Prudential In 14-Year Lease For Scotts Road Site

Source : The Straits Times, Feb 1, 2008

A BUILDING on Singapore's first transitional office site in Scotts Road will be completed in September at a cost of about $75 million.

LONG LEASE: Prudential has locked in an unusual agreement that allows it to lease a four-storey building (left) on Singapore's first transitional office site for 14 years instead of the usual three to five years. The insurance giant will pay $6.50 per sq ft - or about $975,000 - per month for the $75 million building. Mr Seah, the chief executive, says Prudential sees value in locking in a longer-term lease. -- PHOTO: KOP CAPITAL

The entire four-storey block has already been leased to insurance firm Prudential, which has locked in an unusual rental agreement that will last for an effective 14 years.

Prudential will pay $6.50 per sq ft per month for the building. At about 150,000 sq ft of space, that works out to $975,000 a month.

The agreement is unusual because most office leases are granted on a three-year basis - although this can range from two to five years - with an option for renewal.

In today's market of rising office rents, Prudential sees value in locking in a longer-term lease, explained chief executive Philip Seah.

Mr Seah said rents at the Scotts Road building would be half of what Prudential would have to pay to extend its current leases at Fuji Xerox Tower in Anson Road and at Bugis Junction, where it has a combined 130,000 sq ft of space.

Both those leases, as well as Prudential's third location at Singapore Post Centre, will expire this year.

The firm is seeking a replacement for the Singapore Post location, where it occupies 70,000 sq ft.

In the meantime, Prudential will give up the Fuji Xerox and Bugis spaces and relocate 2,500 of its more than 3,600 staff to the Scotts Road block, Mr Seah said at a ground-breaking ceremony for the building yesterday.

The Scotts Road site, which is being developed by KOP Capital, Hwa Hong Corporation and Dubai Investment Group, is the first and most successful of the Government's temporary office sites - an initiative launched recently to ease a shortage in office space.

The three other sites that were released garnered lacklustre response, with the latest not even awarded due to inadequate bids.

GuocoLand Earnings Sink 25% To $34m

Source : The Straits Times, Jan 31, 2008

INVESTORS might be tempted at first to blame a slowing housing market for a 25 per cent slide in GuocoLand's second-quarter earnings.

A closer scrutiny of the property developer's accounts, however, shows that for the quarter ended Dec 31, it actually reaped higher revenue from its property development projects in Singapore and China.

In fact, the explanation for the profit slump was the sale of its long-term investment in BIL International in the second quarter ended Dec 31, 2006, which boosted its bottom line in the earlier period to the tune of a $19.3 million one-off gain.

GuocoLand's net profit for the second quarter ended Dec 31 plunged to $33.9 million, from $45.4 million a year earlier. With the one-off gain stripped out, net profits were well up this year.

Revenue soared 112 per cent to $211.1 million, up from $99.6 million in the previous period.

Gross profit rose from $16.4 million to $40.2 million, with contribution from its West End Point project in Beijing.

West End Point, an 810-unit development in the Xicheng District of Beijing, is almost fully sold, GuocoLand said yesterday.

In Singapore, GuocoLand has three launched developments on the market: Le Crescendo, The View@Meyer and The Quartz.

As at this month, it achieved sales of about 90 per cent for Le Crescendo, The View@Meyer and the launched units in The Quartz.

GuocoLand said it has, in the pipeline, 'prestigious' residential developments in prime districts which will be built on the sites of the existing Sophia Court and Leedon Heights.

Earnings per share for the quarter fell from 7.31 cents to 4.02 cents, while net asset value per share remained unchanged at $2.30.

GuocoLand said that although the spectre of a recession is looming over the United States, the major economies of China and India are nonetheless expected to remain resilient.

Still, it noted that with the withdrawal of the deferred payment scheme in October, buyers are turning 'more cautious' in view of the 'downside risks' arising from the continuing global credit fallout, high oil prices, weak equity market sentiments and rising inflation.

Heading To Town? Choices Galore For Those In North

Source : The Straits Times, Jan 31, 2008

Fully open KPE, new expressway, Thomson rail line will cut travelling time to city

MOTORIST Shiva Bhaskaran pays between $4 and $5 in Electronic Road Pricing (ERP) charges daily to get to work.

The 49-year-old information technology director passes under two gantries on his 25-minute drive from his Yio Chu Kang home to his office in Raffles Link via the Central Expressway (CTE).

Said the owner of an eight-year-old Mercedes-Benz: 'I use the CTE although it is not the only route I can use. It's the most convenient.'

He may have a few alternative routes now, but more viable choices in travel routes - and even travel modes - will open up for him by 2020, as for all those living in the north and north-east corridor.

Residents living in areas such as Woodlands, Sembawang, Yishun, Ang Mo Kio and Bishan will benefit from some of the projects Transport Minister Raymond Lim listed yesterday.

First up, the opening of the rest of the Kallang-Paya Lebar Expressway (KPE) on Sept 20, following the opening of its maiden 3km stretch from Sims Avenue to Fort Road in the East Coast Parkway last October.

When fully open, a 12km underground stretch will link north-east neighbourhoods such as Buangkok, Bartley and Tampines to the Pan-Island Expressway and the city.

Those living in these northern suburbs can expect to cut commuting time to the city by a quarter, said Mr Lim, at the unveiling of the third and final part of the the Land Transport Review.

But the $1.74 billion KPE is not the only facility built to meet the travel demands of these residents. Another new expressway, the 21km North-South Expressway (NSE), will be built parallel to the CTE by 2020.

Singapore's 11th expressway, costing between $7 billion and $8 billion, is expected to cut travel time to the city by nearly a third, for those in the north. The NSE has been raised before as the long-term answer to the CTE's congestion, but the Government has, till now, held off building it.

Asked why it was the right time now, Mr Lim replied that travel demand in the northern corridor was projected to grow by 63 per cent.

Besides the KPE and the NSE, the Government - which hopes to persuade more to use public transport - will add a new north-south rail line, the Thomson line, for residents in the north.

The 27km rail line announced last week will run from Woodlands to Marina Bay and link Sin Ming, Kim Seng and Thomson, neighbourhoods now outside the rail network.

By 2018, commuters in Sin Ming, for example, can shave 20 minutes off the 45 minutes it now takes to get to town.

Expressways and road interchanges in the northern corridor going south to the city will also be widened.

By 2011, the CTE will have an extra lane from Jalan Toa Payoh to Yio Chu Kang; traffic flow will also be improved along the northbound CTE where it enters the PIE.

Member of Parliament for Sembawang GRC Ellen Lee is hopeful that the measures will relieve the congestion her constituents experience during the morning rush hour.

But just how will motorists take to the new projects, and will they bite at the alternative means of travel offered?

For Mr Shiva, giving up his car is not an option as he can afford it and also 'because I have invested so much in my car'.

But he added: 'I will definitely use the North-South Expressway when it's ready.'

Property-Related Loans Still Growing

Source : The Business Times, February 1, 2008

LOCAL bank lending related to property shows no sign of abating despite an impending US recession and associated slowdown of the Singapore economy.

Total property-related loans, which include housing loans and lending to building and construction businesses, was 3.2 per cent higher in December than the previous month, reaching $110.7 billion, according to preliminary data released by the Monetary Authority of Singapore (MAS) yesterday.

On a yearly basis, property-related loans were up 23.4 per cent from Dec 2006's figure of $89.7 billion.

These loans constituted the main bulk of banks' lending business here, boosting total loans and advances to $233.4 billion in December last year. This figure is 20 per cent higher than in December 2006.

Loans grew despite measures undertaken by the government to cool the property sector. Last October, the government unexpectedly removed the deferred payment scheme for homebuyers, in an apparent bid to curb speculation.

Lending to building and construction firms jumped 42.6 per cent from a year ago to $37.5 billion. On a monthly basis, the loans were up 8.7 per cent.

December also saw loans to homebuyers reach $73.1 billion, or 15 per cent higher than a year ago, and 0.6 per cent up month-on- month.

Generally, loans to most business segments went up, except loans to sectors such as agriculture, mining and quarrying, manufacturing and business services.

Borrowing by business services companies has been on a downtrend since last November. It surged to $5.3 billion in October, then dropped 12 per cent to $4.7 billion in November and by a further 2 per cent in December.

Meanwhile, housing loans were the biggest component of bank lending to consumers. Lending to other segments like share financing and credit cards also continued to grow, although these accounted for only about 7 per cent of total consumer lending.

The number of credit cards in circulation, including supplementary cards, shrank marginally by 0.5 per cent over the month to 5.7 million at end-December. But the total credit card rollover balance - that portion of the credit card debt that is subject to interest charges - went up over the month to $3.02 billion, from $2.99 billion.

Overall, month-on month, and on a yearly basis, loans to businesses grew at a faster pace than loans to consumers. Monthly, loans to businesses rose 5 per cent to $127.8 billion, while consumer loans grew only 0.6 per cent to $105.6 billion.

Year-on-year, business loans grew 26.3 per cent while consumer loans expanded 13.1 per cent.

1st Transitional Office Block Ready In Sept

Source : The Business Times, February 1, 2008

BY September, Singapore's first transitional office building will be ready for its tenant, Prudential Assurance Company Singapore, said the project's developer yesterday.

Kop Capital, which is jointly developing the upcoming Scotts Spazio with partners Hwa Hong Group and Dubai Investment Group, said that the project would cost about $75 million - including the land cost of $37 million. Ground breaking for the four-storey development, next to Newton MRT station, was held yesterday.

Prudential, which has leased the building for 14 years, will be paying $6.50 per square foot a month. The site was sold by the Urban Redevelopment Authority (URA) in August 2007 with a 15-year lease. The building will have 150,000 sq ft of space, Prudential said.

The URA started releasing transitional office sites last year to help ease the supply crunch for space in the office sector.

The Scotts Road site was the first to be offered and it attracted a whopping 11 bids when the maiden tender closed, with the highest offer of $37 million put in by Kop Capital and its partners.

Prudential chief executive Philip Seah said that the company would relocate some 2,500 of its staff, mostly from its current offices in Fuji Xerox Building and Bugis Junction, where its leases are ending.

'Consistent with our image of prominence, we were looking for a strategic location to relocate two of our existing agency centres,' Mr Seah said. 'The first transitional office site at Scotts Road proved to be ideal.'

The rent at Scotts Spazio is about half of what the company could potentially pay were it to stay on at Fuji Xerox and Bugis Junction, Mr Seah said.