The Radiant Face Of Singapore

Source : The Business Times, May 20, 2008

BUILDING FOR TOMORROW

From the Republic's early days, the buildings that define its skyline reflect a nation that is increasingly vibrant

IF a country had a face, it would be the skyline of its city. Like a portrait on a sky-blue canvas, it is the profile of a nation - as visually unique as the individuals who inhabit it. And, like a face, it reflects the character and spirit of its people too.

Impressive edifices: An upcoming marquee project is the Marina Bay Financial Centre, a $2b complex of residential and commercial buildings. The Marina Bay Sands IR will also be a ground-breaking development in many ways

The economic success story of Singapore is not just recorded in the history books, but literally etched in stone. Well, concrete anyway. Soaring office towers decked out in glass and steel gleam proudly, shoulder-to-shoulder, scraping the sky above the Central Business District (CBD). But despite the rush to build on increasingly limited and expensive land, Singapore hasn't become as suffocating a concrete jungle as many other developed cities. For all the human activity that is part and parcel of a bustling cosmopolitan city, Singapore's business district is surprisingly well-ordered and efficient.

The brain behind the city's pleasant face is the Urban Redevelopment Authority (URA). Since the mid-1970s it has been tasked with striking a balance between designing an aesthetically distinctive yet land-efficient cityscape. Beyond figuring out how to make the most of limited land, it also sees 'the need for the CBD to be attractive and distinctive'. Indeed, the number of postcards that promote Singapore's photogenic skyline to the world bear testament to the efficacy of URA's work over the years.

Changing profile: Singapore's skyline in 1977 and 1997. The city hasn't become as suffocating a concrete jungle as many other developed urban areas
What is also notable is how young - compared with other developed cities - Singapore's cityscape is.

A significant early development that contributed to the definition of its skyline came about a couple of decades ago in 1986 with the completion of OUB Centre at Raffles Place. The tower, which has 63 floors and is 280 metres high, was the tallest building outside the United States at the time of its opening.

Today, 22 years later, it still stands as an icon, sharing the title of Singapore's tallest building with two other structures - UOB Plaza One and Republic Plaza, the former having been completed in 1992 and the latter three years later. Together they comprise a triumvirate of titans that stand as towering witnesses to the economic growth of the nation.

But bigger plans are afoot for an island with ambitions bigger than its land mass. Reclamation has been actively pursued to meet the infrastructural demands of a burgeoning economy for decades. Between 1960 and 1990, 51.5 sq km of land was reclaimed, accounting for almost 10 per cent of Singapore's total land area at the time. By 2030, it is estimated that another 100 sq km will have been added.

The swathe of land that houses the buildings in the Marina Bay area is, in fact, reclaimed. Comprising 3.6 sq km of prime real estate, it is the focal point of existing and future developments that will cement Singapore's status as a financial and business hub. Set picturesquely by the waterfront, the area is set to evolve into what URA terms a 'Garden City by the Bay'.

It is envisioned as a round-the-clock microcosm of cosmopolitan living, with a vibrant lifestyle and leisure component that will complement its business environment.

One way URA hopes to infuse more vibrancy in the area is to designate certain zones 'white sites', which means developers can mix commercial, retail and residential components within a single project.

But while many of these new buildings will have a premium view of the bay area and encompass a mix of lifestyle and business facilities, they will not soar as high as the other buildings in the vicinity. This is another deliberate feature - planners do not want to obstruct the view of earlier developments.

Graduating arrangement

In fact, a glance at a picture of Singapore's existing skyline reveals that very trend. The result is a dynamic yet uncluttered and h+armoniously graduating arrangement of heights that do not have to vie for the best view.

One significant development now being built that will acquire some height and prominence in the cityscape is The Sail @ Marina Bay, a luxury condominium which, at 70 stories tall, will be among the 10 tallest residential buildings in the world when it is completed next year. Comprising two distinctively sail-shape towers that are bound to become iconic fixtures of the future skyline, it will provide 1,100 apartments with a splendid view of the bay area.

Another upcoming marquee project is the Marina Bay Financial Centre, a $2 billion complex of residential and commercial buildings that will peak at 55 stories. When it is eventually up, it is expected to add a considerable 150,000 sq ft of Grade A office space, effectively doubling what is currently available in Singapore. The first phase is expected to be ready by 2010.

In fact, when the entire Marina Bay area is fully developed and integrated with the existing financial district, it will be twice the size of London's famous Canary Wharf financial district and will provide a combined total of 2.82 million sq m of office space, equalling what is available in Hong Kong's main business centre.

The most prominent - and anticipated - of these new developments will, no doubt, be the Marina Bay Sands integrated resort that is set to open for business next year. It will be a ground-breaking project in many ways.

A drive across Benjamin Sheares Bridge, which overlooks the expansive site, reveals an orchestra of cranes and a flurry of construction work - an impressive sign of the scale of things to come.

Its one-of-a-kind Sky Park - a two-acre stretch of landscaped gardens that will be perched atop and bridge its three 50-storey hotel towers - will offer breathtaking views of the entire city. When completed, it will offer six million sq ft of retail and entertainment space, 3,000 hotel rooms and a plethora of lifestyle and leisure activities.

While it may not be the tallest upcoming structure, it will undoubtedly be deemed the crown jewel on the eventual skyline. Certainly, at an estimated cost of more than $5 billion, it is likely to be one of the most expensive projects of its kind in the world.

With Singapore's expanding skyline gradually taking form, the fact that each new storey of every eventual building represents a business opportunity is not lost on the different businesses involved in the building industry.

A significant portion of the investment pouring into the city will go to them, as developers continue dreaming up more impressive edifices to meet those increasing demands.

In fact, the total amount generated by the construction and building industry here is expected to hit a whopping $55 billion by 2011.

Last year, the industry grew by almost 10 per cent and awarded $19 billion of contracts.

International building centre

While its position as a financial and leisure hub continues to solidify, Singapore is also becoming a centre for the international building and construction industry.

With such an array of opportunities available and its reputation for business efficiency, almost everyone in the industry's supply chain is finding some reason to do business here. They are either directly involved in the local industry or use it as a regional hub to reach out to larger markets in the region.

A good example is the upcoming BEX Asia 2008 exhibition, when building material and equipment suppliers from around the world showcase their latest products and technologies in Singapore. The event, from May 21-23 at Suntec Singapore, is expected to attract prominent industry players, both local and international.

And so, as developers build bigger and taller, they will continue to redefine Singapore's skyline in the process. From the smattering of grey monoliths that sprouted up in the early days of the economic boom to the myriad glistening peaks and pinnacles that scrape our skies today - and those that will join them in the future - the skyline represents the face of a nation which, as it matures, begins to look increasingly radiant.

Post-Crisis US Economy Seen Settling Lower

Source : The Business Times, May 20, 2008

Productivity gains will be weaker, joblessness higher

(NEW YORK) A normal US economy is likely to look a lot different, and worse, after the credit crisis is over and financial markets settle down.

Companies will continue to struggle to raise cash for expansion and innovation as investors and lenders remain focused on conserving capital. Workers, too, may have less flexibility to go after new opportunities, because many will be stuck where they are - in homes worth less than the balances on their mortgages.

'Once you've made terrible, overly optimistic errors, that paralyses you for some time,' says economist Paul Samuelson, a Nobel laureate.

The bottom line: The US may have to get used to a new definition of normal, characterised by weaker productivity gains, slower economic growth, higher unemployment and a diminished financial services industry.

Long-term growth in the US may drop to 2 per cent to 2.5 per cent a year from the 3 per cent rate of the last 15 years, according to Peter Hooper, chief economist at Deutsche Bank Securities in New York and a former Federal Reserve official.

Even after markets recover, 'the cost of risk capital is likely to be significantly higher than during the credit bubble', he says.

A record three-quarters of US banks that the Fed surveyed last month said that they were charging corporate borrowers a higher premium over what the lenders pay for funds. More than half reported a tightening in lending standards.

Behind the stricter terms: loans and investments made during the credit boom that went sour. Banks and financial institutions worldwide have racked up more than US$340 billion in credit losses and asset writedowns since the start of last year. David Rubenstein, managing director of the Washington-based private equity firm Carlyle Group, says that there is more to come, telling reporters on May 12 that 'enormous losses' have yet to be recognised.

'Credit conditions are more likely to tighten further in the near term than ease,' says Andrew Tilton, an economist at Goldman Sachs Group Inc in New York.

Citigroup Inc chief executive officer Vikram Pandit told shareholders on May 9 that he plans to get rid of about US$400 billion of assets over the next three years after the biggest US bank lost US$5.1 billion for the first quarter.

Companies also face a tougher borrowing environment in the bond market. The spread that investors charge over Treasury securities for high-yield bonds has narrowed since the height of the credit crisis in mid-March. Still, at 663 basis points, it is well above the 495-point average since 1985.

And it is likely to remain higher, says John Lonski, chief economist at Moody's Investors Service Inc in New York. He sees the spread averaging about 600 basis points next year.

Companies are also issuing fewer high-yield bonds, and he forecasts a drop of more than 40 per cent this year, to US$80 billion. 'Next year, we'd do very well to reach US$100 billion,' he says. In 2006, before the onset of the credit crisis, more than US$150 billion in new junk bonds were sold.

Equity capital is also harder to come by. Initial public offerings for fledgling businesses fell to the lowest level in almost five years in the first quarter, the National Venture Capital Association reported.

Less risk-taking can mean a less-vibrant economy, says Mr Samuelson, 93, an emeritus professor at the Massachusetts Institute of Technology in Cambridge, Massachusetts. 'What you could lose are some new ideas that would otherwise get to be practical and get their chance,' he says.

Even well-established companies may have a hard time retrenching. Wall Street analysts say. General Electric Co chief executive officer Jeffrey Immelt might have difficulty selling slow-growing financial services assets, including GE's credit card unit. The Fairfield, Connecticut-based company might even sell its century-old appliance business.

Workers too are feeling the fallout from the credit crisis. The share of respondents in a May 1-8 Bloomberg/Los Angeles Times poll who described themselves as financially secure fell to the lowest level since 1992.

The declining value of houses - the biggest asset for many Americans - has a lot to do with their pessimism. The median price for a single-family home fell 7.7 per cent in the first quarter, the biggest drop in at least 29 years, according to the National Association of Realtors. -- Bloomberg

Kwok Family Woes Now Tabloid Fodder

Source : The Business Times, May 20, 2008

Sun Hung Kai chairman files writ against brothers

A FAMILY feud at Sun Hung Kai Properties, one of Hong Kong's biggest developers, is shaping up to become a feisty legal battle for boardroom control.

The woes of the Kwok family have taken a dramatic twist after the chairman of Sun Hung Kai Properties, who took leave of absence in February, filed a writ against the company and his brothers.

Feuding for boardroom control: (from left) Raymond Kwok, vice-chairman and managing director of Sun Hung Kai Properties; Walter Kwok, chairman and chief executive; and Thomas Kwok, vice-chairman and managing director

At the time, Sun Hung Kai Properties said Walter Kwok was taking leave of absence due to ongoing personal and business overseas trips and planned to resume his duties.

Eager to return, Walter Kwok Ping-sheung has secured an injunction preventing a board vote that would see him ousted altogether, challenging an attempt by his two brothers to gain control of the company.

It is believed that cracks first began showing in the family when a friendship between Mr Kwok and a woman became the source of discontent in the family ranks over her role in the company and the advice she was giving the elder sibling.

In the writ, Mr Kwok disputes claims by his brothers that he is medically unfit to return to the helm of the company. He also listed a number of disagreements over company management. The executive claims that measures he took to boost corporate governance at the company led to discord.

The elder Kwok detailed an agreement between himself, his mother and his siblings prior to his leave of absence which outlined the process by which he would resume his role at the company.

He claims that an attempt by his brothers to permanently remove him is contrary to this agreement. As part of the deal, he was expected to produce two medical reports showing he was fit to return to work.

The ongoing saga and the prospect of the personal lives of the Kwok family being aired in public have put an otherwise modest family on the front page of every tabloid in the city. The family is well known for its conservative public presence and values, as well as its good standing in the community.

The family manages to stay relatively low key in a city where tycoons are treated like movie stars.

Walter Kwok took over as Sun Hung Kai group chairman in November 1990 following the death of his father, Kwok Tak-seng.

Today, the Kwok brothers are third on Forbes' list of the richest people in Greater China, with an estimated net worth of US$14 billion.

Walter Kwok remains an executive director on a number of other boards of listed companies, as well as a standing committee member of the National Committee of the Chinese People's Political Consultative Conference.

However the incident has become fodder for the press, with both sides speaking publicly about their actions. During the weekend, the press followed family members to a number of engagements in which they spoke of acting for the good of the company.

The English-language Standard quoted rival sibling Thomas Kwok as saying that the decision to attempt to oust Walter Kwok was beneficial to both the company and its shareholders.

He dubbed it a 'painful decision to make'.

The newspaper cited sources as saying that the brothers disagreed with a number of their sibling's management decisions, some of which were made without consulting them.

It had previously been reported that the brothers were unhappy that although the daily operations are mainly overseen by the younger siblings, Walter Kwok had been taking an aggressive stance on business matters recently.

The female friend of Walter Kwok had moreover never been employed by the company, but started to show ambitions in certain parts of Sun Hung Kai's business.

According to sources, this involved a desire to be put in charge of the company's China operations.

The tycoon was reportedly one of several billionaires kidnapped by notorious gangster Cheung Tze-keung, otherwise known as 'Big Spender', in 1997. These reports have never been confirmed by the family.

US Entered Recession In Q1: Merrill

Source : The Business Times, May 20, 2008

NEW YORK - The United States economy is currently in a recession that began last quarter, Merril Lynch said.

The call comes despite the fact that gross domestic product grew 0.6 per cent in the January-March period, a meagre but still-positive rate.

GDP readings are subject to sharp revisions and, due to their quarterly nature, tend to lag other indicators like spending and confidence, according to Mr David Rosenberg, the bank's chief economist for North America.

'Last week's data flow confirmed that a recession began in the first quarter of this year,' Mr Rosenberg said in a research note on Monday.

'How can there be a recession with real GDP growth still positive? Well, this happened in the first quarter of 1980, the third quarter of 1990 and initially, the first quarter of 2001. And, all were the onset of official recessions,' Mr Rosenberg said. -- REUTERS

BOJ Revises Up View On Housing Investment

Source : The Business Times, May 20, 2008

TOKYO - The Bank of Japan (BOJ) upgraded its view on housing investment in its monthly report released on Tuesday, saying it has been recovering moderately.

The BOJ had said in last month's report that there were signs of recovery in housing investment although it remained at low levels.

The central bank kept its assessment unchanged that the nation's economy is slowing mainly due to the effects of high energy and raw material costs.

Japan's gross domestic product grew 0.8 per cent in January-March from the previous quarter, beating market expectations for a 0.6 per cent increase thanks to strong exports that weathered a US downturn.

Housing investment also rebounded in the first quarter.

Firms shrank from investment in the quarter as they braced for slowing global growth and high energy costs to hit the world's No 2 economy, the data released last Friday showed. -- REUTERS

California's Luxury Home Prices Down: Poll

Source : The Business Times, May 20, 2008

Fall for 2nd straight quarter due to banks demanding higher credit scores

(SAN FRANCISO) California's luxury home prices fell for the second consecutive quarter as banks required higher credit scores and downpayments, reducing the number of potential buyers in the state's wealthiest communities.

The average price of a luxury home in the San Francisco Bay Area declined 0.8 per cent from the previous three months to US$3 million, according to a survey by First Republic Bank, a unit of Merrill Lynch & Co. Los Angeles prices dropped 2.2 per cent to US$2.35 million, and San Diego prices fell 2.2 per cent to US$2.06 million.

'Values of luxury homes in California have declined slightly in price after many years of strong appreciation,' Katherine August- deWilde, president of San Francisco-based First Republic Bank, said in a statement.

Mortgages are more difficult to obtain after the world's biggest banks reported more than US$300 billion in sub-prime-related writedowns and credit losses since the beginning of 2007. The value of jumbo loans, those over US$417,000, probably fell below 10 per cent of the entire mortgage market in the first quarter, Guy Cecala, publisher of Inside Mortgage Finance, said in an interview. That's the lowest since the Bethesda, Maryland-based newsletter began keeping statistics in 1985.

In Los Angeles, prices fell 3.7 per cent from a year earlier, to the lowest level since the first quarter of 2006. In San Diego, they dropped 4.9 per cent to the lowest level since the second quarter of 2005.

Prices rose in San Francisco, climbing 2.9 per cent in the first quarter from the same period a year earlier, First Republic said.

Reduced availability of jumbo loans cut the median price of San Francisco homes and condominiums by as much as 10 per cent in March, DataQuick Information Systems Inc said last month.

'It's really a liquidity problem,' Mr Cecala said. 'There's no market for securitised jumbo loans. Investors are still not convinced that the mortgage market has cleaned up its act.'

First Republic tracks luxury prices with Fiserv CSW Inc, a provider of automated property valuation services for financial institutions.

'The strongest markets are the best neighbourhoods in San Francisco, desirable close-in suburbs and upscale coastal communities,' Ms August-deWilde said. 'The higher end of the luxury market is the most active.' - Bloomberg

Waterfront Cluster With High-End Appeal

Source : The Straits Times, May 20, 2008

New Fullerton Heritage zone has luxury retail and dining outlets to draw the well-heeled

RAFFLES Place may be best known as the arena where high-flying bankers and corporate executives slog away for handsome salaries. But a small patch of it is set to become a luxury retail haven where they can spend their hard-earned cash on art, jewellery and fine dining.

The waterfront strip around the historic Collyer Quay is being transformed into a playground for well-heeled locals and tourists, as developers of the Fullerton Heritage zone seek to lure these big spenders away from Orchard Road.

Features range from a luxury retail cluster in The Fullerton Hotel to a classy Chinese restaurant and bar in Clifford Pier by Hong Kong's trendy Aqua restaurant group.

The overriding strategy is clearly to pull in the well-to-do who might normally shop and dine in and around Orchard Road, the country's main shopping belt.

The Fullerton Heritage's general manager, Ms Sulian Tan-Wijaya, said the waterfront destination will 'create a new luxury retail cluster that currently does not exist in the Raffles Place area'.

Its expected clientele will include business and leisure travellers, executives from the Central Business District (CBD) and new Marina Bay Financial Centre, casino patrons and residents from upcoming condominiums nearby like The Sail and Marina Bay Residences.

The retail element will be concentrated at The Fullerton Hotel, where under-utilised conference rooms have been converted into more than 5,000 sq ft of space for five shops.

The retailers include London-based Singapore fashion designer Ashley Isham; jewellers Mouawad, Vois and Raffles Jeweller; and a high-end Chinese and Asian contemporary art gallery called I Preciation.

I Preciation has been operating since 2003, while the remaining four will open by July - in time to cash in on the Formula One Grand Prix that is expected to draw 240,000 spectators in September.

Ms Tan-Wijaya is confident that the outlets will enjoy 'a steady stream of business' despite the hefty price tags, as 80 per cent of The Fullerton Hotel's guests are corporate clients.

Brisk sales at I Preciation, where art works go for anything between $10,000 and $4 million, back up her view.

The majority of its clients are executives, high-net worth individuals and keen collectors who work in the CBD, said Mr C.T. Lim, one of the gallery's two owners.

Raffles Jeweller director Margaret Lau said she was lured to The Fullerton Hotel from Orchard Road, where she has been operating for the last 15 years.

She said the hotel's rent is not lower than that in Orchard Road, but she looks forward to 'the prospect of opening up the business to an international corporate clientele'.

She is also confident that her regular clients will make the trip to this newly designated 'destination shopping' zone to buy her bling.

The Fullerton Heritage refers to a string of buildings and land opposite Marina Bay owned by Hong Kong-based Sino Land, the sister company of Singapore property giant Far East Organization.

They include existing buildings One Fullerton, The Fullerton Hotel, The Fullerton Waterboat House, Clifford Pier and Customs House.

Sino Land, which is controlled by the family of property magnate Ng Teng Fong, won the tender for the Collyer Quay corridor in December 2006 with a bid of $165.8 million.

Its ambitious plan to revamp the existing buildings while preserving the area's distinctive architecture is part of larger plans to rejuvenate the Marina Bay area by 2010.

It is also building a luxury boutique hotel called The Fullerton Bay Hotel, which will have 98 rooms with water views, on the site.

Appetites will be catered for with One Fullerton set for an August relaunch with four new eateries.

And Aqua, famed in Hong Kong for its ultra-stylish harbourfront restaurant in Kowloon, will unveil its plans for its 'Chinese fine-dining' restaurant in Clifford Pier later this year.

'We see The Fullerton Heritage as helping to enhance Singapore's position as a leading tourist, business and lifestyle destination,' said Ms Tan-Wijaya.

World Property Markets Frozen: Mack

Source : The Business Times, May 20, 2008

Bid-ask price gaps are too wide, many are sitting on the sidelines

(NEW YORK) Global real estate markets are frozen because buyers and sellers remain far apart on price and aren't ready to concede values won't return to levels achieved in 2007, Apollo Real Estate Advisors LP senior partner William Mack said.

Slow market: Confidence is not expected to return to real estate until everybody believes the blood-letting is over

'The markets are kind of stuck,' said Mr Mack, who has helped raise almost US$6 billion for new real estate investments. 'The bid-ask spread is too wide. A lot of money and a lot of people are sitting on the sidelines trying to establish where the next move is.'

Mortgage-related losses have forced financial institutions to write down more than US$300 billion in assets and constrained lending for property acquisitions. In New York City, Manhattan office building sales fell in the first quarter to the lowest since 2005, according to data from Real Capital Analytics.

Recent signs of recovery in shares of real estate investment trusts are 'a bounce off the bottom', said Mr Mack, 68, in an interview last week. The Bloomberg Reit Index has risen 9.8 per cent this year, after falling 22 per cent in 2007, the steepest dive in the 14-year history of the measure.

'The sales market is very, very slow,' said Mr Mack. 'The leasing market has slowed down because there have been a lot of layoffs, and people are not as confident they need extra space and that's throughout the world.'

Confidence won't return to the market until 'everybody believes that the blood-letting and the writing down of assets is over, or near-over', said Mr Mack. 'We need a realisation that terms and conditions that existed a year ago are not going to come back in the near future.'

Property values have fallen and lenders are willing to lend only about 65 per cent of value, compared with 90 per cent in the past. 'Unless you have a good deal of equity, you're going to be out of the game,' Mr Mack said. 'That is the penalty for rolling the dice.' Apollo is waiting for the right moment to start making acquisitions and Mr Mack said he thinks the East and West coast property markets will offer some of the best opportunities.

The gap between sellers and buyers remains 'very large', said Mr Mack, who founded Apollo's real estate unit in 1993 as property markets were recovering from a recession.

The group's investments have included New York's Time Warner Center, the St Katherine Dock office/retail development in London, and the Pascal Tower in Paris.

Apollo Real Estate was founded in 1993 by Mr Mack and Apollo Management LP, a private equity firm. -- Bloomberg

US Recession May End By Next Quarter: Economists

Source : The Business Times, May 20, 2008

Growth to pick up to 2.1% in 2nd half: NABE poll

(ATLANTA) The US economy will probably exit from a recession by the end of the next quarter as credit markets improve after a year of turmoil, according to a survey of economists.

The worst of the US credit crunch and housing slump is about over, and growth will pick up to 2.1 per cent in the second half, according to the poll of 52 professional forecasters by the National Association for Business Economics (NABE).

More than 60 per cent of the economists surveyed between April 17 and May 1 predicted that businesses and consumers will find it easier to borrow in the final six months of the year.

The share of analysts who said that the US is in or will have a recession this year rose to 56 per cent from 45 per cent in February. They anticipate that the Federal Reserve's steepest interest rate cuts in two decades, tax rebates, record exports and some stabilisation in housing will lead to a recovery this quarter or next.

'We are most of the way through the downturn, or the worst of it,' said Lynn Reaser, a Bank of America economist in Boston who chairs the economic survey committee. 'Recovery forces are in place and conditions should improve over the next year and a half.'

The worst housing recession in a quarter century, turmoil in financial markets and higher energy prices are taking a toll on current growth.

The economists predicted the expansion will slow to an annual pace of 0.4 per cent in the second quarter, following two straight periods of 0.6 per cent gains. Second-half growth forecasts were cut to 2.1 per cent from 2.8 per cent in February. Still, about three-quarters of those predicting a recession said that it will end in the second or third quarter.

The NABE survey points to gradual improvement into 2009, when US gross domestic product (GDP) may increase 2.7 per cent, a forecast trimmed from 2.9 per cent in the February survey.

'Although housing and credit markets will gradually loosen their grip, US economic growth is expected to only slowly return to health,' Ellen Hughes- Cromwick, the group's president and chief economist at Ford Motor Co, said in a statement.

The Fed will keep its benchmark overnight lending rate between banks at 2 per cent this year, and raise the rate to 3 per cent by the end of 2009 as the central bank fights the threat of faster inflation, according to the NABE survey median.

Futures markets show that traders expect the rate to hold at 2 per cent through October. The Fed's next policy meeting is June 24-25. - Bloomberg

Home Rates Going Back To 2003 Levels? Not Quite

Source : The Business Times, May 20, 2008

Falling interbank rates won't automatically mean a throwback to the past

Singapore interbank rates - the prices banks charge each other for short-term funds - are threatening to fall back to record lows.

In fact, many bankers reckoned interest rates after the recent spate of cuts may be headed upwards.

The benchmark three- month rates are now nearing one per cent, down from around 3.5 per cent a year ago and threatening to ease to the record levels around 0.5 per cent in early 2003. Naturally, it should be good news for homeowners as they expect to see their borrowing costs return to the low levels of 2003, when banks were dishing out loans at 50 basis points and below.

Is this on the cards again? Well, it depends on who you talk to. If you call your local bankers, they are likely to tell you that the domestic and global credit situations are quite different from the Sars days when banks had to fight for their home business.

Foreign banks were relying more on the interbank market for their retail funding and when interbank rates fell to near zero, they were able to price their home loans at well below one per cent. Some of the foreign banks had also just gotten their Qualifying Full Bank licences then and were using their home loan platform and price cutting to jump-start their consumer business. Today, they have been allowed to build a wider retail network of branches and ATMs and they depend more on the retail deposits to fund their home loans.

As such, they are not able to use the undercutting strategy too aggressively, having built up some expensive retail deposits. Maybank, for instance, launched a 1.58 per cent package which was limited to a short promotion period. Given the costs of running the retail branches and the limit that deposit rates can be cut, pricing for home loans is also not given much leeway downwards, local bankers argue.

Also, the banks are more disciplined now with their credit pricing, given the global credit crunch and the sub-prime-related problems in the US. Because of their overall tighter credit policy, it is no longer easy for them to build their business based on an underpricing strategy with risks in property loans having gone up worldwide. In the last quarter, banks such as HSBC and Citigroup continued to write off sub- prime and other real estate-related portfolios at alarming levels.

In fact, many bankers reckoned interest rates after the recent spate of cuts may be headed upwards. 'Given that the sub-prime crisis and the subsequent credit turmoil has not abated with the financial markets remaining volatile, the outlook for interest rates is still uncertain at this point in time with upside bias as the longer-term interbank rates have been on the uptrend over the past one month,' said Gregory Chan, head of secured lending, OCBC Bank.

Perhaps the biggest difficulty for the consumer has been the expensive refinancing costs. Banks well aware of the possibility of refinancing in a downward trend market have been clever to price in the higher penalty costs should consumers make their switch. For instance, those who borrowed at around 3.2 per cent last year would have to factor in a 1.5 per cent prepayment charge, repayment of legal subsidies and other administrative charges which may work out to well over 2 per cent of total loan size, making it difficult for them to refinance. As such, some of the banks have actually enjoyed some widening in margins as their deposit rates fell while their home loan rates have not been adjusted down as much.

'Banks still have to make a margin. People forget that at 2-3 per cent, it is historically still very low for home loans, compared to the days of near 10 per cent after the 1997 crisis,' said one banker. The bottom appears to hold around 1.6-1.7 per cent for the first year for the time being but with heavy prepayment penalties priced in.

In any case, observers noted - unlike the sluggish credit market of 2002 - Singapore, underpinned by projects such as the integrated resorts and ongoing massive private and public building, is undergoing quite a boom on the corporate front. Local banks have been able to repark their surplus funds elsewhere in better-yielding corporate loans and papers instead of the falling interbank market.

Building and construction loans continued to absorb some of the surplus funds. Bankers reported the spreads in Asia for good corporates have widened by 100 basis points or more in the last few months and Asian borrowers long spoilt by the massive liquidity are now finally paying the right price for loans.

In fact, some developers suspect the banks are nearing their regulatory limit themselves for property-related loans with the two casinos and the ongoing condo building sucking up much liquidity. Smaller developers are even being avoided or squeezed with some getting quoted up to even 400 basis points above interbank.

Banking analysts, however, present a slightly different picture.

One foreign analyst reckoned foreign banks have not pulled their punches and didn't believe that they have been tied down by other global credit issues.

'Asia has never been more important to the foreigners and they will remain very active in the region,' he argued, adding that mortgage demand seemed to have dried up and most of the activity is now refinancing. He figured the foreign banks have actually won market share from the local banks, seen from Q1 results.

The other change is the emergence of interbank- pegged home packages. One analyst said these are becoming increasing popular and the fall in the interbank market would automatically adjust some of these home rates. But he conceded tighter credit controls and a more disciplined approach will mean - all else being equal - that rates will fall less than they would have in the past when Sibor fell.

Also, the looming global slowdown and property downturn could mean banks may have to drop rates again, analysts say.

One thing is for sure: if rates were really to fall back to the levels of 2003, analysts and bankers reckon it would also mean that while you may save on borrowing costs, you would probably have another property recession and negative equity at hand.

The author is a freelance writer

Home Rates Going Back To 2003 Levels? Not Quite

Source : The Business Times, May 20, 2008

Falling interbank rates won't automatically mean a throwback to the past

Singapore interbank rates - the prices banks charge each other for short-term funds - are threatening to fall back to record lows.

In fact, many bankers reckoned interest rates after the recent spate of cuts may be headed upwards.

The benchmark three- month rates are now nearing one per cent, down from around 3.5 per cent a year ago and threatening to ease to the record levels around 0.5 per cent in early 2003. Naturally, it should be good news for homeowners as they expect to see their borrowing costs return to the low levels of 2003, when banks were dishing out loans at 50 basis points and below.

Is this on the cards again? Well, it depends on who you talk to. If you call your local bankers, they are likely to tell you that the domestic and global credit situations are quite different from the Sars days when banks had to fight for their home business.

Foreign banks were relying more on the interbank market for their retail funding and when interbank rates fell to near zero, they were able to price their home loans at well below one per cent. Some of the foreign banks had also just gotten their Qualifying Full Bank licences then and were using their home loan platform and price cutting to jump-start their consumer business. Today, they have been allowed to build a wider retail network of branches and ATMs and they depend more on the retail deposits to fund their home loans.

As such, they are not able to use the undercutting strategy too aggressively, having built up some expensive retail deposits. Maybank, for instance, launched a 1.58 per cent package which was limited to a short promotion period. Given the costs of running the retail branches and the limit that deposit rates can be cut, pricing for home loans is also not given much leeway downwards, local bankers argue.

Also, the banks are more disciplined now with their credit pricing, given the global credit crunch and the sub-prime-related problems in the US. Because of their overall tighter credit policy, it is no longer easy for them to build their business based on an underpricing strategy with risks in property loans having gone up worldwide. In the last quarter, banks such as HSBC and Citigroup continued to write off sub- prime and other real estate-related portfolios at alarming levels.

In fact, many bankers reckoned interest rates after the recent spate of cuts may be headed upwards. 'Given that the sub-prime crisis and the subsequent credit turmoil has not abated with the financial markets remaining volatile, the outlook for interest rates is still uncertain at this point in time with upside bias as the longer-term interbank rates have been on the uptrend over the past one month,' said Gregory Chan, head of secured lending, OCBC Bank.

Perhaps the biggest difficulty for the consumer has been the expensive refinancing costs. Banks well aware of the possibility of refinancing in a downward trend market have been clever to price in the higher penalty costs should consumers make their switch. For instance, those who borrowed at around 3.2 per cent last year would have to factor in a 1.5 per cent prepayment charge, repayment of legal subsidies and other administrative charges which may work out to well over 2 per cent of total loan size, making it difficult for them to refinance. As such, some of the banks have actually enjoyed some widening in margins as their deposit rates fell while their home loan rates have not been adjusted down as much.

'Banks still have to make a margin. People forget that at 2-3 per cent, it is historically still very low for home loans, compared to the days of near 10 per cent after the 1997 crisis,' said one banker. The bottom appears to hold around 1.6-1.7 per cent for the first year for the time being but with heavy prepayment penalties priced in.

In any case, observers noted - unlike the sluggish credit market of 2002 - Singapore, underpinned by projects such as the integrated resorts and ongoing massive private and public building, is undergoing quite a boom on the corporate front. Local banks have been able to repark their surplus funds elsewhere in better-yielding corporate loans and papers instead of the falling interbank market.

Building and construction loans continued to absorb some of the surplus funds. Bankers reported the spreads in Asia for good corporates have widened by 100 basis points or more in the last few months and Asian borrowers long spoilt by the massive liquidity are now finally paying the right price for loans.

In fact, some developers suspect the banks are nearing their regulatory limit themselves for property-related loans with the two casinos and the ongoing condo building sucking up much liquidity. Smaller developers are even being avoided or squeezed with some getting quoted up to even 400 basis points above interbank.

Banking analysts, however, present a slightly different picture.

One foreign analyst reckoned foreign banks have not pulled their punches and didn't believe that they have been tied down by other global credit issues.

'Asia has never been more important to the foreigners and they will remain very active in the region,' he argued, adding that mortgage demand seemed to have dried up and most of the activity is now refinancing. He figured the foreign banks have actually won market share from the local banks, seen from Q1 results.

The other change is the emergence of interbank- pegged home packages. One analyst said these are becoming increasing popular and the fall in the interbank market would automatically adjust some of these home rates. But he conceded tighter credit controls and a more disciplined approach will mean - all else being equal - that rates will fall less than they would have in the past when Sibor fell.

Also, the looming global slowdown and property downturn could mean banks may have to drop rates again, analysts say.

One thing is for sure: if rates were really to fall back to the levels of 2003, analysts and bankers reckon it would also mean that while you may save on borrowing costs, you would probably have another property recession and negative equity at hand.

The author is a freelance writer

URA Announces Plans For New Leisure Destination

Source : Channel NewsAsia, 18 May 2008

In just three years, Singaporeans will be able to enjoy a new attraction in the southern part of Singapore as the Urban Redevelopment Authority (URA) plans to develop the area around Alexandra and Labrador Park into a recreational and leisure hub.

Berlayer Creek is a place where you can find mangrove swamps and exotic birds. But not many people are aware of the natural treasures available there.

Related Video - http://tinyurl.com/5qevj9

With few amenities, access to the place is near impossible, but this is set to change in the next few years.

A mangrove trail, called the Berlayer Creek Mangrove Trail, will be built, complete with lookout points, a plaza and a boardwalk.

Ler Seng Ann, director of Conservation & Development Services, URA, said: "The construction will be carried out carefully such that the eco-system will not be affected."

The Urban Redevelopment Authority will also be sprucing up a stretch of area along the eastern bank of Alexandra Road, between Depot Road and Telok Blangah Road.

The 830-metre stretch – to be called the Alexandra Road Garden Trail – will have footpaths and cycle paths. It will connect to the Southern Ridges recreational corridor and the Horticulture Park (HortPark), which were opened on 10 May.

The new trails will lead to the 330-metre Bukit Chermin Harbour View Walk, which promises a breathtaking waterfront view of the Keppel Harbour and Sentosa from an elevated boardwalk on the sea.

The whole stretch will be called the Labrador Nature and Coastal Walk, and construction is scheduled to start next year.

"The projects aim to enhance the Southern Ridges and southern waterfront as a leisure, recreation destination. When the project is completed in 2011, the public can visit the place from either Labrador MRT station or take a bus to Southern Ridges and walk all the way to VivoCity," said Mr Ler.

The plans were unveiled a few days after Prime Minister Lee Hsien Loong officially opened two pedestrian bridges, the Henderson Waves and the Alexandra Arch, linking Mount Faber to Telok Blangah Hill Park and Kent Ridge Park.- CNA/so

Punggol To Have New Shopping Mall, More Flats

Source : The Straits Times, May 19, 2008

RESIDENTS in Punggol will have a new shopping mall and more fellow residents within the next three years.

The new town, which already has 16,700 flats, has another 2,100 being built now.

The Housing Board also recently launched 1,700 flats and will launch another 4,000 by year's end, said National Development Minister Mah Bow Tan last Saturday at the launch of a two-day exhibition on the progress in Punggol.

He added that, with more residents calling Punggol home, it would become feasible to build more commercial and public facilities.

One being planned is a shopping mall about the size of Junction 8 in Bishan.

The first sale site for a mixed commercial and private residential development will be launched in the town centre in the next two to three years.

Punggol's 4.2km waterway through the town will be used to bring water closer to the community. The Housing Board recently completed technical studies on it and works will begin next year.

A landscape masterplan design competition is being held to tap the expertise of urban planners, architects and landscape architects, who will be expected to contribute designs and concepts for the waterway, two tributaries and 10m-wide promenades along the waterway and town park.

The HDB plans to launch the first public housing site along a waterfront after major works of the waterway are completed in the next two to three years.

Several plots of land will also be set aside for private residential projects.

Work on the coastal promenade will begin soon, while the development of a rustic park on Coney Island will start next year. Other facilities being worked on include a horse-riding centre and a golf range.

US Property To Rebound This Year: Deutsche Chief

Source : The Straits Times, May 19, 2008

'CREDIT CRISIS ENDING SOON'

ZURICH - THE end of the global credit crisis is getting closer and the United States real estate market should recover in the second half of the year, Deutsche Bank chief executive (CEO) Josef Ackermann said in a newspaper interview.

'I think that we are getting closer to the end of the financial crisis,' he told the Swiss Sunday newspaper SonntagsBlick. 'It is not fully over yet, but the signs from the US are encouraging.'

He said the pragmatic approach being taken in the US to resolve the crisis should start to pay off soon.

'We should feel the effects in the second half of the year already and should see a strong recovery of the US real estate market,' he told the paper.

His comments add to growing optimism among analysts who say the worst might be over for the US economy, even if it still struggles for some time because of weak housing, tight credit and high energy costs.

The latest data suggests the world's largest economy might have averted a calamitous downturn and could even escape a recession, by the most common definition, Agence France-Presse reported.

'Remarkably, the economy has been able (barely) to keep its head above water despite all the negative shocks - a testament to its underlying resiliency, an aggressive policy response and the relative strength of global growth,' said Mr Josh Feinman, the chief economist with Deutsche Bank's DB Advisors.

He predicts the US economy, which saw sluggish growth at a 0.6 per cent pace in the past two quarters, will grow 1 per cent for the second quarter and 2 per cent for the July to September quarter.

But Mr Paul Kasriel, the director of economic research at Northern Trust, cautions against reading too much into recent data.

'Any blue skies you see are likely to be short-lived. The economy is in the relative calm of the eye of the business-cycle hurricane. The mortgage credit problems are not over. And credit problems in other sectors are just beginning as the housing recession spreads to the rest of the economy.'- REUTERS, AGENCE FRANCE-PRESSE

US Property Set To Recover In H2: Deutsche CEO

Source : The Business Times, May 19, 2008

(ZURICH) The end of the credit crisis is getting closer and the US real estate market should recover in the second half of the year, Deutsche Bank chief executive Josef Ackermann said.

'I think that we are getting closer to the end of the financial crisis,' Mr Ackermann told the Swiss Sunday newspaper Sonntagsblick. 'It is not fully over yet, but the signs from the United States are encouraging.' He said that the pragmatic approach in the US to resolve the crisis should start to pay off soon. 'We should feel the effects in the second half of the year already and see a strong recovery of the US real estate market,' he said.

The fallout from US households' defaulting on home payments triggered the global crisis, leading to a squeeze in credit markets in Europe and the US as banks stopped lending for fear of being exposed to the sub-prime problems.

Mr Ackermann urged banks to draw lessons from the crisis quickly. 'I am worried that otherwise governments will step up regulations in a way that are harmful to our sector.'

In a separate interview with Germany's Frankfurter Allgemeine Sonntagszeitung, he said Deutsche was sticking to its target of making a pre-tax return on equity of 25 per cent over the business cycle. 'That is our goal. Even in 2007, half of which was a time of crisis, we made 26 per cent. Geograhically and with our broad range of products we are positioned outstandingly for the megatrends.'

Asked about possible acquisitions, he said: 'We do not feel pressured to act. We don't have to buy anything, so we are strong enough. We are among the best in the world in the areas where we do business, but of course that does not mean that we will let a good buying opportunity pass us by.' Deutsche Bank has flagged its interest in the German retail banking operations being put on the block by Citicorp and in Deutsche Postbank, which Deutsche Post is in the process of selling. -- Reuters

Pre-Sold Projects Lend Support As Developers Undergo Correction

Source : The Business Times, May 19, 2008

Greater blow from weaker sales will be felt only over next few years: analysts

PROPERTY developers were mostly hit by slower residential sales in their first quarter results, and for some, they also suffered a lack of fair value gains in investment properties. But even as the residential segment undergoes a correction this year, analysts do not foresee significant earnings weakness as revenue from pre-sold projects is still lending support.

For developers with a large amount of pre-sold projects and are able to hold back new units to await better prices, the greater blow from the weaker home sales will only kick in over the next few years if market sentiment does not pick up, analysts say.

'The earnings for this year have been locked in by the sales done in the past two to three years,' said UOB KayHian analyst Vikrant Pandey. 'Sales have slowed down this year, but the impact will only be felt two, three years down the line when the actual construction takes place.'

Investors have been greeted with a mixed bag of earnings results from property developers for the first quarter. The impact of the US housing problems and global economic slowdown was felt in terms of lower transaction volumes as developers held back new launches in a quiet market.

There was also the timing issue in recognising earnings from development projects on a percentage of completion basis, which added to the earnings volatility, analysts say.

'Q1 is typically a slower quarter for developers simply because of the holiday season and development is slower,' said CIMB-GK analyst Donald Chua. The recognition of earnings from developments that are at the initial stages of construction is hence slower.

Keppel Land reported a 3.5 per cent dip in net profit to $60.3 million due mainly to lower contribution from property trading with the completion of several projects in Singapore and overseas and a writeback on provision in its property investment segment.

In the absence of fair value gains, CapitaLand's first-quarter net profit fell 59.3 per cent year on year to $247.47 million; Overseas Union Enterprise's (OUE) net profit slipped 69.2 per cent to $23.67 million and United Engineers' (UE) net profit slumped 90 per cent to $1.2 million. Excluding fair value adjustments, CapitaLand's net profit would have jumped 36.5 per cent year on year, while OUE and UE would have marked smaller net profit declines.

City Developments, however, which adopts the policy of stating net profit at cost less accumulated depreciation and impairment losses, posted a net profit growth of 30.8 per cent to $164.97 million in its fiscal first quarter despite its revenue falling 1.3 per cent from a year ago to $758.75 million.

Analysts noted that the practice of booking in revaluation differences in investment properties under the Financial Reporting Standard 40 is adding to the earnings volatility. This accounting method is seen inflating developers' bottomlines last year and cutting into their bottomlines in a poorer market condition like now.

But analysts added that they do not treat revaluation gains as part of core earnings and strip off revaluation gains from headline numbers before analysis. While there has been suggestions that FRS40 may not be an accurate reflection of earnings, it does provide a clearer picture of the actual values of properties owned by developers.

For the rest of this year, analysts do not expect developers to report fair value losses as there is room for rental upside, particularly in the office segment where new supply is not coming through yet. 'Rentals are coming from a very low base. There's still a lot of catching up to do,' Mr Pandey said, pointing to the heady asking prices for some prime grade office that have shot up to $17 per square foot.

But developers that lack strong cashflow from pre-sold projects will likely find the going tougher in an environment of low or zero revaluation surplus and slower home sales, analysts caution. Without holding power to defer launches, they will have to slash prices for new projects and accept lower margins.

For this year, Mr Pandey is factoring in a 20 per cent correction in the high-end segment, 13 per cent for the mid-end segment and 5 per cent for the mass market segment.

En-Bloc Woes At Toh Tuck Road - 'It's Like Living In A Shipyard'

Source : The Electric New Paper, May 18, 2008

Residents complain of noise, dust, as developer builds showflat

IT'S not chirping birds that wake them now, but pounding hammers.

And it has been driving some Goodluck View residents up the wall.

The 20-year-old Toh Tuck Road estate has been sold en-bloc, but residents have been given a six-month grace period and need to move out only by August.




















The construction work is so close to his home that his son finds it hard to concentrate while studying for his exams. --Picture: Zaihan Mohamed Yusof

Long before that, in March, developer Hiap Hoe Limited started building the show flat.

Mr X, who rents an apartment there, said he has to endure the 'noise outside his window', every day from 8am.

Said the engineering consultant: 'It's like I'm living in a shipyard. It's all right if they build the showflat in the middle of the road or somewhere further away, but it's hard to live here when there's all that noise so close to your home.'

The fence surrounding the showflat sits barely 2m from his window.

From his three-bedroom apartment, he can see and hear the workers.

Work on the showflat is expected to be completed by the end of July, according to a circular distributed by the estate's management agent.

Yet, Mr X's patience is wearing thin.

Said the Singapore permanent resident: 'My son has to prepare for an exam and he has complained that he is finding it hard to focus. He shuts his windows to block off the noise.

'I find it difficult too because I work from home.'

His neighbour upstairs, Madam Tracy Dean, said that sometimes the noise can be a little too much for her.

At such times, she leaves the apartment.

Said the IT consultant: 'I really look forward to rain because I know the workers will have to stop work. All that grinding and banging can drive you up the wall.

'Even with the windows closed, the noise filters into my flat.'

Mr X and his family plan to move out within three weeks.

Madam Dean will leave for Bangkok in August.

Said Mr X: 'We didn't sign up to live like this. They work without considering that there are still people living here. I've had enough.'

And it's not just the noise. Mr X claims dust and mosquitos have also been invading their homes.

He said he complained to the estate management when construction workers used the swimming pool toilet, leaving trails of mud.

He claimed that by starting work on the showflat, the developer was breaking the en-bloc agreement.

His landlord, Mr John Tilley, also said the developers should not be working there before August.

'We (tenants and owners) are expected to leave by 21 Aug. But it's extremely unreasonable for my tenant to live in such conditions,' Mr Tilley said. 'The six months grace period is meant for those still living here to find alternative accommodation.'

INCONVENIENCE EXPECTED

But a spokesman for Hiap Hoe said the company had not broken any rules.

There are no 'hard and fast rules' on building a showflat during the six-month free stay period, she said.

She added: 'Some inconvenience is expected. But so long as we abide by the construction rules and try to minimise the inconveniences, the issue is unavoidable.

'Building showflats during the free stay period is a very common practice in en-bloc developments. There is no clause that says we start work (on the showflat) only after all the occupants have left.'

The spokesman said they had received some feedback expressing unhappiness over the construction work.

She said no piling work was done, except for the erection of metal beams for the showflat.

The sale of the new development is scheduled for the third quarter of 2008.

Not Too Late To Cash In On Office Boom

Source : The Sunday Times, May 18, 2008

Demand and rentals likely to stay healthy as supply remains limited, say analysts

The housing market in Singapore has started to turn bearish and investors are duly retreating from residential properties and property-related stocks.

But there are other classes of properties that may be worth a look for those still seeking to profit from property investments.

Offices seem the most obvious choice. The segment is still going strong even in the current market malaise, fuelled by a persistent supply crunch and strong demand for space from expanding businesses.

Investors may fear they have missed the boat, with office prices having soared 32.6 per cent last year alone. Growth in prices and rents has also started to moderate.

However, property consultants say it may not be too late to cash in on the office boom.

Demand is likely to stay healthy in the short- to medium-term even as new supply remains limited. Only one million sq ft of new space will be completed this year, according to Corporate Locations, which helps companies lease office space.

'There is currently an excess of demand over available space,' said Mr Moray Armstrong, executive director of office services at property consultancy CB Richard Ellis, in a recent report.

'Landlords will still be able to achieve high rents on rent reviews or lease renewals, due to the absence of alternatives for occupiers.'

Property firm Colliers International also still sees 'immense potential upside' in office rents and values, noting that office values are still about 27 per cent lower than their peak in the mid-1990s.

Buoyant yields

Recently, office prices have started to flatten out with fewer transactions taking place. Rents, however, are projected to keep rising at least until 2010, when more substantial space comes onto the market.

Prices of offices inched up just 1.1 per cent in the first quarter, but rents jumped 7.3 per cent. This indicates that annual rental yields are on the rise and may climb further, property experts say.

Traditionally, yields of office space have been higher than most other types of property. In the last two years, net rental yields for offices largely ranged from 5 to 7 per cent - almost double the usual rental yield for homes, which is about 2 to 4 per cent.

The strong rental yield may also mean that investors can get away without forking out cash for the mortgage payments, said Colliers in a research paper last month.

It said the current fixed interest rate loan for commercial properties is between 4 and 4.5 per cent for the first two years, which means the rent will probably be enough to cover the mortgage instalments.

Higher yields also mean that investors in strata-titled office properties would be able to double their investment in a much shorter time than for homes, said Colliers. It projects 13 to 14 years for offices to reach that stage, compared to 18 to 29 years for homes.

Higher risks

With the greater returns from office investments also come greater risks, warns Colliers.

For one thing, it is more difficult to obtain financing, as banks generally lend only 60 to 70 per cent of the property's sale price or market value, compared to between 80 and 90 per cent for homes. And interest rates tend to be higher for office loans.

Also, buyers cannot use their Central Provident Fund savings to pay for office purchases.

Investors hoping to reap windfall gains by buying older buildings with 'collective sale potential' should also be cautious, as the process is much more difficult for office buildings compared to condos.

How to buy an office unit?

Obviously, most casual investors are unable to afford entire office buildings. What they usually do is to buy strata-titled office units, which are sold singly. But these properties are few and far between.

There are probably fewer than 350 completed office and industrial buildings in Singapore that are available for sale on a strata basis, estimated Colliers.

Most of these, especially offices, are likely to be leasehold and more than 20 years old. These include Golden Mile Complex in Beach Road and High Street Centre in North Bridge Road, both of which have leases that started in 1969.

Investors looking for newer buildings can check out Suntec City Tower, Southbank at North Bridge Road and The Central near Clarke Quay. Units sold in these buildings between last July and February averaged $2,277 per sq ft (psf), $941 psf and $1,749 psf respectively, said Colliers.

Buyers of office units must first place an option fee of 1 per cent of the property's purchase price, said Colliers. They have two weeks to decide if they want to exercise the option, by paying another 9 per cent.

After that, the buyer's lawyer will conduct checks on the property's title, tax, floor plans, tenancy schedule, and so on.

The sale is usually completed three months after the option is exercised, when the remaining 90 per cent of the price is payable.

丽景花园公寓Regent Garden 23业主上诉

《联合早报》May 17, 2008

不满买方长春产业（Allgreen Properties）给予少数业主一笔额外赔偿说服他们出售，原本同意集体出售丽景花园公寓（Regent Garden）的23名新加坡业主，向最高法院上诉庭提出上诉。

丽景花园公寓销售委员会昨天在发给本报的电邮中指，买方给予少数业主一笔额外赔偿，说服他们撤销之前提出的反对申请，以便避免交易经分层地契局（STB）审查的做法缺乏诚信。据消息说，6名少数业主各获得额外20％的赔偿。

销售委员会表示，他们将遵照高庭的判决，如期完成集体出售交易，但希望最高法院上诉庭能够就买方私下与少数业主达成交易的做法是否合理，以及少数业主是否应该和同意出售业主分享额外赔偿等问题作出判决，对他们有个交代。

长春产业昨天受询时确认收到上诉通知书，但由于丽景花园公寓买卖交易已在昨天较早前完成，集团对对方的上诉决定感到不解。

此外，集团也表示，上诉预计不会对集团截至2008年12月底的每股净有形资产（NTA）有显著的影响。

丽景花园公寓的高庭上诉判决是重要的法律先例：高庭下令集体出售计划必须执行，推翻了分层地契局在今年1月30日裁决丽景花园公寓的集体出售“缺乏诚信”而宣判无效判决。

丽景花园公寓共有31个单位，长春产业是在去年4月26日以3400万元将它买下。

去年7月，丽景花园公寓的25个业主签署协议同意出售，剩下的六个业主则未签署协议，后来长春产业劝服了这六个业主同意出售，但之前的25个业主却改变了主意，尝试重新谈判。这些业主于去年7月20日向分层地契局提出申请，要集体出售丽景花园公寓无效，七天后，六名业主也向分层地契局提出反对售卖该公寓。不过，这六名业主在去年11月26日至28日之间先后都同意出售单位，并通知分层地契局，他们决定撤销之前提出的反对申请。

后来，分层地契局发现，较早估价书没使用正确的基线，导致销售市值和价格定在3400万元是不准确的，认为这个交易缺乏诚信，而将销售申请驳回。

不过，长春产业于上个月16日成功取得高庭的庭令，下令丽景花园公寓的25名业主必须完成集体出售计划。