Business Times - 13 Nov 2009 CDL sells $1b worth of homes in Q3 It posts 28.4% jump in profit, sells North Bridge Commercial Complex By KALPANA RASHIWALA CITY Developments Ltd (CDL) sold 854 private homes for a total of about $1 billion in the third quarter of this year. As a result, its sales tally for the first nine months of 2009 came to 1,391 units worth about $1.72 billion, a big jump from the 360 units of about $340 million in the same period last year. Related link: Click here for CDL's financial results Residential projects that contributed to the group's latest Q3 sales include Volari in the Balmoral area, Hundred Trees in West Coast, Livia in Pasir Ris and The Arte at Thomson. The property and hotels group posted a net profit of $193.6 million for the third quarter ended Sept 30, 2009, an increase of 28.4 per cent from $150.8 million a year ago. The improvement was due chiefly to its property development business. There was no one-off divestment gain, unlike for Q3 2008 when the sale of Commerce Point was booked. For the first nine months, CDL's net earnings slipped 13.3 per cent to $416.75 million. CDL said that it has agreed this month to sell all its 60 strata subdivided units in the 999-year-leasehold North Bridge Commercial Complex for $46 million. The sale is slated to be completed in March 2010 and profits will be booked in Q1 2010. On the launch front this quarter, CDL is planning to offer a new 177-unit condo on Thomson Road next to The Arte. The project will comprise one to four-bedroom units, and they will be relatively small at affordable prices, the group said. CDL generated $852.4 million cash flow from operating activities in the first nine months, a 175 per cent jump from $309.8 million previously. Gearing ratio improved to 42 per cent at end-September, from 48 per cent at end-December last year. CDL pointed out that this was not due to any fund-raising exercise such as rights issues or equity funding. Interest cover also improved to 13 times, compared to 11.7 times previously. Group revenue increased 36.7 per cent to $940.9 million for Q3, and 5.5 per cent to $2.35 billion for the first nine months. At Sentosa Cove, the group expects to complete construction of a yet-to-be-launched 228-unit condo on the Quayside Isle Collection plot towards the end of next year. The hotel and commercial components of the site could be completed in second-half 2012. CDL, which is also a major office landlord, said that the group achieved occupancy of 90.3 per cent for its office portfolio as at end-Q3. It said that the office market is seeing an increase in leasing activity. 'Occupiers are, in the meantime, still looking for lower-cost and better-value options, but there are selective companies seeking to expand.' Looking ahead, CDL said that home buying interest in the next few months is expected to remain relatively stable, though not at the same pace as that experienced in Q2 and Q3 this year. This is on the back of the Monetary Authority of Singapore's recent statement that it may introduce further measures to cool the property market should there be risk of renewed escalation of speculative momentum. 'Compared to a year ago, positive property market sentiments are showing signs of recovery,' CDL said. 'For the group's property development segment, it has managed to lock in its profits from presales activities. It also has a wide spectrum of land bank catering to the different needs of the market segment and will be able to extract the appropriate land parcels, at the right time, to seize the opportunities as the market improves.' The counter ended 12 cents lower at $10.08 yesterday. Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.

 

Business Times - 13 Nov 2009

Ho Bee posts record 9-month profit

By KALPANA RASHIWALA

HO BEE Investment posted a strong increase in third-quarter net earnings, lifting its top and bottom lines for the first nine months past the record showing for full year 2007.

Net profit for the quarter ended Sept 30 rose to $99.3 million from $18.7 million for Q3 last year. Revenue swelled from $52.5 million to $209.2 million, largely as a result of a big chunk of income booked for the Orange Grove Residences project, which was completed in July.

Ho Bee's first nine months net profit jumped from $81.8 million to $293.9 million. Revenue quadrupled from $263.5 million to $1.06 billion. The numbers surpass the full-year 2007 net earnings of about $272 million and revenue of $596 million.

The strong report-card for the first nine months was achieved despite the fact that Ho Bee booked some $110 million of writedowns in Q2 this year for fair-value changes of investment and development properties.

'The group's revenue and earnings for the next quarter will remain positive,' said Ho Bee chairman and CEO Chua Thian Poh.

Besides Orange Grove Residences, other projects that contributed to the group's performance in the Jan to Sept period include Vertis in the Amber Road area, Quinterra at Holland Road, and The Coast condo and Paradise Island villas at Sentosa Cove. Ho Bee sold the last of 29 villas at Paradise Island in August for $22 million. All five projects received Temporary Occupation Permit in the first nine months of this year. That's when developers book a chunk of earnings from units sold in residential property developments.

Collections from buyers from these projects boosted Ho Bee's coffers. It enjoyed a whopping $896 million net cashflow from operating activities in the first nine months of 2009. This enabled it to repay nearly $700 million of borrowings this year, trimming group borrowings from about $1.15 billion at end-2008 to $457 million at end-Sept 2009. Cash and cash equivalents stood at $161.6 million at end-Sept 2009, up from $45.1 million at end-2008. Net gearing fell to a low of 0.26 times at end-Sept 2009 from 1.26 times at end-2008.

Ho Bee's net asset value per share appreciated from $1.20 at end-2008 to $1.56 at end-Sept 2009. On the stockmarket yesterday, the counter ended three cents higher at $1.40.

Ho Bee has released two projects in the current quarter - Trilight at Newton Road and Parvis at Holland Hill. The latter is a joint project with MCL Land. So far, 61 Trilight units have been sold since its launch in October and 55 units sold at Parvis, which was released this month.

Next year, Ho Bee is expected to launch a 151-unit condo project at Sentosa Cove named Seascape. The group has another project - a 304-unit condo - in the upscale waterfront housing area which it's developing on the Pinnacle Collection site. This could possibly be released late next year. Ho Bee is developing both projects jointly with Malaysia's IOI group.

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

 

 

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Nov 12, 2009

Kwek launches 'cool' Studio M hotel brand

He aims for 50 worldwide in five years, with first at Robertson Quay area

By Joyce Teo

PROPERTY tycoon Kwek Leng Beng launched an 'utterly cool' hotel brand boasting a Singapore label yesterday. He aims to have at least 50 outlets across the world in five years. The Studio M in Singapore brand is being unleashed through the Millennium & Copthorne Hotels (M&C) chain with the first to open at 3, Nanson Road in the Robertson Quay area around April next year. Singapore could eventually have three to five Studio Ms, which Mr Kwek describes as a 'cross-breed between a boutique hotel and the normal type of hotels'. The brand will cater to mostly savvy business and leisure travellers but not tour groups, said Mr Kwek, who is executive chairman of Hong Leong Group, the parent of M&C. Studio M outlets have been earmarked for the Middle East, India, China, Vietnam and possibly Britain - through management contracts and ownership. The debut hotel at Nanson Road will cost $120 million and will be built on a site Hong Leong bought in late 2006. It paid $45.8 million, or $518 per sq ft of potential gross floor area, in the tender. The hotel will have 365 rooms with interiors and open-air tropical decks designed by Italian architect Piero Lissoni. 'It is chic, stylish, and you don't have to pay a bomb for it,' said Mr Kwek. 'It is like a five-star hotel, but you pay four-star rates.' Rates have not been finalised, but a room will likely cost $230 to $250 a night, he said. Mr Kwek described the Studio M brand as 'utterly cool' and a '21st century new generation type of hotel' that will boast the best technology and pack efficiency into mostly standard rooms of 270 sq ft. He hatched the idea of creating a new hotel brand about four years ago, and said the brand will fill a gap in the market here. There is increasing demand from business travellers who want a distinctive and unique experience from their hotel in addition to functional services such as wireless connectivity, he said. Room rates here have fallen this year, and while the hotel market is not as good as in pre-crisis days, Mr Kwek said it is set to improve. 'It is my belief that the IRs (integrated resorts) will bring different types of customers here,' he said, adding that a second Studio M could be built within the next 12 months. A likely venue is the sleepy Orchard Hotel Shopping Arcade. Mr Kwek said they are studying the possibility of converting it into a Studio M. He also believes the central business district and the Bukit Timah area could support Studio M outlets. And as if Studio M is not enough, Mr Kwek wants to create another hotel chain as 'the world is running out of brands'. Creating another brand will allow M&C to leverage on its vast experience in running hotels across the world. joyceteo@...

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Nov 12, 2009

Five lawyers sued over sale of house

A PRIVATE investigator is suing five lawyers for professional negligence over the sale of his house in 2002. Mr Simon Suppiah Sunmugam, 62, alleged that they had mistakenly paid property agency ERA $28,000 as a commission. He said in his affidavit that he found the buyer of the property. The agency, therefore, did not deserve any payment. The lawyers he is suing are Ms Amarjit Kour, Mr Gregory Tang Wee Thiang, Ms Belinda Ang Choo Poh and Mr Peter Cuthbert Low of the now-defunct firm Peter Low Tang & Belinda Ang. The firm represented his ex-wife Nee Shyam Huey in their May 1996 divorce. The fifth lawyer he is suing is Mr Andrew John Hanam, who acted for him in the divorce. The defence of the four lawyers is that they were hired by Madam Nee and not by Mr Suppiah, and thus owed him no professional obligation. Mr Hanam is denying responsibility on the grounds that the sale of the Suppiahs' matrimonial home after the divorce was arranged by the other lawyers, so Mr Suppiah should refer to them to recover his losses. Court documents showed that when Mr Suppiah defaulted in the divorce settlement, Madam Nee obtained a court order to sell the matrimonial home in Punggol. She found a buyer for $1.6 million but Mr Suppiah objected because the price was too low. He then found a neighbour who was willing to pay $1.75 million. He was expecting his share of the sales proceeds to reach $240,000, but received only $212,000 in July 2002. When he discovered that a commission of $28,000 had been paid to the housing agent, he instructed Mr Hanam to write to the other lawyers to withhold payment. But it was too late. At the opening of the civil suit yesterday, Mr Suppiah took the stand to tell his lawyer Alain A. Johns that despite the sale-and-purchase agreement, which did not authorise payment of the housing agent's commission, the five lawyers failed to protect his interest. The hearing will continue next year. KHUSHWANT SINGH

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Nov 12, 2009

Resort-style design for waterfront flats

Punggol housing project to feature flats with roof gardens and sky terraces

By Jessica Cheam

SINGAPORE'S first waterfront public housing project in Punggol will offer 1,200 flats featuring sky terraces, roof gardens and panoramic views of the Punggol Waterway. The Housing Board (HDB) yesterday unveiled the winning design for the first batch of flats that will line the 4.2km waterway. They will be launched for sale by the middle of next year. The 4.9ha project's unique design will feature blocks of flats that will 'step down' towards the water like terraces, and have solar panels on their rooftops to supply power to common areas. National Development Minister Mah Bow Tan said the winning design 'offers a new lifestyle option for Punggol residents'. 'Its distinctive sky terrace concept will create quality public spaces along the waterway for the community, keeping the kampung spirit alive,' said Mr Mah, who announced the winning team behind the design at the HDB's annual awards held at HDB Hub yesterday. International architectural firm Group8asia and local firm Aedas clinched the top prize for their refreshing, resort-style design, which was inspired by Asia's rice fields and dense rainforests, said Group8asia's principal architect, Mr Manuel Der Hagopian. 'Singapore has a close relationship with water and we wanted to design something that reflected that,' said Mr Hagopian, who is Swiss and has 10 years of industry experience. The project's design enables a high percentage of flats to have views of the waterway, and allows for many green, open spaces such as open courtyards and sky gardens - all leading to the water. Mr Hagopian incorporated high Swiss standards of sustainability in the project, maximising natural light and ventilation. The project will aim to achieve the highest green building award, he said. The naming of the winning design brings to a close the Punggol Waterfront Housing Design Competition that the HDB launched in December last year. The two-stage design competition, which attracted 108 entries with a good mix of local and foreign firms, had a theme of Green Living By The Waters. Surbana International Consultants, B4FS Arquitectos and RSP Architects received merit awards for their designs. HDB deputy director (physical planning) Chong Fook Loong said the board wanted to seek innovative ideas on how to get the best value out of the waterway. The new housing project and the upcoming Punggol Waterway and Promenade are part of the 'Punggol 21-plus' vision unveiled by Prime Minister Lee Hsien Loong in his National Day Rally speech in 2007. By 2011, there will be 23,000 completed homes in Punggol, said HDB. The Government aims to build an extra 21,000 homes along the waterway - 60 per cent HDB flats and 40 per cent private ones. HDB hopes to offer the first batch of waterfront flats for sale next year, and residents are expected to get their flats by 2014 or 2015. Mr Mah also presented 12 awards to seven winners in the categories of construction safety, quality and design. He recognised the contribution by industry partners towards Singapore's successful public housing programme. 'But, success brings with it a new set of challenges, one of which is meeting the rising expectations of Singaporeans for quality public housing,' he said. This is why HDB and its partners should continue to keep abreast of technological improvements and innovation to make HDB flats and estates even better, said Mr Mah. Among the winners were China Construction and Surbana International, which won multiple awards. jcheam@... International architectural firm Group8asia and local firm Aedas' winning design for the waterfront flats is inspired by Asia's rice fields and dense rainforests. -- PHOTO: HDB

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Business Times - 12 Nov 2009

COMMENTARY
High luxury-home prices are good

Policymakers can focus on alleviating life's anxieties such as providing low-cost quality education, healthcare coverage

By LESLIE YEE

I WORK in the real estate sector in Hong Kong but do not cover the residential property market. Nevertheless, like many residents of the Special Administrative Region, I have been fascinated by recent market developments. Over the past few months, prices have been rising, China buyers have been increasingly active, developers have been launching units and analysts have been talking about the lack of supply. Debate raged over the sustainability of price rises with the argument centring on lingering economic weakness versus abundant liquidity coupled with early signs of economic improvement.

News then broke in late October of Henderson Land's sale of a duplex at 39 Conduit Road for HK$439 million (S$78.54 million) or a world record HK$71,280 per square foot. What has since ensued is heated discussion over whether dreams of home ownership for the middle class in Hong Kong have been shattered in part due to rich China buyers driving up prices. Calls are being made for the government to tame the raging animal spirits in the Hong Kong residential market.

The themes playing out in the Hong Kong market are to some extent applicable to Singapore, although the Singapore private residential market rally this time round has been mass-market-led while that in Hong Kong is driven by the high end. Still, with Singapore's imminent opening of the integrated resorts, there could be a new spring in step for high-end properties.

In Hong Kong, questions being discussed include: Are foreigners pricing out locals? Do sky high prices for luxury units matter? What can and should government do to control property prices? What help if any should government render middle-class locals in owning their homes? Are the controversies in the property market a reflection of economic growth in recent years benefiting high-income earners disproportionately while the rest lag behind?

Invariably, there will be some degree of envy when wealthy foreigners come to any city and lord it over the locals. Such a scenario emerges in many a successful city, with rich Russians and Arabs in London, rich China nationals in Hong Kong and rich Indonesians in Singapore. However, should one follow the head rather than the heart, it is not just the Hong Kong property tycoons who ought to celebrate the sale of a luxury unit for HK$71,280 psf but everyone.

Wealthy people have a choice of where to invest their money. Hong Kong people should be proud that there are a fair number of rich people confident enough in Hong Kong's prospects to pay princely sums for property in the territory. Indeed, having millions poured into residential property helps generate real-estate-related jobs plus spending by the dwellers of luxury properties. Real estate investment may not generate the same amount of economic spin-offs as investment into manufacturing but they still bring economic benefits.

Singapore and Hong Kong share many similarities, key of which is that both cities, in my view, have a bright future catering to a rapidly growing Asia as hubs of finance, trade, transport, tourism, and various other services. Economic success of both cities does depend on keeping an open door to foreigners and this includes being broadly welcoming to participation by foreigners in the property market. Hong Kong has an important strategic fight on its hands of being competitively positioned as Shanghai and Beijing make strides up the league of global cities. The people of Hong Kong should be more concerned with the city's ability to thrive in an ever-changing global landscape than the state of the property market. Of course, should Hong Kong continue to grow as a key business hub, expect more reports of developers selling luxury units for mind-boggling sums.

Shelter is a basic need of man and owning a home is a key purchase decision for many people. Defining the type of housing that the middle class should be able to afford is, however, tricky. I believe that all policymakers can largely do is to ensure that there is adequate land supply such that there is a range of property types at different price points available. Just as with any consumer product, we should rely on developers to offer choice to meet a variety of needs.

It is not surprising that developments in the residential property market generate strong emotions. Very high prices at luxury projects are not mere aberrations and high prices at the high end can lead the rest of the market up. Nonetheless, the high end typically forms a small part of the wider market and purchasers at the high end tend to be financially strong, Thus, it would be wrong to see high luxury-unit prices as indicative of a property bubble, which is what policymakers rightly fret about. Instead, what policymakers could do is to be more effective in winning hearts and minds - that high prices at the high end are generally a good thing.

More critically, what policymakers in successful Asian cities can focus on is to put any discussion of residential real estate in a wider context. While anxieties of the middle class with regards to home ownership may be difficult to assuage, the state can focus on doing more in other areas to alleviate life's anxieties such as providing low-cost quality education, healthcare coverage and help with retirement savings. Let the pursuit of making a city a great place to work, live and play go together with ensuring that a range of needs of local residents are well taken care of. While not everyone can live in a prime neighbourhood, everyone can perhaps get reasonably good health care and education.

The writer is a Hong Kong-based real estate executive with extensive experience in the Singapore property market

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

Business Times - 12 Nov 2009

group8asia-Aedas design for Punggol homes

By UMA SHANKARI

THE design for the first public housing project along the upcoming Punggol waterway has been chosen.

International architectural firm group8asia has emerged as winner of the Housing & Development Board's Punggol Waterfront housing design competition. Group8asia teamed up with local firm Aedas to come up with the winning design.

The development, which will be launched in mid-2010, will have about 1,200 mostly four-bedroom apartments and will offer residents an eco-friendly housing experience, HDB said.

National Development Minister Mah Bow Tan announced the winner at an HDB awards ceremony yesterday.

The design will set the benchmark for other developments along the 4.2km waterway. Mr Mah said: 'I am glad to note that the private sector has responded enthusiastically to the challenge of coming up with truly innovative design proposals for this highly anticipated housing project.'

More than 100 firms took part in the contest, half of them foreign firms from as far as Spain, the Netherlands, Japan and Hong Kong.

The government's plans call for about 21,000 homes to be built along the Punggol waterway - comprising 60 per cent public housing and 40 per cent private housing. The waterway is slated to be completed by end-2010.

The winning design will take shape on the first residential plot to be developed along the waterway.

HDB said that the design by group8asia and Aedas stood out from the rest for its sky terrace concepts, with spaces for roof gardens. Other winning attributes include the resort-like design of the development, the 'functional and workable layout' of the site, and the refreshing housing forms that could be replicated along the waterway.

Chong Fook Loong, HDB's deputy director for physical planning, said that homes in the development will be kept affordable. In the same vein, Mr Mah said during the awards ceremony that HDB must be mindful to be cost-effective when designing and building its flats.

The ceremony recognised seven winners with a total of 12 awards in the categories of construction safety, quality and design. Two companies, China Construction and Surbana International, won multiple awards. The other five winners were Thong Huat Brothers, Kian Hiap Construction, Kienta Engineering Construction, Sim Lian Construction and United Premas.

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

 

 

Business Times - 12 Nov 2009

COMMENTARY
Don't give up confirmed list card again

Maintaining land supply will help alleviate volatilities in property prices and rents when cycles change suddenly

By KALPANA RASHIWALA

LAST week, the Ministry of National Development (MND) revealed a slate of eight residential sites that it would sell on the confirmed list starting January 2010. This came after a break of about a year on the sale of such sites.

Should confirmed list land sales have been suspended for such a long period? When markets suddenly pick up and land prices shoot up - as they have this year - it translates to less affordable homes in the mass-market segment.

For the Government Land Sales Programme to be effective, both the confirmed and reserve lists need to operate side by side. By restricting state land sales to the reserve list system - where sites are triggered for launch only upon successful application by developers - the state may effectively be giving all the cards to developers, who have their own self-interest at heart, first and foremost.

For instance, it would not be in a major office landlord's interest to make an application seeking the release of an office site from the reserve list if it is trying to fill a major office development and hopes that office rents will increase. However, if there is suddenly a pick-up in office demand - for example, if major financial institutions and funds resume their strategy of expanding in Asia and setting up hubs in Singapore - office rents could suddenly spike. Having sales of sites on the confirmed list would help to mitigate this.

Mass-market condo sites

Another drawback of selling land only through the reserve list has emerged of late, with prices of mass-market condo sites soaring at state tenders.

In October last year, MND suspended confirmed list land sales. That made sense at the time, during the dark days of the global financial crash. However, it continued the suspension for the first-half 2009 Government Land Sales programme and later, for the H2 2009 programme, even though developers' home sales had shown clear signs of revival by the time the H2 2009 slate was announced in early June.

After several months of strong home sales, especially in the mass-market segment, developers found that they had started to run out of entry-level private residential land. However, it was only in July that they began triggering residential sites for release through the reserve list. To date, six sites have been released, of which tenders for five have closed and been awarded - amid rising land prices.

Many of the sites are well located - near MRT stations, or near reservoirs. These are naturally the type of sites that developers would want released in the reserve list during a mass-market housing boom. However, such prime sites, because they are worth more, also lead to rising land values when there is a shortage of such plots in developers' landbanks. A rapid hike in land prices is not compatible with the national goal of keeping mass-market private home prices affordable.

Had the confirmed list not been suspended for the current half, the government could have used it to introduce some less-choice sites further away from MRT stations and not so near the city, just as it has now done for the H1 2010 confirmed list.

One can't blame developers for not wanting land released too early in the cycle from the reserve list. Frankly, it's not in their interest. Their motivation is to increase the value of their landbanks and existing properties; and having less land supply is generally better than having more supply.

There are also other factors at play. Developers don't have the best information - such as the size of new investments flowing into Singapore in the near future, how many permanent residents and new citizens Singapore will take in each year, and how much monies high net worth foreigners are parking in Singapore. The government has a much better idea.

Always maintaining at least a minimum supply in the confirmed list - in both good times and bad - will help alleviate the volatilities in land values, property prices and rents that come when cycles change suddenly, as they have in the mass-market private housing sector this year.

Booms and busts

While the government has, in the past, suspended the confirmed list midstream of its half-yearly programme when the market turns south, it has never restarted the confirmed list midstream when things suddenly picked up. Instead, it has waited for the prevailing half-year period to end before restarting the confirmed list. The argument for this would be that the authorities want to play by the rules and give more notice to market participants.

However, the substantial time-lag in resuming the confirmed list exaggerates the booms and busts in the property market.

That is why both lists need to operate side by side.

The government does not sell confirmed list sites if bids come in too low. Its usual policy is to award sites only if the top bids are at least 85 per cent of the Chief Valuer's assessed market value. This reserve-price formula - if rigorously applied - acts as a safety mechanism that would create a price floor for state land sites so that land prices don't crash and further erode market confidence in a downturn.

As the Singapore property market matures, it will be able to absorb news of confirmed list sites attracting no bids or low bids - and the sites subsequently not being sold by government. Over time, they will come to be seen as part of natural market cyclical fluctuations. The government should hold some of the cards by maintaining a confirmed list throughout instead of leaving everything in the hands of developers.

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

Business Times - 12 Nov 2009

All Reits must hold AGMs from next year

MAS mandate seen boosting corporate governance, options for fund raising

By LYNETTE KHOO

WITH effect from Jan 1 next year, all real estate investment trusts (Reits) are required to hold annual general meetings (AGMs).

This mandate from the Monetary Authority of Singapore is seen as boosting corporate governance and giving more flexibility to Reits in their fund-raisings.

Under the revised rules announced yesterday, Reits will be required to hold an AGM once every calendar year and not more than 15 months from the last preceding AGM. This means that by the end of next year, all Reits would have held an AGM.

In line with SGX's rule on the timing of AGMs for other listed issuers, Reits will have to hold their AGMs within four months from their financial year end.

MAS said it has considered the merits of this requirement, which 'will enhance corporate governance for Reits by providing an important channel for communication between Reit managers and unitholders, allowing Reit managers to be more accountable to unitholders'.

AGMs will also provide a regular opportunity for Reit managers to seek general mandates from unitholders for the issuance of new units, giving greater flexibility for equity raising.

The past year has seen Reit managers putting up urgent extraordinary general meetings (EGMs) notices to obtain shareholders' approval for fund-raising exercises to refinance their debts.

With the exception of Ascendas Reit (A-Reit), which has been holding AGMs for the past three fiscal years, other Reits have not held an AGM though they may have other regular communication touch-points.

But some are now looking forward to holding their first AGM.

'AGMs will promote the exchange of ideas between the company and unitholders, which will ultimately contribute towards the long term growth of the organisation,' said Yong Yean Chau, chief executive of Parkway Trust Management, the manager of Parkway Life Reit.

'We are looking forward to holding our first AGM next year.'

Simon Ho, deputy CEO of CapitaMall Trust Management, noted that the AGM requirement will further enhance the transparency of the Reits industry and offer another platform for CapitaMall Trust to engage its investors.

Added Yeo See Kiat, CEO of Suntec Reit's manager ARA Trust Management (Suntec) Ltd: 'The AGMs will allow the Reit managers to clarify questions from unitholders, facilitate better understanding of the Reit's performance and enable the unitholders to know the Reit managers better.'

The cost of holding an AGM does not seem to bother some Reit players.

A spokeswoman from A-Reit noted that the cost is affordable and worthwhile.

A general mandate for the issue of new units passed at these AGMs has allowed A-Reit to make two cash calls this year swiftly and price the units at a smaller discount because of the shorter exposure period.

'Our latest private placement in August was done above net asset value (NAV),' she said.

'I believe we are the only Reit that has issued units above NAV this year.'

Singapore Reits are regulated under the Collective Investment Scheme (CIS). MAS said it made revisions to CIS after taking in feedback from public consultation in May and discussions with Reit players.

Under the latest revisions, MAS also scrapped the requirement for Reit managers seeking authorisation for a new Reit to submit information in a prescribed form since Reit managers are now subject to the capital markets services licensing regime.

The Securities and Futures Act was amended on Aug 1, 2008, to regulate Reit managers through the licensing regime.

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

Business Times - 12 Nov 2009

Mitre site sold to Heeton group for about $121m

Price works out to almost $1,100 psf ppr for freehold residential plot

By KALPANA RASHIWALA

A CONSORTIUM led by Heeton Holdings is understood to have signed a deal to buy the freehold Mitre Hotel site at Killiney Road for about $121-122 million. The price works out to almost $1,100 per sq ft of potential gross floor area including an estimated development charge (DC) of $770,000.

Jones Lang LaSalle is understood to have brokered the sale following a tender exercise that closed in September.

The 39,972 sq ft site is zoned for residential use with a 2.8 plot ratio - the ratio of maximum potential gross floor area to land area - under Master Plan 2008. There is a 10-storey height limit. The plot can be developed into a new project with about 110 units of an average size of 1,000 sq ft.

Analysts estimate that based on the unit land price of almost $1,100 psf per plot ratio (psf ppr), Heeton's breakeven cost for a new apartment development could be about $1,600 psf.

The Mitre Hotel, which opened in 1948, stopped letting rooms when it lost its licence in 2002, according to earlier media reports.

The property - which is owned mostly by members of the Chiam family - was ordered to be put up for sale last year by the Court of Appeal, ending a 12-year legal tussle over its sale.

Market watchers said the last time the property was in the market was in August 2007 when it had a price tag of about $200 million or close to $1,800 psf ppr including an estimated $700,000 DC at the time.

Analysts also observe that the latest price of almost $1,100 psf ppr achieved for the property is a slight improvement on the $1,022 psf ppr (including DC) that Hoi Hup paid for the Killiney Apartments plot nearby in April 2007. Hoi Hup is now redeveloping that site into the Residences @ Killiney.

Heeton yesterday reported a 143 per cent year- on-year jump in net earnings for the nine months ended Sept 30, 2009 to $10.5 million.

The company is seeking shareholders' approval for the disposal of five wet-market properties in Singapore to supermarket chain Sheng Siong.

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

 

 

Business Times - 12 Nov 2009

M&C to open Studio M hotel

$120m project will open at Robertson Quay in second quarter of 2010

By NISHA RAMCHANDANI

MILLENNIUM & Copthorne Hotels (M&C) has added a new brand to its portfolio, Studio M, with the first hotel slated to open in Singapore in the second quarter of 2010.

Located at 3 Nanson Road in the Robertson Quay area, the 365-room Studio M hotel will fuse style and functionality by offering integrated technology and wireless connectivity, as well as other features such as an open-air tropical deck.

The project will cost $120 million, of which the land cost was $53 million. Construction is under way.

'The concept of smart business travel is evolving rapidly. There is increasing demand from this largely untapped market segment that craves a distinctive experience, even as they demand functional services like wireless connectivity. Studio M aims to fill this gap,' said M&C chairman Kwek Leng Beng. M&C is a subsidiary of City Developments Ltd.

And when Studio M is launched next year, Mr Kwek - who is also executive chairman of M&C's parent company Hong Leong Group - reckoned that it will benefit from the two integrated resorts.

'When they open, they will bring in new types of customers. You're not taking away existing customers,' he said.

The next stop for the Studio M brand is likely to be the Middle East. M&C is also looking at China, India and Vietnam. 'We plan to take this new brand global,' said Mr Kwek. 'The question is always which will give me more stabilised earnings?'

M&C's financial results for the nine months ended Sept 30 showed that revenue per available room (RevPAR) for its Singapore hotels fell 35.5 per cent year on year to £pounds;57.60 (S$133.32), on the back of a 9.2 percentage point drop in occupancy to 74.8 per cent. Room rates for 9M 2009 were 27.6 per cent lower at £pounds;77.

However, the decline in RevPAR has started to slow, as seen from a 31.2 per cent drop in Q3 2009, versus 44.5 per cent in Q2. Occupancy increased 0.7 percentage point for Q3. But room rates are still under pressure, declining 31.7 per cent in Q3.

'As occupancy demands start to increase, this decline in rate will start to be addressed,' M&C said in its interim statement.

Listed in London, M&C has more than 120 hotels worldwide under several brands.

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

Business Times - 12 Nov 2009

Hersing Q3 profit soars on ERA's strong sales

By UMA SHANKARI

PROPERTY firm ERA Real Estate saw its Q3 profit jump more than five-fold year-on-year as it sold more homes.

Hersing Corporation, its listed parent company, said yesterday in its Q3 financial statement that ERA's after-tax profit for the three months ended Sept 30 climbed to $3.7 million, from $651,000 in 2008. Revenue rose 58 per cent to $57.1 million from $36 million.

'Not only have (home) prices increased, but the volume of transactions has also increased a lot,' said Hersing president Jack Chua.

The strong showing of its property division pushed Hersing's Q3 net profit up 315 per cent to $4.4 million, from $1.1 million in Q3 2008. Revenue rose 49 per cent to $67.2 million, from $45 million in 2008. Revenue was also boosted as Hersing's two other business divisions, StorHub Self Storage and its Western Union money transfer business, also posted better year-on-year results.

ERA marketed a slew of private home launches in the first nine months of the year, including Caspian, Double Bay Residences, The Gale and The Interlace. The company's data shows that of the 12,828 new private homes sold in the first three quarters of 2009, ERA's share came to 2,494, or about 19 per cent.

Mr Chua said that ERA has been working to increase its market share for sales of new private homes as the margins are better. 'New (private) homes contribute a bugger margin for the company than resale flats,' he said.

The firm is now best known for its HDB resale business. In the first nine months of 2009, ERA's market share of the HDB resale market came to 41 per cent.

Mr Chua also said that he expects ERA to be appointed as the marketing agent for more private property launches in 2010.

'The government is releasing more land for buildings more homes, so we will have more market opportunities for ERA,' he said, referring to the decision to restart the confirmed list of the Government Land Sales programme in the first half of next year to meet the strong demand for private homes.

ERA has already been appointed to market several private residential developments that could be launched in Q1 2010.

For the nine months ended Sept 30, ERA saw after tax profit climb 181 per cent to $5.8 million, while revenue rose 19 per cent to $116.1 million.

For Hersing, net profit for the first three quarters rose 116 per cent to $8 million, while revenue climbed 18 per cent to $144.8 million.

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

Business Times - 12 Nov 2009

Yanlord Q3 net profit jumps 10-fold

By LYNETTE KHOO

YANLORD Land Group's net profit for the third quarter ended Sept 30 jumped 10-fold year on year to $91.1 million from $8.8 million.

The surge in earnings attributable to equity-holders came on the back of a spectacular rise in residential sales.

Revenue leapt seven-fold to $583.4 million from $83.5 million a year ago as the gross floor area (GFA) that the group delivered was 770 per cent higher than year-ago period.

A major revenue growth driver was the high profit-margin project at Yanlord Riverside City (Phase 2 and 3) in Shanghai, which accounted for 58.2 per cent of the gross revenue from property sales in the third quarter. Average selling price (ASP) per sq m, however, was little changed from the third quarter last year.

For the first nine months this year, Yanlord's revenue surged 133 per cent from a year ago to $1.39 billion, supported by a rise in GFA delivered and higher ASP per sq m achieved as a result of the change in product mix. This fuelled a 142 per cent rise in net profit attributable to equity-holders for the first nine months to $207 million.

'The board of directors is confident of the group's performance relative to the industry trend for the next reporting period and the next 12 months based on the number of units pre-sold to-date, expected delivery schedules and on-schedule construction works in progress,' Yanlord said in its financial results.

Based on existing sales contracts of pre-sold units, the total pre-contracted sales of $987.5 million as at Sept 30 will be progressively recognised as revenue in the subsequent quarters. As at Sept 30, the group has received advances for pre-sold properties - recorded as 'other payables' in its financial statement - amounting to about $778.3 million. Yanlord said it will continue to tap the recovery of China's real estate industry with new launches in the fourth quarter. It has scheduled to start construction works on a number of key projects.

The group is also expanding its land bank. In September, it acquired four prime residential sites with a total planned GFA of about 162,074 sq m in Waigaoqiao District in Pudong for 2.6 billion yuan (S$528 million). A month later, it signed a pact with the Tangshan Nanhu Eco-City Administrative Committee to jointly explore high-end residential development in Nanhu Eco-City in Tangshan, Hebei.

'We firmly believe that these strategic initiatives, together with Yanlord's reputation in building high-quality residential developments, will contribute positively to our business performance,' said Zhong Sheng Jian, Yanlord's chairman and chief executive officer.

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

Business Times - 12 Nov 2009

High-spec space losing favour due to low office rents

Some firms have gone back to leasing commercial space

By EMILYN YAP

HIGH-spec industrial space has lost favour with tenants in the past few months. As office rents plunged, some companies have gone back to leasing commercial space, says Colliers International.

The move has, in turn, driven down rents for high-spec space. According to the property consultancy, the average monthly gross rent of high-spec space fell 14.1 per cent to $2.93 per square foot at end-September from $3.41 psf at end-March.

The lower rents reflect stiff competition for tenants, Colliers said, adding that some companies had taken advantage of the sharp drop in office rents to relocate to office premises.

This marks a reversal of the trend that started in 2007. As office rents soared on the back of a booming economy, more firms moved away from the central business district to cheaper high-spec industrial space.

But office rents have plummeted amid the economic slowdown. CB Richard Ellis said in September that monthly prime office rents averaged $7.50 psf in the third quarter, dropping 12.8 per cent from the previous quarter. They have fallen 53.4 per cent from their peak in Q3 last year.

Colliers said that on top of shrinking demand, a large supply of high-spec space is expected to appear next year, which has also contributed to falling rents.

In contrast, rents for some factories and warehouses have been relatively stable. Colliers said that from end-March to end-September, the average monthly gross rent of single-user factories in central Singapore stayed firm at $1.30 psf, while that of warehouses in eastern Singapore held up at $1.20 psf.

And on a positive note, Colliers said that there has been a noticeable pick-up in sales of industrial space. These involved mainly private investors, owner-occupiers and domestic companies.

While industrial space markets across the Asia-Pacific appear to be bottoming out, Colliers remains cautious in its outlook. It believes that these markets could stay subdued in the next 12 months, given that the global economy is still recovering and excess manufacturing capacity still exists.

Colliers research and advisory director Tay Huey Ying expects rents and capital values of factories and warehouses in Singapore to rise by up to 5 per cent in the next 12 months 'on the back of the expected improvement in the economy and the manufacturing sector, as well as more optimistic business sentiment'.

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

Business Times - 12 Nov 2009

Stronger action seen to deflate property bubbles

(MUMBAI/HONG KONG) Asia's policymakers are sticking with surgical steps to contain asset price inflation, but may soon have to turn to much more aggressive action if property bubbles keep inflating.

Authorities in Hong Kong, India, Singapore, South Korea and Taiwan in the last several weeks have either increased restrictions on property loans or issued warnings that tighter controls may be needed to contain a boom driven by a mixture of rock-bottom financing rates, rising wealth, government incentives and outright speculation.

Australia's central bank is trying to get ahead of the game. Hot housing markets may push the Reserve Bank of Australia to raise its policy rate in December for the third consecutive month, the first time that has happened in about 20 years.

'At the moment it's a fairly softly, softly approach to things but I guess if this continues and liquidity continues to be ample and continues to push up asset markets, and that's certainly our view, then the moves will become presumably more and more aggressive,' said Robert Prior-Wandesforde, senior Asia economist with HSBC in Singapore.

The more aggressive tactics could include increasing taxes on purchases of second homes, capping mortgage limits or even threats of higher interest rates.

The latter apparently worked for the Bank of Korea to cool its property boom. Like Hong Kong, India and China, South Korean authorities tinkered with mortgage rules, by raising the minimum standard for mortgage debt to income and cutting the maximum ratio of mortgage loans-to-property value.

Yet the central bank also used overt warnings - early on - that higher interest rates could be used to cap property prices. The BOK has not yet raised rates, but its all-in approach has resulted in mortgage lending slowing for a third straight month in October.

Asset price inflation will become increasingly a sore point for China's policymakers.

Bank of America-Merrill Lynch economists believe that China is going to take a cautious approach by maintaining stimulative policies for first-time home buyers, but tighten up rules for those purchasing a second home by increasing down payment requirements and adding to charges.

With real estate investment making up 10 per cent of GDP, the government will not want to deflate overall prices too quickly. The stakes, though, are high.

'There is a big chance this asset price inflation will become a bubble,' Mingchun Sun, chief China economist and head of China equity research with Nomura, said. 'If the government can control the amount of leverage in the purchase of assets, then the damage can be controlled at least.'

One irony of the last year is that the global credit crisis has resulted in a Chinese credit boom, as the government encouraged lending to support the economy. Banks in China are expected to lend 10 trillion yuan (S$2 trillion) this year.

Mr Sun expects mainland banks to lend another 10 trillion in both 2010 and 2011, which would double loans outstanding. And since 70 per cent of credit growth usually ends up in household financial assets, how these households spend and invest this wealth will be key for asset price inflation for years to come.

He is hopeful that the government can control bubble pressures by allowing development on more state-owned property. His top stock picks include China Resources Land and KWG Property Holding Ltd because they own big shares of land in the west, where many Beijing-led projects have yet to start.

A Reuters poll showed analysts expect monetary tightening to cool some of Asia's property markets next year. From now until the end of 2010, analysts expect residential property prices in Hong Kong to rise 8.8 per cent, and by only 2.5 per cent by the end of 2011.

Similarly in Singapore, house prices are seen up 7.5 per cent between now and the end of next year and then flat by the end of 2011. Interest rates in Hong Kong and Singapore generally track US funding costs, which are expected to begin rising in the latter part of next year.

The last time that the average policy rate in emerging Asia hit the end of an easing cycle was the second quarter 2004.

Five years later and housing prices are up single digits compared with the prior year.

Legg Mason fund managers have gone from bullish to wary on Hong Kong property stocks in the last three months.

With luxury apartment prices rocketing 40 per cent this year in Hong Kong, the US fund is neutral on the industry but remains bullish on mainland Chinese real estate\. \-- Reuters

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

 

 

Business Times - 12 Nov 2009

ING raises UK bubble fears

No underlying fundamentals for sector's performance

(LONDON) ING Real Estate has raised concerns that a recent rise in UK commercial property prices could lead to a bubble, possibly causing values to fall again by end-2010, one of its senior executives said on Tuesday.

'The size of that downturn will depend on the actual rate of the capital appreciation that we see now . . . if it's too big, you could create a bubble,' Kevin Aitchison, CEO of ING Real Estate Investment Management UK told Reuters in an interview.

The view echoed other major property investors who warned this month that Britain's commercial property market recovery could be short-lived, if prices rise too quickly without growth in the economy and rental rates.

UK values rose 1.1 per cent in September, as they started to recover from a two-year downturn that saw valuations plunge 45 per cent, the benchmark Investment Property Databank (IPD) index showed last month.

ING Real Estate, one of the world's largest property investors with a portfolio of 100 billion euros (S$208 billion), estimates actual UK market prices to have risen up to 23 per cent so far this year, however, due to huge investor demand.

'At the moment, investor demand is huge but because the occupier side continues to deteriorate, the underlying fundamentals for property performance actually aren't there,' Mr Aitchison said on the sidelines of an ING Real Estate seminar.

He remains bullish about the long-term prospects for UK commercial property and sees the next three to five years as a positive time for UK assets as the occupier market recovers and rents start rising in 2011.

The company still has equity of between £200 million (S$462.9 million) and £300 million available for UK real estate, but is in no hurry to invest the money right now, due to continued risks in the market, Mr Aitchison said.

'We are treading with caution. We will certainly try to invest that amount of money but it has got to be the right stock,' he said, adding that weak occupier demand also makes this a bad time to invest in the development of new projects.

ING prefers UK real estate sectors such as retail properties like shopping centres and retail warehouses, and multi-tenanted industrial estates, in particular focusing on assets on long leases.

It is focused mainly on raising a UK property fund in partnership with private equity firm Hamilton Bradshaw, and does not have imminent new fund launches in the UK, Mr Aitchison said.

'We're always conscious of the fact that we still have cash for existing clients, and we need to make sure that we're not raising money for the sake of it,' he said.

Asked about the impact of an imminent split of ING Real Estate's parent, the Dutch bancassurer ING Group, Mr Aitchison said that it 'will be business as usual'.

ING Group is selling its worldwide insurance operations over the next four years as part of a restructuring ordered by the European Commission.

'Even if we were real estate on its own, or part of insurance - real estate is one of the biggest managers in the world, insurance is fifth or sixth biggest in the world - so we will remain part of a substantial business,' Mr Aitchison said. -- Reuters

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

Battle of the 'flations

05:55 AM Nov 10, 2009

by William Pesek

IT'S A, well, golden opportunity.

Renowned commodities bull Jim Rogers thinks gold will double to at least US$2,000 an ounce. Economist Nouriel Roubini, branded Dr Doom for his accurate prediction of the scale of the financial crisis, says that's "utter nonsense".

As these well-known market personalities duke it out, they're doing us a favour by highlighting a critical debate: Which is the bigger threat - inflation or deflation?

Inflation, though not to the extent many fear. Saying this opens me up to a rebuke from the National Inflation Association. It chided Mr Roubini last week for arguing there's no inflation to drive gold that high. The group said he "doesn't understand inflation and deflation".

Then again, who really does these days? If you're looking at economics through traditional lenses, very little makes sense. Many concepts that seemed like rock-hard truths two years ago are looking shaky.

Just ask Mr John Reed, who helped engineer the merger that created Citigroup.

Mr Reed last week apologised for his role in building a firm that had taken US$45 billion ($62.5 billion) in direct aid, and said banks that big should be split up. Turns out, the 1999 repeal of the Depression-era Glass-Steagall Act separating consumer banking from those involved in capital markets was a terrible idea after all.

Up has become down, and down has become up. Amid such disorientation, the risk is policy-makers will apply old ideas and relationships to new challenges. One such error would be prematurely taking away the stimulus that's only now stabilising growth.

MONEY ALMOST FREE

Only a fool would dismiss inflation risks at a time when the US Federal Reserve, Bank of Japan and Bank of England are holding short-term rates near zero and the European Central Bank isn't far behind.

But central banks are starting to unwind emergency measures introduced to stave off disaster, and that's appropriate. The risk is that policy-makers go overboard looking for exit strategies. That, in a nutshell, is Mr Roubini's shtick and it's hard to refute his views. Yes, inflation must be contained, but so must the forces of deflation in the short run.

To me, Mr Roubini's worries are more persuasive than Mr Rogers' bet on gold. That also goes for Mr Roubini's view that bubbles pervade rallies in emerging-markets. They do.

GOLD on the up

As 2010 approaches, there are widespread expectations that gold will continue rising. India's recent purchase of US$6.7 billion of gold focused attention on the trend.

Yet the global economy is turning Japanese more than those fixated on inflation may realise. In a world awash in liquidity traps, price pressures aren't the usual threat.

That's not to say inflation won't perk up, particularly in emerging markets. The Fed's ultra-low rates are likely to result in inflation in China, Indonesia and Thailand before they do in the US. Bank lending is locked in neutral, at best, even though monetary-base growth in the US has increased exponentially over the past year. Oddly, the main beneficiary of the Fed's liquidity is emerging-market stocks.

At the same time, highly indebted US households will be spending even less now that unemployment is above 10 per cent. Weekend news reports about the jobless rate climbing to a 26-year high were a huge consumption killer.

TOO BIG TO FAIL

Couple that with Washington's embrace of the too-big-to-fail doctrine. Fannie Mae, for example, is looking for another public bailout - US$15 billion this time. Executives at Citigroup, American International Group and Goldman Sachs all know the government won't let them go the way of Lehman Brothers.

That encourages reckless decisions and will slow the process of clearing imbalances in the commercial real-estate market and other sectors. All this suggests that Japan's experience these past 20 years is more relevant to the US than many admit. Japan is still grappling with deflation.

The key difference is the concentration of financial distress. In Japan, bad debt was concentrated in the corporate sector; in the US it's in households. The US may be sowing the seeds of yet another bad-loan crisis by expanding home ownership anew. How encouraging those who may be better off renting to buy homes in a weak economy is good policy is beyond me. It's all a bit too Japan-like for comfort.

The trick for policy-makers is to take some of the froth out of asset prices without going too far, too quickly, and ushering in global deflation.

The writer is a Bloomberg News columnist. The opinions expressed are his own.

Copyright 2009 MediaCorp Pte Ltd | All Rights Reserved

 

 

A HOME TO CALL YOUR OWN

Let owners mortgage their HDB flats for private loans

05:55 AM Nov 09, 2009

by Conrad Raj editor-at-large conrad@...

THE Housing and Development Board (HDB) has received numerous awards and kudos over the nearly 50 years of its existence, including the 2008 United Nations Public Service Award for providing affordable homes to the vast majority of Singaporeans.

For the most part, the commendations are deserved. More than 85 per cent of Singaporeans now live in an HDB flat with 95 per cent of them considered home-owners, according to HDB chairman James Koh Cher Siang. This must be the highest ratio of home-owners of any country in the world.

But while you can rent out your flat under certain conditions, and even do a lease buyback to unlock value if you are an elderly, you cannot mortgage your apartment for a loan even if the property is fully paid up for.

Why not? I could not get a proper answer from a phone call to the HDB.

So I went to its website where it said: "HDB flats can only be mortgaged to banks or financial institutions to finance the purchase of the flat itself. You are not allowed to use your HDB flat, which has been fully paid for, as collateral to banks to raise credit facilities for private reasons. This is to avoid exposing flat owners like yourself to the risk of losing your flat should you be unable to repay the bank loan."

This begs the question: Why this difference between an HDB flat, which in effect comes with a 99-year lease, and any other leasehold property?

Perhaps HDB's reasoning was valid and even necessary during those days, now long past, when most buyers were less sophisticated and less knowledgeable in the ways of modern finance. But people these days are more sophisticated.

And in any case, some HDB flat-owners already make themselves vulnerable to banking foreclosure rules when they take out a home loan from a financial institution. In other words, they are already exposed to the risk of losing their flat - allowing them to take out a mortgage loan does not add to that risk.

So why not let the flat owner have a shot at putting his asset to better use? Furthermore, shouldn't the financial institution be the best judge as to whether one's flat is good enough collateral for a loan?

Then there are those residents eligible for lease buyback - applicable to the elderly in three-room and smaller flats, who under the scheme would have the tail-end of their lease bought up by the HDB and given a monthly payment through an annuity for life. Why not offer them the alternative of using the flat to get a loan?

Over the last few years, the HDB has been easing its rules, especially on selling and tenanting out its flats. For instance, since 2003, anyone wishing to sell his flat bought with bank loans and without a Central Provident Fund housing grant, has been able to do so after living in it for a year, compared with two-and-a-half years previously.

The same time-lock applies to those who bought resale flats without housing grants, and who choose to refinance their mortgages with a bank loan.

You can also sublet your entire flat after living in it for five years in the case of a subsidised unit, and only three years if you did not use an HDB subsidy.

Yet, one cannot use the flat to get a private loan. And we are not talking small beer here. These days some HDB flats - especially those near a Mass Rapid Transit line - can cost almost as much as a private apartment.

Singaporeans these days are financially more sophisticated, and the HDB's rules ought to change with them. It's time the board eases its restrictions on using housing board flats as loan collateral, and let HDB dwellers really feel that they own their homes.

Copyright 2009 MediaCorp Pte Ltd | All Rights Reserved

 

 

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Nov 11, 2009

Some warehouse sales may be OK

Holding occasional sales to clear stock may be allowed, says URA

By Jessica Lim & Leow Si Wan

BARELY a week after it told retailer Mustafa to stop sales at its warehouse, the Urban Redevelopment Authority (URA) has signalled that it will adopt a more flexible stance on such events. The authority maintained yesterday that such events are illegal, but added that it might allow them in certain cases, such as when sales are conducted occasionally to clear stock. It said it would look at the circumstances of each case before deciding whether to take action. URA did not give specifics but said that among the factors it would consider are whether a warehouse sale would give rise to problems such as traffic congestion and illegal parking. Last Wednesday, the URA served a writ of summons on Mustafa, ordering it to stop running sales out of its warehouse in Kallang Pudding Road. Mustafa's sales were unlike warehouse events elsewhere, in which shoppers trudge through storage areas to pick up bargains. The retail giant had converted the first two levels of its warehouse into a 24-hour department store and a supermarket. This, URA said, was not allowed because commercial activities are not allowed at warehouse 'zones'. Mustafa has since stopped sales at its warehouse. Such sales held in warehousing districts across the island, although on a smaller scale, have a large following. Each weekend, throngs of Singaporeans flock to areas such as Tuas, Woodlands, Upper Aljunied and MacPherson to buy everything from mince pies to ice cream. Tour operators even ferry visitors to such events. Warehouse sales are popular because of the bargains on offer: Distributors can sell products available at supermarkets and other stores for much less because they do not have to incur transport, rental and other costs that retailers do. One such importer, Fassler Gourmet in Woodlands, opens its doors to walk-in customers daily. About 60 people swing by each day to pick up cut-price seafood: A 200g packet of Fassler's smoked salmon, for instance, costs $9.90 at the warehouse and more than $15 at supermarkets. The company's main business is selling gourmet produce like frozen lobster bisque soup and salmon sashimi to restaurants, supermarkets and even Singapore Airlines. Such daily sales are illegal under URA regulations, but owner Martin Fassler, 48, said he has not received any complaints so far. He admitted, however, that Woodlands Terrace, where the warehouse is located, is a 'total mess on Saturdays'. 'We get schools visiting and even community clubs which organise factory visits for their members,' he said. Other distributors who stage such public sales from time to time also report that business is good. Ms Frances Chow, a supervisor at wine distributor Excaliber in Aljunied, said the company holds sales once or twice a year, when there is stock to clear. But she added: 'I had no idea it isn't legal. It is good if URA clarifies its rules.' Industry experts such as Singapore Retailers Association executive director Lau Chuen Wei and retail consultant Lynda Wee said ad hoc warehouse sales make business sense as distributors need to clear stock every now and then to make way for new goods, or hold a fire sale on products nearing their expiry date. If they had to rent space to conduct such sales, their costs would be higher. But both experts agreed that those who conduct daily sales out of warehouses enjoy an unfair advantage over regular retailers. Dr Wee said one key advantage that those who operate out of warehouses have is that they pay much lower rentals. Added Ms Lau: 'In land-scarce Singapore, zoning is important so that land use can be priced accordingly.' Warehouse shopping aficionados, meanwhile, say such sales are a boon. Accountant Jane Ang, 28, said: 'You can get much cheaper items at such sales, sometimes up to even 70 per cent off. 'If it is not a daily occurrence, I think they should be allowed to continue - it works two ways. Retailers get rid of unwanted stock, and we can pick it up cheap.' Retiree Kuan Kwok Chung, 62, a frequent customer at Fassler Gourmet, is another who hopes the sales can stay. 'The food is fresher and cheaper than even at wet markets. It is such a service to consumers and is a different experience from supermarket shopping,' he said. limjess@... siwan@... The shutters of Mustafa's warehouse in Kallang Pudding Road were down when The Straits Times paid a visit yesterday evening. -- ST PHOTO: SAMUEL HE

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Nov 11, 2009

This for developers and their customers

NO PROPERTY bubble shall be tolerated. This bald assertion went down like a splash of cold water on the fast heating market when, in September, the Government stopped home loans on easy terms and chose not to extend concessionary support for developers upon its scheduled expiry next year. These concessions were granted in the last Budget. Speculative demand did slow as a result of these moves, but price levels were still too high for comfort. Developers were pushing their luck cashing in after a fallow period. Last week came an early announcement that land sales targeted at mass market buyers, including parcels for executive condominiums, will be available for bids early next year. Land releases have a gestation period between tender and launch, but the depressant effect on sentiment is immediate. The market understands that, like nothing else. This undoubtedly was the intention of the National Development Ministry, as the consensus among government trend trackers is that the variable economic recovery is hard to chart. It makes sense that asset price inflation associated with unjustified market exuberance has to be checked. Within days, the Monetary Authority of Singapore reinforced the message with a prominent warning on real estate activity in its year-end Financial Stability Review. It cited risks covering the opposing contingencies of a faltering economic recovery leading to property portfolio devaluations, and a sustained recovery leading inevitably to higher interest rates, which would be trouble for the over-leveraged and the illiquid. The central bank's concern about macro stability is naturally holistic, seeing what adverse impact unrestrained stock and property bets in a period of unstable growth can have on the soundness of the banking system. Household debt shall not grow onerous, it is saying by extension. Banks' lending capacity must remain unimpeded so as to keep the economy oiled. It would be compromised if the rebound falters and brings in its train business failures, job losses and the ultimate danger of soured loans forcing banks to be again stringent with credit. The MAS bottom line (developers should prick their ears up here) is that further intervention in the property market would be necessary if 'speculative momentum' re-emerged. Buying activity and price levels for the rest of the year and up till the next Budget is presented will tell if the industry and its customers see the inherent risks of acting too hastily on the rebound. It took Hong Kong a dozen years for property values to right themselves. But stable growth never stood a chance in that archetypal monetised enclave. Its government is now desperately acting to head off a bubble forming.

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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

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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.

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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.

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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.

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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.

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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.

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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

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