UOB-KH's Q1 Net Profit Slips 29.5%

Source : The Business Times, May 14, 2008

BROKERAGE UOB-Kay Hian recorded slimmer takings for the first quarter ended March 31, 2008, as it failed to repeat the stellar performance it put up during the industry boom last year.

Its total income slipped 22 per cent to $134.1 million, from $172.1 million last year. Its profit after tax attributable to equity-holders dropped 29.5 per cent to $43.2 million, from $61.2 million. Its earnings per share fell to 5.96 cents this year, from 8.44 cents last year.

UOB-Kay Hian explained its poorer showing by saying: '2007 was an exceptional year with record turnover for the stock broking industry and the group. Market volume in Singapore and the region began to slow in (the) fourth quarter (of) 2007 and continued into (the) first quarter (of) 2008.'

The brokerage said its revenues and net profit slipped 'in tandem with the general decline in trading volume and lower commission income'. 'The first quarter of 2008 was challenging for the financial markets. Market and trading conditions were volatile during this period due mainly to concerns over the impact of the sub-prime mortgage on financial institutions, the effects of the credit crunch on consumer spending and longer-term economic growth prospects. Market turnover in Singapore was lower compared to the same period in 2007,' UOB-Kay Hian said.

Its commission income slipped to $105.1 million, from $142.8 million the year before. That was partially offset by a higher interest income of $22.2 million, compared with $18.6 million last year - due mainly to a larger margin portfolio. But, with the lower commission income, commission expenses also fell - decreasing 31 per cent, from $35.4 million in 2007 to $24.3 million this year. Its finance expenses also fell significantly - by 27 per cent - due to lower working capital requirements.

The group's balance sheet remained strong, with UOB-Kay Hian maintaining a net asset value of $996.0 million, as at March 31, 2008. The brokerage said its funding requirements were substantially reduced this year, due to lower loans advanced to support trading and initial public offer activities in Singapore and Hong Kong.

Looking ahead, UOB-Kay Hian said that it expects to remain profitable for the current year, barring any significant deterioration in market sentiment.

The investment house recently beat out seven other bidders for a 15-year-lease site at Scotts Road/Anthony Road. Its record $34 million tender works out to $242.5 per sq ft for the 93,461 sq ft plot - double the original estimates by property market insiders. Its bid was also some 11 per cent more than what had been paid for the first transition office site in Newton in August 2007.

UOB-Kay Hian said then that it would develop the site into its new office.

ISD's Former Headquarters Up For Tender

Source : The Business Times, May 14, 2008

The Singapore Land Authority (SLA) has launched a public tender for the adaptive re-use of the former headquarters of the Internal Security Department (ISD) and Ministry of Home Affairs (MHA) at Phoenix Park, off Tanglin Road.

Garden variety: Block A of the former headquarters of the Internal Security Department and Ministry of Home Affairs at Phoenix Park, off Tanglin Road. The site is designated for office use

Designated for office use, the 641,851-sq-ft site houses 24 low-rise blocks with a gross floor area of 143,160 sq ft. The guide rent is $165,000 per month or $1.15 per square foot (psf) per month.

SLA is looking for a master tenant to take the whole site. SLA senior manager of project services Winston Cheah said: 'The set-up of the premises allows for the tenant to parcel and sub-lease the blocks, each creating a separate identity.'

The site's historic associations go back to the mid-20th century when the British Secret Service built the first blocks there after World War II. Their design was decided by Lord Mountbatten, then Supreme Allied Commander of the South East Asia command.

ISD's predecessor, the Special Branch, moved in in 1948, until MHA moved in from 1977-2001. MHA was followed by Republic Polytechnic from 2004-2006.

Cushman & Wakefield managing director Donald Han says the fact that the buildings were recently used 'shows occupation readiness', which should make them more attractive to bidders.

He reckons office rents there could be $4-$5.50 psf per month. So the developer will need to achieve a break-even cost of $2.50-$3.50 to see a good profit margin.

Mr Han also said the site has ample parking and outdoor space that could be maximised.

SLA also revealed yesterday that the tender for 10 Winstedt Road, formerly Monk's Hill Secondary School, closed on April 16 with seven bids received.

The 164,798.5-sq-ft site and premises with a gross floor area of 83,889 sq ft drew a top bid of $211,328 per month or $2.52 psf per month from Allbest Equipments. This is 43 per cent above SLA's guide rent of $147,300 per month or $1.76 psf per month.

Allbest general manager C H Chan said that if the company is awarded the site, it intends to use 5-10 per cent of the built-up area for its corporate office and lease out the rest at $7-$8 psf.

On the demand for such space, Mr Han said: 'As long as it can be ready within six months, the market is still in the hands of the landlords.'

Fed Warns Market Conditions Are 'Far From Normal'

Source : The Business Times, May 14, 2008

But liquidity moves have helped relieve strain: Bernanke

(SEA ISLAND, Georgia) US Federal Reserve chairman Ben Bernanke said yesterday that emergency Fed liquidity measures have helped relieve strain in financial markets, but the recovery process remains incomplete.

'To date, our liquidity measures appear to have contributed to some improvement in financing markets,' he told the Federal Reserve Bank of Atlanta's annual markets conference. 'These are welcome signs, of course, but at this stage conditions in financial markets are still far from normal. A number of securitisation markets remain moribund,' he said via video link from Washington.

He said that the central bank will increase its auctions of cash to banks as needed. 'We stand ready to increase the size of the auctions if further warranted by financial developments.'

The Fed chief's comments contrast with those by Treasury Secretary Henry Paulson and Wall Street leaders including Vikram Pandit, chief executive officer of Citigroup Inc, who say the worst of the credit crisis is over.

Mr Bernanke noted a 'substantial' improvement in the market for Treasury repurchase agreements and narrower spreads on agency mortgage-backed securities and corporate debt. But risk spreads remained generally high, while strong demand from financial institutions for liquidity from the Fed showed that funding problems persist.

The flight from risk since last August has made financial institutions reluctant to lend to each other, driving up banks' borrowing costs.

'Ultimately, market participants themselves must address the fundamental sources of financial strains - through deleveraging, raising new capital, and improving risk management - and this process is likely to take some time,' Mr Bernanke said. He added that the size of auctions of liquid funds for banks under the Term Auction Facility created last December, which already have been increased to US$75 billion from US$20 billion, could be upped again if demanded by market conditions.

The Fed has slashed interest rates by 3.25 percentage points since mid-September and pumped billions into financial markets to stop them seizing up amid a global credit crunch sparked by the US sub- prime mortgage crisis.

Controversially, the Fed's steps also included a massive cash line that enabled JPMorgan to rescue faltering investment bank Bear Stearns. Defending the Fed's actions, Mr Bernanke said a Bear Stearns bankruptcy could have touched off a much broader liquidity crisis.

He acknowledged intervention risked a moral hazard that investors would renew risky behaviour in the expectation of being protected by the central bank. But he said regulation ahead of a crisis was the best way to address that risk.

'The problem of moral hazard can perhaps be most effectively addressed by prudential supervision and regulation that ensures that financial institutions manage their liquidity risks effectively in advance of the crisis,' he said.

'In particular, future liquidity planning will have to take into account the possibility of a sudden loss of substantial amounts of secured financing,' he said, noting that bank supervisors aimed to ensure that institutions had adequate risk-management measures in place.

Mr Bernanke said the creation of the Term Auction Facility seemed to have overcome 'to a significant degree' the stigma of borrowing directly from the Fed at its traditional discount window. Banks are often hesitant to borrow at the window worrying that their borrowing will become known by market participants, who might view them as being in distress.

He also said measures to provide liquidity to large Wall Street dealers had been helpful, saying that they appeared to have bolstered confidence among dealers' counterparties. -- Reuters, Bloomberg

US Home Foreclosures Hit Fresh High In April: Survey

Source : The Business Times, May 14, 2008

WASHINGTON - In a further sign of the still-troubled US housing market, a survey on Wednesday showed home foreclosure actions hit a fresh all-time high in April of 243,353.

The survey by the research firm RealtyTrac said the percentage of foreclosure actions - including default, auction sale notices and bank repossessions - rose 4 per cent from the prior month and 65 per cent year-over-year.

The report showed one in every 519 US households received a foreclosure filing during the month.

'The total number of US properties with foreclosure activity in April was the highest monthly total we've seen since we began issuing the report in January 2005,' said James Saccacio, chief executive of RealtyTrac.

'Although only about 2 per cent of households nationwide are in foreclosure, these properties contribute to already bloated inventories of homes for sale, and put downward pressure on home values.'

Areas of California, Florida, Nevada and Arizona that had seen booming home values before the property meltdown continue to be particularly hard-hit by foreclosure activity, the survey showed.

Despite a 5 per cent month-over-month decrease in foreclosure activity in April, Nevada continued to hold the nation's highest state foreclosure rate, RealtyTrac said, with one in every 146 Nevada households in foreclosure, 3.6 times the national average.

California had the second highest rate in April, with one in every 204 households receiving a foreclosure filing. -- AFP

Tax Rebate Won't Stem US Rcession: Merrill

Source : The Business Times, May 14, 2008

The US economy is in a recession and stimulus from a government tax rebate later this quarter will only temporarily stem a fall in consumer spending, a Merrill Lynch economist said on Wednesday.

US households will get tax rebates next month as part of a US$152 billion stimulus package passed earlier this year, aimed at propping up an economy hit by the sub-prime mortgage crisis, losses at top banks and a credit crunch.

'I still maintain the business cycle is bigger than the government,' Merrill's North American economist David Rosenberg said at a client conference in Singapore.

He said the world's largest economy was already in recession as consumer spending and confidence had fallen and jobs losses were rising, with the number of hours worked having fallen sharply.

Describing housing as 'the quintessential leading indicator', Mr Rosenberg, a long-time bear on the US economy, said he expected home prices to fall another 15-20 per cent before stablising.

He also predicted inflation in the United States would slow as consumer spending weakens, and that the Federal Reserve would be forced to cut rates further to deal with the recession.

'No asset class security is priced today for a recession scenario,' Mr Rosenberg said, which is why he was bullish on US Treasuries but bearish on stocks. -- REUTERS

CityDev Q1 Net Profit Up 31%; More Profits To Be Recognised

Source : The Business Times, May 14, 2008

Property developer City Developments Ltd said net profit for the first quarter ended March 31, 2008 rose 30.8 per cent to $164.97 million due to strong property development segment.

Basic earnings per share rose to 18.1 cents versus 13.9 cents a year ago - an increase of 30.2 per cent.

Revenue for the period, however, fell 1.3 per cent to $758.75 million.

Explaining the dip in revenue, CityDev said the group's share of revenue in the jointly-controlled entities (JCE) is not included according to its policy of equity accounting for its JCE.

If its share of revenue in JCE was to be included, the revenue for Q1 2008 would show an increase of 6.9 per cent to $956.8 million, compared to $895.1 million a year ago.

For the period, profits were recognised from City Square Residences, One Shenton, Tribeca and The Solitaire. Profits were also recognised from joint-venture projects such as The Sail@ Marina Bay, St. Regis Residences, The Oceanfront @ Sentosa Cove, Parc Emily, The Botannia and Ferraria Park.

However, no profit recognition has been made yet for Cliveden at Grange and Wilkie Studio as these projects are still in the initial stage of construction.

Going forward, CityDev has lined up four projects for launch once the sentiments improve and when pent-up demand can be expected. These are Shelford Suites, The Arte @ Thomson, Pasir Ris Phase 1 and The Quayside @ Sentosa.

It expects office leasing to remain strong with upward adjustment of existing rentals to higher level when the existing leases are up for renewal.

It is expediting the construction of two commercial properties -- 3-storey Tampines Concourse as well as the two 8-storey office towers, 9 Tampines Grande -- to cater to the growing demand for office location, outside of the Central Business District.

With profits yet to be recognised from residential developments sold over the last three years which are still in the course of construction, the group is confident of remaining profitable during the next 12 months, even if it decides to continue to hold back or pace its property launches. -- BT newsroom

NZ House Sales Slump To 16-Yr Low

Source : The Business Times, May 13, 2008

(WELLINGTON) New Zealand house sales fell to their lowest level in 16 years in April, the Real Estate Institute of New Zealand (REINZ) said yesterday.

Sales by Real Estate Institute members fell to 4,464 houses in the month, a fall of 13 per cent on March. The figure was 45.5 per cent lower than a year earlier.

Slowdown: Residential property in Auckland, New Zealand. Prices in the Auckland region, the country's biggest population and commercial centre, rose 3 per cent, although sales tumbled 16.7 per cent

It was the lowest monthly sales total since January 1992, when 4,427 properties were sold, REINZ said.

'April shows that the loss of confidence in the housing market is deeper than we had anticipated,' national president Murray Cleland said in a statement.

The REINZ national median house price fell 1.1 per cent to NZ$345,000 (S$363,195) from the month before, to end 1.1 per cent lower than a year earlier.

Business and consumer confidence has eroded sharply over the past two months in the face of high interest rates and reduced activity, leading some commentators to talk of the economy going into recession.

The median number of days taken to sell a house was 44 from 40 in March and 28 days a year ago.

The Reserve Bank of New Zealand, which has kept its official cash rate at a record 8.25 since July last year, has noted the slowing housing market.

Last week, it said if credit conditions become too tight because of a re-emergence of financial market turmoil, the economic and housing slowdown could be exacerbated.

The latest Reuters poll has 12 of the 16 economists surveyed expecting rate cuts to begin by September this year.

Prices fell in five of the REINZ's 12 regions and rose in seven.

'About the only glimmer of hope was the fact that a number of regions saw their median prices recover, suggesting that the March figures were something of an aberration. However, the trend overall is for declining house values,' Mr Cleland said.

Prices in the Auckland region, the country's biggest population and commercial centre, rose 3 per cent, although sales tumbled 16.7 per cent. Prices in the capital Wellington slipped 8.5 per cent. -- Reuters

Asian Economies Holding Up: Merrill Lynch

Source : The Straits Times, May 14, 2008

ASIA'S strong economic growth will persist despite an ailing US economy as the region diversifies its export markets and a new breed of young and wealthy citizens drive consumption, investment bank Merrill Lynch said on Wednesday.

Inflation is a bigger risk to the region than a slowdown induced by a recession in the United States, the world's biggest economy, said Timothy Bond, Merrill Lynch's chief Asia economist.

Despite a global credit crunch resulting from a crisis in the US housing market, Asian economies expanded 9.5 per cent and China grew 11.5 per cent in the second half of last year, he said at a Merrill Lynch conference in Singapore.

In the first quarter of this year, the region is expected to grow a slower but still robust 9.0 per cent, and China 10.5 per cent, he said.

'I think we have a lot of evidence to support the decoupling view,' he said, referring a view that Asian economies are now in a better position to withstand the impact of a US recession, unlike in the past.

Mr Bond also noted that while Asian exports to the US were flat last year, shipments of made-in-Asia goods to the rest of the world expanded 19 per cent.

'I think the message here is that there is a lot of strength in the global economy despite some very clear headwinds in the US economy, and this is a region that exports to the world, not just the United States,' he said.

Asian exports to Europe have been growing 25 to 28 per cent annually due mainly to the stronger euro currency which makes Asian goods cheaper, he said, adding that intra-Asian trade has also increased.

'Europe has been the number one driver of Asian exports over the past few years, not the United States,' Mr Bond said.

Any slowdown in exports should be offset by an acceleration in consumption, powered by the emergence of younger and wealthier Asians who, unlike their parents, would like to spend their money, Merrill Lynch experts said.

'In the last five years, you have seen people become wealthier in this region... There's many more millionaires in Asia now than there were five years ago,' said Mark Matthews, chief Asia equities strategist at Merrill Lynch.

'So even if their costs are going up and they are complaining about the gasoline (and) their food, the fact is that they are living in nicer places, they are going on longer holidays and they are spending more.' -- AFP

Direct Link From Alexandra Rd To Keppel Bay To Be Built

Source : The Straits Times, May 14, 2008

IN three years, nature lovers will be able to trek 2.2km directly from Alexandra Road to the southern Keppel waterfront, cutting through garden paths and mangrove swamps along the way.

The more adventurous ones can take another 6km trail along the waterfront, and get to the hills in the Mount Faber and Telok Blangah areas.

Altogether, this 8km loop connecting hills in the Southern Ridges to the southern Keppel waterfront is part of a 2002 plan by the Urban Redevelopment Authority to create more parks and waterbodies in Singapore.

The URA on Wednesday announced the details of the 2.2km walkway, which it called the Labrador Nature and Coastal Walk.

Prime Minister Lee Hsien Loong last Saturday announced the development of the walkway when he opened two pedestrian bridges linking hills in the Southern Ridges.

The 9km-long Southern Ridges consist primarily of three large hill parks - Mount Faber, Telok Blangah Hill Park and Kent Ridge Park.

The 2.2km walkway will start with a garden trail at Alexandra Road, where the newly opened Alexandra Arch is. More shrubs will be planted, and cycling paths and more footpaths will be built.

The path then continues into the Berlayer Creek mangrove swamps, currently not accessible to the public. A boardwalk will be built along the banks of the swamps and information boards about flora and fauna in the area will be put up.

The pathway finally opens out into the sea, with a boardwalk connecting Labrador Park to the future promenade of the Reflections at Keppel Bay condominium.

With the condominium and the Labrador Park MRT station also expected to be completed by 2011, that southern area, together with existing nearby recreational areas, such as Gillman Village and Vivocity, is expected to generate more buzz, said Mr Ler Seng Ann, director of URA's conservation and development services.

With the completion of the 2.2km walkway, more areas of Singapore's land and coastline will be made accessible to the public, he said.

The 2.2km walkway is estimated to cost $10 million and construction will begin next year

Underground 'City' To Free Up Space

Source : The Business Times, May 13, 2008

Singapore is looking at building underground power stations, water reclamation plants, wafer fabs and R&D labs, data centres, warehouses and port and airport logistics centres to free up surface land for other economic uses.

Industrial landlord Jurong Town Corporation has called a tender for a wide-ranging 'underground rock cavern (URC) usage feasibility study' to see how best caverns beneath the island can be used.

The consultant awarded the study will have to work with various government agencies on possible uses for the caverns.

For instance, it will have to work with the Energy Market Authority on power stations, the Civil Aviation Authority of Singapore on airport logistics, or the Public Utilities Board on water reclamation plants.

The study will cover such 'space, technical and functional requirements, operation and maintenance requirements and identification of issues of concern', the tender document says.

The tender, called on Friday last week, closes on June 6. Due to the specialised nature of the project, only tenderers with proven URC expertise and experience are eligible.

The winning consultant will have to identify and study proven URC usage in other countries and determine the technical and operational feasibility of such usage here.

The consultant will also have to look at the environment, health and the likely public reaction on such matters as radiation and pollution, harmful airborne particles and damage to existing buildings or infrastructure, among other things.

A JTC spokeswoman said yesterday JTC will be the facilitator for the multi-agency study. 'The study will look at possible uses for URCs as well as costs,' she said. 'The latter include costs for excavation and facility construction for each specific use.'

JTC declined to say which areas of Singapore have potential for URCs. 'The latest feasibility study is looking just at usage, and not sites,' the spokeswoman noted.

Singapore has so far used underground caverns for munitions storage for the defence forces. It blasted caverns out of granite beneath the disused Mandai Quarry.

And it is currently constructing Phase 1 of the $700 million Jurong Rock Cavern (JRC) project beneath Jurong Island to store 1.485 million cu m of crude oil and oil products like naphtha, condensate and gas oil.

JRC will be used by petrochemical companies such as Jurong Aromatics Corporation, which is building a US$2 billion aromatics complex and is the first committed customer.

The first of five caverns being built under Phase 1 will start operating at end-2010. Phase 2 of the project will add another 1.3 million cu m of storage.

In March, when Defence Minister Teo Chee Hean commissioned the underground munitions facility at Mandai, he said it would free up 300 ha of land - half the size of Pasir Ris Town - and need 20 per cent less manpower to operate than a surface facility.

Likewise, JRC will free up 60 ha of surface space - bigger than Bishan Park - to accommodate the storage needs of the oil industry here.

Land on Jurong Island is being snapped up by new petrochemical investors. BT understands that no more land is available from JTC for above-ground oil storage terminals, after Hin Leong's Universal Terminal and Emirates National Oil Company's Horizon Terminal.

Industrial landlord Jurong Town Corporation has called a tender for a wide-ranging 'underground rock cavern usage feasibility study' to see how best caverns beneath the island can be used.

Bernanke Says Crisis Not Over; Prices Worry Others

Source : Reuters, May 14, 2008




MIDLAND (Texas) - United States Federal Reserve Chairman Ben Bernanke said the credit crisis was not over, even as his colleagues revealed growing concerns about inflation that could signal a pause in interest rate cuts.

'Conditions in financial markets are still far from normal,' Mr Bernanke said on Tuesday. 'Ultimately, market participants themselves must address the fundamental sources of financial strains. This process is likely to take some time.'

A string of other Fed officials in separate speeches seemed increasingly worried that rising energy costs would put upward pressure on inflation, potentially dampening their fervour to cut rates further.

The comments highlighted the Fed's ongoing predicament: It must prevent economic growth from slumping too deeply even as it grapples with price pressures that are largely out of its control.

Bonds sold off sharply following the comments and rate future markets began pricing in strong prospects for higher interest rates by year-end. Stocks improved on the comments, with the Dow industrials and the benchmark S&P 500 paring losses, while the Nasdaq rose.

Dallas Fed President Richard Fisher spoke to the difficulty faced by the central bank, saying a slower US economy would not necessarily bring down commodity costs.

'There still is growth in the world economy, even if we slow down,' Mr Fisher said. 'It's difficult for me to see a supply response that will feed into that demand to relieve all the price pressures we see on oil.'

Like Mr Bernanke, Mr Fisher noted some improvements in market conditions but said the financial sector was 'not out of the woods yet'.

Separately, the Cleveland Fed's Sandra Pianalto said that although core US price measures were climbing faster than she wanted, Fed monetary policy was compatible with low inflation.

Oil prices continue to set new records, and were trading above US$125 (S$172) a barrel on Tuesday, after earlier setting another record high near US$127.

Such steep increases have have erased at least one full percentage point from US economic growth, according to Mr Thomas Hoenig, president of the Kansas City Fed.

Mr Hoenig said the economy faced a difficult set of circumstances because of high oil prices, the housing downturn and subsequent credit contraction, but growth should pick up later this year.

Mr Fisher, who has dissented against the Fed's more aggressive rate-cutting efforts, said predictions of a very deep recession were misguided.

'I'm not sure how deep the economic slowdown will be,' he said at a community event in Midland, Texas, even as he admitted the softness could linger for some time.

A Philadelphia Fed survey of professional economists seemed to counter that optimism, however, finding that the chances of an outright contraction in gross domestic product have risen.

In an attempt to prevent such an outcome, the Fed has slashed interest rates by 3.25 percentage points since mid-September, bringing its benchmark rate to 2.00 per cent, and pumped billions of dollars into financial markets to stop them seizing up amid a global credit crunch sparked by the US subprime mortgage crisis.

But the wave of speeches on inflation could signal the Fed's intention to leave rates on hold from here on out, analysts said.

Controversially, the Fed's emergency steps also included a massive cash line that enabled JPMorgan Chase to rescue faltering investment bank Bear Stearns. Defending the Fed's actions, Mr Bernanke said a Bear Stearns bankruptcy could have touched off a much broader liquidity crisis.

Mr Bernanke acknowledged that intervention risked a moral hazard that investors would renew risky behaviour in the expectation of being protected by the central bank. But he said regulation ahead of a crisis was the best way to address that risk. -- REUTERS

New Connectors To Link Southern Ridges To Waterfront

Source : The Straits Times, May 14, 2008

A SERIES of connections will provide a seamless link at the Southern Ridges from Alexandra Road to the waterfront at Bukit Chermin, the Urban Redevelopment Authority announced on Wednesday.

Along the way, visitors can take in the greenery and rustic charm of the mangrove areas of Berlayer Creek, and the waterfront views at Bukit Chermin.

The Labrador Nature and Coastal Walk was first announced last Saturday by Prime Minister Lee Hsien Loong at the official opening of the two pedestrian bridges - Henderson Waves and Alexandra Arch - at the Southern Ridges.

URA said the plan is in line with its efforts to further enhance the attractiveness of Singapore's Southern Ridges and southern waterfront as yet another leisure and recreation destination for Singaporeans and visitors.

The Labrador Nature and Coastal Walk will offer three distinctive experiences:

# Alexandra Road Garden Trail
# Berlayer Creek Mangrove Trail; and
# Bukit Chermin Harbour View Walk

'When completed, the Labrador Nature and Coastal Walk will not only open up stretches of inaccessible coastline for the public's enjoyment, but also link up the attractions in the Southern Ridges and the southern waterfront to form a comprehensive recreational corridor,' said the URA.

'The project will allow visitors seamless connectivity while enjoying a variety of recreational activities.'

Visitors can enjoy scenic hilltop and nature walks across Mount Faber, Telok Blangah Hill and Kent Ridge Park, wine and dine at the food and beverage outlets at Gillman Village, explore the Berlayer mangrove creek, and take in the views of the Keppel Bay enroute to Harbourfront.

Said Mrs Cheong Koon Hean, Chief Executive Officer of URA: 'The Labrador Nature and Coastal Walk, when completed, will allow us to better appreciate some of the very special places on our island that were previously not accessible.

'Together with the earlier completed links at Henderson Waves and Alexandra Arch at the Southern Ridges, this new project will further realise our plans to create a memorable experience for Singaporeans and visitors in this part of Singapore.'

Construction for the Labrador Nature and Coastal Walk is scheduled to start in 2009 and it is expected to be completed in 2011.

The 830 metre Alexandra Road Garden Trail will stretch along the eastern bank of Alexandra Road between Depot Road and Telok Blangah Road.

It will be well connected to the Southern Ridges recreational corridor and the HortPark. The nearby Gillman Village and the recently completed Alexandra Arch will also act as attractions for the users of the park connector.

In line with the Garden Trail concept, footpaths and cycle paths will meander around the matured roadside trees along Alexandra Road, and special landscaping such as flowering shrubs will add interest to the walk. There will also be rest points and information centres along the trail.

The second segment of the project is the 960 metre Berlayer Creek Mangrove Trail. Berlayer Creek is one of the few mangrove areas located in the southern part of Singapore and in close proximity to the city area.

The proposed mangrove trail will offer urbanites a quiet nature retreat from the busy city life and the opportunity to enjoy the natural charm of the mangrove.

The Bukit Chermin trail will culminate at the 330 metre Bukit Chermin Harbour View Walk proposed at the mouth of Berlayer Creek.

This elevated boardwalk on sea will skirt around the foothill of Bukit Chermin, and connect to the future promenade of the Reflections at Keppel Bay condominium eastwards and Labrador Park westwards. Rest points along the boardwalk will allow visitors to soak in the beautiful southern waterfront views of Keppel Harbour and Sentosa.


A New Playground in the South

The Southern Ridges, Labrador area and Keppel waterfront will collectively form a major recreational and leisure destination at the southern part of Singapore.

Two attractive linkages at the Southern Ridges - Henderson Waves and Alexandra Arch and their connecting elevated walkway - are now open to the public.

Visitors can take a seamless stroll from HarbourFront MRT station all the way to Kent Ridge Park through a series of other interesting trails.

Mount Faber, a key node within the Southern Ridges, has also been revamped to cater for better facilities such as restaurants and eateries while developments along the Keppel waterfront such as St James Power Station, VivoCity and Harbourfront Centre have anchored the waterfront as a leisure and vibrant commercial centre.

From Ministry HQ To Office Space

Source : TODAY, Wednesday, May 14, 2008

Site at Phoenix Park being put up for public tender to ease space crunch

FANCY having your office desk in the room where Internal Security Department or British Secret Service officers may have once carried out interrogations?

To help ease the office space crunch, the Ministry of Home Affairs' former Phoenix Park headquarters in Tanglin Road is being put up for public tender.

"The master tenant will have much literal space and flexibility to do up the property," said Mr Winston Cheah, a senior manager at Singapore Land Authority (SLA), which is managing the tender.

The site's well-worn buildings are not only rich in national history and heritage, but come with a large land area.

Yesterday, 10 potential bidders turned up to view the 59,630 sq m site, which has been vacant since May 2006.

While there are some conservation guidelines such as height restrictions, the 31 separate low-rise buildings are proving attractive.

One potential bidder, Mr Danny Wong, marketing manager of Hean Nerng Holdings, said: "The potential is good here, because there are a lot of blocks. Companies will be better off leasing one whole block to themselves, rather than leasing in a commercial development where they've got to share different floors."

Mr Wong added: "Over here, they can have their own space, own entrance, so it's ideal for companies which want to have a very good corporate image front."

Combined, the buildings cover a gross floor area of 13,300 sq m. SLA has proposed an indicative rent of $165,0020 per month for the master tenant, who could sublet space or use it all themselves. This would be on a three-year tenure that is renewable till 2017.

Mr Donald Han, managing director of Cushman and Wakefield, said: "The advantage of this site is the sprawling land. To attract office users, you need ample car-park facilities."

The tender closes on June 4.

Check Before You Renovate

Source : TODAY, Wednesday, May 14, 2008

Radac’s here to help, but consumers should ensure contractor is accredited first

Letter from FAROK MAJEED
Chairman, Renovation and Decoration
Advisory Centre (Radac)

WE REFER to the letter “Renovation Aggravation” by Raymond Ng (April 29).





















Radac was set up by the Consumer’s Association of Singapore (Case) in 1986 to provide greater control in the renovation industry.

Recognising Radac’s importance, growth and capability, Case’s Central Committee recommended that Radac operate as an independent body not only to look after the interests of consumers at large, but also to improve the standard and quality of renovation and meet the demand of more sophisticated consumers.

In 1995, Radac was registered as an independent voluntary, non-profit consumerbased body comprising of council members from practising professionals in the real estate, construction and other industries.

Being a registration body, Radac accredits and registers qualified renovators in its Singapore National Registry of Accredited Renovators (Singaroar). These renovators are given the accreditation and recognition as Radac-accredited renovators. They are not members of Radac.

To be accredited, one must satisfy requirements like sound financial standing, technical competence and be registered for at least three years with a Housing and Development Board (HDB) licence or at least seven years for those without a HDB licence.

They are also required to be covered under the public liability insurance for a minimum sum of $200,000, to protect the interest of the accredited renovators as well as homeowners who engage them.

The list of Radac-accredited renovators is updated in our annual renovation guide — Singaroar — as well as our website at www.radac.org.sg.

As Raymond Ng pointed out, this complimentary renovation guide is distributed to new homeowners through the HDB. It can also be obtained, free of charge, from HDB branch offices, town council offices and the Radac Resource Centre.

To assist consumers in obtaining their rights and good value for money, Radac issues the Radac Standard Contract which contains contractual obligations, recommended payment terms, etc to protect consumers and renovators. This can be obtained from the Radac Resource Centre at $5 per copy. Radac-accredited renovators, as well as consumers, are strongly encouraged to use this standard contract.

Consumers should provide feedback to Radac if any accredited renovator rejects their request to use this contract.

We would like to thank Raymond Ng for his feedback and would appreciate it if he could contact our Resource Centre at 6565 9929 or email radacnet@singnet.com.sg, to provide us with more details, so we can look into the matter.

When engaging a renovator, consumers are advised to check Radac’s website to confirm the accreditation before signing any agreement and should make sure that the agreement is signed with the accredited renovator and not any of their associated firms which are not accredited and not registered in Singaroar. Radac provides mediation services should disputes arise between consumers and accredited renovators.

Former MHA Complex Up For Office Lease

Source : The Straits Times, May 14 2008

Tanglin site can be leased for an initial 3 years, with option for renewal till 2017

THE sprawling Phoenix Park site in Tanglin Road, which housed the Ministry of Home Affairs (MHA) for more than two decades, can now be leased for office use.

The 641,852 sq ft site, in the exclusive foreign embassy district, should help ease Singapore's office space crunch.

PRESERVING HISTORY: Three of the four blocks that are now under conservation study, which means future tenants must retain their facades, including the windows and certain architectural features, during renovation work. -- PHOTO: URBAN REDEVELOPMENT AUTHORITY

The Singapore Land Authority (SLA) yesterday launched the site tender. The site is now also open for public viewing for the first time.

The historical buildings were built by the British after World World II. They also once housed the headquarters of the Internal Security Department, which is now at New Phoenix Park in Irrawaddy Road. The MHA moved into Phoenix Park in 1977 and stayed there until 2001, when it relocated to Irrawaddy Road.

The complex was then used by Republic Polytechnic for about two years until the middle of 2006, when the institution moved to its new campus in Woodlands.

The successful bidder will likely have to spend several million dollars to spruce up the rundown buildings before leasing them out. There are 31 blocks, of which 24 are single-storey and four are two- and three-storey buildings. Two substation blocks and one bin centre make up the rest of the buildings.

The four main blocks are now under conservation study, which means future tenants must retain the facades, including the windows and certain architectural features, during any renovation work.

The site - a gazetted tree conservation area - has a basketball court and four carparks.

The SLA wishes to work with a master tenant instead of several tenants. Its guide rent is $165,000 a month, or about $1.15 per sq ft (psf). The site has a gross floor area of 143,160 sq ft and can be leased for an initial three years, with options to renew the lease up to 2017.

Hean Nerng Holdings, a firm specialising in converting old premises for new uses, believes the site has good potential as an office location.

Mr Danny Wong, its marketing manager, said on a site tour yesterday: 'Offices can lease out one whole block with their own entrance. It's good for corporate branding.'

While the site is strictly for office use, the SLA allows for supporting uses such as a staff canteen, gymnasium and other food and recreational facilities.

Offices on the site may appeal to advertising firms, for instance, and could rent for $3 psf to $6 psf, sources said.

Due to tight supply, office rents in Singapore have surged to an average $17 psf to $18 psf for top buildings in areas like Raffles Place.

Since February last year, the SLA has helped relieve the shortage by tendering out 18 former schools and other vacant properties for office use. So far, 13 of them have been taken up.

Its tender for the former Monk's Hill Secondary School off Bukit Timah Road attracted seven bids - all above its guide rent of $147,300 a month.

AllBest Equipment had the highest tendered monthly rent of $211,328, or $2.52 psf.

General manager C.H. Chan said it would use one of the four blocks for its corporate office and lease out the rest at possibly $9 psf to $10 psf.

The firm will spend up to $4 million on renovation, which will bring its break-even cost to about $6 psf to $7 psf, he said.

Worldly Pursuits In Dubai

Source : The Straits Times, May 13 2008

No doubt about it - The World in Dubai belongs to the rich and famous. This cluster of real estate is shaped like a map of Earth

YOU can buy Australia, New Zealand, Shanghai or even the Antarctica, and develop it into a private kingdom.

But first, you have to be invited to purchase this exclusive piece of real estate located 4km off the coast of Dubai - The World, a spectacular man-made archipelago shaped like a map of Earth.

'Currently, only one island that is part of Greenland is fully developed with a three-storey glass-framed mansion, equipped with water, sewage and electrical systems'

According to locals, it is owned by Sheikh Mohammed Rashid Al Maktoum, the vice-president and Prime Minister of the UAE and ruler of Dubai -- PHOTOS: NAKHEEL, CARA VAN MIRIAH

Every year, 50 invitations are sent to businessmen, celebrities and members of royalty.

Nakheel, the United Arab Emirates-owned property developer behind the project, wants to turn it into the world's first island community for the elite.

Covering 931ha, The World is twice the size of Sentosa, which has a total area of 463ha.

According to Mr Christopher O'Donnell, Nakheel's chief executive officer, half of the 300 islands with names such as Ireland and Shanghai, have been sold.

Although there had been talk that celebrities such as British singer Rod Stewart, footballer David Beckham and Hollywood couple Brad Pitt and Angelina Jolie have each bought an island here, Nakheel did not confirm any of these purchases.

Instead, the confirmed buyers include Chinese businessman Bin Hu who paid 103 million dirhams (S$38 million) for Shanghai island with plans to build a resort; Kuwait-based investment group The Investment Dar and Efad Holdings, which will transform Australasia into a resort with private residences; and Singapore-based firm Cinnovation Group, which will build a 730 million-dirham resort and spa on Nova Island.

Each island, with an average size of 300,000 sq ft, is priced between 73.5 and 183.6 million dirhams, says Nakheel spokesman Aaron Richardson.

He declined to reveal the exact cost of the multi-billion-dollar project. With The World's barren islands, buyers will have to factor in other costs, such as building a house, ferry terminal and desalination plant.

Currently, only one island that is part of Greenland is fully developed with a three-storey glass-framed mansion, equipped with water, sewage and electrical systems. Mr Richardson would only reveal that the island belongs to an 'influential local family'.

According to locals, it is believed to be owned by Sheikh Mohammed Rashid Al Maktoum, the vice-president and Prime Minister of the UAE and ruler of Dubai.

He is also the man behind Nakheel's other island developments, such as The Palm Jumeriah, the smallest of the three artificial palm-shaped islands along the coast of Dubai.

These island developments, along with the skyscrapers rising rapidly from the desert plains, have reshaped Dubai in recent years.

The remnants of the old city, though, is tucked away at the Bur Dubai, known for its winding alleys, beautiful palaces, mosques and old homes.

Just like the old days, the bustling local markets or souks see merchants selling spices, gold, silk, fishes and textile.

As developers compete to build the world's tallest supertower in this fast-growing city, mega-resort Atlantis will open at the 560ha Palm Jumeirah in September.

Located on the Palm's crescent, the facilities will include an Aquaventure water park and a 1,539-room resort.

On the Palm, there are also waterfront condos and double-storey villas, which are located on the 16 'fronds'.

According to Edward Sands Towers properties, which specialises in the Palm's residences, a 1,184 sq ft one-bedroom seaview apartment is priced at 3 million dirhams, while a four-bedroom garden villa, spanning 5,000 sq ft, costs 15 million dirhams.

Homeowners come from China, South America, Britain, the United States and even Nepal.

So far, more than 4,000 properties have been snapped up, with 2,000 families now living on the island.

But with over 5,500 residential units, and more to come from third-party developers plus 30 new hotels, the island is in danger of becoming congested.

The construction of the Palm also sparked environmental concerns. The continuous breakwater was subsequently modified to create gaps on either side to allow tidal movement to oxygenate the water within and prevent it from stagnating.

Mr O'Donnell tells Life!: 'During the planning stages, we have local, regional and international institutions to prepare a comprehensive environmental impact assessment of the marine environment.

'The creation of new landscapes and seascapes promotes the existence of marine life.'

And two F-100 Super Sabre fighter jets have been stripped and sunk near the island to create an artificial reef, intended to encourage marine life.

At the end of this year, Nakheel will be developing yet another man-made island called The Universe.

Spanning 3,000ha of reclaimed land below The World, it will form a cluster of islands in the shape of the solar system. It is expected to have residential units and hotels.

Asked what would follow next, Mr O'Donnell jests: 'We have already conquered The World and next, The Universe. These are icons of Dubai.'

SC Global's Q1 Earnings Rise 75% To S$19.2m, Outlook Cautious

Source : Channel NewsAsia, 13 May 2008

Property developer SC Global saw its net profit rise 75 percent in the first quarter to S$19.2 million, despite revenue falling 20 percent to S$43 million.

But the outlook going forward appears cautious. Like many other developers releasing results in recent days, SC Global said market sentiment has been dampened by the sub-prime fallout in the US.

It said medium to long-term fundamentals in the Singapore market continue to remain sound, which is expected to help underpin the property sector.

Barring unforeseen circumstances, SC Global expects to remain profitable in the next quarter ending June 30. - CNA /ls

Former MHA Complex At Tanglin Road Put Up For Tender

Source : Channel NewsAsia, 13 May 2008

The former Ministry of Home Affairs (MHA) Complex at Tanglin Road, which is also known as Phoenix Park, has been placed for tender.

According to the Singapore Land Authority (SLA), the prime site on the fringe of the Orchard Road belt will be open for adaptive re-use as office space.

Analysts said they are expecting to see strong interest due to the current office space crunch.

Winston Cheah, Senior Management, Project Services, SLA, said: "At the moment, there is an office space crunch. We are contributing by providing more office space. We hope the successful bidder can make this into an office icon."

Phoenix Park has a land area of just under 57,000 square metres and a gross floor area of about 13,000 square metres. The tenancy is for an initial three years and renewable on terms up to 2017.

What makes the site stand out is its 31 individual blocks.

Danny Wong, Marketing Manager, Hean Nerng Holdings, said: "The potential is very good here. There are a lot of blocks. Companies are better off leasing one block to themselves, (compared to leasing) a commercial development where they have to share different floors. Over here, they can have their own space and their own entrance. This is good for companies who want a strong corporate image."

And the sprawling landscape means more car park space will be available, compared to the financial district.

The current indicative rent of S$165,000 a month is also seen as tempting, despite the retrofitting work required.

Donald Han, Managing Director, Cushman & Wakefield (Singapore), said: "The current price as a guide price translates into about S$1.15 psf. If you're looking at refurbishing this entire portfolio at a cost of about S$50 – S$70 psf, it (will) breakeven at about S$2.50 to S$3.00 psf. In this area, you can look at leasing anything from about S$4.00 to S$5.50."

Cushman & Wakefield said bidders may pay up to S$4.00 psf.

"If you look at other transitional sites at Scotts Road near the MRT, the breakeven point is about S$5.00 psf. We lease that at about S$7.00 to S$8.00 psf. So where Phoenix Park is, with no easy access to MRT, we're at S$5.00, not beyond S$6.00," said Mr Han.

Likely tenants include those who may not require a city centre location, but would like to remain accessible to the financial district such as advertising agencies.

The tender closes on June 4.

Since February last year, SLA had tendered out 20 former schools, vacant community centres, childcare centres and institutional buildings for office use only. - CNA/so

An Underground Reservoir?

Source : TODAY, Wednesday, May 14, 2008

Govt tender to study feasibility of more facilities in rock caverns

Land-scarce Singapore is already storing some of its military munitions in this way. And work is underway on similar storage facilities for crude oil and oil products.

Now, the Government wants to look at building power stations, warehouses, incineration plants, airport logistics centres and reservoirs all below ground.

Industrial landlord Jurong Town Corporation (JTC) last Friday called a tender for a "underground rock cavern usage feasibility study" to see how subterranean grottos could be used to maximise land use. Among other things, the winning consultant will have to study the costs and the use of underground caverns in other countries. It will also advise JTC on the possible environmental and health issues, such as pollution, radiation and damage to existing buildings and infrastructure.

Last July, TODAY broke the story of how government agencies including the JTC were exploring the feasibility of creating caverns for living.

Professor Zhao Jian, who led early feasibility studies on cavern development in Singapore, had said then that the potential for space underground was "almost limitless" and was "particularly useful for any facilities that are not desirable at surface level, for example, sewage treatment plants".

The study now up for tender will look merely at feasibility and not sites, a JTC spokeswoman told the Business Times.

However, potential sites could be areas with deposits of igneous rock, such as granite, in the central, northern and northeastern areas of the island.

A 1995 paper by Nanyang Technological University researchers including Prof Zhao, in the Quarterly Journal of Engineering Geology, concluded that the Bukit Timah granite which forms one-third of the surface area of Singapore had good potential for underground cavern construction.

The tender closes June 6, and the consultant is expected to work with the Civil Aviation Authority of Singapore and the Energy Market Authority, among others.

other cavern projects:

• In March, the Ministry of Defence opened caverns under the disused Mandai Quarry to store ammunition such as bullets, bombs and missiles. The warehouse caverns each about the size of six basketball courts were blasted out of solid granite underneath the quarry, freeing up surface land the size of Pasir Ris town.

• The JTC is constructing the $2-billion Jurong Rock Cavern beneath Jurong Island, for use by petrochemical companies. The first caverns under Phase 1 should begin operations in 2010.

• A plan in the late 1990s to construct a Science City, a mixed-use commercial project, under Science Park 2 was derailed by cost factors. - TODAY/ar

HPL's Q1 Profit Jumps 76.2% To $20.5m

Source : The Business Times, May 14, 2008

HOTEL Properties Ltd (HPL), controlled by businessman Ong Beng Seng, yesterday posted a 76.2 per cent year-on-year increase in first-quarter group net earnings to $20.5 million.

Revenue rose 40.6 per cent to $146.1 million. The group said its hotels and resorts in Singapore, Maldives and Bali have generally made significant improvements in room rates as well as occupancy. Contributions from the property division also increased due to higher profits recognised for the group's condo development in Bangkok, The Met, as well as higher rental income from the group's investment properties, in tandem with the higher prevailing rental rates.

Deal cost: HPL made further contribution for its share of the remaining acquisition cost for the Farrer Court site

The group owns the Hilton and Four Seasons hotels, Forum and HPL House in Singapore's Orchard Road area.

During the quarter ended March 31, 2008, the group made further contribution for its 22.5 per cent share of the remaining acquisition cost for the Farrer Court site, resulting in an increase in the group's investment in associates and a corresponding increase in borrowings. Interest expense, however, remained constant due to lower prevailing interest rates.

The group's cash and bank balances fell from $123.5 million as at Dec 31, 2007 to $95.3 million as at March 31, 2008.

Earnings per share rose from 2.43 cents (restated) for Q1 2007 to 4.07 cents for Q1 2008. Group net asset value per share rose marginally from $2.40 as at end-2007 to $2.43 as at March 31 this year. On the stock market yesterday, HPL closed four cents higher at $2.89.

HPL yesterday also announced the appointment of Stephen Lau as executive director. Mr Lau, 53, is currently head of the group's hotel division.

The group is slated to complete later this year its fourth property in Maldives and the second managed by its hotel management arm, HPL Hotels & Resorts, according to information in HPL's 2007 annual report.

Following the success of Hard Rock Hotel in Bali and Pattaya, the group is developing a Hard Rock Hotel in Penang.

SC Global Q1 Profit Rises 75% To $19.2 million

Source : The Business Times, May 14, 2008

SC GLOBAL Developments has reported profit after tax and minority interest (Patmi) of $19.2 million for the first quarter ended March 31 - an increase of 75 per cent over $10.9 million a year earlier.

Gross profit increased 22 per cent year- on-year. SC Global said higher selling prices were achieved, resulting in a higher gross margin of 58 per cent versus 38 per cent a year earlier. Group revenue fell 20 per cent to $43.1 million, from $54 million a year earlier.

SC Global said it had a low inventory of completed properties for sale compared with last year, when revenue was attributed to sales of completed properties.

During the quarter, it began revenue recognition of The Marq on Paterson Hill based on progress of construction.

Revenue also included contributions from The Lincoln Modern and Kairong International Gardens in Shenyang, China.

Contribution from the group's associate company in Australia, AVJennings (AVJ), fell to $1.7 million, from $2.3 million a year earlier. SC Global said this was due to the absence of revenue from a land syndication arrangement with a joint-venture partner in the corresponding quarter last year. AVJ reported that, except for New South Wales, sales in all states were satisfactory.

Inventories, including development properties, under the group's balance sheet comprise mainly projects under construction and land.

The liabilities of the group and company fell $10 million and $28 million respectively to $23.1 million and $5.1 million. The group had a cash and cash equivalent position of $67.9 million on March 31.

SC Global said it expects to debut a new project in Martin Road and the second phase of its residential units at Kairong International Gardens in the second half of 2008.

Earnings per ordinary share for the quarter on a fully diluted basis was 4.71 cents, up from 3.57 cents a year earlier.

SC Global's share price closed three cents higher at $1.51 yesterday.

CapitaLand, US Fund Jostle For The Atrium

Source : The Business Times, May 14, 2008

Price will be over $800m; CMT eyeing synergies with Plaza Singapura: sources

The race to snap up The Atrium @ Orchard is said to have narrowed to two parties: a US fund, and a unit of CapitaLand group, possibly CapitaMall Trust (CMT), which owns Plaza Singapura next door. The price is understood to be in the region of $2,200-$2,300 per square foot of net lettable area (NLA). Based on the property's total NLA of around 370,000 sq ft, the asset would be priced at over $800 million.

New look: If The Atrium is bought by CapitaLand, it could be repositioned to have a bigger retail component, given its Orchard Rd frontage

The property is being sold by Singapore Land Authority (SLA).

BT understands a deal is in the process of being sewn up.

While some analysts questioned the rationale behind CMT's interest in a predominantly office development, seasoned property investors said CapitaLand or CMT would be the most logical buyer of the asset, given the synergies that can be drawn from owning the Plaza Singapura mall.

It can also reposition The Atrium, which is a predominantly office development, to have a bigger retail component, given its Orchard Road frontage.

The expression-of-interest exercise for the Grade A office property closed on Feb 22 and is believed to have attracted a number of offers. The two highest bidders - the US fund and CMT/CapitaLand - were selected to proceed with due diligence. Industry players do not seem to know much about the US fund or its plans for the property.

SLA will issue a fresh 99-year leasehold tenure for the property from mid-2008, according to earlier reports. The Atrium comprises two office towers, seven and 10 storeys high, with ground-floor retail space.

Currently, The Atrium's retail component is confined to only about 10,000 sq ft out of the total 370,000 sq ft NLA.

Some feel that the eventual buyer of The Atrium may introduce more shop/ restaurant space into the development given its location in Singapore's main shopping belt. One way would be to decant space from the upper floors and create higher-value retail/ restaurant space on the lower levels - a tried-and-tested CMT asset enhancement formula. 'Another way would be to punch an atrium into the development and install escalators to bring shoppers up to the first few levels of the property. There may also be scope to introduce retail space in the basement,' a market watcher suggested.

However, it may take a while before such plans are executed due to the current office crunch and ongoing leases in the property.

'If CapitaLand Retail/ CMT end up with The Atrium, there'll also be scope to better connect it with the group's Plaza Singapura mall. Perhaps they could buy/lease state land between the two properties and build low-rise facilities suitable for, say, alfresco dining. Extending retail activities closer to Orchard Road would also help to draw more shoppers to Plaza Singapura,' an industry observer said.

Completed in 2002, The Atrium's current average monthly rent (based on existing leases) is understood to be below $6 psf - translating to a passing net property yield of just over 2 per cent. However, BT understands this could go up to more than 3 per cent within the next 12 months.

CMT is currently trading at about 4 per cent distribution yield on the stock market. Some suggested using a significant debt component to fund the acquisition. As at March 31, 2008, CMT had an asset size of about $5.9 billion and a gearing ratio of 35.3 per cent. CMT could fund the acquisition of The Atrium entirely through debt and still not exceed 45 per cent gearing at trust level. 'If the cost of funding is sufficiently below The Atrium's net property yield, the acquisition could still be immediately yield accretive to CMT. If not, there's always the possibility of the property being initially acquired by CapitaLand Retail and warehoused for asset enhancement and other yield- boosting exercises before being offered to CMT,' an analyst suggests.

The $2,200-2,300 psf price currently being negotiated is lower than the 'above $2,700 psf' price tag indicated at the start of the property's marketing campaign in January. However, sentiment in the office investment market has weakened, because of difficulty in securing debt funding, and concerns of surging supply post-2011.

The asset is said to be stuck with some long leases locked at pretty low rental rates. Tenants include Temasek Holdings, Barclays and MTV Asia.