Source : The Business Times, October 17, 2008
Says it'll take time to restore normal credit flows; hints rates may be cut further
(NEW YORK) Federal Reserve chairman Ben Bernanke on Wednesday gave a dour assessment of the US economy, citing a 'significant threat' from shuttered credit markets in remarks that indicated he was open to cutting interest rates further.
Together with dismal data on retail sales and factory growth, the remarks helped send US stocks on their greatest one-day percentage slide since the 1987 crash.
Mr Bernanke said it would take some time to restore normal credit flows and pledged that the US central bank would continue to act aggressively to fight the crisis. Importantly, he said inflation risks were ebbing, which suggests Fed officials see latitude to lower borrowing costs further.
'By restricting flows of credit to households, businesses, and state and local governments, the turmoil in financial markets and the funding pressures on financial firms pose a significant threat to economic growth,' Mr Bernanke told the Economic Club of New York. 'We will continue to use all the tools at our disposal to improve market functioning and liquidity,' he said, adding that policymakers' aggressive and quick response crucially distinguished this episode from the crisis of the 1930s.
Still, Fed vice-chairman Donald Kohn, speaking separately in New York, said escalating mistrust among financial institutions had hampered the immediate benefits of lower interest rates. At the same time, he said, inflation was likely to move lower as the banking crisis dragged on growth.
St Louis Fed president James Bullard said the unexpectedly sharp 1.2 per cent drop in September retail sales reported on Wednesday increased the risk of recession. 'The third quarter, I think, will be flat to slightly negative,' he told reporters. 'That is going to push up the probability that it will later be named a recession.'
The data contributed to expectations that Fed officials will follow up the emergency interest rate cut made last week with another reduction at their next meeting on Oct 28-29.
In concert with central banks around the globe, the Fed cut benchmark rates by a half point to 1.5 per cent last week. It said an intensification of the financial crisis had raised risks to growth, while curbing the risk of inflation.
In the latest bid to restore financial market stability, the US government on Tuesday announced a dramatic plan to recapitalise banks, beginning with a US$125 billion equity investment in nine major financial institutions.
But even with the government scrambling to restore credit, Mr Bernanke cautioned it would take time for the economy to heal. 'Stabilisation of the financial markets is a critical first step, but even if they stabilise as we hope they will, broader economic recovery will not happen right away,' he said.
Mr Kohn agreed. 'The troubles in credit markets have spilled over into the economy,' he said.
Analysts said Mr Bernanke's words suggested the Fed chief saw the deteriorating outlook as calling for another rate cut.
'Bernanke's comments reinforce the sense that the Fed will lower interest rates when it meets again,' said Tony Crescenzi, chief bond market strategist at Miller, Tabak & Co in New York.
Mr Kohn, meanwhile, said he was hopeful that the government's plan to inject US$250 billion in equity into ailing banks would be effective in thawing credit markets. 'It's not going to cure all the ills, but it's a very important step in that direction,' he said. 'The situation here is quite severe.' - Reuters
Friday, October 17, 2008
US Economy Weaker In All Regions: Beige Book
Source : The Business Times, October 17, 2008
(NEW YORK) The economy deteriorated throughout the US last month and pessimism about the outlook spread, the Federal Reserve said in its regional economic survey.
'Economic activity weakened in September across all 12 Federal Reserve districts,' the Fed said in its Beige Book report, published two weeks before officials meet to set interest rates.
'Consumer spending decreased in most districts, with declines reported in retailing, auto sales and tourism.'
With the economy weakening under the impact of the year-long financial crisis and housing recession, and consumer prices easing, most investors anticipate the Fed will lower interest rates by a quarter point on Oct 29 as a follow-up to an emergency rate cut a week ago.
The Fed, European Central Bank and four other central banks cut interest rates on Oct 8 in an unprecedented coordinated effort to prevent a freeze in credit markets from causing a global recession. The Fed reduced its benchmark rate to 1.5 per cent.
'The credit crunch has hit Main Street with a Category 5 wind,' said Mark Vitner, senior economist at Wachovia Corp in Charlotte, North Carolina, before the report.
The Beige Book reported declines in most districts for manufacturing, while 'nearly all' districts reported reduction in business for service industries. 'Several' regional banks reported 'their contacts had become more pessimistic about the economic outlook.'
Housing and construction 'weakened or remained low' throughout the country and demand for housing-related goods, building materials and construction equipment remained at 'low levels' in all regions, the Fed said.
'Credit conditions were characterised as being tight across the 12 districts,' with several reporting reduced credit availability for businesses.
Wednesday's report was prepared by the Chicago Fed, based on information collected on or before Oct 6.
The Fed is facing increasing evidence that the US may already be in a recession.
Labor Department figures on Oct 3 showed that payrolls fell by 159,000 in September, the biggest reduction in five years. The unemployment rate was 6.1 per cent, an increase from 5 per cent as recently as April.
Retail sales fell 1.2 per cent in September, extending their decline to a third consecutive month, the longest slump in at least 16 years.
Manufacturing in the US contracted in September at the fastest pace since the last recession.
The Institute for Supply Management's factory index dropped to the lowest level since October 2001, the Tempe, Arizona-based group reported on Oct 1.
'The most recent jobs report has increased the probability of recession,' James Bullard, president of the Federal Reserve Bank of St Louis, said on Tuesday.
The Beige Book reported reduced inflationary pressures across most districts. 'I feel better about inflation,' Federal Reserve Bank of Atlanta president Dennis Lockhart said on Sept 30. 'The weaker economy combined with lower oil and commodity prices should serve to suppress inflationary pressures, especially headline or overall inflation.' - Bloomberg
(NEW YORK) The economy deteriorated throughout the US last month and pessimism about the outlook spread, the Federal Reserve said in its regional economic survey.
'Economic activity weakened in September across all 12 Federal Reserve districts,' the Fed said in its Beige Book report, published two weeks before officials meet to set interest rates.
'Consumer spending decreased in most districts, with declines reported in retailing, auto sales and tourism.'
With the economy weakening under the impact of the year-long financial crisis and housing recession, and consumer prices easing, most investors anticipate the Fed will lower interest rates by a quarter point on Oct 29 as a follow-up to an emergency rate cut a week ago.
The Fed, European Central Bank and four other central banks cut interest rates on Oct 8 in an unprecedented coordinated effort to prevent a freeze in credit markets from causing a global recession. The Fed reduced its benchmark rate to 1.5 per cent.
'The credit crunch has hit Main Street with a Category 5 wind,' said Mark Vitner, senior economist at Wachovia Corp in Charlotte, North Carolina, before the report.
The Beige Book reported declines in most districts for manufacturing, while 'nearly all' districts reported reduction in business for service industries. 'Several' regional banks reported 'their contacts had become more pessimistic about the economic outlook.'
Housing and construction 'weakened or remained low' throughout the country and demand for housing-related goods, building materials and construction equipment remained at 'low levels' in all regions, the Fed said.
'Credit conditions were characterised as being tight across the 12 districts,' with several reporting reduced credit availability for businesses.
Wednesday's report was prepared by the Chicago Fed, based on information collected on or before Oct 6.
The Fed is facing increasing evidence that the US may already be in a recession.
Labor Department figures on Oct 3 showed that payrolls fell by 159,000 in September, the biggest reduction in five years. The unemployment rate was 6.1 per cent, an increase from 5 per cent as recently as April.
Retail sales fell 1.2 per cent in September, extending their decline to a third consecutive month, the longest slump in at least 16 years.
Manufacturing in the US contracted in September at the fastest pace since the last recession.
The Institute for Supply Management's factory index dropped to the lowest level since October 2001, the Tempe, Arizona-based group reported on Oct 1.
'The most recent jobs report has increased the probability of recession,' James Bullard, president of the Federal Reserve Bank of St Louis, said on Tuesday.
The Beige Book reported reduced inflationary pressures across most districts. 'I feel better about inflation,' Federal Reserve Bank of Atlanta president Dennis Lockhart said on Sept 30. 'The weaker economy combined with lower oil and commodity prices should serve to suppress inflationary pressures, especially headline or overall inflation.' - Bloomberg
$1b Sales From Mid-East Projects: CapitaLand
Source : The Business Times, October 17, 2008
CAPITALAND has made about $1 billion worth of sales in two projects in the Middle East.
In a statement yesterday, the company said that it had sold 849 units out of a total of 1,559 units in the two developments since June.
The developments are the 691-unit Raffles City Bahrain and the 868-unit Rihan Heights in Abu Dhabi.
Raffles City Bahrain is owned and developed by the Syariah-compliant Raffles City Bahrain Fund, which is managed by CapitaLand, while Rihan Heights is the first phase of CapitaLand's 49 per cent-owned associate company Capitala's US$5-6 billion flagship integrated development Arzanah.
Liew Mun Leong, president and CEO of CapitaLand Group, said: 'Besides our core markets of Singapore, China and Australia, CapitaLand is now seeing contributions from its fourth engine of growth, namely the new markets of the Gulf Cooperation Council (GCC) countries, as well as Asian countries like Vietnam, Thailand and India.'
CapitaLand said that it had launched 750 residential units of its 80 per cent-owned The Vista, Vietnam and 590 residential units of its 49 per cent-owned The Orchard Residency, India.
While The Vista units have been fully booked, 309 units at The Orchard Residency have been sold. In Thailand, TCC Capital Land, CapitaLand's 40 per cent-owned joint venture with TCC Land, has sold or booked over 2,400 residential units to date.
Raffles City Bahrain, in the country's capital city of Manama, will be an integrated project comprising residential, retail and serviced residence components.
The average sale price of the residential units achieved was about $615.67 psf. CapitaLand said that this was higher than the average price of $474.92 psf for similar residential apartments in Bahrain.
Rihan Heights is part of the Arzanah integrated development which is located on a prime 1.4 million square metre waterfront site surrounding Zayed Stadium on Abu Dhabi main island.
The average sale price achieved ranged from about $902.74 psf to $976.78 psf, depending on the size, level and orientation of the unit.
CAPITALAND has made about $1 billion worth of sales in two projects in the Middle East.
In a statement yesterday, the company said that it had sold 849 units out of a total of 1,559 units in the two developments since June.The developments are the 691-unit Raffles City Bahrain and the 868-unit Rihan Heights in Abu Dhabi.
Raffles City Bahrain is owned and developed by the Syariah-compliant Raffles City Bahrain Fund, which is managed by CapitaLand, while Rihan Heights is the first phase of CapitaLand's 49 per cent-owned associate company Capitala's US$5-6 billion flagship integrated development Arzanah.
Liew Mun Leong, president and CEO of CapitaLand Group, said: 'Besides our core markets of Singapore, China and Australia, CapitaLand is now seeing contributions from its fourth engine of growth, namely the new markets of the Gulf Cooperation Council (GCC) countries, as well as Asian countries like Vietnam, Thailand and India.'
CapitaLand said that it had launched 750 residential units of its 80 per cent-owned The Vista, Vietnam and 590 residential units of its 49 per cent-owned The Orchard Residency, India.
While The Vista units have been fully booked, 309 units at The Orchard Residency have been sold. In Thailand, TCC Capital Land, CapitaLand's 40 per cent-owned joint venture with TCC Land, has sold or booked over 2,400 residential units to date.
Raffles City Bahrain, in the country's capital city of Manama, will be an integrated project comprising residential, retail and serviced residence components.
The average sale price of the residential units achieved was about $615.67 psf. CapitaLand said that this was higher than the average price of $474.92 psf for similar residential apartments in Bahrain.
Rihan Heights is part of the Arzanah integrated development which is located on a prime 1.4 million square metre waterfront site surrounding Zayed Stadium on Abu Dhabi main island.
The average sale price achieved ranged from about $902.74 psf to $976.78 psf, depending on the size, level and orientation of the unit.
Credit Crisis Now Hurting Economy: Fed's Rosengren
Source : The Business Times, October 17, 2008
BOSTON - The troubled housing and credit markets are hurting the broader US economy, requiring a proactive policy response that includes direct outreach to homeowners, a top Federal Reserve official said on Thursday.
Boston Federal Reserve President Eric Rosengren said in prepared remarks that rekindling short-term borrowing for corporations was also crucial to keeping growth from veering too far off track.
'While housing and financial markets are most impacted, there is little doubt that the effects are spilling over to the rest of the economy,' Mr Rosengren said.
But he added: 'With appropriate and determined policy actions under way, I believe much of the spillover can be mitigated and the economy can return to growth that is closer to potential next year.'
Equity markets, however, remain extremely volatile despite Thursday's rally, and interbank borrowing is still costly and in short supply.
Meanwhile, news on the economy was increasingly grim. In the latest string of reports, industrial production posted its biggest monthly fall in 34 years, while a regional manufacturing index dropped to its lowest reading since 1990.
Mr Rosengren said that making sure credit-worthy borrowers regain their access to capital was paramount to laying the groundwork for recovery.
'Firms with top credit ratings can be critical stabilizers during difficult times,' he said.
Hitting home
Mr Rosengren placed great emphasis on dealing with falling home values. The ripple effects of the housing downturn have been enormous, exacerbated by highly-leveraged bets of financial institutions on real-estate linked assets.
This requires that any rescue measures look to boost sentiment in the market at the micro level.
'Individuals shopping for homes need to be confident that appropriate financing is available. Individuals need to be more confident in housing transactions proceeding normally. And individuals need to feel that there is potential for housing prices to rise,' Mr Rosengren said.
To that end, the Boston Fed head cited his bank's recent conference on foreclosure prevention, which he said was aimed at grappling with a widespread problem by helping thousands of people in one sitting.
Mr Rosengren said an absence of mechanisms for an honest attempt at mortgage renegotiation presents serious challenges.
'A persistent complaint among distressed borrowers has been their inability to reach informed representatives of the loan servicers, to discuss and resolve their payment problems,' he said. 'In many accounts, borrowers report repeated efforts to reach servicers' representatives and describe the frustration of bouncing around a 'telephone maze.' -- REUTERS
BOSTON - The troubled housing and credit markets are hurting the broader US economy, requiring a proactive policy response that includes direct outreach to homeowners, a top Federal Reserve official said on Thursday.
Boston Federal Reserve President Eric Rosengren said in prepared remarks that rekindling short-term borrowing for corporations was also crucial to keeping growth from veering too far off track.
'While housing and financial markets are most impacted, there is little doubt that the effects are spilling over to the rest of the economy,' Mr Rosengren said.
But he added: 'With appropriate and determined policy actions under way, I believe much of the spillover can be mitigated and the economy can return to growth that is closer to potential next year.'
Equity markets, however, remain extremely volatile despite Thursday's rally, and interbank borrowing is still costly and in short supply.
Meanwhile, news on the economy was increasingly grim. In the latest string of reports, industrial production posted its biggest monthly fall in 34 years, while a regional manufacturing index dropped to its lowest reading since 1990.
Mr Rosengren said that making sure credit-worthy borrowers regain their access to capital was paramount to laying the groundwork for recovery.
'Firms with top credit ratings can be critical stabilizers during difficult times,' he said.
Hitting home
Mr Rosengren placed great emphasis on dealing with falling home values. The ripple effects of the housing downturn have been enormous, exacerbated by highly-leveraged bets of financial institutions on real-estate linked assets.
This requires that any rescue measures look to boost sentiment in the market at the micro level.
'Individuals shopping for homes need to be confident that appropriate financing is available. Individuals need to be more confident in housing transactions proceeding normally. And individuals need to feel that there is potential for housing prices to rise,' Mr Rosengren said.
To that end, the Boston Fed head cited his bank's recent conference on foreclosure prevention, which he said was aimed at grappling with a widespread problem by helping thousands of people in one sitting.
Mr Rosengren said an absence of mechanisms for an honest attempt at mortgage renegotiation presents serious challenges.
'A persistent complaint among distressed borrowers has been their inability to reach informed representatives of the loan servicers, to discuss and resolve their payment problems,' he said. 'In many accounts, borrowers report repeated efforts to reach servicers' representatives and describe the frustration of bouncing around a 'telephone maze.' -- REUTERS
Fitch: Govt's Guarantees Reinforce Market Confidence In S'pore, M'sia
Source : The Business Times, October 17, 2008
Fitch Ratings on Friday said that it views the concurrent moves by the Singapore and Malaysian regulators to guarantee bank deposits to be positive for the respective banking systems.
The agency further notes that the Outlook on the credit ratings of Singapore and Malaysian banks continues to be Stable thanks to their relatively strong credit profiles and resilience amid the extreme global financial market turmoil and credit crisis.
Although Singapore banks' profit growth has moderated and their asset quality is expected to deteriorate slightly, their high credit ratings are on balance supported by the banks' solid loss absorption capacity, as a result of their robust capital position. The prudent supervisory environment under the Monetary Authority of Singapore (MAS) also contributes to the stability and sound financial health of the banking system. Indeed, MAS has been injecting liquidity to stabilise the local interbank market, which had tightened considerably towards end-September 2008. Importantly, Singapore banks' funding base remains well-diversified given the large proportion of retail deposits and their liquid asset ratio is still satisfactory.
Meanwhile, although still on an improving trend, Malaysian banks too may find it difficult to maintain earnings growth and asset quality improvement. Nevertheless, their capital levels are still satisfactory with a good buffer to absorb higher loan losses. Liquidity conditions in Malaysia have remained largely stable thanks to the local banks' stable funding and liquidity profiles.
The deposit guarantee mechanisms in the two countries are essentially aimed at maintaining market confidence, the loss of which could have been detrimental to the stability of the financial systems. Notwithstanding the relatively sound fundamentals of the two banking systems, the absence of such regulatory guarantee could have been disadvantageous for Singapore and Malaysian banks considering that a number of other banking systems have recently made various government guarantee arrangements. Looking ahead, Fitch notes that financial system stability in Singapore and Malaysia should be ensured at least until the expiry of the deposit guarantee (both of which will expire at end-2010), thus enabling banks to focus their resources more on negotiating the weaker economic environment. -- FITCH STATEMENT
Fitch Ratings on Friday said that it views the concurrent moves by the Singapore and Malaysian regulators to guarantee bank deposits to be positive for the respective banking systems.
The agency further notes that the Outlook on the credit ratings of Singapore and Malaysian banks continues to be Stable thanks to their relatively strong credit profiles and resilience amid the extreme global financial market turmoil and credit crisis.
Although Singapore banks' profit growth has moderated and their asset quality is expected to deteriorate slightly, their high credit ratings are on balance supported by the banks' solid loss absorption capacity, as a result of their robust capital position. The prudent supervisory environment under the Monetary Authority of Singapore (MAS) also contributes to the stability and sound financial health of the banking system. Indeed, MAS has been injecting liquidity to stabilise the local interbank market, which had tightened considerably towards end-September 2008. Importantly, Singapore banks' funding base remains well-diversified given the large proportion of retail deposits and their liquid asset ratio is still satisfactory.
Meanwhile, although still on an improving trend, Malaysian banks too may find it difficult to maintain earnings growth and asset quality improvement. Nevertheless, their capital levels are still satisfactory with a good buffer to absorb higher loan losses. Liquidity conditions in Malaysia have remained largely stable thanks to the local banks' stable funding and liquidity profiles.
The deposit guarantee mechanisms in the two countries are essentially aimed at maintaining market confidence, the loss of which could have been detrimental to the stability of the financial systems. Notwithstanding the relatively sound fundamentals of the two banking systems, the absence of such regulatory guarantee could have been disadvantageous for Singapore and Malaysian banks considering that a number of other banking systems have recently made various government guarantee arrangements. Looking ahead, Fitch notes that financial system stability in Singapore and Malaysia should be ensured at least until the expiry of the deposit guarantee (both of which will expire at end-2010), thus enabling banks to focus their resources more on negotiating the weaker economic environment. -- FITCH STATEMENT
A-Reit's Q2 Distribution Income Up 15%
Source : The Business Times, October 17, 2008
Ascendas Real Estate Investment Trust (A-Reit), Singapore's No. 1 industrial property trust, said on Friday that its second- quarter income distribution to shareholders increased 15 per cent as its tenants paid higher rents.
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The trust will distribute S$53.4 million, or 4.01 cents a share, for the three months ended September, from S$46.5 million, or 3.51 cents a year earlier, it said.
Net property income for 1HFY2008/09 increased by 20.4 per cent to S$142.3 million compared to a year ago, of which 46.7 per cent is contributed organically by rental rate increases from both positive rental reversions in the multi-tenanted buildings and stepped rental increases in the single-tenanted buildings.
Despite the slowdown in the economy, barring any significant further deterioration in the economic situation resulting from the global financial turmoil, the manager expects to be able to deliver a return that is in line with its recent performance for the balance of the current financial year.'
As at 30 September 2008, A-Reit has 76.7 per cent of its debt hedged into fixed rate for the next 3.93 years.
Barring any further deterioration in the external economic environment, the manager believes that A-REIT is well-positioned to deliver a DPU for the current financial year that is in line with its recent performance.
Ascendas Real Estate Investment Trust (A-Reit), Singapore's No. 1 industrial property trust, said on Friday that its second- quarter income distribution to shareholders increased 15 per cent as its tenants paid higher rents.
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The trust will distribute S$53.4 million, or 4.01 cents a share, for the three months ended September, from S$46.5 million, or 3.51 cents a year earlier, it said.Net property income for 1HFY2008/09 increased by 20.4 per cent to S$142.3 million compared to a year ago, of which 46.7 per cent is contributed organically by rental rate increases from both positive rental reversions in the multi-tenanted buildings and stepped rental increases in the single-tenanted buildings.
Despite the slowdown in the economy, barring any significant further deterioration in the economic situation resulting from the global financial turmoil, the manager expects to be able to deliver a return that is in line with its recent performance for the balance of the current financial year.'
As at 30 September 2008, A-Reit has 76.7 per cent of its debt hedged into fixed rate for the next 3.93 years.
Barring any further deterioration in the external economic environment, the manager believes that A-REIT is well-positioned to deliver a DPU for the current financial year that is in line with its recent performance.
GuocoLand Sinks Into The Red For Q109
Source : The Business Times, October 17, 2008
GuocoLand Ltd has reported a net loss of $2.8 million for the fiscal first quarter ended 30 September, down from a net profit of $27.7 million a year ago.
This was mainly attributed to unrealised mark-to-market foreign exchange loss of $19.2 million arising primarily from the revaluation of US$300 million bank loans as the US dollar appreciated against the Singapore dollar.
The group's revenue decreased by 20 per cent to $153.1 million as compared to the previous corresponding period mainly due to lower revenue recognised for property development projects in China.
Earnings per ordinary share for the period was a negative 0.34 cents.
GuocoLand Ltd has reported a net loss of $2.8 million for the fiscal first quarter ended 30 September, down from a net profit of $27.7 million a year ago.
This was mainly attributed to unrealised mark-to-market foreign exchange loss of $19.2 million arising primarily from the revaluation of US$300 million bank loans as the US dollar appreciated against the Singapore dollar.The group's revenue decreased by 20 per cent to $153.1 million as compared to the previous corresponding period mainly due to lower revenue recognised for property development projects in China.
Earnings per ordinary share for the period was a negative 0.34 cents.
PM Lee Sees Slower Growth, Uncertainty Next Year
Source : The Business Times, October 17, 2008
Singapore's Prime Minister Lee Hsien Loong said on Friday the city-state had fallen into recession and that the economic outlook over the next 12 months was uncertain.
'The current global financial turmoil has clouded Singapore's economic outlook. Our economy has gone into recession,' Mr Lee said at the opening of a research and development facility.
'We must expect slower growth and greater uncertainty at least over the next year.'
Singapore last week eased monetary policy for the first time in five years after advance data showed its trade-reliant economy contracted for a second consecutive quarter in the July-September period.
The city-state's economy shrank an annualised, seasonally adjusted 6.3 per cent in the third quarter, after declining 5.7 per cent in the preceding quarter.
Singapore last sank into a recession - defined as two consecutive quarters of economic contractions - in 2002 in a global downturn after the Sept 11, 2001 attack. -- REUTERS
Singapore's Prime Minister Lee Hsien Loong said on Friday the city-state had fallen into recession and that the economic outlook over the next 12 months was uncertain.
'The current global financial turmoil has clouded Singapore's economic outlook. Our economy has gone into recession,' Mr Lee said at the opening of a research and development facility.'We must expect slower growth and greater uncertainty at least over the next year.'
Singapore last week eased monetary policy for the first time in five years after advance data showed its trade-reliant economy contracted for a second consecutive quarter in the July-September period.
The city-state's economy shrank an annualised, seasonally adjusted 6.3 per cent in the third quarter, after declining 5.7 per cent in the preceding quarter.
Singapore last sank into a recession - defined as two consecutive quarters of economic contractions - in 2002 in a global downturn after the Sept 11, 2001 attack. -- REUTERS
Falling Rents May Take Shine Off S-Reits
Source : The Business Times, October 17, 2008
SINGAPORE-LISTED real estate investment trusts, or S-Reits, are now finding favour with analysts.
UOB Kay Hian, for example, upgraded the S-Reit sector from market weight to overweight earlier this month due to the 'overwhelmingly attractive' yield spread. JPMorgan similarly said in a recent report that the Reit model is not broken. The research firm has 'buy' calls on seven S-Reits. Analysts from other research firms have also been recently issuing 'buy' calls on several Reits here.
This is quite a reversal from a year ago, when the S-Reit sector was considered unattractive. Many Reits were facing concerns about their ability to refinance debt amid the credit crunch. Acquisitions, which had been fuelling growth, were also becoming harder to come by.
But now, some of these Reits are seen to be sources of stable, visible and recurrent income in uncertain times. Yields are also at historic highs as stock prices continue their downtrend.
Analysts are now saying that debt refinancing will not be an issue for all Reits. For one, strong sponsors could act as lenders of last resort for Reits and prevent any fire sale of assets. Retail and industrial Reits are the most exposed to refinancing risk. So investors are encouraged to buy those Reits with strong sponsors and avoid certain sectors.
But the one thing that has been largely overlooked in most analyses is the impact of falling rents.
Rents will fall across most sectors - that much is certain. Office trusts, such as K-Reit Asia and CapitaCommercial Trust, will be among the first to be hit.
The massive upheaval in the banking system means that financial institutions are unlikely to continue with any expansion plans yet to be executed. Other businesses will have reduced access to bank credit and scale back expansion plans. With a reduced appetite for space and looming new office supply coming onstream in 2010, landlords are losing their bargaining power and rents will inevitably fall.
Kim Eng Research, for one, expects prime Grade A office rents to fall by up to 15 per cent by the end of 2009.
Rentals for retail Reits will also fall. Already, there are signs from retailers in Reit properties that they cannot afford the high rents being charged at the moment. Retail spot rents are being hit by slowing economic growth and falling visitor arrivals amid increasing supply. Goldman Sachs yesterday said that it expects retail rental rates to fall 15 per cent between now and 2010.
Reits here typically renew their leases on a revolving basis, with a certain fraction of tenants re-signing every year. So those tenants who signed three-year leases last year could be stuck forking out high rentals for another year or two. But tenants renewing their leases soon will ask for lower rents. In a couple of years - say, by 2010 - the bulk of a Reit's tenants could be paying lower rents, leading to lower rental incomes for S-Reits. Their yields are not likely to look so attractive then.
Analysts are now beginning to factor falling rents into their calculations. Goldman Sachs yesterday downgraded K-Reit from 'buy' to 'neutral'. 'We have been positive on K-Reit, given its attractive pricing relative to book value and our expectation that organic growth for the next two years at least will still find good support from positive rental reversions,' said the firm in a report. 'However, we underestimated the focus by investors on the direction of spot rents and were not sufficiently conservative in terms of how far Singapore office rents could decline from their peak.'
However, even with falling rents factored in, S-Reits can be attractive, some maintain. After imposing worst-case operating assumptions for each property sub-segment, including a blowout of financing costs and accelerating the rental reversions to the entire portfolio, Daiwa Institute of Research's David Lum still estimates that all S-Reits could deliver recurrent worst-case yields of at least 6 per cent per year.
But whether making 'buy' or 'sell' calls for S-Reits, it's important to factor in the impact that falling rents will have on S-Reit rental incomes over the next 2-3 years. Refinancing is not the only concern.
SINGAPORE-LISTED real estate investment trusts, or S-Reits, are now finding favour with analysts.
UOB Kay Hian, for example, upgraded the S-Reit sector from market weight to overweight earlier this month due to the 'overwhelmingly attractive' yield spread. JPMorgan similarly said in a recent report that the Reit model is not broken. The research firm has 'buy' calls on seven S-Reits. Analysts from other research firms have also been recently issuing 'buy' calls on several Reits here.
This is quite a reversal from a year ago, when the S-Reit sector was considered unattractive. Many Reits were facing concerns about their ability to refinance debt amid the credit crunch. Acquisitions, which had been fuelling growth, were also becoming harder to come by.
But now, some of these Reits are seen to be sources of stable, visible and recurrent income in uncertain times. Yields are also at historic highs as stock prices continue their downtrend.
Analysts are now saying that debt refinancing will not be an issue for all Reits. For one, strong sponsors could act as lenders of last resort for Reits and prevent any fire sale of assets. Retail and industrial Reits are the most exposed to refinancing risk. So investors are encouraged to buy those Reits with strong sponsors and avoid certain sectors.
But the one thing that has been largely overlooked in most analyses is the impact of falling rents.
Rents will fall across most sectors - that much is certain. Office trusts, such as K-Reit Asia and CapitaCommercial Trust, will be among the first to be hit.
The massive upheaval in the banking system means that financial institutions are unlikely to continue with any expansion plans yet to be executed. Other businesses will have reduced access to bank credit and scale back expansion plans. With a reduced appetite for space and looming new office supply coming onstream in 2010, landlords are losing their bargaining power and rents will inevitably fall.
Kim Eng Research, for one, expects prime Grade A office rents to fall by up to 15 per cent by the end of 2009.
Rentals for retail Reits will also fall. Already, there are signs from retailers in Reit properties that they cannot afford the high rents being charged at the moment. Retail spot rents are being hit by slowing economic growth and falling visitor arrivals amid increasing supply. Goldman Sachs yesterday said that it expects retail rental rates to fall 15 per cent between now and 2010.
Reits here typically renew their leases on a revolving basis, with a certain fraction of tenants re-signing every year. So those tenants who signed three-year leases last year could be stuck forking out high rentals for another year or two. But tenants renewing their leases soon will ask for lower rents. In a couple of years - say, by 2010 - the bulk of a Reit's tenants could be paying lower rents, leading to lower rental incomes for S-Reits. Their yields are not likely to look so attractive then.
Analysts are now beginning to factor falling rents into their calculations. Goldman Sachs yesterday downgraded K-Reit from 'buy' to 'neutral'. 'We have been positive on K-Reit, given its attractive pricing relative to book value and our expectation that organic growth for the next two years at least will still find good support from positive rental reversions,' said the firm in a report. 'However, we underestimated the focus by investors on the direction of spot rents and were not sufficiently conservative in terms of how far Singapore office rents could decline from their peak.'
However, even with falling rents factored in, S-Reits can be attractive, some maintain. After imposing worst-case operating assumptions for each property sub-segment, including a blowout of financing costs and accelerating the rental reversions to the entire portfolio, Daiwa Institute of Research's David Lum still estimates that all S-Reits could deliver recurrent worst-case yields of at least 6 per cent per year.
But whether making 'buy' or 'sell' calls for S-Reits, it's important to factor in the impact that falling rents will have on S-Reit rental incomes over the next 2-3 years. Refinancing is not the only concern.
Sands May Spin Macau Retail Into Property Fund
Source : The Business Times, October 16, 2008
But it says it's under no pressure for a fire sale despite funding problems
(MACAU) Las Vegas Sands Corp might spin off billions of dollars of Macau retail assets into a property fund, but is under no pressure for a quick sale despite problems funding ambitious casino expansion, an executive said.
Massive space: Las Vegas Sands has 1.3 million square feet of leased retail space at its Grand Canal Shoppes, attached to the Venetian Macao casino, and at the newly opened Four Seasons Hotel next door
The company, which runs the giant Venetian Macao casino and is building more hotels and casinos in the territory, floated the idea of selling its shops into a listed property trust a couple of years ago.
But with stock markets tanking in the last year, hitting real estate investment trusts (Reits) hard, Las Vegas Sands is now considering packaging the property into a fund for institutional investors.
'It's something we'll look at, whether it's a wholesale fund or a Reit,' David Sylvester, the company's head of retail in Asia, told Reuters in an interview.
Las Vegas Sands has 1.3 million square feet of leased retail space at its Grand Canal Shoppes, attached to the Venetian casino, and at the newly opened Four Seasons Hotel next door.
The firm is also building another 850,000-sq-ft shopping centre, scheduled to open by the end of 2009 on the Cotai Strip - reclaimed land that Las Vegas Sands chairman Sheldon Adelson has vowed to turn into a 'neon alley' of hotels, casinos and entertainment venues.
'We're talking multiples of billions of dollars,' Mr Sylvester said, declining to give an exact value of what he thought the retail assets were worth. He added that Las Vegas Sands would retain a controlling stake in any fund.
'We don't want to sell them off because we want involvement,' he said. 'Obviously we'd like to have a majority share so we can manage it.'
Mr Adelson, the son of a cab driver who built a casino empire in Las Vegas before turning to the Chinese gambling enclave of Macau, injected his own capital into Las Vegas Sands last month through the purchase of US$475 million of convertible senior notes.
He told Reuters at the time that Las Vegas Sands was reconsidering efforts to obtain US$5.25 billion in financing for the Cotai Strip and was likely to instead seek smaller-scale financing for individual projects.
Analysts say the firm needs about US$1.5 billion to complete projects on two plots of land on the Cotai Strip, and is likely to find refinancing of its Macau debt difficult, or at least expensive.
'I know that funding is an issue, and we're sorting it out as a group,' Mr Sylvester said. 'But it's not creating a fire sale.'
However, investors would be eager to buy into the retail assets, Mr Sylvester added.
'All the way through we've had property investors interested,' he said. 'It's blue-chip retail in Asia, which is hard to get your hands on because it's closely held.'
With the likes of De Beers, Chanel and Louis Vuitton as tenants, the Four Seasons is raking in US$160 per sq ft in retail rent each year, while the Venetian Macao is taking US$130.
Retail makes up about a fifth of total revenue at the Venetian Macao. For the full year the Venetian Macao's revenue is forecast to reach US$1.97 billion, according to JPMorgan analysts.
Macau's casino revenue had been growing at break-neck speed since 2002, when it allowed foreign operators to compete with a former monopoly owner Stanley Ho.
But revenue fell 3.5 per cent in September from a year earlier because the Chinese authorities restricted visa approvals for people travelling to the former Portuguese enclave, the only place in China where casinos are legal.
Beijing has become increasingly nervous about Macau because of its impact on society and its use by corrupt officials to launder money, analysts say.
Mr Sylvester said the Venetian was better placed than most casinos, because only 27 per cent of its visitors were from mainland China. 'With the integrated resort model, based on a three-night stay, we're deliberately going for the broad Asian market.'
The average stay now for those who book a hotel room at the Venetian Macao is just under two nights, Mr Sylvester added. -- Reuters
But it says it's under no pressure for a fire sale despite funding problems
(MACAU) Las Vegas Sands Corp might spin off billions of dollars of Macau retail assets into a property fund, but is under no pressure for a quick sale despite problems funding ambitious casino expansion, an executive said.
Massive space: Las Vegas Sands has 1.3 million square feet of leased retail space at its Grand Canal Shoppes, attached to the Venetian Macao casino, and at the newly opened Four Seasons Hotel next doorThe company, which runs the giant Venetian Macao casino and is building more hotels and casinos in the territory, floated the idea of selling its shops into a listed property trust a couple of years ago.
But with stock markets tanking in the last year, hitting real estate investment trusts (Reits) hard, Las Vegas Sands is now considering packaging the property into a fund for institutional investors.
'It's something we'll look at, whether it's a wholesale fund or a Reit,' David Sylvester, the company's head of retail in Asia, told Reuters in an interview.
Las Vegas Sands has 1.3 million square feet of leased retail space at its Grand Canal Shoppes, attached to the Venetian casino, and at the newly opened Four Seasons Hotel next door.
The firm is also building another 850,000-sq-ft shopping centre, scheduled to open by the end of 2009 on the Cotai Strip - reclaimed land that Las Vegas Sands chairman Sheldon Adelson has vowed to turn into a 'neon alley' of hotels, casinos and entertainment venues.
'We're talking multiples of billions of dollars,' Mr Sylvester said, declining to give an exact value of what he thought the retail assets were worth. He added that Las Vegas Sands would retain a controlling stake in any fund.
'We don't want to sell them off because we want involvement,' he said. 'Obviously we'd like to have a majority share so we can manage it.'
Mr Adelson, the son of a cab driver who built a casino empire in Las Vegas before turning to the Chinese gambling enclave of Macau, injected his own capital into Las Vegas Sands last month through the purchase of US$475 million of convertible senior notes.
He told Reuters at the time that Las Vegas Sands was reconsidering efforts to obtain US$5.25 billion in financing for the Cotai Strip and was likely to instead seek smaller-scale financing for individual projects.
Analysts say the firm needs about US$1.5 billion to complete projects on two plots of land on the Cotai Strip, and is likely to find refinancing of its Macau debt difficult, or at least expensive.
'I know that funding is an issue, and we're sorting it out as a group,' Mr Sylvester said. 'But it's not creating a fire sale.'
However, investors would be eager to buy into the retail assets, Mr Sylvester added.
'All the way through we've had property investors interested,' he said. 'It's blue-chip retail in Asia, which is hard to get your hands on because it's closely held.'
With the likes of De Beers, Chanel and Louis Vuitton as tenants, the Four Seasons is raking in US$160 per sq ft in retail rent each year, while the Venetian Macao is taking US$130.
Retail makes up about a fifth of total revenue at the Venetian Macao. For the full year the Venetian Macao's revenue is forecast to reach US$1.97 billion, according to JPMorgan analysts.
Macau's casino revenue had been growing at break-neck speed since 2002, when it allowed foreign operators to compete with a former monopoly owner Stanley Ho.
But revenue fell 3.5 per cent in September from a year earlier because the Chinese authorities restricted visa approvals for people travelling to the former Portuguese enclave, the only place in China where casinos are legal.
Beijing has become increasingly nervous about Macau because of its impact on society and its use by corrupt officials to launder money, analysts say.
Mr Sylvester said the Venetian was better placed than most casinos, because only 27 per cent of its visitors were from mainland China. 'With the integrated resort model, based on a three-night stay, we're deliberately going for the broad Asian market.'
The average stay now for those who book a hotel room at the Venetian Macao is just under two nights, Mr Sylvester added. -- Reuters
UK Housing Prices May Decline Further
Source : The Business Times, October 16, 2008
Market to hit near bottom in late 2009: Knight Frank
(EDINBURGH) UK house prices may fall another 15 per cent by the end of 2009 following a similar drop in the past year as values slide back to 2003 levels, Knight Frank LLP said.
The slump will leave five million properties, or 24 per cent of the private-housing market, with a lower value than the purchase price, the London-based real-estate broker said in an e-mailed statement yesterday. Average prices won't recover to last year's peak until 2015.
'Our forecast suggests that we will be closing in on the bottom of the market during late 2009 or early 2010,' Liam Bailey, head of residential research at Knight Frank, said in the statement. 'We are now at least halfway through the process of price falls, with around 15 per cent of an estimated 30 per cent peak-to-trough decline already factored into prices.' Prices are dropping as the UK economy grows at a slower rate and banks grapple with the fallout from the credit crisis. Lenders approved 32,000 loans for house purchases in August, the least since comparable data began nine years ago, the Bank of England said on Sept 29.
The revival in prices will be led by luxury properties in central London, where values may get back to last year's peak by 2012, when the Olympics will be held in the UK capital. The recovery may take until 2019 in Northern Ireland, the broker said.
'The winners in this market will be anyone with equity who can buy over the next six months,' said Mr Bailey. 'Those requiring significant finance will be unlikely to be quick enough on their feet. Vulture funds and cash-rich individuals will be the first to benefit.' The value of newly-built apartments and houses has fallen 50 per cent or more in some regional cities, the broker said. 'It looks as if price declines are already coming to a close here.'
The price falls will be particularly welcomed by people who had given up hope of ever being able to buy their own home, said Knight Frank.
The biggest drop in property in values this year and next will be in Northern Ireland and Wales followed by London, said Knight Frank. The smallest declines will be in the north of England and Scotland, it said.
Development land values may slump 15 per cent next year after plunging 33 per cent from their peak already, said Knight Frank.
Agricultural land prices may drop 10 per cent in 2009 after peaking this year.
Knight Frank is Europe's biggest closely held property broker by revenue. -- Bloomberg
Market to hit near bottom in late 2009: Knight Frank
(EDINBURGH) UK house prices may fall another 15 per cent by the end of 2009 following a similar drop in the past year as values slide back to 2003 levels, Knight Frank LLP said.
The slump will leave five million properties, or 24 per cent of the private-housing market, with a lower value than the purchase price, the London-based real-estate broker said in an e-mailed statement yesterday. Average prices won't recover to last year's peak until 2015.
'Our forecast suggests that we will be closing in on the bottom of the market during late 2009 or early 2010,' Liam Bailey, head of residential research at Knight Frank, said in the statement. 'We are now at least halfway through the process of price falls, with around 15 per cent of an estimated 30 per cent peak-to-trough decline already factored into prices.' Prices are dropping as the UK economy grows at a slower rate and banks grapple with the fallout from the credit crisis. Lenders approved 32,000 loans for house purchases in August, the least since comparable data began nine years ago, the Bank of England said on Sept 29.
The revival in prices will be led by luxury properties in central London, where values may get back to last year's peak by 2012, when the Olympics will be held in the UK capital. The recovery may take until 2019 in Northern Ireland, the broker said.
'The winners in this market will be anyone with equity who can buy over the next six months,' said Mr Bailey. 'Those requiring significant finance will be unlikely to be quick enough on their feet. Vulture funds and cash-rich individuals will be the first to benefit.' The value of newly-built apartments and houses has fallen 50 per cent or more in some regional cities, the broker said. 'It looks as if price declines are already coming to a close here.'
The price falls will be particularly welcomed by people who had given up hope of ever being able to buy their own home, said Knight Frank.
The biggest drop in property in values this year and next will be in Northern Ireland and Wales followed by London, said Knight Frank. The smallest declines will be in the north of England and Scotland, it said.
Development land values may slump 15 per cent next year after plunging 33 per cent from their peak already, said Knight Frank.
Agricultural land prices may drop 10 per cent in 2009 after peaking this year.
Knight Frank is Europe's biggest closely held property broker by revenue. -- Bloomberg
UK Commercial Property Returns Fall
Source : The Business Times, October 16, 2008
(EDINBURGH) Commercial property returns in the UK, Europe's largest market for real-estate investment, fell in the 12 months to Sept 30 at the fastest rate in at least 21 years as price declines accelerated.
The annualised loss on investments in offices, shops and warehouses was 18 per cent, the biggest since Investment Property Databank Ltd started tracking the market in 1987, the London-based company said in an e-mailed statement on Tuesday. September's 2.4 per cent loss was the worst monthly return this year.
Rents and capital values dropped after banks granted fewer loans to investors as the subprime mortgages market collapsed. Demand for commercial real estate was also crimped by job cuts in the financial-services industry.
'The signs of weakening occupier demand are now becoming clearly visible,' Ian Cullen, co-founder of IPD, said in the statement.
Capital values dropped 2.9 per cent in September, led by stores. That was the 15th straight monthly decline and it brought the drop for this year to 14 per cent.
The total loss on commercial property returns for the year, after taking rental income into account, is more than 10 per cent, compared with a 22 per cent slump in the FTSE All-Share Index and a 3.9 per cent return on UK government bonds. -- Bloomberg
(EDINBURGH) Commercial property returns in the UK, Europe's largest market for real-estate investment, fell in the 12 months to Sept 30 at the fastest rate in at least 21 years as price declines accelerated.
The annualised loss on investments in offices, shops and warehouses was 18 per cent, the biggest since Investment Property Databank Ltd started tracking the market in 1987, the London-based company said in an e-mailed statement on Tuesday. September's 2.4 per cent loss was the worst monthly return this year.
Rents and capital values dropped after banks granted fewer loans to investors as the subprime mortgages market collapsed. Demand for commercial real estate was also crimped by job cuts in the financial-services industry.
'The signs of weakening occupier demand are now becoming clearly visible,' Ian Cullen, co-founder of IPD, said in the statement.
Capital values dropped 2.9 per cent in September, led by stores. That was the 15th straight monthly decline and it brought the drop for this year to 14 per cent.
The total loss on commercial property returns for the year, after taking rental income into account, is more than 10 per cent, compared with a 22 per cent slump in the FTSE All-Share Index and a 3.9 per cent return on UK government bonds. -- Bloomberg
70% Of Danga Island Villas Snapped Up
Source : The Business Times, October 16, 2008
(JOHOR BARU) Nearly 70 per cent of the luxury waterfront villas on Danga Island, located within Iskandar Malaysia, have been taken up by buyers from all over the world even though the project will only be launched in November.
Ready buyers: The 152 villas of the Danga Island Villas project, located within Iskandar Malaysia, are priced between RM4 million and RM15 million each
Danga Bay Sdn Bhd chief executive officer Lim Kang Ho said the Danga Island Villas managed to secure RM230 million (S$105 million) sales at the Cityscape international property show in Dubai last week.
Investors' bullish perception on the project was further testament of their confidence in Iskandar Malaysia and Danga Bay, he said.
'Despite the prevailing global economic conditions, they are still willing to spend and invest in our project, reflecting their confidence in Danga Bay and Iskandar Malaysia backed by the government,' he told a media conference.
Mr Lim said Danga Bay Sdn Bhd had not deferred any project planned for Danga Bay due to the global economic uncertainties.
Mr Lim also said the value of completed projects at Danga Bay, for example, apartments, commercial blocks and the Casa Almyra residential development, had doubled, further proving its lure to investors.
The Danga Island Villas project, worth RM900 million in gross development value, is the first high-end waterfront lifestyle living concept in Iskandar Malaysia, straddling over 45 acres of a natural island off Danga Bay.
The 152 villas, which come complete with private berths for yachts, are priced between RM4 million and RM15 million each.
Of the 70 per cent Danga Island Villas units sold todate, Mr Lim said 27 per cent of the buyers were Johoreans, 28 per cent from those living in Kuala Lumpur and Penang and 6 per cent from Sabah and Sarawak.
Buyers from Middle East countries, India, Pakistan, Canada and Spain accounted for 38 per cent, 5 per cent from Singapore and 2 per cent from Hong Kong.
The project is targeted primarily at wealthy retirees, jetsetting businessmen, expatriate families and the well-heeled from Malaysia and the region keen to make Iskandar their home.
Other upcoming property developments in Danga Bay are refurbishment of the Danga Bayleaf Restaurant into a RM30 million convention hall and construction of office blocks.
A budget hotel and a six-star luxury hotel are on the drawing board, he added. -- Bernama
(JOHOR BARU) Nearly 70 per cent of the luxury waterfront villas on Danga Island, located within Iskandar Malaysia, have been taken up by buyers from all over the world even though the project will only be launched in November.
Ready buyers: The 152 villas of the Danga Island Villas project, located within Iskandar Malaysia, are priced between RM4 million and RM15 million eachDanga Bay Sdn Bhd chief executive officer Lim Kang Ho said the Danga Island Villas managed to secure RM230 million (S$105 million) sales at the Cityscape international property show in Dubai last week.
Investors' bullish perception on the project was further testament of their confidence in Iskandar Malaysia and Danga Bay, he said.
'Despite the prevailing global economic conditions, they are still willing to spend and invest in our project, reflecting their confidence in Danga Bay and Iskandar Malaysia backed by the government,' he told a media conference.
Mr Lim said Danga Bay Sdn Bhd had not deferred any project planned for Danga Bay due to the global economic uncertainties.
Mr Lim also said the value of completed projects at Danga Bay, for example, apartments, commercial blocks and the Casa Almyra residential development, had doubled, further proving its lure to investors.
The Danga Island Villas project, worth RM900 million in gross development value, is the first high-end waterfront lifestyle living concept in Iskandar Malaysia, straddling over 45 acres of a natural island off Danga Bay.
The 152 villas, which come complete with private berths for yachts, are priced between RM4 million and RM15 million each.
Of the 70 per cent Danga Island Villas units sold todate, Mr Lim said 27 per cent of the buyers were Johoreans, 28 per cent from those living in Kuala Lumpur and Penang and 6 per cent from Sabah and Sarawak.
Buyers from Middle East countries, India, Pakistan, Canada and Spain accounted for 38 per cent, 5 per cent from Singapore and 2 per cent from Hong Kong.
The project is targeted primarily at wealthy retirees, jetsetting businessmen, expatriate families and the well-heeled from Malaysia and the region keen to make Iskandar their home.
Other upcoming property developments in Danga Bay are refurbishment of the Danga Bayleaf Restaurant into a RM30 million convention hall and construction of office blocks.
A budget hotel and a six-star luxury hotel are on the drawing board, he added. -- Bernama
Former School Site Up For Tender In Bukit Timah
Source : The Straits Times, Oct 14, 2008
A PLOT of land in Upper Bukit Timah that can be used for commercial purposes or as a foreign system school will go up for tender tomorrow.
The built-up site on Jalan Seh Chuan was occupied by the Jurong Garden School, and Seh Chuan High School before that.
It is close to the Canadian International School, the German European School Singapore and the Beauty World Shopping Centre.
It has an area of 3,464 sq m - about half the size of a football field. The building on it has a gross floor area of 4,221 sq m.
Tenancy is for an initial period of three years with a renewal option for two further three-year terms.
The Singapore Land Authority (SLA) has received about five inquiries for the site but declined to reveal approximate figures for the tender.
Bidders have until 11am on Nov 5 to lodge tenders.
The site showround will be on Oct 23.
The SLA has awarded more than 40 properties for educational use since April last year.
For more details, consult SLA's State Property and Information Online (SPIO) website at www.spio.sla.gov.sg or call 6323-9154.
A PLOT of land in Upper Bukit Timah that can be used for commercial purposes or as a foreign system school will go up for tender tomorrow.
The built-up site on Jalan Seh Chuan was occupied by the Jurong Garden School, and Seh Chuan High School before that.
It is close to the Canadian International School, the German European School Singapore and the Beauty World Shopping Centre.
It has an area of 3,464 sq m - about half the size of a football field. The building on it has a gross floor area of 4,221 sq m.
Tenancy is for an initial period of three years with a renewal option for two further three-year terms.
The Singapore Land Authority (SLA) has received about five inquiries for the site but declined to reveal approximate figures for the tender.
Bidders have until 11am on Nov 5 to lodge tenders.
The site showround will be on Oct 23.
The SLA has awarded more than 40 properties for educational use since April last year.
For more details, consult SLA's State Property and Information Online (SPIO) website at www.spio.sla.gov.sg or call 6323-9154.
Wheelock Stake In SC Global Rises To 15%
Source : The Business Times, October 16, 2008
WHEELOCK Properties has lifted its stake in SC Global Developments to 15 per cent from 13.09 per cent, SC Global said yesterday.
Wheelock increased its stake in the open market between Feb 4 and Oct 15 this year. The increase was also due to a reduction in SC Global shares on issue after a recent buy-back exercise. Wheelock made its purchases through wholly owned subsidiary Ardesia Developments.
SC Global chief Simon Cheong is the company's largest shareholder. On Oct 8, he had a deemed stake of 53.513 per cent and a direct stake of 0.155 per cent, according to a filing by SC Global with the Singapore Exchange that day.
In September, he upped his stake in the company, buying 7.79 million shares at 75 cents each in a married deal, which worked out to an investment of $5.8 million in all. David Tsang, SC Global's executive director and director of corporate finance, also bought 500,000 shares at 75 cents apiece.
The two directors bought the shares in their individual capacity. Mr Cheong said then that he and Mr Tsang had bought into the company because they saw value in it.
SC Global shares lost one cent to close at 48.5 cents yesterday, while Wheelock shares shed 3.5 cents to end at 83 cents.
WHEELOCK Properties has lifted its stake in SC Global Developments to 15 per cent from 13.09 per cent, SC Global said yesterday.
Wheelock increased its stake in the open market between Feb 4 and Oct 15 this year. The increase was also due to a reduction in SC Global shares on issue after a recent buy-back exercise. Wheelock made its purchases through wholly owned subsidiary Ardesia Developments.SC Global chief Simon Cheong is the company's largest shareholder. On Oct 8, he had a deemed stake of 53.513 per cent and a direct stake of 0.155 per cent, according to a filing by SC Global with the Singapore Exchange that day.
In September, he upped his stake in the company, buying 7.79 million shares at 75 cents each in a married deal, which worked out to an investment of $5.8 million in all. David Tsang, SC Global's executive director and director of corporate finance, also bought 500,000 shares at 75 cents apiece.
The two directors bought the shares in their individual capacity. Mr Cheong said then that he and Mr Tsang had bought into the company because they saw value in it.
SC Global shares lost one cent to close at 48.5 cents yesterday, while Wheelock shares shed 3.5 cents to end at 83 cents.
Parkway Centre For Sale For About $1,000 psf ppr
Source : The Business Times, October 16, 2008
Price is 15% higher than Katong Mall, which was sold in July
PARKWAY Centre, which is controlled by Hong Kong-listed Far East Holdings International, has been put up for sale with an indicative price of about $160 million. This works out to about $1,000 per square foot per plot ratio, around 15 per cent higher than the $865 psf ppr for Katong Mall, which was sold in July.
Jones Lang LaSalle is marketing the site and its associate director (investments), David Batchelor, said that while the market is slowing down, he does expect a deal because Parkway Centre is one of only two private commercial developments available in Marine Parade Central for investors to consider. The other is Parkway Parade. Mr Batchelor added that local and foreign investors and private equity funds have already shown interest.
The 99-year leasehold Parkway Centre has three retail shop units and 107 office units. Mr Batchelor said that the retail rental is $25-30 psf per month and the office rental, $4-5 psf per month. Far East Holdings International (which is not related to Far East Organization here) owns 40 per cent of Parkway Centre. Mr Batchelor said that approval from 80 per cent of the stakeholders in Parkway Centre has been received.
Under the Master Plan, the 18,665 sq ft site is zoned for commercial use and has a gross plot ratio of up to 3.2. Based on the Written Permission dated Nov 21, 1985, it also has the potential to be redeveloped into an office-cum-retail development with a gross floor area (GFA) of up to 157,625 sq ft, subject to relevant authorities' approval and payment of differential premium for the top-up of lease if applicable. The differential premium is estimated to be about $16.6 million.
Price is 15% higher than Katong Mall, which was sold in July
PARKWAY Centre, which is controlled by Hong Kong-listed Far East Holdings International, has been put up for sale with an indicative price of about $160 million. This works out to about $1,000 per square foot per plot ratio, around 15 per cent higher than the $865 psf ppr for Katong Mall, which was sold in July.
Jones Lang LaSalle is marketing the site and its associate director (investments), David Batchelor, said that while the market is slowing down, he does expect a deal because Parkway Centre is one of only two private commercial developments available in Marine Parade Central for investors to consider. The other is Parkway Parade. Mr Batchelor added that local and foreign investors and private equity funds have already shown interest.
The 99-year leasehold Parkway Centre has three retail shop units and 107 office units. Mr Batchelor said that the retail rental is $25-30 psf per month and the office rental, $4-5 psf per month. Far East Holdings International (which is not related to Far East Organization here) owns 40 per cent of Parkway Centre. Mr Batchelor said that approval from 80 per cent of the stakeholders in Parkway Centre has been received.
Under the Master Plan, the 18,665 sq ft site is zoned for commercial use and has a gross plot ratio of up to 3.2. Based on the Written Permission dated Nov 21, 1985, it also has the potential to be redeveloped into an office-cum-retail development with a gross floor area (GFA) of up to 157,625 sq ft, subject to relevant authorities' approval and payment of differential premium for the top-up of lease if applicable. The differential premium is estimated to be about $16.6 million.
Lian Beng Posts Higher Q1 Receivables
Source : The Business Times, October 16, 2008
CONTRACTOR Lian Beng Group yesterday said that trade receivables has increased $11.8 million 'as the group has yet to receive payments for some of its progress billings'. This was despite a fall in revenue for its first quarter to Aug 31, to $36.2 million from $42 million a year ago. Net profit, however, doubled to $2 million from $998,000 on lower cost of goods sold. From the year ago period, earnings per share rose to 0.36 of a cent from 0.21 cent.
Explaining the revenue drop, Lian Beng said that several construction projects have not attained the minimum percentage of completion in order for revenue to be recognised. Likewise, profits rose on higher recognition of several construction projects.
The company said that it held cash on hand of $6 million, up from $4 million a year ago. However, it had overdrafts of $19.4 million, slightly more than $18.3 million last year. Net cash from operating activities came to $10 million, from negative $2.46 million a year ago, on higher payables due to advance payments on construction projects.
CONTRACTOR Lian Beng Group yesterday said that trade receivables has increased $11.8 million 'as the group has yet to receive payments for some of its progress billings'. This was despite a fall in revenue for its first quarter to Aug 31, to $36.2 million from $42 million a year ago. Net profit, however, doubled to $2 million from $998,000 on lower cost of goods sold. From the year ago period, earnings per share rose to 0.36 of a cent from 0.21 cent.Explaining the revenue drop, Lian Beng said that several construction projects have not attained the minimum percentage of completion in order for revenue to be recognised. Likewise, profits rose on higher recognition of several construction projects.
The company said that it held cash on hand of $6 million, up from $4 million a year ago. However, it had overdrafts of $19.4 million, slightly more than $18.3 million last year. Net cash from operating activities came to $10 million, from negative $2.46 million a year ago, on higher payables due to advance payments on construction projects.
Flood Of New Homes But Sept Sales Up Just 18%
Source : The Business Times, October 16, 2008
Developers quadrupled the number of new homes for sale last month, but units sold rose only 18 per cent from August.
Accompanying the less-than-satisfactory take-up were lower prices in some areas, according to Urban Redevelopment Authority data released yesterday.
The number of units sold recovered slightly to 376 last month from 320 in August, which coincided with the traditionally slow Hungry Ghost month.
A total of 767 new units were put up for sale - including 258 in the core central region (CCR) where sentiment is weakest.
Given the big jump from 194 in August, some analysts say that this could be due to smaller developers with less holding power launching units even during a weak market.
'They could be pushing out projects in the CCR, even though sentiment is bad in the high-end segment, because they have no choice,' one analyst said.
Take-up was especially poor in the CCR. The region accounted for 34 per cent of units launched last month but only 19 per cent of sales.
On the other hand, September's jump in launch volume could be because some projects were withheld during the Hungry Ghost month, said Nicholas Mak, director of research and consultancy at Knight Frank.
Last month also saw prices ease slightly in areas such as Bukit Timah and Newton. CBRE said that some units at Madison Residences and Floridian along Bukit Timah Road were sold at median prices of $1,801 per square foot (psf) and $1,443 psf - 10 per cent lower than a year ago.
Similarly, Viva in Thomson Road and Park Infinia in Wee Nam Road achieved $1,555 psf and $1,501 psf - about 5 per cent less than comparable projects early this year, CBRE noted.
Preliminary URA estimates show that the Q3 residential price index fell 1.8 per cent, after climbing 3.9 per cent in the first half.
But many developers are holding prices firm. 'There is still no broad-based decline in home prices based on the September sales, although news about Lehman Brothers and AIG has dampened sentiment,' said Li Hiaw Ho, executive director at CBRE Research.
Sales volume last month was driven mostly by new launches such as Concourse Skyline (68 units sold), The Peak At Balmeg (47), Traselveo (41), Viva (19) and Mulberry Tree (13). Most of the units launched and sold were in the rest of central region (RCR).
Analysts said that buyers are looking at mid-range private properties - even more than at mass-market homes. The RCR, where most mid-tier private homes are located, accounted for 48 per cent of launches and 60 per cent of sales last month.
Colliers director for research and advisory Tay Huey Ying said that sales volume is likely to dip to 250-300 this month. 'The mood in October will likely be sombre due to the shockwaves from recent events in the global financial industry,' she said. 'Hence, developers's launch volume is likely to come in lower than September's but still higher than August's.'
Developers will not cut asking prices drastically in the next few months, analysts reckon. But small falls can be expected. Colliers, for example, expects prices of high-end and luxury homes to continue to slide by up to 5 per cent in Q4, while prices of mid-tier homes could fall up to 3 per cent.
Ms Tay said that prices of mass-market homes can be expected to hold firm or weaken less than 2 per cent in Q4.
Developers quadrupled the number of new homes for sale last month, but units sold rose only 18 per cent from August.
Accompanying the less-than-satisfactory take-up were lower prices in some areas, according to Urban Redevelopment Authority data released yesterday.
The number of units sold recovered slightly to 376 last month from 320 in August, which coincided with the traditionally slow Hungry Ghost month.
A total of 767 new units were put up for sale - including 258 in the core central region (CCR) where sentiment is weakest.
Given the big jump from 194 in August, some analysts say that this could be due to smaller developers with less holding power launching units even during a weak market.
'They could be pushing out projects in the CCR, even though sentiment is bad in the high-end segment, because they have no choice,' one analyst said.
Take-up was especially poor in the CCR. The region accounted for 34 per cent of units launched last month but only 19 per cent of sales.
On the other hand, September's jump in launch volume could be because some projects were withheld during the Hungry Ghost month, said Nicholas Mak, director of research and consultancy at Knight Frank.
Last month also saw prices ease slightly in areas such as Bukit Timah and Newton. CBRE said that some units at Madison Residences and Floridian along Bukit Timah Road were sold at median prices of $1,801 per square foot (psf) and $1,443 psf - 10 per cent lower than a year ago.
Similarly, Viva in Thomson Road and Park Infinia in Wee Nam Road achieved $1,555 psf and $1,501 psf - about 5 per cent less than comparable projects early this year, CBRE noted.
Preliminary URA estimates show that the Q3 residential price index fell 1.8 per cent, after climbing 3.9 per cent in the first half.
But many developers are holding prices firm. 'There is still no broad-based decline in home prices based on the September sales, although news about Lehman Brothers and AIG has dampened sentiment,' said Li Hiaw Ho, executive director at CBRE Research.
Sales volume last month was driven mostly by new launches such as Concourse Skyline (68 units sold), The Peak At Balmeg (47), Traselveo (41), Viva (19) and Mulberry Tree (13). Most of the units launched and sold were in the rest of central region (RCR).
Analysts said that buyers are looking at mid-range private properties - even more than at mass-market homes. The RCR, where most mid-tier private homes are located, accounted for 48 per cent of launches and 60 per cent of sales last month.
Colliers director for research and advisory Tay Huey Ying said that sales volume is likely to dip to 250-300 this month. 'The mood in October will likely be sombre due to the shockwaves from recent events in the global financial industry,' she said. 'Hence, developers's launch volume is likely to come in lower than September's but still higher than August's.'
Developers will not cut asking prices drastically in the next few months, analysts reckon. But small falls can be expected. Colliers, for example, expects prices of high-end and luxury homes to continue to slide by up to 5 per cent in Q4, while prices of mid-tier homes could fall up to 3 per cent.
Ms Tay said that prices of mass-market homes can be expected to hold firm or weaken less than 2 per cent in Q4.
YTL Launches Sandy Island Villas On Sentosa Cove
Source : The Business Times, October 16, 2008
It also sells 3 villas, and the highest price registered so far is $2,100 psf
ULTRA-high net worth individuals with at least $13.9 million to spare will now have a new piece of luxury to own - a Sandy Island villa on Sentosa Cove - after Malaysia's YTL Group launched its collection of 18 waterfront villas hereyesterday.
Waterfront luxury: The Sandy Island villas have been designed by Italian architect Claudio Silvestrin, while gardens for the villas and the island's lush setting are the works of Australian landscape designer Jamie Durie
Nestled within a tropical rainforest setting, the villas have generated strong local and global interest, said YTL Group. Three villas have been sold, and the highest price registered so far stands at $2,100 per square foot (psf).
The 99-year leasehold properties have built-up areas ranging from 7,500 to 9,200 sq ft. Designed by Italian architect Claudio Silvestrin, whose work includes the Giorgio Armani flagship stores, each villa is unique in layout and furnishings.
Gardens for the villas as well as the island's lush setting are the works of Jamie Durie, one of Australia's best landscape designers.
'Singapore is an increasingly sophisticated country attracting the global affluent who want to buy luxury landed property, which is permitted only in Sentosa Cove. These wealthy individuals expect the best,' said Francis Yeoh, chairman of YTL Corporation, parent of the YTL Group.
In fact, the desire to create 'the best' for potential clients contributed to a delay in Sandy Island's launch. Nonetheless, this was none too worrying for Dr Yeoh, whose overriding concern was to assemble a strong team of designers to create properties which can withstand the test of time. 'You can't hurry a good thing,' he said in an interview with BT.
Neither is Dr Yeoh overly worried about launching the villas amid today's global financial fallout. 'For me, (timing) is not important, just because there is an economic cycle that is not the most pleasant to launch this product,' he said. 'You need not suffer the cycles if you truly have the quality.'
Savills Singapore is the marketing agent for the Sandy Island collection. According to its marketing and business development director Ku Swee Yong, there remain cash-rich individuals who have not been significantly affected by the financial turmoil.
Apart from locals, individuals from regions such as Hong Kong, Japan, Europe and the Middle East have also shown interest in the villas, he said. In today's climate, 'the urgency to commit (to a purchase) is a bit less', Mr Ku remarked. But he added that the financial turmoil has also caused some investors to feel more secure parking their wealth in properties instead of banks.
For YTL, Sandy Island is among several other projects it has for the Singapore market. Should the right prime address come along, the group will develop a new luxury mall - Starhill Gallery - here. The company is also working on a new development at the Westwood Apartments site in Orchard. 'Singapore is an address which I believe cannot be ignored,' said Dr Yeoh. 'I would say that the Chinese, Indians and Southeast Asians, the future's very rich would love to invest in a place like Singapore.'
And beyond Singapore, weaker global markets could present more investment opportunities for YTL globally. 'I hope this is my opportunity to pick up a few prime properties around the world. . . I'm looking forward to doing a few deals this calendar year.'
It also sells 3 villas, and the highest price registered so far is $2,100 psf
ULTRA-high net worth individuals with at least $13.9 million to spare will now have a new piece of luxury to own - a Sandy Island villa on Sentosa Cove - after Malaysia's YTL Group launched its collection of 18 waterfront villas hereyesterday.
Waterfront luxury: The Sandy Island villas have been designed by Italian architect Claudio Silvestrin, while gardens for the villas and the island's lush setting are the works of Australian landscape designer Jamie DurieNestled within a tropical rainforest setting, the villas have generated strong local and global interest, said YTL Group. Three villas have been sold, and the highest price registered so far stands at $2,100 per square foot (psf).
The 99-year leasehold properties have built-up areas ranging from 7,500 to 9,200 sq ft. Designed by Italian architect Claudio Silvestrin, whose work includes the Giorgio Armani flagship stores, each villa is unique in layout and furnishings.
Gardens for the villas as well as the island's lush setting are the works of Jamie Durie, one of Australia's best landscape designers.
'Singapore is an increasingly sophisticated country attracting the global affluent who want to buy luxury landed property, which is permitted only in Sentosa Cove. These wealthy individuals expect the best,' said Francis Yeoh, chairman of YTL Corporation, parent of the YTL Group.
In fact, the desire to create 'the best' for potential clients contributed to a delay in Sandy Island's launch. Nonetheless, this was none too worrying for Dr Yeoh, whose overriding concern was to assemble a strong team of designers to create properties which can withstand the test of time. 'You can't hurry a good thing,' he said in an interview with BT.
Neither is Dr Yeoh overly worried about launching the villas amid today's global financial fallout. 'For me, (timing) is not important, just because there is an economic cycle that is not the most pleasant to launch this product,' he said. 'You need not suffer the cycles if you truly have the quality.'
Savills Singapore is the marketing agent for the Sandy Island collection. According to its marketing and business development director Ku Swee Yong, there remain cash-rich individuals who have not been significantly affected by the financial turmoil.
Apart from locals, individuals from regions such as Hong Kong, Japan, Europe and the Middle East have also shown interest in the villas, he said. In today's climate, 'the urgency to commit (to a purchase) is a bit less', Mr Ku remarked. But he added that the financial turmoil has also caused some investors to feel more secure parking their wealth in properties instead of banks.
For YTL, Sandy Island is among several other projects it has for the Singapore market. Should the right prime address come along, the group will develop a new luxury mall - Starhill Gallery - here. The company is also working on a new development at the Westwood Apartments site in Orchard. 'Singapore is an address which I believe cannot be ignored,' said Dr Yeoh. 'I would say that the Chinese, Indians and Southeast Asians, the future's very rich would love to invest in a place like Singapore.'
And beyond Singapore, weaker global markets could present more investment opportunities for YTL globally. 'I hope this is my opportunity to pick up a few prime properties around the world. . . I'm looking forward to doing a few deals this calendar year.'
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