High US home inventories a major concern: Greenspan

TOKYO – Former Federal Reserve Chairman Alan Greenspan said on Tuesday that falling US home prices and high home inventories raised major concerns amid the ongoing turmoil in the sub-prime mortgage market.

He added that the slide in the dollar was neutral for the economy, and that the currency would slide in the long run relative to East Asian currencies.

‘I don’t think it’s favourable or unfavourable,’ Mr Greenspan said when asked about the falling dollar.

‘What is not true is that because we have a large current account deficit, the dollar has to weaken,’ said Mr Greenspan, who was speaking to a CEO conference in Tokyo via video link from Washington.

 

Source: REUTERS (Business Times 6 Nov 07)

LACK OF ONE-OFF GAIN – Wheelock books 78% lower earnings

UPMARKET developer Wheelock Properties yesterday reported a 77.6 per cent drop in second-quarter net profit to $30.4 million.

But profit from continuing operations was up 90.3 per cent from $16 million previously.

The reason for the drop in bottom-line profit was that Wheelock had booked a one-off gain of $116 million in the second quarter last year from the sale of its British-based Hamptons Group.

Revenue for the three months ended Sept 30 slipped 9.8 per cent to $97.6 million.

The company attributed this mainly to lower revenue recognition of units that had been sold in The Sea View and The Cosmopolitan condominium projects.

This was partly offset by higher dividend income from the group’s 20 per cent stake in Hotel Properties.

Second-quarter earnings per share were 2.55 cents, down from 11.38 cents previously while net asset value per share stood at $1.71 compared with $1.69 as at March 31.

Six-month net profit slipped by 65.6 per cent to $55.9 million on revenue of $191.6 million.

Wheelock said the prospects for improved rental rates are good for both office and retail space at its commercial property, Wheelock Place.

Its 338-unit Scotts Square, a luxurious condominium project, was well received during its soft launch. Half of the development has been sold at an average price of $3,986 per sq ft. Sales of the remaining units are ongoing.

 

Source: The Straits Times 6 Nov 07

Horizon Towers: Seven vow to go all out to stop sale

$2m spent in fight to keep homes but they’re willing to pay more to win

SEVEN owners who opposed the collective sale of Horizon Towers from the word ‘go’ vowed last week to spend as much as it takes to keep their homes.

They have already spent nearly $2 million to fight the sale and may rack up double that by the time the saga is resolved.

‘We have no budget,’ said one, a retired former chief executive. ‘In life, not everything has to do with money. For us, this is our only home.’

These owners are locking horns with the majority owners – those who voted or the collective sale – at the Strata Titles Board (STB).

The hearing, with all the twists, turns and fighting over legal niceties that has marked it from day one, involves majority owners seeking STB approval for the original sale application rejected in August.

A number of minority owners – including the defiant seven who are split into two groups, each represented by different lawyers – oppose this, on a variety of grounds.

Disgruntled owners are becoming more common in Singapore. The property boom and the surge in collective sales have led to increasing numbers of people finding that rising replacement costs mean their bounty from selling en bloc counts for little.

One of the seven minority owners, who lives in a 5,000 sq ft penthouse, said: ‘There are seven people in my family, including the helper. You cannot expect us to downgrade to a 1,000 sq ft place.’

But the problems at Horizon Towers go deeper than that. The unhappiness over the sale of the 99-year leasehold estate started in January, said the seven minority owners.

It was then that they and many others learnt – via a newspaper report – that their 210-unit estate had been sold for $500 million to Hotel Properties and two partners.

The seven are among the 10 groups of owners who did not agree to sell and subsequently filed objections.

One has withdrawn his objections.

They say the $500 million price tag, which works out to $850 per sq ft, is an unfair sum because prices have risen considerably. Developments nearby sold for more than double the price per sq ft achieved at Horizon Towers this year.

The seven owners spoke freely about protecting their homes but were cagey about disclosing personal details.

Six of the seven refused to divulge full names, although they are listed in the STB affidavit.

They were also reluctant to reveal job details. One is a businessman, one runs her own company and there are at least three retirees – a lawyer, a chief executive and a property developer.

What unites them is the fight for their homes – something they say money cannot buy, and certainly not at last year’s prices.

Apart from their ability to spend hundreds of thousands of dollars to fight the sale, they are also clued-up about the law. ‘We are very different from other objectors,’ said Ms J. Tan, one of the seven. ‘We are very well-informed and very well-educated.’

A second owner, who was bemoaning the fact that every day of delay costs them about $100,000 in legal fees, said: ‘Every time someone makes a mistake, it becomes my problem.’

Said another: ‘If I don’t have grounds, I will not throw away my money. If I win, nobody will pay us back.’

 

Source: The Straits Times 6 Nov 07

Inflation may hit record 4% next year

Citigroup forecast based on further tightening of labour and property sectors

INFLATION may hit a record- breaking 4 per cent in the first half of next year as a red-hot economy adds more strain on the already-tight labour and property markets.

The warning from Citigroup economist Chua Hak Bin also came with a call for the Government to allow the Singdollar to appreciate faster while possibly deferring less urgent major investment projects like the Marina Bay botanic gardens.

‘We maintain that overheating and inflation risks remain high,’ said Dr Chua in a research report out yesterday.

‘The economy is now at full employment, and the cost of hiring foreign workers has now increased considerably given higher accommodation cost.’

Despite greater uncertainty about the global economy, he said Singapore is likely to beat next year’s official growth forecast of 4 per cent to 6 per cent, as it has done so in previous years.

His assessment found backing among other economists while others felt a slowing world economy will keep prices in Singapore in check.

HSBC economist Robert Prior-Wandesforde agreed that the Monetary Authority of Singapore (MAS) may allow a faster strengthening of the Singdollar to curb inflation from imported goods at the next monetary policy review in April.

The tightening carried out last month is unlikely to have a dramatic effect on inflation, said Mr Prior- Wandesforde.

But Action Economics economist David Cohen brushed off overheating concerns, predicting that inflation in the first half of next year should come in at just over 3 per cent.

‘The bigger concern is a potential slowing in the world economy, so it’s a balanced outlook right now,’ he said.

Dr Chua’s report comes a month after Prime Minister Lee Hsien Loong said while there are shortages in office space, the economy, as a whole, is not overheating and inflation is well under control.

The MAS has attributed the rise in inflation largely to a July hike in the goods and services tax rate. It is expecting prices to increase by 3.5 per cent on average in the first half of next year, before moderating in the rest of the year.

‘We are probably less sanguine,’ said Dr Chua.

He said global energy and food prices are rising sharply, driven by record oil prices and adverse weather conditions in farming areas. But bigger challenges lie in the domestic property and labour markets.

Dr Chua said the consumer price index (CPI) is lagging behind the steep increases in property prices and rents.

Housing CPI costs rose 0.4 per cent in September. But official indexes show that residential rents surged 11.4 per cent in the third quarter, while those for commercial space jumped 14.8 per cent.

The labour market is also at its tightest in a decade, with unemployment at 1.7 per cent.

Unlike previous years when the Government could simply let more foreigners in to work, skyrocketing rents mean their wages have to be hiked to cover their housing costs.

Labour costs are thus likely to continue rising after surging 8.5 per cent in the second quarter, said Dr Chua.

 

Source: The Straits Times 6 Nov 07

CDL, US group to buy 44 units of Grange Road condo

PROPERTY giant City Developments (CDL) has teamed up with United States financial services group Wachovia to buy 44 homes in CDL’s freehold Grange Road project for $432.4 million.

Industry analysts suggest CDL might be preparing to list a real estate investment trust (Reit) using the properties. Knight Frank executive director Peter Ow said: ‘The only reason I can think of for this deal is so that they can put the apartments in a Reit in the future.’

CDL, however, declined to say if a Reit was in the pipeline, but it acknowledged it was studying this as well as other business models.

Under the deal, which works out to an average price of $3,750 per sq ft (psf), Wachovia’s real estate arm, Wachovia Development, will take a 60 per cent stake in the joint-venture company.

According to CDL, there are plans to rent out the 44 three- and four-bedroom apartments and penthouses – which take up two of the four towers at Cliveden at Grange – as well as possibly selling them off later if prices rise.

CDL executive chairman Kwek Leng Beng said yesterday: ‘The development has seen strong foreign interest from both individual buyers and retail investors since its launch… The deal is in line with our business strategy of leveraging on the capital appreciation potential of our developments.’

He had earlier indicated that CDL was considering keeping two blocks of homes at Cliveden instead of selling them off in a rush.

The deal could also mark the start of CDL’s preparation for a residential Reit, property analysts said.

The venture would mean that there are now just 24 units left for sale at Cliveden, which was launched for sale in July.

A total of 42 units were sold at an average price of $3,690 psf before the joint venture was announced yesterday. Many of the buyers are foreigners from Britain, Australia, Hong Kong, China, Taiwan and Indonesia, among other centres.

Wachovia is not new to the local real estate scene. It is also teaming up with CapitaLand to redevelop Char Yong Gardens and Farrer Court.

Mr Ow said the deal was positive for CDL due to the limited upside now for luxury homes. Putting the homes in a Reit, he said, would allow CDL to keep the apartments over a longer period of time, say three to seven years, and ride out any possible drop in prices in the near future.

 

Source: The Straits Times 6 Nov 07

Sports Hub proposals promise to add buzz to Kallang

Three groups unveil designs and plans, which include bringing in top sporting events

TOP sporting events, a 24/7 year-round lifestyle destination and ample entertainment and retail options.

Singaporeans were promised all these and more when the three consortia bidding to build the Sports Hub – which will replace the 34-year-old National Stadium – unveiled their designs and proposals yesterday.

The project will transform the Kallang waterfront area from a sleepy nook into a world-class athletic and recreational centre.

The three bidders are the Alpine group, which includes local construction firm Woh Hup; SingaporeGold (SG), which is led by the Macquarie Group; and the Singapore Sports Hub (SSH) group, which counts design firm Arup Sports among its members.

The groups have employed architects who have been involved in some world-famous projects, such as Beijing’s National Stadium – better known as the ‘Bird’s Nest’ – and Munich’s Allianz Arena, and have promised that Singapore’s new stadium will be equally iconic.

Alpine’s proposal, for example, centres on a stadium that bears a resemblance to the Allianz Arena, the most memorable of the 12 venues for last year’s soccer World Cup in Germany because of its exterior, which resembles a pillow.

The group’s plan calls for a similar stadium encased in a translucent membrane made of material similar to Teflon.

Alpine also has plans for a man-made beach along the Kallang waterfront.

The SSH’s ‘Premier Park’ proposal involves a dome-shaped stadium with a lightweight retractable roof that can be programmed to provide different colour schemes at night.

The covered roof will allow for the projection of images, similar to that of a ‘giant IMAX screen’, said the group’s lead architect, J. Parrish, who had a hand in designing the ‘Bird’s Nest’ in Beijing.

Its proposal also includes go-karting and white-water rafting facilities.

The last bidder, SG, unveiled its proposal for a horseshoe-shaped stadium that opens out directly onto the waterfront in March. It did not announce any major changes to its plan yesterday.

The three groups had submitted their designs earlier in the year, but were made to go back to the drawing board when the Singapore Sports Council (SSC) announced in June that that a public water sports centre, located at the site of the Oasis building, had to be incorporated.

They were given until September to submit the refined proposals, which were kept under wraps until they were presented to the media yesterday.

Apart from unique building designs, each consortium also promises to make Singapore a flagship venue for international sports events.

Proposals include an annual pre-season tournament involving top European soccer teams, international cricket matches and tennis tournaments.

The Sports Hub is the world’s first and largest sports facility infrastructure involving a public-private partnership. The scheme is one in which the private sector designs, builds, finances and operates public facilities.

The hub is expected to cost between $650 million and $800 million. It will include a new 55,000-capacity stadium with a retractable roof, a 6,000-capacity indoor aquatic centre, and a 3,000-seater multi-purpose arena, as well as retail and other recreational facilities.

The winning bidder will be announced in January, and construction is expected to be completed in 2011.

The evaluation process is ongoing, and a committee will soon submit its reports to the approval authority, which is chaired by Minister of Community Development, Youth and Sports Vivian Balakrishnan.

 

Source: The Straits Times 6 Nov 07