Saturday, October 4, 2008

Conservation To Include Structures

Source : The Business Times, October 4, 2008

CONSERVATION efforts will now extend beyond historic buildings to include heritage structures such as bridges, pavilions and towers, National Development Minister Mah Bow Tan said yesterday.

BRIDGING THE TIMES
Elgin Bridge at Boat Quay is one of six historic bridges to be conserved


Familiar structures slated to join more than 6,800 buildings conserved so far include the Botanic Gardens bandstand and swan lake gazebo, the look-out towers at Toa Payoh Town Park and Seletar Reservoir Park, and the water intake towers and bridges at MacRitchie Reservoir and Lower Peirce Reservoir.

Six historic bridges will also be conserved - Elgin Bridge at Boat Quay, Cavenagh Bridge outside the Fullerton Hotel, and the Anderson, Ord, Read and Crawford Bridges. 'What makes a place distinctive and memorable is not just buildings,' said Mr Mah. 'There are many places and landmarks we can identify with and feel for in Singapore.'

He also announced the conservation of four black-and-white bungalows at Bukit Chermin.

Conservation status prevents the alteration of a building beyond URA's guidelines and, by guaranteeing its future, raises the value of the conserved building.

Mr Mah was speaking at yesterday's presentation ceremony for the URA Architectural Heritage Awards (AHA) 2008.

The awards are presented yearly to owners, architects, engineers and contractors to promote quality restoration of buildings in Singapore with preservation or conservation status. The seven winning restoration projects this year are: Sri Temasek in the Istana grounds, The Screening Room in Ann Siang Road, The Sea View Clubhouse in Amber Road, 14 Cable Road, Tan Chin Tuan Mansion in Cairnhill Road, 120 Cairnhill Road, and Citylights in Jellicoe Road.

Including this year's crop, 84 buildings have received awards since the inception of the AHA in 1995.

High Loan Exposure Becomes Dampener

Source : The Business Times, October 4, 2008

Analysts say Singapore banks may have over-lent to property sector.

THE tables have turned. In the heady days when the Singapore economy was roaring ahead, banks which grew their loans the fastest were lauded. Now that the economic outlook has worsened considerably, a high exposure to loans is a cause for concern.

CHANGING LANDSCAPE
In the heady days when the Singapore economy was roaring ahead, banks which grew their loans the fastest were lauded. Now, a high exposure to loans is a cause for concern


Analysts have been sounding the alarm on deteriorating asset quality, or the possibility of loans defaulting, when times are bad.

In a recent report, ratings agency Standard & Poor's noted that property-related exposure is relatively high for Hong Kong and Singapore banks. 'While housing loans form the bulk of it, the share of commercial real estate and construction is high for a single sector exposure,' the report said. 'With economic growth expected to slow down in 2008 and 2009, the quality of this portfolio's unseasoned portion is at risk.'

Morgan Stanley analyst Matthew Wilson wrote in a report that from 2004 to 2007, banks lent aggressively at very low credit spreads 'on the assumption that asset values would continue to inflate and macro growth trends in Asia would sustain'.

He added: 'Singapore banks, in particular, appear to have over-lent into an over-built property bubble. The credit cycle has now clearly turned and higher rates will exacerbate inevitable asset quality issues.'

A report from DMG & Partners pointed out that the banks which have been most aggressive in recent lending could potentially face more severe asset quality reduction.

'Banks that have expanded their loan book more aggressively in the years preceding the economic weakness face a higher risk,' analyst Leng Seng Choon wrote. He said that DBS is most aggressive in lending over the past three-and-a-half years.

'Our analysis showed that DBS has been the most aggressive in loan expansion from December 2004 to June 2008,' the report said.

'Over this period, DBS recorded a loan compound annual growth rate of 16.3 per cent, which is significantly higher than OCBC's 11.2 per cent and UOB's 11.5 per cent.'

It added: 'Given DBS recent aggressiveness in loan expansion, the risk of asset quality deterioration is higher than its peers.'

The biggest risk to earnings would come from an increase in non-performing loans and a subsequent rise in the level of provisioning, UBS analyst Jaj Singh said in his report. 'We are projecting an increase in provisioning from the 17 basis points (as a percentage of loans) of the last few years to 30 basis points.' He noted, however, that a return to the levels of the Asian financial crisis is unlikely as corporate balance sheets and the finances of individuals are healthy.

The banks' core business of loans will also be impacted along with the downturn in the economy, some analysts believe.

Citi said in a report that 'worsening job conditions could weaken mortgage affordability and add pressure to the fragile property market'.

But UBS's Mr Singh said although the slowing economy will lower earnings growth for the banking sector, there are still some bright spots in the economy. 'The reason for this support is primarily due to the construction/real estate sector,' he said in the report.

'Singapore is in the middle of a construction boom, with large infrastructure projects under development, such as the expansion of the Mass Rapid Transit and the construction of two integrated resorts.'

He added: 'We believe these projects are relatively insulated from the slowdown in the economy as they are well-funded and have deadlines to meet.'

Orchard Mall To Grant Only 'Green Leases'

Source : The Straits Times, Oct 3, 2008

SINGAPORE'S Orchard Road shopping strip will soon be home to the first eco-mall here with 'green tenants'.

313@Somerset tenants will have to stick to a host of green rules. -- PHOTO: LEND LEASE RETAIL

Business people setting up shop at 313@Somerset have to sign 'green leases' committing them to achieving environmental targets, said Ms Maria Atkinson, global head of sustainability for Australia's Lend Lease, the mall's developer.

Ms Atkinson is one of the five international experts invited by the Building and Construction Authority (BCA) to review Singapore's green building movement.

As part of their lease terms, retailers at 313@Somerset will have to comply with fit-out guidelines such as using greener materials and reducing water and energy usage, she added. They will have to participate in community programmes to increase awareness of the benefits of green buildings, and report energy consumption to track the building's performance.

Such practices could be encouraged so tenants can help owners achieve certain operational targets for green buildings, added Ms Atkinson.

The green leasing concept was one of the panel's key recommendations. It also suggested the Government rent and lease only green buildings via its agencies to encourage more green buildings.

The panel will convene here again in October next year when Singapore will host, for the first time, the International Green Building Conference.

313@Somerset will be completed late next year.

Grade A Office Vacancy Doubles To 1.2% In Q3

Source : The Business Times, October 3, 2008

GRADE A office vacancy has doubled in the third quarter of 2008, rising from 0.6 per cent in the previous quarter to the current 1.2 per cent.

This is also the first time in eight quarters since Q3 2006 that Grade A office vacancy has risen above the one per cent mark.

CB Richard Ellis (CBRE) says market fundamentals have changed and sentiments have 'deteriorated' with pre-commitment rent levels likely to come under pressure.

CBRE executive director Moray Armstrong added: 'There is an increase in vacancy as certain occupiers have relocated to less expensive cost options in lower grade and, or, decentralised locations.'

According to CBRE, office rents have also plateaued with both Grade A and prime office rents remaining static at $18.80 per square foot per month (psf pm) and $16.10 psf pm respectively.

CBRE had earlier anticipated rents would only soften beyond 2010. But with the events of the past few weeks, it now believes that the correction will be fast- forwarded to early 2009.

'Landlords are adopting more reasonable asking rents, although in the immediate term occupiers will still face rentals that are at all-time highs. We will continue to monitor the trend over the next few months to see how swiftly the fast approaching new office supply allied with slowing demand will combine to bring down rents from today's levels,' added Mr Armstrong.

There were increases in vacancy rates for most micromarkets in the third quarter of 2008 - with the exception being Orchard Road, which saw a one percentage point drop in vacancy due to higher occupancy at the newly completed Visioncrest and at StarHub Centre.

Mr Armstrong said that occupiers are 'understandably cautious' given the challenging financial and economic environment, but he pointed out that a number of recently announced pre-commitments demonstrate that there is underlying confidence in Singapore's relative position.

Still, he noted that many occupiers are also chasing lower costs and are relocating to decentralised locations, built-to-suit facilities and business park space.

CBRE estimates the confirmed new office supply over the next five years is now slightly higher at 10.64 million sq ft.

CBRE said the increase stemmed from increases in proposed net lettable area from developments under construction.

'We do not consider this volume of supply excessive based on our estimated average annual demand of 1.6 million sq ft,' said Mr Armstrong, highlighting that about 26 per cent of the new supply has already been pre-committed.

Mr Armstrong explained that the 1.6 million sq ft demand figure represents its projected five-year average office take-up level over the period 2008-2012.

He believes that this figure represents a realistic take-up figure that has factored in lower GDP going forward.

By comparison the past three-year average office take-up level was just under 2.2 million sq ft.

URA Revenue From Land Sales Surges 80% To $8.3b

Source : The Business Times, October 3, 2008

LAND sales revenue collected by the Urban Redevelopment Authority (URA) for the Singapore government reached $8.3 billion for FY07/08, up 80 per cent on the $4.6 billion collected during the property market peak of FY96/97.

According to URA's Annual Report FY07/08, development charge collected by URA for the current period also hit a record $1.1 billion.

On a year-on-year basis, land sales revenue for the year rose about 200 per cent over the $2.7 billion collected for FY06/07, while development charge revenue increased by about 100 per cent over the $527 million collected. A total of 31 sites were sold in FY07/08 compared with 16 sites the previous year.

The key sites sold under the Government Land Sales programme in the past year include two Marina View land parcels and a site at Beach Road.

Operating surplus increased by 75 per cent or $11.1 million to $25.9 million. However, the lower investment income earned in FY07/08 resulted in a decrease in the total surplus by 74 per cent or $78.6 million to $28.3 million.

Current assets fell to $1.33 billion for the period, down from $1.38 billion the previous financial year.

Capital and development expenditure rose by $18.3 million or 96 per cent to $37.3 million. The rise was mainly due to higher development expenditure for implementing infrastructural and environmental enhancement works for the Downtown at Marina Bay and the Southern Ridges projects.

The net surplus of $23.2 million was lower than the previous year's $85.5 million due to a drop in URA's non-operating surplus.

URA said that this resulted from a shift of some of its surplus funds to more liquid and lower yielding assets such as bonds and bank deposits to fund its development projects, and also a reduced return from investment from the volatile equity market in FY07/08.

Operating income for the year increased by $29.7 million to $166.8 million. The increase was mainly due to higher agency fees from sale of site and agency projects, and income from processing more development applications.

Agency and consultancy fees increased by 54 per cent to $34.7 million, while income from development control rose 57 per cent to $30 million for the year.

Operating income from parking fees and related charges increased by 7 per cent to $59.3 million.

Singapore Recession Will Last Several Quarters: Citi Economists

Source : The Business Times, October 3, 2008

Worst will likely be in H1 2009, they predict in new report

It's no longer a question of if but how severe, and not just 'technical' in nature.

The recession widely expected to have set in here may not be short and shallow but could well last several quarters, say Citigroup's Singapore economists.

And that's several quarters of year-on-year contraction in GDP, not just quarter-on-quarter dips, with the worst likely coming some time in the first half of 2009, the Citi analysts, led by Chua Hak Bin, write in a Singapore Strategy report published this week.

A technical recession in Q3 - with two consecutive quarters of GDP declines - had pretty much been on the cards even before the negative August manufacturing data released last week all but confirmed it. Economists across town have cut their estimates of Singapore's 2008 growth to sub-4 per cent.

Among the more bearish, Citigroup economist Kit Wei Zheng pared his GDP growth forecasts to 2.8 per cent for 2008 and 2.5 per cent for 2009. He reckons the upcoming Q3 flash estimates will likely show a one per cent dip from a year ago, and a 7.4 per cent fall from the preceding Q2.

Declaring that they are 'not ready to call the bottom', his Citi analyst colleagues say the severity and duration of the recession is still unclear, and will depend on how the global downturn and global credit crunch pan out.

'A protracted downturn, with a continued contraction in Q4 2008 and early 2009, cannot be ruled out,' they say.

Bear markets typically do not hit bottom until the economy is at or past the worst quarter of a recession, they note, and the current slump is only in its 50th week, still short of the average 85 weeks in previous bear markets with recessions.

The 1985-86 and the 2001 recessions each saw four quarters of year-on- year GDP contraction, while the 1997-98 Asian crisis had three. The 2003 Sars recession was a 'short' single-quarter downturn, due largely to successful disease containment rather than economic factors.

But now more than half of the world's economies (notably the major and big ones) are at risk of recession - with the US and the UK, in particular, on the brink of a systemic financial crisis.

Singapore's financial services will soon feel the impact of the credit crunch and global consolidation - and job growth may turn negative next year, the Citi report says.

Standard Chartered Bank economist Alvin Liew also believes the recession at hand here will not be short and shallow, as the externally driven Singapore economy lacks 'buffer' sectors such as commodities to help offset some of the global slump.

His forecasts see a small 0.4 per cent Q3 GDP growth from a year ago, but one risk is that the sequential contraction could be slightly deeper and could well lead to a year-on-year contraction - 'something not seen since June 2003', he notes.

Stanchart's GDP forecasts for Singapore have been slashed to 3 per cent for 2008, and 2 per cent for 2009.

'This is not just about export competitiveness, but . . . the implications of a protracted external demand collapse, and subsequent impact on domestic demand,' Mr Liew says.

Furthermore, inflation is not easing fast enough, he notes. Imported inflation 'is still hounding us', with core inflation remaining elevated at 5.8 per cent in August, he estimates. It would, therefore, be premature to switch entirely to an easing or even neutral monetary policy, he says.

Amid the gloom and doom, one economist who remains relatively if cautiously optimistic is Daiwa Institute of Research's Prasenjit K Basu.

While conceding that a technical recession 'unfortunately, looks rather likely', he maintains that it will be just that - a short technical recession, one due largely to the volatile pharmaceutical sector. The latest investment commitments in Singapore have been the strongest yet, he points out.

The financial turmoil will likely take its toll here in Q4, with reduced turnover volumes and growth, but the overall impact will not be huge, in his view.

Indeed, Mr Basu believes Asia's 'relative strength' will show up amid the global and US financial meltdown.

'Even in the near term, we believe Asia will stand out as a relative pillar of strength in the global economy, supported by the resilience of intra-emerging economy demand,' he said.

Analysts Say Developers Have To Be More Creative To Drive Sales

Source : Channel NewsAsia, 03 October 2008

The next six months look set to be bumpy for the private residential property sector, with market watchers predicting prices will head south by about 10 per cent.

And real estate agents and developers are likely to get creative in driving sales and keeping costs down.

Builder and developer United Engineers will focus on infrastructural projects elsewhere in the region while the Singapore property market adjusts to the global financial turmoil.

Given the uncertainties ahead, its CEO, Jackson Yap, said developers will be reluctant to bid for land for residential development. However, there is hope that construction costs could come down next year.

Mr Yap said: "The main thing is there is still a lot of activity in Singapore and (it) will probably peak with the construction of the two IR projects. Probably (in the) second half of next year, we can see it coming off and if construction cost comes off, then it is easier for developers to pass some of it through lower prices to consumers."

Real estate agency PropNex said buyers can expect more incentives, such as interest or stamp duty absorption schemes and vouchers that could be worth tens of thousands of dollars.

Mohamed Ismail, CEO, PropNex, said: "Some developers in the past have even (conducted)... a lucky draw... for the consumers, the buyers, and there is a separate draw for agents... From the developers' perspective, they just factor this as part of the marketing cost."

Market players said some developers may also hold more roadshows in the heartlands to reach out to a wider pool of potential buyers. But the effectiveness of all these strategies still comes down to good value and right pricing.

For now, industry watchers said it is unlikely for developers to lower prices, even though there may be some room for bargaining.

Ku Swee Yong, director, Savills, said: "Most of the large and experienced developers still have relatively deep pockets because of their investment income, for example from office rentals, retail mall rentals, hotel rentals. Those are still doing pretty well, and that is helping them with covering their interest expenses on their land bank and on properties that they have yet to launch and sell."

Developers are also expected to scale back on sales launches until consumer confidence picks up. - CNA/ms

Dormitory Decision Upsets Some Serangoon Gardens Residents

Source : Channel NewsAsia, 03 October 2008

Despite the various mitigating measures being proposed, some residents in Serangoon Gardens did not take too well to the news that a foreign workers' dormitory is going to be set up in the area.

Foreign workers in Singapore (file picture)

The dormitory will be at the former Serangoon Garden Technical School site, just right across the road from the residents.

There is going to be additional fencing to keep workers in as well as planters to screen the site. But is this a satisfactory compromise for residents?

"I am fed up!" a woman screamed from her car.

"I am thinking of moving out," said a resident.

Serangoon Gardens housing estate (TODAY's photo)

"We are living with people; they move around. If you fence them up, and say 'this is your area, this is my area', I don't think it is going to work," said Angela Yeo, a resident at Burghley Drive.

Although the dormitory is for foreign workers in the manufacturing and services sectors, residents said it does not mean security is less of a concern.

Chen Sung Sheng, a resident at Burghley Drive, said: "I think it is the same, isn't it? It all boils down to the same... foreign workers, regardless of what they are working as. Of course, we can't say that all foreign workers are bad. But majority of us are not very happy about it."

The former Serangoon Garden Technical School

The other issue that irks residents - the way the decision was made.

"The whole consultation process, while it was useful, it kind of makes the residents feel 'what was the point?'" said Lim Chia Joo, a resident at Burghley Drive.

However, some felt the proposed measures have helped allay their concerns.

Rose Tan, a Serangoon Gardens resident, said: "If, after that study, they think that it is feasible to go ahead with the project, I am sure they would have taken steps to address the many concerns that were raised by the residents."

Residents are asking the police to step up patrols in the area. They also want the police post, which operates from noon to 10pm, to extend its opening hours. - CNA/ir

Property Stocks On Downward Slope

Source : The Business Times, October 4, 2008

Stock prices will continue to fall as home prices continue to decline for the rest of this year and in 2009, analysts say.

PROPERTY stocks took a beating yesterday following news that private home prices fell for the first time in 41/2 years, officially marking the end of the boom. And the worst is not over yet - the share prices of Singapore- listed developers can be expected to continue to slide, analysts say.




















The FTSE Real Estate Index shed 10.9 points, or 2.4 per cent, yesterday to close at a 52-week low of 451.7. The index has lost 48.5 per cent since the start of the year. In contrast, the Straits Times Index has lost 33.7 per cent so far in 2008.

Singapore's three biggest developers by market capitalisation all saw their stock prices fall yesterday. CapitaLand dropped 10 cents to close at $2.94, City Developments shed 36 cents to end at $8.01 and Keppel Land declined 14 cents to $2.61.

But property stocks have not bottomed out, analysts reckon. 'We are not there yet,' said DMG & Partners analyst Brandon Lee. 'A lot of the news has been factored in (into the share prices), but we still have some way to go.'

CIMB analyst Donald Chua agrees. 'We are not really seeing the full impact yet and it's a bit too early to call the bottom.' But property stocks are looking cheaper and more attractive than two or three years ago, he said.

The latest quarterly flash estimate released by the Urban Redevelopment Authority showed the overall price index for private residential property fell 1.8 per cent in the third quarter, after a marginal 0.2 per cent rise in Q2.

The market had been expecting physical property prices to fall since the start of this year, though it took the index three quarters to get there. 'The index decrease was expected and anticipated by the market, especially as many commentaries have evoked anecdotal evidence based on selected transactions in certain projects to comment that prices have already fallen by up to double- digit percentages,' said DBS Vickers analyst Adrian Chua.

But that did not stop investors selling down developer stocks yesterday in response to the latest negative news.

Stock prices will continue to fall as home prices continue to decline for the rest of this year and in 2009, analysts say. 'Overall, we are predicting further mid single-digit price declines for Q4 2008, before dropping 3-5 per cent on a year-to-date comparison,' said DMG's Mr Lee.

'With macro-economic growth not expected to recover in the near term, we believe the price correction would continue through 2009, falling between 8-15 per cent, with the CCR (core central region) bearing the brunt of the decline.'

DBS Vickers' Mr Chua also expects single-digit price drops for private homes for the whole of 2008 and believes the price downtrend should continue into 2009. High-end properties should bear the brunt of any price falls, while the mass-market segment should be relatively resilient, he said.

Investors are now holding off buying homes in anticipation of prices falling further, and the poor demand is affecting market sentiment on property counters.

Merrill Lynch analysts wrote in a report: 'We expect the price index to turn more negative in the upcoming quarters given weakening market conditions.'

There is also the risk that tighter credit could lead to higher interest rates, which would increase the cost of holding on to properties and potentially lead to a larger number of 'fire sales' as more projects approach completion and property investors start to do their sums. Some buyers could be waiting to snap up distressed assets on the secondary market, contributing to lower sales for developers.

All these mean that developers are selling very few private homes. For example, only about 60 were sold in the primary market in the first two weeks of September, said DMG's Mr Lee.

Home prices need to fall further before demand could go in the opposite direction, and property counters recover.

Smells Like Recession

Source : The Business Times, October 4, 2008

US lawmakers okay US$700b rescue plan but credit crunch knocks out economy

THE bailout package has a nice ring to it, but economists now say that it is nowhere near enough to get the global or even the US economy out of jail.

The massive US$700 billion rescue plan aimed at saving the US financial sector returned yesterday before the House of Representatives with fresh sweeteners to sway them. It worked.

Having thrown out the plan last week and stunned stock markets across the world, the lawmakers voted yes in its latest incarnation by a margin of 263-171.

The Senate had already approved the plan earlier this week. So what happens next?

Quite simply, more trouble, economists say - with a US recession now increasingly likely. This was the case even before the rescue plan was approved. Crucial credit channels remain jammed, as banks everywhere grow increasingly nervous about lending to one another, choking the supply of credit to fund business operations and investment activity. 'Whatever happens over the weekend, the outlook for the global economy is much dimmer,' said Song Seng Wun, senior economist and head of research at CIMB here.

He warned that Singapore's economy could stall or even contract in 2009, if the US slips into recession next year - a scenario 'which now looks increasingly likely'.

'The drag will be from lower exports as well as a significant slowdown through the economy, with perhaps the only exception being the construction sector,' he added.

In a startling sign of how deeply the crunch was biting, nearly 100 US corporate treasurers took part in an emergency conference call on Thursday to warn one another that banks there are using any excuse to charge more to renew lines of credit, Bloomberg reported. Banks are afraid to lend even to investment grade corporate clients, who are struggling to keep credit lines open to pay employees and purchase raw materials. Some were charged an extra 75 basis points to keep credit lines open.

Meanwhile, the authorities are turning to every weapon in their arsenal - and finding it ineffective. This week, futures traders were betting heavily that the US Federal Reserve would slash its target for the federal funds rate - the rate which US banks charge one another for loans - by half a percentage point to just 1.5 per cent at its next policy meeting on Oct 29, in a bid to stimulate economic activity by reducing the cost of borrowing.

But with interbank rates already more than double the Fed's official target rate of 2 per cent now, any cut in interest rates would be 'more of a psychological move to boost confidence that things are being done', said Mr Song. 'Banks will still be fairly cautious about interbank lending and counterparty risk' as a lot more US banks are likely to fail due to worsening economic conditions, he added.

Meanwhile, the real economy is being hit. Latest data showed that US employers slashed payrolls by 159,000 in September, the most in more than five years, a worrisome sign that the economy is hurtling toward a deep recession. Almost 760,000 jobs have disappeared this year. At a household level, that means millions of Americans will be forced to buy less 'stuff' - bad news for an economy that relies on consumer spending for about 70 per cent of its growth. Goldman Sachs economists expect a recession worse than the ones seen in 1990 and 2001.

Treasury Secretary Hank Paulson and Fed chairman Ben Bernanke have resorted to increasingly bold and desperate measures to fight the flames. They saved mortgage finance giants Fannie Mae and Freddie Mac and insurer American International Group, and arranged rescues for Merrill Lynch, Morgan Stanley and Goldman Sachs. They guaranteed money-market funds, banned short-selling of stocks; and pumped hundreds of billions of dollars into interbank markets worldwide to bring down borrowing costs.

None of it was enough to stop the crisis of confidence sweeping through the financial sector, which has already reached European shores. Governments in Europe are desperately trying to prop up more banks crippled by a lack of short-term funding.

London interbank offered rates or Libor, the global benchmark used to price a wide variety of bank loans and debt securities worldwide, remain far above official central bank target rates for interbank lending - suggesting that the deep mistrust between financial institutions is unlikely to vanish soon.

The Singapore interbank offered rate or Sibor for three-month Sing-dollar loans - an important benchmark for housing and business loans here - remains much higher than in early September, before Lehman collapsed. This, despite coming down of late. 'The bailout programme notwithstanding, things still could get worse,' said David Cohen, director of Asian economic forecasting at Action Economics in Singapore. He expects fewer new jobs to be created here in the coming months compared to the strong employment growth earlier this year, which will mean less spending by consumers and leaner times for businesses. 'Until the last couple of weeks, I was still optimistic that things could still get back on track. But now it does seem that the whole global economy is going to weaken going into 2009.'

Now, Trough Ahead

Source : TODAY, Friday, October 3, 2008

After 4-1/2 years, prices dip 1.8%; turmoil may force owners’ hands

THE tide has finally turned, in one analyst’swords. After more than four years, or17 consecutive quarters, of growth since early 2004, the prices of private homes posted their first decline of 1.8 per cent.

And coming as this does amid a period of global financial turmoil, the flash figures herald challenging times ahead for home owners — especially those whose purchases will be completed next year.

















Between July and September, the Urban Redevelopment Authority’s private residential property price index fell 1.8 per cent, after a 0.2 per cent increase in the previous quarter, according to flash estimates. This, even as public housing resale prices held steadily to growth of 4.2 per cent.

The drop comes as little surprise. “Market sentiment amongst home buyers has been deeply affected by the on-going US financial crisis, slowing economy, plunging stock market and fears of a global recession,” noted ERA Asia Pacific’s assistant vice president Eugene Lim.

The question now is, how gloomy things ahead will get, and when the trough will come. Mr Lim expects the immediate future to be “bumpy”. Knight Frank’s director of consultancy and research Nicholas Mak anticipates that any gain in the first half would be given up in the second half.

More pessimistic is Chesterton International’s head of research and consultancy Colin Tan. Expect private property prices to dip by at least 5 per cent in the fourth quarter, in an “acceleration” of the decline, he says. The deceleration of the URA’s index — which hitherto had been picking up speed, quarter on quarter, since the first quarter in 2004 — began back in the last quarter of last year. With the backslide now begun, the situation could get uglier next year, with 13,400 private homes expected to come on stream as new developments are completed.

Many buyers of these private homes have purchased their properties on deferred payment schemes and “have been hanging on in the meantime,” observed Mr Tan. The completion of the purchases, however, would mean that the buyers have to start paying for them.

With the current financial turmoil threatening to spill into the next year, these buyers may not be able to afford the homes. This could be further exacerbated by a credit crunch, as banks tighten on lendings and increase interest rates. Should the buyers choose to lease out their assets, good yields may elude them given the glut of new homes.

Mr Tan notes that the third quarter is the time that expatriates choose to sign their leases, after returning from summer holidays. With the precarious global economy, fewer expatriates may enter and stay on in Singapore.

The last resort – sell.

If things are bad enough, panic selling could ensue. It already has begun, even if cases are far and few in between. In August this year, property tycoon Kwek Leng Beng acknowledged that there have been some cases of panic-selling in the secondary high-end market.


ON THE BRIGHT SIDE ...

Despite all this, there is a upside to the property downturn, Mr Tan believes. “It is usually a good sign when property prices follow the economic fundamentals. If prices continue to increase despite a downturn, that is a deviation and the market could eventually head for a collapse,” he said.

A gradual decline would also augur well for a soft landing in a downturn, as “everybody has time to adjust if it’s coming down gradually”.

For the serious homebuyer, it’s also all good news.

Lecturer Isabel Chew, who has been shopping for a private appartment for the last few months told Today: “I’m glad that prices are finally dropping. I will look around for a good bargain and if not, wait for a few more months.”

Unusual projects may also still show “sparks of activity” if interesting projects are launched, said CBRE Research’s executive director Li Hiaw Ho, citing Marina Bay Suites, Sentosa Quayside and The Arte.

With URA figures showing that the luxury and high-end market sales have dipped, well-priced good quality projects below $1,000psf have seen good market response, noted ERA. “Perhaps the on-going financial turmoil has prompted investors to take their money out of intangible investments and park them in tangible investments like properties,” said Mr Lim.

Projects that sold well in Q3 include Livia at $650 psf, Beacon Heights at $900 psf and Concourse Skyline at $1,500-1,800 psf.

More Growth Ahead, But Slower?

Source : TODAY, Friday, October 3, 2008

HDB RESALE INDEX UP 4.2%

THE slightly smaller increase of 4.2 per cent in resale prices between July and last month, when compared to the second quarter’s4.5 per cent, may be a sign that HDB resale prices have begun to moderate.

But overall, analysts expect the market to continue to post growth next year, if at a slower pace. A sign that demand for flats could be easing up somewhat: The housing board has deferred the launch of a Design, Building and Sell Scheme (DBSS) site in Bedok. It had, last November, announced plans to release three such sites in the first half — so far, tenders for the Simei and Toa Payoh sites have been awarded.

“Taking into account changes in market conditions since November 2007, and to allow interested developers more time to evaluate the sites offered for sale, the tender for the Bedok site is now being scheduled for launch in the last quarter of 2008,” said HDB yesterday.

For the resale flat market, PropNex CEO Mohamed Ismail predicted that overall this year, market prices would see 15 per cent growth.

And he expects to see strong demand continue into next year, “mainly because of the time lag to develop the Build-to-Order (BTO) and DBSS flats, coupled with stronger demands from Permanent Residents (PR) due to higher rental cost”.

Even so, he puts next year’s HDB price increase at 6 to 8 per cent — almost half that of this year’s — citing economic uncertainties and a reduction in the Cash-Over-Valuation that HDB buyers are willing to fork out.

For now, demand should continue to be fuelled not just by the existing domestic market, but also new PRs and citizens: For the first half of this year, there were a record 34,800 newPRs and 9,600 new citizens, compared to 28,500 and 7,300 for the same period last year.

With two integrated resorts up in the next two years, foreign middle-management employees are also expected to put themselves up in HDB flats.

Singaporeans, meanwhile, will continue to need a place to live in, economic downturn or not. “Market uncertainty will not stop me from buying if I really need a flat,” saidMr Mark Chong, 29, an international assignment consultant, who thinks resale flats offer a better choice of location than new flats.

Still, new HDB flats coming on stream should take some demand away from the resale market, noted ERA Asia Pacific’s assistant vice-president, Mr Eugene Lim.

HDB has, to date, launched about 5,000 of the planned supply of 8,400 BTO flats for this year. Subject to demand, HDB plans to offer another 3,400 new flats under the BTO system in the remaining months, in towns such as Punggol, Sengkang and Yishun.

Developers May Be First To Feel The Chill

Source : The Straits Times, Oct 3, 2008

Global credit freeze

Interest costs are rising and they may be stuck with project backlogs

PROPERTY developers here are likely to be among the first to feel the chill winds sweeping into Singapore from the big freeze-up in global credit markets.

For years, being among the largest borrowers in town, they have lapped up cheap credit to finance major projects. But now, they are set to feel the squeeze from the markedly higher interest costs arising from the global credit crunch.

They may also face a large backlog of vacant units, if buyers who signed up to buy properties through deferred payment schemes fail to secure financing to complete purchases. These schemes were stopped last October.

The global credit crisis erupted about a year ago in the United States, but until now, it has not touched Singapore in a truly significant way.

Local banks did not scale back on loans to firms and individuals. The interbank market - comprising loans between banks - was flush with cash. In early August, the one-month Singapore Interbank Offered Rate (Sibor) charged for loans between banks was just 0.75 per cent.

But this cosy scenario altered dramatically after the collapse of US investment bank Lehman Brothers two weeks ago. US insurer American International Group almost went belly up soon after.

In the 10 days after that, as global credit markets froze up completely and banks refused to lend to each other, the one-month Sibor shot up, hitting 2.275 per cent last Friday before easing to 1.8125 per cent yesterday.

Singapore home buyers have started to notice that 'distressed sales' are now more common, as banks turn more cagey about extending loans to buyers, in case they are over-stretched financially.

Remisier Alan Goh said: 'I recently saw a flat that the owner had to sell cheap. Otherwise, the bank would not give him a loan for his new flat, which had just received its temporary occupation permit (TOP).'

Going by gloomy reports put out by analysts, the situation may not improve, as an estimated 15,000 new flats are set to hit the market by the end of next year.

'Our economist is now projecting the service sector will create just 20,000 jobs next year, against the 100,000-plus jobs a year created since 2006,' said Citigroup analyst Wendy Koh.

She expects the residential market to swing from 'a standoff between buyers and sellers to a buyer's market'.

A softening job market and rougher economic conditions are hardly likely to encourage any bank to expand its mortgage portfolio.

For property developers, this will be a double whammy, hitting them just as the income stream from completed projects is due to help fund their start-ups.

Credit Suisse noted that in the second quarter, smaller developers were already saddled with gearing ratios of 242 per cent. In other words, for each dollar put up by their shareholders, they had borrowed another $2.42.

Some analysts are worried that with credit drying up, these heavily indebted developers could face difficulties in refinancing as interest rates rise.

Large developers have been more prudent, maintaining their gearing at 52 per cent in the second quarter, but that may be scant consolation given the size of their commitments.

Credit Suisse estimated that CapitaLand's gearing could rise to 1.1 times if all $8 billion of its major commitments comes in at once.

Keppel Land is also likely to be financially stretched by its projects in the Marina Bay Financial Centre, and in Vietnam and China, Credit Suisse added.

Even Allgreen Properties could see its gearing shoot up to 1.5 times, given its $2billion worth of impending investments in China.

Weighted down by such large financial commitments, whenever new problems emerge in global credit markets, developers will face a fresh round of worries.

Take last Tuesday, after the US Congress rejected the original US$700 billion (S$1 trillion) plan to buy the troubled assets of US financial institutions.

The big loser on the local market that day was City Developments, which plunged $1.27, or 14.8 per cent, to $7.33 at the opening bell.

In contrast, traders were relatively sanguine about local banks, despite the bruising received by financial institutions elsewhere. DBS Group Holdings lost only 90 cents, or 5.3 per cent, falling to $16 at the opening bell that day.

Twelve Iconic Structures

Source : The Straits Times, Oct 4, 2008

The URA has extended its conservation efforts to cover towers, bridges and structures other than buildings for the first time.

LONG-TIME Toa Payoh resident Kenny Leck has seen many changes in the housing estate where he has been living for 28 years.

Neighbours have moved away and old blocks of flats have been demolished to make way for skyscraper blocks.

The lookout tower at Seletar Reservoir Park, built by the Public Works Department in the late 1960s, has a striking angular geometry chracteristic of the period. -- PHOTO: URA/KEVIN LEONG

Yesterday, the 30-year-old bookseller was glad to hear that one landmark in his neighbourhood will be conserved: the 25m-tall Lookout Tower in Toa Payoh Town Park.

Built in 1972, it was at one time a very popular spot for photo taking. Mr Leck said that on public holidays, his family often went to the park to take photographs, posing with the tower looming in the background.

'The tower holds fond memories for residents and it is a good move to keep it,' he said.

He was responding to the announcement that the Urban Redevelopment Authority (URA) is extending its conservation programme beyond buildings, to include structures such as towers, pavilions and bridges.

The structures are: the Botanic Gardens' bandstand and the Swan Lake Gazebo; MacRitchie Reservoir's water intake tower and bridge and its pavilion and bridge; the water intake tower, bridge and weir at Lower Peirce Reservoir and the lookout towers in Toa Payoh Town Park and Seletar Reservoir Park.

The six historic bridges to be conserved are Anderson, Cavenagh, Elgin, Read, Ord and Crawford.

In announcing the extension of the URA conservation programme, National Development Minister Mah Bow Tan said that what makes a place distinctive and memorable are not just buildings.

'It could be an elegant tower, a historic bridge or a beautiful pavilion. There are many places and landmarks that we can identify with and feel for in Singapore - places where we spent quality time with our family and friends.'

He cited the Lookout Tower in Toa Payoh Town Park, which he called a landmark that many people identify with the estate.

He was speaking at the annual URA Architectural Heritage Award ceremony held at The Sea View Clubhouse at Amber Road. The clubhouse, built in the early 1900s, is a former seaside bungalow that has been restored and is a heritage award winner this year.

More than 6,800 buildings have been conserved under the URA programme since the programme started almost 30 years ago.

The National Parks Board also has its own conservation programme, under which some of the more scenic and significant tree-lined roads in Singapore are protected.

These include Arcadia Road, Mount Pleasant Road and Mandai Road. Mature trees along these roads cannot be cut down.

In June, the Land Transport Authority announced that it is saving the oldest bus stop in Singapore - a bus stop along Old Choa Chu Kang Road that was built in the 1970s.

Yesterday, Mr Mah also announced that four black-and-white houses at Bukit Chermin in Telok Blangah will also be conserved. These were built in the early 1900s by the then Singapore Harbour Board for its senior staff members.

The four houses, together with 25 pre-war colonial buildings that are already conserved at the Southern Ridges, can be developed for future use as hotels, restaurants, art galleries and the like.

Dr Kevin Tan, president of the Singapore Heritage Society, is pleased that the URA is now looking at individual structures for conservation. 'It is a welcome and long overdue move as these structures are important to our historical and cultural landscape,' he said.

组屋转售价指数创历史新高

Source :《联合早报》October 3, 2008

金融市场波动大,组屋转售市场依然红火。建屋发展局的预估数据显示,今年第三季组屋转售价指数上升至137.4点,已经突破1996年的最高峰,显示组屋需求仍然强劲。

建屋局在文告中指出,第三季的组屋转售价指数上扬了4.2%,比第二季的的4.5%涨幅低,显示组屋转售价格的上升幅度已经放缓。

将建在宏茂桥52街的Park Central@AMK私人组屋,上个月中开始让申请者陆续选购,四房式单位至今已销售一空,五房式售出超过一半。售价最高的20个顶楼单位也都已找到买家。(档案照片)





当局将增建组屋 并继续推出私人组屋

建屋局也表示,当局将增加组屋的供应。今年首9个月,建屋局推出了5000间预购组屋,由于市场需求强劲,该局未来3个月将在榜鹅、盛港及义顺推出3400间预购组屋。

另一方面,建屋局继续通过设计、兴建和销售计划(Design, Build and Sell Scheme,简称DBSS)下推出私人组屋。建屋局至今已经推出了6个DBSS地段。除了分别在6月和8月推出四美和大巴窑的地段,建屋局昨天也宣布在今年第四季,推出勿洛的DBSS地段。

组屋转售价指数在1996年房屋市场红火时高达136.9点。今年7月,一些市场人士已经预测组屋转售价会在第三季,突破这个历来最高点。

受访的房地产经纪表示,尽管受到美国金融危机影响,公共住屋的需求仍然相当强劲。

博纳集团(PropNex)总裁伊斯迈今年7月已经预测组屋转售价会在今年内创下历史新高。

他指出,组屋转售价过去九个月已经上涨了12.4%,而他预测组屋转售价今年会取得15%的增长。

博纳总裁:明年走势还会强劲

伊斯迈认为,组屋市场明年的走势还会保持强劲。这是因为设计、兴建和销售计划下兴建的组屋和预购组屋需要一段时间才能进入市场。

ERA房地产公司助理副总裁林东荣指出,新公民和永久居民的人数增加,也是促使组屋价格上涨的因素。

他也预测在DBSS计划下推出的新单位,将受到买主的欢迎。

房地产经纪认为,组屋转售价格将继续上升,但步伐会开始放缓。伊斯迈说,组屋的溢价(cash-over-valuation)减少,其实是促使组屋转售价指数上涨幅度微减的原因。

林东荣则认为,随着建屋局兴建更多组屋,有意购买组屋的国人将有更多选择,转售价上涨的幅度会开始放缓。

私宅价格开始下滑

Source :《联合早报》October 3, 2008

我国私人住宅价格终于抵不住来自美国金融风暴的压力,私宅价格指数在连续上涨了17个季度,或四年多后,首次下滑。分析师表示,这只是一个开始,并预计未来几个月,本地私宅价格的下跌幅度将会扩大。

市区重建局公布的第三季初步预估数字显示,本地私宅价格指数下跌了1.8%,由177.5点微跌至174.3点。这是本地楼市自2004年第一季以来,首个呈现跌幅的季度。尽管楼市已在去年第四季开始趋软,但第二季的私宅价格指数仍上扬0.2%。

我国私人住宅价格终于抵不住来自美国金融风暴的压力,私宅价格指数扭转四年多来的涨势,首次下跌。

莱坊(Knight Frank)研究部主管麦俊荣说:“自2007下半年以来,投资者情绪一再受打击,进而使私宅交易量直线下降。美国金融和经济问题越来越严重,整体私宅价格下滑是迟早的事。”

他认为,私宅价格至少在未来12个月里将持续下跌,今年下半年的跌幅还可能“侵蚀”掉上半年所取得的3.9%增幅,使今年全年的价格较去年横摆。

卓登国际(Chesterton International)研究部主管陈瑞谨则指出,过去两个多星期暴发的美国金融海啸重重打击了市场情绪,即将在本月底公布的实际完整数据可能要比预估数据来得低。预估数字是根据每一季的前10个星期呈交的房屋转让禁令(caveats)中的交易价格,再加上新销售的单位来统计。市建局将在本月24日公布完整数据。

过去三个月,一般代表中档私宅的其他中央区(RCR)楼价,跌幅最大,退低2.1%,而反映高档私宅市场,位于第9、10、11邮区,以及新市区和圣淘沙的核心中央区(CCR),屋价则退低2%。唯一出现涨幅的为反映大众私宅市场的中央区以外(OCR)屋价,在组屋短缺以及转售价持续攀升的情况下获得支撑,微涨了0.1%。

相比之下,今年第二季,只有核心中央区的私宅价格退低0.1%,其他中央区和中央区以外则分别上涨0.7%和0.9%。

为了更准确地反映房地产市况,市建局自2006年第四季起,也提供全岛按三大区块细分、搜集的私人房产数据。

虽然第三季总共售出的新单位有1500至1600个,与第二季的1525个单位不相上下,分析师解释,除了农历七月的楼市淡季外,整体私宅价格指数呈现负增长主要是因为一些发展商以较低价格来推出新项目,而一些二手单位也以较低价格成交。

争取到不错销售成绩的莉雅苑(Livia)、Clover by the Park、The Concourse Skyline和达高轩(Dakota Residences)等都是以较低的平均尺价售出。

其中,鸿福集团的The Concourse Skyline,推出的90个单位成功售出了63个,售价介于每平方英尺1500至1800元之间,略低于目前金融区住宅的1800元至3300元平均尺价。以每平方英尺970元来推出达高轩也比它原本瞄准的每平方英尺1000元至1100元来得低。

眼见新项目身价被打折扣,一些看淡楼市的投资者也开始脱售手上未完工或刚完工的单位。例如去年“炒气”最旺的项目滨海舫(The Sail@Marina Bay),今年以来就有约50个单位易主,一些单位的转售价要比去年高峰期来得低20%左右。  

进入第四季,世邦魏理仕(CBRE)执行董事李晓和表示,雷曼兄弟(Lehman Brothers)清盘加上美国国际集团(AIG)面对财务危机,使市场信心重创,私宅价格正面对极大的压力,售价和销售额将进一步下降。

他说:“不过,如果市场期待以久的项目如Marina Bay Suites、升涛湾的Sentosa Quayside和汤申路的The Arte等被推出市场,可能会让市场恢复一些生气。”

分析师:楼价不会跳水

虽然私人住宅价格已开始下跌,但分析师预计本地楼价不会跳水。

1997年暴发亚洲金融危机时,本地楼价猛跌40%,但分析师认为,这样的情况预料不会在这一轮下跌周期里重演。论供应和房贷负债比率,这一轮的下调较接近2000年第三季至2004年第一季的低潮期,整体价格跌幅可能相近当时的约20%。

第一太平戴维斯(Savills)行销与业务开发主管邱瑞荣认为,组屋需求依然强劲,供应又短缺,而转售价已经达到每平方英尺500元,给予大众化私宅支撑,价格下跌幅度预料不会太大,而中高档私宅方面,由于大发展商在去年已锁定了丰厚的利润,有能力持守,屋价的下跌幅度也不会因供不应求而猛泻。  

卓登国际研究部主管陈瑞谨也认为,本地楼价将会有个软着落,价格将尾随经济走势波动,即使在最糟的情况下,本地楼价也只会失去去年全年的涨幅。不过,这样的情况只有在全球经济大萧条、又有银行倒闭、本地企业大规模裁员、房贷利率大幅度飙升的情况下才会发生。去年,本地的高档豪宅价格一口气暴涨了33%,创下历史新高。

房地产类股跌至三年半来最低

私宅价格指数扭转四年多来的涨势,首次下跌,拖累房地产类股在昨天的交易中下跌至近三年半以来的最低水平。

反映本地房地产关联股走势的富时海峡时报房地产控股与发展指数(FTSE ST Real Estate Index)昨天下跌5.08%,至462.62点,是2005年4月18日以来的最低水平。该指数是从今年初867.19点猛跌47%,要比海峡时报指数今年至今的32%跌幅来得大。

相比去年6月21日的1044.71点历来最高水平,该指数则下滑了56%。

在昨天的交易中,我国目前三家最大的房地产上市公司都一度下跌至近三年半以来的最低水平。

老大嘉德置地(CapitaLand)的股价昨天曾一度下滑4.6%,但在闭市前回弹,最后以每股3.04元收市,跌幅为0.7%。老二城市发展(CDL)的股价则一度下挫7.8%,并以每股8.37元闭市,下跌4.8%。老三吉宝置业(Keppel Land)的股价曾在交易中退低4.6%,但最后以每股2.75元收场,跌幅为2.8%。

莱坊研究部主管麦俊荣预计,本地楼市的跌势将持续至少一年,并表示那些手头上仍有未推出项目的发展商应趁还能赚取一些利润的时候尽快发售,否则可能得等上一段很长的时间。

瑞士信贷(Credit Suisse)的分析师则表示,虽然许多发展商和业主还有持守的能力,至今仍等待本地楼市回稳,但市场信心已被近期的美国金融海啸给重折,接下来还得面对更多大风浪,比如大量新供应、前来我国公干的外来专才将减少、大规模裁员和环球资产减值等,因此给予房地产关联股“不如大盘(underweight)”的评级。

这名分析师在星期二发表的一份报告中也指出,自5月以来,本地发展商的经商环境急转直下,不但得应付疲弱需求,还得承担更高的建筑成本以及面对更吃紧的信贷环境。分析师预计,发展商接下来将被信贷短缺以及更高的借贷成本困扰,资产价值也将减值,进一步把股价推下楼。

不是所有市场人士都对本地发展商感悲观,星展唯高达(DBS Vickers)的分析师表示,相比过去涨势扭转的情况,私宅价格指数这一次的跌幅相对小许多。1996年,楼价在一个季度退低7.9%,而在2000年第三季,楼价也从第二季的1.4%增长下滑,报2.7%的跌幅。

虽然认为屋价将在今年和明年下跌,但预计今年的跌幅将限制在单位数。分析师指出,带动下跌的主要是高档私宅的售价,但在组屋售价仍取得增长的支撑下,大众化私宅屋价预计将持稳。

Green Light For Dorm Plans

Source : The Straits Times, Oct 4, 2008

Separate access road and noise and security measures will address residents' concerns

PLANS for a dormitory to house foreign workers in Serangoon Gardens will go ahead, despite unhappiness expressed earlier by some residents there.

But in a nod to their concerns, the Ministry of National Development (MND) announced yesterday that measures would be taken to minimise disruption in the area.

ST PHOTO: DESMOND WEE

For starters, no more than 600 foreigners - generally factory workers in the IT and electronics industries in Ang Mo Kio - will be housed at the dormitory, which will be up within a year.

An earlier feasibility study had shown that the premises of the former Serangoon Gardens Technical School could hold up to 1,000 workers.

An access road to the building will also be built, so buses transporting the workers to and from their 'home' will not wind through the middle-class estate, which already has traffic congestion problems.

Once the road, which leads only to the dormitory, is built, the buses will enter the compound via a slip lane on the Central Expressway and exit through a new road leading to Ang Mo Kio Avenue 1.

To keep the workers from disturbing the estate's residents, the dormitory operator will have to implement noise-control, security and other measures.

The facility will also have adequate amenities, including provision shops, so workers will have little reason to leave it.

Finally, the site area will be reduced, setting it further back from homes along Burghley Drive and giving residents there an additional buffer from noise.

Announcing these measures yesterday, Minister for National Development Mah Bow Tan said they would ensure that the dormitory would not create a 'huge impact'.

The measures are a result of discussions between the ministry, the Member of Parliament for the area, Mrs Lim Hwee Hua, and grassroots leaders, he said.

A majority of residents contacted yesterday said they had expected the plan to go ahead, but that the measures went some way to address their concerns.

Their reaction was a far cry from that of a month ago, when plans for the dormitory first made the news.

The residents raised an uproar, collecting more than 1,600 signatures from among the more than 4,000 households in the estate, firing letters to the press and protesting vociferously in a meeting with their Members of Parliament.

They said that allowing large numbers of foreign workers into the area could lead to a spike in crime, drunken and disorderly behaviour and traffic congestion, and that the value of their properties would be hit.

The issue also spiralled into a national debate of sorts, with residents and those who supported keeping foreign workers away from population centres on one side, and those who cried 'discrimination!' on the other.

Yesterday, Mr Mah reiterated that the need for temporary dormitory spaces was pressing and added that other sites - fewer than 10 - would be released within a month. No details were given on their locations but a feasibility study will be done for each before the MND goes to grassroots leaders for their feedback.

In the meantime, Mr Mah said, the Government was working hard at getting permanent dormitories in Chua Chu Kang and Lim Chu Kang ready.

There were 577,000 foreign workers here last year, up from 475,000 in 2006.

Speaking to reporters yesterday, Mrs Lim conceded that some Serangoon Gardens residents would be disappointed by the decision, but emphasised that the measures had been taken to address their concerns.

She said it was 'no trivial matter' to create a new access road and that it was a 'substantial revision'.

Ms Sujata Jayaram, 43, who chairs the estate's Chartwell neighbourhood committee, said there were 'mixed feelings' but that residents were pleased with the infrastructure arrangement.

Another Burghley Drive resident, Madam S. Raja, 69, said she was glad that the road would not be clogged with traffic. Calling the decision 'a compromise', she said: 'We will cross the bridge when we come to it. At the moment, it's okay.'