Amber Glades up for en bloc sale at $145m

JUDGING by the asking prices of new collective-sale sites, it would seem there is no shortage of confidence in the property market.

Amber Glades, off Amber Road on the East Coast, has just been put up for collective sale at an indicative price in the region of $145 million. And the buyer can also expect to pay a development charge of about $9 million on top of that.

Amber Glades is on a 40,917 sq ft site with a 2.8 plot ratio. At the indicative price, the cost works out to $1,345 per square foot per plot ratio (psf ppr).

In August, a smaller site off Meyer Road sold for $58 million or an estimated unit land price of $882 psf per plot ratio including a development charge.

Marketed by Colliers International, the Amber Glades site can be redeveloped into 88 residential units of 1,300 sq ft each. Colliers executive director of investment sales Ho Eng Joo estimates that based on the indicative price, the breakeven price is about $1,700-$1,800 psf. This would put the launch price at over $2,000 psf.

But a selling price of $2,000 psf would not be a new benchmark for the East Coast area. Mr Ho believes some new developments have already been transacting at this price.

Market watchers claim that the Aalto on Meyer Road is one development achieving such prices – though a check of the latest data for on the Urban Redevelopment Authority’s website reveals that only one unit was sold in September and the transacted price was $1,570 psf. Whether subsequent sales have been done at a higher price will be known next month.

For now, according to caveats lodged, The Seafront on Meyer has had units transacted at over $2,000 psf but these have been penthouse units.

Closer to the Amber Glades site are the residential developments One Amber and The Esta. Recent transactions in these developments are in the range of $1,000 psf and $700 psf respectively.

 

Source: Business Times 24 Oct 07

Reserve site up for sale, sparked by $7.8m bid

Committed sum for 17conservation shophouses comes to just $460K each

With property prices hitting new peaks in recent times, it is rare to see a committed bid of just $7.8 million for a 15,200 sq ft site near the city centre.

Based on the committed bid received by the Urban Redevelopment Authority (URA), each of the 17 two-storey shophouses on this Jalan Sultan site could, theoretically, go for as little as $460,000 a unit.

The committed bid is not the transacted price for the reserve list site as it will now be put up for public tender. Still, it gives an indication of the range of bids that could eventually come in.

The 17 shophouses have been gazetted for conservation and the successful tenderer is required to restore and reconstruct these conservation shophouses in accordance with the tender conditions and the Urban Redevelopment Authority’s Conservation Guidelines for Historic District.

Zoned for commercial use, the shophouses could be used for office or even as hotels.

Colliers International executive director (investment sales) Ho Eng Joo believes the winning bid could be around $14 million or roughly $800,000 a unit. Add to this renovation and restoration costs of about $300,000 per unit and the potential winning bidder could be looking at spending about $1.1 million per unit.

But as Mr Ho notes: ‘The area is changing.’ Highlighting that KeyPoint, formerly known as Jalan Sultan Centre, was sold recently for $1,186 psf of net lettable area, Mr Ho believes the 17 shophouses could give an investor a yield of over 5 per cent if each unit is rented out for at least $5,000 a month.

‘Only the lack of carparking could be an issue,’ he added.

Over in Woodlands, the Singapore Land Authority has released a 172,223 sq ft residential development site at Woodlands Avenue 2/Rosewood Drive and developers could also be looking at a bargain.

Mr Ho reckons the site, which is on the confirmed list of the Government Land Sales programme, could go for between $250 – $280 psf ppr. With a plot ratio of 1.4, the gross floor area could be up to 241,112 sq ft, giving the site a price tag of between $60.2 million and $67.5 million.

The site may not be directly next to an MRT station but Mr Ho believes a future development would have good rental potential as it is close to the Singapore American School.

 

Source: Business Times 24 Oct 07

Mapletree plans to list Reits, snap up new assets

Commercial trust may include VivoCity; company eyes big growth overseas

(SINGAPORE) Mapletree Investments intends to list a commercial trust with a $3-$3.5 billion portfolio in the next six months as it moves to grow its fee income and expand its footprint overseas, says chief executive Hiew Yoon Khong.

‘Over the next four years we want to scale up our capital management business by being very active in key markets,’ he told The Business Times in a recent interview.

Besides Singapore, the company is looking at China, India and Vietnam for acquisitions. And in the slightly longer term it is also interested in Taiwan, South Korea and Thailand – particularly their logistics and industrial sectors.

The plan is to bump up revenue from fee income to 50 per cent of overall revenue in the next three to five years – from just 9 per cent in Mapletree’s last financial year.

To grow the capital management business, the company has opted to look abroad. Right now only about 20 per cent of its portfolio is outside Singapore. But Mr Hiew said the proportion could be as high as 80 per cent in five years.

‘As a group, we hope to be able to break into one or two new markets a year,’ he said. The greatest opportunities, he believes, are in China, where Mapletree is now looking at second-tier cities. First-tier cities are ‘too crowded and the values are too high,’ he said.

In particular, Mapletree is trying to expand its commercial presence in Singapore and the region.

‘People know us as a logistics player, but as a company we are a lot more than that,’ Mr Hiew said. ‘Looking forward, we will be bidding for land to do development work. In Singapore, we are keen to have a bit more exposure to the office sector in particular.’

One way to do this is through the upcoming commercial trust – which the market has been waiting for.

The trust will likely contain VivoCity – Mapletree’s largest asset, with a book value of about $1.6 billion – as well as other commercial properties including office buildings Harbourfront Centre and PSA Building and nightspot St James Power Station, Mr Hiew said.

Mapletree is already lining up a pipeline of assets for the trust. In a break from tradition, the company this year started bidding for commercial land sites in Singapore.

In July it won a government land sales site at Anson Road/Enggor Street in a public tender that drew other big names such as CapitaLand and Keppel Land. Mapletree’s offer was 23 per cent higher than the next highest bid.

In addition, Mapletree is likely to launch a Reit based on assets in India, with its Indian property development partner Embassy Group, by the first half of 2008.

Market talk of Embassy’s Reit, which will be managed through a joint-venture partnership between Embassy and Mapletree, has been around since early this year. Mr Hiew confirmed plans for the Reit.

‘We will probably hold some sort of equity stake in the trust but that is not finalised yet,’ he said.

Mapletree has also secured a deal to co-manage the Lippo Group’s Indonesia-focused retail Reit. The prospectus for this Reit was lodged with the Monetary Authority of Singapore (MAS) last Friday.

Mr Hiew is also committed to growing Mapletree’s private equity franchises. For example, the company – together with its partner CIMB – will be launching its second Malaysia fund in the next six months.

Mapletree’s growing portfolio in Singapore and overseas will serve as an asset pipeline for both the existing Mapletree Logistics Trust and the new commercial trust, as well as any funds the company might set up in future.

‘We are very keen to support the growth of our Reits and fund business,’ Mr Hiew said.

With its asset-light strategy in place, the company will now be able to take on bigger projects and move faster on them.

Right now, assets under management stand at $2.2 billion, while Mapletree owns a further $4.8 billion of assets.

Mr Hiew’s aim is to grow by $1 billion or so each year.

‘Four years ago we mapped out strategic initiatives for the company to enhance our value,’ he said. ‘When we review the programme now, we are happy with the progress to date but will look to scale up these businesses much more.’

 

Source: Business Times 24 Oct 07

KepLand Q3 net profit climbs 113%

Turnover surges 49.4% to $382m mainly due to robust residential sales

KEPPEL Land, Singapore’s third-largest developer by market value, yesterday said that net profit for its third quarter more than doubled on strong home sales and higher office rents.

Net profit for the three months ended Sept 30, 2007, hit $81.8 million, up 112.7 per cent from the $38.5 million recorded a year ago.

Earnings per share rose 111.1 per cent to 11.4 cents, from 5.4 cents a year ago.

Profit was boosted by a 49.4 per cent increase in turnover to $382 million – from $255.6 million a year ago – which KepLand attributed mainly to robust residential sales in Singapore and abroad.

The developer saw higher revenues from Park Infinia at Wee Nam, The Suites at Central and Freesia Woods in Singapore. It also reported higher revenues from 8 Park Avenue and The Seasons in China and Elita Promenade in India. KepLand also saw maiden revenue contribution from its newly launched Villa Riviera in China.

Rental income from the group’s office buildings was also higher compared to the third quarter of 2006, KepLand said.

For the nine months ended September 30, 2007, KepLand’s net profit rose 74.1 per cent to $207.3 million, while turnover climbed 71 per cent to $1.04 billion.

Earnings per share rose 73.5 per cent to 28.8 cents.

KepLand sold a total of 750 homes in Singapore in the first nine months of 2007, it said.

Strong sales were achieved at Reflections at Keppel Bay, with all 600 launched units sold.

As a result, profit from Singapore grew a significant 184.6 per cent to $134.6 million for the first nine months of the year.

With the increase, the proportion of group profit from Singapore expanded to about 65 per cent, as compared to 40 per cent for the same period in 2006.

Going forward, KepLand, together with joint venture partners Cheung Kong Holdings and Hongkong Land will launch the 223-unit Marina Bay Suites early next year on the back of hot demand for private homes.

Official data shows that private home prices have climbed 22.6 per cent since the start of the year. Said KepLand: ‘The group will release other prime residential projects in tandem with market demand.’

The developer also added that it will benefit from rising office rents in Singapore, both through its own properties and through its listed trust K-Reit Asia.

Grade A office rentals hit $14.90 per square foot (psf) per month in the third quarter, up 70.7 per cent from $8.73 psf at end- 2006, according to data from CB Richard Ellis. KepLand owns about 40 per cent of K-Reit.

KepLand also said it sold more than 2,200 homes overseas in the first nine months of the year – mainly in China and India.

And riding on the strength of the overseas markets, the developer hopes to launch several new projects in China, Vietnam and India in the fourth quarter of 2007.

KepLand’s shares rose five cents to close at $8.25 yesterday. The stock has climbed some 19.6 per cent since the start of the year.

 

Source: Business Times 24 Oct 07

Genting seeking $3.2b loan for Sentosa resort

GENTING International plc, a unit of Asia’s biggest casino operator by market value, is seeking to borrow a record S$3.2 billion to fund a casino resort in Singapore, three people with knowledge of the transaction said.

The overseas unit of Kuala Lumpur-based Genting Bhd is adding to S$2.17 billion raised in a rights offer in August, and S$450 million of convertible bonds it sold in April to partly fund the resort.

Genting International’s loan will push lending to Asia’s casino industry to about US$9.1 billion, more than double the total for last year, according to data compiled by Bloomberg. Lending to the region’s industry is set to grow as countries including Japan consider joining Singapore in lifting bans on casinos.

‘There are quite a few countries in Asia where gambling is banned,’ said Harsh Agarwal, a credit analyst with Lehman Brothers. ‘If more countries legalise gambling, we should see an increase in bank lending for casinos.’

Las Vegas Sands, the world’s largest casino operator by market value, hired eight banks last month to arrange a loan of about S$5 billion for its Singapore gaming resort.

Genting International’s loan will be a record for the Singapore-listed company. The gaming operator has yet to pick arrangers, said the people, who declined to be identified because the information is private.

Tan Hee Teck, chief executive officer of Resorts World at Sentosa Pte, Genting International’s S$5.2 billion casino project in Singapore, didn’t return calls made to his office yesterday.

The regulated gambling market in the Asia-Pacific region is expected to expand 15.7 per cent a year to US $30.3 billion in 2011, according to PricewaterhouseCoopers. The region will replace Europe, the Middle East and Africa as the second-biggest gaming market after the US by 2011, PwC says.

Genting International will be building the casino on Sentosa island, known for its golf courses and beaches. The resort will include South-east Asia’s first Universal Studios theme park.

Singapore’s government lifted a four-decade ban on casinos two years ago and issued licences to Genting International and Las Vegas Sands.

‘Bankers will take a lot of comfort in that Genting does have a history in casinos,’ Mr Agarwal said.

 

Source: Bloomberg (Business Times 24 Oct 07)

MAS official casts light on two market risks

Deputy MD also calls on banks to update their stress test scenarios

(SINGAPORE) THE recent credit crisis has put the spotlight on off-balance-sheet exposures and regulatory liquidity requirements, said Ong Chong Tee, the Monetary Authority of Singapore’s (MAS) deputy managing director.

Two financial innovations most often cited as the culprits which caused the credit markets to seize up – risky assets packaged into collateralised debt obligations (CDOs) and structured investment vehicles (SIVs) – are held as offbalance- sheet items by financial institutions.

This has led to no transparency on their holdings.

Mr Ong said SIVs allow banks to gain exposure to risky assets such as US sub-prime mortgages which were the initial trigger for the crisis through contingent arrangements that minimise capital charges. As off-balance-sheet items, banks did not have to set aside capital for these assets.

‘CDOs and SIVs therefore helped to spread the exposures and losses from sub-prime. But they also did something else – they made the financial system a lot more opaque and a lot harder to determine who owns what risks,’ he said.

Mr Ong was speaking at a derivatives conference yesterday.

‘In mid-August, when the Libor (London interbank offer rate) market was malfunctioning, I had asked a senior banker why banks are not lending to each other. His reply was simple – uncertainty. As we know, the flip side to that uncertainty is the fall in confidence.’

‘Banks are uncertain about their own balance sheets and they are uncertain about other banks’ balance sheets. At the crux of this uncertainty is their inability to value their own derivatives positions and to estimate the probability that their contingent liabilities may be called,’ said Mr Ong.

The recent crisis has surfaced many issues that regulators and financial institutions will need to give attention to so that financial innovation can continue on solid foundations of robust risk assessment and management, he said.

Mr Ong highlighted two issues.

‘First, it is clear that both financial institutions and regulators have to give more attention to off-balance-sheet exposures, whether they arise from contingent liquidity lines, implicit or explicit credit enhancement and support, or exposures that could come back on balance sheet for reputation considerations,’ he said.

Second, the recent events highlighted the importance of liquidity risk management and regulation, said Mr Ong.

‘In the past months, we have seen a stark demonstration and perhaps timely reminder, that market liquidity risk and funding liquidity risk can be interlinked. Liquidity evaporated across a range of credit markets and wholesale money markets, and where it was still available, spreads had shot up considerably,’ said Mr Ong.

‘These events reinforced the fundamental importance of regulatory liquidity requirements, alongside regulatory capital or solvency requirements.’

Mr Ong called on banks to update their stress test scenarios with elements of the recent events and simulate the impact not just on capital but also on their liquidity positions.

 

Source: Business Times 24 Oct 07

Sub-prime crisis negligible: Infosys CEO

The challenge to the company was the sudden appreciation of the rupee

(NEW YORK) India’s No 2 software services exporter, Infosys Technologies Ltd, has felt a ‘negligible’ impact on its business from the US sub-prime mortgage crisis, its chief executive said on Monday. ‘Given our size, impact has been negligible,’ S Gopalakrishnan said in an interview.

US clients, who account for more than half of the company’s business, have not pulled back on information technology (IT) spending or cancelled projects with it, Mr Gopalakrishnan said, despite the sub-prime mortgage crisis that has sparked fears of an economic downturn in the US.

Adding to those worries is the rupee’s steep appreciation – it has gained up to 12.5 per cent against the US dollar this year. ‘What challenged Infosys was this sudden appreciation,’ Mr Gopalakrishnan said. He added that he expects the rupee, which has hit 91/2-year highs against the US dollar, to be very volatile in the short term.

Infosys, which has about 80,000 employees, has previously said that margins may fall by 50 to 100 basis points in the fiscal year that ends in March.

The company has also said that it will lose about 20 billion rupees (S$734 million) in revenue in the year, given the rupee’s strength against the US dollar.

But Infosys, whose clients include ABN AMRO, Goldman Sachs and Royal Philips Electronics, would be able to cope if the rupee appreciates gradually in the medium to long-term, Mr Gopalakrishnan said.

‘If the appreciation is gradual, we are able to grow our business, sustaining margins,’ he said.

The company was in deal talks with 14 to 15 companies in Europe and the US at any given time, for an aggregate value of about US$1 billion, he said, but declined to elaborate.

 

Source: Reuters (Business Times 24 Oct 07)

Govt puts residential site in Woodlands up for sale

THE Government has launched for sale a residential site in Woodlands, which has been enjoying a buoyant property market of late despite its far-flung location.

The Singapore Land Authority offered the 172,223 sq ft site in-between Woodlands Avenue 2 and Rosewood Drive in a tender that closes on Nov 20.

The site can accommodate a condo of up to five storeys with a gross floor area of 241,112 sq ft.

Mr Ho Eng Joo of marketing agent Colliers International said an apartment there could sell for more than $600 per sq ft (psf).

Already, some 20 units at Far East Organization’s executive condo, La Casa, were sold at a median price of $564 psf last month. La Casa was launched in 2005 at $380 psf on average.

While Woodlands may be far from town, properties there have registered rising rents, as the Singapore American School is in the vicinity, consultants say.

The Woodlands site comes under the Government’s confirmed list, where sites are put up for tender on a specific date.

The Government also sells sites on its reserve list, which are put up for tender only if a developer commits to submitting a minimum acceptable bid.

Yesterday, a developer did just that with a 99-year leasehold commercial site in Jalan Sultan involving the restoration of 17 two-storey conservation units.

The Urban Redevelopment Authority has an offer from a developer willing to bid at least $7.8 million for the 0.14ha site to be tendered out in two weeks.

In Amber Road, where property values continue to rise, a freehold site housing the 63-unit Amber Glades has been launched for sale at a guide price of $145 million. The tender for the 40,917 sq ft site closes on Dec 5.

 

Source: The Straits Times 24 Oct 07

September inflation rate eases to 2.7%

Consumer prices decline 0.3% from August, latest statistics show

THOSE who think prices in Singapore just keep going up had a pleasant surprise yesterday when the latest inflation figures were released.

Consumer prices rose at a slower rate of 2.7 per cent last month from a year earlier and eased from August’s 2.9 per cent.

Not only did last month’s consumer price index (CPI) inflation come in lower than all market forecasts, overall prices also retreated by 0.3 per cent from the previous month.

Department of Statistics (DOS) figures announced yesterday showed that cheaper housing and lower transport and communication costs led the month-on-month decline in consumer prices.

‘Housing costs went down by 1.2 per cent due mainly to lower housing maintenance charges and cheaper household durables’, while car prices and road taxes also declined, said the DOS.

After the goods and services tax (GST) increase contributed to a 2.1 per cent price hike from June to July, the change in the CPI in the two subsequent months was similar to those in the months before.

‘This shows that there is no evidence so far of an uptick in inflation for August and September after the oneoff increase in the GST rate in July,’ said a DOS statement.

Year-on-year inflation cooled last month partly because the percentage increases in housing and transport costs were lower than those recorded in August.

While the cost of food last month climbed 3.7 per cent from a year earlier, housing expenses were up by a mild 0.4 per cent, while transport and communication prices increased by 2.2 per cent.

Food accounts for the biggest chunk of household spending, followed by transport and communication, then housing.

The moderation in inflation caught 13 economists polled by Bloomberg by surprise. They expected inflation to pick up to between 3 per cent and 3.2 per cent last month. The median consensus forecast was 3.1 per cent.

HSBC economist Prakriti Sofat noted: ‘It surprisingly came in below consensus in September.’

Standard Chartered economist Alvin Liew said: ‘It is surprising that housing costs rose less than clothing and footwear, given the run-up in residential rents lately.’

However, with energy and food prices rising, economists expect year-on-year inflation to trend upwards in the months ahead.

‘We think that the slight slowing in the headline CPI rate is a blip in the otherwise upward trend. Our view is that CPI readings will continue to grind higher till the middle of 2008,’ said Ms Sofat.

United Overseas Bank economist Ho Woei Chen said higher oil and asset prices and wage costs mean inflation risks remain on the upside.

DBS economist Irvin Seah said the bulk of the jump in monthly inflation since July was due to the one-off GST effect, which will last until June next year.

Mr Liew argued: ‘Although GST plays a big part, there are other components in play.

‘Given what we are seeing in oil, commodity and food prices, as well as transport fares, even if the rise in housing costs remains low, we still think inflation will likely be trending upwards for the next few months.’

In the first nine months of the year, inflation has averaged 1.4 per cent.

Singapore’s central bank predicted that inflation for the whole of this year will be between 1.5 per cent and 2 per cent.

It projects that inflation will rise to about 3.5 per cent year-on-year in the first half of next year, partly due to July’s GST hike, and come in at 2 per cent to 3 per cent for the whole of next year.

 

Source: The Straits Times 24 Oct 07

KepLand reports 113% increase in third-quarter profit

Developer chalks up $82m gain on strong sales; another player, CCT, reports steady growth

SINGAPORE’S booming residential home market sent Keppel Land’s (KepLand’s) net profit in the third quarter rocketing by 112.5 per cent to $81.8 million.

Turnover was at $382 million, up nearly 50 per cent from $255.6 million a year earlier.

Singapore proved especially lucrative.

KepLand earned $56.4 million in Singapore on strong contributions from sales at its Reflections at Keppel Bay and Park Infinia at Wee Nam condo projects. The company has sold 600 of the 1,129 units at Reflections.

KepLand sold 750 residential units in Singapore in the first nine months of the year and more than 2,200 homes overseas, mainly in China and India.

Earnings per share for the nine months ended Sept 30 reached 28.8 cents, up from 16.6 cents a year earlier.

Net asset value per share stood at $2.34 as at Sept 30, up from $2.12 at the end of last year.

KepLand will launch the posh Marina Bay Suites early next year and release other residential projects in line with market demand. There is also a slew of launches coming up in China, Vietnam and India later this year.

KepLand said demand for quality housing across Asia remains robust, supported by economic growth, homeowner aspirations, urbanisation and a rising middle class.

KepLand has interests in the Marina Bay Financial Centre, K-REIT Asia and Ocean Financial Centre.

Another property player, CapitaCommercial Trust (CCT), reported yesterday that it is achieving steady growth and expects to benefit from a strong office market.

It reported a distributable income of $29.6 million in the third quarter, up 52 per cent from a year earlier and 13.5 per cent above forecast.

Distribution per unit was 2.14 cents in the third quarter and 8.49 cents on an annualised basis, up 18.9 per cent from a year ago.

Third-quarter net property income was at $59.7 million.

CCT’s yield-accretive acquisition of Raffles City last year also helped lift its results.

Rentals committed at CCT’s prime assets have crossed $11.50 per sq ft a month, the highest rate reached during the office market’s peak in 1990, it said.

CCT said its acquisition of Wilkie Edge, if approved, will bring its asset size to $4.8 billion. It expects to grow this further to between $5 billion and $6 billion by 2009.

 

Source: The Straits Times 24 Oct 07