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Nov 11, 2009

SPH-led venture puts in top bid for Clementi mall

By Joyce Teo

A JOINT venture between Singapore Press Holdings, NTUC Income and NTUC FairPrice has topped the tender for a mall at Clementi Town Centre with a bid of $541.9 million. This is nearly 42 per cent above the se-cond-highest bid of $382 million from a venture between Keppel Land's Alpha Investment Partners and Guthrie. The top bid was submitted through CM Domain, which is 60 per cent owned by SPH's Times Properties, with 20 per cent stakes held by NTUC Income and NTUC FairPrice. Frasers Centrepoint was third, with a bid of $352.1 million, followed by Capita-Mall Trust at $338.8 million and Lend Lease Retail Investments 3 at $303.3 million. Sim Lian Holdings was last with a bid of $170 million, according to the Housing Board yesterday. The 99-year leasehold mall at the junction of Commonwealth Avenue West and Clementi Avenue 3 has direct links to the Clementi MRT station. It is part of a larger development being built by the HDB comprising two 40-storey blocks of flats, a two-storey carpark serving 388 HDB flats, a roof garden and a bus interchange. The Clementi mall will occupy basement one, the third and fourth floors as well as part of the fifth storey. A library will take up 1,975.7 sq m on the fifth floor and there is a carpark at basement two. Levels one and two are for the air-conditioned bus interchange. Total gross floor area is about 25,000 sq m while the net floor area is up to 18,000 sq m. CM Domain will need to fit out the mall as the HDB is building only the shell structure. Property consultants estimate the fit-out cost at $40 million to $50 million. That would put the top bid at around $3,000 psf of retail net floor area. Consultants said this could be a record level as the price of suburban malls has generally not crossed $2,500 psf. Jones Lang LaSalle's head of investments, Ms Stella Hoh, said CM Domain could be looking at an average rent of $16 to $17 psf, assuming a capitalisation rate of 5.5 per cent and a $50 million fit-out cost. Knight Frank's managing director Danny Yeo said it depends on the expected returns. 'If they are looking at a net yield of 4 to 4.5 per cent, the achievable rent is $14 psf. But if they are expecting returns of 5.5 to 6 per cent, they would need to do close to $18 psf.' An SPH spokesman said the company decided to bid for the mall because it is in a good catchment area and there are not many shopping centres nearby. 'Suburban malls are well patronised, with resilient rentals and sustainable income,' he said yesterday. The property is in a high traffic area due to the integrated transport amenities and the business will provide a solid and steady income stream to the joint-venture parties, he added. Colliers International's executive director (investment sales) Ho Eng Joo said students from nearby institutions like the National University of Singapore and Ngee Ann Polytechnic like to gather in the area. joyceteo@...

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Nov 11, 2009

Property cycles hard to predict

But the Government will do its best to avoid boom-bust cycles, says Finance Minister

By Fiona Chan

PROPERTY cycles are hard to predict, but the Government will try to avoid boom-bust cycles, said Finance Minister Tharman Shanmugaratnam yesterday. 'We will keep our eyes on the ball and use all the tools at our disposal, but in a calibrated fashion,' he told about 80 business leaders at a forum to garner feedback for the Economic Strategies Committee. Mr Tharman is heading this committee to look into new ways for Singapore to grow. The Government will probably not use 'macro tools' to manage property cycles, such as changing interest rates or exchange rates, because these rates have many other effects such as on businesses as well, said Mr Tharman in his concluding remarks at the forum. But there are other options. These include tweaking rules on credit, adjusting land supply and - in extreme situations - amending tax policies, he said. Two months ago, the Government introduced measures to help cool the property market, including removing the interest absorption payment scheme and significantly increasing land supply. On Monday, the Monetary Authority of Singapore also highlighted the possibility that additional cooling measures may be needed if there is a renewed surge in property speculation. 'We do want to manage the property cycle as best we can, prevent boom and bust,' said Mr Tharman, adding that this is not easy as it is difficult to anticipate Singapore's property needs four or five years in advance. As for broader economic cycles, Singapore will always be exposed to ups and downs beyond its control, he said. 'As a city, and a global city at that, we will always be subject to global cycles in specific industries as well as the global macro cycle,' he said. The important thing is to achieve good average growth over the cycle, rather than go for a lower growth path to avoid volatility, said Mr Tharman. 'If you try to dampen all volatility, you usually end up with a lower average as well.' The unusually strong growth that Singapore enjoyed in 2006 and 2007 helped pull the average growth across the most recent business cycle up to 5 per cent, he added. Without this, wage growth in particular would have been weak. So Singapore should opt for a path of good growth in incomes, but prepare its businesses and workers well for occasional shocks and respond quickly when they come, said Mr Tharman. Singapore has 'not come out too badly' in the downturn in terms of its ability to buffer companies and employees and to prepare for recovery, he said. But for its next growth phase, the country must undergo a 'step change'. What are needed are higher skills, higher productivity and a higher level of expertise across the board. Singapore could not engage in strategies of the industrial policy type, that try to plan well ahead of the market. But it moves quickly to identify emerging market trends and work with early adopters to develop clusters of real strength, Mr Tharman said. One advantage that Singapore can use is its diversity of both people and companies. This will prove a big boon in an age where the Asian consumer is expected to be a key driver of economic growth, Mr Tharman said. 'In Singapore, you can get a feel of what is happening all around Asia... a sense of what the emerging drivers are.' fiochan@...

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Nov 11, 2009

S'pore household net wealth hits $1 trillion

HOUSEHOLDS have generally weathered the financial crisis well with net wealth rising to an all-time high of $1 trillion as of Sept 30, after slumping to $895 billion in the first quarter this year. The record numbers - released in the Monetary Authority of Singapore's (MAS) annual Financial Stability Review on Monday - go a long way towards explaining why the recession that has just ended seemed less painful than previous downturns. The recovery in the stock and property markets since the first quarter is one reason, but Singaporeans are also richer as they saved, invested and paid down their debt. The global economic recovery has meant a strong rebound in net wealth - assets minus liabilities. Take property assets, for instance. The MAS data showed that real estate holdings have turned around - they were up by an estimated 9 per cent to $537 billion in the three months to Sept 30, from the low of $491 billion in the second quarter. The central bank noted that household assets remain more than six times the value of household liabilities, while aggregate household net wealth is about four times the value of gross domestic product, up from about 3.6 times in the first quarter. Singaporeans refused to splurge on credit, keeping debt at roughly the same level during the economic downturn, the data showed. Total liabilities increased by just 4 per cent year-on-year in the third quarter - much lower than the long- term average growth rate of about 13 per cent, the MAS said. Most of the increase came from mortgages, which account for the bulk of household borrowing. This was mainly due to the increased activity in the property market. 'In short, households have generally weathered the crisis relatively well on the back of their strong balance sheets,' said the MAS.

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Business Times - 11 Nov 2009

Chinese real estate sector surges in Oct

Rise in sales and new construction as investment increases 18.9%

(BEIJING) China's real estate sector powered ahead in October, suggesting that private sector investment is starting to contribute more significantly to an economic recovery led so far by government spending.

Property sales and new construction surged, while investment in real estate rose 18.9 per cent in the first 10 months from a year earlier, picking up from 17.7 per cent in the first nine months, the National Bureau of Statistics reported yesterday.

Calculations show that investment growth in October alone slowed to 28.4 per cent from 37.0 per cent in September, and 34.6 per cent in August.

'Although property investment dipped a bit in October from the previous two months, growth is still very strong and the trend is expected to continue, given the figures for sales and new starts,' said Xing Ziqiang, an economist at China International Capital Corp (CICC) here.

Economists pay attention to the property data because real estate, which is dominated by private firms, accounts for more than 20 per cent of fixed- asset investment, the main engine of China's growth in recent years.

Property sales growth measured by floor space quickened to 48.4 per cent in the first 10 months from 44.8 per cent in the first three quarters.

That translates into an 81.7 per cent surge in October alone, compared with a year earlier, up from 56.3 per cent growth in September, according to CICC.

Floor space started in the year to date rose from year-earlier levels in October for the first time since the beginning of 2009. The year-on-year increase in October was 56 per cent, CICC calculated. That matches September's reading, which was the strongest in at least five years.

'I think sales and new construction starts are more important figures than investment because they are leading indicators,' Mr Xing said.

With the sector showing broad-based strength, property prices in 70 cities rose 3.9 per cent in October from a year earlier, up from 2.8 per cent in the year to September. - Reuters

Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.

Business Times - 11 Nov 2009

Mustafa Warehouse closes doors to shoppers

URA case against company due for mention in court today

THE shutters finally came down at Mustafa Warehouse in Kallang Pudding Road yesterday afternoon after the company was slapped with a writ of summons last Thursday by Urban Redevelopment Authority (URA) for unauthorised use of the warehouse building.

The case against the building's owner, Mohamed Mustafa & Samsuddin Co Pte Ltd, is due to be mentioned in the Subordinate Courts today.

The six-storey building is approved for warehouse use but for the past four weeks or so, a department store has been operating on the first level and a supermarket on level two. Commercial activities like these are not permitted in warehouse developments. The building's upper levels are used as a warehouse.

Yesterday afternoon, around 2pm, customers shopping in the facility were told to leave, after which staff started to close the shutters on the first two levels, BT understands. Customers were told to shop at Mustafa Centre in Little India instead.

Last week, when URA served the writ of summons to Mustafa, a URA spokeswoman said that approval to use the premises as a warehouse was given in 2001. Its owner subsequently submitted an application in 2004 to change the building's use to a wholesale centre for household goods and appliances.

'The application was not approved and URA advised the owner that the proposed wholesale centre use involves sale of products and is considered commercial use, which is not allowed in a warehouse development. URA recently received feedback regarding the unauthorised commercial activities,' URA's spokeswoman said last Thursday.

If found guilty, Mustafa could be fined up to $200,000 for the breach, which is classified as a planning offence under the Planning Act.

Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.

 

 

Business Times - 11 Nov 2009

Interest grows for sustainable buildings: study

Real estate execs ready to pay a premium to retrofit their owned assets

By UMA SHANKARI

CORPORATE real estate executives, whose companies drive demand for office space, are increasingly willing to invest in refurbishing their owned assets to meet sustainability goals, according to a new survey.

The 2009 CoreNet Global and Jones Lang LaSalle sustainability survey found 74 per cent of real estate executives would pay a premium (generally one per cent to 5 per cent) to retrofit owned space for sustainability criteria, up from 53 per cent in 2008.

However, only 37 per cent would consider paying a premium rent (between one per cent and 10 per cent), while another 21 per cent indicated they would only be willing to pay a premium rent if it was offset by lower operating costs.

Some 67 per cent of respondents also said obtaining funds to implement sustainability strategies is a difficult or extremely difficult challenge.

The executives surveyed are responsible for real estate portfolios totalling billions of square feet worldwide.

'These results clearly show that sustainability as an issue is here to stay, but companies are increasingly aware of the commercial realities,' said Chris Wallbank, Jones Lang LaSalle's head of energy and sustainability services for the Asia-Pacific region. 'It is no longer enough to simply be 'green'. Organisations want to see the benefits to the bottom line.'

The focus on cost reduction is seen in the 60 per cent of real estate executives that are adopting workplace strategies to meet sustainability goals while reducing overall occupancy costs - up from 54 per cent in 2008. The executives are continuing to focus on strategies that are easy to implement and provide short-term cost savings, such as energy efficiency programmes and waste recycling.

But making targeted investments in sustainability can be challenging. More than 50 per cent of executives said insufficient industry metrics, difficulty in calculating return on investment (ROI) and lack of tools for collecting necessary performance data are difficult or extremely difficult challenges.

'Companies are looking for help in making targeted sustainability investment decisions and measuring the results in terms of both environmental and financial performance,' Mr Wallbank said. 'Clarification of industry metrics globally, tools that collect data and turn it into information, and clear methodologies for calculating project ROI will be critical to overcoming these challenges.'

The global survey of 231 corporate real estate executives was conducted in September and October 2009.

Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.

Business Times - 11 Nov 2009

SPH-led consortium makes top bid for Clementi mall

With FairPrice and Income onboard, it puts in $541.9m bid

(SINGAPORE) A joint venture involving Singapore Press Holdings (SPH) subsidiary Times Properties, NTUC FairPrice Co-Op and NTUC Income Insurance Co-op placed the top bid of $541.898 million for a mall being developed in Clementi Town Centre by the Housing & Development Board (HDB).

The top bid was 41.9 per cent above the next highest bid of $382 million, made by a joint venture involving Keppel Land's fund management unit Alpha Investment Partners and Guthrie.

HDB is building only the core structure and facade of the mall, which it aims to hand over to the winning bidder in August next year. The new owner will then finish the project internally, with flexibility to plan the theme and layout.

Clementi Mall - the working name for the property - comprises two basement levels and five storeys above ground with a maximum net floor area of 18,000 square metres or 193,750 square feet of retail space.

An air-conditioned bus interchange will be on the first level and the third level will be connected to Clementi MRT Station.

The SPH-led consortium's top bid works out to $2,797 per square foot (psf) based on the maximum allowable retail net floor area (NFA), says Stella Hoh, head of investments at Jones Lang LaSalle, which handled the tender exercise for the mall for HDB.

Including an estimated fitting-out cost of about $50 million, the unit price works out to $3,055 psf of retail NFA, she added.

Knight Frank managing director Danny Yeo, using a lower fit-out expenditure assumption of $40 million, says the top bid works out to about $3,003 psf of retail NFA.

'To achieve a 5.5 per cent to 6 per cent net property yield that most investors would want today for such an asset, an average gross monthly rental of about $18 psf would be required. Right now the average rental at the best suburban malls is about $15-16 psf,' he said.

'If they get their tenant mix right, it would not be a problem to grow the mall's rental level in a few years,' he added.

When contacted, a spokesman for SPH said: 'We intend to optimise the usage efficiency of the mall.'

He added that 'the joint venture parties have evaluated the business case for the project and believe that it is a reasonable bid', citing several factors, including the good catchment area.

Besides its location in Clementi Town, the property is in close proximity to the Holland, Bukit Timah and West Coast areas with key tertiary institutions such as the National University of Singapore, Ngee Ann Polytechnic, Singapore Polytechnic and UniSIM.

'There are not many malls in the area. The property is in a high-traffic area due to integrated transport amenities and the business will provide solid and steady income stream to the JV parties,' he added.

SPH is leading the joint venture with a 60 per cent stake, with FairPrice and Income taking 20 per cent each.

FairPrice will operate a supermarket and Income is also considering taking up some space in Clementi Mall, said SPH's spokesman.

The other bidders at yesterday's tender were Frasers Centrepoint Ltd ($352.1 million), the trustee of CapitaMall Trust, and Australia's Lend Lease group.

Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.

 

Business Times - 11 Nov 2009

OUE reports 21.7% fall in Q3 earnings

By UMA SHANKARI

OVERSEAS Union Enterprise (OUE) reported a 21.7 per cent fall in third-quarter net profit to $7.81 million, from $9.97 million a year ago.

Revenue for the three months ended Sept 30, 2009 fell 7.6 per cent to $33.5 million, from $36.2 million in Q3 2008.

The group, which gets the bulk of its revenue from its hotels, said that the decrease in total revenue was largely due to lower revenue generated by the hospitality division resulting from severe global economic downturn, as well as ongoing refurbishment works at Meritus Mandarin Singapore.

Revenue from the hotels that are owned and managed by the group fell to $32.8 million in Q3 2009, from $35.6 million in Q3 2008. The severe global economic downturn caused revenue per available room (RevPAR) for the hotels in Q3 2009 to fall to $121 from $147 a year ago.

Earnings per share for Q3 2009 fell to four cents from five cents a year ago.

For the nine months ended Sept 30, 2009, OUE posted a net loss of $27.4 million. For the same period last year, the company's net profit was $45.8 million. This was due to a $52.2 million impairment loss on development properties. Revenue for the nine months fell 19 per cent to $94.9 million.

Looking ahead, OUE said that if the economy continues to recover, and with the completion of refurbishment works at Meritus Mandarin Singapore, revenue is expected to increase in the new financial year. It also said that its investment properties Mandarin Gallery and Overseas Union House/Change Alley Aerial Plaza are still undergoing retrofitting and development works respectively. Mandarin Gallery is expected to commence operation and contribute revenue in the new financial year, with current committed leases for about 99 per cent of the 126,000 square feet of retail space. The redevelopment works of Overseas Union House/Change Alley Aerial Plaza are expected to be completed by the second half of next year.

OUE shares last traded at $9.34.

Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.

Business Times - 11 Nov 2009

All tools to avoid property boom, bust

FINANCE Minister Tharman Shanmugaratnam yesterday said the government will use every tool at its disposal 'in a calibrated fashion' to prevent boom and bust in the property market. One day after the Monetary Authority of Singapore served notice of further action to cool the housing market if needed, in the face of growing speculation risks, Mr Tharman spoke about the need to manage the property cycle.

It won't involve macroeconomic levers such as the interest rate or exchange rate, though, as such tools apply across the board to businesses at large, not just the asset markets.

'But we do have other tools like credit rules, land supply decisions and, in the extreme, tax policies, which we will use in a calibrated fashion depending on the circumstance, depending on the stage of the asset market.' He was speaking about managing volatility generally at an Economic Strategies Committee industry forum when he cited the property market. 'We will keep our eyes on the ball and use every tool at our disposal in a calibrated fashion to try to manage . . . as best as we can,' he said.

But it's 'very hard to anticipate four to five years in advance what's going to happen globally, regionally and hence within this global city', he said, recalling how the government did pay heed to market signals of a supply glut in the property sector a few years ago, but found instead, by 2006 and 2007, a severe shortage, especially in the office market.

Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.

Business Times - 10 Nov 2009

Bahrain housing market likely to be static in Q4

(DUBAI) Property prices, rents and transactions in Bahrain's housing market were static in the third quarter, and are likely to remain so for the fourth quarter, CB Richard Ellis said yesterday.

'The end of summer and Ramadan should bring some vibrancy to the market, but it remains to be seen whether Q4 will herald the return of significant levels of energy to the flagging market,' the property services firm said in a report. Property prices across the board have fallen by as much as 15 per cent year-on-year, the firm's senior director Mike Williams told Reuters.

Mortgage rates in the smallest Gulf Arab economy are prohibitive and will stunt the market until liquidity and appetite for mortgage business returns to the banking sector, the report said.

Villa compounds continue to see relatively high occupancy levels and rental rates have stabilised after two of three years of rapid rental rate increases, it said, adding that the significant delivery pipeline of apartments may cause a demand-supply imbalance for some time. 'The return of job creation will be key to filling vacant units,' it said.

In October, Mr Williams told Reuters there will be some 60,000 residential units delivered to the market up to 2013, out of which 38,000 will be government-sponsored low-income housing units.

Meanwhile, the rate of new lettings in the country's office market dropped sharply between the first and third quarters.

'Where previously medium and international sized corporates were seeking space predominantly in Seef District for a variety of reasons, they have been sitting on their hands during the summer months and enquiries have declined significantly.'

Office rates fell by as much as 20 per cent in 2009 with the greatest fall happening during the summer months and Ramadan, it said.

In September Dubai-based research firm Proleads said that Bahrain's total construction sector projects are valued at more than US$36 billion with 148 in construction or bidding and 54 cancelled or on hold. - Reuters

Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.

Business Times - 10 Nov 2009

Fewer US owners of mortgaged homes underwater

(LOS ANGELES) The number of US homeowners who owe more than their properties are worth fell in the third quarter as values stabilised and some homes were lost to foreclosure, Zillow.com said.

About 21 per cent of owners of mortgaged homes were underwater, down from 23 per cent in the second quarter, the Seattle-based property data provider said yesterday in a report.

'The decline in the percentage of homeowners with negative equity is a positive sign, and is directly attributable to the stabilisation of home values from the second quarter to the third,' Zillow chief economist Stan Humphries said in a statement.

'It is also attributable to many homeowners who were previously underwater on their mortgage losing their homes to foreclosure.'

US foreclosure filings climbed to 937,840 in the third quarter, a 23 per cent increase from a year earlier, Irvine, California-based RealtyTrac Inc said on Oct 15. Zillow estimated that the median value of single-family houses, condominiums and cooperative apartments declined 6.9 per cent in the same period.

The rate of decline slowed, as home values dropped 0.4 per cent from the second quarter to a median of US$190,400, Zillow said.

Bank sales of foreclosed properties accounted for 21 per cent of all US home sales in September, Zillow said. Such transactions made up 74 per cent of sales in Merced, California; 69 per cent in Stockton, California; and 68 per cent in the Las Vegas area. About 27 per cent of homes sold nationwide went for less than the sellers originally paid for them, Zillow said.

Rising foreclosures that began with defaults on sub-prime mortgages, a global recession and increasing unemployment have hurt the US housing market. Unemployment surged to a 26-year high of 10.2 per cent last month, the Labor Department said last week. Payrolls fell by 190,000 workers. Housing will hit bottom by March 2010, with lower-priced properties recovering value more quickly than expensive homes, First American CoreLogic said last month. -- Bloomberg

Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.

Business Times - 10 Nov 2009

Wages rise, debts slow and S'poreans get richer

Households have weathered crisis relatively well: MAS

By SIOW LI SEN

(SINGAPORE) Singaporeans are getting richer as household debt has risen slower than wage growth, financial crisis notwithstanding. Add high property prices and the reluctance to spend freely and you have household assets standing at more than six times the household debts.

'Households have on the whole weathered the crisis relatively well, thanks to strong balance sheets,' according to the Monetary Authority of Singapore's (MAS) Financial Stability Review 2009 released yesterday.

'The asset quality of household loans has not deteriorated significantly and so should not affect the stability of the banking system,' it said.

Household net wealth stood at an all time high, an estimated $1,001 billion in Q3 2009, after hitting a trough at $895 billion in Q1 2009. This is also more than double that of $400 billion plus in 1999.

Aggregate household net wealth is at about 4 times of gross domestic product, up from about 3.6 times in Q1 2009.

Still, the MAS said the healthy position is not uniform across all homes.

'Those who were retrenched or highly leveraged would likely have come under more pressure,' it said.

As Singaporeans maintain discipline in taking on consumer debt, assets remain more than 6 times the household liabilities .

Cash and CPF balances alone have exceeded total household liabilities since 2006.

After declining in Q4 2007 and Q1 2009, household holdings of equity and managed funds are estimated to have recovered by about 40 per cent to $150 billion in Q3 2009, in tandem with the rising global equity markets.

Similarly, property holdings have turned around, up by an estimated 9 per cent to $537 billion in Q3 2009 from the low of $491 billion in Q2 2009.

Total liabilities increased moderately by 4.4 per cent year-on-year in Q3 2009, which is much lower than the long-term average growth rate of about 13 per cent. Most of the increase came from housing loans, which account for the bulk of household borrowing. After moderating from around 15 per cent in Q4 2007 to 8.8 per cent in Q4 2008, housing loan growth has seen a recent uptick to 12 per cent in Q3 2009 due to increased activity in the property market.

Other types of household debt such as credit cards, car loans and share financing grew at a sluggish pace.

Share financing loan growth recovered from negative territory in Q2 2009 to 18 per cent in Q3 2009, along with the rebound in the stock markets.

Share financing represents less than one per cent of total household debt currently.

Credit card loan growth slowed from 19.5 per cent in Q3 2008 to 11.4 per cent in Q3 2009 while car loans shrank by 2.2 per cent in Q3 2009 as a result of falling car sales.

Credit card loans comprise a relatively small share of total household debt at about 3 per cent as of Q3 2009.

Household remuneration growth has outpaced the rate of increase in household debt in the last few years and the household debt to remuneration ratio has been falling.

'However, the ratio may rise this year, as the downturn would likely constrain wage growth. As of June 2009, average wages had contracted 2.1 per cent year-on-year, compared to a 3.8 per cent rise in household liabilities over the same period,' the MAS said.

Looking ahead, households may be tempted to take on more leverage in the short term, given strong market sentiment in the domestic equity and property markets and expectations that low interest rates could persist for some time, it said.

'This might expose households to increased risks in light of the still uncertain paths of economic recovery and interest rates. The current healthy balance sheet position suggests that households in general would be well placed to weather these downside risks.'

Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.

 

Business Times - 10 Nov 2009

HLF stirs waters, cuts HDB home loan rates

DBS says it, too, is offering revised low rates; OCBC says it remains competitive

By SIOW LI SEN

(SINGAPORE) Hong Leong Finance (HLF) has slashed its HDB home loan rates in a bid to undercut the competition amid a low interest rate environment, but it seems some banks might have been even quicker on the draw.

Yesterday, HLF said its latest HDB home loan rates are 0.50 per cent lower than its last promotional rates.

It now offers variable rates at 1.33 per cent, 2.13 per cent and 2.83 per cent for the first, second year and third year respectively. The variable rates are based on a board rate which currently stands at 4.25 per cent. Its new two-year fixed-rate package charges 1.63 per cent and 2.63 per cent in the first and second year respectively, totalling 4.26 per cent.

But rival DBS said it too has new lower home loan packages applicable to both HDB and private properties. A DBS spokeswoman said the bank 'just' revised its home loan rates.

DBS's variable package charges the same 1.675 per cent based on three-month Sibor plus one per cent for every year of the loan. The three-month Sibor or Singapore interbank offered rate is 0.675 per cent. Borrowers can also opt for a two-year fixed rate at 1.88 per cent for both years which amounts to 3.76 per cent.

At OCBC, the variable rate for three years is the same 1.66 per cent each year and based on its board rate of 4.5 per cent. Those who want a two-year fixed can pay 1.99 per cent per year.

'OCBC Bank's home loan packages will remain competitive to respond to market conditions,' said Phang Lah Hwa, head of consumer secured lending, OCBC Bank.

HLF, Singapore's largest finance company, said the new rates apply until the end of the year and are for up to 80 per cent financing.

'The revision in rates is to ensure that our package is one of the lowest in the market,' said an HLF spokeswoman.

'We hope that with the new rates, our customers will continue to support us and allow us to capture a bigger slice of the HDB market which is presently very active and healthy,' she said.

HLF said customers who sign on with a minimum loan of $200,000 will also get a choice of KrisFlyer air miles or dining vouchers with five hotels in Singapore.

'There has been an increasing demand for HDB flats and we pride ourselves with moving with the market and the changing needs of our customers,' said Ian Macdonald, HLF president.

'Response to Hong Leong Finance's earlier home loan promotion has been very encouraging and we are confident that the new rates will perform just as well,' he added.

Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.

Business Times - 10 Nov 2009

Beware of low interest rates - they may bubble over

By ROBERT SAMUELSON

WHEN Nouriel Roubini talks, the world listens. Prof Roubini is, of course, the once-obscure New York University economist whose dire warnings about a financial crisis proved depressingly prophetic. Last week, Prof Roubini was shouting. Writing in the Financial Times, he warned that the Federal Reserve and other government central banks are fuelling a massive new asset 'bubble' that - while not in imminent danger of bursting - will someday do so with calamitous consequences.

Here's Prof Roubini's argument. The Fed is holding short-term interest rates near zero. Investors and speculators borrow US dollars cheaply and use them to buy various assets - stocks, bonds, gold, oil, minerals, foreign currencies. Prices rise. Huge profits can be made.

But this can't last, Prof Roubini warns. The Fed will eventually raise interest rates. Or outside events (a confrontation with Iran, fear of a double-dip recession) will change market psychology. Then, investors will rush to lock in profits, and the sell-off will trigger a crash. Stock, bond and commodity prices will plunge. Losses will mount, confidence will fall and the real economy will suffer. 'The Fed and other policymakers seem unaware of the monster bubble they are creating,' he writes.

Haven't we seen this movie before? Well, maybe. Like home values a few years ago, asset prices have risen spectacularly. Since its March 9 low, the US stock market has gained more than 50 per cent. An index of stocks for 22 'emerging market' countries (including Brazil, China and India) has doubled from its recent low. Oil at about US$80 a barrel has increased 150 per cent from its recent low of US$31. Gold is near an all-time high around US$1,090 an ounce. Meanwhile, the US dollar has dropped against many currencies. Half of Prof Roubini's story resonates.

But the other half is less convincing: that prices, driven by cheap loans, have reached speculative levels. Remember that the economy seemed in a free fall early this year. Terrified consumers and cautious companies hoarded cash, cut spending and dumped stocks. Since then, the mood and economic indicators have improved. Higher stock and commodity prices have mostly recovered the big losses of those panicky months.

Today's prices are usually below previous peaks. Oil's peak was nearly US$150 a barrel. Similarly, the S&P 500 stock index, around 1,065, is a third lower than its peak on Oct 9, 2007 (1,565.15), and roughly where it was on Election Day 2008 (1,005.75). By historical price-earnings ratios - the ratio of stock prices to per-share profits - these levels can be justified, if the economic recovery continues. With massive layoffs, business costs have been cut sharply.

Nor is it clear that cheap US dollar loans are promoting speculation. 'In the United States and Europe, banks are reducing lending,' says economist Hung Tran of the Institute of International Finance, a research organisation of financial institutions. 'You see hedge funds taking on less leverage (borrowed money) than in 2007.' What actually happened, he says, is that as investors became less fearful, they moved funds from cash into other markets, pushing up prices. He cites outflows this year from money market mutual funds exceeding US$300 billion.

Indeed, that's what the Fed wants, argues economist Drew Matus of Bank of America. Low interest rates on money market funds and current accounts are 'trying to force you to do something with it (the money)' - either spend it or invest it. Depression prevention means supporting consumption and asset markets.

So, Prof Roubini's new bubble remains unproved. But this doesn't invalidate his warning. We've learned that there's a thin line between promoting economic expansion and fostering bubbles. With hindsight, lax Fed policies contributed to both the 'tech' bubble of the late 1990s and the recent housing bubble, though how much is debatable.

The most worrying signs of speculative excesses, says Mr Tran, involve some Asian and Latin American developing countries. They've received sizable capital inflows (money from abroad). These have boosted local stock markets and reflect disaffection with the US dollar.

Their central banks - imitating the Fed - have also kept local interest rates low, fuelling rapid credit growth. Some of their stock markets have exceeded previous highs. These countries face a dilemma. Raising rates may attract more 'hot' foreign capital; keeping them low may encourage speculative borrowing in local currency.

But the dilemma arises from the Fed's low interest rates and the weak US dollar. The conclusion: How deftly the Fed navigates from its present policy matters for the world as well as the US. If it's too fast, it may kill the economic recovery; if it's too slow, it may spawn bubbles - and kill the recovery. -- The Washington Post Writers Group

Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.

Business Times - 10 Nov 2009

Clementi Mall tender draws top bid of almost $542 million

By KALPANA RASHIWALA

The Housing & Development Board's tender for Clementi Mall has attracted a total of six bids. The top bid by CM Domain Pte Ltd, a unit of Singapore Press Holdings, was for $541.898 million, which works out to $2,800 per square foot based on the net lettable area of 18,000 sq metres or 193,750 sq ft.

The mall is being sold on 99-year leasehold tenure.

HDB is building only the core structure and facade, which it aims to hand over to the eventual buyer around August next year. The new owner will then finish the project internally, with flexibility to plan the theme and layout. The buyer will also have naming rights to the mall.

Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.

Business Times - 10 Nov 2009

JLL expects Asian business to drive growth

(MUMBAI) Property services firm Jones Lang LaSalle (JLL) sees its Asian business driving growth next year as the region powers a global economic recovery, a top official said yesterday.

The company expects Asia to contribute almost a third of revenue in 2010, from a quarter in 2008, on the back of rising demand in China and India, and as key markets such as Hong Kong and Australia start to show recovery.

China and India - the world's two most populous countries - have seen home and office sales reviving in major cities as prices fell as much as a fifth, and lower mortgage rates, after the global financial crisis last year cut off funding and demand.

'It seems Asia is recovering more quickly than the US or Europe and actually will be one of the drivers of the world recovering,' JLL's chief financial officer, Lauralee Martin, told Reuters in an interview.

'It's growing on both revenue and profit basis. It could reach a third of our revenues as we get into next year,' Ms Martin, who is on a short visit to Mumbai, said.

JLL is betting on more transactions as other Asian countries also see capital coming into the market, and believes that its strong position in the property management business gives it the competitive edge.

'In the first nine months, we have grown our property management business by 30 per cent because we have been able to save clients a great deal of money from that service,' Ms Martin said.

'In a slowdown, reducing employees may not be the best thing, but reducing the cost of services is certainly a better option,' she said.

Last month, the Chicago-based company, one of the world's largest real estate services firms, reported that third-quarter income rose a third, but said that revenue fell 12 per cent to US$595 million as the global real estate downturn weighed.

'The US market is not expected to get better until mid-2011. We could see a bottoming out by late 2010. But leasing and project development business will still feel pressure,' Ms Martin said\. \-- Reuters

Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.

Business Times - 10 Nov 2009 More action may be needed if recent property measures inadequate: MAS Risk of speculation escalating as market expects low interest rates to persist By CONRAD TAN (SINGAPORE) Further action to cool the Singapore property market may be needed if recent measures to dampen speculation prove insufficient, the Monetary Authority of Singapore said yesterday. Looking ahead, 'price levels and transaction activity bear close monitoring', MAS said in its yearly Financial Stability Review, published yesterday. 'As Singapore emerges from recession and with the market expecting low interest rates to persist for some time, the risk of a renewed escalation of speculative momentum cannot be discounted.' Despite lingering uncertainties in the economic outlook for Singapore and the rest of the world, 'the domestic property market activity has taken on its own dynamic', MAS said in a special section in the report highlighting what it sees as the key risks to Singapore's financial system. Other downside risks centre on the sustainability of the global economic recovery after governments start to withdraw their fiscal stimulus and tighten monetary policy, MAS said. 'Should growth turn out weaker than expected, property buyers and speculators could face capital losses as the market corrects. Conversely, if the recovery stays on course, interest rates will eventually rise and drive up financing costs with severe implications for those who have overextended themselves,' it said elsewhere in the report, commenting on the recent sharp rise in private home prices. 'While the market rebound may appear to be aligned with improved prospects for the domestic economy, the current low interest rate environment has also played a part by reducing the cost of property financing,' MAS said. 'If unchecked, this could lead to a rising spiral of demand and prices as more and more property buyers and speculators are drawn into the market, and expose the property market to the continuing risks in the global economy.' The steep increase in property prices here in recent months has already prompted the government to act to discourage speculation. In September, the government banned interest-only housing loans and the interest absorption scheme that allows developers to absorb interest payments for apartments that are still being built. It also restarted the confirmed list of the Government Land Sales programme in the first half of next year to meet the strong demand for private homes. Unlike sites listed on the reserve list, confirmed-list land sites are put up for sale at a pre-determined date, without the need for the sale to be triggered by an application from developers. Last Friday, the National Development Ministry said that it would place eight residential sites on the confirmed list for the first six months of next year. That definite increase in residential land for sale is expected to have a dampening effect on overall home prices. 'We would view the comments made by the MAS as more of a pre-emptive signal for now,' said Donald Chua, an equity analyst at CIMB here in a note to clients. 'A low interest rate environment coupled with strong property demand has led to fears of rising speculative activity.' However, since the recent measures to discourage speculation were announced, 'the euphoria on property has clearly cooled down in recent months, which should lead to more normalised property demand', he added. If the latest measures aren't effective in curbing home price increases quickly enough, the government's next step could be to reduce the limit on how much of a property's price may be financed with a bank loan, from 80-90 per cent now, Mr Chua said. Banks' loan exposures to the property sector remain in line with historical trends, MAS said. Its most recent aggregate bank lending data show that half of all Singapore-dollar bank loans at the end of September were to the broad property sector, with business loans to the building and construction sector making up 17.8 per cent of total bank lending, and consumer housing loans contributing another 31.6 per cent. Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.

 

Business Times - 10 Nov 2009

nex mall to have roof garden dog run

By KALPANA RASHIWALA

(SINGAPORE) nex, the mall which is being built next to Serangoon MRT Station, will have a dog run - the first in a shopping centre here.

The 2,000 sq ft run will be on the roof garden at the fourth level. 'We hope that with the introduction of a designated dog area at nex, perhaps we can attract a new group of regular mall visitors who are pet lovers,' says Tong Kok Wing, general manager of Guthrie Consultancy Services, which is providing project consultancy and marketing for nex.

The run has been set aside for dogs to exercise and play in an off-leash environment under the supervision of their owners. 'Under guidelines stipulated by the Agri-Food and Veterinary Authority (AVA), certain breeds of dogs must be muzzled and the same will apply here,' a Guthrie spokeswoman said.

To visit the dog run, dog owners and their pets will have to use designated lifts in the mall or escalators outside. Dogs will not be allowed in other parts of the mall.

A Pet Safari store will be on the same level as the dog park. The store, operated by Pet Lovers Centre - one of Singapore's largest pet food retailers - will occupy more than 5,000 sq ft in a double-storey unit. It will offer pet food, accessories, veterinary services and pets for sale.

So far, more than 70 per cent of retail space at nex has been committed. Anchor tenants include Challenger, rivals Fairprice Xtra and Cold Storage, Courts, Isetan, Shaw Cineplex, Food Republic and Food Junction. The mall is being developed at an estimated cost of $1.3 billion and is slated to be completed by end-2010.

Other places in Singapore where there are dog runs include West Coast Park, Bishan Park and Pasir Ris Farmway.

Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.

 

 

Business Times - 10 Nov 2009

Katong Mall sold for $247.6m

New owners will spend $55m to redevelop the property

By UMA SHANKARI

(SINGAPORE) A consortium of investors - including CapitaLand's former head of retail Pua Seck Guan - has signed a deal to buy Katong Mall from Tuan Sing Holdings for $247.6 million.

The deal marks one of the largest investment transactions in Singapore's property market this year.

Katong Mall was acquired by Tuan Sing in June 2008 through a collective sale deal. The property group paid $219 million for the site then.

The consortium of investors - which comprises no more than six parties and includes corporate investors, institutional investors and Mr Pua - is acquiring Katong Mall via Perennial Katong Retail Trust, a private property trust set up for the purpose of buying the mall.

The transaction is expected to be completed by end-January 2010. The sale was brokered by Landmark Property Advisers.

Katong Mall, located at the junction of East Coast Road and Joo Chiat Road, is a four-storey building with three basement levels and with remaining lease of about 70 years. The new owners will spend $55 million to redevelop the property, which is expected to increase the mall's net lettable area by about 20 per cent, from 172,170 square feet to over 206,000 sq ft.

Works, which are expected to last for 12 to 15 months, will commence sometime next year upon approval from the relevant authorities.

'Katong Mall has immense potential to become a thriving lifestyle-cum-food and beverage hub in the Katong and Marine Parade precincts,' said Mr Pua. 'The mall enjoys an excellent location and is well-supported by large affluent population catchments from the surrounding Marine Parade, Katong and Joo Chiat areas.'

In addition, Katong Mall presents 'significant value creation opportunities' which can be harnessed through good asset planning, appropriate repositioning and optimal tenancy remixing, he added.

There are already new tenants lined up.

The BreadTalk group has expressed keen interest in taking up leasable space at the revamped Katong Mall to house a series of its brands, such as Food Republic, Din Tai Fung, BreadTalk, Toast Box and Ramen Play.

Mr Pua's Perennial Real Estate, a Singapore-registered real estate company, also has a majority stake in the company that will manage the mall.

Tuan Sing said that after taking into account the relevant acquisition cost, the book value of Katong Mall came to $194.8 million as at end-September 2009.

The expected gain from the transaction is estimated to be about $42.7 million, or 3.75 cents per ordinary share.

Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.

 

 

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Nov 10, 2009

Apex court clears air on property deal

Not signing option form may not be enough for pullout if all the terms for deal have been met

By K.C. Vijayan

FAILING to sign the option-to-purchase form may not be enough to let one pull out of a property deal. This is especially so if the buyer's deposit has been banked in and there are e-mail exchanges to show that a deal had been agreed upon, the Court of Appeal has ruled. The case in point - the sale of an apartment in an Upper Serangoon condominium in May 2007. E-mail messages were exchanged indicating that a price of $506,000 had been agreed upon and later, the 1 per cent option fee was paid and banked in. About a week later, the seller tried to back out. His lawyer, Mr Leslie Netto, argued that the seller was obliged to go ahead with the deal only after the seller had signed and issued the option to purchase. But the Appeals Court held that this was a 'mere formality' as all the conditions needed for a binding written contract had already been fulfilled in this case. The buyer's deposit had been banked in and the exchange of e-mail messages between both parties identified them and the property clearly. They showed that the parties had agreed on the price and the terms to close the deal. Legally, all three Ps - parties, property and price - and the T - terms of the option to purchase - had been met and the Appeals Court said this was enough to satisfy the criteria for a binding written contract. In law, such property deals have to be made in writing. The judgment released last week also showed the court was prepared to recognise e-mail messages to transact a property deal. 'The requirement of a signature had also been satisfied on the facts of the present case,' said Justice Andrew Phang, who wrote the apex court's 23-page grounds of judgment. Another reason cited for enforcing the contract, or recognising the deal, in this case was the exchange of money that had taken place. The judgment is a timely one, said lawyers and property dealers, as it makes clear that one party cannot pull out at the last minute should a better offer arise. Signing the option letter is not the point of no return in such deals. Said Drew & Napier's Mr Adrian Tan: 'This is a problem that has surfaced in the last few years ever since the property boom started.' Money has changed hands and then the parties try to get out of the deal by not signing the option forms when they see prices rise. This will not work any more, he said. 'The Court of Appeal has conclusively established the law in this area. All home owners and property agents should take note.' Mr Chris Koh, director of Dennis Wee Properties, said banking in the option fee of $5,060 in this case amounted to acceptance of the deal. His advice: 'If you are not sure of wanting to sell, then don't accept the cheque. You cannot accept the cheque and then say you don't want to sell.' vijayan@... About the case WHEN a couple who had been renting a unit in Rio Vista condominium in Upper Serangoon learnt that a fourth-floor unit was being sold in 2007, they offered to pay $506,000 for it. Mr Chiranjeev Singh and his wife then gave property agent Helene Ong a cheque for 1 per cent of the purchase price, which she banked into seller Joseph Mathew's bank account here, as instructed. Mr Mathew was then working in India. Four key e-mail exchanges ensued - three from Ms Ong to Mr Mathew, and one from him indicating acceptance of the deal. But about a week later, he e-mailed Ms Ong, rejecting the offer and declining to sign the option-to-purchase form she had sent him. Mr Mathew returned here on May 26, 2007, and went into talks with Mr Singh about the deal. The talks failed and lawyer Boo Moh Cheh took the case to court for Mr Singh. High Court Judge Andrew Ang ordered Mr Mathew to sign the option-to-purchase form, failing which the Supreme Court Registrar would exercise its power to sign it on his behalf. Mr Mathew appealed to the Court of Appeal, which dismissed his suit and ordered him to pay costs. His unit, which eventually went at the $506,000 price first agreed upon, was understood to be worth $670,000 some 15 months later.

Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access

 

Business Times - 10 Nov 2009

Australian home loans rise most in 6 mths

This gives central bank scope to raise interest rates for a 3rd time this year

(SYDNEY) Australian home-loan approvals rose by the most in six months, increasing the central bank's scope to raise interest rates for a third time this year.

The number of loans granted to build or buy houses and apartments climbed in September by 5.1 per cent to 65,505 from August, when they fell a revised 1.9 per cent, the statistics bureau said in Sydney yesterday. The median estimate of 17 economists surveyed by Bloomberg was for a 3 per cent gain.

Rising home loans, stoked by grants from Prime Minister Kevin Rudd's government, add to signs of an economic rebound that may prompt governor Glenn Stevens to raise borrowing costs on Dec 1 for a third straight month, according to analysts surveyed by Bloomberg. Rising house prices, which jumped 8.4 per cent in the six months through September, are among reasons the bank raised borrowing costs.

'Stevens has flagged the risk of excesses forming in the housing market' and will be keen to see slower demand in coming months as borrowing costs rise and grants are cut, said Helen Kevans, an economist at JPMorgan Chase & Co in Sydney.

The Australian dollar rose to 92.58 US cents at 3.06 pm in Sydney from 92.21 cents just before the report was released. The two-year government bond yield gained three basis points to 4.68 per cent. A basis point is 0.01 percentage point.

First-home buyers accounted for 26.1 per cent of dwellings financed in September, up from 24.7 per cent in August, the statistics bureau said yesterday.

Treasurer Wayne Swan last year tripled to A$21,000 (S$27,005) a grant to first-time buyers of new homes, and doubled to A$14,000 payments for those purchasing existing dwellings. In May, he extended the increases through to the end of September, when they were partially reduced. The payments will be cut to their original A$7,000 at the end of this year.

The number of finance approvals for the construction of new homes surged 8 per cent in September, taking the gain since August 2008 to 84 per cent.

'A housing construction boom is set to kick in from late 2009 and will be a key growth engine through 2010,' Westpac Banking Corp economists including Matthew Hassan in Sydney said in a note to investors.

Mr Stevens last week became the first central banker in the world to raise borrowing costs twice this year, when he increased the official cash rate target to 3.5 per cent, citing a rebound in consumer confidence and Chinese demand for exports.

Mr Stevens will boost the overnight cash rate target by another quarter percentage point next month to 3.75 per cent, according to 14 of 17 economists surveyed by Bloomberg. That would be the first time in history the central bank has boosted borrowing costs at three successive meetings.

Investors are betting that there is a 68 per cent chance Mr Stevens will raise the rate by a quarter point, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange at 2.18 pm.

Gross domestic product will expand 1.75 per cent this year and 3.25 per cent in 2010, the bank said on Nov 6. Three months ago, it forecast gains of 0.5 per cent and 2.25 per cent respectively.

Jobs advertised in newspapers and on the Internet fell 1.7 per cent in October, according to an Australia & New Zealand Banking Group Ltd report released in Melbourne yesterday.

Speculation that Mr Stevens will continue to raise borrowing costs, as counterparts in the US, Europe and the UK keep their benchmark rates at historic lows, has driven a 32 per cent gain in the Australian currency this year, pushing it towards parity with the US dollar. - Bloomberg

Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.

 

 

Business Times - 10 Nov 2009

Saudi to face 'substantial' housing shortage by 2015

(DUBAI) Saudi Arabia will face a 'substantial' housing shortage by 2015 as a growing population and rising employment fuel demand, Deutsche Bank said.

The kingdom will require an estimated 1.2 million additional homes by 2015, compared with a projected supply of just 900,000, the German bank said in a report yesterday. That amounts to a shortfall of 25 per cent.

'Government initiatives to enhance living standards and improve mortgage access will boost affordability and unlock huge latent demand,' Dubai-based analysts Nabil Ahmed and Athmane Benzerroug wrote. The kingdom's market 'is the strongest in the Gulf' and has remained relatively resilient.

Saudi property prices were down 15 per cent year-on-year as of the third quarter, compared with an average slump of 40 per cent in other Gulf markets, the report showed. - Bloomberg

Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.

Business Times - 10 Nov 2009

Ho Bee, MCL sell 51 units at Parvis

(SINGAPORE) Ho Bee Investment and MCL Land last week sold 51 units at their Parvis condo at Holland Hill at an average price of about $1,480 per square foot (psf).

Unlike the recent trend of smallest units in a project selling out first, what happened at Parvis was quite the reverse, with four-bedroom apartments accounting for the most number of units sold - 19. This was followed by two-bedders (15 units) and three-bedders (14 units).

MCL and Ho Bee even sold three penthouses in response to buyer interest, although these were not part of the initial batch of 85 units they released for the preview.

They are now proceeding to do an official launch of the project at the weekend, when they will release more units in the freehold condo, which has a total of 248 units. The 12-storey project is being built on the former Holland Hill Mansions site.

Ho Bee general manager Chong Hock Chang revealed that ex-owners of Holland Hill Mansions had picked up seven apartments.

Singaporeans bought 39 of the 51 units sold. Permanent residents and foreigners acquired the remaining 12 units; they were mostly Malaysians, with some Indonesians, Mr Chong added.

The three penthouses sold comprise two single-level units of 2,300 square feet each, with three bedrooms and costing about $3.3 million apiece, and a 2,800-sq-ft duplex unit with four bedrooms, priced at about $4.1 million. The duplex was picked up by a foreigner while Singaporeans bought the two single-level penthouses.

Last month, Ho Bee released the freehold Trilight condo on Newton Road. To date, it has sold 61 units in the 30-storey project at an average price of $1,650 psf.

Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.

Business Times - 10 Nov 2009

China to curb use of debt for property soon

(BEIJING) China's central bank and banking regulator may 'soon' issue measures to limit the use of debt in property purchases after asset prices climbed, a Shanghai official said.

Regulators may reduce 'leverage ratios', Fang Xinghai, the director-general of Shanghai's financial services office, said at a forum in Beijing yesterday.

A record US$1.27 trillion of new loans this year and inflows of cash from investors betting that the yuan will appreciate threaten to create stock and property bubbles. China's banking regulator plans to review debt levels at some developers on concern that borrowings are fuelling excessive gains in property prices, a person familiar with the matter said previously.

'Asset prices may continue to climb as foreign capital flows into China betting on the yuan's gain,' said Xing Ziqiang, an economist at China International Capital Corp in Beijing.

A measure of property stocks on the Shanghai Composite Index declined one per cent, the biggest fall among five industry groups.

'Given the rise of asset prices, whether in real estate or the stock market, or some kind of other assets, there is a case for reducing the leverage ratio in these areas, particularly in the real estate area,' Mr Fang said yesterday.

His office is a local regulator and policymaker, underneath the Shanghai government.

While home prices rose at the fastest pace in a year in September and the Shanghai Composite Index of stocks has climbed 73 per cent this year, Mr Fang is 'not concerned' at asset-price levels. Existing rules, such as a 30 per cent down-payment requirement for first mortgages and restrictions on borrowing to buy stocks, limit risks to the financial system, he said.

The China Banking Regulatory Commission said on Oct 28 that it plans to tighten rules on personal loans to prevent them from being used for speculation.

The commission also wants to reduce leverage at developers that bought land at inflated prices and at large state-owned companies that have entered the property market, the person familiar with the matter said, declining to be identified because the plans hadn't been made public.

Excessive borrowing by some developers threatens to cause an increase in delinquent debts should prices collapse, the person said\. \-- Bloomberg

Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.

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Nov 9, 2009
Billionaire eyes islands beyond Singapore
By Amresh Gunasingham
HE ARRIVED in a whirlwind of publicity earlier this year and bought a $15.46 million penthouse at The Sail @ Marina Bay condominium. Now, Indian billionaire Bhupendra Kumar Modi is setting his sights beyond Singapore. He wants to spend US$100 million (S$140 million) to buy beach resorts in popular spots such as Bintan and Batam, and invest in at least four smaller islands which remain largely underdeveloped. The privately owned islands with a combined land area of more than 300ha - or two-thirds the size of Sentosa - are north of Batam. Dr Modi is the flamboyant founder-chairman of conglomerate Spice Group, which has interests ranging from telecommunications to entertainment. Speaking to The Straits Times at his 5,834 sq ft home, the Singapore permanent resident said he expects more than a 100 per cent return on his investments. 'I never realised until I came to this country that these islands were so big and so close,' said Dr Modi, 60, who moved here in May from the United States. He also relocated the global headquarters of Mumbai-based Spice Corp to Singapore, and set aside US$200 million to invest through his office here. Already, well over US$100 million has been sunk into investments, from property and office space to acquiring a 20 per cent stake in online telephony firm MediaRing in August. Now he is looking further afield. He plans to turn popular tourist spots such as the Pura Jaya resort in Batam into attractive havens for the rich and famous from Bollywood. The carrot? Casinos and private villas with pools and spas. He also plans to build more and better houses, schools and hospitals on these islands. Pura Jaya's owner, Indonesian businessman Zulkarnain Khadir, has confirmed that he is looking to sell the resort and is in discussions with Dr Modi as well as some other parties. 'For the last 12 years, these islands have lacked investment. There has been little change,' Dr Modi noted. He is understood to be in discussions with a number of banks as potential partners. He feels developing the nearby islands offers an avenue to overcoming the challenge of land scarcity in Singapore: 'Looking at future development, we cannot continue doing what we have (here) for the last 50 years because it has reached a point of saturation. These islands could be examples of the future, that would also be commercially viable.' Mr Michael Yong, a director of Kosmo Suria - the company that owns the group of islands just off Batam - said it was in early-stage discussions with Dr Modi: 'We have a meeting planned... to take these plans further. Our estimated target to start development is early next year.' Dr Modi has also made his presence felt in other areas. He has pledged one of the largest single donations of $1.3 million to the Lee Kuan Yew School of Public Policy, which will fund scholarships and executive training programmes. This contribution was recognised at the school's annual dinner in September, which was graced by Minister Mentor Lee Kuan Yew. 'I'm not here just to do business. I could do business anywhere. I'm here because I see a long-term future,' Dr Modi said.
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		Dr Modi wants to buy resorts in popular spots like Bintan and Batam and invest in at least four smaller islands. -- PHOTO: BHUPENDRA KUMAR MODI

 

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Nov 10, 2009

Katong Mall changing hands at $248m

It will get $55m revamp to become lifestyle, F&B hub

By Joyce Teo

A FORMER CapitaLand executive has stitched together a $247.55 million deal to snap up Katong Mall. Mr Pua Seck Guan (second picture) set up a private trust called Perennial Katong Retail Trust to buy the mall from Tuan Sing Holdings' Golden Cape Investment. The investors are no more than six parties, including corporate and institutional investors and Mr Pua. The seven-storey centre, in a fairly affluent neighbourhood at the junction of East Coast and Joo Chiat roads, will undergo a $55 million revamp lasting 12 to 15 months. This will transform it into a lifestyle and food and beverage hub, said Mr Pua, who was chief executive of CapitaLand Retail before stepping down a year ago. Tuan Sing bought the mall en bloc for $219 million last July. Mr Pua said this deal started about three weeks ago when 'some one approached me'. 'After pumping in the upgrading cost, the returns can be attractive,' he said, adding that the expected net property yield after completion will be about 6 per cent to 8 per cent. Its gross floor area will be relatively unchanged at 282,000 sq ft after redevelopment works. But its net lettable area will rise from 172,170 sq ft to over 206,000 sq ft, said a statement from Perennial Real Estate. The revamp will add 99 more carpark spaces to make a total of 278. These will be on basements two and three. About 30,000 sq ft of retail space on basement two will then be relocated to more prime areas on the upper floors as well as a newly created fifth floor - now the rooftop. A cinema will occupy the top floor, while anchor tenants will include a food court and gourmet supermarket, said the statement. BreakTalk has expressed interest in leasing space at the mall. Mr Pua is the founder and CEO of Perennial Real Estate but still heads the international operations at Indian real estate giant DLF, which he joined after leaving CapitaLand. Apart from asset management, he is looking to put together a fund at DLF as well a real estate investment trust for the firm's India assets. He said the DLF job 'allows him to be more entrepreneurial'. More plans are in the pipeline for Perennial, formed to engage in real estate activities, including fund and asset management and retail management in Singapore, India and China, he said. The Katong Mall transaction is expected to be completed by the end of January. The mall is likely to close around the middle of next year for renovation works. joyceteo@... An artist's impression of the revamped Katong Mall. The upgrading will last 12 to 15 months. -- PHOTO: PERENNIAL REAL ESTATE   Mr Pua Seck Guan, former CapitaLand executive.

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Nov 9, 2009

New flats for Bukit Merah View residents

300 families can pick Sers replacement flats in nearby Tiong Bahru

By Jennani Durai

FAMILIES in about 300 flats in Bukit Merah View will be offered new homes in nearby Tiong Bahru as their old blocks are slated for redevelopment. The homeowners can choose from 700 units of new flats ranging from studio to 5-roomers in the Boon Tiong Road area that will be built by the Housing Board. The 36-year-old flats in Blocks 110, 111, 113 and 114 will be torn down, to be replaced by 700 units, under the Selective En-bloc Redevelopment Scheme (Sers). News of the move was announced yesterday by the ward's MP, Ms Indranee Rajah, who was making good on her earlier promise to the constituents. She gave the news at Tanjong Pagar GRC's Tree Planting Day, at which Minister Mentor Lee Kuan Yew was the guest of honour. The Bukit Merah move brings to 73 the total number of sites identified for Sers since August 1995. The area's residents had expressed disappointment at being passed over for upgrading when Ms Indranee became MP for Tanglin-Cairnhill in 2001. 'I promised them that I would look into it and since that time I have had an ongoing dialogue with the HDB over the residents' concerns.' She found from her walkabouts and a survey of the residents that most preferred Sers over upgrading. Ms Linda Cheang, 44, who lives on the third floor of Block 114, said: 'We told Ms Indranee twice... that we wished to have the en-bloc scheme. She said some of the other residents wanted upgrading. We said we don't want that as the flats are too old...' Sers involves redeveloping old blocks of flats and rehousing residents in new and better flats nearby. The homeowners will be compensated according to current market value, said Ms Indranee. In turn, they can buy the replacement flats at subsidised prices. Each owner will be informed by the HDB of his compensation amount, she added. Ms Indranee noted that the replacement flats will be at a prime location, near Tiong Bahru Plaza and an MRT station. In addition, some shops and an eating house will be built. The news came as a relief to many residents who had been waiting a long time for improvement work on their blocks. 'When we heard a few years ago the blocks opposite ours were going en-bloc, I felt disappointed as I had almost bought a flat there. Now, I'm glad these flats will finally go en-bloc,' said food-seller K.W. Teo, who lives in Block 110. Ms Cheang agreed: 'I am very happy.' The homeowners may register for their replacement flat in the third quarter of next year, said an HDB statement. The HDB will also hold an exhibition from Nov 12-18 near Block 114 for residents to find out more about Sers. Construction of the replacement flats will begin in early 2011 and is expected to be completed by mid-2014. But Block 116 will not be torn down. The four-storey block was considered for Sers, said the MP. But a study of the area found that it, along with Block 115, which houses the market and hawker centre, formed 'an integral focus point of the community at the neighbourhood centre'. 'If Block 116 was...torn down, it would be like ripping away part of the heart of the community,' said Ms Indranee. But she assured the residents that she will seek HDB's approval for the block to be considered for the Lift Upgrading Programme. 'Again, this promise is not made lightly. I am very conscious that there are many elderly people in Block 116 who would benefit greatly from having lifts. So I will do my best for Block 116. 'You will not be left out.' jennanid@... Additional reporting by Rachel Chang

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Nov 10, 2009

'Youth Triangle' malls not so hip among teens

Plaza Singapura and VivoCity displace Heeren and Cathay Cineleisure as the places to be seen

By Eisen Teo

ORCHARD Road's long-time 'Youth Triangle' - The Heeren, Cathay Cineleisure Orchard and *Scape Youth Park - is fading. Mall rats are leaving the area for the new top three - Plaza Singapura, VivoCity and Suntec City - with Ion Orchard and Orchard Central, which opened in July, taking fourth and fifth places, respectively. A survey of about 1,000 youths has found these malls to be their favourites in terms of affordable shops and entertainment outlets. They are also places to see and be seen. The Straits Times poll, executed by online entertainment company Sulake, involved 974 respondents, mostly between the ages of 12 and 18. They completed the survey at youth networking site Habbo Hotel, where each was required to log in with unique identities to prevent duplication. Eight in 10 respondents went to malls at least once a week; one in 10 did so daily. Many praised Plaza Singapura for its 'one-stop convenience' - it has a cinema complex, restaurants and value-for-money apparel. For mall addict Richie Liaw, 15, a Secondary 3 student from Punggol Secondary, Plaza Singapura is a second home. He studies at its ground-floor Starbucks almost every day - though books do not always take priority. 'I like watching girls go by, and there are many pretty ones around this part of town,' he said. Runner-up VivoCity, which opened in 2006, attracts a following for its vast sky garden and reasonably priced outlets. The malls' representatives say youth- oriented events are key to keeping them interested. Plaza Singapura's marketing communications team stages concerts, among other things, said mall manager CapitaLand Retail. VivoCity even uses social networking site Facebook to publicise events, said its general manager Chang Yeng Cheong. Still, new malls Ion Orchard and Orchard Central are gaining ground for three reasons: location, location, location. Muhammad Ruslan, 14, dubs Ion Orchard 'the hottest new place in town'. Other than the new shops, the Sec 2 student from Manjusri Secondary likes that the mall is linked to the Orchard MRT station. He and his peers are bored by Cineleisure and The Heeren, he said. In the poll, Cathay Cineleisure came in 10th, while The Heeren failed to make the cut at all. Once dubbed the 'Youth Triangle' with *Scape Youth Park in a 2003 Sunday Times report, these two malls must reinvent themselves to recapture audiences. Cathay Organisation, which owns Cineleisure, is lining up a series of youth-oriented activities for its 75th anniversary next year, while The Heeren, which will emerge from its renovation later this month, aims to appeal to young adults in their 20s and early 30s. Capturing the youth market is key for mall operators because they have a more recession-proof disposable income, and may also grow up to be part of a loyal fan base, said Singapore Retailers Association president Jannie Tay. Mall operators face tough competition, she said. 'Retail space in Orchard Road alone has doubled in the last 12 months... More malls will open in the next 12, together with the integrated resorts. So is there excessive retail space? Yes.' Reaching out to youths will be key to keeping up business. Otherwise, as Ion Orchard regular Lynn Yang, 16, from Chung Cheng High (Yishun), said: 'I might as well just stay home and shop online.' eisenteo@... Additional reporting by Eunice Ng

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Nov 10, 2009

MAS flags two risks to property buyers

Danger of loss in a weak economy or interest rate burden in a buoyant one

By Gabriel Chen

HOME buyers are being advised to pause a moment before leaping into the purchase of that dream apartment. The Monetary Authority of Singapore (MAS) yesterday cited two scenarios in which the resurgent private property sector may not stay quite so rosy. The central bank also flagged possible fresh measures to cool the sector, on top of last week's government announcement that plenty of mass market condominium sites will be released next year. The first scenario MAS outlined is that if economic growth proves to be weaker than expected, property buyers - including speculators - could suffer losses as the market corrects and home prices fall. Second, even if the economic recovery stays on course, property buyers could suffer a hit of a different kind in the longer term, the central bank warned. In a rebounding economy, it is more likely that interest rates - now at rock bottom levels - will eventually rise, and this will drive up monthly instalments on home loans that are not fixed. This could have severe implications for buyers who have over-extended themselves with big home loans, believing interest rates will always stay low. The MAS issued the words of caution in its annual Financial Stability Review released yesterday, even as it acknowledged a strong rebound of the economy. It said households here have weathered the crisis relatively well, owing to their sound money management. Banks are not weighed down by risky loans. However, MAS said that with the market expecting interest rates to stay low for some time, more buyers, including speculators, may be drawn to the market, driving up demand and prices. Given the risks, MAS said prices and sales needed to be monitored closely. It outlined earlier government market cooling steps, adding: 'The nature and timing of further measures, if deemed necessary, would have to be balanced against the still-uncertain path of economic recovery.' According to Urban Redevelopment Authority data, private home prices surged 15.8 per cent in the third quarter - the sharpest quarterly rise in 28 years. Volume has been strong with 12,969 homes sold in the first nine months of the year. Experts expect full-year sales to exceed the 2007 new home sales record of 14,811 units. The MAS warning comes as a growing number of Asian nations, such as Hong Kong and South Korea, step up efforts to rein in property buying, for fear of a home prices bubble. In September, Singapore, for its part, announced a slew of measures to cool the market, including the withdrawal of the interest absorption scheme that allowed home buyers to defer payments. Details of mass market land sites to be offered to developers in the first half of next year were unveiled last week. These steps have had some effect already - with the number of home sales falling in the last two months. A key indicator of speculative activity, sub-sales - when uncompleted homes are bought and resold before being built - are also down. MAS pointed to encouraging signs on banks' property exposure. More than 70 per cent of housing loans are for owner-occupied residential properties, which suggests a lower risk profile, it said. One trend MAS noted: the share of total loans where the value of the outstanding loan is above 80 per cent of the property's value has surged from 8 per cent last December to 17 per cent in September this year. However, dreaded negative equity, where a home loan exceeds the value of the home, remains very low at less than 3 per cent of loans. In any case, banks' checks include the person's debt-servicing ability. Said Standard Chartered Singapore's general manager for retail banking products, Mr Dennis Khoo: 'You should not have more than $1 for every $2 that you earn going into overall debt servicing.' gabrielc@...

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Nov 8, 2009

YOUR LETTERS HDB: Divorcee should be able to get loan

We refer to the letter from Ms Norliah Abu, 'Divorced and can't afford a flat' (Oct11). We have looked into Ms Norliah's circumstances. She has enjoyed housing subsidies in the form of a Central Provident Fund (CPF) housing grant and HDB concessionary loan. She transferred her executive flat to her ex-husband in December 2007. Based on her CPF savings and her monthly salary, she should be able to obtain a bank loan to purchase a flat. Ms Norliah and her two children are currently living with her brother. She has applied for a four-room flat in Jurong West under our Sale of Balance Flats exercise. The average purchase price of a four-room flat in Jurong West is about $260,500. Based on the Housing Board's preliminary assessment, she will need a bank loan of about $140,000 for the intended flat purchase. She can pay her monthly instalments solely using her monthly CPF contributions. She can also consider buying a more affordable flat to minimise her loan. Ms Norliah is not eligible to apply for a subsidised rental flat, as it is meant for the needy who have no other housing options. If she is unable to obtain a bank loan, she may contact the HDB on 6490-3827 for assistance. Tay Koon Quie Deputy Director (Sales) Housing & Development Board

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