Conservation To Include Structures

Source : The Business Times, October 4, 2008

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

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

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

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

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

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

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

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

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

High Loan Exposure Becomes Dampener

Source : The Business Times, October 4, 2008

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Orchard Mall To Grant Only 'Green Leases'

Source : The Straits Times, Oct 3, 2008

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

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

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

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

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

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

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

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

313@Somerset will be completed late next year.

Grade A Office Vacancy Doubles To 1.2% In Q3

Source : The Business Times, October 3, 2008

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Source : The Business Times, October 3, 2008

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

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

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

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

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

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

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

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

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

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

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

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