No resale levy for second-timers buying ECs

NEW executive condominiums (ECs) will be even more attractive now that the resale levy is no longer payable.

The Housing and Development Board imposes the levy on those who sell their first flat to buy another from the board. It is a fixed sum that ranges from $15,000 to $50,000 according to flat type, and $55,000 for ECs.

In a statement yesterday, HDB said: ‘To align the purchase of new ECs with the Design, Build and Sell Scheme (DBSS), second-timers buying a new EC unit from the developer will no longer have to pay the resale levy.’

HDB also said that previously, first-timers who bought new ECs were barred from buying another new EC, HDB or DBSS flat. This bar has now been lifted.

PropNex CEO Mohamed Ismail believes the change will give ‘greater incentive’ to HDB dwellers who aspire to a condominium lifestyle by way of an EC.

Mr Ismail reckons the dropping of the resale levy, coupled with rising HDB resale flat prices, could leave some second-time buyers with up to $100,000 to add to their housing budget, depending on the size of the flat they sell.

He also believes developers could be encouraged to bid for EC sites, as demand will grow.

The government has said it intends to release more EC sites.

The first to be released, after a gap of more than three years since the last EC site was sold in 2004, will be at Punggol Road/Punggol Field.

The 2.27ha site with a plot ratio of 3.0 was put on the reserve list of the Government Land Sales Programme yesterday. And with the dropping of the resale levy, consultants expect interest in the site to increase.

Cushman & Wakefield managing director Donald Han says the last EC site at Woodlands, where La Casa now stands, was sold for $150 per sq ft per plot ratio (psf ppr). Since then, two DBSS sites – launched at Tampines in October 2005 and Boon Keng Road in March 2007 – sold for $114 psf ppr and $234 psf ppr respectively.

Mr Han says EC sites typically fetch more than DBSS sites. And based on the last DBSS site price at Boon Keng Road, but factoring in Punggol’s location and EC site status, he expects the Punggol EC site to fetch $190-$220 psf ppr.

‘We expect strong interest from developers and contractors for this site due to revival of HDB market activity and recent price increases – supported mainly by HDB upgraders and new home buyers,’ he said.

‘In addition, the government has committed its resources to turning Punggol into a major waterfront township and Punggol itself has been a news focal point lately.’

 

Source: Business Times 21 Nov 07

Woodlands residential site surprises with 8 bids

Evan Lim’s top bid of $56m marginally higher than Frasers Centrepoint’s

A 99-year leasehold residential site in Woodlands was found to have drawn a surprising eight bidders when the government tender closed yesterday, with the top bid coming to some $56 million – or $232 per square foot per plot ratio (psf ppr).

Recent government land tenders have drawn only a few bidders each, which market watchers said was a sign of the property market cooling off.

For the 172,200 sq ft site at Woodlands Avenue 2/Rosewood Drive, the top bid was put in by Evan Lim & Co Pte Ltd.

The company just pipped second highest bidder Frasers Centrepoint, which offered $55.5 million – or $230 psf ppr.

Other bidders include Wing Tai and Sim Lian Land. The site has a 1.4 plot ratio – giving it a maximum gross floor area of 241,100 sq ft.

Nicholas Mak, director of research and consultancy at Knight Frank, said that the price was ‘realistic’, although it came in below prior market expectations of $250-$280 psf ppr.

The number of bids was impressive, considering the recent market turbulence, experts said. ‘The bids show that developers are confident of healthy suburban buyer demand,’ said Mr Mak.

Ku Swee Yong, Savills Singapore’s director of marketing and business development, said: ‘Developers still see that there is good demand from the mass market, arising from job growth and rising wages.’

With construction costs for mass market condos estimated at about $300 psf, the break-even price for the site could be around $530 psf, experts said.

This means that apartments in the project could eventually be launched at about $700 psf – higher than what private homes in Woodlands are fetching at the moment.

Separately, the Urban Redevelopment Authority (URA) on Monday awarded a transitional office site at Tampines to City Developments’ unit Glades Properties.

The developer had put in the only bid for the site, offering $10 million, or $81 psf ppr – lower than the $100 psf ppr that most property consultants had expected the 15-year leasehold site to fetch. This led to market talk that the site might not be awarded.

Yesterday, URA also said that an unnamed developer has entered a bid of $187 million for a 3.2ha, 99-year leasehold residential site at Simei Street 4, triggering a public tender which will be launched in two weeks’ time.

The price offered by the developer works out to $235 psf ppr. The site has a 2.3 plot ratio – giving it a maximum gross floor area of 797,400 sq ft.

Market watchers, however, reckon that the plot could fetch more.

‘I think the winning bid could come to $350 psf ppr,’ said Ho Eng Joo, Colliers  International’s executive director for investment sales. Apartments coming up on the site could be launched at about $800 psf, he said.

URA yesterday also awarded the tender for the 99-year leasehold condo site at Enggor Street (Land Parcel B) to Allgreen Properties, which had submitted the highest bid of $717 psf ppr in a public tender.

 

Source: Business Times 21 Nov 07

En bloc millionaires to drive market

If just two-thirds buy homes, they may spend $6b: Savills

(SINGAPORE) Around 5,700 homes were sold through collective sales in the first half of this year and the home owners who will have to look for replacement homes are expected to drive the property market.

A report by Savills Singapore estimates that if just two-thirds of those displaced by collective sales – about 3,900 of them – choose to buy replacement homes, their collective kitty could total $6 billion, representing the total payout to these en bloc millionaires.

Savills director (marketing and business development) Ku Swee Yong does not expect all $6 billion to be spent though. ‘About $4 billion could be channelled into new property acquisitions,’ he reckons.

And developments in the fringe and suburban areas such as Bukit Timah, Upper Bukit Timah, Clementi, Novena/ Thomson, and Upper East Coast will be their targets.

Savills projects that only two-thirds of the en bloc millionaires will be in the market for a new home because it believes many already own second homes, if not more.

Savills’ analysis reveals that of the 2,795 home owners affected by the collective sales in Q2 2007, up to 2,159 owned homes in the prime districts of District 9, 10 and 11.

And Mr Ku reckons that half of these home owners already own at least one other home.

Interestingly, Mr Ku believes that only 20 per cent of the displaced home owners from homes outside the prime districts have second homes. But the number of en bloc millionaires could taper off if collective sales continue to fall. In Q3 2007, only 13 en bloc deals worth about $1.1 billion were done, down from $6.4 billion for 45 sites in the previous quarter.

Yet, en bloc millionaires are also expected to support the already buoyant residential market.

Savills says that assuming that 30 per cent of owners (or their tenants) affected by collective sales require rental accommodation, 974 units would have been needed to meet the demand over the last nine months. Savills added that the situation is expected to worsen in 2008, with some 800 units needed per quarter to accommodate displaced owners (or their tenants).

Savills does expect most demand for rental units to come from an increase in the number of foreigners working here.

Its report highlighted that foreigners working here grew by 14.9 per cent, from 875,500 last year to just over one million thus far, representing the highest year-on-year growth in the last 10 years. ‘With a low unemployment rate and high job creation rate, the number of foreigners working in Singapore is expected to grow sharply,’ it added.

Its analysis of data reveals that average rents of all non-landed residential properties in the prime districts rose by 13 per cent to $3.70 per square foot (psf) a month between Q2 and Q3 in 2007, while high-end residential rents climbed even higher to $6 psf a month.

Savills also noted that rents in Districts 8 and 12, on the fringe of the city, have risen by 35 and 23 per cent respectively to about $1.90 psf a month.

 

Source: Business Times 21 Nov 07

LATEST US DATA – Housing starts up 3% in Oct, permits down 6.6%

Building permits fall to 1.178m unit pace, the lowest level in 14 years

(WASHINGTON) US home construction starts were up 3 per cent in October, the biggest monthly gain in eight months but building permits were down 6.6 per cent to a level not seen in 14 years, a government report yesterday showed.

The Commerce Department said that housing starts set at an annual pace of 1.229 million units in October from a 1.193 million unit pace in September.

It was the biggest monthly increase since February and came after starts tumbled 11.4 per cent the prior month.

Economists were expecting to see a slight decrease in starts to a 1.17 million unit pace from the initially reported 1.191 million pace.

Building permits fell 6.6 per cent in October to a 1.178 million unit pace. That was the lowest level since July 1993 and well below the 1.200 million unit level economists were expecting.

Construction of single-family homes fell 7.3 per cent to the lowest since October 1991 but multi-family home building surged 44 per cent.

Sales of single-family homes are dropping as potential buyers wait for prices to fall even more and some banks make it more difficult to get mortgages.

Demand is declining as fast as construction, preventing builders from trimming inventories and suggesting that the real estate recession will linger into 2008.

‘The meltdown in residential construction will extend for many more months and represents a serious drag on economic growth,’ Robert Dye, senior economist at PNC Financial Services Group in Philadelphia, said before the report.

Permits were forecast to drop to a 1.2 million pace, according to the survey median, with projections ranging from 1.1 million to 1.324 million.

Construction of single-family homes dropped to a 884,000 pace while work on multi-family homes rose to a 345,000 annual rate.

The increase in starts was led by a 21 per cent jump in the Mid-west. Construction rose 8.5 per cent in the Northeast and 5.8 per cent in the West. Starts fell 4.6 per cent in the South.

A report on Monday added to evidence that housing was far from recovery. The National Association of Home Builders/Wells Fargo confidence index held at a record low of 19 in November.

Toll Brothers Inc, the largest US luxury homebuilder, said on Nov 8 that fourth-quarter revenue fell 36 per cent and the cancellation rate rose to the highest ever.

‘We do think that this is worse than it was in ‘88 through ‘90,’ chairman Robert Toll said on a conference call. ‘We can’t predict how long this down period will last.’

Declines in home construction have reduced growth since the start of 2006 and detracted 1.1 percentage points in the third quarter.

Homebuilding will drop at a 22 per cent annual pace this quarter, the most since the last three months of 1981, according to a forecast by economists at Lehman Brothers Holdings Inc.

Foreclosures doubled in September from a year earlier as sub-prime borrowers struggled to make payments on adjustable-rate mortgages, RealtyTrac Inc said on Oct 11.

Rising foreclosures and falling sales are adding to inventories and pushing down prices.

The Case-Shiller index of home prices in 20 major cities declined 4.4 per cent in the 12 months though August, the most since records began in 2001.

 

Source: Reuters, Bloomberg (Business Times 21 Nov 07)

GuocoLand to develop 1st project in Vietnam

The 17.5 ha integrated development will cost US$58 million

GUOCOLAND yesterday broke ground on a US$58 million development in Vietnam – its first project in the country.

The 17.5 ha site will be home to The Canary – an integrated development which will house some 1,200 residential apartments, a hotel, a trendy retail mall and an international school.

GuocoLand said that the first phase of the residential apartments will be launched soon. This will be followed by the development of the first phase of the retail mall.

The entire development is scheduled to be completed in five to six years’ time, the developer said. ‘However, the actual progress will depend on market conditions in Vietnam,’ said Lawrence Peh, GuocoLand’s general manager for Vietnam.

The Canary is located near the Vietnam-Singapore Industrial Park, near Ho Chi Minh City. The project will be the first fully integrated development in Vietnam’s Binh Duong Province, GuocoLand said.

‘When The Canary is completed, it will add vibrancy to Binh Duong Province, which is a leading recipient of foreign direct investment among Vietnam’s provinces,’ said GuocoLand in a statement.

Besides GuocoLand, many other Singaporean developers – including Keppel Land, CapitaLand, Frasers Centrepoint and Allgreen Properties – have of late made forays into Vietnam’s booming property market.

GuocoLand’s shares closed five cents down at $5.20 yesterday. The company’s stock has climbed 128.5 per cent since the start of the year.

 

Source: Business Times 21 Nov 07

Nina’s estate set to go to administrators

Feng shui expert files application to preserve assets of HK$100b estate

IN HONG KONG

THE stage is set in Hong Kong for a feisty probate battle over the fortune of Nina Wang Kum Yu-sum, once Asia’s richest woman, and control of the sprawling Chinachem property empire.

The estate of Ms Wang, who died in April this year, is likely to be put in the hands of court-appointed administrators pending the outcome of what is expected to be a protracted legal fight over her estimated HK$100 billion (S$18.6 billion) fortune.

Feng shui expert and businessman Tony Chan Chun-chuen claims to be the sole beneficiary of the deceased tycoon’s estate and is set to square off with the Chinachem Charitable Foundation, which claims a 2002 will left everything in its name. The foundation is headed by family members of Ms Wang.

This week, Mr Chan made a bid to have independent administrators appointed to preserve the assets of Ms Wang’s estate. The application has been adjourned until Dec 10.

The administrators will establish who owns the shares in the Chinachem companies – one of Hong Kong’s biggest private developers – as well as other types of assets, according to John Lees, director of forensic accountant and corporate restructuring firm John Lees & Associates.

‘They would look after these to make sure the right people are dealing with them … both sides would be putting together a set of orders the court would have to approve,’ he said. Administrators may force the company to put further developments on hold pending the outcome of the court case.

This is not the first time that the assets of Chinachem have come under the spotlight. The group of companies was at the heart of a protracted legal battle between Ms Wang and her father-in-law, following the death of Chinachem founder Teddy Wang The-huei.

Teddy Wang vanished in 1990 at the hands of kidnappers. For the next nine years, Ms Wang insisted that her husband was still alive, until a court finally declared him dead in 1999 upon the wishes of his father, Wang Dinshin.

For the next eight years, Ms Wang and her father-in-law waged a bitter war over the estate of Teddy Wang. Nina Wang stayed at the helm of Chinachem throughout, but was accused by her father-in-law of faking a will to inherit his son’s estate. The will – signed ‘one life, one love’ – contradicted another that the tycoon had made in 1968 which would see his fortune bequeathed to his father.

During the trial, it emerged that the elder Wang had told his son that Ms Wang was having an affair. The court heard that Teddy was so angered by the infidelity that he had made the 1968 will, rescinding an earlier one that split his estate equally between his father and wife.

Although the High Court sided with the father-in-law, Ms Wang won at the top court, also stymieing any criminal proceedings against her. The total legal bill came to HK$562 million, but that was not an end to the affair: it had long been suspected that there were other individuals financing Mr Wang, and he defied a court order to reveal their identities.

Chinese press reports named various property personalities as being behind the litigation. Had Ms Wang lost, the Chinachem property fortune could have ended up in the hands of her rivals.

The elderly Mr Wang described these individuals in the Chinese-language press as ’sympathetic and righteous lenders’, but refused to reveal their identities. In Hong Kong, third parties are barred from funding litigation on another’s behalf.

Ms Wang was ranked as the 154th richest person in the world by Forbes magazine last year. The litigation over her estate has left most of Hong Kong mystified: she battled for so long over her husband’s fortune that many are baffled as to how she herself could have had anything but a watertight legacy.

 

Source: Business Times 21 Nov 07

DIFC eyes US property, telecom, energy assets

Investments could come after dust settles on mortgage crisis: governor

(DUBAI) The Dubai government agency that bought into Deutsche Bank this year said it could invest in US banks, property and other sectors after the dust settles on a mortgage crisis that has cut asset prices.

Banks that have reported losses from defaults on sub-prime, or high-risk mortgages, could be among the targets for DIFC Investments, which is helping drive Dubai’s push to build two of the world’s 10 largest financial institutions in eight years.

‘There are good opportunities and the prices are good, but is this the bottom or is there more downturn to come?’ Omar bin Sulaiman, governor of the Dubai International Financial Centre (DIFC), told Reuters on Monday.

Asked whether the targets could include firms such Citigroup and Merrill Lynch, Mr bin Sulaiman said: ‘Without mentioning names we have a track record of taking stakes in major banks, with the right partners for management.’

Citigroup, the largest US bank, and Merrill Lynch, the world’s largest brokerage, replaced their chief executives after reporting credit market losses of at least US$21 billion between them.

DIFC Investment’s purchases in the United States could include property, telecom, and oil and gas assets, Mr bin Sulaiman said.

Defaults on sub-prime mortgages drove up borrowing costs around the world and prompted banks to shrink from riskier lending, making it more difficult for private equity funds to finance acquisitions.

The collapse of takeover bids, including Qatar’s plan to buy British supermarket chain J Sainsbury plc, and a tumble in stock prices this year has made assets cheaper.

‘The challenge is how low do we look. There are good assets in the US, good opportunities for acquisitions to be identified,’ Mr bin Sulaiman said.

‘The price has to be right and you need to understand the strategy of the organisation and if that aligns with our strategy, the decision is easier,’ he said.

Mr bin Sulaiman leads the financial services strategy of Dubai, which created the DIFC, a self-regulating dollarbased investment zone, to capture banking and other business in the world’s biggest oil-exporting region.

Having turned state companies into the world’s eighth largest airline, Emirates, and fourth largest port operator, DP World, Dubai wants to build two of the world’s 10 largest financial institutions by 2015.

‘It could be through acquisitions or home-grown,’ Mr bin Sulaiman said.

DIFC Investments bought a 2.2 per cent in Deutsche Bank this year to become the fifth biggest shareholder of Germany’s largest bank. The purchase was worth about 1.35 billion euros (S$2.9 billion) at the time the deal was announced in May.

DIFC Investments is looking to invest about US$1.8 billion in an unidentified publicly traded financial services company among the 20 acquisition targets it is evaluating, the agency’s managing director, Bisher Barazi, said in September.

Separately, Dubai International Capital LLC, the manager of US$13 billion for the emirate’s ruling sheikh and coinvestors, plans to buy a US$500 million stake in a publicly traded Japanese company this year.

‘We’re looking at a Japanese-headquartered company we like very much,’ chief executive Sameer al-Ansari said in an interview in Dubai on Monday.

Dubai International will host a group of Asian companies in Dubai next month to discuss investment opportunities, Mr al-Ansari said. Nobuyuki Idei, chairman of Sony Corp’s advisory board, and Eishu Kosuge, chairman of Daiwa Securities SMBC Europe, will speak at the event, according to Dubai International’s website.

Dubai International last month agreed to buy a US$1.26 billion stake in New York-based hedge fund Och-Ziff Capital Management Group LLC. Dubai International aims to raise assets under management to more than US$25 billion by mid-2009, it said in July.

 

Source: Reuters, Bloomberg (Business Times 21 Nov 07)

Sweet collective-sale deal for 15 houses in Balestier

Each owner gets $4m – 2 to 3 times what they would have made if they sold separately

IT TOOK 18 months but the owners of 15 terrace houses in Balestier have pulled off a sweet deal to match some of the collective sales that have been making headlines all year.

They have banded together to sell their properties for $61 million, giving each a payout of about $4 million.

This is two to three times what they would have made for their homes individually and a huge gain for those who bought several years ago.

It is quite a coup given that the deal was trickier than the usual collective sale and the fact that the once roaring en bloc market has cooled considerably since tougher rules were put in place last month.

The quieter market made the sale of the 15 terraces in Jalan Bunga Raya quite an achievement, said Mr Shaun Poh, senior director for investment advisory services and auctions at DTZ Debenham Tie Leung, which marketed the houses.

The mostly two-storey homes are not strata-titled as in a typical condo. This meant every owner had to agree to sell, unlike in a strata development where only 80 per cent of owners have to agree.

While similar deals have been sealed before, getting 15 out of 15 owners to sign the deal ‘was a challenge’, Mr Poh said. ‘If anyone doesn’t sign, that’s it. No deal.’

DTZ worked for about 18 months to collect all the signatures, he said.

The offer proved too sweet to resist for owners such as housewife Virgie Orlino, 47, who was initially reluctant to sell her house, which has been home for about 14 years.

‘We didn’t want to sell, but the rest wanted to sell, so we decided to cooperate,’ she told The Straits Times, adding that the price was ‘not bad’.

For some owners, who bought their homes more than 10 years ago, the payout represents a real windfall.

Retiree Ho Chaw Fu, 70, is ‘very happy with the price’. No wonder: Mr Ho bought his house for $300,000 about 30 years ago.

He may not be alone. Although one or two of the homes – lined up in two rows along a cul-de-sac – appear recently renovated, others look decades-old.

Despite acrimony being the word of the day for many other collective sales, the Balestier terraces deal went quite smoothly, owners said.

One owner, who did not want to be named, said people in the street ‘get along very well’ and were ‘very cooperative’ about the sale. He added that a few were planning to relocate together to another area so they could still be neighbours.

A reason for all this harmony could be the good price the sellers fetched. It works out to $739 per sq ft (psf) of potential gross floor area – a record level for Balestier, said Mr Poh.

The Balestier area has seen keen interest from developers such as City Developments and Soilbuild, which have both picked up projects in the vicinity recently.

The buyers of the terraces are understood to be a Chinese property developer and its Singaporean partner.

They were awarded the properties on the very day the tender closed, which means their bid was fairly strong.

They can build up to 36 storeys on the site, which has a plot ratio of 2.8.

About 56 apartments can be built with an average size of 1,500 sq ft each and may eventually be sold at $1,400 to $1,500 psf.

The developers also get the road itself, which they can keep or use as development land.

A similar deal was sealed last year when owners of some bungalows in Bukit Timah teamed up to sell their properties and developer Simon Cheong bought a group of 16 terrace houses in Cairnhill last year.

 

Source: The Straits Times 21 Nov 07

Waterfront condos coming up at Bedok Reservoir

FOUR condominiums will be built where the former Waterfront View estate in Bedok Reservoir Road used to be.

The first will be launched in the first quarter of next year, said developers Frasers Centrepoint and Far East Organization yesterday.

It will be called Waterfront Waves and have 405 units, of which more than half will be three- and four bedroom apartments. More than 60 per cent of the units will also have reservoir views, the developers added.

The Straits Times understands that the other three condos will also have ‘Waterfront’ in their names and are likely to be of similar sizes.

Together known as the Waterfront collection, the four-condo development is the largest in the area to have a direct water frontage, the developers said. In all, it could have 1,600 units.

The developers are also in talks with the Public Utilities Board about ‘enhancing the neighbourhood’s communal parks and water bodies’.

Although property consultants will not disclose prices for Waterfront Waves, they believe prices may start from $700 per sq ft (psf).

Mr Ku Swee Yong, director of marketing and business development at Savills Singapore, said units on lower floors with no water views could fetch that price.

On higher floors, prices could go up to $850 psf, he added.

Frasers Centrepoint and Far East jointly bought the former HUDC site last year for about $240 psf of gross floor area.

 

Source: The Straits Times 21 Nov 07

Woodlands condo plot draws 8 bids

EIGHT bidders have put in tenders for a residential site near the Singapore American School and right in the middle of the heartland, Singapore’s new real estate hot zone.

Bids for the plot – located between Woodlands Avenue 2 and Rosewood Drive – ranged from $36.4 million to $56 million.

EL Development, a unit of Evan Lim, lodged the top bid.

Frasers Centrepoint came in just behind with $55.5 million, according to a Singapore Land Authority (SLA) statement yesterday.

The narrow gap between the top two bidders reflects the keen interest in the 172,223 sq ft site, which is near the American international school and, thus, in an area popular with expatriate families, said Mr Lui Seng Fatt, regional director and head of investments at Jones Lang LaSalle.

A condominium of up to five storeys with a gross floor area of 241,112 sq ft can be built on the 99-year lease site, which has a gross plot ratio of 1.4, the SLA said. This works out to about $232 per sq ft (psf) per plot ratio, which can translate into a break-even price of about $400 psf for the project, said Mr Lui, adding ‘the project may be able to sell for about $500 psf, depending on the circumstances’.

Analysts noted that the competitive bidding for the Woodlands site contrasted sharply with the lacklustre response to recent public tenders for sites at Enggor Street and Marina View, both located in the more central parts of Singapore.

This confirms ‘the trend that the focus has shifted to the outlying areas, now that the prices in the central districts, including districts 9, 10, 11, have risen significantly’, said Mr Lui.

That theory will get a further test in two weeks, when the Urban Redevelopment Authority (URA) launches a tender for a reserve site at Simei Street 4, which has an area of 3.22ha and is earmarked for residential development with a maximum gross floor area of 74,084 sq m.

The call for bidders was triggered by an application made by a developer who committed to bid at least $187 million for the land parcel.

Also, the URA has awarded the tender for a transitional office site between Tampines Concourse and Tampines Avenue 5 to Glades Properties, the sole bidder with a price of $10 million.

This works out to $868 per sq m for a site with a gross floor area of 11,520 sq m. The land parcel has a 15-year lease.

 

Source: The Straits Times 21 Nov 07

First-time buyers get better shot at executive condos

FIRST-TIME home hunters will soon get increased priority to buy executive condominiums (ECs).

The Housing Board now requires EC developers to reserve at least 90 per cent of units for first-time buyers in the first month of sale. First-time buyers are those who have yet to receive a housing subsidy.

Until now, there was no such requirement.

In another change, families who have previously bought a new HDB flat will no longer have to pay a resale levy – ranging from $15,000 to $50,000 – when they buy a new EC flat.

Both new rules will apply first to ECs expected to be built in Punggol Field.

The Government made the 2.27ha plot available yesterday.

The plot, which can fit an estimated 620 homes, is now on the reserve list, which means that it will be put up for tender once a private developer commits to a minimum bid that meets the Government’s reserve price.

Property consultants say the latest moves by the HDB will raise demand for ECs, while addressing the housing needs of some newly-weds.

The EC scheme, introduced in 1995 to bridge the gap between public and private housing, allows families with monthly incomes of up to $10,000 to buy apartments similar to private condos.

Units come with facilities comparable to those of condos, such as swimming pools. But ownership restrictions apply within the first 10 years.

Eligible buyers can get a $30,000 housing grant for their EC, but they cannot sell it within the first five years, or let a foreigner buy it within the first 10 years.

Due to the restrictions, ECs were a less popular alternative to private housing to the extent that, for a while, the Government stopped offering this type of housing since the last one, La Casa, was launched in 2005 amid a property downturn.

But following a sharp run-up in property prices this year, the Government revived its EC programme to meet rising demands from Singaporeans.

New ECs typically cost 30 per cent less than full-fledged private condos, estimated Mr Lui Seng Fatt, regional director and head of investments at Jones Lang LaSalle.

Yesterday, the HDB also lifted the restriction on EC owners – who had received a housing subsidy – enjoying a second subsidised public housing unit, be it an EC, HDB flat or flat built and sold by private developers under the Design, Build and Sell Scheme (DBSS).

These EC owners can now buy another new EC, or a new flat built by the HDB or private developers, after a 30-month waiting period.

Those who used a housing grant for their first new EC will have to pay a resale levy of $55,000 on their original home if they move into a new HDB flat – to ensure a fair distribution of housing subsidies.

Previously, those who bought a new EC unit were barred permanently from buying a second new EC unit, HDB flat, or flat built and sold by private developers under the DBSS.

The change, with immediate effect, will put EC owners on an equal footing with owners of private properties, as the latter are allowed to buy new HDB dwellings after a 30-month wait from the time they dispose of their homes.

The HDB, in a statement yesterday, said the rule change was to ‘better meet the needs of EC buyers and align the EC policies more closely with public housing schemes’.

Property consultants say the changes are set to boost EC demand at a time when private home prices have quickly risen beyond the reach of many hoping to upgrade from HDB flats.

From January to September, private home prices shot up 22.9 per cent, more than twice the rate of resale HDB flats.

‘The EC will be quite a hot item now,’ said Mr Eugene Lim, ERA Singapore’s assistant vice-president.

Consultants do not expect the changes, alone, to make much of an impact on the current supply of lower cost housing, as there are no other EC plots on the market.

To date, 23 EC projects with about 10,400 homes have been developed and sold by the private sector.

 

Source: The Straits Times 21 Nov 07

GuocoLand looking out for more project sites in Vietnam

It breaks ground on its first development in the country – an $84m integrated complex

HO CHI MINH CITY – SINGAPORE developer GuocoLand Group yesterday broke ground on its maiden development in Vietnam – The Canary – and says it is already on the lookout for further development sites.

The US$58 million (S$84 million) investment in The Canary reflects a high level of investor confidence in Vietnam’s booming economy, said a Singapore agency official at the ground-breaking ceremony yesterday.

The 17.5ha development will boast residential, commercial, hotel and educational facilities. It is the first integrated project to be built by a foreign investor in Vietnam, outside the commercial centre Ho Chi Minh City and the capital Hanoi.

It is being built in affluent Binh Duong province, 17km north of Ho Chi Minh City, near the Vietnam- Singapore Industrial Park (VSIP).

The flagship industrial zone was started in 1996 by a consortium of five Singapore firms led by SembCorp Parks, in a venture with Vietnamese state-owned Becamex IDC.

With a gross floor area of 290,000 sq m, The Canary is expected to yield 1,200 homes, in addition to a shopping mall with 85,000 sq m of retail space, a hotel, an international school and a sports complex. Homes will also face the popular 27-hole Song Be golf course.

Centre director Chiong Woan Shin of IE Singapore’s Ho Chi Minh City office told The Straits Times that the project reflects the level of confidence of Singapore companies.

Construction of the residential area’s first phase is under way and due for completion in 2009.

The two- to four-bedroom apartments, ranging from 85 sq m to 160 sq m, will be targeted at locals and expatriates alike, said Mr Lawrence Peh, general manager of Guoco- Land Vietnam.

GuocoLand’s international investment general manager Ho Sing added that the group is looking for more locations in Vietnam for further projects.

CBRE Vietnam’s managing director, Mr Marc Townsend, said he expected the project to be well-received. ‘With so many people working at the VSIP, it will be time- and cost-efficient to live there,’ he said.

The project will be launched for sale next year. He estimates that the homes will be priced at a premium above US$800 per sq m, or S$108 per sq ft – a price fetched by a residential project nearby.

IE Singapore’s Ms Chiong added that more Singapore companies were venturing into Vietnam.

But fast-rising home prices are also proving to be the bane of ordinary Vietnamese and even some expatriates. This is exacerbated by speculators flipping properties for a quick profit.

Property prices have jumped 50 per cent in Vietnam since the start of this year, and in Hanoi and Ho Chi Minh City, they have tripled.

The result is that owning homes in the cities is far beyond the means of most ordinary Vietnamese. The issue is a hot topic in the country’s legislature.

 

Source: The Straits Times 21 Nov 07

Large yuan revaluation ‘would hurt growth’

SEOUL – A BIG Chinese currency revaluation would invite speculation and damage growth, said Dr Fan Gang, a monetary policy adviser to the People’s Bank of China.

Sharp increases in the yuan’s value would trigger ‘large speculative capital inflows and outflows that will kill China’s growth and financial stability’, Dr Fan, a member of the central bank’s monetary policy committee, said at an investment forum in Seoul yesterday.

Officials from the Group of Seven nations have increased pressure on China to let the yuan appreciate more and take the burden off other currencies. French Finance Minister Christine Lagarde said on Sunday that the yuan causes ‘tensions’.

‘What would happen after a large – say 40 per cent to 50 per cent – appreciation of the yuan? Another request in two years,’ Dr Fan said. He was referring to United States lawmakers’ calls for bigger gains.

The yuan has climbed about 11.5 per cent versus the US dollar since a fixed exchange rate was scrapped in July 2005.

The world’s fourth-largest economy grew 11.5 per cent in the third quarter as record trade surpluses pumped in cash. A stronger currency would make exports more expensive, staunch the inflow of money and ease tensions with trading partners.

The dollar is likely to keep falling, a problem for the yuan, Dr Fan said. Central bank governor Zhou Xiaochuan said yesterday that his country supports a strong dollar.

Source: BLOOMBERG NEWS (The Straits Times 21 Nov 07)

Asian stocks rebound as US dollar steadies

Hedge funds, traders snap up blue chips, hot China plays across Asia on greenback’s gain

REGIONAL stock markets, including Singapore’s, made startling recoveries in late trading yesterday after nosediving early in response to a big drop on Wall Street.

The Straits Times Index (STI) collapsed by 85 points right after the opening bell but finished in positive territory – up 26.55 points at 3,438.27.

The catalyst for the dramatic comeback was a steadying of the greenback against the Japanese yen, alleviating fears of an exodus of funds and sparking a buying spree in Tokyo that spread to the rest of Asia.

Hedge funds and big-time traders snapped up blue chips and hot China plays across the region.

Some dealers attributed the big shift in mood to a rumour that the United States Federal Reserve might consider another rate cut.

Fears are growing that the US may be tipped into a recession by the worsening mortgage crisis.

Market watchers, however, dismissed the rumour as too far-fetched to explain the region’s strong recovery.

‘It has become a no-brainer trading Asian shares. Prices swing in tandem with the movements of the US dollar against the yen,’ said a dealer.

Traders have been reacting to every tiny movement in the foreign exchange market for any possible unravelling of yen carry trades – massive loans taken out by hedge funds in Japan, where interest rates are low, to make huge bets on higher-yielding assets elsewhere.

The STI’s early plunge came as the US dollar shed almost one yen to 109.63 in early trade. Once the currency bounced back to 110.43 yen after lunch, a rally swept across the region.

Market sentiment also got a boost from a rise in US stock futures in Asian trades, fuelling hopes of a rebound on Wall Street. The Dow Jones Industrial Average plunged by 213 points on Monday.

Other Asian bourses saw similar trading patterns. Hong Kong’s Hang Seng Index closed 311 points higher at 27,771 after losing 1,056 points in the morning, while Tokyo’s Nikkei 225 Index rose 169 points to 15,211.52, recovering from a morning loss of 114 points.

Among the biggest gainers in Singapore were badly battered bank stocks and China plays. DBS Group Holdings closed 20 cents higher at $19.60 after plunging to a four-month low of $18.80, while United Overseas Bank rose 40 cents to $19.60.

China plays mostly ended on the upside, led by gains in giant shipbuilders Cosco Corp, which rose five cents to $6.45, and Yangzijiang, which went up three cents to $2.09.

While the rebound brought cheers to traders glum at recent mounting losses, some felt the rebound was too good to be true.

CIMB-GK research head Song Seng Wun said: ‘The market has been sold so hard and for so long that it doesn’t take much effort to get a rebound. But can this last?’

Many traders now fear yesterday’s rebound may turn out to be a ‘dead cat bounce’ – a small recovery like last Wednesday’s one-day rebound.

Many also worry that foreign funds may have used the rebound as an excellent opportunity to get rid of their investments in the region.

A Citigroup report showed that as turmoil engulfed regional markets last week, about US$5.6 billion (S$8.1 billion) of stocks were sold off by foreign investors. Among the worst-hit markets was China, with US$1.1 billion worth of shares offloaded by foreigners.

Other hard-hit markets included Hong Kong, where US$191.1 million worth of shares were sold by funds investing only in Asian stocks, and Singapore, with US$51 million worth of shares offloaded.

UNITED States stocks rose yesterday, rebounding from three-month lows, after a gain in the price of oil boosted energy companies and Credit Suisse Group said shares of Google may reach US$900 next year.

ExxonMobil and Chevron both climbed the most in three months.

Google rallied after Credit Suisse said the most-popular search engine will expand its share of the mobile advertising market.

Benchmark indexes gained even after Freddie Mac, the second-largest source of money for US home loans, said it may cut its dividend and reported a US$2 billion (S$2.9 billion) loss – three times what some analysts had estimated.

The Dow Jones Industrial Average rose 125.27 points, or 1 per cent, to 13,083.71 after two hours of trading. The Nasdaq Composite Index increased 40.24 points, or 1.6 per cent, to 2,633.62.

Crude oil rose for a third day after the US dollar touched a new record low against the euro. The greenback’s 11 per cent slide this year has made oil, metals and other commodities denominated in the US currency cheaper for foreign investors.

 

Source: BLOOMBERG NEWS (The Straits Times 21 Nov 07)

Things get hotter as shrinking dollar goes pop

US dollar’s image losing currency as emblem of extravagance, success

NEW YORK – WHEN people start talking about rappers and supermodels shunning the US dollar, you know there’s a problem.

As the greenback recently hit historic lows against other major currencies, rap mogul Jay-Z released a new video in which he flashed euros, not dollars. It was also widely reported recently that one of the world’s richest supermodels, Gisele Bundchen, opted to be paid in euros because of the dollar’s weak outlook.

Her spokesman denied that the model was spurning the dollar, saying Bundchen was paid in the currency of a job’s location.

Nevertheless, the euro bought an all-time record US$1.4752 earlier this month, and the British pound had also been trading at its highest levels against the dollar since the early 1980s.

The Canadian dollar, often called the ‘Loonie’, reached parity with the US dollar in September for the first time since 1976.

While investors, multinational businesses and travellers have been witnessing the dollar’s slide for years, pop culture is new territory.

Jay-Z’s Blue Magic video seems to have been an attempt to acknowledge the dollar’s decline in an ironic way and to paint the artist as an international superstar who is smarter than those accepting greenbacks.

‘It is probably a particularly good strategy as the ‘image of the dollar’ loses its ‘currency’ as an emblem of extravagance and success,’ Mr Steven Tepper, associate director of Vanderbilt University’s Curb Centre for Art, Enterprise and Public Policy, said in an e-mail.

‘So, you have the combination of a weakening visual icon – the dollar – and a growing international audience that will understand and connect to the image of the euro.’

As for Bundchen, she would not have been the first to favour contracts in other currencies. Others included billionaire investor Warren Buffett and Pimco managing director Bill Gross.

‘Any international business person that is moving assets around the world will want to do as many deals in the strongest currency available, which is certainly not the dollar these days,’ Mr Tepper added.

The dollar’s decline represents expectations that the United States economy will slow relative to other economies. Recent cuts to the Federal Reserve’s key interest rate have also weakened the dollar.

A weaker dollar also makes American goods cheaper and more competitive in foreign markets, tightening the trade deficit. It helps some US companies with operations abroad, whose profit is greater when converted into dollars. But at the same time, a cheaper dollar makes foreign goods and travel more expensive.

Source: ASSOCIATED PRESS (The Straits Times 21 Nov 07)

Rise in US housing starts not sign of rebound for sector

Unexpected 3% rise due to surge in apartments; applications for building permits continue to fall

WASHINGTON – CONSTRUCTION of new homes and apartments in the United States rebounded last month by the largest amount in eight months, but the unexpected increase was not viewed as a signal of a housing turnaround.

The Commerce Department reported yesterday that housing construction rose by 3 per cent last month, the first increase after three months of declines and the biggest advance since a 6 per cent rise last February.

However, all of the strength came in the volatile apartment sector, which jumped by 44.4 per cent.

Construction of single-family homes fell for a seventh straight month, declining by 7.3 per cent last month compared with September.

Analysts believe that housing is likely to remain weak through much of next year as builders struggle with historically high levels of unsold homes and rising mortgage defaults which are dumping even more homes back on glutted markets.

The overall increase left construction last month at a seasonally adjusted annual rate of 1.229 million units, down 16.4 per cent from activity a year ago.

Applications for building permits, seen as a good sign of future activity, fell for the fifth straight month in October, dropping by 6.6 per cent to an annual rate of 1.178 million units. That is down a sharp 24.5 per cent from a year ago.

The rebound in overall construction came as a surprise to analysts who had forecast a drop of 1.3 per cent.

However, the 6.6 per cent slide in permit applications was more severe than the 4.8 per cent fall expected by Wall Street.

Troubles in housing are expected to seriously depress overall economic growth in the current quarter and early next year with some analysts growing more concerned about an outright recession.

Yesterday, Freddie Mac, the second-biggest buyer of US mortgages, posted its largest-ever quarterly loss – US $2 billion (S$2.9 billion) – and said it may cut its dividends to weather ’significant deterioration’ in the housing market.

The US Federal Reserve has cut interest rates twice since September but has signalled that it is not likely to make further reductions unless the economic weakness deepens significantly, because of worries that a surge in oil prices will make inflation worse.

In Europe, shares in UBS tumbled, but then clawed back, on concerns that the Swiss-based bank will suffer more losses due to exposure on assets hit by the US sub-prime mortgage crisis.

In Britain, buy-to-let mortgage lender Paragon Group said it may need to raise £280 million (S$831 million) from shareholders because of difficulty faced in raising funds in the credit crunch, prompting its shares to plunge nearly 40 per cent.

 

Source: ASSOCIATED PRESS, BLOOMBERG NEWS, REUTERS (The Straits Times 21 Nov 07)