Thursday, May 28, 2009

1 In 8 US Homeowners Late Paying Or In Foreclosure

Source : The Business Times, May 28, 2009

NEW YORK - One of eight US households with a mortgage ended the first quarter late on loan payments or in the foreclosure process in a crisis that will persist for at least another year until unemployment peaks, the Mortgage Bankers Association said on Thursday.

US unemployment in April reached its highest rate in more than a quarter century and is still rising, helping propel mortgage delinquencies and foreclosures to record highs.

Such economic conditions drove up foreclosures of prime fixed-rate mortgages, which represented the largest share of new foreclosures for the first time since the rapid growth and the ensuing collapse of the sub-prime loan market.

'We clearly haven't hit the top yet in terms of delinquencies or the bottom of the housing market,' Jay Brinkmann, the association's chief economist, said in an interview.

Prime fixed-rate loans, made to borrowers with high credit quality, comprise 65 per cent of the US$9.9 trillion in outstanding first mortgages, according to the industry group.

'The housing market depends on the employment situation,' he said, 'and we don't expect unemployment to bottom out until the middle of next year, so then normally housing would not recover until after employment recovers.'

A record 12.07 per cent of loans on one-to-four unit residences were at least one payment past due or in the foreclosure process in the first quarter, on a non-seasonally adjusted basis.

Foreclosure actions were started on an all-time high 1.37 per cent of first mortgages in the quarter, a record increase from 1.08 per cent the prior quarter.

The share of loans in the foreclosure process rose to a record 3.85 per cent from 3.30 per cent in the fourth quarter and 2.47 per cent a year earlier.

California, Florida, Arizona and Nevada accounted for nearly half of the new foreclosure activity in the quarter and half of the increase in prime fixed-rate foreclosure starts.

Those severely hit states, the biggest winners in the five-year housing boom earlier this decade, continue to worsen as recession overtakes problems spawned by lax lending standards.

'Every job loss, every divorce, every incident like that is going to be turning into a foreclosure because they are so far under water with the homes already,' Mr Brinkmann said.

When a house is 'under water', its price has fallen below the size of the mortgage.

Average US home prices swooned more than 32 per cent in March from the 2006 peak, according to Standard & Poor's/Case-Shiller indexes.

Foreclosures mounted in the first quarter even though various temporary moratoriums were in place to delay the failure of distressed loans.

The short-term freezes artificially tempered new foreclosures before federal loan modification programs took root.

But loans that had already been modified re-defaulted in the quarter, Mr Brinkmann said. Foreclosure actions also were taken on vacant homes, which make up as much as 40 per cent of the properties with failing mortgages, he said.

Some loan servicers also began the foreclosure process on borrowers who clearly did not qualify under the various mortgage fixes, he said.

On a non-seasonally adjusted basis, the delinquency rate dipped to 8.22 per cent from 8.63 per cent.

The bankers' group noted that the late payment rate always declines in the first quarter due to seasonal factors and said that after such adjustments, the rate jumped to a record 9.12 per cent. -- REUTERS

Property Transactions With Contract Dates Between May 1st - 8th, 2009

Distressed Properties May Flood Markets

Source : The Business Times, May 28, 2009

But Asia is in better shape than mature markets, says GIC Real Estate chief

Distressed property assets may emerge in developed markets in the next two years or so, GIC Real Estate's president Seek Ngee Huat said yesterday.

'Refinancing difficulties will force many property owners to sell their assets into an already weakened market,' he said at the first public seminar organised by the National University of Singapore's Institute of Real Estate Studies.

Dr Seek: 'Refinancing difficulties will force many property owners to sell their assets.'

According to Dr Seek, not many distressed sales have surfaced in the troubled property markets of the US and UK yet. Nevertheless, a 'flood' may come if credit markets remain tight as large volumes of loans mature.

Professor at the Wharton School of the University of Pennsylvania Joseph Gyourko shared some worrying numbers on this at the seminar. He cited estimates from Goldman Sachs, which found that US$1.2 trillion of commercial property debt will come due in the US from 2009 to 2011.

With the near shutdown of the commercial mortgage-backed securities market, some property owners will not be able to obtain refinancing, he said.

In fact, distressed property assets in the US have just started to appear and will increase in number over the next few years, Prof Gyourko told reporters on the sidelines of the seminar. These assets can come from any property segment depending on owners' ability to roll over debt.

There will be a 'historic investment opportunity not seen in the US since the early 1990s' and investors are setting up funds for this, he said.

GIC Real Estate's Dr Seek said that most property markets in developing Asia are in better shape because they relied less on leverage. While mature markets are more likely to offer opportunistic acquisition deals, emerging Asia seems to be attracting strategic long-term acquisitions, he said.

There are also investment opportunities in undervalued real estate investment trusts (Reits), Dr Seek said.

The downturn has affected Reits globally, which are now separated into 'haves' and 'have-nots' - the 'haves' are those with sound asset bases, manageable debt levels and the ability to raise new funds, he said.

'Further consolidation of the Reit market is inevitable,' he added. The 'haves' will survive this downturn and become stronger, while the 'have-nots' will languish and some may eventually fail or be absorbed.

Kaki Bukit CarMart Site Available For Application

Source : The Business Times, May 28, 2009

THE Urban Redevelopment Authority yesterday made available for application a 30-year leasehold industrial site next to Ruby Warehouse Complex at Kaki Bukit Road 2 on the government's reserve list.

The property is expected to generate a fair amount of interest given its location in a mature industrial estate and low capital outlay involved, says Colliers International director (industrial) Tan Boon Leong.

The 1.07-hectare plot is currently occupied by Kaki Bukit CarMart but its operator will return the site to the state when its current Temporary Occupation Licence expires at the end of this month.

Colliers's Mr Tan reckons that likely parties that may trigger the site's release for tender could include contractors/develo- pers, car dealers and workshop owners, and those involved in the logistics, hardware, marine and oil and gas industries.

Being on the reserve list, the site will be launched for tender only upon successful application by a developer with an undertaking to place a minimum bid acceptable to the state.

URA noted on its website that the plot is located within the established Kaki Bukit Industrial Estate and next to the industrial estates at Kampong Ubi and Eunos Techpark.

Prominent uses in the vicinity include warehousing and automobile industries. Surrounding developments include Gordon Warehouse, Borneo Motor and Kah Motor.

Mr Tan reckons that the site could be released for tender if interested parties undertake to bid at least $40 per square foot per plot ratio (psf ppr), although the actual tender for the property could see top bids of $50-70 psf ppr.

Even at the higher end of that range ($70 psf ppr), the investment in the site - which has a 1.0 plot ratio (or ratio of maximum potential GFA to land area) - will amount to around $8 million, making the site affordable to a bigger pool of potential investors.

The plot is zoned for Business 2 use, suitable for a range of uses such as clean/light industry, general industry and warehousing.

Two years ago, when the industrial property market was buoyant, a site along Kaki Bukit Road 3, a 30-year leasehold plot with Business 1 zoning, fetched $71.86 psf ppr.

Separately, the Singapore Land Authority yesterday announced the successful auction of a two-hectare site at 20 Eunos Road 4 for use as a heavy vehicle park. The successful bidder is Lim Chai Kiui, the 62-year-old chairman of Kim Soon Lee group, which currently operates the existing heavy vehicle park on the site.

Based on his winning bid at yesterday's auction, he will pay SLA a monthly sum of $63,000 - which works out to about 29 cents per square foot of site area. The plot was offered for tenancy on a three-year term with an option to renew for a further two years.

STC Offers Short-Term Office Leases

Source : The Business Times, May 28, 2009

Six-month lease offer at 18 Cross St part of move to attract clients to China Sq Central

THE Straits Trading Company (STC) is offering short-term leases at 18 Cross Street for companies in search of transitional office space.

Tenants can sign up for leases of at least six months at the 15-storey Grade A office tower, which is part of China Square Central, and asking rents range from $8 to $10 psf.

Some 50,000 square feet of space spread across the 7th to 10th floors are available for this arrangement.

According to STC executive vice-president Eric Teng, short-term leases will be useful for companies which are waiting for office rents to fall further before committing to new leases.

There are also situations where firms need a bit more time before they can move out, but their landlords are not keen to give short-term lease extensions, he said.

Companies guarding against the possible spread of the H1N1 virus can also consider moving some work teams to 18 Cross Street for the time being, he added.

STC hopes that the experience of working at China Square Central may attract some tenants to stay on longer. This is a way to 'encourage 'sampling' of our product', said Mr Teng.

STC said that it can help tenants by footing some refitting or renovation costs first. Tenants will then repay the company through higher monthly rentals.

Knight Frank director of business space (office) Agnes Tay felt that STC's move to attract tenants is creative.

If STC aims to entice them to stay, it can consider offering attractive renewal packages after their short-term leases end, she added.

Around 75 per cent of office space at 18 Cross Street is currently occupied, STC said.

The company previously owned 18, 20 and 22 Cross Street but completed a sale and leaseback deal with Allco Commercial Reit (now known as Frasers Commercial Trust) in 2006.

STC now has a master lease on these properties which ends in 2012.

UE And GuocoLand Add Green Beauty

Source : The Business Times, May 28, 2009

Green concerns have gone beyond consumers toting reusable shopping bags to developers putting up buildings that are kind on the environment.

Winner again: UE has clinched its third and fourth Gold award for The Rochester condominium, shopping mall and hotel development

Two developers that have met the mark in this area are United Engineers Ltd (UE) and GuocoLand, with each clinching Green Mark awards given out by the Building and Construction Authority (BCA).

Having bagged two BCA Green Mark awards since 2007, UE has clinched its third and fourth Gold award for The Rochester condominium (residential category) and Park Avenue Rochester Hotel and The Rochester Square Shopping Mall (commercial category). The condominium, shopping mall and hotel form a mixed development in One-North, South Buona Vista Road.

This is the first commercial project in One-North to win such an award and deploy a district cooling system. This cooling system distributes thermal energy in the form of chilled water or other media from a central source to multiple buildings, eliminating the need for separate systems in individual buildings.

Having a green building, however, does not necessarily translate to absolute cost savings in the short term, since facilities such as the district cooling system can cost quite a substantial amount.

Platinum winner: GuocoLand's Sophia Residence, a condominium coming up in the prime residential enclave of Mount Sophia in District 9

Benefits of green buildings are long term, some of which can be rather intangible, says David Liew, managing director of UE Developments. 'A good and clear conscience goes beyond what money can buy.'

Other green features of The Rochester include energy-efficient air-conditioning and lighting, and a water-efficient sanitaryware system in compliance with WELLS (Water Efficiency Label System), a national rating system by BCA.

Another plus point is the use of recycled building materials. The project will have outdoor furniture made from recycled materials and concrete kerbs built from recycled concrete aggregate.

A sky garden on the condominium's ninth storey and vertical greenery from levels four to eight in the commercial buildings add a touch of beauty.

UE, which has a history dating back to 1912, has managed to keep pace with the times, tailoring its corporate philosophy to take account of the current green focus.

'As a corporate citizen, we have a social responsibility as most of our projects will definitely have a physical and environmental impact on our island-state,' said Mr Liew. 'As a company, where we have to be responsible to our customers, shareholders and employees, maintaining a portfolio of environmentally sustainable buildings has also increasingly demonstrated long-term asset value and investment merits,' he added.

UE has plans to put its next project up for the Green Mark award - the UE Biz Hub in Changi Business Park.

GuocoLand is another developer that has excelled in meeting environmental standards, clinching the Platinum Green Mark award for its residential project, Sophia Residence.

The condominium is coming up in the prime residential enclave of Mount Sophia in District 9. This is the group's third such award, and its second Platinum.

Homebuyers seem to be more aware about environmental sustainability these days, and GuocoLand has kept its clients satisfied.

Trina Loh, managing director of GuocoLand (Singapore), noted that Sophia Residence is one of the first Green Mark Platinum award projects assessed under the new and more stringent BCA Green Mark criteria. 'We are proud that Sophia Residence has excelled with its outstanding eco-friendly features and has exceeded some of the requirements.'

The innovative design process for the building façade also leads to a lower RETV (Residential Envelope Transmittance Value). This lessens the heat load and can achieve up to a 25 per cent reduction in electricity bills for air-conditioning.

An interesting feature of the condominium is its eco ponds and biofilter ponds. These ponds, which are part of the landscaping, will be fed by rainwater and ground water harvested from the development's roof terraces and infiltration trenches.

The ponds will then filter the water using oxygenating reeds and will be able to support diverse water plants and fish. The filtered water is collected in an irrigation tank and can be reused to irrigate the landscape.

The projected energy savings could come up to 3.8 million kWh a year - equivalent to S$728,000 in energy bills. Savings in potable water come up to 47,000 cubic metres a year, or up to S$115,000.

But beyond cash savings, the extensive green features will enhance the overall quality of life for the homeowners, said Ms Loh.

5 Circle Line Stations Open

Source : The Straits Times, May 27, 2009

THE first five stations of the new Circle Line were opened by Deputy Prime Minister and Defence Minister Teo Chee Hean on Wednesday morning.

A 'raindrop' concept bench seen at the Bishan MRT station. -- ST PHOTO: TERENCE TAN

Trains will start rolling from Thursday morning at Bartley, Serangoon, Lorong Chuan, Bishan and Marymount stations.

Commuters can transfer to the existing North-South line and North-East line at Bishan and Serangoon respectively.

15 Y-shaped beams are a unique feature at the Circle Line stations and can be seen at the Lorong Chuan (left), Bartley and Marymount stations. -- ST PHOTO: TERENCE TAN

'The Circle Line will open up multiple new connections for residents in the north and the north-east,' said Mr Teo before launching the new line.

About 55,000 commuters are expected to use the first five stations every day.

The Circle Line station platform is seen at the Marymount station. -- ST PHOTO: TERENCE TAN

The remaining 24 stations of the line will open from next year. Once fully operational, the line's daily ridership is expected to go up to 500,000.

Transport Minister Raymond Lim told reporters on Wednesday that progress at the other stations are on track.

Circle Line escalators are seen at the Serangoon station. -- ST PHOTO: TERENCE TAN

Tunnelling work for the entire line is almost completed, and is expected to be finished by September, said the Land Transport Authority.

While it is not clear yet which other stations will open next, the LTA said six stations have already received the Temporary Occupation Permit - an indication that they will be next in line.

Trains will start rolling from Thursday morning at Bartley (left), Serangoon, Lorong Chuan, Bishan and Marymount stations. -- ST PHOTO: TERENCE TAN

These are Dhoby Ghaut, Bras Basah, Esplanade, Promenade, Stadium and Tai Seng.

Public transport operator SMRT, which will operate the new line, said it will donate takings from its first 22 days of operations to charity.

SMRT's president and chief executive officer Saw Phaik Hwa said the operator expects to collect about $400,000.

Consider Top-Up Rule When Selling Below Valuation Sale Rule

Source : The Straits Times, May 28 2009

Sliding flat prices may force some to refund with cash

OWNERS of Housing Board flats, already hit by a softening market, may now have to stump up cash if they are selling their properties below valuation.

This is the result of a longstanding rule by the Central Provident Fund Board which property agents say was enforced loosely until recently.

Under this rule, a property owner who had used his CPF funds to pay for his property is required to refund the principal withdrawn and interest accrued into his CPF account after settling any outstanding debt. If there is a shortfall, he needs to make good on that amount if he is 'unable to provide good reasons for selling his flat at a price below the fair market value'.

This clause was not an issue when the market was booming as recently as a year ago, but could hurt transactions now that property prices are sliding and more flats are being sold below valuation.

Overall resale prices dropped 0.8 per cent from January to March this year, after climbing 14.5 per cent over the whole of last year. Meanwhile, the median cash over valuation amount - an indication of how coveted a particular property is - was just $4,000 from January to March, less than a third of the $15,000 registered in the previous quarter.

Property owners selling their flats below valuation say they are being advised by Housing Board staff that they may have to top up any shortfall in their CPF refunds - or get the CPF Board to accept their reasons for pricing the flat below valuation - before the transaction can go through.

The situation is making people such as civil servant S. Salim fret. The 44-year-old father of one signed an agreement early this year to sell his Jurong West maisonette for $10,000 below its valuation of $358,000.

'I don't have the money (for the top-up). But if I don't go through with the sale, who knows, the buyer may sue me for breach of contract.'

He has written in to the CPF Board listing the reasons for his flat's price - like the fact that it is on the second storey and his kitchen does not get much sunlight - and is still waiting for a reply.

The CPF Board, when asked how many people have been asked to make a top-up over the years, would only say: 'Of those who sold their property over the last 12 months, fewer than 10 members had to top up the difference in cash to make up the full required CPF refund.'

This figure, however, does not include home owners who may have altered the selling price of their flat to match valuations in order to avoid hassle.
The CPF Board said: 'These members understood the Board's rationale for this requirement, which is to preserve their retirement savings. They have since made the necessary arrangements to put back the amounts into their own CPF accounts for their retirement needs.'

Last year, 28,419 flats changed hands, with the majority paying for them with CPF savings.

Mr Eric Cheng, executive director of HSR Property Group, reckoned that the CPF Board was tightening up on policing transactions after having learned their lessons from before.

'Perhaps they see the trend of cashback coming back, and they could be trying to pre-empt it,' he said.

'Cashback' practices were rampant about five years ago. Under this illegal arrangement, buyers and sellers collude to inflate the price of a flat so that the buyer can get a bigger home loan than is allowed.

As home loans are usually paid through CPF savings, this allows a buyer to prematurely 'withdraw' money from his retirement savings account before reaching age 55.

Mr Cheng said cashback practices in this climate would differ slightly: A buyer and seller could collude to understate the price of a flat - with the difference paid to the seller in cash - so that the seller need not refund the full amount to his CPF account.

Despite the concerns over fraud, the chief executive of property agency PropNex, Mr Mohamed Ismail, feels that the CPF Board should waive the rule altogether for flats which are sold not less than 10 per cent below valuation.
He reasoned: 'There is always a lag time for valuation to catch up with the actual price of flats. Having the buffer would mean that people need not be so anxious waiting for approval.'

Meanwhile, the director of Dennis Wee Properties, Mr Chris Koh, advised sellers who are selling their flat below valuation to write to the CPF Board before signing on the dotted line. Or else, 'they may be caught in a situation whereby not only are they not making from the sale of their flat, but they have to further cough up cash', he warned.


Source :《联合早报》May 28, 2009


新加坡政府产业投资公司(GIC Real Estate)董事经理薛义华博士指出,抹平房地产债务、取得再融资,是美国和发达国家目前面对的棘手问题。考虑到许多房地产贷款将在2011年之前到期,如果拥有这些资产的基金经理在为债务取得再融资面对困难,它们也许会决定脱售。




另一名主讲人美国沃顿商学院房地产和金融教授约瑟夫·吉尤科(Joseph Gyourko)则提出,不良资产已开始在美国出现,而这些资产其实存在很好的投资价值,但由于投资者遇到财务问题而被迫将它们“牺牲”。