Another New Hotel Opens

Source : The Straits Times, May 7, 2009

TO A backdrop of declining numbers of tourists visiting Singapore, another hotel, the Park Hotel Clarke Quay, has opened this month.

Like many others operating in this less-than-stellar climate, the 336-room four-star hotel at Clarke Quay is dangling a special package chockful of freebies. -- ST PHOTO: LIM SIN THAI

Like many others operating in this less-than-stellar climate, the 336-room four-star hotel at Clarke Quay is dangling a special package chockful of freebies.

Many hotels, including another one which opened recently, have rolled out similar value-added promotions.

Far East Organization's boutique hotel, Quincy, opened in March with a $208++ flat rate covering all its services, such as three meals, Internet use, and limousine pickup from the airport.

The offers are a sign of how anxious hotels are for their share of a shrinking pie.

For the 10th straight month, visitor arrivals in March were down compared to the same period last years.

The downward trend forced hotels to slash their average room rate to $196 in March. It marked the first time in nearly two years the average room rate has dropped below $200.

Despite such worrying signs, the Park Hotel Group remains optimistic.

Based on the 'strong' booking response from leisure and business travellers alike, the group's director Mr Allen Law forecast an 80 per cent occupancy by August. In comparison, the average hotel occupancy rate for March was 74 per cent.

'Clarke Quay is an area which a lot of tourists want to visit, and there are not many hotels there. We think we've hit a good market segment,' said Mr Law.

Read the full story in Friday's edition of The Straits Times.

Bubble Lifts Pop Up In HDB Blocks

Source : The Straits Times, May 07 2009

Glass lifts provide views of the outside, and are cheaper and faster to install.

ONCE found only in places such as shopping malls and hotels, bubble lifts are going up at Housing Board blocks.

Since January, residents of Block 46, Owen Road, near Farrer Park, have been enjoying the view from their very own glass lift - the first of its kind in an HDB block.

Bubble lifts will be built in 19 HDB blocks in other areas. -- ST PHOTO: LAU FOOK KONG.

As part of HDB's Lift Upgrading Programme, four other blocks in the precinct will be fitted with 10 such lifts. They will be ready for use by July.

These lifts are different from conventional ones as they have transparent glass panels along their walls. Instead of being enclosed, they also adopt a shaftless design, which gives passengers in the lifts a view of the outside.

As part of a pilot trial by HDB, bubble lifts will find their way to 19 HDB blocks in areas such as Jurong East Street 24, Buffalo Road in Little India, and Sims Drive in Aljunied.

Depending on the residents' receptiveness as well as the lifts' performance, bubble lifts might eventually pop up all over Singapore.

Bubble lifts are not only attractive for the views they afford, they are also faster to build. It takes about one year to construct a bubble lift, while a conventional lift takes a couple of months more.

Bubble lifts are also cheaper. An HDB spokesman said the design of a bubble lift means there is no need to construct an enclosed shaft, which is required for a conventional lift. This shaves off about 25 per cent of the total construction cost.

This also means a more affordable price for residents. For an eight-storey block of three-room flats like Block 46, Owen Road, each household has to pay only $760, or 5 per cent of the lift upgrading cost. The rest is subsidised by the Government and the town council.

But due to its design, a bubble lift is not suitable for all estates. HDB explained that for places with little shade, it might get too hot in the lift car or the sun's glare might be too strong during the day.

Constant exposure to the elements also means that the lift has to be built with materials that can withstand weathering, or problems might occur.

The Straits Times understands from residents of Block 46 that during its first three months of operation, the bubble lift stalled a few times every week.

'My daughter got stuck in there before,' said Mr Andrew Liew, a 63-year-old retiree.

'But it's not so bad now,' he added. 'It's definitely much more convenient to have a lift on every floor, plus the view is nice.'

Indeed, the see-through concept of the lift is proving popular with many residents.

Madam Xuan Gui Zhu, 56, said in Mandarin: 'My two grandchildren love it. When the lift was ready, they would take it up and down again and again.'

She also saw things from another angle: 'Not only can we look out, other people can also look in. That makes it safer for everyone.'

Deals Start Cooking In Slow Office Market

Source : The Business Times, May 7, 2009

Three buildings in CBD may change hands as buyers shop again

After a nine-month lull, investment sales activity for office buildings could pick up soon.

BT understands a deal is on the cards for Parakou Building at the corner of Robinson Road and McCallum Street. Due diligence by a potential buyer is also said to be going on for the 13-storey Anson House, while VTB Building (formerly known as Moscow Narodny Bank Building) at Robinson Road has also been generating interest.

Attracting buyers: VTB Building at Robinson Road, a 16-storey freehold office block that is more than 30 years old, is said to have drawn offers of around $60 million, which works out to around $900 per square foot

The 16-storey freehold Parakou Building, which is about three years old, is expected to change hands at about $82 million or $1,300 per square foot (psf) of existing net lettable area, while a price of about $85 million or $1,100 psf-plus is being bandied about for Anson House. Prices of both properties are about 35 per cent lower than what the owners paid for them in 2007 during the property upcycle.

VTB Building, a 16-storey freehold office block that is more than 30 years old, is said to have drawn offers of around $60 million, which works out to around $900 psf.

'There's a sweet spot for office blocks priced at $1,100 to $1,300 psf or with a lump sum investment of between $70 million and $100 million,' says Knight Frank executive director (investment sales) Foo Suan Peng.

While prices for Parakou Building and Anson House are about 35 per cent below what their owners paid, bigger price discounts are expected for larger office towers costing several hundred million dollars or more because there is less equity around and because of tight bank financing, say property consultants.

Potential buyers keen on Singapore office blocks are said to be assuming at most 50 per cent bank financing for proposed acquisitions these days. Such investors are not institutional players like big-name property funds that dominated office investment sales deals a few years ago, but rather the likes of family concerns with 'old money', investors involved in businesses that are doing well such as renewable energy, as well as a few private equity funds, according to Mr Foo.

And these parties are largely from Singapore and the region (mainly Hong Kong and Indonesia), he added. 'Some of them may have wanted an office building as their flagship business premises or as investment but were priced out in the past two years. These are long-term investors, not short-term traders or speculators,' Mr Foo says.

Credo Real Estate managing director Karamjit Singh says 'there won't be too many office transactions likely to take place in the next six months because sellers that are in a position to hold, will hold'.

'Many owners are sitting on high costs; current values of their buildings will be below cost. If banks aren't chasing them and they are not in a distressed position, these owners are unwilling to take a haircut and are likely to wait it out rather than divest now,' Mr Singh added.

However, the hit on the foreign owners of these buildings from selling properties today below their purchase price may be mitigated by foreign currency movements. For instance, for Parakou Building's owner, UK fund manager New Star Asset Management Group (which was recently acquired by Henderson Group), its expected 35 per cent loss (in Singapore dollar terms) should be significantly offset by a 27 per cent appreciation in the Singapore dollar relative to the pound over its holding period for this investment, a property market watcher observed.

Similarly, the fund managed by Australia's Macquarie Bank that bought Anson House in 2007 for $129.5 million should find its loss from selling the asset for about $85 million being cushioned by the depreciation of the Australian dollar against the Singapore dollar.

Anson House is on a site with a remaining lease of about 87 years.

Will Property Recover Faster Than Expected?

Source : The Business Times, May 7, 2009

MARKET turning points are very hard to spot. A recent example was the March 9 market bottom. Then, the world seemed a bleak place: we were in for a prolonged depression; banks were going to fail; many companies were going bankrupt and millions were going to lose their jobs and stay unemployed for years. That period also coincided with a spate of bad news from the Chinese companies listed in Singapore - the so-called S-chips. The cash wasn't in the banks. The founders were losing control over their companies because they'd pledged their shares to financial institutions. Profit was overstated, and the companies' status as going concerns was in question. One by one, the S-chips were getting suspended.

Under the never-ending onslaught of bad news, many investors threw in the towel and cashed out. By February, cash sitting on the sidelines was at its highest in more than 10 years. Government statistics showed that the amount of deposits of non-bank customers with domestic banking units and deposits with finance companies was equivalent to 99 per cent of the aggregate market value of all the stocks listed on the Singapore Exchange (SGX). The previous peak was in 2002, when the cash/market cap ratio was 91 per cent.

History has shown that such a high level of cash holdings portends strong upside in the equities market. The rebound did eventually come - almost out of the blue - and took many by surprise. The recovery - fuelled by sightings of 'green shoots' in the economy - has lasted eight weeks and equity prices have gained more than 40 per cent. But through it all, many analysts and fund managers still doubt the sustainability of the recovery.

So what do we make of the projections of most property consultants that private residential property will slump by 25-35 per cent this year? The forecasts suggest more downside for the rest of the year given that prices fell 'only' 14.1 per cent in the first quarter. But like the pundits in the stock market, there is a possibility that these consultants too will miss the market turning point. For one, the stock market leads the property market by 4-8 months. If the stock market remains buoyant, then there is a probability that the property market too will stabilise. And, as noted earlier, there is a lot of cash waiting to get into the market.

Already, there are signs that US real estate - the source of the current global financial crisis - is recovering. According to The New York Times, Sacramento (among the first US cities to fall victim to the real estate collapse) has seen investors and first-time buyers out in force competing for bargain-price foreclosures. Sales are up 45 per cent from last year, and the vast backlog of inventory has diminished. Progress is also visible in other hard-hit areas.

If so, one shouldn't be too quick to dismiss the hope that the US property slump, just like the stockmarket slump, may end sooner than the doomsters think.

Property Transactions With Contract Dates Between April 20th - 25th, 2009

UK House Prices Fall 1.7% In April

Source : The Business Times, May 7, 2009

Prices have now fallen by 22% from their peak in August 2007

(LONDON) House prices in Britain fell by a bigger- than-expected 1.7 per cent in April and by 17.7 per cent in the three months to April compared with a year earlier, the Halifax house price survey showed yesterday.

Economists had expected a fall of one per cent on the month and a three- month annual decline of 17.7 per cent.

The mortgage lender said house prices were also 17.7 per cent lower than in April last year and that prices have now fallen by 22 per cent from their peak in August 2007.

The figures suggest the housing market is still a long way from recovery, despite some signs that activity levels may be stabilising, and Halifax said prices were likely to keep falling for some time.

Halifax said April's fall took the average price of a home to £pounds;154,716, a level not seen since April 2004.

'We think conditions will remain challenging over the next few months. The fact that the economy is in recession and unemployment is rising sharply is not a great recipe for demand,' said Halifax chief economist Martin Ellis.

'There are some signs that confidence is improving a little bit but we still expect further house price falls.'

Falling prices combined with record low interest rates have improved conditions for people who are able to invest in property.

Halifax said the house price to earnings ratio, a key measure of affordability, fell to 4.26 in April, the lowest since September 2002.

But lending conditions remain tight, Mr Ellis said. 'There are some signs that more deals are becoming available and that the restrictions on credit availability are loosening up a little bit, but it's still a lot tougher than a couple of years ago.' - Reuters

URA Puts Stop To Grangeford 'Dorm' Flats

Source : The Straits Times, May 7, 2009

A PLAN to run student dormitory rooms at Grangeford condominium in Leonie Hill is no more.

Master tenant Ideal Accommodation completed sub-dividing 140 apartments into a total of 600 units last month.

But it has been ordered to take down all the partitions by the end of the month.

The Urban Redevelopment Authority (URA) investigated the project after receiving complaints about the plans.

Late last month, URA asked for the condo units to be restored to their original condition, according to a Business Times report. URA declined to comment.

The Business Times also earlier reported that Ideal had found takers for about half of the 600 units - seeking monthly rents of $900 to $1,400 per furnished unit.

Now it may have to terminate the leases and find the takers alternative accommodation. Ideal's founder Tang Yong declined to comment. But The Straits Times understands that Ideal is appealing against the decision.

The condo's owner, Overseas Union Enterprise (OUE), which had signed a two-year lease with Ideal for 170 flats, will have to step in if Ideal fails to act.

OUE had acquired Grangeford in a $625 million collective sale during the property boom in 2007. Because demand is very poor, it is holding back the launch of the project and leasing the units out.

Owners of other apartments and projects are also reportedly carrying similar sub-divisions but on a smaller scale.

The Straits Times understands that the URA is also investigating these cases.