Thursday, August 9, 2007

Can Growth Be Sustained?

Source : The Business Times, August 9, 2007

ANNA TEO takes stock of the perils and prospects that face Singapore's economy

LIKE just about everyone else, the Monetary Authority of Singapore was upbeat about Singapore's growth prospects - both near and medium-term - when it released its latest annual report two weeks ago. But amid the optimism, the central bank did sound out a note of caution about global financial shocks. It couldn't have known then how quickly the warnings would ring true.

At a media conference to unveil the report, MAS pointed to economic and financial risks that threaten financial stability, not least of which include weaker-than-expected US growth as a result of a more severe unravelling of its sub-prime market. The US housing mortgage problem has led to increased risk aversion in the credit market, particularly in structured products, MAS noted. If the risk aversion spreads, there could be a sharp spike in volatility across various asset classes and markets, with spillover effects on the Singapore economy and domestic financial sector. Sentiment around the region would take a hit, and investor decisions will be affected, it said.

Sure enough, the US sub-prime woes worsened, and stock markets across Asia-Pacific were mauled early this week, to put it mildly. The question is - will it prove to be a short sharp slump, another blip on the charts, or will the market turmoil develop into a full-blown crisis with deleterious effects on Singapore's financial markets and economy at large, just when it looked like Singapore was ensconced in a new 'golden era' of growth?

The signs and indicators so far - buoyant job market, rising incomes, erstwhile bull stock market, a runaway property market, plus an influx of business talents and opportunities- had 'Boom Town' written all over. Exuberant economists could hardly contain their enthusiasm about Singapore's exciting prospects and potential in the years ahead.

With the economy having notched up well over 8 per cent growth in the second quarter (despite weak manufacturing output in June), Singapore has seen nine consecutive quarters where its GDP growth exceeded 6 per cent. And if growth for the year turns out at 8 per cent - about the same pace as in 2006 - it would be the fourth straight year that the economy has outrun the official trend growth estimate of 3-5 per cent.

Such growth streaks - with scant hints as yet of overheating pressures - have no doubt inspired talk of the dawn of a Golden Era here. The question - as always, but particularly in light of the latest market meltdown - is, how sustainable? The world - not least the regional economies - has, of course, undergone some sea changes in the last 10 years since the Asian crisis. But a look at Singapore's growth record over the past 25 years or so does show a pretty impressive pre-1997 growth streak that would be hard to beat, or even match.

Between 1987 (when it pulled out of a debilitating recession) and 1997, Singapore's GDP growth averaged about 9.2 per cent a year. The period includes two relatively 'slower' years - 1991 and 1992, when economic growth eased to about 6.5 per cent.

In his 1992 Budget speech, then Finance Minister Richard Hu spoke of Singapore's medium-term sustainable growth as 5-7 per cent, which he said 'may seem a let-down after the average growth of 8.5 per cent in the last three decades'. But Singapore's GDP had reached a higher base of over US$10,000 per capita, he said, the economy was at full employment, and 'expansion could no longer be as effortless and rapid as before'.

The official estimate of the country's long-term growth potential was later cut to a more conservative 4-6 per cent, but economists in the mid-1990s were confident that 'regional factors' could add a few more bonus growth points.

In the event, the government has actually since pared the economy's trend growth potential down to 3-5 per cent, given its maturing status and supply constraints, notably slow labour growth.

Fast forward past the 1997 regional crisis, the 2001 IT bust-up, and a restructured, revitalised economy has, since 2004, enjoyed above-trend growth every year. And economists again believe that the economy's underlying growth potential has risen to near-8 per cent, helped this time by not just new 'regional factors', the Chinese and Indian growth dynamoes, but also domestic policies. An even more proactive pro-enterprise strategy, diversification away from the electronics mainstay, as well as a more liberal immigration policy, are key.

Still, even with the best-laid plans, there will emerge external factors, forseen and unforseen, to throw things awry. This 'sub-prime' fallout is not the first market battering this year, and surely it won't be the last. For now, most analysts are of the view that the region will come away perhaps a little battered and bruised from the upheaval but with its economic fundamentals intact, and Singapore should still be on course to achieve another milestone of sorts this year - when its per capita GDP crosses US$30,000.

Still, for an indication of the effort and challenge it takes to scale new peaks as the economy prospers, it took Singapore five years - between 1989 and 1994 - for its per capita GDP to rise from about US$10,000 to over-US$20,000. In 1980, it was still under US$5,000.

Evidently, breaching the US$30,000 mark - still just over a third of Luxembourg's income level - has taken Singapore a whole lot longer, 13 whole years. But considering that back in 1965, the newly-independant country's per capita GDP was just over US$500, the growth has been nothing short of a feat.

Stanchart Chalks Up Record Half-Year Profit

Source : The Business Times, August 9, 2007

STANDARD Chartered Bank Singapore has turned in record operating pre-tax profit of US$205 million for the half-year ended June 30, up 53 per cent.

Its operations in the Republic are the strongest for the UK-based bank that is 14 per cent owned by Temasek Holdings.

'Singapore had the strongest growth ... the group grew 30 per cent,' said Lim Cheng Teck, chief executive, Standard Chartered Bank Singapore, yesterday.

The Singapore operations' profit contribution to the group is now more than 10 per cent, up from 9.1 per cent a year ago, he said.

Income was up 38 per cent to US$400 million while costs rose 36 per cent to US$187 million as the bank hired more people and invested in new products, he said.

One of the new products was the bank's mortgage product which offered a flexible Singapore offer rate (SOR) with an interest rate cap, launched in May.

With this SOR-pegged loan, borrowers peg their interest rates to the 3-month Singapore wholesale offer rate with a guaranteed interest rate cap in the first two years.

Standard Chartered Singapore's mortgage book had fallen to US$3.6 billion from US$3.9 billion a year ago as customers repaid home loans after the bank repriced them higher.

But with the latest mortgage product, home loans are growing again, he said.

Half of new home loans booked (since May 2007 when the product was launched) are SOR-pegged.

Consumer banking posted operating profit before tax of US$110 million, up 21 per cent with all major businesses doing well, led by small and medium sized banking and wealth management sales such as unit trusts.

The bank distributes third party funds and unit trust assets under management are S$1.7 billion.

Mr Lim said wholesale banking operating profit before tax more than doubled to US$95 million.

Commodity corporates including traders and financial institutions led the growth in revenues. Global market revenues were driven by derivatives and foreign exchange products together with strong contribution from debt capital markets and corporate finance.

The bank is confident that the strong momentum it achieved in the first six months of this year will continue into the second half of 2007.

'We're mindful of external changes of the last 2-3 weeks and confident of continued growth.

'We believe this is a short-term market correction and do not see a big fallout,' Mr Lim said.

OCBC Beats Expectations With $532m Q2 Profit

Source : The Business Times, August 9, 2007

OVERSEA-CHINESE Banking Corporation (OCBC Bank) achieved strong operating profits for the second quarter.

Its net profit for the three months to June 30 also beat analysts' expectations but was a third lower than the year-ago earnings which included a big divestment gain.

Q2 net profit came to $532 million, beating the $476 million median estimate of analysts polled by Bloomberg.

But it was 33 per cent lower than the previous corresponding quarter's $795 million, which included net divestment gains of $482 million from its sales of a property at Kim Seng Road and stakes in Robinson, Straits Trading and Southern Bank.

Net profit for the first half rose 6 per cent year on year to $1.18 billion, helped in part by a $90 million divestment gain and a tax refund of $62 million.

Excluding exceptionals, the group's Q2 core net profit was up 65 per cent at $518 million, against the previous Q2's $314 million. First-half core net profit was 63 per cent higher at $1.03 billion.

At yesterday's results briefing, the bank said it marked down its collateralised debt obligations (CDOs) portfolio by $33 million to reflect low market liquidity. OCBC said it has US$430 million or $650 million invested in CDOs, representing 4.2 per cent of shareholders' equity and just 0.4 per cent of its total assets.

Chief executive David Conner said yesterday: 'We have not made any impairment charge as the entire portfolio is still performing and there are no losses.'

Turning to the bank's results, he said strong growth across all business and geographic segments boosted the earnings for the quarter.

Net interest income for Q2 rose 28 per cent to $558 million.

The bank saw net customer loans grow 13.5 per cent over the year to $63.7 billion as at end-June, but behind its larger rivals United Overseas Bank and DBS Bank which reported a 17.5 per cent and 18.6 per cent loans growth, respectively.

OCBC said the increase in loans was mainly to the building and construction, manufacturing, non-bank financial institutions, investment and holding companies.

'We anticipate significantly higher volumes in second quarter flowing into the third quarter, so we anticipate the loan book growing for the rest of the year,' Mr Conner said, adding that the bank had been winning more financing for condo projects.

The bank's net interest margin in Q2 improved to 2.13 per cent, up 13 basis points from a year ago largely due to lower deposit costs in Singapore and Indonesia.

The booming capital markets raked in huge profits for the local banks in terms of fees from stockbroking, wealth management and investment banking.

Non-interest income for Q2 surged 50 per cent from last year to reach $493 million, contributed mainly by higher fee and commission income, life assurance profits and net gains from investment securities.

Turning to the group's overseas joint ventures, Mr Conner said the group was not looking at investing more in Bank of Ningbo, in which OCBC has a 10 per cent stake. 'But in the long term, we'd like to own a lot more, but current regulations prevent us from doing so.'

OCBC declared an interim net dividend of 14 cents a share. Its share price ended 3.6 per cent or 30 cents higher at $8.70 yesterday.

Local Banks Bask In Profitable Q2

Source : The Business Times, August 9, 2007

Fee income soars, housing loans climb, leading to 35% rise in core net earnings

HIGHER lending activity and soaring fee income saw the three Singapore-listed banks post another sharp rise in core net profit in the second quarter.

Their combined net profit rose 35 per cent to $1.77 billion, excluding one-time gains, fuelled by buoyant economic conditions and the frenzied stockmarket activity earlier in the year.

OCBC Bank saw its core net profit grow the fastest, rising 65 per cent year-on-year to $518 million.

Its larger rivals, United Overseas Bank (UOB) and DBS, also saw double-digit growth in their bottom lines over the year. DBS's net profit rose 21 per cent to $664 million, while UOB's grew 32 per cent to $585 million.

Non-interest income soared at all three banks, as they raked in fund management fees, stockbroking commissions and gains from investments.

DBS, the largest of the three lenders, saw the most rapid loans growth. Its net customer loans rose 19 per cent over the year to a record $99 billion at end-June, led by corporate and small business loans in Singapore and Hong Kong.

UOB saw the fastest growth in housing loans - the largest single component in the loan book of each bank, comprising about one-quarter of total loans. Its housing loans rose 18 per cent over the year and 5 per cent over the quarter to $20.7 billion at end-June.

DBS, the largest mortgage lender here, saw its home loans grow more slowly to $26.1 billion, while OCBC's stayed largely unchanged at $18.1 billion.

Net interest margins, which measure the difference between what the banks earn on loans and pay on deposits, generally held steady, as all three banks worked to improve their asset-liability mix to offset the impact of declining interest rates.

In May, the three-month Singapore interbank offered rate (Sibor) used by the banks to benchmark most of their Singapore-dollar corporate and small business loans fell sharply, triggering concerns that their margins would be dragged down.

But some analysts warned at the time that the full impact of the lower Sibor on the banks would be seen only in their second-half earnings.

The Sibor has since recovered slightly, but at 2.6 per cent, it is still substantially below the 3.4 per cent level at the start of the year.

DBS chief executive Jackson Tai said at the release of the group's results on July 27 that he did not believe interbank rates would remain low for long. 'The fundamentals don't support this kind of rates.'

OCBC's net interest margin actually improved from the first quarter, rising to 2.13 percentage points from 2.04 points in Q1.

Its chief executive, David Conner, said the bank had worked 'very hard' to improve the bank's mix of deposits by selling more current and savings accounts.

Yesterday, the banks' share prices rose amid a rebound in the broader market after Monday's sharp falls. DBS shares rose 5.3 per cent to close at $21.80, while OCBC ended 3.6 per cent up at $8.70. UOB's share price rose the most, ending 6 per cent higher at $21.20.

H1 Surprise Boosts Govt Growth Forecast

Source : The Business Times, August 9, 2007

Global backdrop favourable, S'pore ship is ready: PM

SINGAPORE) Economic growth in the first half of 2007 turned out to be higher than expected, and the government has raised its forecast for full-year growth to 7-8 per cent, Prime Minister Lee Hsien Loong announced in a highly upbeat National Day message.

While the upward revision of the full-year forecast was anticipated - it brings the official estimate in line with market projections - news that the economy grew 7.6 per cent in the first half, or 0.3-point higher than the advance estimates indicated last month, surprised most economists.

Details of Singapore's second-quarter economic performance will be released tomorrow. But weak manufacturing data of late had led many economists to cut their estimates of Q2 GDP growth by an average 0.2-point from the 8.2 per cent flash estimate.

Instead, a 7.6 per cent first-half pace now suggests that Q2 growth could be as high as 8.7 per cent, assuming a small 0.1-point adjustment to the Q1 number to 6.5 per cent.

DBS Bank economist Irvin Seah believes the Q2 upside came from the services and construction sectors, which more than made up for the manufacturing slack.

And UOB economist Alvin Liew estimates that the Q2 momentum pace, in seasonally adjusted annualised terms, would have been a hot 14 per cent, faster than earlier announced.

'Personally, I don't think that pace of growth can be sustained,' he said, adding that he's factoring in growth to slow to minus-2.3 per cent quarter on quarter, seasonally-adjusted, annualised rate.

And even with a Q3 moderation, the economy would still be on track to achieve 7-8 per cent growth year-round, he added.

Indeed, Singapore has much to cheer about this National Day, PM Lee said in his message, broadcast last night.

'While the global financial markets have been choppy the last few days, the medium-term fundamentals for Asia remain strong,' he said.

'We celebrate National Day in a happy mood. It has been another good year for Singapore. Altogether now, we have had four good years of growth.'

The economy added 111,000 jobs in the first half - the highest number ever - and unemployment is at a low 2.4 per cent. 'Workers are enjoying good wage increases and higher bonuses because businesses are doing well,' Mr Lee said.

The outlook ahead is favourable, and Singapore - at the heart of a rising Asia - is gearing up for 'new and exciting' projects.

If Singapore and Singaporeans 'keep on adapting and readapting' to global changes, 'we can keep growing strongly for many more years', he said.

The one potential party-pooper: Widening income gaps, which could threaten the country's social harmony and national cohesion, Mr Lee said.

'We cannot stop or reverse this global trend. But we can do a lot to help Singaporeans cope with it.' The basic approach is to grow the economic pie and have everyone 'benefit from Singapore's success'.

Meanwhile, the government is making changes to help Singaporeans 'work longer, earn more and build up' their retirement savings, including improving the Central Provident Fund scheme.

Singaporeans have 'every reason to be confident about our future', Mr Lee said. 'The global backdrop is favourable. The winds and tides are with us. Our spirit is high, and our ship is ready.'

Small Law Firms Muscled Out By Big Boys, High Costs

Source : The Business Times, 08 Aug 2007

New rules also hamper sole proprietorships

Despite the good times, an unlikely group of people are finding the going tough - lawyers.

More small law firms - which have between one and five lawyers - have been folding up this year than in the past five years.

According to The Law Society of Singapore, the number of small law firms fell to a five-year low of 690 last month.

In the past two years, the number of such firms remained constant at slightly above 710.

Lawyers that BT spoke to were not surprised to hear that their ranks were starting to thin out, pointing to rising costs as the main culprit.

Terence Hua, 33, who has been a sole proprietor for the past one-and-a-half years said: ‘To us, a booming economy represents higher operating costs. Rent goes up, and staff want to be paid more.

‘Survival has been a real question for me, and I’ve been looking at my options in the job market recently. I left bigger firms to be my own boss, but I’m not totally a dreamer.’

Apart from the problem of rising costs, lawyers say that the benefits of a booming economy do not necessarily trickle down to small firms.

Rajan Chettiar, 41, who has been a sole proprietor for the past four years said: ‘The lawyers that enjoy the boom are the big and medium-sized firms because they handle the en bloc sales, and transactional work from increased business activity.’

‘But the small law firms can’t do that work because they lack the manpower needed to execute the deal.’

Hoon Tai Meng who dissolved his firm of five lawyers after 10 years to join KhattarWong this year agrees that size matters.

‘We had to turn away good work because we were too small to execute the deals.’

‘It was difficult to handle corporate transactions above $10 million but now with a big team, there are no limitations.’

And Mr Hua added: ‘Many of us do general work like criminal and matrimonial cases, which do not necessarily increase because the economy is booming. In fact, these days it is difficult to get the constant flow of such work needed to run a business.’

Another problem is that more people are opting to represent themselves in court.

Chief Justice Chan Sek Keong noted that more convicted offenders are appearing in High Court appeals without lawyers, in an interview published in the latest edition of the Singapore Academy of Law’s Inter Se magazine.

BT was unable to get figures from the courts on lawyerless litigants in the past five years. But figures from the Supreme Court show that for this year, about 24.8 per cent of magistrates’ appeals by the accused for the first five months of the year on average were unrepresented.

And while there is more conveyancing work now, fees remain competitive.

Kenneth Tan, managing director of Asia Law Corporation said that conveyancing fees have edged up by about 10 to 20 per cent this year.

And sole proprietor Nicholas Narayanan, 35, who set up his firm this year said that a new rule which kicked in last month requiring lawyers to have two signatures for withdrawals above $30,000 from clients’ accounts presents hurdles for sole proprietors to do conveyancing.

This is because conveyancing lawyers make payments on behalf of their clients, which often exceed $30,000. And it can be difficult for sole proprietors to find another lawyer to sign off every time such payments are made.

The biggest law firms in Singapore have enjoyed strong growth. Since 2003, Allen & Gledhill and Rajah & Tann grew by about 50 per cent to 281 and 225 lawyers, respectively. WongPartnership more than doubled to about 180 lawyers.

CJ Chan said at the opening of the legal year in January that small law firms play an essential role in servicing poorer sections of society, but have not benefited from globalisation and the ‘fruits of Singapore’s economic progress’. It is ‘imperative’ for the Law Society to make a ’special effort’ this year to help small law firms, he said.

Family Feuds Over Real Estate Show Money Is Root Of All Evil

Source : The Straits Times, 9 Aug 2007

I READ with sadness the article, ‘Families feud over real estate in red hot market’ (The Sunday Times, Aug 5).

The current property frenzy has reduced kinship to the level of dollars and cents. Blood relationships count for nothing when there are millions of dollars at stake.

Mother sues son, brothers sue one another, wife sues husband, children sue their parents - the list goes on. Our society has indeed placed materialism at the top of their priority list.

I remember a similar incident happened to my mother’s family when my dead uncle left behind a private home worth close to $2 million more than 10 years ago.

There was much friction as there was no will and there was also a dispute on the valuation of the property. There was much distrust with each other and a cold war soon ensued.

Naturally, relationships soured among the siblings. The yearly mass gathering during Chinese New Year soon dwindled and vanished altogether. The distribution of the estate was delayed and the wait was also costly as the property market soon nosedived. The lawyers handling the estate also had a hard time trying to persuade all parties to come to a reasonable settlement.

Soon, one by one, my uncles and aunties died within a short 10-year period due to old age or sickness. Sad to say, some of the relatives’ funerals were badly attended as the news was not even relayed to us. Although some of the relatives were enriched by a few hundred thousand dollars later after settlement, they could not live through their old age happily and in unison.

I find the whole episode very sad and discouraging. For having played together as children happily under one big roof, the ending for most of them was one of division and estrangement. Some brothers could not even bade a final farewell to their sisters when they passed away. The love of money perhaps is the root of all evil.

Gilbert Goh Keow Wah

20 Per Cent Threshold To Stop En-Bloc Sale illogical

Source : The Straits Times, 9 Aug 2007

Having read Mr Gene Chia Choon Hwee’s misgivings in his letter, ‘En-bloc sale frenzy: Concerns of a home owner in Singapore’ (Online forum, Aug 6).

Allow me to offer my comments as another concerned resident living where a group is strenuously engaged in pressing for an en-bloc sale.

We live in a private estate which is regarded as being almost unique in design in Singapore, but the group is keen to pre-empt impending changes in the pipeline in government rules on en-bloc sales.

For the average Singaporean, the purchase of a property, whether in public or in private housing, is the biggest single investment of one’s lifetime, made with the primary intention of having a roof over one’s head, with little thought of profit, or even notional loss when the property market goes off the boil.

In our case, the price of the property we purchased dropped by as much as 30 per cent in a couple of years. This is unlike investment in the stock market where shares can be re-purchased with profit.

The empirical evidence in the case of en-bloc sales is that not many sellers are happy with the subsequent relocation, mostly in new quarters which compare unfavourably with where they were previously living. A lot of the extra cash that was supposedly the incentive for selling will go towards renovation of their new home.

Intending sellers fail to recognise that the ease with which they can sell their property must necessarily mean that they will find it correspondingly difficulty in acquiring another.

While the Government may be disinclined to interfere in the property market, one area where it should step in, and urgently, is in the rules presently governing en-bloc sales, which require 20 per cent non-assent to stop the process.

There is plenty of room to argue that this goes against the principle of ‘minority rights’ which need to be protected, even if not zealously, then at least adequately.

In the corporate scene, minorities can continue to retain their stakes unless the volume is less than 10 per cent.

What is significantly so different between property and stocks for the difference to be double?

In fact, taking into consideration the reality that a property is an investment bought with a long-term view in mind, for continued occupation and not for profit, the 20 per cent threshold seems illogical.

The Government should relook this formula and revise it.

Narayana Narayana

UOB Tightens Up On Home Loans In Face Of Dizzy Market

Source : The Business Times, 9 Aug 2007

Bank imposes caps on valuations and puts 80% ceiling on loans

Wee Cho Yaw has done it again, though only time will tell if he was ahead of the curve.

At a time when property prices have started to touch giddy heights, the chairman of United Overseas Bank (UOB) has reportedly asked his institution to tighten lending criteria.

Since late last month, UOB has been lending only 80 per cent of a home’s valuation, even though most banks are willing to stump up 90 per cent of the selling price.
UOB has also decided to put its own cap on valuations, which appear more conservative than the current market prices.

Mr Wee, arguably Singapore’s sharpest banker, stepped down as chief executive of UOB in April this year and was succeeded by his oldest son, Ee Cheong.

UOB’s stricter lending criteria mean that some potential borrowers have been turned away. A UOB mobile sales banker complained that she has been losing sales but has told prospective customers that she can try to appeal on their behalf. UOB is believed to be the first bank to make its lending norms more stringent.

At UOB’s second-quarter results on Tuesday, Eddie Khoo, executive vice-president, personal financial services, said that less than 10 per cent of the bank’s new home loans this year provided more than 80 per cent financing.

‘We require a higher cash portion,’ said Mr Khoo.

He said that more than 80 per cent of UOB’s home loans were for owner occupation and that foreigners accounted for 20 per cent of home loan customers.

For certain hot projects in the prime districts such as Orchard Residences, Scotts Square or St Regis Residences, UOB has put a valuation cap of $3,600 per square foot (psf), even though sales and sub-sales have been reported at much higher prices.
Scotts Square, launched last week, saw 169 units sold at an average price of $3,983 psf. The highest price paid was $4,430 psf for a one-bedroom apartment on the 41st floor, of the 338-unit project, said Wheelock Properties, the developer.

The median price for St Regis Residences on Cuscaden Road, developed by City Developments, is $3,713 psf, according to Urban Redevelopment Authority data. In June, it was reported that a unit went for $4,635 psf at the 173-unit St Regis Residences which has only 15 units unsold.

At selected projects in the upmarket districts 9, 10, 11 and in Marina Bay, UOB is said to have set the valuation cap at not more than $2,600 psf.

Sub-sales of The Sail @ Marina Bay are being advertised at prices ranging from $1,900 psf to over $3,500 psf. Caveats lodged show that units were sold from prices as low as $1,249 psf for The Sail which was first launched in 2004.

Even for the recently launched Fontaine Parry near Serangoon, UOB is said to have a valuation cap of $834 psf. According to sole agent Knight Frank, the first phase of Fontaine Parry, which was sold out, saw prices starting at $850 psf and some sub-sales are now going for $900 psf.

For the first half of 2007, UOB grew its total home loans book 18 per cent, outpacing the industry average, to $20.7 billion. DBS’s group home loans rose 8.75 per cent to $26.1 billion. UOB said Singapore mortgages were up 15 per cent while DBS reported an almost similar growth of 14 per cent.

In August 1995, Mr Wee said famously: ‘I don’t think the property market will collapse but prices have reached a high and the upside is limited.’

Although still sympathetic to first-time property buyers or HDB upgraders, he said the bank had more stringent criteria for speculative buyers and those investing in second properties.

The strategy meant that UOB lost some market share in property loans.

UOB that year reduced financing to only 65-70 per cent of the purchase price of a property, compared to about 90 per cent in 1992, just before the height of the property frenzy which peaked in 1996 before crashing.

Singapore’s property market subsequently went into a long depression, which lasted for the most part of the decade until 2003 and sent many borrowers into negative equity - where the size of their loan was larger than the value of their property.

The bank is opting for caution again.

Said a spokesman: ‘UOB has always taken a prudent approach in its credit assessment process. A loan application is assessed on the creditworthiness of the borrower as well as the merits of the property. We would consider the loan application favourably if the borrower meets our criteria. From time to time, the bank reviews its home mortgage policies, and if necessary, adjustments may be made to align with market conditions.’

Fortune Believed To Have Sold M21 En Bloc

Source : The Business Times,9 Aug 2007

Residential project’s buyer believed to be a fund representing US, UK investors

In the latest en bloc sale of a new residential project, Fortune Development group is believed to have sold its entire M21 freehold apartment development at Mandalay Road to a group of overseas investors for around $100 million or an average $1,400 per square foot (psf).

Sub-sale plan: When completed in 2009, M21 will have 61 units. Market watchers reckon the new owner is probably planning to sell the apartments individually

M21’s showflat was opened for a briefing for sales agents and a small party was held there on Aug 2, but before the weekend was out potential home buyers were told that the whole project had been sold, BT understands.

The buyer is believed to be a fund representing US and UK investors. Savills, the project’s sole marketing agent, declined to comment on the deal when contacted by BT.

The M21 development will be 17 storeys high when it is completed around late-2009 and will have a total of 61 units. These comprise one, two, three and four bedders - all with study rooms/family rooms - and three penthouses.

Market watchers reckon the new owner is probably planning to sell the apartments individually in the sub-sale market to ride on the current firm market.

BT understands that in May, Novena Capital (whose shareholders include Fission Development) sold all 24 freehold apartments in its Novelis project at Sinaran Drive near Novena MRT to a Middle Eastern-registered company, for about $25 million or $1,500 psf on average. And the Middle Eastern party is offering the units for sale at about $1,650-$1,700 psf in the sub-sale market. It is understood to have sold four units so far.

Last week, Keppel Corp and Keppel Land sold two villa apartment blocks in their Reflections at Keppel Bay condo to the Al-Nibras Islamic Real Estate Fund - a joint venture between Kuwait Finance House and Amanah Raya Berhad - for about $286 million. The 56 waterfront homes in the two blocks were believed to have been sold for $2,000-$2,500 psf.

Market watchers note that bulk purchases of apartments by investors have been gathering pace this year, with a view to selling the units for a quick gain and/or renting out the units (particularly for completed developments).

In June, seven units at the completed JC Draycott were sold at one go, for $1,825 psf. In late March, Thai tycoon Charoen Sirivadhanabhakdi bought 47 of the 48 apartments at Hoi Hup’s Suites @ Cairnhill for $205 million or about $2,550 psf.
Individuals shopping for homes may be miffed if they are denied a chance to buy a unit in a new project directly from a developer because the developer has sold a whole stack of units or even the whole project to bulk buyers. Such individual buyers may then have to buy their dream homes in these projects from these bulk purchasers in the subsale market - at higher prices.

However, market watchers say that from the developers’ standpoint, the appeal of bulk purchases is that they reduce the risks to developers if an investor is willing to take a chunk of units in a project.

In addition, with the current buoyant property market, developers don’t have to give any extra discount to bulk buyers. ‘From a developer’s viewpoint, it makes no difference whether they sell 50 units to 50 individual buyers or one buyer. The price is the same these days. The bulk buyer, or en bloc buyer, must accept the fact that because of the state of the market, it is difficult to get discounts on bulk purchases,’ explains CB Richard Ellis executive director (residential) Joseph Tan.

70% Of The Parc Condo Taken Up In One Week

Source : The Business Times, 9 Aug 2007

The Parc Condo (Picture): Average prices have risen from the low-$800 psf range initally to the high-$800 psf range now

A Joint venture between Chip Eng Seng and Lehman Brothers has sold about 70 per cent of their 659-unit freehold project, The Parc Condominium, at West Coast Walk, over the past week.

The developers began selling the project on Aug 1 at an initial average price in the low-$800 psf range but this had increased to the high-$800 psf range by yesterday evening, according to the project’s sole marketing agent Savills Singapore.

As of 7pm yesterday, about 460 units had been sold and sales were still going on.

The Parc Condo’s pricing is slightly higher than that of the nearby Botannia condo, where units are going for just over $800 psf on average, up from the initial $700 psf when the project was released around March/April. The 493-unit condo, being developed by a City Developments-CapitaLand tie-up, is about 70 per cent sold. It is being built on a 956-year leasehold site.

Chip Eng Seng and Lehman Brothers are developing The Parc on the former Westpeak site. The acquisition cost of the site in April last year was $206.09 million, reflecting a unit land price of $348 psf of potential gross floor area inclusive of an estimated development charge of $21.5 million then.

Savills said that most of those who have bought units in The Parc Condo over the past week are locals, while foreign buyers made up only a small number. ‘The local buyers seem to be buying mostly for their own use; we’re seeing a lot of young families. Some purchasers also picked up units for their children. Those who sold their Westpeak homes through the collective sale last year were given the first bite of selecting units,’ a Savills spokesman added.

The development comprises seven 24-storey blocks. Units range from one bedders (plus study) to five bedders. There are nine five-bedroom apartments of 2,433 sq ft each. Penthouses come with either three or four bedrooms, the majority above 3,000 sq ft, inclusive of roof gardens. A typical three-bedroom apartment costs around $1.1 million.

Horizon Towers Sellers Studying Demand To Extend Deadline

Source : The Business Times, Thursday, August 9, 2007

The majority owners of Horizon Towers - who face possible legal action over a botched en bloc sale of the development - have huddled together to decide if they should extend the deadline for the completion of the collective sale.

Stymied: Horizon Towers' buyers had threatened to sue every one of the sellers, when the en bloc sale collapsed on a technicality

Their lawyers have also denied all allegations that the sellers have not kept up their end of the deal.

BT understands the sales committee of Horizon Towers met with some of the owners of 173 units - who had agreed to the en bloc sale - yesterday, and are meeting others today, to decide if they should accede to demands of the buyers to push back the completion date and file a fresh application for the sale.

It’s believed the sellers’ lawyers from Tan Rajah & Cheah communicated this to the buyers’ representatives from Allen & Gledhill (A&G) yesterday, to hold off any legal action earlier threatened by A&G, if the sellers did not respond to the buyers’ demands by 3pm yesterday.

Tan Rajah & Cheah have also denied allegations by A&G that the majority sellers have breached the collective sale agreement.

This latest development comes on the back of a fresh dramatic twist to the saga on Monday: Horizon Towers’ buyers - Hotel Properties Limited (HPL), Morgan Stanley Real Estate and Qatar Investment Authority - had threatened to sue every one of the sellers, when the en bloc sale collapsed on a technicality.

At a hearing before the Strata Titles Board (STB) last week, the STB had rejected the majority sellers’ application for a collective sale order on the grounds that certain statutory requirements had not been fulfilled. The buyers then sent a letter of demand to the majority sellers on Monday - asking that the sellers push back the collective sale completion deadline, currently on Aug 11, by four months and file a fresh application for a collective sale order.

Should they fail to do so, the sellers would be sued for between $800 million and $1 billion for a breach of the sales contract.

The majority sellers - which make up some 84 per cent of the owners of Horizon Towers - had agreed in February to sell their Leonie Hill development en bloc to HPL and company for $500 million.

They are now believed to be in the midst of discussing if they should accede to the buyers’ demands.

BT understands that, even if the sellers don’t push the sale deadline back by the full four months, they are considering extending the Aug 11 deadline by a shorter period of time - just to give themselves enough time to discuss the buyers’ demands.

The legal suit which the buyers have threatened to bring against the majority sellers would mean that the owners of the 173 units would be personally liable for $5.78 million per unit - a sum which is likely to wipe out any gains that can be hoped to be achieved from a fresh en bloc sale of Horizon Towers.

The $500 million price tag would have meant that the 199 apartment owners would have pocketed about $2.3 million each and the 11 penthouse owners at least $4 million each.

The neighbouring development, The Grangeford, had been pledged for sale in June for $625 million or about $1,820 psf ppr.

It’s been reported that the majority sellers of Horizon Towers had changed their minds, after signing off on the deal, after nearby developments such as The Grangeford started fetching much higher sales prices. The majority sellers are not allowed to renege on their deal with HPL. But the sale collapsed last week at the hearing before the STB, when minority sellers - who objected to the deal - raised arguments that the sale had failed to comply with legal requirements.

The minorities themselves are not being sued by the buyers, having not been a party to the sales contract.

These ongoing developments, however, are no doubt taking their toll on the minorities - whose fate of their homes will remain in limbo until all is settled.

Sizzling Real Estate Sector

Source : The Business Times, Thursday, August 9, 2007

Bullish investors may drive 2007 sales to a record high, while home prices and rents continue to surge. KALPANA RASHIWALA reports

After years of being in the doldrums, the Singapore property market has been staging a spectacular recovery in the past couple of years. The rally is being fuelled by a surge in confidence from foreign investors as well as local buyers. The real estate sector is firing on all cylinders, including investment sales, residential and office.

En bloc fever: Leedon Heights was one of the big deals this year, netting $835 million

A whopping $24.81 billion worth of investment sale deals were sealed in the first six months of this year, according to CB Richard Ellis (CBRE). Investment sale deals - a gauge of major property players’ confidence level in the mid-to-long-term prospects for the real estate sector - include collective sales, other land deals, transactions of entire office and other buildings, as well as strata-titled units above $5 million. The first half of 2007’s sparkling investment sale numbers include some 75 collective sales worth $9.3 billion, higher than $8.2 billion for the whole of last year.

CBRE expects the full-year investment sale figure to surpass the record $30.51 billion set in 2006, hitting as high as $35 billion.

Major deals in H1 this year include the $1.04 billion sale of Temasek Tower, the collective sale of Leedon Heights ($835 million) and Novotel Clarke Quay Hotel ($201 million).

In the residential sector, the Urban Redevelopment Authority’s (URA) Q2 price index for private homes was up 8.3 per cent from the preceding quarter and 21 per cent higher year on year. And latest Q2 official figures show that the residential price recovery that began some two years ago in the high-end segment fuelled by foreign buyers has started filtering down to other segments of the market, based on URA’s sub-indices.

Prices of non-landed private homes in the Core Central Region (CCR) - which includes prime districts 9, 10, 11, Downtown Core (including Marina Bay) and Sentosa - were up 7.9 per cent in Q2 over Q1, while prices of non-landed homes in Rest of Central Region (RCR) - which includes areas like Bukit Merah, Queenstown, Geylang, Toa Payoh and Katong - rose 8.1 per cent over the same period. The Outside Central Region (OCR), covering suburban mass-market locations like Woodlands, Clementi, Jurong, Hougang, Tampines and Bedok, posted a 7.2 per cent quarter-on-quarter rise in Q2.

The rental market has also been sizzling, with residential rental indices of non-landed private homes rising 12 per cent in Q2 over Q1 for the CCR, and by 10 per cent and 9.4 per cent respectively for RCR and OCR in the same period. The Q2 rental indices were up around 35 per cent from a year ago for each of the CCR and RCR, and by 28.3 per cent for OCR.

In the public housing segment, the Housing & Development Board’s (HDB) resale flat price index rose 3 per cent quarter-on-quarter in Q2, compared with a 1.3 per cent gain in Q1.

The outlook for the residential sector is bright. Most property consultants predict that URA’s overall private home price index may surge a further 8 to 15 per cent in the second half, chalking a full-year increase of 23 to 30 per cent. Analysts generally expect HDB resale flat prices to post an 8 to 10 per cent full-year increase.

Interestingly, collective sales have caused a ripple effect. For instance, those who sell their homes through en bloc sales are looking for replacement homes, in many cases outside the prime districts where they sold their en bloc properties because of rapidly rising prices in the prime locations.

This has helped to spur a recovery in the other market segments, even HDB resale flats, where a few units have been purchased at record prices by those who sold their private homes through en bloc sales.

At the same time, as developers pull down en bloc sale sites to redevelop them, the resulting shortage of prime district apartments has helped fuel rental hikes for such homes. In the industrial property market, average rents for all categories of space increased in Q2 this year. High-tech space posted the biggest quarter-on-quarter gain of 11.9 per cent to $2.35 psf per month, as the office space shortage and rising office rentals led many qualifying occupiers to move to high-tech properties, according to CBRE. The average monthly prime retail rent along Orchard Road posted a 1.8 per cent quarter-on quarter gain in Q2 to $34.40 psf - close to the $35.10 psf achieved in 1996.

As for the office sector, a shortage of space in the near term, coupled with strong demand from occupiers including big-wig international financial institutions have been the key factors driving a whopping 80 per cent year-on-year rise in CBRE’s average prime rental in Q2 to $10.80 psf a month. This surpassed the 1996 peak of $9.90 psf a month, and is fast closing in on the 1990 historic peak of $11.50 psf a month. The Q2 office rental figure is also more than double the $4 psf during the current cycle trough in Q1 2004.

Market watchers expect office rents to head further north in the next few years because of the supply crunch. However, the government has been releasing more office sites, including the maiden ‘transitional office’ plot which can be built into a low-rise office building in about a year.

In addition, it has made available more 99-year condo sites, mostly in suburban locations. Besides tackling the supply side, the authorities have also begun releasing more property market data so that participants can make more informed decisions. So far, the indication from government is that it is not inclined to intervene to cool demand.

Fundamentals for the Singapore real estate sector remain strong for the next couple of years, at least - barring unforeseen circumstances.

Of course, a sustained rout in the local stock market because of the selldown on Wall Street is likely dent sentiment in the Singapore property market. But there could also be a more direct hit if the US sub-prime mortgage default fiasco dries up some of the liquidity that has been powering the local real estate sector’s sparkling recovery.

The Parc Condominium

Address : West Coast Walk
District : 05
Tenure : Freehold (Foreigners Eligible)
TOP Date : Estimated 2012
Site Area : 34,042.4 sqm 1366,432.39 sqft (Former West Peak Condominium Site)
Total Units : 659 units in 7 blocks of 24-storey towers
1+study : approx 667sqft (24 units)
2+study : Approx 980 sqft (71 units)
3br : Approx 1216 - 1302sgft (282 units)
3+study : Approx 1421 sqft (126 units)
4br : Approx 1442 – 1518 sgft (144 units)
*5br : Approx 2432 sqft (9 units)
Penthouse : Approx 3498 sqft (3 units)

Subsale : from $1000-1200/psf - 100% FULLY SOLD Project in a week

Developer : CEL (Chip Eng Seng/Lehman Brothers)

Project Extensive site area- One of the largest USPs Freehold development that houses 659 dwelling units with full recreational facilities.

Orientated to North South facing offers unobstructed views towards the stadium, Pandan Reservoir View, Kent Ridge Views, etc.

Location- Easy access to AYE and Clementi MRT. It is within 5 km Harbourfront, Vivo City, Sentosa, the future Integrated Resort, One North, Biopolis, NUS, SIM and Ngee Ann Polytechnic, and West Coast Recreation Centre & Clementi Stadium s just opposite

Bus Available Outside (Along AYE) : 97, 196, 197, 198 (SBS), 188, 963 (SMRT)

Map Source :

Quality finishes and fittings- Split System Air Con, built-in wardrobes and fully fitted kitchen with cabinets, hood & hob, conventional oven and microwave oven.

Investment Potential- Rentable with huge pool of potential residents, lecturers and professionals form the nearby educational, science and business parks.

-Elderly Fitness Area
-Spa Beds
-Floating Slabs
-Reflective Pool
-Lagoon Pool
-Toddler's Pool
-Spa Seats
-Timber Bridge
-Continental Shelf Plaza
-Linear Slabs
-Adventure Play Areal
-Fitness Corner
-50m Lap Pool
-BBQ Area
-Basketball Half Court
-Aqua Gymnasium
-Entertainment Deck
-Wading Pool
-Landscaped Garden
-Lazy River

OCBC Completes The Hat-Trick

Source : TODAY, Thursday, August 9, 2007

THE banking sector lived up to analysts’ expectations as they completed a hat trick of impressive second-quarter results, rounded off by Oversea-Chinese Banking Corp yesterday.

And the sector’s stellar performance is set to continue, with some analysts predicting another record year of profits.

“The economy is doing well. The fee income and non-interest part of the business will perform reasonably well in the second half, and grow slightly faster. In terms of other core parts of business, lending is what I expect to pick up in the second half, with higher volumes and reasonably stable margins. The outlook is still fairly positive for their earnings,” said Mr David Lum, an analyst at Daiwa Institute of research.

According to OCBC, net profit in the three months ended June 30 was $532 million— 65 per cent higher from a year earlier, but down 33 per cent if one-time items were included.

Analysts had forecast average earnings of $476 million. Total income was $1.05 billion, up 37 per cent from $764 million a year earlier, while net interest income was $558 million, 28 per cent higher than the comparative quarter’s $435 million.

OCBC’s chief executive officer David Conner said the bank’s first-half performance was “underpinned by strong growth across all our key business segments and geographies …(reflecting) not only the healthy business environment but also the significant investments we have made over the years to grow our customer businesses.”

The economy grew 7.6 per cent in the first half, and is expected to keep its blistering pace for the rest of the year, with the official forecast raised to 7 to 8 per cent for this year.

“The wealth factor reality in Singapore is positive. The outlook for our business in the region is quite good, but there are potential risks of a recession from the US,” said Mr Conner.

Even if a United States recession does occur, Mr Conner is confident it will have minimal effect on the global economy, expecting the economies of Japan, Europe, China and India to take over as “engines of growth”.

Bank shares rose sharply yesterday, helping to push the benchmark ST Index up 3.4 per cent, to 3,413.17. OCBC advanced 3.6 per cent to $8.70, DBS Group Holdings Ltd rose 5.3 per cent to $21.80, while United Overseas Bank Ltd climbed 6 per cent to $21.20.

Bank shares have been volatile in recent days as concerns heightened over how the problems of US subprime mortgages might hurt the quality of risky assets that banks hold.

OCBC, which said earlier its exposure to the US subprime mortgage market is small, yesterday said it made a loss provision of US$33 million ($49.9 million) on its collateralised debt obligations (CDO) portfolio, to reflect the “low liquidity” in the CDO market in recent months.

‘The Winds Are With Us, Our Ship Is Ready’

Source : Today, Thursday, August 9, 2007

Strong growth will continue if Singapore adapts to economy

THE Singapore skyline — spotted with cranes, perhaps a little hazy on the day, but distinctive because of its constant transformation-made the perfect backdrop for the Prime Minister to share some very good news with Singaporeans as the nation celebrates its 42nd birthday.

The figures were nothing short of impressive: In the first six months of this year, the economy grew 7.6 per cent, “higher than we had expected”, said Mr Lee Hsien Loong. A total of 111,000 jobs were added, “the highest number ever” and unemployment stands at 2.4 per cent, which he described as “very low”.

Against a favourable global backdrop and with Singaporeans having “every reason to be confident” about the future, Mr Lee announced that the Government had also raised its official growth forecast for the whole year to “between 7 and 8 per cent”, up from 5 to 7 per cent. Narrowing the range emphasised this quiet confidence.

The upshot of all these good-looking figures?

“Workers are enjoying good wage increases and higher bonuses because businesses are doing well,” said Mr Lee in his televised National Day Message yesterday.

“Our efforts to transform our economy are paying off. The global economy is continuing to change. If we keep on adapting and readapting to it, we can keep growing strongly for many more years,” said Mr Lee, whose speech also touched on how Asia had changed for the better since the 1997 financial crisis.

In a break from the past, the Prime Minister delivered his third National Day message from the top floor of the National Library to reflect a changing Singapore

And the changes, he noted,are aplenty, with many “new and exciting projects” underway, such as the integrated resorts, the banking and financial centre, the gardens by the bay and, of course, this year’s National Day Parade held on the largest floating stage in the world.

“There is buzz and excitement in the air, as our city changes before our eyes day by day ... We are not just creating a new downtown, but building a first-class living environment for all Singaporeans.

“Within a decade, our city and our whole country will be completely transformed. The world is taking notice. It will be a new Singapore, but with our own unique identity, and the can-do and neversay-die spirit of the Lion City,” said Mr Lee, echoing — perhaps even more so this year — the upbeat tone of his messages in the past two years.

Still, despite the rosy outlook, Mr Lee made it clear Singapore faces one major challenge to its social harmony and national cohesion: Widening income gaps.

Noting that such income gaps exist everywhere in this age of globalisation — where the presence of hundreds of millions of unskilled workers have pushed down wages at the lower end — Mr Lee assured that a lot could be done to help Singaporeans cope with it.

“Our basic approach is to grow the economic pie. When companies expand, there will be more and better jobs for everyone,” he said. The Government is also working towards strengthening the social safety nets by putting in place programmes such as ComCare and Workfare to help the lower-income families.

But apart from globalisation pressures, the widening income gap here is also due to Singapore’s ageing population.

“I know many older Singaporeans worry about whether they can make ends meet. We are making changes to help you to work longer, earn more and build your retirement savings,” said Mr Lee. “We will enhance the value of your HDB homes, which are a nest-egg for old age. We will improve the CPF scheme, so you can enjoy a steady income and peace of mind in your golden years.”

While changes are being introduced at the official level, Mr Lee cautioned that the Government “cannot solve all the problems alone”.

“Everyone must play a part. We each must take responsibility for ourselves, make the effort to do well, and provide for our families and our old age,” he added.

Mr Lee also urged better-off Singaporeans to do their bit.

“The more you have gained from society, the greater your obligation to give back something to your fellow citizens. Let your giving come from the heart,” he said.

The National Day message has traditionally served as a curtainraiser for the Prime Minister’s biggest political speech of the year — the upcoming National Day Rally. And, judging from the time devoted during his 10-minute speech to the widening income gap, many expect this to be a key theme when Mr Lee next addresses the nation on Aug 19.

Horizon Towers Owners Likely To Be Taken To Court By Buyers

Source : Channel NewsAsia, 08 August 2007

Parties involved in the failed en bloc sale of Horizon Towers appear likely to be headed for the courts.

A deadline given by buyers of the Leonie Hill condominium has lapsed, leaving them open to sue the majority owners for losses of between S$800 million and S$1 billion.

The Strata Titles Board (STB) rejected the S$500 million deal last Friday, but the buyers want the sellers to give an extension and submit another application for the sale.

Channel NewsAsia understands that the sellers have yet to accede to these demands when the deadline expired at 3pm on Wednesday.

Owners of Horizon Towers could be taken to court soon.

Lawyers representing the buyers allege that they are now in breach of a contract to sell the condominium, inked in February this year.

K Shanmugam, Partner, Allen & Gledhill, says: "The application that was made was faulty, which is what the STB has ruled. So from our perspective, the sellers have not complied with their contractual obligation to make a proper application in court. We therefore decided that we will sue unless the demands that have been set out in Allen & Gledhill's letter were met."

The buyers - HPL, Morgan Stanley Real Estate and Qatar Investment Authority - say they stand to sustain major losses, including loss of profits.

Mr Shanmugam says: "The choices in this case for all parties are quite stark. For us, if we walk away, there are two substantial international parties who had confidence in Singapore and who have invested in this project. And the third, HPL, is a public company answerable to shareholders. And if they walk away and do nothing, how are they going to answer to their shareholders? And it's a substantial loss."

Deputy chairman of the sales committee Ms Doreen Siow told Channel NewsAsia that the sales committee is still consulting with its lawyers, Tan, Rajah & Cheah, and is meeting residents on Wednesday and Thursday to discuss their options.

Meanwhile, lawyer Shriniwas Rai, representing a separate group of majority owners, argues that the contract should no longer be enforceable after the STB's rejection of the sale.

Shriniwas Rai, Partner, Hin Rai & Tan, says: "I think that parties should look at how to get the matter resolved, either by mediation which is one approach - or to go by an originating summons to get a ruling from the High Court whether the contract as it stands now is enforceable or not. Whether it's a conditional contract, or it's a good contract. In my view it is a conditional contract. The board's approval is a first requisite, and having failed to obtain that, I think the purchaser cannot go ahead with the sale."

But he suggests that mediation as the best way for all parties to settle the case. - CNA/ch

Horizon Towers Sellers Debate Possible Options

Source : The Straits Times, Thu, Aug 09, 2007

THE row over the thwarted Horizon Towers collective sale remains in limbo today after owners spent last night meeting lawyers to thrash out a course of action.
They ignored a 3pm deadline yesterday imposed by the estate's thwarted buyers and will meet again today as they try to grapple with the threat of a $1 billion lawsuit.

The buyers - Hotel Properties Limited (HPL), Morgan Stanley Real Estate and Qatar Investment Authority - have threatened to sue the sellers if they do not respond to their demands.

'We're still in discussions with our lawyers on what step to take next,' said the deputy chairman of the condominium's sales committee, Ms Doreen Siow.

But there was an air of defiance emerging from the ranks of owners yesterday.

The owners know the legal deadline for the sale expires on Saturday so they have until then to decide on their next move.

They have also dismissed the buyers' claims that they have not fulfilled their side of the sale contract.

'Our lawyers, Tan, Rajah & Cheah, have denied allegations of any breach of contract,' said Ms Siow.

The spiralling legal row was ignited last Friday when the Strata Titles Board (STB) axed the sale application for the Leonie Hill condominium, citing procedural errors.

It seemed the last act in a bitter row that began in February when the buyers inked the deal to buy the estate for $500 million.

But on Monday, the buyers made certain demands including asking the sellers to apply to extend the sale deadline from Saturday to allow a new application to go to the STB.

The sellers were also told that they could ask the High Court to reconsider the STB ruling.

But there was a sting in the tail: legal firm Allen & Gledhill, which is acting for the buyers, said the owners of 173 units who voted for the sale could be sued for lost profits of between $800 million and $1 billion. That works out to as much as $5.78 million per unit on average.

Senior Counsel K.Shanmugam, of Allen & Gledhill, said HPL, a listed firm, is answerable to investors and is facing a substantial loss.

The owners are likely weighing three obvious options. One is to extend the sale deadline and make a new application. The second option is to extend the deadline and appeal to the High Court over the STB ruling.

But these will mean the sale proceeding at the original price struck in February, one that looks low in today's rising market.

Their $500 million price - which is also the reserve price agreed on last year - works out to about $815 per sq ft (psf) of potential gross floor area. The Grangeford estate nearby was recently sold for $1,820 psf.

The third option is to do nothing, which essentially leaves the buyers in a position to carry out their threat to sue for the lost profits of $800 million to $1 billion.

It is a huge sum but not out of sync with the booming property market, industry observers say.

Meanwhile, all sides are awaiting the STB's explanation of its decision, which will be out 'in due course'.

This would help the owners decide whether it is worthwhile appealing against the ruling.

The sellers' lawyers and marketing agent First Tree Properties could also be in the firing line as the owners could counter-sue them for not getting the paperwork right, said an observer. 'The case shows that there's no incentive to be a consenting owner as you can end up being a potential defendant.'

A lawyer who declined to be named said it may scare off owners and kill the booming collective sale market.

Another observer said: 'It's a big Pandora's box.'

OCBC's Profits Slip A Third To $532m But Beats Forecast

Source : The Straits Times, Thu, Aug 09, 2007

OCBC Bank's net profit fell 33 per cent, as better-than-expected growth in loans and fee income was masked by an absence of one-off gains that boosted the bottom line last year.

Earnings for the second quarter ended June 30 clocked in at $532 million, beating a median estimate of $476 million by eight analysts polled by Bloomberg News.

This was down from last year's $795 million, which had included $482 million of divestment gains from the sale of shares in retailer Robinson & Co and other investments.

Excluding such exceptional items, OCBC's operating numbers were impressive. Core earnings surged 65 per cent to $518 million, buoyed by a 28 per cent hike in net interest income and a 50 per cent jump in non-interest income.

This puts it at the top of the class in a local banking field which has scored well overall in the quarter, analysts said. DBS Bank last week reported a 21 per cent gain in earnings, while United Overseas Bank (UOB) posted a 32 per cent bottom-line rise.

'OCBC has been the only one to show a big improvement in net interest margins, which is a surprise considering how the other two banks fared,' said Daiwa Institute of Research analyst David Lum. 'It looks like the source of improvement came from a big drop in their funding costs.'

Banks fund the loans they give either by taking deposits or borrowing from other banks.

OCBC chief financial officer Soon Tit Koon said the bank enjoyed lower funding costs in Singapore and Malaysia due to lower interest rates and a higher proportion of savings and current account deposits.

Indeed, OCBC's net interest margin rose 0.13 percentage point to 2.13 per cent, the biggest improvement among the local banks. At the same time, its loans book expanded 12 per cent to $65.3 billion, driven mainly by corporate lending, especially in building and construction.

But lending to home buyers was flat, and this partly explained why the bank lagged behind the 18 per cent increase in UOB's loans book and the 19 per cent increase at DBS.

OCBC chief executive David Conner said the bank, which leads the market in HDB loans, is very much in the market, and has been increasing its sales force. Loan approvals in the quarter was up 75 per cent.

Non-interest income of $493 million was boosted by big gains in stockbroking commissions, wealth management fees and investment banking, which offset a 50 per cent fall in foreign exchange income. Life insurance profits almost doubled to $123 million, helped largely by strong contributions from insurance subsidiary Great Eastern Holdings.

On collateralised debt obligations (CDOs), Mr Conner said the bank has marked down its portfolio by US$33 million (S$49.7 million) due to low liquidity for the financial instrument that is at the centre of the United States mortgage crisis.

He, however, reiterated that there have been no losses or rating downgrades so far and the CDO investments, in any case, are too small relatively to significantly hurt OCBC's earnings.

Second-quarter earnings per share were 66.1 cents, up from 39.2 cents. Net asset value per share, before valuation surplus, was $4.39, up from $3.84. An interim dividend of 14 cents a share has been declared.

OCBC shares closed 30 cents up yesterday at $8.70.

Families Feud over Real Eestate In Red Hot Market

Source : The Straits Times, Sunday, Aug 05, 2007

FOR 50 years, cafe owner Mohanlal Ramchand Daswani and his mother lived happily together under one roof.

He said that he was her main caregiver, and paid for all her medical bills.

Today, they do not talk to each other - all because of a lawsuit over a Savannah CondoPark apartment in Simei, which Mr Mohanlal, 51, bought last year.

His 86-year-old mother, Mrs Ishwaribai Ramchand Daswani, accused him of using her money to buy the four-bedroom apartment and putting it under his name.

The money had come from the $1.06 million proceeds that she had received from the collective sale of the family home in Phoenix Mansion along Cairnhill Road in 2005.

He claimed she had given him the money to buy the apartment for himself. He is married with two children. Mother and son settled the case last week after a day-long trial, but bitterness lingers.

PAYA LEBAR CRESCENT PROPERTIES, JULY 2007: Businessman Chang Ham Chwee (left), 68, is suing his daughter, who has a low IQ, and three siblings for three properties worth $9 million. His late mother bequeathed a bungalow to him and two other houses to his daughter, Ms Chang Lee Siang (right), 48, and three other siblings including Chang Hung Hor (top right), 67. But he claims all three belong to him as they were bought with profits from the family business which he ran. The case is still being heard. Photos/ TERENCE TAN, FRANCIS ONG

SAVANNAH CONDOPARK UNIT, JULY 2007: Mrs Ishwaribai Ramchand Daswani (right), 86, sued her son, Mr Mohanlal (left), 51, for using her money to buy and register a $700,000 condo unit under his name. He claimed, however, that she gave him the money and instructed him to list the unit under his name. Mr Mohanlal conceded the case a day after trial began as he did not want his mother to go through 'such a difficult time'. Photos/ TNP

MITRE HOTEL, KILLINEY ROAD, MAY 2007: Mr Chiam Heng Hsien (left), 62, was sued by his cousin Mr Chiam Heng Luan, 93, and other relatives over the Killiney Road property. Mr Chiam Heng Hsien claims a 1948 agreement allows operators to occupy it indefinitely, but his relatives - including Heng Tin (right), Heng Chow (above right) and Siew Juat (top right) - want it sold. The judge agreed. Photos/ ST & TNP

TELOK KURAU HOUSE, FEBRUARY 2007: Madam Hwang Chow (left) sued her daughter, Madam Ong Foon (right), and son-in-law, Mr Tay Peng Keng (far right), to claim more than $520,000 in profits from the sale of their house in Telok Kurau. The couple argued that her share was only $146,000, as more than $920,000 of the $1.39 million received from selling the house was repaid to OCBC Bank and the CPF Board. Her daughter died three days after the lawsuit was filed last year. After the case was settled in February, Mr Tay paid his mother-in-law $325,000. Photos/ WANG HUIFEN, TNP, WANBAO
Mr Daswani, the sixth child of seven children, said he is disappointed with his mother's demands and would rather 'cut off all ties' with her.

His mother has declined to comment.

At a time of rising property prices, property disputes involving family members have been hogging headlines.

Besides Mr Daswani's case last week, there was also the lawsuit businessman Chang Ham Chwee brought against his low-IQ daughter and three siblings over three Paya Lebar bungalows worth at least $8 million.

In the past two years, there have been at least seven reported cases of families feuding over properties.

Lawyers interviewed by The Sunday Times said anecdotal evidence suggests that the property boom - residential property prices jumped 8.3 per cent from April to June this year alone - could have played a part in quarrels over property.

One lawyer, Mr V. Subramaniam, said that while people have become more aware of their rights, the property boom has made it 'more worth their while to bring the case to court'.

Wong Partnership lawyer Andre Maniam agreed. 'It is a function of the property market,' he said.

He is representing Mr Chiam Heng Hsien, 62, who is up against his family who wants to sell the 40,000 sq ft of prime land in Killiney Road on which Mitre Hotel sits.

The family had tried to sell the site at the height of the last property boom in 1996. Mr Chiam, who has a 10 per cent share of the property, reportedly refused to allow the sale unless he received $21 million.

This year, the family returned to court. The judge has ruled that the site will be sold by public tender and ordered Mr Chiam to vacate the site at least four weeks before the sale is completed.

However, it has not been decided whether he will be compensated.

The property is currently estimated to be worth $100 million - nearly 30 per cent more than its last offer of $72 million in 1997.

After rulings are made, however, reconciliation in most cases is near impossible.

Mr Daswani has agreed to return his mother 95 per cent of the apartment's current value - about $845,000 - but said: 'I think at this point, enough is enough. I need to get on with my life.'

Mr Chiam of Mitre Hotel said: 'I don't think the relationship can be the same again.'

His cousin, Sloane Court Hotel founder Chiam Heng Luan, 93, who led the other relatives in the court battle against Mr Chiam, could not be reached for comment.

Businesswoman Chan Siew Khim, 69, who is battling her 68-year-old brother, Mr Chang Ham Chwee, said it is 'shameful' for family members to wash their dirty linen in public.

In court, Mr Chang, a businessman, sits separately from his siblings and they avoid eye contact.

'Why must it turn out like this?' his sister laments.

It is a question which Mr Chew Tong Seng, 72, and his wife, Ng Mui Yan, 68, too ask themselves.

They successfully sued their eldest son after he sold their Cactus Road shophouse in Yio Chu Kang for $890,000 and kept the money.

Madam Ng said in Mandarin: 'We worked hard to bring him up, but now we just get heartache.'

The parents have not spoken to their son since the case concluded in 2006. They have five sons.

When contacted, their son Mr Chew Cheng Quee, 45, a businessman, who is married with two sons, said he has been 'deeply hurt'.

'We have got along for over 40 years...I can lose the money, but relationships, cannot. I can't even eat or sleep properly now,' he said in Mandarin.

One year after his wife's death, taxi driver Tay Peng Keng, 57, still cannot bring himself to talk to his mother-in-law, who sued the couple for more than $520,000.

Madam Hwang Chow, then 79, said that was her share of proceeds from the sale of a three-storey house in Telok Kurau they had jointly bought, then sold in August 2005 for $1.39 million.

After the case was settled in February, Mr Tay paid his mother-in-law $325,000. Three days after receiving the court papers, Madam Ong Foon died of cancer. She was 51 years old. The couple have one daughter.

Mr Tay now says: 'I just want to stay as far away as possible from them.'

The Sunday Times tried to contact Madam Hwang through her lawyer but she did not respond.

Madam Chan, however, is already certain of one outcome: 'Because of money, a family becomes like this...Money can be earned, but kinship cannot be.'

Growth Forecast Raised To 7%-8%

Source : The Straits Times, Aug 9, 2007

PM in an upbeat N-Day message says: Country will be completely transformed within a decade

HERE'S another reason for cheer on National Day.
The work to transform Singapore's economy is paying off as Prime Minister Lee Hsien Loong announced a new and higher growth forecast for this year, of between 7 and 8 per cent.

The earlier projection was 5 to 7 per cent.

The positive outlook was not just because Singapore drew more investments or gave more people jobs. Mr Lee put it down to the way Singaporeans had responded.

'Our people are adapting and working smarter. We are organising ourselves more efficiently, and making better use of our resources. In short, we have increased our productivity,' he said yesterday in his National Day message.

'Our efforts to transform our economy are paying off. The global economy is continuing to change. If we keep on adapting and re-adapting to it, we can keep growing strongly for many more years.'

As he spoke of a changing Singapore, Prime Minister Lee Hsien Loong also changed the venue for his annual National Day message.

Instead of delivering it from the staid Istana office, he opted for the top floor of the National Library Building with the attractive Singapore skyline as his backdrop.

Explaining the change to reporters after recording the 10-minute message that was shown on television yesterday, he said: 'We've been doing National Day messages for years and years. The format is quite standard. I thought this year we should make a change.

'Singapore's changing. I'm talking about it and I'd like Singaporeans to see it. And here we are in the National Library. I'm proud of the building and I'm proud of the view.'

Growth in the first six months of the year hit 7.6 per cent which, he said, was higher than expected.

Just last month, the Monetary Authority of Singapore said it was not changing its forecast, although it acknowledged second-half growth could accelerate.

But private-sector economists had been predicting that full-year growth would be closer to the now-revised rates.

Said United Overseas Bank economist Alvin Liew: 'Latest GDP figures show the economy has successfully diversified, so even when manufacturing is weak, we can still achieve stronger growth.'

'Going by the new numbers, we reckon the economy grew 14 per cent from the first to the second quarter. It's a blistering pace,' he added.

However, there are dark clouds that could dampen growth.

Fortis Bank strategist Joseph Tan highlighted several, such as the office space crunch, a job market hungry for workers, and the mortgage woes in the United States.

'With all this uncertainty, it is going to be tough for Singapore's growth to be sustained in the second half,' Mr Tan said.

PM Lee noted the financial markets had been 'choppy', but said Asia's medium-term fundamentals remain strong.

Overall, his message was an upbeat one.

Singapore had four good years of growth, and much to look forward to, including the integrated resorts and the Formula One Grand Prix race.

A decade after the Asian financial crisis, the region had regained its balance and countries were moving forward.

Singapore was 'at the heart of this rising Asia' and had strengths like a corrupt-free society and disciplined workers to draw on.

'Looking ahead, we are poised to take off,' he said.

He added: 'Within a decade, our city and our whole country will be completely transformed. The world is taking notice. It will be a new Singapore, but with our own unique identity, and the can-do spirit of the Lion City.'

Still, he was mindful about the concerns of Singaporeans who were being left behind and the widening wage gap.

Help was available, he said, adding: 'We want everybody to benefit from Singapore's success.'

He also assured older Singaporeans that they will not be neglected. 'I know many older Singaporeans worry about whether they can make ends meet. We are making changes to help you to work longer, earn more and build up your retirement savings.

'We will enhance the value of your HDB homes, which are a nest egg for old age. We will improve the CPF scheme, so that you can enjoy a steady income and peace of mind in your golden years.'

Singaporeans had every reason to be confident about the future, he said as he wished them a happy National Day. 'The global backdrop is favourable. The winds and tides are with us. Our spirit is high, and our ship is ready.'

Soleil @ Sinaran Drive

Soleil- The Twin Tower Landmark

Strategically located in prime District 11 (Sinaran / Moulmein Drive), the proposed condominium development is in a well-established and popular neighbourhood comprising residential, commercial and hotel development.

Map Source :

Walking distant to the Novena MRT, the development is just next to Novena Square shopping center, Velocity and entertainment outlets. It is also near to medical facilities e.g. Thomas Medical Centre and Far East Medical Suites. Such coveted location offers residents quick and easy access to work places at the Central.

A “Lifestyle Development” offering luxurious, distinctive styling and modern comforts that appeal particularly to young professionals because of the ease of commuting to work and play entertainment places.

It is also an excellent investment potential in terms of capital gains and rental returns.

Soleil has a very unique building façade, which inspired by the natural, organic and sculptural architectural concepts. It is also a wellness retreat – a home within a resort to escape from busy work schedule and urban hectic lifestyle. There are many interesting common facilities, which include entertainment pavilions and spa cabanas for spas and Jacuzzis. This will be a prefect venue for private events and poolside parties.

Developer - Centrepoint
Tenure - Leasehold 99 yrs w.e.f. 23rd Oct 2006
Total Units - 427, 2 Blocks of 36 storeys each
TOP - est. 2011
Site Area: Approx. 134,160 sqft/plot ratio 3.5

Unit Types:
1br - 90 units (495-581 sqft)
2br - 107 units (936-958 sqft)
2+study - 56 units (1098 sqft)
2br loft - 32 units (1464 sqft including void)
3br - 64 units (1485 sqft)
4br - 64 units (1722 sqft)
5br Penthse - 4 units (4704-4908 sqft)

Price: currently $1400-1500psf on average
Date of launch: Mid August

Note: The above price is subject to changes.

OCBC's Q2 Profit Rises 65% To $518m

Source : The Business Times, August 8, 2007

Oversea-Chinese Banking Corp, Singapore's smallest bank, on Wednesday said its quarterly profit rose 65 per cent, helped by strong loan growth and higher fee income on the back of buoyant capital markets.

The bank reported net profit of $518 million (US$342 million) excluding exceptionals for the April-June period, up from $314 million a year ago and against an average forecast of $460 million by four analysts polled by Reuters.

OCBC, controlled by the family of Singapore tycoon Lee Seng Wee, has lagged its larger rivals in capturing loan growth in recent quarters despite a strong local economy and booming construction market.

Singapore's second-biggest lender, United Overseas Bank, on Tuesday posted a 32 per cent rise in quarterly profit, excluding exceptional gains, as a construction and property boom fuelled strong loan growth.

Last month, DBS Group Holdings, South-east Asia's biggest lender, reported a 21 per cent jump in quarterly net profit excluding one-offs, beating market expectations, due to higher loan income and strong fees. -- REUTERS

M&C earnings more than double in Q2 and H1

Source : The Business Times, August 8, 2007

Hotel group's CEO, who took up post in March, quits; search for successor starts

SECOND-QUARTER and first-half net earnings have more than doubled for Millennium & Copthorne Hotels plc.

Mr Kwek: H1 results were strong particularly in London, New York, S'pore

The year-on-year jump in profit after tax and minority interests came on the back of tax credits, higher gross operating margins through better cost control, and a strong showing by its 39 per cent-owned associate CDL Hospitality Trusts.

M&C, the London-listed hotel arm of Singapore property group City Developments, also announced that group chief executive officer Peter Papadimitropoulos has left the company 'by mutual consent with immediate effect'. He took up the top post only in March this year and was the company's third CEO in just three years.

Many hotel analysts were critical of his leaving. 'This is likely to disappoint bulls of the stock who had expected Papas, with his corporate finance and private equity background, to act as a catalyst for the crystallisation of M&C's asset value,' a Reuters report quoted Merrill Lynch analysts as saying.

'When Papas' replacement is appointed it will be M&C's fifth CEO in just five years...we believe today's departure once again highlights the corporate governance concerns at M&C,' Merrill Lynch said.

M&C said the search for a new chief executive is underway. In the meantime, executive director Wong Hong Ren will once more step in as interim group CEO.

The hotel group reported a 123.8 per cent jump in net profit to £40.5 million (S$124 million) for the second quarter ended June 30, 2007, compared with Q2 last year.

Net earnings for the first six months of 2007 also increased 122.4 per cent to £52.7 million, from £23.7 million in H1 2006.

M&C said that group revenue per available room (RevPAR) increased 9.3 per cent (at constant exchange rates) in Q2 and by 8.9 per cent for H1. RevPAR for Asia increased by 13.5 per cent to £46.98 in H1 2007 compared with the corresponding period last year.

Over the same period, RevPAR for the group's Singapore properties, on a like-for-like basis, jumped 28.8 per cent, fuelled by a 21.4 per cent hike in average room rates and a 4.9 percentage point increase in occupancy to 85.5 per cent.

'Overall, the half-year results were strong, particularly in London, New York and Singapore, where we have experienced buoyant market conditions,' M&C chairman Kwek Leng Beng said in a statement. 'As outlined in May, the group has focused on actively maximising yield management opportunities and I am pleased to say that we have achieved our targets so far. The third quarter has begun well with RevPAR up by 7.6 per cent in the first four weeks of July. The outlook for the year as a whole remains positive and our expectations are unchanged,' Mr Kwek added.

Revenue rose 4 per cent in Q2 to £169.3 million, while H1 revenue inched up 3.1 per cent to £322.4 million.

M&C's bottomline benefited from an overall tax credit of £8.2 million in Q2 2007 and £3.2 million in H1 2007, primarily due to a change in UK tax legislation in respect of the removal of a clawback on hotel tax allowances.

Basic earnings per share increased to 13.8 pence in Q2 2007, from 6.3 pence in Q2 2006. First-half 2007 EPS was 18.0 pence, up from 8.2 pence in H1 2006. M&C shareholders will receive an unchanged interim dividend of 2.08 pence per share.

Hiap Hoe H1 Net Up 75% to $8m

Source : The Business Times, August 8, 2007

Earnings per share rose to 3.14 cents, from 2.05 cents a year ago

NICHE property developer Hiap Hoe yesterday said that net profit for the first half ended June 30, 2007, rose 74.8 per cent to $8 million - from $4.6 million a year ago - boosted by the company's property sales.

The profit figure for H1 2006 took into account a non-recurring gain of $3.9 million, the developer said. Excluding this gain, profit for the first six months of 2007 registered an 11-fold increase over the previous year.

Earnings per share rose to 3.14 cents, from 2.05 cents a year ago.

Hiap Hoe attributed the good showing to strong property sales as well as higher selling prices.

The company's first half revenue rose 261.2 per cent to $55.6 million, from $15.4 million for the corresponding six months last year. The six-month revenue already surpasses the full-year 2006 revenue of $50.6 million.

'The group has performed well due to strong market demand for residential property,' Hiap Hoe said.

Official data shows that private home prices have climbed 13.5 per cent since the start of the year.

Revenue contribution from Hiap Hoe's residential projects Papillon, Moonstone Residences, Proximo and City Edge totalled $55.2 million in the first half, the developer said.

Proceeds from the brisk sales of Cuscaden Royale and Oxford Suites - which were snapped up within a short period after their respective launches in the first half of the year - have yet to be recognised as construction has not started for both projects.

The company has more projects lined up going forward. 'With the Singapore economy expected to remain buoyant, the group is planning to launch its development project in Bukit Timah in the fourth quarter of 2007,' it said.

'Other possible launches in the first half of 2008 include developments at St Thomas Walk, Cavenagh Road and Toh Tuck Road.'

As the uptrend in residential property prices is now spreading beyond the prime districts, Hiap Hoe is seeking out 'promising sites' for future development.

The company's stock closed two cents down at 92.5 cents yesterday.