Sale of Seletar Garden could fetch up to $75m

This works out to $683-$733 psf ppr inclusive of DC for the 73,099 sq ft site

SELETAR Garden, a mixed development at Yio Chu Kang Road, is up for sale by tender with the estimated price of between $70 million and $75 million.

This works out to be $684-$733 per square foot per plot ratio (psf ppr) inclusive of development charge (DC) for the 73,099 sq ft site.

The property is being marketed by PropNex, whose head of investment sales Charles Chua says there is also a possibility of the alienation of three parcels of adjoining remnant state land at an estimated additional $8.3 million.

This will bring the total site area to over 100,000 sq ft and with a possible gross floor area (GFA) of over 140,000 sq ft.

Together with the state land, the site could cost between $555 and $590 psf ppr. Mr Chua believes the site, which is within a 15-minute walk of the Yio Chu Kang MRT offers potential for a boutique serviced-residence or condominium and food-and-beverage centre.

Mr Chua estimates that the current open market value for the residential units at Seletar Garden is between $850 and $850 psf.

Based on the indicative collective sale price, each owner is expected to make a premium of at least 80 per cent over the open market price, Mr Chua said. He estimates that about 40 residential units of between 1,600 and 1,800 psf can be built on the site. The break-even price for the potential new development would be about $750 psf.

 

Source: Business Times 25 Sept 07

Second transitional office site released

THE government yesterday launched for sale its second transitional office site in a bid to improve the supply of office space.

Market watchers estimate that the 1.2 hectare site in Tampines could fetch about $100 per square foot per plot ratio (psf ppr) – which works out to some $12.4 million in total.

The land parcel is the second transitional site offered by the Urban Redevelopment Authority (URA) as office rents in Singapore continue to climb amidst a supply shortfall.

Transitional office sites are expected to help tide over the space shortage until new supply starts to kick in from 2009 onwards.

URA in August awarded the first transitional office site at Scotts Road. That site attracted 11 bidders, with the winning bid coming to $37 million, or $219 psf ppr.

The new site, which has a maximum gross floor area of 124,000 sq ft and a 15-year lease, is expected to fetch a lower price as it is not in the central area.

‘The Scotts Road site can fetch rents of between $7 and $8 psf per month, while this site will be able to get only about $4-$5,’ said Ku Swee Yong, director of marketing and business development at Savills Singapore.

Some experts were more bullish, however.

Knight Frank director of research and consultancy Nicholas Mak expects the site to fetch between $200 and $260 psf ppr, similar to the Scotts Road site. That price works out to $24.8-$32.2 million.

‘With the current absorption rate of office space at 91.9 per cent, coupled with a shortage of Grade A office space in the prime area, demand for suburban offices with good location and well-developed infrastructure is in strong demand,’ said Mr Mak.

‘The office space that will be developed on this site is likely to be attractive to banks and financial institutions to house their backroom operations.’

The land parcel is located at Tampines Concourse/ Tampines Avenue 5 – within the established Tampines Regional Centre.

The upcoming office building will be within walking distance of the Tampines MRT station and bus interchange.

The building is expected to be a low-rise development of about three storeys that can be built quickly in about a year, URA said.

 

Source: Business Times 25 Sept 07

Residential property launches gathering speed again

Ho Bee previews Turquoise, Wheelock properties to launch Scotts Square

DEVELOPERS are slowly stepping up residential property launches again, with Ho Bee Investments previewing its Turquoise condo at Sentosa Cove and Wheelock Properties (Singapore) holding the official launch of Scotts Square later this week.

Turquoise, which will have 91 apartments, will be priced at $2,500 psf on average. Ho Bee has been conducting viewings at its showflat lately for its business associates and is expected to begin sales at a preview starting on Thursday.

The 99-year leasehold project comprises three- and four-bedroom units, and penthouses.

Ho Bee will develop the six-and-a-half storey project on Sentosa Cove’s Waterfront Collection site, which is flanked by Tanjong Golf Course and waterways.

It bought the site in a tender that closed in November last year, for $919 psf per plot ratio (psf ppr).

This will be the first condominium launch in Sentosa Cove’s Southern Residential Precinct.

Ho Bee also won another condominium site (jointly with Malaysia’s IOI Group) in March this year. The duo paid $1,361 psf ppr for the plot, dubbed The Seaview Collection, and they are expected to develop it into an eightstorey condo with about 150 units.

Ho Bee is also said to have begun marketing The Orange Grove, a 72-unit freehold condo, in Indonesia.

The average price of the 12-storey project is understood to be around $3,000 psf.

It is diagonally across the road from another condo that Ho Bee began selling around January this year – the 60-unit Orange Grove Residences. Four units are left in the five-storey freehold condo. The current price is about $2,500 psf on average.

Over in the Scotts Road area, Wheelock Properties has sold about half of its 338-unit Scotts Square at an average price of $3,983 psf since July. And although it is holding an official launch for the freehold project on Friday, the group’s executive director, Tan Bee Kim, says the plan is not to sell off all the remaining units just yet.

The developer is in the midst of deciding just how many units it will sell for now, as well as the pricing. Market watchers expect the average price to inch up to slightly above $4,000 psf.

Over in the Dunearn Road location, MCL Land has sold off all but the showflat of its 163-unit cluster terrace housing development, Hillcrest Villas, in two weeks. The average price achieved for the 99-year leasehold development was around $870 psf of strata area.

 

Source: Business Times 25 Sept 07

German fund manager eyes Asia properties

Union Investment looks to quadruple its regional portfolio over a 4-year period

GERMAN fund manager Difa Deutsche Immobilien Fonds (recently renamed Union Investment) is looking to quadruple its property portfolio in Asia over the next four years, its Asia-Pacific head has told BT in an interview.

‘Right now, we have 10 properties worth about 500 million euros (S$1,055 million) in Asia,’ said the group’s Asia- Pacific managing director, Steffen Wolf.

‘We would like to grow the portfolio value to at least two billion euros or so.’ he added.

Union Investment, which owns some 15 billion euros worth of real estate across the world, last year turned its attention to Asia in search of attractive acquisitions.

Since September last year, it has acquired 10 properties in the region, including six residential projects in Japan and two office properties in South Korea.

In Singapore, Union Investment has bought two properties.

In January, it acquired Vision Crest’s office block and the House of Tan Yeok Nee next door in the Penang Road/ Clemenceau Avenue area for a total of $260 million from mainboard-listed property group Wing Tai.

Union Investment is now working on more acquisitions in Japan, China and Singapore, Mr Wolf said.

‘We are also closely looking at Malaysia, India and Thailand,’ he added.

Right now, the group’s focus is on the key cities in all the countries, he said.

Asia, said Mr Wolf, is ‘very strategic’ to Union Investment.

The group has traditionally invested in Europe and the US, but has of late been building up its Asian team in Germany.

The logical next step was to set up a physical presence in the region, and so the group opened an office in Singapore in October 2006.

Right now, the office has just two people, but Mr Wolf wants to grow the team to six or eight by the end of the year, he said.

In Singapore, the group is looking at office properties as well as residential, retail and hospitality assets for acquisition, Mr Wolf said.

The group ideally has to acquire finished, freestanding and already leased-out buildings. It is, for example, not allowed to take on the risks involved with developing a greenfield project.

Its business model is based on collecting rents and distributing them to shareholders.

But Union Investment will not rush into acquisitions, Mr Wolf said.

The cash-rich company is in Asia for the long haul, and will be willing to wait for good acquisition opportunities to come by, rather than compete head-on with more aggressive bidders.

‘We can ride through market cycles,’ Mr Wolf said. ‘We are not affected by crises such as the sub-prime crisis. We have a lot of cash.’

 

Source: Business Times 25 Sept 07

Foreigners snap up 87% more landed homes in first half: DTZ

Companies make 265 buys in H1 2007 vs one in H1 2006

(SINGAPORE) Foreigners, including permanent residents, bought 232 landed homes here in the first half of this year, up 87 per cent from the same period last year, according to DTZ Debenham Tie Leung’s analysis of caveats.

But foreign buyers’ share of total caveats lodged for landed homes in H1 2007 was about 7.6 per cent, down slightly from a 7.9 per cent share in the same year-ago period.

Nearly 90 per cent of these foreign buyers in the first six months of this year were Singapore permanent residents.

Malaysians accounted for the biggest share or 23.7 per cent of foreign buyers of landed homes in H1 2007, followed by United Kingdom nationals (18.5 per cent) and Australians (7.8 per cent).

The number of landed homes picked up by Singaporeans in H1 2007 was up 76.3 per cent year-on-year, though Singaporeans’ share of total caveats for landed homes fell to 83.7 per cent in H1 2007 from 92.1 per cent in H1 2006.

The decline was due to a surge in the number of landed homes bought by companies, to 265 in H1 this year from just one in the same period last year.

In all, 265 caveats were lodged by companies for bungalows, semi-detached houses and terrace homes in H1 2007, compared with just one caveat in H1 2006. The companies include both local and foreign corporations, and could possibly reflect the effect of some investors including individuals or small groups of investors who made purchases through companies, market watchers reckon.

‘There have been small developers and contractors buying up stretches of landed houses in places like Telok Kurau and Kembangan, with the aim of tearing them down and redeveloping the site into a small block of apartments,’ says Knight Frank executive director Peter Ow.

DTZ’s analysis, which was based on caveats captured by Urban Redevelopment Authority’s Realis system, also showed that the most popular landed housing districts sought after by foreigners in H1 2007 differed from those pursued by Singaporeans.

The top location for foreigners (including PRs) who bought landed homes during the period was District 10 (which covers areas like Grange Road, Tanglin, Chatsworth, Jervois, Bishopsgate, Holland Road, Swettenham Road and Laurel Wood Avenue), followed by Districts 15, 11 and 19.

District 15 covers Katong, East Coast and the Meyer Road locations; District 11 includes the Bukit Timah and Dunearn vicinity, Gilstead Road and Gentle Drive; and District 19 includes Serangoon Gardens and Lorong Chuan.

Other popular locations included Districts 21 (which covers the Upper Bukit Timah area) and 4 (Sentosa Cove) In contrast, among Singaporean landed home buyers, the most popular district was 19, followed by Districts 15, 10, 16 (part of Bedok and Tanah Merah), 20 (including Sembawang Hills and Upper Thomson) and 28 (which covers locations like Seletar Hills and Mimosa Place).

‘Foreigners seem to be zooming in more on traditional residential property investment locations, such as prime Districts 10 and 11 and the traditionally popular District 15,’ said a market watcher.

Among companies which bought landed homes from January to June this year, District 15 was the most in demand, followed by Districts 19, 10 and 14.

The 232 landed homes that foreigners purchased in the first half was just 11.5 per cent shy of the 262-unit figure for the whole of last year. The record was set in 1999, when foreigners picked up 347 landed homes on the island.

In Singapore, foreigners have to be PRs before they can receive permission to buy landed homes on mainland Singapore, and Sentosa Cove is the only location where foreigners who are not PRs are allowed to purchase landed property. Even then, foreign would-be buyers must seek permission from the Land Dealings (Approval) Unit under the Singapore Land Authority.

Typically, it takes about four weeks for approval to be granted, but on Sentosa Cove, the time has been cut to less than 48 hours under a special fast-track approval scheme.

Foreigners, including PRs, can at any one time own only one landed home in Singapore and must occupy it themselves rather than renting it out.

 

Source: Business Times 25 Sept 07

HPL: Horizon Towers sellers extend deadline

Buyer will now ask for adjournment of legal proceedings

(SINGAPORE) Hotel Properties Ltd (HPL) has finally secured a much-needed extension of a deadline to purchase the Horizon Towers development.

And the listed developer will now make good on its promise to apply for an adjournment of the legal proceedings it has commenced against the sellers.

HPL announced yesterday evening that the sellers of the Leonie Hill property have officially agreed – en masse – to push back the deadline by four months, to Dec 11. This will give HPL and its partners – who collectively agreed to buy Horizon Towers for $500 million in February – the time needed to push through the en bloc sale.

The deal had fallen through in August when the Strata Titles Board (STB) rejected Horizon Towers’ application for a collective sale order – on the grounds that the application was defective.

STB’s decision, which came just days before the original sale completion deadline, meant there was no time for a fresh application to be filed or for a High Court appeal of STB’s judgment to be heard.

HPL and its partners – Morgan Stanley Real Estate-managed funds and Qatar Investment Authority – needed the sellers to extend the deadline, but its repeated requests in recent weeks went unheeded. The buyers then took legal action and sued the sellers for up to $1 billion in damages.

The situation reached a turning point when HPL chief Ong Beng Seng arranged a meeting with some 40 owners of Horizon Towers, at the Hilton last week. At this meeting, Mr Ong’s lawyers Allen & Gledhill told the attendees that they would be prepared to adjourn the legal proceedings if the sellers agreed to extend the deadline – and that they would drop the lawsuit altogether if the sale goes through.

This meeting was followed by a second meeting at the Raffles Town Club the next day, which was attended by owners of 135 units of Horizon Towers. These owners decided to push back the collective sale deadline to Dec 11 and to do everything ‘reasonably necessary’ to effect the collective sale.

They told BT after the meeting that they would be reaching out to the owners of the remaining 42 units – who did not attend the meeting – to seek their support. Their efforts have apparently succeeded, judging by HPL’s announcement yesterday.

HPL also told BT now that it has received official confirmation of the sellers’ decision to extend the sale completion deadline, it would honour its promise to apply for an adjournment of the legal proceedings it has filed against the sellers. This means a Thursday court showdown between the buyers and the sellers will be averted. Up next is Friday’s High Court hearing of the appeal against STB’s decision.

 

Source: Business Times 25 Sept 07

Foreigners snap up 87% more landed homes in first half: DTZ

Companies make 265 buys in H1 2007 vs one in H1 2006

(SINGAPORE) Foreigners, including permanent residents, bought 232 landed homes here in the first half of this year, up 87 per cent from the same period last year, according to DTZ Debenham Tie Leung’s analysis of caveats.

But foreign buyers’ share of total caveats lodged for landed homes in H1 2007 was about 7.6 per cent, down slightly from a 7.9 per cent share in the same year-ago period.

Nearly 90 per cent of these foreign buyers in the first six months of this year were Singapore permanent residents.

Malaysians accounted for the biggest share or 23.7 per cent of foreign buyers of landed homes in H1 2007, followed by United Kingdom nationals (18.5 per cent) and Australians (7.8 per cent).

The number of landed homes picked up by Singaporeans in H1 2007 was up 76.3 per cent year-on-year, though Singaporeans’ share of total caveats for landed homes fell to 83.7 per cent in H1 2007 from 92.1 per cent in H1 2006.

The decline was due to a surge in the number of landed homes bought by companies, to 265 in H1 this year from just one in the same period last year.

In all, 265 caveats were lodged by companies for bungalows, semi-detached houses and terrace homes in H1 2007, compared with just one caveat in H1 2006. The companies include both local and foreign corporations, and could possibly reflect the effect of some investors including individuals or small groups of investors who made purchases through companies, market watchers reckon.

‘There have been small developers and contractors buying up stretches of landed houses in places like Telok Kurau and Kembangan, with the aim of tearing them down and redeveloping the site into a small block of apartments,’ says Knight Frank executive director Peter Ow.

DTZ’s analysis, which was based on caveats captured by Urban Redevelopment Authority’s Realis system, also showed that the most popular landed housing districts sought after by foreigners in H1 2007 differed from those pursued by Singaporeans.

The top location for foreigners (including PRs) who bought landed homes during the period was District 10 (which covers areas like Grange Road, Tanglin, Chatsworth, Jervois, Bishopsgate, Holland Road, Swettenham Road and Laurel Wood Avenue), followed by Districts 15, 11 and 19.

District 15 covers Katong, East Coast and the Meyer Road locations; District 11 includes the Bukit Timah and Dunearn vicinity, Gilstead Road and Gentle Drive; and District 19 includes Serangoon Gardens and Lorong Chuan.

Other popular locations included Districts 21 (which covers the Upper Bukit Timah area) and 4 (Sentosa Cove) In contrast, among Singaporean landed home buyers, the most popular district was 19, followed by Districts 15, 10, 16 (part of Bedok and Tanah Merah), 20 (including Sembawang Hills and Upper Thomson) and 28 (which covers locations like Seletar Hills and Mimosa Place).

‘Foreigners seem to be zooming in more on traditional residential property investment locations, such as prime Districts 10 and 11 and the traditionally popular District 15,’ said a market watcher.

Among companies which bought landed homes from January to June this year, District 15 was the most in demand, followed by Districts 19, 10 and 14.

The 232 landed homes that foreigners purchased in the first half was just 11.5 per cent shy of the 262-unit figure for the whole of last year. The record was set in 1999, when foreigners picked up 347 landed homes on the island.

In Singapore, foreigners have to be PRs before they can receive permission to buy landed homes on mainland Singapore, and Sentosa Cove is the only location where foreigners who are not PRs are allowed to purchase landed property. Even then, foreign would-be buyers must seek permission from the Land Dealings (Approval) Unit under the Singapore Land Authority.

Typically, it takes about four weeks for approval to be granted, but on Sentosa Cove, the time has been cut to less than 48 hours under a special fast-track approval scheme.

Foreigners, including PRs, can at any one time own only one landed home in Singapore and must occupy it themselves rather than renting it out.

 

Source: Business Times 25 Sept 07

Jumeirah to open its first European resort

(DUBAI) Jumeirah Group, the hotel management company owned by Dubai’s government, leased a property being built in Mallorca, Spain from a German real estate fund to gain its first European resort and spa.

The 120-room Jumeirah Port Soller resort is held on a ‘long-term’ lease from the WestInvest Interselect fund, Jumeirah said in a statement posted on its website yesterday.

The resort, due to open in 2010, is being built by WingField Corp and was bought for WestInvest by Deka Immobilien GmbH, according to the statement.

Jumeirah is expanding outside Dubai, where it manages the sail-shaped Burj al-Arab hotel. The company has urban hotels in London and New York, and aims to expand its network five-fold to 57 properties by 2011, chairman Gerald Lawless had said in May.

Spanish hotel prices rose the most in four years last month, led by rate increases on the Balearic islands including Mallorca, the Spanish government said in a report yesterday.

 

Source: Business Times 25 Sept 07

Ciputra Property to tap up to US$150m in Jakarta IPO

Developer plans to use proceeds to acquire companies and subsidiaries

(HONG KONG/JAKARTA) Indonesian real estate developer PT Ciputra Property is planning to raise up to about US$150 million in a domestic initial public offering, according to a listing prospectus and a source familiar with the deal.

Ciputra Property, a mixed-use commercial property unit of PT Ciputra Development Tbk, plans to sell 40.19 per cent of its enlarged share capital ahead of a listing scheduled for Nov 12.

The company, which has holdings in shopping malls in Jakarta and Semarang, said it plans to use 521.9 billion rupiah (S$85.4 million) from the proceeds to acquire a number of companies and subsidiaries, and the remaining funds from the sale as working capital and for construction costs.

Registration and book- building for the deal are scheduled for Oct 9-19, with pricing due on Oct 22, and the public offering set for Nov 5-7.

The deal is being sponsored by Citigroup and Danareksa.

Indonesian companies have raised over US$3 billion so far this year in initial public offerings and follow-on equity sales according to Thomson Financial, marking a record for Jakarta’s stock market.

Initial public offerings, or IPOs, raised US$680 million.

The Jakarta stock market has risen 30 per cent so far this year on the back of strong foreign demand and an improving economy.

In May, the president director of the Jakarta Stock Exchange, Erry Firmansyah, told Reuters the bourse was aiming to double the number of new listings this year. During 2006, a total of four initial public offerings raised just US $278 million.

Some of the bigger listing candidates in Indonesia include state-owned toll road operator PT Jasa Marga, which hopes to raise roughly US$300 million this year, and coal miner PT Indo Tambangraya Megah, a unit of Thailand’s Banpu plc, which is looking to raise about US$100 million in an IPO.

 

Source: Reuters (Business Times 25 Sept 07)

Credit fallout to hit London office building

CBRE sees 2.5m sq ft of new space instead of 4.5m forecast earlier

(LONDON) The equivalent of two to four skyscrapers per year are now unlikely to be built in London in 2009 to 2011 due to fallout from the US subprime crisis, property services firm CB Richard Ellis (CBRE) said yesterday.

CBRE said it expected 2.5 million square feet (232,300 sq metres) of new office space per year to be built in central London in 2009 through 2011, instead of a previously forecast 4.5 million square feet.

But that could help to extend London’s commercial property cycle by reducing the risk of too many new offices going up in the crane-dotted UK capital, Peter Damesick, head of UK research at CBRE, said. He said the decision to slash his estimate for London’s development programme by 44 per cent was the result of higher funding and construction costs and because financial market turbulence had cast a pall over the UK capital’s jobs outlook, potentially holding back rental growth. ‘Funding for office developments has become harder to obtain and got more expensive,’ Mr Damesick told Reuters, citing anecdotal evidence which showed lending margins doubling in some cases to 175 basis points over benchmark interest rates. J’There is also a feeling that the strength of (occupier) demand in the short-term will be less than was expected six months ago due to the impact of potential financial dislocation on London’s financial services,’ he said. In addition, the regeneration of a large area of London before the 2012 Olympics was likely to push up construction costs even further, he said.

But a degree of self-regulation now would benefit the property industry going into the next decade, even though the supply of office space was near a record low in central London, with an average vacancy rate of 3.3 per cent at the end of August, according to CBRE data.

‘It will reduce the risk, which was beginning to appear in the pipeline, of medium-term oversupply and enhances the prospects for rental stability,’ Mr Damesick said. ‘So we’ll probably see slower rental growth in the short-term but less risk of a rental downturn in the medium term.’

Excessive office building helped to extend and deepen a downturn in London’s property market in the early 1990s.

Among the ambitious office development projects that have come into question in recent weeks is the 72-storey London Bridge Tower – nicknamed the Shard of Glass – which is due for completion in 2010/11 and lies on the city’s south bank. Property investment firm CLS Holdings plc, one of the joint venture partners behind the Shard project, said financing options were under review and demolition works were still due to begin before the end of the year.

 

Source: Reuters (Business Times 25 Sept 07)

Taipei housing market confidence dips

Rising prices push figure down to lowest in 4 years

(TAIPEI) Taipei housing market confidence dropped to its lowest in almost four years because of rising prices, a Taiwan government-sponsored survey showed.

The housing confidence index for Taiwan’s capital fell to 97.55 in the second quarter, slipping below 100 for the first time since the third quarter of 2003, the Institute for Physical Planning & Information wrote in a report. A score lower than 100 means most respondents view conditions as poor.

Residential property in Taipei cost an average NT$316,000 (S$14,331) per ping in the second quarter, an increase of NT$54,000 per ping from a year earlier, the report said. Each ping equals 3.3 square metres.

People paid an average NT$9 million for a home in Taipei in the second quarter, down from NT$9.3 million a year earlier, according to the report posted on the institute website. The survey polled 1,233 people who had already bought a house, 895 people who were looking to buy, and 744 people looking to rent.

Taiwan’s Council for Economic Planning and Development, which sponsored the survey, decided to cancel its press briefing on the release because it indicated a slowdown in the island’s property market, the Economic Daily News reported yesterday.

Taiwan’s central bank on Sept 20 raised its discount rate on 10-day loans by an eighth of a percentage point to 3.25 per cent, compared with the 4.75 per cent benchmark interest rate in the US.

That resulted in an exodus of money as individuals and companies invest in higher-yielding assets abroad.

Taiwan residents invested a net US$17.2 billion in overseas securities in the second quarter, the biggest quarterly net outflow on record, the island’s central bank said in August.

 

Source: Bloomberg (Business Times 25 Sept 07)

Shanghai properties draw pension funds

JLL: Foreign insurers may buy in as yields dip see short-term investors exiting

( SHANGHAI) Overseas pension funds and insurers may become main buyers of premium office and commercial properties in Shanghai as shorter-term investors could sell due to falling yields, Jones Lang LaSalle (JLL) said last week.

Property investors with a relatively short-term investment horizon, such as banks and private equity firms, may have achieved their return targets and consider selling, especially when investment yields are being compressed, it said.

‘Some of the opportunistic and value-added investors will now be looking to sell because they have met their IRR (internal rate of return) targets,’ the property consultancy said in a press release.

‘Consequently, we believe that the number of core assets up for sale will rise as these funds realise their investments,’ it said, adding that long-term investors such as pension funds and insurance firms would likely become the buyers.

Several long-term investors last year bought major projects, including the US$188 million acquisition of a Shanghai office property by German pension fund SEB, it said.

Greg Hyland, a JLL director, told reporters he didn’t expect an immediate wave of investment from foreign insurers and pension funds in Shanghai’s property market – partly because China is trying to cool its property market and some of the recently introduced measures would complicate cross-border transactions.

Rents and capital value of Shanghai office and commercial properties are expected to rise, but growth would be ‘less explosive’ than in 2000-2006 when rents rose 14 per cent annually, JLL said.

Opportunistic investors, who typically hold properties for three to five years, have already been hunting for property projects in second-tier Chinese cities for higher yields, it said.

Foreign investors, including Wall Street banks Goldman Sachs and Morgan Stanley, have poured billions of dollars into Shanghai properties over the past few years, partly driven by China’s currency appreciation.

Strong price rises in Shanghai and other major Chinese cities such as Beijing have driven down rental yields.

Gross yields on Shanghai office property fell to below 8 per cent in 2006, although they are still higher than the around 5 per cent in Hong Kong and Singapore and 4 per cent in Tokyo, and most fixed-income products, property consultancy CBRE has said.

JLL said that Shanghai’s office property market is becoming attractive to long-term investors because of the steady demand from international corporations and the growing supply of grade-A office towers.

The occupancy rate of high-end offices in Shanghai may stay at around 90 per cent over the next three years, with investment-grade office supply likely to peak in 2010 – when total space should reach 6.2 million square metres, JLL said.

 

Source: Reuters (Business Times 25 Sept 07)

Only 20% of US sub-prime mortgages at risk

No plans to scrap such mortgages as they democratise credit: US official

ABOUT 5 per cent of all US mortgages are sub-prime but only one fifth of these are at risk of default, US Department of Housing and Urban Development (HUD) assistant secretary Darlene Williams said yesterday.

Ms Williams was speaking at the inaugural Asia-Pacific Housing Forum held in Singapore yesterday where she said that there was no intention of abolishing sub-prime mortgages.

‘Sub-prime mortgages democratise credit, and so we don’t want to throw that option away,’ she said.

Instead, the HUD’s Federal Housing Administration is expected to help an estimated 240,000 families avoid foreclosure by underwriting refinanced loans of those still creditworthy.

Ms Williams maintained that some of those who defaulted on their sub-prime mortgages had poor financial literacy. ‘Many did not even read their contracts,’ she said.

Also speaking at the forum was Minister of National Development Mah Bow Tan who said that affordability in the public housing sector was not a problem in Singapore as people serviced their loans through their Central Provident Fund (CPF) savings, with little cash outlay.

With over 80 per cent of Singaporeans living in Housing and Development Board (HDB) flats and 95 per cent of these owning their homes, Singapore has one of the highest, ‘if not the highest’, home ownership rates anywhere, Mr Mah said.

Speaking to representatives of housing authorities from around the world, Mr Mah explained that there were two key government policies that helped make public housing in Singapore so successful: the Land Acquisition Act, and the use of CPF savings to pay for flats.

On public housing, he said: ‘Over the years, this has developed into an implicit social contract that has laid a firm foundation for Singapore’s economic, social and political stability.’

CapitaLand gives $1m to 10 charities

TEN charities received a combined $1 million yesterday from the philanthropic arm of Asian property giant CapitaLand. Giving away 10 cheques of $100,000 each was CapitaLand Hope Foundation chairman Lim Chin Beng.

Set up in 2005, the foundation aims to help young people, with children’s charities its main focus. This year’s donation – the largest by the foundation so far – goes to helping over 1,400 children in Singapore, Thailand and Vietnam.

‘We don’t just build offices, houses and malls,’ said Mr Lim. ‘We’d like to think we build lives too.’

The Singapore-based corporation now sets aside 0.5 per cent of its net profit for its charity arm every year.

About $4 million was pumped into the foundation last year, said Mr Lim.

Though a quarter of the money went to local charities yesterday, future donations could go to fund more projects in China and across the region, said Mr Lim.

Yesterday’s cheque recipients spanned a range of needs faced by children in Singapore and beyond, from cancer to housing development and education.

Among the recipients was The Straits Times School Pocket Money Fund. Established in 2000, it has so far helped more than 10,000 children, providing for basic expenses such as meals during recess, transport and miscellaneous items such as worksheets and stationery.

ST editor Han Fook Kwang, who received the cheque on behalf of the fund, said: ‘Even with a booming economy, there are many children without basic needs, such as enough pocket money, so we are most grateful for generous donors like CapitaLand.”

While many corporations have established philanthropic arms, pledging a fixed percentage of their net profits is rarely done, said Mrs Tan Chee Koon, chief executive officer of the National Volunteer and Philanthropy Centre.

The move, she said, is commendable as it attests to a company’s commitment to giving, by ‘consciously weaving it into their corporate DNA’.

 

Source: The Straits Times 25 Sept 07

HPL to ask to adjourn Horizon Towers hearing on Thursday

Decision follows official confirmation of extension of sale deadline to Dec 11

THE move by the Horizon Towers sellers to extend the sale deadline of their estate has succeeded in fending off Thursday’s High Court hearing.

Hotel Properties (HPL) said yesterday that it will apply to have the hearing adjourned. This came after it received official confirmation of the extension from the condominium’s sale committee.

Law firm Tan, Rajah & Cheah informed HPL that the estate’s new committee had extended the time for obtaining a collective sale order to Dec 11. The seven-member committee represents owners of 177 units.

These are the majority owners who have signed the agreement to sell en bloc.

HPL and its two partners, the intended buyers of the Horizon Towers, are suing the sellers of the 99-year leasehold estate for an alleged breach of contract.

The sale committee, the third at the Leonie Hill estate since the saga began a few months ago, was formed last Thursday. That was when almost all who were at a meeting voted to extend the deadline to Dec 11.

Sellers of 135 units – out of 177 units which signed the sale agreement – attended.

This option to extend by four months was part of the original sale agreement. The owners also agreed to do everything ‘reasonably necessary’ to effect the sale.

Those owners who organised the meeting were believed to have stated in a circular that absent owners were deemed to have agreed with the majority decision made at the meeting.

All eyes will now be on another legal front – Friday’s High Court hearing over the sellers’ appeal to quash the Strata Titles Board (STB) ruling last month that aborted the collective sale deal.

STB dismissed the Horizon Towers case over a procedural error and not over any arguments put up by a group of owners opposed to the sale. That deal lapsed as the sellers did not extend the Aug 11 deadline.

Last Friday, the HPL-led consortium filed an affidavit asking that it be allowed to participate in Friday’s appeal, claiming that the issues would be more effectively adjudicated with its involvement. A decision will be made on Friday.

If the appeal succeeds, the case could go back to the STB. But a negative verdict could end the Horizon Towers deal once and for all.

If it goes back to the STB, the minority owners who object to the sale will resurface issues such as the contract’s apparently low price and the unusual fact that the commission for the estate’s marketing agent will be paid by the buyers, not the sellers.

HPL said earlier that it will drop its lawsuit if a collective sale order is obtained. Its group wants Horizon Towers for $500 million, the price inked in February.

 

Source: The Straits Times 25 Sept 07

Second short-term office site released at Tampines

THE Government has released a second temporary office site for sale, this time at the Tampines Regional Centre.

This followed the strong response to a similar plot along Scotts Road last month, which drew a better-thanexpected 11 bids.

The two sites are the first plots of office land to be offered in Singapore on 15-year leases as part of the Government’s efforts to ease an office crunch that has sent rents and prices soaring.

The Tampines plot ‘will continue to help meet the demand for office space in the short to medium term’, the Urban Redevelopment Authority (URA) said in a statement yesterday.

Located at the corner of Tampines Concourse and Tampines Avenue 5, the 1.15ha site can be built up to a maximum gross floor area of about 124,000 sq ft.

A low-rise development of about three storeys can be built on the plot ‘quickly in about a year’, the URA said.

While they expect a good level of interest in the Tampines parcel, property consultants said competition for it is likely to be less keen than that for the Scotts Road plot.

The 1.04ha site, next to the Newton MRT station, drew a top bid of $37 million, or $219 per sq ft per plot ratio (psf ppr).

Mr Donald Han, managing director of property firm Cushman & Wakefield, said the Scotts Road site was hot due to its prime location.

In contrast, the Tampines plot is in the suburbs. It will also be competing with nearby sites at the Changi Business Park, which are sold on short-term, 30-year leases.

Mr Han expects five or six bids for the site, which are likely to be lower than the price fetched for the Scotts Road plot. Offers could range from $140 to $160 psf ppr, or about $17.3 million to $20 million, he said.

‘On top of everything, the market now expects that more transitional sites will be released,’ Mr Han added.

Mr Nicholas Mak, director of research and consultancy at Knight Frank, predicted, on the other hand, that while the Tampines site would fetch fewer bids than the Scotts Road plot, the bid levels would be the same.

‘Suburban offices with good locations and well-developed infrastructures are in strong demand,’ he said.

His estimate for the site: $24.8 million to $32.2 million, or $200 to $260 psf ppr.

 

Source: The Straits Times 25 Sept 07

Inflation rises to 2.9% – highest since December 1994

Climbing food prices and higher transport and communication costs drive CPI up

CONSUMER prices rose by 2.9 per cent last month from a year earlier, the biggest increase since 1994, as the effects of the goods and services tax (GST) hike continued to set in.

The August figure came in above the median market expectation of 2.8 per cent.

Economists are predicting that inflation could pick up in the months ahead, with crude oil prices at record highs.

But they do not expect any change in the key monetary tool available to tackle inflation – the central bank’s stance on the Singapore dollar which is up for its semi-annual review next month.

Last month’s increase follows a 2.6 per cent rise in July, when a 2 percentage point hike in the GST took effect.

Climbing food prices and higher transport and communication costs, which together make up nearly half of household spending, helped to hoist the Consumer Price Index (CPI) last month.

Food prices crept up by 3.3 per cent year on year, according to data released by the Department of Statistics yesterday. This is the fastest pace since the 4.7 per cent seen in Jan 1995, noted HSBC economist Prakriti Sofat.

Meanwhile, transport and communication costs rose 3.4 per cent, while health-care costs climbed the most – by 6 per cent.

The acceleration in consumer prices is largely explained by a further pickup in food, housing and transport costs with some further impact of the July GST hike also flowing through, Ms Sofat added.

On a month-on-month basis, last month’s CPI rose 0.3 per cent over July, after increasing 2.1 per cent over June.

For the first eight months of the year, consumer price inflation averaged 1.3 per cent.

Economists are predicting year-on-year monthly inflation to nudge above 3 per cent by the end of this year.

‘In September, we expect to see inflation above 3 per cent as oil prices hit record highs. And the increase in bus fares in October will continue to add to price pressures,’ predicted United Overseas Bank economist Ho Woei Chen, She also forecast inflation of 1.8 per cent for the full year.

She expects the Monetary Authority of Singapore (MAS) to maintain its current policy of a modest and gradual appreciation of the Singdollar at next month’s review.

While inflation is at multi- year highs, DBS economist Irvin Seah believes that further monetary tightening – via a steeper appreciation path – to combat inflation is not on the cards.

‘I think MAS will stand pat for now, because there is a sense that the substantial upward trend in inflation is largely due to the GST hike,’ he said.

A steeper Singdollar appreciation path is more effective in curbing imported inflation, and could hurt Singapore’s exports at a time when the global economy is cooling, said Mr Seah. A strong Singdollar makes Singapore exports more expensive in foreign markets.

‘You will need other non- monetary measures to keep domestic inflationary pressures in check.’

 

Source: The Straits Times 25 Sept 07

Defaults on sub-prime loans ’stabilising’

THE default rate for strife-hit United States sub-prime mortgages is stabilising, a US housing official said yesterday at a housing conference in Singapore.

Defaults on these loans, issued to homebuyers with low income or a poor credit history, triggered global shock waves recently and sparked intense scrutiny of Singapore banks’ exposure to them.

Assistant secretary of policy development and research at the US Housing and Urban Development Department, Dr Darlene Williams, indicated that she did not expect last week’s half-point US interest rate cut to affect the number of defaults significantly.

Speaking to reporters at the inaugural Asia-Pacific Housing Forum, she said: ‘The hope is that the Fed rate cut would send the signal that the government is concerned and willing to continue to analyse the situation so that the market can relax.’

‘We believe we still have a market that is correcting, but we don’t expect any drastic changes to the rate of defaults.’

Dr Williams said sub-prime loans form only a small percentage of the US mortgage market and only 20 per cent of such mortgages are at risk of default.

‘Our economic fundamentals are strong. The loan defaults are half of what they were in the 1980s and interest rates are low compared with the double-digit rates of 20 years ago,’ she said.

Sub-prime loans play a role in helping people own homes, she said. ‘Sub-prime mortgages democratise credit, so we don’t want to throw that option away.’

The three-day housing forum is organised by Habitat for Humanity and the Singapore Institute of Planners.

At the same event, Singapore National Development Minister Mah Bow Tan shared the Republic’s successful experience of housing its citizens at affordable prices.

 

Source: The Straits Times 25 Sept 07