms Nor'ain and Ms Tan were acting for Indonesian company JAK Alhadad & Co, in a complicated battle over properties left by an Indonesian millionaire who died in 1953.

In July 2004, $4.6 million from the sale of the properties was handed over to the courts, pending a decision on how it should be split. Two months later, the two women lawyers applied to a court for $4.27 million to be paid to JAK.

However, they made this application under a different lawsuit between JAK and MrChua's clients, two Indonesian lawyers acting for some of the beneficiaries.

None of the three lawyers told the assistant registrar about the competing claims. The assistant registrar ordered the release of the money to JAK.

Justice Rajah has ordered JAK to return the money to the courts but that may prove to be an uphill task as it has been split among multiple parties, including lawyers and various parties in Indonesia.

After a four-hour hearing on Thursday, the Court of Three Judges reserved judgment. It will give its decision later.

Senior Counsel Andre Yeap, representing the Law Society, called it a classic case of lawyers 'saying things they know are false, not saying things they should - all with a view to depriving other people of benefits and entitlement'.

Ms Nor'ain's lawyer, Mr N. Sreenivasan, conceded that her non-disclosure amounted to grossly improper conduct, but said it did not constitute fraud and deceit.

Ms Tan's lawyer, Mr Shashi Nathan, said his client, who now lives in Austria, was 'naive' and was acting on MsNor'ain's instructions. MsTan, who received $64,000 in legal fees for the case, has repaid $15,000 and will pay $1,000 more each month, he said.

Mr Chua's lawyer, Senior Counsel Deborah Barker, argued that he did not think he had any duty to feed the court 'background' information.

She said that even if the court found that he had a duty to inform, his failure to do so could not be seen as fraud or deceit. She also pointed out that MrChua got nothing out of the $4.27 million paid out.

More to apply for home office scheme as approval period extends

2008-04-06T19:42:00.000-07:00

The Home Office Scheme has been popular since it was introduced in 2003.

So far, more than 20,600 authorisations have been issued, with 19,500 approved applications for HDB flats and 1,100 for private properties.

With the Housing and Development Board (HDB) extending the approval period for the scheme from three years to five years, more are expected to join the scheme.

From the beginning of this month, the approval period for all new applications and renewals will be on a five-year validity period.

HDB said the aim of the extension is to give home offices more time to develop their businesses.

Authorities said most of the applications are for IT consultancy, web design, real estate services and advertising. - CNA/ac

Source : Channel NewsAsia - 6 Apr 2008

Bank savings earn less interest as key rate plunges

2008-04-06T19:38:00.000-07:00

Banks trim rates on deposits as they struggle to maintain margins

SAVERS are again feeling the pinch as interest rates continue to fall, further squeezing what meagre returns they might get on bank deposits.

Citibank, Maybank and Standard Chartered Bank (Stanchart) have all trimmed rates for their high interest savings accounts given the fall in the rate banks pay each other to borrow cash.

This rate - the Singapore Interbank Offered Rate (Sibor) - hit a 12-month low of 1.25 per cent last month. It has fallen steadily from 2.88 per cent a year ago, and economists say it will drop further.

With their own margins under pressure, banks have responded by trimming rates for customers.

Maybank has cut rates for iSAVvy, an online savings account, from 1.08 per cent to 0.88 per cent a year for a daily balance of $5,000 to $50,000.

Stanchart’s rate for its eSaver online savings product is 1.08 per cent a year, down a tad from a month ago when it paid 1.2 per cent for deposits from $50,000 to $199,999.

The base rate for Citibank’s Step-Up Interest Account - it pays progressively higher rates as the monthly balance increases - has fallen by more than half to 0.3 per cent a year.

Mr Robin Chua, the head of deposits at Citibank Singapore, said the revised rate of 0.3 per cent is competitive compared with rates for other typical savings accounts.

‘The maximum Step-Up interest rate, at 1.2 per cent a year, is actually in line with what the industry offers on a Singdollar, 12-month time deposit,’ he added.

DBS Group Holdings, United Overseas Bank and OCBC Bank have also adjusted some of their fixed deposit rates downwards.

For instance, the three banks recently lowered their 12-month fixed deposit rate for amounts between $50,000 and $1 million to 1.2 per cent a year from 1.4 per cent earlier this year.

The leaner interest rates have prompted some consumers to shop around for the best offers in town.

Client servicing staff Mak Wei Jiat recently closed her eSaver account at Stanchart and moved the money to a Maybank iSAVvy account.

‘It may be only a small change in interest rates, but it can add up to a lot when you’re factoring in a big sum,’ she said.

IT operations manager Calvin Chin said with inflation climbing and interest rates declining, he will be earning less on his savings.

Meanwhile, with the share market so volatile, people like himself will be cautious about committing themselves to risky investments.

‘For the man in the street, besides keeping cash at home, the option available to him is to continue to keep savings in a bank,’ complains the unhappy 38-year-old.

Economists believe saving rates here could head lower in the near term, partly because of interest rate cuts in the United States and a strengthening Singapore dollar.

‘We think Sibor will trend below 1 per cent by the second half of the year, and stay low for a while,’ said Stanchart economist Alvin Liew, who also believes the US will be in for a protracted recession.

OCBC Bank economist Selena Ling feels any turnaround in Sibor is likely to come only when there is greater clarity over the US recession, what end-point the Federal Reserve sets for its rate-cutting cycle and what monetary policy expectations Singapore’s central bank has.

Source : Straits Times - 7 Apr 2008

US moves may be too late to tame recession

2008-04-06T19:34:00.000-07:00

Of 8 postwar recessions, only once was stimulus package passed before recession ended

If history is a guide, US government efforts to combat recessions often come too late to do much good. Furthermore, such efforts can sow the seeds for the next downturn.

The news last Friday that the economy shed 80,000 jobs in March, the worst loss in five years, triggered a wave of hand-wringing, fault-finding and proposed fixes in Congress and in the presidential campaign. The jobs report added to a building consensus that the country has slipped into recession, one that may have begun early this year or in late 2007.

Yet past efforts to head off or alleviate recessions with crash spending programmes and tax rebates, classic anti-recessionary plays, often did not kick in until after the recession had ended.

‘History shows very often that these programmes even go on for years and years after the recession is over,’ said economist Bruce Bartlett, who worked in the 1980s administrations of Presidents Ronald Reagan and George H W Bush.

Of the eight US recessions in the six decades since World War II ended, only once was the stimulus package passed before the recession’s end, Mr Bartlett found. That was legislation enacted in June 2001 that contained the first round of President George W Bush’s tax cuts - to combat a recession that began in March 2001 and ended in November 2001. ‘That would be the rare case,’ Mr Bartlett said.

In the seven other postwar recessions - Nov 1948-Oct 1949, Aug 1957-Apr 1958, Apr 1960-Feb 1961, Dec 1969-Nov 1970, Nov 1973-March 1975, July 1981-Nov 1982, and July 1990-March 1991 - stimulus packages were either passed just as they were ending or considerably later.

Part of the reason for the mismatches, besides usual congressional delay, is because it often is not known for months, even years, when a recession officially begins and ends. Two consecutive quarterly contractions in the gross domestic product is the common definition. But the official determination, made by the National Bureau of Economic Research, takes longer and is based on a more complicated formula.

It is still too early to know the impact on the economy of the US$168 billion stimulus package passed by Congress and signed by Mr Bush in January. Rebate cheques of up to US$1,200 per couple and even more for families with dependent children will start arriving in mailboxes in May. Mr Bush has argued against additional stimulus packages.

The Federal Reserve, the US central bank, also has anti-recessionary weapons at its disposal, primarily the ability to lower short-term interest rates and inject more liquidity into the financial system. The Fed has dropped rates a full 3 percentage points since September to 2.25 per cent. Studies show it takes nine to 12 months for Fed rate cuts to affect the economy.

The central bank recently took extraordinary steps to calm financial markets from a panic triggered by mortgage defaults, including arranging the US$29 billion rescue of investment house Bear Stearns, and offering hundreds of billions of dollars in new emergency loans to investment banks and other financial institutions.

The new jobs report shows a loss of jobs so far this year of 232,000 and a jump in the unemployment rate to 5.1 per cent from 4.8 per cent. That puts the Fed under pressure to cut rates further and to do more to calm jittery markets. But there are limits to how much more it can do.

It probably is too late to do much else that will help, either by the Fed or by Congress, to keep the recession from ending earlier than it will on its own, said David Wyss, chief economist at Standard and Poor’s.

The US$168 billion package will help a bit, Mr Wyss said. ‘Otherwise, the usual pattern is that by the time Congress does anything, you’re back in the recovery phase, and you end up boosting the recovery too much. And creating the seeds of the next recession,’ he said.

Still, Alice Rivlin, former director of the Congressional Budget Office and later deputy Fed chairwoman, said the government has been quite successful in recent years in mitigating the severity of recessions. ‘We haven’t had a really bad one in quite a long time. We have a lot more tools now, and the economy is more flexible than it used to be,’ she said.

Chris Edwards, director of tax policy for the libertarian-leaning Cato Institute, cites an unquenchable thirst in Washington to find quick fixes for hard times, and that is even more pronounced in an election year. ‘Congress and the administration want to be seen as doing something, and the politicians on the campaign trail are going to be promising even more.’

As if on cue, Republican John McCain and Democrats Hillary Rodham Clinton and Barack Obama all issued statements decrying the job losses, and offering their competing remedies, within an hour of the bleak Labor Department employment report’s release. — AP

Source : Business Times - 7 Apr 2008

The fine line between confidence, complacency

2008-04-06T19:21:00.000-07:00

THERE’S a fine line between confidence and complacency and markets are currently treading dangerously close to it - the US Federal Reserve’s actions may have calmed some nerves for now, but there is the very real likelihood that Wall Street has moved too far into a complacency zone and may not have fully appreciated the magnitude of the slowdown ahead.

One sign of this, for example, is that experts including Fed chief Ben Bernanke himself are still debating whether the US is in recession, as if there is any doubt. At last week’s Senate testimony, Mr Bernanke said the US economy ‘may contract’ in the first half, clearly reluctant to admit present reality.

Research house Ideaglobal, however, has no qualms calling a spade a spade: ‘The US economy saw some unequivocally bad news on Friday. Non-farm payrolls revealed that the US economy shed 80,000 jobs in March, versus a loss of 76,000 in February and 76,000 in January. The February and January numbers were revised upwards from 63,000 and 22,000 respectively which add up to -67,000 in back-to-back revisions…

‘The data clearly confirms that the US economy is in recession. As a result, expectations for a 50 basis point cut by the FOMC (Federal Open Market Committee) at its April 30 meeting rose to 36 per cent from 20 per cent on Thursday.’

Ideaglobal also expects more downward revisions in the months ahead. ‘The recession that has yet to enter its most intense phase will continue to extract a painful price in terms of overall output and productivity… we expect the shape of the recession will see one trough reached in spring 2008 and another in the early winter of 2009.’

Either confident or complacent - readers should judge for themselves - is BCA Research, which said in its second-quarter strategy outlook that the bear market has ended and that investors should start buying now. ‘Our sense is that monetary reflation may be slowly winning the battle against deflationary pressures coming from the housing meltdown, financial de-leveraging and retrenchment in banking activity,’ said BCA.

It used various indicators to arrive at this conclusion, including sentiment indicators like insider buying/selling and the spread between the two-year Treasury and federal funds rate. In its haste to call a market bottom, BCA may have forgotten that the end of a bear market does not necessarily herald the start of a new bull market.

DBS Bank recognises this important point in its second-quarter regional equities strategy in which it said ‘we remain cautious about the second quarter because of the buildup of risks in the US credit market and economy. We expect earnings forecasts and downgrades to bite, leading to further adjustments in stock prices globally’.

It added that although expectations are that the US will recover in the second half, it believes the negative news flows have yet to run their course as risks increase.

‘The conviction for a second-half recovery now is not as high as compared to the first quarter. Risks we are seeing now include: 1) magnifying of US credit rick, 2) balancing of US inflation risks that could lead to a lack of relief from rate cuts, 3) little bearishness in terms of growth and earnings forecasts, implying room for downward revisions, 4) a potential Europe slowdown that has not been priced in, 5) high correlation between US and Asian equity markets, 6) a slowdown in Asia’s growth on its own cyclical dynamics.’

A best-guess is that the ‘confidence’ in stocks over the past fortnight has come solely because short-covering has helped to keep the upward momentum going, aided no doubt by hedge funds which have had an awful first quarter and are looking to quickly redeem themselves.

In other words, markets know that the excesses built up over six years cannot be purged in a few months but are riding the momentum for the time being, in the hope that the Fed’s actions have bought them enough time to make some quick money.

DBS is probably right in saying that investors should ‘go defensive’ in the second quarter because it’s unlikely that markets can continue to shrug off repeated doses of bad news as they seem to have done in the past week, nor can they cope when below-par earnings start to be reported.

Source : Business Times - 7 Apr 2008

More Japanese MNCs expect S’pore operations to be profitable

2008-04-06T19:18:00.000-07:00

But high labour costs pushing many to mull plant relocation to nearby countries: Jetro survey

In a year when fewer Japanese multinational corporations in Asia were likely to make money, more Japanese operations in Singapore were saying otherwise.

The latest poll of Japanese firms in the region shows 88.3 per cent of the Japanese manufacturers that have set up shop here were expecting to turn in operating profits last year, up from 83.7 per cent which reported gains in 2006.

The number is likely to pick up this year as more Japanese MNCs here - up from 59.3 per cent to 66.7 per cent - are looking to even stronger export sales in 2008 despite uncertainty in the global market, according to the poll of 1,745 Japanese MNCs taken by the Japan External Trade Organisation (Jetro) in October-December last year.

More also anticipated improved production efficiency and churning out more high value-added products.

Export sales were the single biggest contributor to profit expectations among Japanese MNCs. Other factors included local sales, prices, costs, productivity and the exchange rate.

Notwithstanding a brighter outlook for their bottom line in Singapore, Japanese MNCs still seemed bothered by the high labour costs - and many, the largest number in the region, were planning to relocate their plants to neighbouring countries, according to the poll.

Jetro, which is the Japanese government’s trade and investment promotion agency, says that Thailand is a popular alternative location for Japanese manufacturers of chemicals and electric and electronic parts in Singapore and Indonesia.

Japanese producers of electric machinery and electronic equipment here have also been shifting their operations to China.

Yet, it doesn’t mean that Japanese firms can make more money in other parts of Asia.

For Asia as a whole, the Jetro poll shows that the number of Japanese MNCs likely to post an operating profit has slipped from 71.5 per cent in the previous year to 69.9 per cent in 2007 - lower than the number in Singapore. Among the countries where there was a drop in the number were those where the Japanese has a big presence - China, Hong Kong, Malaysia and Thailand.

After South Korea, Singapore in 2007 had the largest percentage of Japanese MNCs predicting a profitable year for their operations here.

The proportion in South Korea jumped from 79.3 per cent in 2006 to 92 per cent in 2007. But the biggest improvement was seen in Vietnam, where the proportion of Japanese MNCs expecting operating gains rose from 58.2 per cent to 77.8 per cent.

Commenting on the latest poll, Jetro says that the less upbeat sentiment of Japanese firms in 2007 came ‘amid a difficult business environment marked by upward pressure on procurement costs due to soaring resource prices’.

Among non-manufacturing Japanese MNCs with a presence in Asia, the overall proportion looking to an operating profit last year was about the same as that for Japanese manufacturers - 69.5 per cent, according to the Jetro poll.

For Singapore alone, the proportion was 74.7 per cent, with 18.7 per cent expecting ‘no change’ and 6.7 per cent predicting ‘deficit’. Only Taiwan (92.3 per cent), South Korea (83.3 per cent) and Hong Kong (76.1 per cent) had a higher proportion of Japanese firms likely to make money.

Japanese non-manufacturers’ presence in Vietnam was still relatively small, according to Jetro. In China, they were working to develop the domestic markets and build service and sales networks.

Despite some Japanese manufacturers relocating their operations from here to other Asian countries, more than half (59.7 per cent) of the Japanese firms polled in India still valued Singapore highly as a market in the next 5-10 years - higher than the proportion in Thailand (44.5 per cent).

Source : Business Times - 7 Apr 2008

Another 60 units sold at City View

2008-04-06T19:12:00.000-07:00

CITY View @ Boon Keng, a condo-like Housing Board project, has sold an additional 60 units under a walk-in selection process that ended yesterday.

In all, almost 520 units out of 714 have been sold, a spokesman for Hoi Hup Sunway Development told The Straits Times.

As for the remaining 190-odd units, the developer will decide how best to sell them. Meanwhile, the project is still open to the public for sale, he added.

Some 460 units were sold earlier under a different process that required balloting, as applications had outnumbered the units available. As it turned out, many successful applicants got cold feet, and there were excess units left after all buyers had been given a chance to buy the flats they wanted.

City View boasts condo-like features, such as timber floors, built-in wardrobes and air-conditioning. But they do not have more expensive common facilities like swimming pools.

The project, which comprises 72 three-room flats, 168 four-room flats and 474 five-room flats, can be bought only by families earning no more than $8,000 a month.

The units cost between $349,000 and $727,000 each.

The take-up for City View has been a major talking point because the overwhelming response from potential home buyers has not translated into actual sales.

About 3,500 applications for the flats were received by the time registration closed in January.

Source : Straits Times - 7 Apr 2008

Lawyers in trouble: In the soup again over conflict of interest

2008-04-06T19:09:00.000-07:00

Three counsel have become the first this year to be referred to the Court of Three Judges, which hears cases of serious misconduct by lawyers. Law Correspondent K.C. Vijayan reports

SUSPENDED lawyer Vasantha Vardan will have to face the Court of Three Judges again on four new charges involving different clients - in circumstances similar to that for which she was penalised over a year ago.

In November 2006, she was found guilty of acting improperly in the case of a property agent who fleeced his clients, and was suspended for two years.

She had acted for the property agent as well as his clients, placing herself in a conflict-of-interest situation.

Ms Vardan, a lawyer since 1994, had failed to explain the contents of the documents to the clients - a couple trying to sell their home - and they ended up being cheated by housing agent Shaik Raheem Abdul Shaik Shaikh Dawood in 2001.

Shaik, 55, is serving 22 months behind bars for cheating.

In the present charges, Ms Vardan is said to have acted improperly in relation to three other couples and another woman who went to Shaik to sell their HDB flats and ended up short-changed by him.

The complainants were generally illiterate couples who were cash-strapped. The complaints occurred in 2001.

The disciplinary committee found no dishonesty on Ms Vardan’s part, but held that she had placed herself in a conflict- of-interest position.

Senior Counsel Tan Tee Jim, prosecuting for the Law Society, said Ms Vardan had placed her own as well as Shaik’s interests over those of the complainants. ‘Members of the profession would be well advised to avoid all such situations of conflict of interest and to conscientiously advance the interests of their clients.’

Her lawyer, Mr Thangavelu, urged the committee to reprimand her or impose a fine instead of referring the case to the Court of Three Judges. Rejecting the plea, the committee said these were serious breaches of duty.

Entrapment defence fails in touting case

ENTRAPMENT as a defence did not save lawyer Rayney Wong from being referred to the Court of Three Judges for touting.

Mr Wong, a lawyer for the last 23 years, had offered referral fees to a Ms Jenny Lee, who had approached him with a property deal for his firm.

It turned out that Ms Lee was a private investigator working undercover, who recorded their conversations and then complained to the Law Society.

Ms Lee was part of a group of private investigators hired by some lawyers to check if competing law firms were offering fees to estate agents.

Faced with disciplinary committee hearings in 2005, Mr Wong refused to enter his defence then, claiming that Ms Lee’s evidence should be excluded because it was obtained by entrapment.

Mr Wong took this argument to the High Court and even to the Court of Appeal, but was turned down each time as the courts ruled that there was no entrapment.

When the case returned to the committee and it reconvened last year, Mr Wong pleaded guilty to the charge and urged the committee to reprimand or fine him instead of referring it to the Court of Three Judges.

His lawyer, Senior Counsel Sant Singh, said the fact that Mr Wong was entrapped and that he pleaded guilty were mitigating factors.

But the committee, chaired by Senior Counsel Steven Chong, said there was ‘no entrapment’, as Mr Wong offered the incentive to Ms Lee without incitement from her.

The committee also said it was ‘apparent’ this was not the first time Mr Wong had offered a referral fee.

It also said he decided to plead guilty only upon realising that his defence was almost certainly bound to fail and the guilty plea therefore carried ‘little weight’.

Accused of overcharging clients

A LAWYER has been referred to the Court of Three Judges for allegedly overcharging his clients.

It follows a hearing by a disciplinary committee, set up by the Chief Justice, which decided that lawyer Low Yong Sen had billed a couple three times more than what it felt would have been fair.

In all, Mr Low, a sole proprietor who has been in practice for about 15 years, billed his clients $4,300 in expenses he incurred in a property deal he handled for them in November 2005.

The committee felt $1,385 would have been a more reasonable amount, based on the Law Society’s submissions.

As part of that $4,300 bill, Mr Low had charged $1,850 for expenses related to his dealings with eight government departments.

The society’s valuation of that bit of work: $193.

For incidental expenses such as phone charges, Mr Low charged $350, seven times what the committee felt was reasonable.

A second misconduct charge involved Mr Low engaging his brother’s firm to undertake some services for his clients without informing them about their relationship, as required under the Legal Profession (Professional Conduct) Rules.

Mr Low’s brother, Mr Michael Low, was also a secretary in his law firm.

The committee, chaired by Senior Counsel Steven Chong, held that the two charges were sufficiently serious to be referred to the Court of Three Judges.

The committee has alternative powers to fine or reprimand a lawyer if it considers the charge to be less serious.

Another charge for billing his clients $3,000 in legal fees was dropped as the committee felt it was not excessive.

Source : Straits Times - 7 Apr 2008

7 signs of a property slowdown

2008-04-05T21:16:00.000-07:00

Buyers seem to be gaining ground again in the private homes market but consultants say it’s far from crashing yet

After rocketing to dizzying heights last year, the private homes market has stalled because of the global credit crunch - an external factor that took the market by surprise.

The withdrawal of the deferred payment scheme last year has also dampened demand somewhat.

Sales volumes and interest have fizzled out just as quickly as the market surged last year.

While many players hang on to the notion that strong fundamentals - low interest rates, for instance - will support the market, sentiment has fast melted away.

Is the property market slowing to a crawl? We examine the mounting evidence.

1 Growth in home prices weakens

The Urban Redevelopment Authority’s (URA’s) early estimate of first-quarter data showed a 4.2 per cent rise in private home prices against 6.8 per cent in the previous quarter and 31 per cent last year.

Consultants expect price growth to weaken. Prices, especially for high-end homes, might fall but not significantly as sellers are still reluctant to accept lower prices, said a seasoned property agent. ‘There’s no urgency to do so.’

2 Launches are held back

Developers have ample properties to sell but most continue to hold back launches. Some small ones have gone ahead but the response has been unimpressive.

With buyers and sellers choosing to remain on the sidelines as the global impact of a slowing United States economy remains uncertain, the market is largely quiet.

URA data showed that only 185 new private homes were sold in February, down from 328 in January. Last year, developers sold 14,811 new homes.

3 Collective sales have died down

This market is dead, for now at least, as developers stay away and new rules make it tougher for owners to sell en bloc.

So far this year, only one sale has been done compared with 26 in the first quarter of last year.

And one potential sale - that of Makeway View in Newton - was cancelled after the buyer, Bravo Building Construction, said it had found out that it would have to pay a higher-than-expected development charge.

Owners of some estates are starting to lower their price expectations.

Pinetree Condominium in Balmoral Park, for instance, was recently relaunched at a lower indicative price of $128 million - down from around $145 million last September, but still well above the 2006 price tag of $59 million.

4 Investor funds pull out or hold off

Islamic investment bank Kuwait Finance House, which agreed last December to buy 97 Goodwood Residence units for $818.4 million from GuocoLand, allowed the purchase option to lapse.

Both parties said last month that they were still in talks but did not provide clear reasons for the pullout. Industry sources had speculated that the fund’s price - a record for the condo’s area - was too high.

A recent DTZ Research report said some funds are holding off making investments, at least for the first half of this year, until the extent of the US slowdown and its global impact become clearer.

5 Sellers hand out discounts galore

In the resale market, sellers are getting more flexible. There are more desperate sellers in the market this year, property agents said.

Some want to sell one or two of their properties because they had bought some units under the deferred payment scheme, and payment is due in six months to a year, one agent said.

For new launches or sales of new units, some developers are also willing to give discounts when asked, while others offer stamp duty rebates to attract buyers.

6 Agents less sought after, ads dwindle

Property agents have more free time and are taking out fewer advertisements because of the poor response.

Last year, a seller’s unit could be marketed by five to six agents, with the deal going to the agent who garnered the best price.

But this year, a seller might go with one agent, said HSR Property Group’s executive director, Mr Eric Cheng.

On average, an ad for a reasonably priced unit could attract 12 to 15 calls last year. That is now down by half, he said. Prime, high-end homes have it worse, he added, noting that there could be no calls at all for some ads.

‘I have not been advertising since Nov 15 because I could see sales volume falling,’ said agent Andrew Soh.

7 Buyers toss in low bids to test the waters

Some developers have offered rather low bids in recent land tenders, which signals a slowing property market.

The Government in mid-March decided not to award a landed housing site in Jurong West as the bids were too low.

Then, the lowest bid for a Yishun condo site came in at just $95 per sq ft of potential gross floor area.

‘The developers are pricing in the risks of falling prices,’ said Knight Frank’s director for consultancy and research, Mr Nicholas Mak.

‘Given thin volume, they could also be hoping that there is no competition.’

Going forward, optimistic players are waiting for the market to regain some of its former glory in the next six months.

The pessimistic ones are prepared to ride out the whole year and possibly the next.

‘If volume remains thin, there is a chance that private home prices might weaken this year, but the market is not expected to crash,’ said Mr Mak.

Source : Sunday Times - 6 Apr 2008

On the market

2008-04-05T21:11:00.000-07:00

In this new weekly column, we bring you a sampling of properties up for sale around the island. In the spotlight this week and next: New project launches.

Whitley Villas
freehold
115 Whitley Road
Units: Six semi-detached houses and two cluster bungalows

Prices: $3.5 million for a semi-detached house, $4.5 million for each bungalow

Launch date: Yesterday

Developed by the Fortune Group, this series of two-storey houses, with attics, is located in an established residential area near the Catholic Junior College.

The semi-detached units range in size from 2,895 sq ft to 3,024 sq ft.

Also on offer are two cluster bungalows - one 4,219 sq ft and the other, 4,316 sq ft, in size.

Huit Terraces
999-year leasehold
6-10 Meng Suan Road

Units: Eight terraces

Prices: $2.3 million for corner units and $1.75 million for intermediate ones

Launch date: Yesterday

The main draw of these three-storey terrace houses is a private infinity pool on the second floor of each unit.

The corner houses each have a land area of up to 3,162 sq ft, with a built-up area of up to 5,134 sq ft.

The intermediate units each have a land area of 1,957 sq ft and a built-up area of 3,912 sq ft.

East Coast Residences
freehold
412 Upper East Coast Road

Units: 59

Prices: From $994 per sq ft (psf), averaging $1,125 psf. Monthly maintenance estimated at $225 to $360

Expected launch date: April/May, but previews are ongoing now

This project, near the Lucky Heights area, offers mainly smaller units, starting at 517 sq ft for a one-bedroom unit with a study and going up to 1,238 sq ft for the three-bedroom units.

There are also 10 penthouses, from 1,378 sq ft to 1,679 sq ft in size. Floors are marble in the living and dining areas and timber in the bedrooms. Wardrobes, kitchen cabinets and ovens are provided.

Ventura View
freehold
16 Rambutan Road, off Joo Chiat Place

Units: 24

Prices: $800 to $950 psf

Launch date: This week

Located near several well-known eateries, Ventura View offers a wide range of units, from studios starting at 397 sq ft in size to a four-bedroom penthouse that spans 2,286 sq ft.

The project, by construction firm DJ Builders, comes with a swimming pool, a gym and barbecue areas.

Source : Sunday Times - 6 Apr 2008

Email lushhome@gmail.com for more information.

The civil servant turned CEO

2008-04-05T20:54:00.000-07:00

CapitaLand’s Liew Mun Leong talks to VIKRAM KHANNA about his journey to the corporate world and the new dynamics of S’pore’s property market

‘I SPENT 22 years in the civil service, but people never believed I was a civil servant,’ says CapitaLand’s CEO, Liew Mun Leong, winner of the outstanding CEO award at the 2006 Singapore Business Awards.

‘I remember when I was leaving for the private sector, I was walking to the lift with Ngiam Tong Dow who was the first permanent secretary I worked for. I said to him, thank you for your help all these years in the civil service. And Mr Ngiam looked at me and said, ‘but you have never really been a civil servant’.’

Certainly, Mr Liew does not fit the stereotype. If you were to meet him without knowing his background, you would more likely think he’d been in business than in government. And you would not be totally wrong; even while in government, he displayed an entrepreneurial streak.

His style as a CEO is also un-civil servant like. For instance, he’s not a believer in hierarchy or protocol - something he learned from working with one of Singapore’s founding fathers, Dr Goh Keng Swee. ‘If I go to a city in China and I want to see a site, I won’t necessarily go through the CEO. I’ll just go straight to the site and have the person down there show it to me.’

To engage in a conversation with Mr Liew is to be ‘edutained’. A natural and vivid communicator, he is a repository of stories, anecdotes, jokes and above all, lessons. He conveys the impression of someone who learns something from everything he does and observes, who is constantly in learning mode - and who remembers it all - names, places, dates, incidents going back decades, even prices on restaurant menus.

Emails to staff

Read his recently released book, ‘Building People: Sunday Emails from a CEO’ and you get the idea. These were emails he wrote to his staff on Sunday afternoons, in his characteristically direct and casual style. They are about anything he might have learned from someone he has met, a book he has read, an experience he has had.

He is a great believer in the power of communication. ‘CEOs and leaders could do well to make known their thought, ideas, concerns and encounters,’ he writes in his preface, ’so that the people they lead can be closer to them mentally and emotionally.’

Sixty-two year old Mr Liew’s long professional journey which has taken him to the top of South-east Asia’s largest property development company, began as a civil engineer in the Ministry of Defence, building military camps, barracks and airbases. He later joined the public works department, where he helped construct, first Paya Lebar airport, and then Changi airport during the 1970s.

‘Changi was the largest project in Singapore, it was huge,’ he recalls. But I remember, when we were building it, all we were focused on was making sure it would be ready for the official opening on July 1, 1981. We never thought we were building the best airport in the world. It never even crossed our minds.’

Later, Mr Liew was to go back to build Changi’s terminal two in the mid-1980s.

After that, he had his first opportunity as a CEO. ‘I was approached by the government. They said SISIR (the Singapore Institute of Standards and Industrial Research) is in trouble, can you help?

‘SISIR was started in the 1970s to test Singapore-made goods and to help SMEs meet technological standards. I was originally meant to spend two years there, but I ended up spending five-and-a-half years.’

‘If you ask me where the turning point was in my thinking as a leader, it was at SISIR,’ he says. ‘Because in PWD and Mindef I played technical and functional roles, but now for the first time, I had to take total responsibility and answer to a board.’

When Mr Liew took over at SISIR, it was troubled. ‘The first thing I did was interview all the scientists and engineers there, one by one, to find out what’s bothering them.

‘What I found was that they were doing their own work. They were motivated, but they didn’t know where the organisation was going. Nobody had pulled them together and said to them ‘this is our mission, this is where we are going.’

‘One thing I told them was that I don’t want SISIR to do academic research. I want to do industrial research that I can commercialise. We are serving industry, we are not doing something esoteric.

‘I realised that as a leader and CEO, I needed to formulate a vision for them. A direction had to be defined. Because otherwise, we only had a fragmented bunch of laboratories in which people were doing their own thing. I also realised I had to communicate a lot with them. So I started holding town hall meetings for all the staff every quarter. I also learned the importance of doing Q&A with staff.’

And then, Mr Liew saw an entrepreneurial opportunity for SISIR. ‘It struck me that SISIR had a pot of gold in the form of expertise - scientists and engineers. But their work was not commercialised. And because of that, SISIR had to keep going back to the government for grants. And that meant we were controlled by the Ministry of Finance, even when it came to recruitment of people.

‘So I thought, we should be self-financed. Once we were not subsidised, the government would not interfere.

‘So, I went to the Minister staff meeting, chaired by Lee Hsien Loong, who was then the Minister for Trade and Industry. I said, Minister, I’ve got good news for you, I don’t need a government grant anymore. I will be self financed, but I need to be liberalised in terms of my practices and processes.

‘He looked at me and said, are you sure you can survive? I said, sure, I will do marketing. But if the government wants me to set standards, I will treat the government as my client and I will charge for it. I will also do contract R&D and testing and I will buy my own equipment for that. He said ok, you give me a programme and I’ll give you three years to be self financed. And in the end, we succeeded.’

Having proven himself as a CEO at SISIR, Mr Liew was persuaded to take up his first job in the private sector. In 1992, he became CEO of the construction company L&M.

The immediate priority there was to clean up a financial mess; the company had overexpanded and its share price was languishing. Mr Liew found himself having to retrench staff and tighten financial controls. In 1995, L&M was bought over by an Indonesian consortium led by Johannes Kotjo, former CEO of the Salim Group, with Bambang Suharto - the elder son of Indonesia’s then president - also being one of the shareholders. They persuaded Mr Liew to stay on as CEO.

‘They said they would give L&M this pan-Jakarta highway project. It was sure to make a lot of money. So I stayed on for a while.’

‘I remember every Friday I had to go to Jakarta for meetings. But I found that the meetings were about distribution of money. Someone from public works would say he needs to get various approvals, so he needs $2 million. Someone else would say he will do a survey for us, it’ll cost US$3 million. Some general would say he needs $3 million for another task. I thought, by the time I finish distributing all this money, what will be left for the company? It was a scam.’

Mr Liew chose to resign, although by then L&M had been turned around and its share price had more than doubled.

There was another challenging job waiting for him, at Pidemco Land, the government-linked property company, which he joined in 1996.

‘At that time, the government had already started the ’second wing’ policy,’ he recalls, referring to the government’s strategy of encouraging local companies to venture overseas. ‘But Pidemco was not able to handle its overseas projects. They had projects in Suzhou, Shanghai, Vietnam, Malaysia and Auckland but didn’t have the expertise to develop or run these projects. So I brought in the whole chain of expertise, many of my PWD kakis.’

Gradually, Pidemco was stabilised. But the biggest turning point for the company came in November 2000, when it acquired DBS Bank’s stake in DBS Land, the bank having already announced its intention to exit the property business. Mr Liew had four days to make the decision, as other suitors were also interested.

‘There was no way we could do thorough due diligence. All we had to go on was publicly available information. We had had no dialogue with DBS Bank.’

Ho Ching, who was then CEO of the Singapore Technologies Group, Pidemco’s parent, set up a meeting between Mr Liew and Jackson Tai, who was then DBS Bank’s chief financial officer.

‘I remember I met Jackson Tai at the Empire Cafe at 6.30. We exchanged prices for five rounds before we settled at S$2.92 a share for DBS Land. Then we shook hands.’

The effective merger of DBS Land and Pidemco led to the creation of CapitaLand, Singapore’s largest listed property company.

‘The acquisition of DBS Land gave us scale,’ says Mr Liew. At last, CapitaLand could become a significant international player. And over the next seven years, that is what it became. It now has a footprint that spans more than 100 cities in over 20 countries. It is Asia’s largest owner/operator of retail malls and the global leader in service residences, as well as a leading REIT and property fund manager.

‘Over the seven years, we have generated $19 billion in total shareholder return and have accumulated profits of $4.9 billion,’ says Mr Liew.

Tough calls

But along the way, he had to make some tough calls. One of them was the sale of the Raffles Hotel in September 2005 for $1.7 billion to the private equity firm, Colony Capital.

‘I remember, at the press conference to announce the deal, the first question I was asked was, ‘Mr Liew, how would you like to be known as the man who sold The Raffles?’

‘I said, I don’t think it’s wrong. First, we would need $2 billion to be in the world’s top 10 in terms of the number of rooms, which we can’t justify to our shareholders. Second, even if we do that, the return on equity would be low, around 4 per cent. Third, it is not a business we thought we could run in parallel with Ascott. I have two hospitality arms. I think Ascott is better in the sense that it’s in the top league in the world. So, why not take the $2 billion and invest in Ascott instead? And then of course, I got a gain of $600 million for our shareholders.

‘The people who objected to the sale were talking on the basis of sentiment and emotion. But I said, shareholders have put money in me. I can’t give them returns in the form of emotional payback. I have to give them returns in cash.

‘And anyway, at the end of the day, ok we sold the Raffles, but the Raffles is still in Beach Road!’

Apart from triggering a jump in CapitaLand’s share price, the Raffles deal marked a turning point in the perception of the company, says Mr Liew. ‘Investors no longer saw us as just a GLC; they saw us as a very commercial player.’

This perception was reinforced when CapitaLand became the first Singapore property company to launch a real estate investment trust (REIT), the CapitaMall Trust, in July 2002. The process had taken six years.

Mr Liew explains: ‘When I took over Pidemco Land in 1996, we were very heavily laden with bank borrowings. The problem was, how do we relieve this burden. Then came the Asian crisis in 1997. The excesses in the real estate had made banks reluctant to lend. So we had no choice but to tap the capital markets.’

‘But the REITS we created were not done as a monetisation exercise. We created them as a second income stream, a second purse, unlike some people who treat Reits as an opportunity to sell their assets.’

Private equity is another area into which CapitaLand has ventured. It has 15 private equity funds, but with a difference: ‘In all our property funds, we have a sponsor’s stake of up to 30 per cent, our own skin is inside’ Mr Liew points out. ‘And we show investors our projects. So we’re not an ordinary fund manager, we are also the investor and the developer. Because of that, we were able to create 15 funds so quickly, in China, Japan, India and Vietnam.’

As an engineer, Mr. Liew is convinced that his work helps to build not just physical structures, but people. ‘One reason Singapore has been very successful is because of how we have provided infrastructure and housing,’ he says. ‘Because we have built an environment that is effective. And when you build such an environment, the people are also built. So, if you can build for people, you can build people. That’s the mission of the company. We want to build for people so that people can be built.’

Source : Business Times - 5 Apr 2008

How to beat inflation

2008-04-05T20:45:00.000-07:00

With the rising cost of living and lower bank deposit rates, risk-averse Singaporeans are seeing their savings eroded by inflation. Lorna Tan looks at 10 ways to tackle increasing prices.

It is ironic. Singaporeans who are uncomfortable with taking financial risks and who prefer to leave their cash untouched in savings deposits are in fact taking a big risk by not protecting themselves against inflation.

The continued rise in the cost of goods and services is a clear indication that inflation is creeping up on everyone and eroding the value of their money.

For instance, a movie ticket cost $1 in the early 1970s. Fast forward to today and a weekend movie outing will set you back by $10.

If you are one of those risk-averse investors whose money is mainly in bank deposits and you think you are ‘playing safe’, think again.

In the long run, your savings will actually shrink and you could become poorer, not richer, because of inflation.

Said IPP Financial Advisers investment director Albert Lam: ‘With inflation, your dollar buys a smaller percentage of an item over time, meaning its purchasing power is reduced.’

Recent figures released by the Department of Statistics do not paint a rosy picture.

In January, the Consumer Price Index (CPI) rose to a 25-year high of 6.6 per cent from a year earlier, as the cost of housing, food, transport and communication rose.

In February, it was up 6.5 per cent from a year earlier. The rise was led by higher prices for cooked food, milk products, fresh poultry, fruit and bread, as well as higher petrol prices, taxi fares and car costs.

Meanwhile, banks have slashed their annual rates to about 1.2 per cent a year for a 12-month deposit. And bank savings are attracting meagre rates of about 0.3 per cent.

If your money is sitting idle in a bank and earning interest that is lower than the rate of inflation, you are not making it work hard enough for you.

Over time, your nest egg will be eroded by inflation. For instance, if the inflation rate is 5 per cent and your fixed deposit is earning 1.2 per cent, you are looking at a shortfall of 3.8 per cent.

What triggered this spike in inflation?

Mr Joseph Chong, the chief executive of financial advisory firm New Independent, pointed out that the current bout of high inflation is concentrated in energy, especially crude oil and food.

He said that under-investment in oil exploration and conservation in the 1980s and 1990s when crude oil fell to US$10 a barrel led to a lack of supply as demand kicked in from a strong global economy.

‘In order to diversify away from crude oil, the United States doled out big subsidies for farmers to produce ethanol from corn.

‘Acreage previously used for food and feed production was converted to ethanol production, which created a food supply squeeze,’ he added.

The increase in Singapore’s Goods and Services Tax (GST) to 7 per cent from 5 per cent last July was a one-off factor that contributed to the spike in inflation, said Mr Lam.

Another one-off factor was the Government’s revision of annual home values.

The good news is that this jump in inflation is expected to be contained within the first half of this year.

The Government’s official inflation forecast for this year is 4.5 to 5.5 per cent.

Inflation averaged 2 per cent from 1980 to last year.

How does inflation affect your purchasing power?

You should factor in the impact of inflation on your purchasing power when you lay out your long-term financial goals.

If not, you will underestimate the amount that you need to set aside to save or invest in order to achieve your desired standard of living upon retirement.

Mr Stanley Sim, the financial advisory manager of New Independent, worked out that in just 20 years, inflation of 2 per cent a year would reduce $10,000 to $6,676 in terms of purchasing power, which translates into a loss of 33 per cent in monetary value.

If inflation reaches 5 per cent, it will reduce $10,000 to $3,585, a loss of 64 per cent in value.

Source : Sunday Times - 6 Apr 2008

10 ways to overcome the shrinking dollar

2008-04-05T20:41:00.000-07:00

It takes discipline and a sound investment strategy to combat the corrosive effects of inflation, say financial experts.

1 Cut down spending, live within your means

IPP Financial Advisers investment director Albert Lam’s advice is to review your lifestyle and consumption patterns.

For instance, you can substitute a branded item with a no-frills one, or switch to a cheaper mode of transport like the bus.

2 Try to save 20% of your pay or more

This is a useful tip especially for those just starting their careers, says head of ipac financial planning’s advisory team, Mr Bill Castellas.

Establishing a disciplined pattern of ‘money behaviour’ will go a long way towards building surpluses for long-term investments.

3 Do not be overly conservative

Invest your money instead of leaving all of it in savings deposits or fixed deposits, said Mr Lam.

New Independent’s financial advisory manager Stanley Sim also suggests that instead of parking spare cash in savings deposits, investors can place it in money market funds that have zero sales charges and offer better rates.

4 Don’t rely solely on guaranteed products

Mr Castellas feels that such products, like bonds, might provide peace of mind but only marginal protection against inflation over the long term.

5 Save regularly via an investment platform

The earlier you start investing a small amount that you can afford to set aside, the quicker your investment will grow till it builds up into a significant sum in later years.

‘Set aside an affordable sum from your daily expenses each month via a regular savings plan,’ said Mr Castellas.

‘You can put it into growth-oriented assets like equities and or real estate investment trusts.’

6 Take on sensible level of investment risk

Build an investment portfolio with a reasonable spread of defensive and growth assets that suit your lifestyle.

7 Invest for returns that will beat inflation

In order to beat inflation, consider investing in a globally diversified portfolio of stocks and bonds with a long-term horizon, said Mr Sim.

A moderate-risk portfolio, comprising 60 per cent equities and 40 per cent bonds, should be able to generate a 6 to 8 per cent return a year over the long term.

8 Understand the power of compounding

Start planning, saving and investing as early as possible so you can enjoy the benefits of compounding, said Mr Lam.

He suggested investors apply the Rule of 72, a handy tool that illustrates the effects of compounding.

To work out how long it will take for your investment to double in value, divide 72 by the percentage return. With a return of, say, 9 per cent a year, to double your money, you will need eight years, that is, 72 divided by nine.

Mr Sim noted that if you can invest $10,000 in an instrument that gives you an annual return of 6 per cent, that sum will grow to about $32,000 after 20 years.

If you start early, the compounding effects will help you fight inflation by preserving and growing your wealth.

9 Invest in asset classes that appreciate

Both Mr Lam and Mr Sim gave property as an example. But invest in this asset class only if it is within your means.

If rents increase at a faster rate than inflation, your property rental yield will provide a healthy return, they said.

10 Limit exposure to depreciating assets

Such assets include consumer goods like cars.

Source : Sunday Times - 6 Apr 2008

What is SIBOR

2008-04-05T20:38:00.000-07:00

It stands for the Singapore Interbank Offered Rate

Where do you see this?

In bank statements explaining how your mortgage rates are determined.

What does it mean?

It refers, more or less, to repayments on your loans, because Sibor affects the mortgage rate.

Sibor is the rate at which banks lend to one another. When it falls, so do rates for variable or Sibor-linked mortgages. When the Sibor rises, you have to fork out more.

Sibor also gives a rough indication of where deposit and savings account rates at banks might be headed, as it is influenced partly by the supply and demand for funds in the Singapore interbank market.

When Sibor is low, it is cheaper for foreign banks, which have a smaller deposit base than local ones do, to borrow funds from the interbank market for their lending activities.

When this happens, the foreign banks are less likely to offer higher fixed deposit rates to attract Singaporeans to park cash with them.

But when liquidity in the market is tight and interbank rates rise, local banks will offer more attractive rates to convince Singapore savers not to switch to foreign rivals.

Why is it important?

Sibor is a key component used by banks in setting their home loan rates.

A blend of different interest rates - such as one-month, three-month and even 12-month Sibors - is typically used by banks to set fixed or variable rates for home loans.

The three-month Sibor is a common benchmark rate used by the banks to adjust their deposit rates. By monitoring it, you can get an indication of where banks are headed next with their fixed deposit and savings account rates.

Sibor is also used to set rates for so-called transparent mortgage packages offered by the three local banks as well as Standard Chartered, HSBC and Citibank.

These are linked directly to Sibor or another publicly disclosed rate, such as the Central Provident Fund (CPF) rate or the swap offered rate (SOR).

SOR is made up of Sibor plus a bank’s lending costs, and is currently at about 1.39 per cent, down from 3 per cent a year ago.

In a falling interest rate environment, mortgage rates linked to Sibor or SOR will also trend downwards.

Sibor tends to track the United States Federal Reserve funds rate, which has been slashed in recent weeks to 2.25 per cent as the Fed attempts to stave off an economic recession in the US.

Sibor has plummeted from 2.94 per cent to 1.31 per cent over the past year, and economists say it might not have bottomed out yet.

Source : Sunday Times - 6 Apr 2008

Mum dead for two years, but no sign of probate yet

2008-04-05T20:33:00.000-07:00

Q I am the executor and trustee for the estate of my mother, who died in April 2006. Her estate is worth less than $600,000, and I have a certified true copy of her will.

Soon after my mother’s death, my father and I engaged her lawyer to prepare and file duty returns. However, it has been almost two years and we still have not obtained the grant of probate.

In the two years, the lawyer switched to another law firm without informing us. My father later managed to trace her to her new firm.

More recently, some shares that form part of my mother’s estate dropped in price. And a cheque worth $3,700, which was issued to my father by an insurance company, cannot be banked in as my mother was the trustee.

This long process of waiting has created a lot of distress for my father. He and I have urged the lawyer to speed up the process on many occasions, but we are still waiting for the grant of probate.

We wish to know what we can do to help reduce the waiting time. We are also concerned that the legal and court fees and the drop in value of shares owned by my mother will increase as the process lengthens. Can you suggest what we should do?

A I note that you did not mention the cause(s) of the delay. If you are unsure of the actual cause(s), you should ask your lawyer and try to understand what are the obstacles she faces so as to take appropriate measures to solve the problem.

As there is no dispute over the validity of the will, I assume that the delay is due to an inability to obtain the certificate from the Commissioner of Estate Duties, which enables you to obtain the grant of probate from the court.

Generally, the entire procedure for obtaining the grant of probate for deaths before Feb 15 can be divided into three stages:

1. Apply to the court and obtain a tentative order of grant of probate. (This takes about two weeks to one month.)

2. File the estate duty affidavit, cooperate fully with the Estate Duty Branch (Inland Revenue Authority of Singapore) if it has queries or requires documentation. (This takes about one month onwards depending on whether you are able to address inquiries made by the Commissioner of Estate Duties.)

3. If no estate duty is payable, the Commissioner will issue a certificate to confirm this. If the Commissioner’s assessment is that estate duty is payable, there will be a request for payment, after which a certificate will be issued to confirm that estate duty has been paid. With the certificate, you can return to court to obtain the final grant of probate. (This takes about one month.)

I believe the delay in your case is because it was held up at the second stage. You need to know why the Commissioner of Estate Duties is not able to issue the certificate. Even if your mother’s estate does not attract estate duty because it is worth less than $600,000, you still need to address the Commissioner’s queries so as to obtain a certificate stating that no estate duty is payable.

Before issuing such a certificate, the Commissioner needs to be satisfied, among other things, that your mother did not make any gift within five years of her death. Such gifts might attract duty. The Commissioner also needs to be satisfied that the sum of $3,700, which you say is due to your father, should be excluded from the assessment of estate duty because your mother was only the trustee.

To reduce the processing time, you need to cooperate fully with the Commissioner of Estate Duties. Attend to all the queries that have not been satisfactorily addressed. Locate and deliver all the documents the Commissioner has requested. If you are unable to supply the answers or documents, you should inform the Commissioner, who might then make certain assumptions so as to proceed with the assessment.

Source : Sunday Times - 6 Apr 2008

Panel set up to help developers incorporate waterways into projects

2008-04-05T20:10:00.000-07:00

Singapore’s water agency, PUB, has formed an ABC Waters Review Panel to help developers incorporate water bodies into their projects.

It was set up late last year together with the Urban Redevelopment Authority (URA) and the Law Ministry. The panel also has several high-profile local architects as members.

Environment and Water Resources Minister, Dr Yaacob Ibrahim, revealed this at the launch of the S$2.5 million Kolam Ayer ABC Waterfront pilot project - under PUB’s Active, Beautiful and Clean (ABC) Waters programme - on Saturday.

Dr Yaacob said: “The idea is very simple. At the end of the day, when developers develop their projects, I’m sure there must be ways in which they can integrate waterways in their design. Previously, that integration had not occurred. They saw it as a setback to have to fulfil a PUB requirement, but now we are telling them that there are ways in which that can be integrated.

“The panel will help to advise the developers on what they can do to integrate the waterways. With the enhancement, that could be a selling point. We want to explore the possibilities.”

PUB will also produce a set of ABC Waters Design Guidelines to provide design ideas and technical support for professionals.

Developers who incorporate water features into projects already have a fast-track process to tap on the ‘green lane’. Since it was introduced in 2006, 15 proposals have been submitted via this channel.

On the Kolam Ayer facelift project, Dr Yaacob said even though the physical infrastructure has been completed, the important factor now is the involvement of the community to take ownership and ensure the area remains clean and vibrant.

He said: “For the place to come alive, we need residents to take ownership. I’ll be very happy if we can demonstrate this as a viable and sustainable project over the long term.”

Chiang Heng Liang, Chairman of the ABC Waters Project Community Workshop, said: “It’s up to the community, the people, the grassroots, residents, interest groups and all these people coming together to organise gatherings and meaningful activities… to interact and mingle.”

Four groups have already expressed interest in helping to inject vibrancy into the area. They include Bendemeer primary and secondary schools which have adopted sections of the river to conduct river patrols and organise river clean-ups.

For a particular family, the completion of the waterfront project is worth waiting for.

Ismail Yacob, a Kolam Ayer resident, said: “It enhances the quality of life and, at the same time, beautifies our estate.”

His wife, Nurashikin I Cheong, said: “Maybe during school holidays, we can come here to barbeque.”

With this development completed, residents can look forward to more activities by the waterfront such as yoga and a Sunday flea market.

Subsequent facelifts under PUB’s ABC Waters programme will be conducted at Bedok and MacRitchie reservoirs.

Source : Channel NewsAsia - 5 Apr 2008

Still bullish on Singapore property

2008-04-04T21:06:00.000-07:00

DESPITE the US subprime crisis, which will have a cyclical impact, Liew Mun Leong remains bullish on Singapore’s property market in the medium term.

‘Main street America is suffering from the sins and mistakes of Wall Street,’ he says. ‘And when main street gets hit, that will affect Asia, we can’t run away from it.’

However, Singapore’s property market has some strong underpinnings, he maintains. Most importantly, the drivers of Singapore’s property market have changed in recent years. ‘The rise in property prices since 2002 is no longer due to domestic policy changes such as the liberalisation of CPF and the HDB sub-sale policy.

‘It is driven by the remaking of Singapore. Singapore as a global city, as a gateway to Asia, the integrated resorts, plus the displacement demand from en-bloc sales.’

The change in the number and profile of foreign buyers is also notable, he points out. ‘In the past foreign buyers were mainly from Malaysia and Indonesia. But now, there are big buyers from at least 12 countries.’

The proportion of foreign buyers for private properties has also risen from 13.7 percent of the total in 1996 to 25 per cent in 1997. And the number of foreign professionals coming to live in Singapore has tripled over that period, as has foreign direct investment.

At the same time, the affordability of private residential properties as measured by mortgage payments as a percentage of household income has improved, going from around 46 per cent to 36 per cent.

And then Mr. Liew points to the big picture: ‘Singapore has 700 sq km, with 4.5 million people. The population is projected to grow to more than 6 million, but the city cannot grow. If we reclaim another 11 per cent we’ll be in international waters already.’

‘Another point, I tell foreigners. Compare putting $5 million in a house in Singapore with putting $5 million in a house in, say, Bangkok or Jakarta. In Singapore, the government provides so much support in the form of infrastructure. What infrastructure support would you get in Bangkok or Jakarta? This is an important issue when you buy property. Investors realise this.

‘So, if you analyse all the fundamentals, Singapore as a global city is a winning formula. And I’m not saying this because I’m selling property.’

Source : Business Times - 5 Apr 2008

Plot ratios may change in certain local conditions: Mah

2008-04-04T21:04:00.001-07:00

WILL plot ratios go up in the draft Master Plan 2008?

‘There will be changes in certain places to reflect certain local situations, local conditions,’ National Development Minister Mah Bow Tan said yesterday without elaborating.

But there will ‘not be a major review across-the-board’ of plot ratios for the draft Master Plan 2008, he said. Plot ratio is the ratio of maximum gross floor area (GFA) to site area, so the higher a site’s plot ratio, the more the GFA that can be built on it.

The draft Master Plan 2008 is expected to be unveiled in late May and exhibited for a month for public feedback before being finalised and gazetted by the year-end.

Mr Mah last year ruled out massive, across-the-board islandwide increases in plot ratios for Master Plan 2008 to cope with a long-term population planning parameter of 6.5 million. Yesterday, he said: ‘We will do our Master Plan review every five years. As we go forward, as the situation changes, we will make the appropriate decision then.’

A study by Jones Lang LaSalle published by BT earlier this year said undeveloped state sites within walking distance of Circle Line MRT stations, particularly those that intersect with existing MRT lines, will be among the top candidates for higher plot ratios in Master Plan 2008.

The study highlighted areas near Paya Lebar MRT Station and Buona Vista MRT Station, where the Circle Line will intersect with the existing East-West Line, and HarbourFront MRT, where the Circle Line crosses the North-East Line.

Source : Business Times - 5 Apr 2008

Mah disagrees with suggestions on land sales, deferred payment scheme

2008-04-04T20:59:00.000-07:00

NATIONAL Development Minister Mah Bow Tan yesterday disagreed with suggestions by property tycoon Kwek Leng Beng on the need for the government to review its first-half 2008 land sales programme and rethink its decision to scrap the deferred payment scheme.

Mr Mah said the government can be nimble on state land sales because the programme is reviewed every six months, depending on changes in the market.

But the H1 2008 programme will not be changed midstream, he said. ‘We should be careful of knee-jerk reactions. You can’t adjust it just because something is happening yesterday and then we change things today. We’ve got to take a longer-term view.’

Mr Mah was speaking at a media briefing after he delivered the keynote address at Urban Redevelopment Authority’s Corporate Plan seminar at Grand Copthorne Waterfront Hotel.

In an interview published by BT this week, Mr Kwek had urged the government to review its H1 2008 land sale programme, which was fixed last year when the property market was buoyant compared with today.

On the decision announced in October last year to scrap the deferred payment scheme, Mr Mah said yesterday it was carefully considered, taken ‘after a lot of thought, deliberation’.

‘The objective was two-fold,’ he said. ‘One, to remove excessive speculation from the market. And two, to make sure there is financial prudence - that people make decisions and don’t over-commit themselves.

‘These are two very important objectives and they are still relevant today - in fact, probably more so in today’s kind of market. I don’t see any need for us to change our decision on that.’

Mr Kwek had suggested the deferred payment scheme could be revived, but this time with a higher initial payment of 30 per cent instead of 20 per cent previously. He also said that if a developer wants to extend a deferred payment scheme to a buyer, perhaps the developer’s bank might be in a better position to assess viability, while keeping an eye on prudence.

Mr Kwek also made a suggestion he said could make housing more affordable for young Singaporeans, including singles. The government could build more public housing units and lease them to young first-time buyers with an option to buy the flats within 10 years at fixed prices, he said.

Responding yesterday, Mr Mah said he disagreed with the premise that young couples cannot afford to buy an HDB flat.

‘The average amount of money they need to put up for monthly mortgage payments is well within their means, something like 20 per cent. This is quite affordable,’ he said.

‘If you were to rent, they will probably be paying as much, if not more, in rental, than to buy the flat. It doesn’t make sense to rent when you can buy using your CPF. You rent, you can’t use your CPF.

‘When you buy, you actually buy a place you can call your own. It’s an investment. When you rent, it’s not yours.

‘Our home ownership policy with all the generous housing subsidies that we have given actually allows most Singaporeans, young couples, to be able to buy their own homes.

‘If you look at the numbers, you’ll find that suggestion (by Mr Kwek) does not quite make sense.’

Source : Business Times - 5 Apr 2008

National Development Minister responds to property issues

2008-04-04T20:56:00.000-07:00

On rental housing:

‘Our strategy is two-pronged… We are looking to increase the supply from 43,000 today, to go up to about 50,000. So that’s another 7,000 - an increase of about 20 per cent.

‘We are also relooking the eligibility criteria to make sure they cater to the really needy.

‘As an article mentioned today, a lot of people in the queue really shouldn’t be in the queue. They already enjoyed a housing subsidy…and cashed out, and are now coming out to join the queue. So while they are eligible today, strictly speaking, there are other people much more in need of a rental flat.

‘There are other alternatives in place - whether it’s a studio apartment, smaller flat, or the lease buyback scheme that we will roll out next month. All these are ways to monetise their flats.

‘Joining the rental flat queue is not the way and I think we have to relook our criteria.’

On withdrawing the deferred-payment scheme:

‘It was a very carefully considered decision…The objective was twofold: remove excessive speculation from the market and make sure there is financial prudence so that people…don’t over-commit.

‘These are still relevant today. We don’t see a need to change the decision.’

On City Developments chief Kwek Leng Beng’s suggestion that the Government remain ‘nimble’ in a changing property market and review the land sales programme:

‘It’s a point of view a developer will take, but there are many players in the property market; they all have their own views… They represent different, conflicting interests.

‘We can be nimble, but we have to bear in mind that we have to take a longer-term view about things…We should be careful about knee-jerk reactions.

‘We can’t adjust because something happens yesterday and we change things today.’

On increasing Singapore’s population:

‘We don’t know what will happen, what the numbers will be in 10 to 20 years.

‘But if we do need to increase our population to 6.5 million in the future…it is comforting to note that our physical resources, especially land, are able to support this.’

Source : Straits Times - 5 Apr 2008

Minister Mah assures there is no shortage of housing in Singapore

2008-04-04T20:51:00.000-07:00

National Development Minister Mah Bow Tan has said there is no shortage of housing in Singapore.

He said, "Based on all the BTO (Build-To-Order) projects that we've had so far, (for) all of the projects, all of the developments for the last year - except one - there've always been flats left over, even after everybody in the queue has been offered."

Mah Bow Tan (file pic)

But some home buyers often decline the opportunity to pick their flats, if the choices do not meet their expectations.

So the Housing and Development Board (HDB) is looking at new measures to limit this.

But Mr Mah assured that it is unlikely HDB will raise the administrative fee.

He said, "I don't think increasing it from S$10 to S$100 all round is going to work, because people will only say, 'Oh, you're now trying to collect more money, the government's trying to make more money from me'.

"I am asking HDB to study this, to find a way to discourage people from giving up their flats, or giving up their chance so easily. Yes, some people will say 'It's my prerogative to give it up, I don't want it, I can give it up'. Fair enough, but then you will have to suffer some penalties."

Mr Mah also responded to calls for the deferred payment scheme on property purchases to be brought back amid signs of a slowdown in residential property sales.

He said: "The decision to remove the deferred payment scheme was a very carefully considered decision. The objective of it was twofold. One was to remove excessive speculation from the market and two it was to make sure that there is financial prudence.

“These two objectives are still relevant today, probably more so in today's market, so I don't see any need for us to change our decision on that."

There have also been hopes for plot ratios to be increased but the minister said that changes will only be made when necessary.

For now though there won't be a major review across the board. - CNA/ms/vm

Source : Channel NewsAsia - 4 Apr 2008

HDB reviewing application process

2008-04-04T20:48:00.000-07:00

THE Housing Board is in the process of reviewing its current application process, National Development Minister Mah Bow Tan disclosed yesterday.

This follows recent public concerns that the thousands of applications that pour in for an HDB project bear little relation to the actual take-up rate of flats.

HDB’s latest condo-like flats, City View @ Boon Keng, for example, sold only 250 or so out of 714 units, despite receiving 3,500 applications.

Eligible buyers pay $10 to enter a ballot for HDB’s sales exercises. This assigns them a queue number to select a flat in a particular sales project.

Mr Mah acknowledged it was frustrating for some couples in the queue - who might have missed out on selecting a flat because of the high numbers - and said there was a need to address it.

‘I’ve asked HDB to study this to discourage people from giving up their flats, or chance, so easily.’

The idea is to have a queue that ensures that when buyers get to the front, they book the flat, said Mr Mah.

‘That will be fair to people in the queue, and good for HDB, to get some certainty about the supply and demand situation.’

More details on the review will come at a later date, he said.

Source : Straits Times - 5 Apr 2008

The West also rises with Jurong East makeover

2008-04-04T20:42:00.000-07:00

360-hectare Jurong Lake District will marry offices and retail outlets with waterfront playground

With malls, hotels, offices and entertainment outlets, the sleepy charms of the area around Jurong East MRT Station are poised for a stunning makeover. The place - called Jurong Gateway - will be turned into the biggest regional centre on the island.

Add to this the land and water development around the nearby Jurong Lake - with kayaking, dragon boating and a lakeside village - and the transformation that melds business opportunities with leisure pursuits will be complete.

Jurong Gateway will provide 5.4 million sq ft gross floor area of new office space and 2.7 million sq ft of retail, F&B and entertainment area - more than 2.5 times the current size of Tampines Regional Centre, Minister for National Development Mah Bow Tan announced yesterday.

The time frame for development will be about 10-15 years and sites in the location are likely to be tendered out for private sector development based on market demand and pace of take-up.

The 70-hectare Gateway will also have at least 1,000 new private homes as well as 2,800 hotel rooms - roughly the same quantum as the Singapore River hotel belt.

Meanwhile, the Lakeside precinct around the Jurong Lake has been earmarked as a new waterfront playground spread over 220ha of land and 70ha of water. It is envisaged as a major leisure destination for Singaporeans and tourists, with about four or five proposed new attractions.

Jurong Gateway and Lakeside together make up Jurong Lake District, the blueprints for which were revealed by Urban Redevelopment Authority (URA) yesterday.

The 360ha total potential area for development is close to the size of Marina Bay.

In his speech at URA’s corporate plan seminar, Mr Mah stressed the importance of decentralisation as a key planning strategy to maintain balance between supporting economic growth and a high-quality living environment.

While Marina Bay and the city remain Singapore’s main commercial centre, new commercial hubs like Jurong Gateway will be developed outside the city centre to provide more choices of attractive business locations and bring jobs closer to homes. URA has also earmarked the area around Paya Lebar MRT Station for development into an alternative business hub.

URA said Jurong Gateway will be ideal for company headquarters, business services as well as companies in the science and the research and development (R&D) fields. Such companies will be able to tap a large labour pool from a one million-population catchment in Jurong East and West, Clementi and Bukit Batok, enjoy proximity to a cluster of over 3,000 companies in the International Business Park and Jurong and Tuas industrial estates. Jurong Gateway is also a major transport hub, with Jurong East MRT Station and a bus interchange. The area around the MRT station is designated for development into an integrated commercial and transport hub with white use - allowing office, retail, residential and hotel use. A short distance away, at Jurong Town Hall Road, sites have been designated for high-rise office use.

The tallest buildings in Jurong Gateway will be 35 storeys high but building heights will step down towards Jurong Lake, allowing most developments to have panoramic views of the lake.

A new big-box retail format incorporating consumer electronics, furniture and hypermarket being developed by TT International will add about 34,000 sq m of retail space when completed by end-2009.

Mr Mah also stressed that Singapore’s long-term approach to planning - encompassing the Concept Plan and Master Plan process - is a fundamental part of the republic’s sustainable development effort. He noted that Singapore’s physical resources, especially land, are able to support a long-term population planning parameter of 6.5 million.

The minister also touched on how the influx of foreigners is making some Singaporeans uneasy. ‘They find the competition for jobs and school places tough. They see themselves priced out of the housing of their choice.’

Highlighting the contribution of foreigners to various tiers of the Singapore economy and society, Mr Mah said: ‘We must . . . convince our people that at the end of the day, if we want to have a good life, we must learn to accept the foreigners in our midst.’

Source : Business Times - 5 Apr 2008

URA’s Jurong Gateway plan draws mixed response

2008-04-04T20:41:00.001-07:00

Consultants and developers hail alternative hub, but fear over-supply in medium term

PROPERTY consultants and developers have given a mixed reception to the Urban Redevelopment Authority’s (URA) plan for Jurong Gateway, which will have about 5.4 million sq ft of gross office area over 10-15 years.

While they welcome an alternative commercial hub that will provide lower-cost office space, some are worried about the timing that yesterday’s announcement - made at a point when there is sufficient confirmed mid-term supply - will have on sentiment.

Others are worried the announcement may scare foreign investors from the local office market because of potential over-supply in the not-too-distant future.

First, the positive views.

Jones Lang LaSalle’s Singapore country head Chris Fossick welcomed URA’s plans for the new commercial hub around Jurong East MRT Station, comparing it to Changi Business Park in the east, which has attracted backroom offices of financial institutions.

Both locations are similar - close to transport hubs and a substantial labour pool, Mr Fossick noted. ‘Singapore is in need of such facilities to provide an alternative to more highly-priced real estate in the CBD (central business district) for companies that don’t need to be in the CBD.

‘From a macro perspective, we can be more competitive as a country when it comes to office space. We can go to banks, IT firms or any MNC and say: ‘You have two choices in Singapore: CBD office space or good-quality office space in Jurong or Changi.’ We can say Singapore has office space that is expensive as well as space that’s inexpensive.’

Another advantage of decentralisation is preventing congestion in the CBD from getting worse, Mr Fossick said.

Giving a more cautious view, CB Richard Ellis executive director Moray Armstrong said: ‘The launch of the vision for the area comes at a time when there seems to be ample supply of office space catered for.

‘I wonder how strong interest will be in developing the new office space in Jurong because there is already quite a healthy level of confirmed office supply on the island, the bulk of which is a product of the government’s policy reaction in the past two years of releasing greater volume of land.

‘Office space in the Jurong Gateway location is untested, but if the government is taking a long-term view, it’s not unreasonable to envisage this location emerging as a Tampines equivalent.

‘Nonetheless, the target they have set looks pretty ambitious in terms of the overall quantum of space, even for a 10-15 year time-frame. After all, Tampines has existing and new office developments in the pipeline with a total net lettable area of about two million sq ft, and that would be over a span of 12-13 years.’

City Developments group general manager Chia Ngiang Hong also voiced concern about the timing of the release of office sites at Jurong Gateway.

‘Hopefully, the government will study the market situation carefully before it starts tendering out new office sites,’ he said. ‘Otherwise, it won’t be healthy to cause a massive over-supply in the market again.’

Source : Business Times - 5 Apr 2008

Jurong Lake District: Over 1,000 private homes to be built

2008-04-04T20:38:00.000-07:00

PROPERTY hunters looking to buy a stake in the newly revamped Jurong Lake District will be happy that more than 1,000 private homes will be built there.

But no more new Housing Board flats are planned for Jurong, said National Development Minister Mah Bow Tan yesterday.

This is also partly because the focus is on building up Sengkang and Punggol towns, said Mr Mah.

‘There is sufficient public housing in Jurong so the next phase will be… on private housing,’ he added.

However, if demand is strong for the private homes, more land can be re-allocated for condominiums.

That is why the sites around the MRT stations are mostly white sites, said Mr Mah.

‘But all this ultimately has got to depend on the market and how it responds, whether the emphasis is more on office or housing.’

The Urban Redevelopment Authority said yesterday that the residential buildings at Jurong Gateway are likely to be 35 storeys at most, and building heights will gradually step down towards the lake to enable good views.

Colliers International’s director of research and consultancy, Ms Tay Huey Ying, said it was timely for the Government to make early plans to accommodate and tap on any spillover in demand from the Central Business District.

This could occur from the office, hotel and residential sectors when mega projects, such as the two integrated resorts and Marina Bay Financial Centre, are completed and up and running, she said.

Source : Straits Times - 5 Apr 2008