$5,600 psf for penthouse new high in property price here

53rd-storey Orchard Residences unit fetches over $28m

A NEW record property price for Singapore has been set, even though fewer sales are being made in high-end residential projects since the time of the US sub-prime mortgage crisis.

CapitaLand and Sun Hung Kai Properties are said to have sold earlier this week a penthouse on the 53rd storey of The Orchard Residences for about $5,600 per square foot (psf), or over $28 million. This surpasses the previous benchmark of $5,500 psf set in August when a 54th storey penthouse fetched about $27.8 million.

This means that all four penthouses in the 99-year leasehold development are now sold.

The developers are said to have sold about 73 per cent of the total 175 units in the condo. The buyer of the final penthouse sold this week is believed to be a foreigner. The 5,048 sq ft unit has five bedrooms, a study and a family room.

A stone’s throw away, Wheelock Properties (Singapore) is said to have sold more than 30 apartments at its freehold Scotts Square since the official launch of the project on Sept 28.

The developer is said to have largely maintained its average price at around the $4,000 psf mark from its preview in July, when it sold about half of the project’s 338 apartments.

Over in Sentosa Cove, Ho Bee has sold 38 of the 50 units it has released so far in its 91-unit condo, Turquoise, since late September. The units have been sold at prices ranging from nearly $2,500 psf to $2,770 psf.

The average price is about $2,600 psf, Ho Bee Investment executive director Ong Chong Hua said when contacted by BT yesterday. Buyers of the 38 units – which include four penthouses – were an equal mix of foreigners and Singaporeans, he said.

Apartments at the 99-year leasehold Turquoise typically cost around $5.3 million for a three-bedroom unit, $6.4 million for a four-bedder and around $9.3 million for a penthouse.

DTZ Debenham Tie Leung executive director (residential) Margaret Thean acknowledges that buyers, both local and foreign, have been more cautious after the stock market setback at the time of the US sub-prime mortgage crisis.

‘But we still see activity going on. For the high-end projects, we’ve not noticed any withdrawal of liquidity. The only difference is that prospective buyers are more cautious, doing more calculations and being more selective in their choice of investment before making a commitment,’ she said.

Market watchers also say that the recovery in the stock market in recent weeks has led to a return of confidence in the property market, as seen in a pick-up in subsales activity lately.

Over in the Seletar Hills area, Tong Eng Brothers unit Fairview Developments is launching two landed developments. One is the freehold 8 @ Stratton, comprising eight cluster semi-detached houses priced at $1.98 million to $2.2 million.

The houses have built-up areas ranging from 3,595 sq ft to 3,649 sq ft and strata areas of 4,930 sq ft to 5,145 sq ft.

The second project is Nim Green, a collection of just three terrace houses – a corner unit with an asking price of $2.5 million and two intermediate units with a price tag of about $2 million.

 

Source: Business Times 12 Oct 07

MAS seeks amendments to financial market laws

Changes aim to enhance regulatory oversight, responsiveness to market innovation

LAWS relating to the financial market in Singapore will be amended, with regulators asking for comments on the proposed changes.

The Monetary Authority of Singapore (MAS) has released a policy consultation paper on proposed changes to the Securities and Futures Act (SFA) and the Financial Advisers Act (FAA).

This is the third in a series of policy consultations that the MAS is conducting following a review of the two pieces of legislation that started last year.

The proposed changes aim to enhance MAS’ supervisory oversight of capital markets services and holders of financial advisers’ licences and the responsiveness of the regulatory framework to market innovation.

One of the changes proposes to let the holders of licences for capital markets services (CMS) and financial advisers (FA) have perpetual licences so that they do not need to renew their permits every three years.

MAS is proposing to amend the law to require foreign regulators to obtain its permission to inspect CMS and FA licence holders.

Noting the increasing globalisation of capital markets, MAS said that it has been receiving more requests from foreign regulators to inspect licence holders whose parent entities they supervise.

The authority said that such inspections should be subject to safeguards including the requirement to protect confidentiality of information and reciprocity by foreign regulators to its requests.

MAS is also proposing to extend the power to issue a prohibition order to banks, insurance and finance companies which are at present exempt from licensing.

Currently MAS is empowered only to issue such orders against CMS licence holders.

Other changes also propose to amend the definitions of ’securities’ and ‘futures contract’ to let MAS prescribe new products as securities as well as exclude other products which may not be considered as financial instruments.

The consultation paper can be found on the MAS website. Comments should be sent by Nov 9.

 

Source: Business Times 12 Oct 07

High Court gives Horizon sale fresh lease of life

STB dismissal overturned, en bloc law clarified, but sale still faces uncertainties

(SINGAPORE) The High Court yesterday overturned the Strata Titles Board’s (STB) decision in August to dismiss Horizon Towers’ collective-sale application – and sent the matter back to the board for its continued deliberation.

This means that, barring any objection, Horizon Towers’ application will go back to the STB and will be heard from the point it was dismissed – giving the en bloc sale a chance to succeed.

What could block its path is an appeal filed by any of the minority owners against the High Court’s decision yesterday. The three groups of minority owners, however, told BT yesterday that they have yet to decide if they will file an appeal.

‘It’s something that we’ll need to sit down and discuss – we’ll need to read through the judgment carefully and weigh all our considerations before deciding how to proceed,’ said S K Phang, who represents one of the minorities.

The judgment was also significant for clarifying several aspects of the collective sales law, several players noted.

Justice Choo Han Teck, in his decision to overturn the board’s dismissal in August, ruled that the three missing pages in Horizon’s application to the STB did not constitute an ‘incurable defect’ as the board had alleged – as it wasn’t a substantial omission that prejudiced the minority owners.

He noted that the STB was notified of the missing pages, and provided with them during the hearing.

‘If (the error or omission) does not (cause prejudice to the minority), the board is, in my opinion, empowered to allow an amendment or correction so that the record is clear. If one takes the view that the board has no power to allow an amendment even for a typographical error, then an entire en bloc sale could be stalled by a comma in the wrong place. The law should not have such drastic consequences when there was otherwise no prejudice,’ Justice Choo said.

He also emphasised the purposive nature of the law and the need to apply it consistently. ‘Fairness requires that the law is applied consistently to everyone in similar circumstances. If the majority succeeds, it is because it is right, not because it is the majority. Likewise, if the minority succeeds, it is because it is right and not because it receives favours granted only to the underdog,’ Justice Choo ruled.

His judgment found favour with all parties involved, even the minority owners – who welcomed the clarity to en bloc rules it afforded. ‘It clarifies a lot of matters for us practitioners in the en bloc arena and is an authoritative ruling that has closed some gaps in interpretation right now,’ Dr Phang said.

Senior Counsel K Shanmugam of Allen & Gledhill, who represents the buyers – Hotel Properties Ltd (HPL) and its partners – also welcomed its guidance: ‘We now have a better idea of how the statutes should be interpreted and the guidance would be useful going forward.’

He added that the result was ‘exactly the result we wanted, what we argued for’ and it was a result which he knew a number of the majority sellers wanted – as they too want the sale to go through.

Lim Seng Hoo, current chairman of the Horizon Towers sales committee, said: ‘We are very grateful for the result. It shows we have not breached in the first place the contract with HPL (and its partners) as they have alleged.’

HPL and its partners have sued the majority owners for failing to do everything in their power to submit a proper application to STB. That suit has been temporarily stayed, but HPL is likely to still consider suing the owners for up to $1 billion in damages if the en bloc sale still falls through.

There are still hurdles to overcome. Even if the minorities decide not to appeal, there’s no guarantee the en bloc sale will go through. The STB’s calendar is believed to be bursting with appointments from other collective-sale applications to be heard.

The board was unable to revert to BT’s queries yesterday as to whether it would have a slot for Horizon Towers, but lawyers said it is likely that Horizon Towers’ application would be given priority, given its Dec 11 deal completion deadline.

But that’s not the only possible stumbling block: the STB will need to pick up from where it left off, that is continue hearing the minority owners’ objections to the sale and consider the merits of the sale, before deciding whether to grant the order needed for the completion of the collective sale.

And, as Dr Phang told BT, the minorities still have many objections to the en bloc sale which have not yet been heard. ‘We were only in the midst of questioning our first witness when the STB dismissed the entire application; when we go back to the board, it will have to hear our other objections. We have quite a few arrows in our quiver which we still haven’t shot,’ he said.

Philip Fong of Harry Elias partnership, who also represents several minority owners, added: ‘Our contention has been that this collective sale was done in bad faith – and that will remain our contention as we appear before the STB.’

The STB would, however, now need to view the minorities’ objections to the sale in the light of the judgment handed down by the High Court yesterday.

 

Source: Business Times 12 Oct 07

Henderson’s dividend fund wary of Reits

It favours banks as they’re the cheapest sector in Asia

HENDERSON Global Investors’ Asian equity dividend fund favours banks but is wary of real estate investment trusts (Reits), its manager said yesterday.

Mike Kerley, who manages the US$100 million Horizon Asian Dividend Income Fund, also said the fund was ‘underweight’ exporters due to their vulnerability to a slowdown in the US economy and the weak dollar. Banks are the cheapest sector in Asia due to concerns about their exposure to US sub-prime mortgages, Mr Kerley told reporters on the sidelines of presentation.

He said he also favoured Asian banks because they were a proxy for domestic demand, which will hold up better than exports in the event of a US recession.

‘We’ve talked to virtually all the banks we owned about their sub-prime exposure. It’s possible there may be something we don’t know about but I’m pretty confident the amount is low,’ he added.

Asian bank stocks, like their counterparts in the US and Europe, have fallen in recent months because of concerns about the US housing market. The shares have since recovered from their lows.

Mr Kerley said the Henderson Asian dividend fund’s holdings include South Korea’s Kookmin Bank, Singapore’s United Overseas Bank (UOB), Hong Kong-listed Hang Seng Bank and Bank of China, Australia’s Westpac Banking Corp and Malaysia’s Bumiputra Commerce and Malayan Banking.

UOB had a better franchise and more creative management than Singapore rival DBS Group, he added when asked why the fund did not hold DBS. Mr Kerley had earlier said in a presentation that DBS ‘looked pretty cheap’.

Turning to other sectors, Mr Kerley said he was wary of owning Reits because they had become relatively expensive. Several Reits had been structured to boost earnings in the initial years and it was not clear whether the dividends were sustainable, he added.

In terms of country allocation, Mr Kerley said he liked Taiwan because valuations were attractive. The Taipei stock market may also benefit from a ‘liquidity overflow from China’ as investors sought safer bets.

Mr Kerley said in addition to picking stocks that offer a mix of dividend and growth, the fund also writes put options on its portfolio to lock in gains and will use synthetic products in certain countries to reduce withholding tax.

 

Source: Reuters (Business Times 12 Oct 07)

US credit crunch may test global economic growth

Broader slowdown cannot be ruled out after sub-prime fallout: IMF

(WASHINGTON) The recent global credit squeeze caused by the meltdown of risky US mortgage loans may test the ability of the world’s economy to keep expanding as it has over the past several years, the International Monetary Fund (IMF) said on Wednesday.

The IMF also said government policymakers would be confronted with new problems from the continuing process of globalisation and warned against overconfidence that economic stability would continue indefinitely.

In the analytical chapters of its World Economic Outlook released in advance of the Oct 17 publication of the forecast, the IMF said the durability of the global economic expansion is likely to persist.

‘Nevertheless, with financial markets around the world now being affected by the fallout from the US sub-prime mortgage difficulties, a broader economic slowdown cannot be ruled out,’ the IMF said.

Commenting on the released chapters, Simon Johnson, the IMF’s chief economist, said at a news conference that financial globalisation ‘is beginning to enter territory we have not seen before’.

He said the rapidity with which the credit crunch in the US spread to other countries demonstrates that ‘the interconnections between different kinds of financial institutions and between countries are becoming more complex and when sparks fly, they fly quite a long way and they jump over firebreaks’.

The IMF report is issued in advance of meetings of the Group of Seven major industrialised nations and the annual meetings of the IMF and its sister organisation, the World Bank, on Oct 20-22. The IMF warned against overstating prospects for future stability.

‘The process of globalisation continues to present policymakers with new challenges as reflected in the difficulties in managing volatile capital flows, increasing exposure of investors to developments in overseas financial markets and the uncertainties associated with large current account imbalances.’ The IMF said interest rates had returned to more neutral levels in most major advanced economies.

But the 185-nation lending organisation said, ‘The correction of asset prices in some countries and the current rise in risk premiums and tightening credit market conditions may also test the strength of the current expansion.’

 

Source: AP (Business Times 12 Oct 07)

US growth to slow to 2% in 2008: survey

CEOs polled say economy will be hurt by the increase in costs of credit

(NEW YORK) US economic growth will slump to 2 per cent or less next year, hurt by the increase in costs of credit, a majority of US chief executive officers predict in a new survey.

How the turmoil in financial markets unfolds will be the most important determinant of the economy’s performance next year, according to one-third of executives surveyed by the Business Council. Forty per cent said that it was ‘very important’ to the outlook.

The group, which includes the heads of Fortune 500 companies, said that its index of business confidence dropped to the lowest level since it began in February 2005.

Executives’ concern that the sell-off in credit markets and deepening housing-market slump may spill over to consumer spending parallels remarks by some Federal Reserve officials.

The Washington-based Business Council’s gauge of confidence fell to 38.2 from 47.8 in February. The index reflects survey questions about current conditions and the outlook over the next six months.

Foreclosures are deepening the US housing recession by pushing more homes onto a market where sales and prices are dropping. US foreclosures doubled in September from a year earlier as sub-prime borrowers struggled to make payments on their adjustable-rate mortgages, RealtyTrac Inc said.

There were 223,538 foreclosure filings last month, including default and auction notices and bank repossessions, RealtyTrac said yesterday. California had the most with 51,259 and Florida was second with 33,354. The national foreclosure rate was one for every 557 households.

‘The truth of the matter is that borrowers are going into default as soon as they hit their adjustments,’ said Rick Sharga, executive vice-president of marketing for RealtyTrac.

On Wednesday, Treasury Secretary Henry Paulson said that a new mortgage industry coalition would help coordinate efforts by financial companies to help an estimated two million homeowners whose introductory mortgages with low rates are now resetting at much higher rates. He said that 11 of the largest mortgage service companies, representing 60 per cent of all mortgages in the country, had agreed to join the new coalition. Other members will include mortgage counselling agencies, investors and large trade organisations.

But both credit rating agency Standard & Poor’s and investment bank JPMorgan said that the worst of the credit markets turmoil is yet to come.

David Wyss, chief economist at S&P said at a conference in Hong Kong: ‘We’ve seen the worst of the panic, but we haven’t seen the worst of credit losses.’ He expected another 25 basis-point rate cut by the Fed by the end of January next year.

JPMorgan in a research report said that the losses of struggling companies will be more severe as time goes by, after they bought themselves time by having looser bank covenants.

Former Federal Reserve chairman Alan Greenspan said that the credit crunch will eventually take its toll on the US economy.

A home prices slump will eventually prompt consumers to cut back spending, he told the World Business Forum in New York.

 

Source: Bloomberg, AP (Business Times 12 Oct 07)

US$ sellers continue to bear down

US DOLLAR bears continued to find reasons – even if some were less than substantive – to force their favourite target to fresh lows in Asia yesterday.

The euro surged back above US$1.42 and the Australian dollar recorded a fresh 23-year high of 90.49 US cents, while the Canadian dollar was not afraid to continue scaling fresh peaks despite already trading at highs versus the embattled US unit not seen in more than three decades.

By the Asian close, the euro had rebounded half a per cent to US$1.4206, while another chunky 0.8 per cent surge in gold – to US$746.6 per ounce – gave even more upside impetus to commodity currencies like the Australian, New Zealand and Canadian dollars. The latter three eventually closed the day between 0.4 and 0.7 per cent better off once again – at 90.41 US cents, 76.97 US cents, and C$0.9772 per US dollar respectively.

Traders reported that with the Bank of Japan leaving rates unchanged (as expected) at 0.5 per cent yesterday, and August machinery orders falling more than expected, the Japanese yen ended up matching the US dollar’s weakness in Asia yesterday.

Elsewhere in the region, however, even the threat of central bank intervention could not prevent the latter from recording fresh multi-year lows versus Asian front-runners like the Malaysian ringgit, Indian rupee and Philippine peso. Locally, the greenback dipped slightly to match Wednesday’s S$1.4620 lows, while closing the day with further losses of 0.3 per cent each to 3.3640 ringgit and 44 pesos – but did recover a touch to finish about unchanged at 39.3 rupees.

Traders reported that more overnight expressions of concern about a weaker US housing sector were this time compounded by talk of an imminent auto-workers’ strike.

Abroad, UK-based currency research firm Forecast highlighted fresh rumours of a possible depeg of the Saudi Arabian riyal from the US dollar as Middle East holidays associated with the end of Ramadan approach this weekend.

Exceptionally, the British pound was a currency which did end up even worse off than both the US and Japanese currencies, following yet more bad news overnight from the UK residential property market.

After the Asian close on Wednesday, the country’s Royal Institute of Chartered Surveyors (RICS) reported that house prices had fallen at their fastest pace in two years in the third quarter.

Researchers at UK investment bank Barclays Capital warned: ‘The RICS release is part of the reason sterling has sold off sharply overnight and we expect further depreciation over the next few months, particularly against the euro.’

By the Asian close yesterday, the British pound had chalked up losses of 0.3, 0.4 and 0.7 per cent versus the US dollar, Singapore dollar and euro – to close at US$2.0406, S$2.9844 and 69.62 pence per euro, respectively.

And in terms of our charts, the UK unit’s sharp slide yesterday forced it through the key support area of S$2.9930-50 we highlighted on Wednesday this week – opening the way for a sharper downside move towards the S$2.95 area.

 

Source: Business Times 12 Oct 07

MGM’s casino resort to rival Vegas’ best

AN OTHERWISE dismal year for the Atlantic City casino industry turned a bit brighter on Wednesday when gambling giant MGM Mirage, announced plans to build a huge resort hotel that would rank among the most expensive casino projects in history. The casino hotel, to be called the MGM Grand Atlantic City, will cost US$4.5 billion to US$5 billion, it said.

The current Las Vegas record holder is Wynn’s, which cost US$2.7 billion and opened in 2005, though there are several casino hotel projects on the drawing boards in Las Vegas in the US$4 billion to US$5 billion range.

The project, expected to be completed by 2012, includes three distinct hotel towers. One is expected to have a ‘more contemporary feel,’ Gordon Absher, an MGM spokesman said, while a second will be more upscale. A third, he said, will be an all-suites tower ‘for high rollers or those who are willing to pay to be treated like high rollers’. The property will also include a 1,500-seat theatre, a spa, a convention centre and up to 500,000 square feet of retail space.

The MGM announcement comes at a time of declining gambling revenue as Atlantic City faces increased competition from slot parlours that have recently opened in Pennsylvania and New York. Through the first nine months of 2007, the city’s casinos won a combined US$3.8 billion, a 5 per cent drop compared with figures in the period a year earlier, according to the New Jersey Casino Control Commission.

‘What this says is that, like us, MGM sees this decline as a temporary phenomenon,’ said Michael Pollock, publisher of trade journal The Gaming Industry Observer.

Mr Absher said MGM did not look at the overall performance of Atlantic City’s 11 casinos but instead focused on the experience of a single property: the Borgata, the first billion-dollar casino in a market that still ranks as the second-largest in the US. Despite new competition from nearby markets, at the Borgata, which opened in 2003, revenue from slot machines and table games has risen modestly in the first nine months of 2007. MGM owns 50 per cent of the Borgata.

MGM is only the most recent company to wager large sums that Atlantic City can transform itself from a low-rent gambling factory on the Jersey Shore into a world-class entertainment destination. In that view, Atlantic City would become a kind of Las Vegas East that lures younger tourists who spend as much money on fine food, big-name performers, expensive hotel rooms and other amenities as they do gambling.

Harrah’s, for instance, has spent hundreds of millions of dollars in Atlantic City over the last couple of years to improve its four properties there.

And Pinnacle Entertainment, which operates six casinos across the country, announced plans last year to build a US$1.5 billion casino hotel in place of the Sands, which closed last year. ‘For those casino companies willing to make the investment, the upside in this market is enormous,’ Mr Pollock said.

 

Source: NYT (Business Times 12 Oct 07)

After sub-prime, investors turning to commodities

Search for higher yields leads to CCOs tied to a portfolio of commodities

(NEW YORK) Investors and fund managers bitten by the collapse in sub-prime mortgages are now looking for new opportunities to trade bonds linked to traditionally volatile commodity prices and risky emerging markets.

While the ensuing credit crunch from the sub-prime collapse reduced liquidity and rocked markets globally, there are some who see a comeback in packaging commodities and emerging market securities – even though they are viewed as some of the riskiest investments in the marketplace.

‘These are very new markets,’ said Mirko Mikelic, a fund manager at Fifth Third Asset Management in Grand Rapids, Michigan. ‘I think people will look at it, but it’s not clear if it’s a viable market.’

Some managers are already setting up deals, however. But the shape of the business is changing. The era of the small manager ‘has probably come to an end’, according to Alex Cigolle, chief investment officer of Strategos Capital Management, the CDO management unit of Philadelphia-based Cohen & Co. ‘You’re going to see massive consolidation.’

That shrinking market is sparking a new migration on Wall Street. Now, in a search for higher-yielding assets – and new jobs – an army of structured credit experts is studying products such as Collateralised Commodity Obligations, or CCOs, that are tied to the performance of a portfolio of underlying commodities, such as precious metals or energy prices.

The gravitation toward commodities makes sense as new records in oil, gold and wheat prices helped five of the world’s best-known commodity indexes gain an average of 18 per cent through September. ‘Things like debt linked to commodities and emerging market CDOs are still being sold,’ said Lars Gloessner, a senior consultant for Huxley Associates, a Wall Street job recruiter.

Here’s how a typical CCO works. The issuer sells protection on the underlying commodity portfolio to the counterparty under what is known as a ‘trigger swap agreement’. To fund its obligations under the swap, the issuer sells notes in the amount of the protection sold, according to Fitch Ratings. Proceeds from the notes then serve as collateral for the issuer’s exposure under the swap until it matures.

At maturity the issuer liquidates the remaining asset and returns the proceeds to noteholders.

 

Source: Reuters (Business Times 12 Oct 07)

Existing and new-home sales expected to drop

‘Exceptionally weak’ US housing market may lead to recession

BOSTON- EXISTING home sales this year probably will fall to a five-year low – worse than forecast – signalling that the United States housing market is far from hitting its bottom.

New-home sales may decline 24 per cent to a 10-year low of 804,000, and existing home sales, to 11 per cent, the National Association of Realtors said in a news statement on Wednesday. It was the 10th time this year the group had lowered some part of its monthly housing and economic forecast.

Home resales tumbled to a five-year low in August as prices declined, sub-prime mortgage defaults soared and lenders such as Countrywide Financial raised standards even for borrowers with the best credit.

US Federal Reserve policymakers have said the housing market is ‘exceptionally weak’, and some economists think the slump may push the US into a recession.

‘The credit tightening is knocking homebuyers out of a market that already was quite weak,’ said Mr Brian Bethune, an economist at Global Insight.

A month ago, the Realtors called for an 8.6 per cent decline in sales of previously owned homes, which account for about 85 per cent of the market.

Existing home sales may drop to 5.78 million this year from 6.48 million last year, and prices for both new and existing homes are also forecast to fall, the Realtors said.

The decline in new-home sales forecast for the year by the Realtors would put sales 37 per cent down from the record of 1.28 million in 2005. That would exceed the 25 per cent three-year drop that ended in 1991, the last housing recession.

The Fed cut last month the rate it charges banks, by half a percentage point to 4.75 per cent. The first reduction in four years was double the amount most economists had forecast.

The rate cut probably will not give a boost to the housing market until next year, Mr Donald Kohn, the vicechairman of the Fed, said last week.

‘Housing markets are likely to remain depressed in the coming months, as housing demand is restrained by the difficulty in obtaining mortgages and perhaps also by spreading expectations on the part of buyers that house prices will fall, as they already have in a number of markets,’ Mr Kohn said.

‘A cutback in housing construction is a positive sign for the market because it will help lower inventory and firm up home prices,’ Mr Lawrence Yun, an economist with the Realtors, said in the report.

With prices in the existing home market falling, home builders have slashed prices and abandoned land purchases.

 

Source: BLOOMBERG NEWS (The Straits Times 12 Oct 07)

Investment property sales jump 94% to $15.7b

INVESTMENT property sales nearly doubled, touching $15.69 billion, in the third quarter, reflecting buoyant investor sentiment.

This was 93.9 per cent higher than the $8.09 billion recorded in the same period last year, a new report by property consultancy CB Richard Ellis (CBRE) showed yesterday.

Most investment sales – 64.3 per cent, or $10.1 billion – came from the private sector, while public sector land sales made up 35.7 per cent, or $5.6 billion.

For the first nine months, major property deals worth $40.95 billion already exceed last year’s full-year value by 34 per cent, said CBRE.

In the third quarter, the office sector was the top performer, accounting for 43.5 per cent, or $6.83 billion, of major property deals – more than quadruple the $1.37 billion in the previous quarter.

Prime office rents also topped the 1990 historical peak of $11.50 per sq ft (psf) per month to hit $12.60 psf per month, up 82.6 per cent year-on-year.

CBRE expects occupancy levels to stay in the range of 91 per cent to 95 per cent for the next five years, even as more office space is built.

The third quarter also saw a rise in industrial property rents, except for warehouses.

The office space crunch has led to more demand for high-tech space, which has risen 8.5 per cent to $2.55 psf, and is set to reach $2.75 psf by year- end, said CBRE.

Its rental statistics are based on a selected basket of prime office buildings.

The Urban Redevelopment Authority said yesterday that its third-quarter statistics will be released by monthend, and will be more comprehensive as it is based on the tax records of all rental transactions in the quarter.

CBRE has also forecast that a record $50 billion in investment property sales would be completed by year-end.

 

Source: The Straits Times 12 Oct 07

Sing Holdings sells EastGate units for $63m

A DECISION to focus on the booming residential property market has seen Sing Holdings sell off 48 commercial units in its EastGate building for $63 million.

The 10-storey EastGate, developed by Sing Holdings, received temporary occupation permit (TOP) status in 1998 and is located along East Coast Road and near Marine Parade Central.

Of its 52 units, four were sold before TOP. Sing Holdings said yesterday that it had decided to sell off its remaining units to focus on residential property.

Managing director Lee Sze Hao said in a statement: ‘The divestment of EastGate is in tandem with the company’s current business model of focusing on residential property development.

‘With the appreciation in values of commercial space, we believe that it is now an opportune time to unlock the value of EastGate.’

The units are being sold to Develica Asia Pacific, a wholly owned unit of Develica Asia Pacific Management, which invests in regional commercial real estate.

Develica chief executive officer Chris Brown said: ‘This is an excellent acquisition as it allows us to tap into the decentralisation of office operations out of the central business district due to the rise in rentals there.’

The sale price works out to about $1,059 per sq ft based on a net saleable area of 59,491 sq ft.

Sing Holdings will reap a net gain of some $15.9 million from the sale, which is expected to completed on Dec 13.

It intends to use the proceeds to pursue opportunities to expand its land bank for residential property development projects. The sale was brokered by Savills Singapore.

 

Source: The Straits Times 12 Oct 07

China plans to launch Reits on Shanghai bourse

BEIJING – CHINA plans to launch real estate investment trusts (Reits) on the Shanghai Stock Exchange as part of a bid to provide more financial products for investors, a senior official said yesterday.

Mr Zhu Congjiu, the general manager of the Shanghai Stock Exchange, did not specify when the Reits would come to market.

But he told a financial forum that his office was planning to launch some Reit products to let more investors reap gains from China’s soaring property prices.

Reits are a cross between bonds and equities, with regular dividends and capital appreciation gains. They invest in real estate directly, either through properties or mortgages, and can be sold like stocks on major exchanges.

‘There is huge potential for Reits in a big and rapidly developing country like China,’ Mr Zhu said, adding that his office would consider opening an international board for foreign firms to sell shares in China.

‘Some institutions have suggested we open such a board and there is also great demand for it. We will actively study it and launch it when the conditions are ripe.’

Mr Gui Minjie, the vice- chairman of the China Securities Regulatory Commission, said at the same forum that Beijing would steadily encourage domestic mutual funds to venture abroad under the Qualified Domestic Institutional Investor scheme.

He said China’s fund industry had significant potential for further growth, especially as the country’s pension funds would expand to around US$1.8 trillion (S$2.64 trillion) by 2030 as the population ages.

Source: REUTERS (The Straits Times 12 Oct 07)

HORIZON TOWERS SAGA – Judge sends en bloc case back to Strata Titles Board

Court overturns board’s ruling, saying technical errors not sufficiently serious to halt sale

THE Horizon Towers sale is back on, after a landmark decision by the High Court yesterday overturned a Strata Titles Board (STB) ruling to abort the deal.

Justice Choo Han Teck ruled that the STB’s move in August to halt the sale based on technical errors in documents was wrong.

He said the errors were not sufficiently serious to prejudice minority owners opposing the $500 million sale of the Leonie Hill condo.

Lawyers said the ruling, which came after an at times hostile hearing last week, will improve the en bloc process for cases pending STB approval by establishing clear guidelines over how ‘paperwork errors’ can be dealt with.

Yesterday’s ruling was hailed by Senior Counsel K. Shanmugam from Allen & Gledhill, who was acting for the buyers: ‘This is exactly the result we wanted.’

The majority owners will now have to take the fractious case back to the STB.

Disgruntled minority owners have two options. They can go to the STB hearing and file their objections, which include disquiet over the price. But others may want to appeal against the High Court judgment.

STB threw out the estate’s sale application because three pages with consenting owners’ signatures were missing.

But Justice Choo said these were insufficient grounds: ‘If an error or omission had caused prejudice to the minority, the board may … dismiss the application.

‘If it does not, the board is … empowered to allow an amendment or correction so that the record is clear.’

Even without the three pages, the 80 per cent requirement for a collective sale had been satisfied, he said.

‘If one takes the view that the board has no power to allow an amendment even for a typographical error, then an entire en bloc sale could be stopped by a comma in the wrong place.’

The ruling has not ended the legal wrangling.

The buyers – Hotel Properties and two partners – are suing the majority owners for alleged breach of contract.

They claim the owners did not do their utmost to seal the sale at the price agreed to in February and want up to $1 billion in damages.

The owners, keen to keep that suit at bay, extended the sale deadline to Dec 11. HPL has put the suit on hold.

Mr Lim Seng Hoo, the estate’s sale committee chairman, said yesterday’s decision showed the owners had not breached their sale contract. ‘We will go back to the STB as soon as we can,’ he said.

Justice Choo’s judgment has wider implications as well in that it puts uncertainties over technical errors to rest.

New collective sale rules that kicked in on Oct 4 allow the STB to disregard technical irregularities that do not prejudice any owner’s interest. But this rule does not apply to applications that pre-date the Oct 4 change.

These applications waiting STB clearance now have clearer guidelines.

‘It is the first time a collective sale rule has been interpreted so clearly and in a purposive way,’ said a lawyer involved in collective sales.

‘It will affect other cases where an attempt to defeat a sale is going to be made on a literal reading of the rules.’

 

Source: The Straits Times 12 Oct 07