Wednesday, August 15, 2007

Danger Of A Deeper Correction Looms

Source : The Business Times, August 15, 2007

Charts turn in favour of US dollar and against the carry trade

NO, it is not the Asian crisis of 1998 all over again. But, yes, it must have become a lot more hairy in financial markets if the world's largest central banks have found it necessary to pump in more than US$300 billion worth of short-term liquidity.

Fund managers at French banking giant BNP Paribas defined the painful return to risk aversion in financial markets last Thursday, by suspending payments on something like 1.6 billion euros' (S$3.3 billion) worth of managed funds - following in the footsteps of US investment bank Bear Stearns a week earlier.

And although the worst seemed to have blown over by this Monday, the mere mention yesterday afternoon that Spain's Banco Santander might also have something like 2.2 billion euros in credit exposure to US borrowers was enough to upset the euro all over again.

Before European traders had time to warm their comfortably padded seats yesterday afternoon, erstwhile 2007 favourites like the Australian dollar, New Zealand dollar and euro had already recorded US dollar lows not seen in seven, 11 and five weeks respectively.

And by the time Asian players had finished for the day, it was the New Zealand dollar which had again recorded the worst losses of the past week - sliding between 4 and 5 per cent each versus both the US dollar and Japanese yen - just as its high (and rising) yields had earlier this year made it one of the most popular destinations for yield-seekers.

Along the way, the drive to reduce risk also hurt more exotic Asian currencies as speculative players closed out positions and sent their money home - with the central banks of Indonesia, Malaysia, the Philippines and Taiwan reportedly coming in to sell the US dollars against their home currencies to slow their losses.

Such hurried repatriations benefited the US dollar and Japanese yen most, since both countries happen to also have the largest pools of funds under management - possibly up to US$25 trillion, by one estimate.

Indeed, the danger that things can get worse before they get better has risen substantially now. To make things potentially worse on the funds flow side, researchers at Swiss bank UBS warn that it's a particularly heavy week for bond maturities and coupon payments on both sides of the Atlantic - which threatens to put even more upward pressure on the yen.

And on the tech front, the picture has soured in awfully swift fashion for US dollar bears as well as carry trade fans, forcing us to look for potentially deeper correction targets in the upcoming fortnight. Key US dollar resistances we have been watching have been all too easily busted on the upside over the past week, while yen supports have been all too easily trashed on the carry trade side.

Let's take a closer look at the US dollar first. Round-number supports for the Australian and New Zealand dollars were understandably brittle at 85 and 75 US cents respectively - given the heavy carry trade unwind. But by yesterday evening, the US$2 support for the pound had also given way, and the US$1.35 support for the euro was less than one US cent away.

On a broader indexed basis, the greenback has already elbowed its way above not only one but two of our overhead resistance areas - easily surpassing the 80.60-80 region and testing the more important 81.25 area by yesterday evening. A successful spike above the latter now opens up an 82.00-20 objective. At home, this will likely translate into a test of the S$1.5280 to S$1.53 topside area at least.

In terms of key yen cross trades, the first important support areas highlighted here last week for favourite beneficiaries like the Australian dollar, New Zealand dollar and British pound - at 100 yen, 99 yen and 237.5 yen - have all been blasted out of the water very easily too.

New respective round-number targets loom on the downside at levels such as 95 yen, 85 yen and 235 yen, if financial market jitters are going to get worse before they get better. All the more so if the key 160-yen support for the euro proves brittle as well.

Genting Prices Rights Issue At $0.60/Share

Source : The Business Times, August 15, 2007

SINGAPORE - Genting International, a gambling firm, has priced shares in a $2.2 billion (US$1.45 billion) rights issue aimed at raising funds to build a casino in Singapore at $0.60 each, a 23 per cent discount to Tuesday's closing share price, the company said late on Tuesday.

Singapore-listed Genting had announced plans in June to give existing investors the right to buy three new shares for every five held.

Despite the discount, Genting stock was up 4.5 per cent at $0.81 in early trade on Wednesday, while the broader market was 2 per cent lower. The issue price of the new shares is a 38 per cent discount to the $0.97 closing share price on June 28, the day the capital raising was announced.

Genting International and cruise operator Star Cruises, both part of the Malaysian gambling and leisure group Genting Bhd, in December won a bid to build and run Singapore's second integrated-resort (IR).

The IR, which will include a Universal Studios theme park and other attractions, is expected to cost US$3.4 billion and is part of Singapore's plan to attract more tourists. -- REUTERS

Design Studio Cashes In On High-End Property

Source : The Business Times, August 15, 2007

RIDING on the high-end property market in Singapore, the US and the Middle East, mainboard-listed Design Studio has chalked up a first-half profit of $4.1 million, reversing an interim loss of $356,000 last year.

The latest result was achieved on a 78 per cent surge in sales to $32.6 million for the six months to end-June.

At the current rate, the company looks poised to significantly improve on its FY06 full-year earnings of $5.6 million, achieved on sales of $59.7 million.

The interior fitting-out specialist had an order book of $132.7 million on Aug 10, including $61.2 million in residential projects, with the rest in interior fit-outs, export sales and distributorships.

The order book includes a number of high-end condominium projects in Singapore - such as Scotts Square and Orchard View by Wheelock Properties, and Suites @ Cairnhill and Ford @ Holland by Hoi Hup Group, among others.

Design Studio has also clinched the contract to fit out 320 guest rooms at the new Crowne Plaza Hotel at Changi Airport's Terminal 3.

Set up in 1992 as a sofa maker, Design Studio focuses primarily on the supply and installation of built-in furniture and fittings for condominiums and hotels.

In recent years, it has built up a strategic presence in key growth markets worldwide.

Last year, 60 per cent of its revenue came from offshore projects in the US, Middle East, Japan, Malaysia and elsewhere.

In Dubai, the company has a $9.43 million contract to supply and install kitchens in 899 luxury apartments at the 160-plus-storey Burj Dubai.

It is also involved in projects in Bahrain, Qatar, Kuwait and Saudi Arabia.

In the US, it is building and installing the deluxe furniture at Donald Trump's 1,281-unit condo-hotel, the Trump International Hotel & Tower, in Las Vegas.

With high-end property in Singapore in overdrive during the past year or so, Design Studio has been courted by developers of exclusive condos in prime districts.

These include Sky @ Eleven, The Sail @ Marina, Ocean Front Condo on Sentosa, Ardmore II and St Regis Residences. It is also fitting out an exclusive Sentosa boutique hotel, The Capella.

Design Studio's executive chairman and managing director Bernard Lim says the company is poised for stronger growth, going forward.

'We are aiming for a bigger slice of the global markets,' he says. 'We will not just foray deeper into markets like the US but penetrate new markets such as Vietnam and India.

'We have successfully established ourselves in Dubai and will extend our presence into the rest of the Middle East. The Singapore market also presents many opportunities. We expect to tap many residential and hospitality projects here.'

S'pore Retains Fitch's Top Credit Rating

Source : The Business Times, August 15, 2007

SINGAPORE retained its top AAA credit ranking and stable outlook at Fitch Ratings, which cited the city-state's strengthening financial and fiscal positions.

Singapore is the only country in Asia with triple-A ratings from Moody's Investors Service, Standard & Poor's and Fitch. It shares the highest investment-grade ranking with nations including the US, UK, Germany and France.

'A diverse economic structure helps to support Singapore's overall growth sustainability and its resilience to shocks,' said Vincent Ho, associate director in Fitch's Asia Sovereign Ratings group, in Hong Kong.

'Together with the country's strengthening external financial position and sound fiscal position in our forecast horizon, we view that Singapore's strong creditworthiness is well supported.' - Bloomberg

SC Global Posts 35% Drop In Q2 Net To $5.3m

Source : The Business Times, August 15, 2007

HIGH-END property developer SC Global Developments said net profit fell 35 per cent to $5.3 million in the second quarter ended June 2007 from a year ago, due mainly to the presence of a one-time investment gain of $5.3 million in the previous period.

Revenue in Q2 2007 fell to $34 million from $50.1 million in the same quarter last year, while earnings per share decreased to 3.30 cents from 6.73 cents. Excluding the one-time item, however, net profit for the quarter would have shown an 89 per cent increase, said the group, which also announced special interim dividends for the first time and a stock split.

'Although revenue was lower in the second quarter this year, the group's business activities continued to perform well,' SC Global said.

While gross margins during the quarter decreased slightly due to the different mix of units sold as compared to last year, sale prices achieved for each project improved. During the quarter, the group completed the sale of its remaining units at The Tomlinson. In June, it also launched its new ultra-luxury project, The Marq on Paterson Hill.

The group said share of profits from AVJennings, its associated company in Australia, increased 66 per cent to $2.9 million as compared to the same quarter last year.

For the first half of 2007, net profit rose 74 per cent to $16.2 million from a year ago.

SC Global has declared a special interim dividend of 7 cents per share, less tax, and said it intends to utilise its balance Section 44A credits to frank the payment of the proposed dividends as well as create greater share liquidity in the market through offering a scrip dividend scheme.

To further increase the liquidity and affordability of its shares, the group is also proposing a share split of every existing share into two shares.

SC Global shares closed up 25 cents at $5.55 yesterday.

United Engineers Share Close At S$3.46

Source : The Business Times, August 15, 2007


United Engineers
Aug 14 close: S$3.46
Phillip Securities Research, Aug 14


1H07 results in line with our estimates: United Engineers (UEL) has reported stable 1H07 financial results, with revenue dropping slightly (-5 per cent year-on-year) to S$268.5 million from S$282.5 million in 1H06. However, gross profit rose 4 per cent to S$49.0 million from S$47.2 million. In retrospect, its gross profit margin rose 1.6 percentage points from 16.7 per cent (1H06) to 18.3 per cent (1H07). According to UEL, the increase was due to stringent job selection in the Engineering & Construction division and also the higher rental rates achieved in the Integrated Facility Management division.

Other income, notably the gain from partial divestment of Yongnam's shares, has contributed significantly to its bottom line. Nevertheless, expenses have also increased substantially, such as the administrative expenses (+37 per cent year-on-year), distribution costs (+47 per cent year-on-year), and interest expense (+16 per cent year-on-year).

The Rochester achieved record prices in District 5. Earlier this month, UEL announced that it has achieved new highs in District 5, with its recently launched condominium development, The Rochester. An average selling price of S$1,300 psf was achieved and almost all the units were fully sold. This is in line with our assumption of S$1,300 psf in our valuation dated July 18, 2007. Its revenue and profit would be recognised in stages as the construction progresses in the next three years.

High IPO Premiums May Take A Breather

Source : The Business Times, August 15, 2007

After blistering year, market may get picky over who it rewards

SINGAPORE) With first-day closing premiums for initial public offerings (IPOs) regularly shooting for the moon, it has been a great 2007 for local IPO investors so far. But market players warn that the recent US sub-prime fallout means it is now less likely that prices will surge on the first day of trading.





















The local IPO market has roared this year, with 37 listings of companies, real estate investment trusts (Reits) or business trusts raising over $4.7 billion. Strikingly, 19 - or more than half of these - saw first-day closing prices of 50 per cent or greater than their issue price, compared to just 14 out of 61 IPOs for all of last year.

And twelve out of the 19 saw prices double or more on the first trading day, compared to just three listings in 2006 that achieved this milestone.

But a whiff of caution and uncertainty could now settle over the market.

Concerns over the US market for collateralised debt obligations (CDOs), which recently led French bank BNP Paribas to freeze US$2 billion worth of funds over difficulty in calculating their value, have led to rising interests rates and drying up of liquidity in other markets.

Banks are generally facing difficulty in placing shares to institutions or marketing to retailers, especially for issues with weaker fundamentals, one market source said. 'Seeing the share price surge on the first day of trading is not a sure thing any more.'

Patrick Lee, head of UBS investment banking for Singapore and Malaysia, added: 'Placements will be more challenging in this environment. The more risky deals will be more difficult to push through. Investors are more focused now on seeing how markets trade and in managing their portfolios.'

He said there was still anxiety over credit markets and the sub-prime fallout. 'The problem is that people don't know how widespread the contagion is. Once they do, the market will normalise,' said Mr Lee.

But deals are still going through, he added, pointing out that Parkway Life Reit, which launched its IPO last week, was 'priced very successfully' near the top of the range, with the institutional tranche 14-15 times subscribed. 'What helped is that Parkway is a good name and the Reit space in Singapore is well regarded,' said Mr Lee.

Other sources said the current market sentiment will have more impact on yield-based instruments than pure equity plays.

'CDOs and Reits are all part of yield-based instruments. So when there is a default in one category of these, it will typically cause a re-pricing of risk premiums. For pure equity plays, equity pricing may be affected, but it is unlikely that you will see drastic actions such as a pullout of the IPO,' the source said.

Some investors may point to Arcapita, the Bahrain-based bank that last week called off the planned listing of a US$300 million investment trust in Singapore. But sources told BT that Arcapita withdrew its IPO because private investors looking to buy its wind farm and water utility assets at higher valuations had approached the bank directly even before the recent market downturn.

Otherwise, the IPO pipeline remains robust. 'The US sub-prime mortgage and CDO situation has not affected our listing pipeline', Lawrence Wong, head of listings at the Singapore Exchange (SGX), told BT.

'We continue to see a healthy pipeline of mandates and interest shown by investment banks and intermediaries on a listing on SGX,' he said.

At DBS - one of the underwriters for Arcapita, along with Morgan Stanley - the bank's head of equity capital markets, Kan Shik Lum, says Asian economies are still robust and the IPO pipeline in Singapore and Hong Kong is going strong.

Though the CDO woes have resulted in the current market volatility and undermined investor confidence worldwide, IPO candidates with strong fundamentals can expect to launch their deals on time and even price their issues aggressively, he said.

'But the chances of some issuers delaying or aborting their fund-raising exercises cannot be discounted,' Mr Kan added.

UBS's Mr Lee said the bank expects markets to remain choppy for the immediate future. 'Although we will see less issuances, there will be a larger proportion of top-quality names because they can still get deals accepted.

'There is still a lot of liquidity and interest in Asia. You will see people coming back to the market, because Asian companies are still doing well,' he said.

The Oceanfront @ Sentosa Cove

The Oceanfront - Landmark Living by the Sea

Surrounded by 360 degrees of spectacular beauty, The Oceanfront @ Sentosa Cove is a stunning architectural landmark by the sea that commands the highest views on Sentosa Cove. Located just minutes away from the Marina Club and the proposed Integrated Resort, be spoilt for choice with the finest array of dining, entertainment and retail offerings. Revel in a world-class marina lifestyle, or tee off at one of two championship golf courses. Live the good life.

Experience the ultimate in true seafront living right here at The Oceanfront. Azure seas. Acclaimed golf courses. Nature in all her resplendent glory. The city just 10 minutes away. A marina at your doorstep. This is Sentosa Cove, one of the world's most exclusive oceanfront residential community. Dive into the ultimate luxury of this world-class development, nestled on Sentosa island's eastern shores, and a sanctuary you can truly call home. Design your own living space on generous land parcels that offers a wealth of opportunity for the individualistic and bold. Savour the luxury of modern living at the Marina Village - where wining, dining and shopping are just a stone's throw away from your front lawn. And have we mentioned Sentosa Cove Marina, Asia's finest yachting hub and meeting point for the world's yachtsmen? Come, sail home to Sentosa Cove.

An Integrated Marina Lifestyle

This exclusive luxury water-edge condominium is seated regally at the northern gateway to Sentosa Cove. The Oceanfront which resembles a shimmering sculpture will be the icon to captivate seafarers as they sail along the Singapore Straits to Sentosa Cove. Unlike other developments on the Cove, this much coveted site was awarded not solely based on price, but on the design because of its strategic location. The outstanding modern marine architectural design of The Oceanfront by internationally celebrated Wimberly Allison Tong & Goo Inc. will be the welcoming beacon for Sentosa Cove. Standing 15-storey tall, The Oceanfront will be the tallest residence in Sentosa Cove. Privileged residents enjoy not only the best views on the island, but also the incredible views of the immense sea and charming marina in this exclusive enclave.

The Oceanfront @ Sentosa Cove is just steps away from the seafront and the first-class marina. The upcoming Quayside Village nearby is expected to house some of the trendiest restaurants and retail boutiques.























Location : Sentosa Cove (District 4)

The Oceanfront @ Sentosa Cove is surrounded by a promenade, perfect for evening strolls and morning jogs, along the seafront and marina. Dine under the stars or shop at the glamorous boutiques at Quayside Village which is but a few minutes away via a pedestrian bridge. As part of the gated-community within Sentosa Cove, residents will also enjoy added amenities, security and privacy. On Sentosa Island, there is the widely anticipated multi-billion dollar Integrated Resort which promises a sophisticated mix of dining, shopping and entertainment options for all.

This exclusive project is owned and developed by TC Development Pte Ltd - a joint venture CDL and TID Pte. Ltd. TID Pte Ltd is a partnership formed between Hong Leong Holdings (Singapore) and Mitsui Fudosan (Japan) – the leading real estate company in Japan

Tenure : 99-year Leasehold
Expected TOP Date : 2008
Site Area : 197,151 square feet
Total Units : 264 units
Building: Two 12-Storeys Towers, Two 14-Storeys towers & One 15-Storeys Tower

The Oceanfront comprises five towers, 12 to 15 storeys high, each with a special curtain wall feature, exemplified by curve lines and planes that create a dynamic yet contemporary space. All 264 exquisitely designed apartments, ranging from spacious two-, three-, four-bedroom units to penthouses (Villas, Sky Suites and Sky Villas) feature full-height glass panels in the living and dining rooms to best take advantage of the magnificent waterfront views. All apartments will have a private lift lobby and most will include balconies.

Unit Types:
2-Bedroom ~ 1,216-1,787sqft (37 units)
3-Bedroom ~ 1,647-2,250sqft (112 units)
4-Bedroom ~ 2,013-4,284sqft (86 units)
Penthouse (incl. Villas, Sky Suites & Sky Villas) ~ 2,745-8,095sqft (29 units)

There are condominiums but none quite like those at Sentosa Cove. These unique waterfront residences combine the best in condominium living with the added luxury of private berthing options.

Enveloped in tranquillity, the low-rise apartments offer an exclusive resort village ambience. The two condominium towers, on the other hand, reach boldly for the sky and are a prominent landmark. They offer an unrivalled and unobstructed view of the seascape, with views of the Southern Islands and beyond that, the deep waters of the South China Sea.

Facilities :-
•Infinity Lap Pool
•Leisure and Children’s Pool
•Jacuzzi
•Children’s Playground
•Gymnasium
•Multi-Purpose Rooms
•Changing Rooms incorporating Steam Rooms
•Cabanas
•BBQ Pit
•Launderette











Apart from lush landscaping and extensive water-features designed to enhance the views towards the sea and marina, residents can also enjoy the ocean views whilst swimming in the infinity pool and relaxing in the Jacuzzi. The various pools will appear as one body of water arcing across the development, where it dramatically looks like it is visually joining the sea. To optimise the views from the deck level to the surrounding vistas, the timber deck has been elevated which also ensures greater privacy for the residents.

CDL Posts $194.4m Profit For Second Quarter

Source : TODAY, Wednesday, August 15, 2007

City Developments Ltd (CDL), one of Singapore's top real estate developers, saw $194.4 million in profit for the second quarter of this year, 331 per cent higher than the $45 million registered a year earlier.

The booming property and hotel sectors boosted CDL's coffers, with these segments contributing around $238 million and $129 million in profit respectively for the first half of the year respectively. Gains came from pre-sold properties like City Square Residences and Tribeca, and joint venture developments like St Regis Residences and The Sail @ Marina Bay.

The company's 53 per cent stake in Millennium & Copthorne Hotels chalked up $87.5 million in profit for the second quarter of the year.

Another notable contributor to the profit column was the developer's rental properties, which posted an 800 per cent year-on-year increase to $27 million for the first half of this year, up from $3 million in the first half of last year.

Prime office rents have risen substantially in the first half: CDL said rentals at Republic Plaza currently stand at $18 psf per month. CDL quoted a Jones Lang LaSalle report which showed Raffles Place office space averaged $13.80 psf per month for the first half of this year. URA media rentals for prime Category 1 office space at $10.33 psf per month for the second quarter.

CDL plans a special interim dividend of 10 cents per share. — Joseph yadao

Bravehearts Stage Market Rebound

Source : TODAY, Tuesday, August 14, 2007

But some stay cautious amid subprime uncertainty

Half empty or half full?

At a time when financial markets are weak at the knees from fears of a full-blown global credit crunch, investors are asking themselves if the recent selldown is a sign to stay away or a buying opportunity.

Yesterday, optimism won out — fuelled, no less, by a string of bullish analyst reports.

The stout-hearted waded into red-stained Asian bourses, which rebounded in the afternoon when counterparts in Europe — one of the areas outside the United States deemed most affected by delinquencies in the US high-risk mortgage sector — kicked off the week on a high note, encouraged by European officials' assurances that their cash injections last week helped improve liquidity.

Singapore share prices clawed back losses, finishing up 0.64 per cent or 21.4 points at 3,380.6. Leading gainers were the Singapore Exchange and United Overseas Bank (UOB).

These financial counters, said some pundits, presented bargains backed by solid fundamentals. In a research report issued yesterday, brokerage DBS Vickers said the impact of the current credit woes on Singapore banking stocks was "overblown".

This is because the three local banks — DBS, UOB and OCBC — have "minimal" exposure to sub-prime mortgages, which are home loans given to US borrowers with poor credit histories and subsequently packaged into complex investments purchased by financial institutions worldwide. Such investments make up less than 0.6 per cent of each of the trio's total assets as at the end of March, calculated DBS Vickers.

"We believe banks would continue to deliver strong results coupled with loan growth in view of the strong macro-economic backdrop," the brokerage arm of DBS Bank said. Credit Suisse took a similar stance when its analysts said the current "scare" had "created an excellent opportunity to buy" banking counters.

Property shares, which have lost about 10 to 15 per cent from May's peak, could deliver "a 10 to 12 per cent type returns" over the next 12 months, global asset management firm Henderson Global Investor's Singapore-based director of property (Asia) Chris Reilly told Channel NewsAsia.

The asset management firm also shrugged off concerns of a global liquidity crunch curtailing en bloc residential purchases in Singapore by private equity firms.

"Interest rates are not that high here. You can make the sums work as long as you can borrow money … Even if the credit market dries up in the short term, I don't think it will be the case for very long. The markets will settle down, and regain their confidence, and it'll even out again," Henderson's head of property equities Patrick Sumner told Today.

Such optimism is not shared by all quarters of the business world.

In the past two weeks, two companies have decided against tapping Singapore's capital markets.

China KL International, a maker of condensers for refrigerators and air-conditioners, withdrew its listing prospectus on Aug 3. Four days later, Bahrain's Arcapita Utility Trust, which would have been the first sharia-compliant trust here, also pulled the plug on fears of a poor reception by public investors.

In short, choppy markets spell lower prices for initial public offers. And even with so-called "cheap" buys, not all are willing to step forward.

Daiwa Institute of Research's David Lum feels it is "hard to tell" if now is a good time to scoop up shares.

"Market sentiment now is very weak," he said.

Agreeing, Schroders Investment Management's London-based chief economist Keith Wade said the current turmoil would not derail the global economy.

But "the difficulty is knowing how long the selloff will go on for – judging when to increase risk is like catching a falling knife. Given that funds will need to unwind positions as a result of the sell off, now does not seem to be the time to go back in," he wrote.

Soleil @ Sinaran Condo Units 37% Sold

Source : The Business Times, 15 Aug 2007

The average price is understood to be around the $1,400 to $1,500 psf range

FRASERS Centrepoint says it has sold 37 per cent of the 417-unit condo, Soleil @ Sinaran near Novena MRT Station, at staff and VIP previews last week.

The average price for the 99-year leasehold project is understood to be somewhere in the $1,400 psf to $1,500 psf range.

Frasers Centrepoint declined to comment on the pricing yesterday, ahead of a soft launch tomorrow for those who have indicated interest in the project.

BT understands the project is being marketed by Savills Singapore and Knight Frank.

The condo has two 36-storey blocks including units with one, two, three and four bedrooms. Some of the two-bedders come with lofts.

The project’s four penthouses will each have five bedrooms.

‘Soleil @ Sinaran will feature a flagship partnership with Aramsa Spas under which residents will be able to enjoy private spa treatments at their doorstep,’ Frasers Centrepoint announced.

The condos, designed by Architects 61, will feature spa cabanas as well as entertainment pavilions where parties can be held in a poolside setting.

The entire 20th floor will be dedicated to a sky terrace with an outdoor and indoor gym and a sky garden.

Soleil is being developed on a site that Frasers Centrepoint clinched at a state tender that closed in July last year.

Its top bid of $238 million worked out to a unit land price of $507 per square foot of potential gross floor area.

Still Plenty Of Liquidity, Says CDL’s Kwek

Source : The Business Times, 15 Aug 2007

But foreign funds seeking investment property are likely to proceed more carefully

‘There is still plenty of liquidity around,’ City Developments’ executive chairman Kwek Leng Beng said yesterday. But foreign funds seeking investment property are likely to proceed more carefully given the escalation of the US sub-prime woes, he noted.

Mr Kwek was speaking at a press conference to announce CDL’s 2007 second-quarter results, which saw revenue rising 28.8 per cent year-on-year to $775.2 million and net profit up more than four-fold from $44.9 million to $194.4 million.

On a half-year basis, revenue soared 35.1 per cent to $1.54 billion, an all-time high for the property developer. Six-month net profit jumped 272.3 per cent to $320.5 million.

Unlike most property companies, CDL did not factor investment property revaluation gains.

Speaking for the first time on the impact of the US sub-prime crisis and the ensuing credit squeeze, Mr Kwek said that he has seen fewer funds making enquiries about CDL’s burgeoning investment property portfolio. ‘Before, they would come knocking everyday,’ he said.

This interest in office buildings has been boosted by rising rental returns and CDL revealed yesterday that its Republic Plaza had recently achieved a new record rent of $17.50 psf per month and is now asking for over $18 psf per month.

Related links: Click here for City Developments’ half-year financial report Financial statement Other corporate results reported on Aug 14 Consolidated corporate resultstable

For H1 2007, profit before tax for the rental properties segment, which includes office space, was $27 million, a year-on-year increase of 800 per cent.

Mr Kwek also said that CDL was considering but not in a hurry to sell its office buildings, or for that matter, launch an office real estate investment trust (Reit) of its own.

For the same period, profit before tax for its property development segment was $238 million, a rise of 266 per cent.

Interestingly, CDL is not rushing to sell off Cliveden at Grange either, its latest luxury condominium offering.

Saying that prices for luxury condos are not likely to keep increasing on the same steep curve it has been charting for the last 12 months, Mr Kwek revealed that he was considering retaining two blocks of Cliveden for rental purposes and long-term investments.

He added: ‘(Luxury prices) won’t be going up in a straight line anymore until things stabilise.’

The luxury end of the market has been largely driven by foreigners. Mr Kwek said that he had spoken to some of his foreign high net worth clients and they have told him the sub-prime crisis is not a ‘big issue’ for them. ‘They feel it will affect the private equity firms more,’ he said. However, he added: ‘It is fair to say some will be cautious and may defer their decision to buy now.’

Mr Kwek was much more bullish on the mid-tier residential segment in which he still sees upside. ‘It has not reached the previous peak yet,’ he said.

CDL is planning to launch four developments in the second half of the year including the 40-unit Wilkie Studio in the Mount Sophia area; a 77-unit project at Shelford Road; the 228-unit Quayside Collection at Sentosa Cove; and a 336-unit project at Thomson Road.

CDL also spent about $1 billion in the first half of the year increasing its landbank, and is consequently raising its gearing ratio to 56 per cent, up from 54 per cent in 2006.

Its residential landbank is now at about 3.5 million sq ft while its total landbank is close to 4.5 million sq ft.

Of the potential gross floor area of 8.9 million sq ft, about 80 per cent can be for residential development.

The positive outlook, boosted by earnings, has prompted CDL to declare a special interim dividend of 10 cents per ordinary share. The payment date will be released at a later date.

CDL closed yesterday at $14.60 per share, down 10 cents.

Sentosa To Develop Mount Faber Ahead Of IR: Report

Source : The Business Times, 15 Aug 2007

The Mount Faber area is to be rejuvenated before the planned integrated resort opens at Sentosa, Channel News Asia reports.

The announcement came yesterday from Loo Choon Yong, chairman of Sentosa Development Corporation at the opening of the island’s latest attraction, the Asian Tour headquarters.

The Asian Tour is the official regional sanctioning body for professional golf in Asia, which aims to expand tournament golf.

The Asian Tour now includes 27 events offering a total of US$27 million in prizes.
Dr Loo was reported as saying that the tourism board and the ministry of trade and industry were ‘asking us to prepare a master plan to look at how we can develop the foothills in Mount Faber; how we can incorporate it into the whole neighbourhood’.
He said: ‘Sentosa is an exciting place, so is VivoCity and St James Power Station. There is residence, there is activity and nightlife, so I think the Faber foothills present opportunities.’

Options being looked at for Mount Faber include recreational activities, dining outlets and accommodation, the report said.

Hitachi Tower, Chevron House Attract Record Bids

Source : The Business Times, 15 Aug 2007

Offer of over $3,200 psf for Hitachi Tower will mark new high: sources

The office market continues to sizzle, with an expression of interest for Hitachi Tower at Collyer Quay said to have resulted in a top indicative bid of over $3,200 per sq ft based on existing net lettable area, sources say.

The figure is a record for office space, surpassing the figure of about $2,650 psf set earlier this year for 1 Finlayson Green.

Shortlisted bidders for the 999-year leasehold Hitachi Tower are now likely to conduct due diligence before finalising their offers, observers reckon.

Bids are believed to have been received mostly from overseas parties. The 37-storey building has about 280,000 sq ft net lettable area. So assuming a top bid of say $3,200 psf, the price would work out to around $900 million.

CapitaLand owns 50 per cent of Hitachi Tower and National University of Singapore the other half.

A similar exercise is said to be going on for Chevron House next door, which is believed to have attracted a top bid of about $2,800 psf.

The 99-year leasehold Chevron House - formerly known as Caltex House - is owned by CapitaLand (50 per cent), IP Property Fund Asia (25 per cent) and NTUC Income Insurance Co-operative (25 per cent).

The former Pidemco, now part of Capitaland, bought the two buildings from entities linked to Ong Beng Seng in 1999.

The spread in top bids between Chevron House and Hitachi Tower is due to the difference in tenure and the orientation of the properties. Also, some leases at Chevron House are believed to have caps on rental increases, which limits the ability of the building’s owner to take advantage of booming office rentals.

More office blocks continue to be offered for sale. Colliers International yesterday launched a tender for The Globe at Cecil Street, with an indicative price of $100 million.

The property, being offered for sale by owner Prosper Realty, is being pitched for its redevelopment potential. The $100 million price tag reflects a unit land price of $1,178 psf of potential gross floor area, including two payments the buyer will have to make to the state - an estimated $12.5 million differential premium to build a bigger project on the site and a premium of $9.6 million to top up the 9,080 sq ft site’s lease to 99 years from the remaining 75 years.

Under Master Plan 2003, the site is zoned for commercial use with an 11.2-plus plot ratio. Colliers says the successful buyer can apply for additional gross floor area (GFA) of up to 2 per cent. This will boost the plot ratio to around 11.42, allowing a 30-storey office block with 103,694 sq ft of GFA.

Colliers has also been marketing Keck Seng Tower in Cecil Street. The tender closed last week, attracting three bids above $200 million or $1,700 psf based on the existing net lettable area. The property is on a 17,322 sq ft site with a lease balance of 72 years.

Yesterday Colliers launched a tender exercise for Cassia View, a 20-storey freehold apartment block in Guillemard Road completed about eight years ago.

Owner Melody Development is offering the property - comprising 68 apartments and four penthouses - with vacant possession. The indicative pricing is $80 million or close to $900 psf based on the total strata floor area of 89,361 sq ft. ‘The buyer could refurbish the property into a serviced residence or hostel. The location is popular among expats and travellers looking for affordable accommodation,’ Colliers executive director (investment sales) Ho Eng Joo says. The tenders for Cassia View and The Globe close on Sept 12.

Market Crisis Just A Speed Breaker?

Source : The Business Times, 15 Aug 2007

While agreeing that the bull market is intact for long-term investors, analysts say it would be prudent to revisit your asset allocation in the wake of the sub-prime crisis, reports GENEVIEVE CUA

The fallout from the crisis in sub-prime mortgages in the US has sparked a rout in credit and equity markets in recent days. The biggest question in investors’ minds must be whether the bull market in asset prices, fuelled by ample liquidity and relatively low interest rates, is over.

In this edition of Executive Money, strategists, analysts and fund managers share their views.

For long-term investors, the consensus is that the bull market is intact - but the consolidation may not be over. So far on a year-to-date basis, equity market indices based on the MSCI, remain positive, with gains of up to 24 per cent between January and Aug 13.

For some time now, strategists have been telling investors to take some profits off the table, while staying invested. Now is not the time to panic, but it would be prudent to revisit your asset allocation. An asset class that has risen over the years could now comprise an outsize share of your portfolio. Here is what the experts say.

Lim Heong Chye, APS Komaba Asset Management:

‘The uncertainty may drag on for a while. Sub- prime mortgages actually comprise a small portion of the entire US mortgage backed securities market. But once they were packaged into collateralised debt obligations (CDOs), the contagion could spread into credit related issues - as it has today.

In credit markets, the only safe place is Treasuries. There will be volatility in the coming weeks, especially for credit issues lower than investment grade. In our fund we hold a lot of cash now, about 20 to 30 per cent. We’re looking to deploy the cash into issues where we see value. We bought some government bonds.’

David Bensimon, technical analyst and trader:

‘Ultimately there is no change to the larger picture. 2007 is a consolidation year. We haven’t finished the consolidation across a range of markets. My price target for the Straits Times Index is to go down to 2800. I’m looking for the S&P 500 to move to 1,360 and ultimately to 1,260. There is a structural difference between today’s environment and the past. In the past three years, the market drops have been 6 to 7 per cent.

There is a process of a re-pricing of risk to appropriate levels across a range of financial markets - interest rates, equities, commodities and currencies - because of the recognition that yields were not high enough to reflect the level of risk. With central banks moving to support the market, the perception has not been that the banks are solving the problem, but that there must be a bigger problem.

Between 2008 and 2010, we’ll see a resumption of tremendous prosperity. We really are living in a prosperity-driven era of growth. We’re going to see substantial further gains. But this year is one of transition, and that has not finished. For stock markets, it’s almost just beginning.’

Dr Shane Oliver, AMP Capital Investors head of investment strategy and chief economist:

‘While shares have had a good bounce in recent days and there are signs that the credit market turmoil may be settling down, it’s too early to say the falls in shares are over.

While the ride is likely to be rough over the next few months and further declines are possible, the recent slump in share markets should not be seen as the start of a bear market. The historical record indicates that corrections of up to 20 per cent are not unusual in the context of cyclical bull markets, so investors should not get too alarmed by the recent turbulence.’

HSBC Investments:

‘Markets are now pricing a high probability that the Federal Reserve will cut US interest rates soon. In July this year we became concerned over a financial accident occurring in the second half of 2007. As a result, we have been cutting back our equity exposure since mid-July.

We do not think the current volatility will last long and would look to increase equity exposure on weakness. Global equity valuations remain reasonable by historical comparison, and corporate earnings remain robust. As the economic cycle remains healthy, the longer term trend for equities is expected to be up.’

Robin Parbrook, Schroders head of Asia ex-Japan equities:

‘We expect Asia to be correlated to any short-term sell-off in global equity markets. But we continue to believe that buying Asia on weakness is the correct strategy. The region has a strong long-term growth outlook, and Asia’s dependence on the US economy for its growth has been much reduced.

While the current problems are worrying in terms of risk appetite (and the subsequent risk of market volatility), they do not undermine the fundamental investment case for Asia. The corporate sector in Asia is in good shape. Balance sheets are strong, cash flows are buoyant, dividend payouts have been rising and capital expenditure plans to date have been relatively disciplined. Economically and politically, the region also looks sound. With the macro-economic risks looking relatively benign in the region itself, we view a 15-20 per cent pull back from recent highs as a good entry point for long-term investors.’

Prudential Asset Management:

‘The recent sell-offs have been less dramatic than previous ones. Are investors really worried, or are they merely ‘testing’ the solidity of the underlying demand by aggressively selling? We think it is the latter.

Strong Asian growth will continue to support corporate earnings in this region. Corporate credit quality especially in Asia remains solid. 2007 may ultimately prove to be no more than a ’speed bump’.

Short-term valuations may look high but Asia’s valuations are not that high when looking at the longer term and comparing them against world levels. The Asian re-rating story is not over.’

Chen Zhao, managing editor, BCA Research (global investment strategy):

‘Market sentiment is still very fragile and emotional, as investors have been spooked. We urge clients to maintain composure. We should always be ready to buy when there is blood on the street.

The key point is that unless one believes the blow-up in the sub-prime mortgage market could significantly alter the underlying trends in the global economy and stock prices, the recent downturn in equity prices is in the very late stages and might have entered its final capitulation phase.

To be sure, like any bottoming process, this one will be volatile. But the prudent strategy is not selling into strength. Rather, investors should wait for opportunities to buy.’

Clariden Leu investment strategy team:

‘Equity markets in the emerging economies held their ground remarkably well in the recent correction. After a well-earned breather in the summer, marked by heightened volatility, equity markets will resume their climb.

We recommend maintaining an overweight in equities and expanding it on price setbacks. Our preferred markets are Europe and selected emerging markets. In the light of further rises in interest rates, we remain underweight in bonds and overweight in the money market.’

Easier To Get That Dream Home

Source : TODAY, 15 Aug 2007

First-time applicants have better chances of clinching new flats

FIRST-TIME applicants — and those who have been unsuccessful repeatedly — will now have a higher chance of landing their dream homes.

The Housing and Development Board (HDB) yesterday announced immediate changes to its priority scheme for its Built-To-Order (BTO) and balloting exercises.

Under the previous scheme, married first-time buyers choosing flats near their parents’ homes received up to four times the priority of regular applicants. And according to HDB, married first-time applicants made up about eight of 10 of those shortlisted through balloting.

To improve their chances of clinching a unit, HDB will reserve at least 90 per cent of the flats for such first-time applicants.

Under this enhanced scheme, if shortlisted second-time applicants do not take up the full 10 per cent of their quota, the balance will be allocated to the first-timers.
First-timers who had failed to be shortlisted four times or more would also be given more chances under the ballot. The move was “in recognition of the more pressing need among the newly-weds to buy an HDB flat, near their parents if possible, so that they could settle down to start a family,” said HDB in a press release.

This is the first initiative following a three-month-long public consultation exercise involving 1,000 heartlanders on ways to strengthen bonds within HDB estates. One recommendation was to increase the chances of success of first-time applicants, as the queues for flats were getting longer. For example, in February there were 2,500 first-time buyers applying for just 465 four-room units in Bukit Merah.

Ms Serene Koh, for one, knows how frustrating the wait can be. The 28-year-old, who works in the banking sector, had been trying for the past two years to get a flat.
She and her fiancé managed to land a unit in Buangkok — but only after “three to four” previous attempts. Said Ms Koh: “We had to wait for the house first before we could decide when to get married.”

Welcoming the changes, Ms Jessica Yeo, 24, and her fiancé are still trying their luck in the balloting exercise for a four-room flat in one of the mature estates — even though they have fixed their wedding for next May. When the couple last checked, they found out that they would be competing with more than 4,000 others for some 300 units.

While the HDB has been encouraging those in urgent need of public housing to consider the resale market, Ms Yeo said: “We did think about getting a resale flat but given the high property prices, it would be very tough on us financially.”

Describing the new scheme as “a shifting of priorities”, C & H Realty’s managing director Albert Lu pointed out that “any effects on the open and HDB market would cancel each other out”.

Said PropNex CEO Mohd Ismail: “The number of second-timers applying under the BTO and Balloting Scheme is very small to begin with, given that they have to pay a levy to the Government if they buy the flats direct from HDB.”

Meanwhile, the HDB yesterday launched the 628-unit Punggol Vista — the first BTO project to come under the new priority scheme.

Situated at the junction of Punggol Central and Punggol Road, the project also marks the first batch of new two-room flats to be offered in Punggol town.

Under the indicative price range given by the HDB, these flats would cost between $75,000 and $91,000, while the three-room units would command a price of between $121,000 and $145,000. The four-room flats have an indicative price of between $184,000 and $227,000.

HDB Boosts Priority Scheme For First-Timers

Source : The Straits Times, 15 Aug 2007

90% of flats offered in build-to-order, balloting exercises reserved for them

The Housing Board has tweaked its priority scheme to greatly increase the chances of first-time buyers and newly-weds getting sought-after new flats.

From now on, 90 per cent of all new flats offered in the HDB’s build-to-order (BTO) and balloting exercises will be reserved for such applicants.

In the HDB computer ballot, only 10 per cent of the homes on offer will go to second-time applicants.

Once this level has been reached, all other applicants from this segment will be withdrawn.

It effectively leaves the field clear for those who have never bought a new HDB flat.

For newly-weds who want a flat nearer a set of parents, their chances are further boosted.

Such couples already have a helping hand under the Married Child Priority Scheme (MCPS), which gives them double the chance during the balloting. This will improve since 90 per cent of flats are now set aside for first-timers.

Under the old system, there was no quota, so first-timers were in the mix along with everyone else.

If there are not enough second-timer applicants to take up the 10 per cent allocation, the leftover flats will also be freed up for first-timers.

The revised scheme also gives a leg-up to applicants who have tried and failed in four or more ballots.

On your fifth attempt, for example, you will be accorded one extra chance. This means your name goes into the ballot one more time.

For your sixth try, you get entered two more times, and so on.

An HDB spokesman said about 380 applicants were unsuccessful for four or more times in BTO and balloting exercises under the priority scheme run from January 2002 to March this year.

Balloting is used when the number of applicants outstrips available flats in an estate. It often occurs when new flats, or those in popular, mature estates are up for grabs.

The move follows a recent announcement by the Minister of State for National Development, Ms Grace Fu, that the HDB would refine the priority scheme for home-seekers with greater needs.

This was one of the central issues raised during several dialogues with residents, called Forum on HDB Heartware, that started last November.

The forum set out to find ways of boosting community ties and giving residents more say in how estates are run.

The HDB said yesterday that under the old scheme, 80 per cent of flat supply generally goes to first-timers. It also added that ‘the improvement in chances will depend on flat supply and the number of applicants’.

The new priority scheme gets its first tryout at Punggol Vista, a BTO project launched yesterday.

Located at the junction of Punggol Central and Punggol Road, the project has 628 units ranging from two-room to four-room flats. Applications close on Sept 3.

First-timer Leonard Tan, 27, who has been unsuccessful in balloting for an HDB flat, welcomed the change.

The air force regular and his wife qualified as a newly-wed couple who wanted to live near their parents, but they were assigned a queue number in excess of 2,000 in a balloting exercise for 465 flats.

‘I’m more confident now of my chances, although with so many first-timers in the market, I know competition will still be tough,’ he said yesterday.

Mt Faber Foothills Slated To Be Next Llifestyle Hot Spot

Source : The Straits Times, 15 Aug 2007

Recreational, dining facilities and tourist attractions are in the works

The sleepy foothills of Mount Faber are set to come alive.

The Sentosa Development Corporation (SDC) has been tasked with turning it into the next lifestyle-cum-entertainment hot spot in Singapore.

This was revealed by SDC chairman Loo Choon Yong at the official opening of golf’s Asian Tour headquarters at Sentosa yesterday.

He said: ‘The Singapore Tourism Board and Ministry of Trade and Industry (MTI) have asked us to prepare a master plan to look at how we can develop the foothills at Mount Faber, and how we can incorporate it into the whole neighbourhood.’

He did not elaborate on what the master plan would contain, but said recreational activities, accommodation, tourist attractions and dining facilities are in the works.

He explained that Mount Faber was being tapped because the 500-ha Sentosa island was ‘quickly running out of room’.

When contacted, MTI declined comment.

But The Straits Times understands that while plans are only in the preliminary stage, the bottom half of the 106-m-high Mount Faber has been earmarked for development.

No forest reserves will be touched. Only the foothills accessible by roads, such as Keppel Hill and Temenggong Road, will be revamped.

Dr Loo said that since the 10-year master plan for Sentosa is already in place, the next step is for what he dubbed a ‘Greater Sentosa’.

‘Together with Resorts World at Sentosa, VivoCity, St James Power Station and Mount Faber, Sentosa will form a vital part of this world-class environment to live, work and play in Singapore,’ he explained.

‘Plans to include Faber foothills in this vision are currently being explored, with more details to be announced in due course.’

He added: ‘Now, Sentosa is an exciting place, and so are VivoCity and St James Power Station. There are residents, activity and nightlife. So, I think the Faber foothills present an opportunity.’

He declined to reveal the costs involved, the exact location or the expected completion date of the project.

The idea to develop the area has surfaced in the past - in 2002, when the Urban Redevelopment Authority launched an Identity Plan, which combined ideas and proposals on how to keep and enhance the special character of 15 areas in Singapore.
One of the suggestions was the creation of ‘hillside villages’, with shops and activities, at Mount Faber’s foothills. It was also proposed that the old black-and-white bungalows along the foothills be converted into culinary schools, bed-and-breakfast lodgings, restaurants or museums.

Miss Susan Teh, chief executive officer of the Mount Faber Leisure Group, which owns The Jewel Box, a leisure and dining complex housed in the revamped Mount Faber Cable Car station, said it was ‘too preliminary’ to comment on the area’s development plans.

‘However, we have been in talks with the relevant authorities in exploiting this strategic location,’ she added.

HDB's Latest Build-To-Order Project - Punggol Vista

A Room With A View Will Cost You ...

Source : TODAY, Tuesday, August 14, 2007

Hotels to be charged room levy for five days during F1 week












AS they gear up to cash in on the thousands of expected visitors for Singapore's first Formula One (F1) race next year, at least 11 hotels located around the proposed street circuit be charged for that lucrative privilege.

As was earlier reported, such hotels will have to pay a room levy of 30 per cent — but in addition, it was confirmed yesterday that all other tourist hotels will be taxed 20 per cent, for the five nights leading up to and including the race day on
The rates, announced by the Ministry of Trade and Industry (MTI), were finalised after the Government had consulted the Singapore Hotel Association.

The list of trackside hotels, however, could change depending on the final circuit design, which is still awaiting approval from the Federation Internationale De L'Automobile.

Back in May, Minister of State (Trade and Industry) S Iswaran had announced that the F1 tax would help defray the cost of staging the event, which could be as much as $150 million.

The race is expected to boost Government coffers by an average of between $15 million and $20 million a year, and boost tourism spending by about $100 million a year.

In setting the F1 levy rates, the MTI said it was mindful that hotels should retain a significant share of the increased revenue.

As to why "trackside" hotels should "contribute more" to the staging of the race, the MTI said: "Some hotels are likely to benefit more from the event than others due to their proximity to the circuit or because their rooms have a good view of the track."

It was common for hotels in F1 host cities to "be near full occupancy" and to raise room rates by as much as two to three times during the race period, the MTI added.

Many hotels here, however, have yet to finalise their room rates, even with the race date and levies have been confirmed. Some are waiting to see if the green light will be given to stage Singapore's race at night.

"The night or day race concept will factor into the viewing demand. We're conducting global market research regarding the acceptable hotel room rates in significant F1 cities. Our final rates will be in line with these practices," said Pan Pacific's public relations manager Cheryl Ng.

Some hotels outside the circuit were unfazed by news of the 20 per cent levy, saying more demand for rooms would help offset it.

"As soon as news of the F1 race broke, we had many enquiries for rooms from both local and overseas guests. We expect to have a healthy occupancy next September," said Sheraton Towers' assistant director (marketing communications) Ernawati Setijo. Already, average hotel room occupancy across Singapore hovered at 86 per cent between April and June this year, despite all-time high average room rates.

Four trackside hotels Today contacted said that while enquiries had been streaming in already, they were not confirming bookings for the race period yet. But they have blocked out rooms to cater to demand.

Trackside hotels could also introduce a "minimum stay requirement" of up to five nights. This practice is common in Monaco, one of the F1's two street races, where there is a three- to four-night minimum stay for hotels that have a good view of the action.

ECB Pumps 7.7b Euros Into Money Market (Channel NewsAsia)

Source : Channel NewsAsia, 14 August 2007

FRANKFURT - The European Central Bank on Tuesday injected 7.7 billion euros (US$10.5 billion) into the money market to calm liquidity fears in the wake of the crisis in the US home loan sector.

Later in the day it injected an additional 17.5 billion euros in its traditional monthly refinancing operation.

The Frankfurt-based ECB, which sets monetary policy in France, Germany, Italy and the 10 other nations that use the euro, had already injected more than 200 billion euros into the market over the last three trading days.

The fresh cash allows commercial banks to borrow from the central bank to meet their liquidity needs.

"The ECB notes that money market conditions are now close to normal," it said, seeking to reassure rattled investors.

But it said ahead of the cash injection that it was "still offering the
opportunity to cover any remaining liquidity needs" before loans to European banks come due this week.

The moves are designed to head off a credit squeeze linked to turmoil in the US sub-prime, or high-risk, mortgage market.

Stock markets around the world rallied Monday in response to the coordinated action of the ECB, and the US and Japanese central banks.

But Tuesday the bourses in London, Paris and Frankfurt opened lower amid continued uncertainty over the possibility of a global credit crunch. - AFP/ir

Horizon Towers Owners To Meet In 2 Weeks To Vote On Sale Extension

Source : Channel NewsAsia, 10 August 2007

SINGAPORE : Owners of Horizon Towers who earlier wanted to sell the condominium will hold an extraordinary general meeting in about two weeks, to vote if they will extend a deadline for the failed enbloc sale.

They have asked lawyers representing the buyers to allow for a grace period until then.

The buyers - Hotel Properties Limited (HPL), Morgan Stanley Real Estate and Qatar Investment Authority - are threatening to sue for between S$800 million and S$1 billion if owners do not proceed with the sale.

The conflict was sparked off when the Strata Titles Board (STB) rejected the collective sale of the Leonie Hill development last Friday, due to a technicality.

The two parties had signed a deal for the sale of Horizon Towers for S$500 million in February.

Following the STB's decision, the buyers' lawyers Allen & Gledhill allege that the sellers are now in breach of their contract, and wants them to extend by four months the deadline for completing the sale.

The collective sales agreement will officially expire on August 11.

Allen & Gledhill also wants the sellers to file for a new collective sale order from the STB, or appeal to the High Court to reconsider STB's decision.

If sued, owners of the 173 units who agreed to sell could each be personally liable for S$5.78 million.

The sellers are represented by Tan Rajah & Cheah. They are maintaining that they are not in breach of the sales agreement.

Channel NewsAsia understands they have also requested STB for more clarity on its decision to halt the deal. - CNA/ms

Soilbuild Opts To Auction 3 Biggest Units At Leonie Parc View

Source : Channel NewsAsia, 21 May 2007

SINGAPORE : Yet another property developer is taking the auction route to sell its high-end luxury homes.

Soilbuild plans to hold an exclusive international auction for its three biggest units at Leonie Parc View on Leonie Hill Road next month.

The auction will be jointly conducted by Christie's Great Estates and Colliers International.

Soilbuild says it hopes to reach out to a wider group of international investors through the auction.

Prospective buyers overseas may place their bids via the telephone.

Leonie Parc View comprises 44 units.

Following roadshows in Hong Kong and Indonesia, 18 out of 20 units released have been sold, at prices averaging between S$2,600 and S$3,000 per square foot. - CNA/ms

En Bloc Hits Sour Note

Source : TODAY, 06 July 2007

Gillman Heights On Enbloc

There was a time, not so long ago, that the lines were neatly drawn in en-bloc sales.

On one side, the majority of residents, their signatures already on a collective sale agreement (CSA) and waiting to cash in; on the other, a minority bloc with objections.

Not any more.

In a growing number of estates, some residents from the majority group are gunning for the same goal as the minority — to scupper the deal.

The reason? What were once sweet deals have turned sour, as juicier sales elsewhere are announced with each passing week.

Some majority residents at several estates are finding ways to challenge the legality of their CSAs. Under the law, a majority can only be formed if there is at least 80 per cent of support within the estate.

Take Gillman Heights, a privatised HUDC estate with 608 units in Telok Blangah. About 20 residents, out of the 532 who had signed the CSA, are now opposing the deal.

Their main contention is over a compensation fund set aside for minority residents who may receive less than the purchase price of their apartments.

One resident, Mr Jerry Lum, is trying to rally those in the majority to challenge the legality of the CSA as the final figure for the compensation fund was inserted after residents had signed the agreement.

According to the estate's sale committee chairman Robert Wiener, the agreement provided for a formula to calculate the amount of compensation — a mechanism which one lawyer told Today is becoming commonplace — and that residents were alerted about the fund.

But Mr Lum is disputing this last point. He said: "I'll fight this all the way."

The Strata Titles Board (STB) said it was "inappropriate" to comment on the case as the Gillman Heights application for sale approval is still pending.

However, as the STB's purview is to hear objections of only minority owners, Mr Lum and his neighbours have appealed in writing to the Ministry of Law to intervene.

Besides Mr Lum's group, another group of majority residents in the estate have changed their minds and declined to approve an extension to the CSA after a $548-million deal with CapitaLand was struck in February.

Circulars posted in the estate indicate unhappiness about how the once-blockbuster deal — CapitaLand is paying $19 million above the reserve price — now stacks up against recent en-bloc deals.

For example, CapitaLand recently paid $1.3 billion for Farrer Court, another privatised HUDC estate, which equates to about $2.15 million each for owners of the 618 units there.

In comparison, Gillman Heights residents are getting $363 per square foot of potential gross floor area, or about $870,000 to $950,000 per apartment.

"Never, never just sit back and allow others (to) sell your home on the cheap," one circular stated. One former management council member said the "tension" in the estate has become "a pain".

At Phoenix Court in River Valley — a single block of 47 apartments with only one minority resident — some majority residents were also against an extension to their CSA ... but to no avail. The STB last week approved the sale to Hiap Hoe for $88.1 million. Sources said some disgruntled owners are still seeking legal advice.

At Horizon Towers on Leonie Hill — one of the first estates caught out by the fast-moving market when neighbouring estate Grangeford Apartments fetched more than double the former's price (psf) — some majority residents had been hoping the deal would expire before approval is given. Their deadline is Aug 11.

But with the STB hearing brought forward to between July 27 and Aug 2, some residents have engaged lawyers to scrutinise the legality of the CSA in the first place.

More interestingly, at Minton Rise in Hougang, minority residents have secured a higher valuation for their estate than the collective sale price. Some of their majority neighbours are now up in arms about receiving around $100,000 less than they could have.

Kheng Leong, a privately-owned property group controlled by the family of banker Wee Cho Yaw, paid $209 million for the estate in January, $31 million less than the latest valuation.

Some majority residents are now trying to call for an extraordinary general meeting to grill the sales committee about the entire en-bloc process.

"People used to think an en-bloc exercise equals a windfall, but some people now realise the compensation they receive cannot afford them an equivalent property, resulting in a downgrade," said lawyer Chia Boon Teck, who represents Minton's minority.

Bernard & Rada Law Corporation associate director M Kumaran, who oversees his firm's en-bloc cases, has also noticed the growing incidence of backtracking majority residents. "If the market had remained steady, the people involved in these sales would never have looked back at the sales process. With the sudden realisation that so much money can be made, they discover what they may honestly believe to be flaws in the process," he said.

But Mr Kumaran warned that majority residents walk a thin line between legitimate objections and obstructing the performance of a contract they had, after all, consented to.

It remains to be seen whether this new trend of the majority rejecting the very CSA they had signed will continue.

Mr Nicholas Mak, head of research at Knight Frank, told Today that the jury is still out on whether property prices will keep on heading north.

"There are signs this can continue ... But the market is cyclical. If prices were to stagnate, that would slow down the en-bloc sale momentum," he said.

In the words of the former management council member from the Gillman Heights sale: "If the market had gone south, we'd all have been heroes. People need to have a sense of realism." TODAY/rose

CapitaLand Says Development Charge Hike Will Raise Costs By 1-3%

Source : Channel NewsAsia, 19 July 2007

SINGAPORE: Property developers and market-watchers alike are still trying to work out the impact of Wednesday's move by the government to raise land development charges.

CapitaLand says it is looking at an increase of just 1-3 percent in the total development costs for its new projects at Gillman Heights and Farrer Court, which it acquired through enbloc sales just recently.

Meanwhile, some analysts say the en bloc fever may still persist, driven by bullishness among developers.

Wednesday's hike in the development charge rate to 70% from 50% came as a surprise to the markets, and was seen as a dampener on en bloc sales.

But there are analysts who point to history. They say there have been hikes of as much as 64% in development charges in some popular areas in the past, and these had little impact on demand.

Said Tay Huey Ying, Director of Research, Colliers International, "This has not caused the collective sales fever to slow down. And neither has it stopped land price from escalating.

"And I think the reason is because developers' bullishness in the end purchaser market is giving them the confidence to go ahead and bid aggressively for land, and they are confident that they can pass on this increase in cost to the end purchasers."

Property giant CapitaLand says it has already factored in estimates on such business costs, and expects total development costs for its recent en bloc purchases to go up by between 1 and 3 percent.

It had paid S$548 million to acquire Gillman Heights, and over S$1.3 billion for Farrer Court.

Some market-watchers say they expect the property market to stay buoyant and the positive sentiment to continue.

Said Tan Hong Boon, Executive Director, Credo Real Estate, "If the reading of the market into this measure is part of the cooling measure that is to come, then probably it may affect sentiments.

"However, from what we are accessing from the market we think that it's just a knee-jerk reaction right now, and the overall market economy is still very strong and the positive market sentiments will continue."

Analysts will be looking out for the next review of the land development charges, which is expected to take place in late August.

This is expected to lead to a significant increase in development charges for some areas.

Despite this, market watchers say overall en bloc deals can hit S$16 billion this year, double the S$8 billion record set in 2006.

Private home prices are expected to go up by as much as 25% this year. - CNA/yy

Strata Titles Board Rules No Deal For Enbloc Sale Of Horizon Towers

Source : Channel NewsAsia, 03 August 2007

SINGAPORE: The high-profile enbloc deal involving Horizon Towers at Leonie Hill is off.

The Strata Titles Board has ruled that the $500 million deal will not go through due to technicalities.

The enbloc drama unfolded earlier this year when the majority owners became unhappy with the agreed price of $800 per square foot after they found out that their neighbours at Grangeford Apartments managed to get $2,000 per square foot.

Channel NewsAsia understands that the Board dismissed the application because the applicants failed to include certain documents.

Some papers were also defective and the application therefore did not comply with STB's requirements.

Horizon Towers had been pledged to be sold for $500 million to Hotel Properties (HPL), Morgan Stanley Real Estate and Qatar Investment Authority, the investment arm of the Qatari Emirate. - CNA/ir

Devonshire Lodge Owner Plans Legal Action Against En Bloc Sale

Source : Channel NewsAsia, 14 August 2007

SINGAPORE: Even before the dust settles on the Horizon Towers saga, the sole unit owner objecting against Devonshire Lodge's collective sale has decided to seek legal action to break the deal.

All the owners, except Mr Jeffrey Lai, had agreed to sell the 27-unit Devonshire Lodge en bloc for $37.2 million.

Mr Lai said he would hire a lawyer to fight the case.

And some owners who had signed the sales agreement are now having second thoughts.

Mr Lai said: "Roughly, each unit will get about $1.5 million. For the smaller unit, they are getting $1 million plus. I won't say that they are getting less or whatever, but at least we want to know that it's a fair valuation when they sell the property, that's all."

The next step, Mr Lai said, is to wait for an independent valuation report which should be ready by the end of the month.

This report will then be submitted to the Strata Titles Board as part of an application against the deal and to set a hearing date to present his case.

When contacted, Toh Tan & Partners, the law firm representing the majority of the owners, said it was unable to comment as the matter is set to go under judgement.

Meanwhile the buyer, developer Evan Lim & Co, said the deal was negotiated at market rate then.

Related Video Link - http://tinyurl.com/3c6c6f
Devonshire Lodge owner plans legal action against en bloc sale


The Strata Titles Board said that to date, there are only three cases where an en bloc transaction has been blocked.

Industry watchers said the typical issues raised by objectors relate to sales process and valuation, which can be subjective.

Nicholas Mak, a property analyst at Knight Frank, said: "In a market where prices are changing almost every month or every quarter, the valuation report may become a bit outdated a couple of months later, so it will help in the beginning to give the residents a certain idea, an independent opinion on the value of their property. But they must act upon that information that is received. If they want to use valuation, they may have to do an update of the valuation report a bit later."

Harry Elias Partnership's Philip Fong said: "For the valuation itself, it doesn't mean that just because it's lower than the fair market price, there is automatically bad faith or lack of good faith. There has to be inadequate marketing, or they have to show that the sale was rushed into, or there was suppression of facts. So, these are limited grounds."

To compound the problems, Mr Fong said, minority dissenters are usually not privy to what went on during meetings to discuss the sale of a property.

They also do not have easy access to the sales committee and documents.

Still, it does not mean they do not have a case.

It all depends on the merit of the case.

Under the Land Titles Act, apart from technical objections, they can also object on the basis of financial loss. - CNA/ir

Decision On Day Or Night F1 Rce Epected B Year's End

Source : Channel NewsAsia, 14 August 2007

SINGAPORE: A decision on whether the Formula One race in Singapore will take place at night or in the day is expected by year's end, said Minister of State for Trade and Industry S Iswaran, on the sidelines of a sports event at Sentosa.

Mr Iswaran also addressed concerns raised about the 20 percent levy imposed on non-trackside hotels during the race period.

He assured these hotels that they would also benefit when the race hits town in September next year as there would be ample demand for hotels across the island.

He said: "When we have an event like F1, you would expect about a 100,000 visitors. Of that 100,000, maybe 30 or 40 percent will be visitors who come in over a three- or four-day period.

"That in itself would create quite a significant increase in the demand for hotel rooms in Singapore and it's not just the 5-star hotels or those on the trackside that will benefit from that. It will have a spillover effect across the island."

The minister added that trials are underway to check if it is safe to have a night race.

A decision is expected by year's end as this will ensure there will be ample time for preparations to market the race globally.

"Next year is quite interesting because there will be the Beijing Olympics in August, our race in September, followed by the ones in Japan and China. Not a bad timing for the overall activity in the region – there will be a lot of tourist and travel interest," said Mr Iswaran.

While the Singapore Tourism Board is looking into offering more activities during the race to create more buzz, the private sector here is also encouraged to capitalise on the race by coming up with interesting business proposals. - CNA/so

Sentosa Planning To Develop Mount Faber Ahead Of IR

Source : Channel NewsAsia, 14 August 2007

SINGAPORE: Plans are underway to develop the Mount Faber area ahead of the opening of the integrated resort at Sentosa.

Recreational activities, dining outlets and accommodation for locals and tourists are among the options that are being considered for Mount Faber.

Chairman of Sentosa Development Corporation, Dr Loo Choon Yong, revealed this at the opening of the island's latest attraction – the Asian Tour headquarters – on Tuesday.

He said: "(The) Tourist board, MTI are asking us to prepare a master plan to look at how we can develop the foothills in Mount Faber, how we can incorporate it into the whole neighbourhood.

"Sentosa is an exciting place, so is VivoCity and St James Power Station. There is residence, there is activity and nightlife, so I think the Faber foothills present opportunities."

The Asian Tour is the official regional sanctioning body for professional golf in Asia, with an aim to expand tournament golf.

With the opening of its headquarters next to the Sentosa Golf Club, Asian golfers are now given more opportunities to play in tournaments held in the region.

The Asian Tour now comprises 27 events worth a total of US$27 million in prize money.

Related Video Link - http://tinyurl.com/2nr6bh
Sentosa planning to develop Mount Faber ahead of IR


Asian Tour's executive chairman, Kyi Hla Han, said: "Asia is a big region now. We cover over 16 countries and we are now starting tournaments in Cambodia and Vietnam.

"Just as Sawgrass is the home of the PGA Tour and Wentworth is the home of the European Tour, we are now proud to say that Sentosa is the home of the Asian Tour."

There are also plans to grow the Barclays Singapore Open, which is one of Asian Tour's flagship events. - CNA/so

First-Timers Get Double Chances To Buy New HDB Flats

Source : Channel NewsAsia, 14 August 2007

Artist Impression of The NEW HDB Flats

SINGAPORE: The Housing and Development Board (HDB) has doubled the chances for first-timers balloting for a new flat as they now get two tickets in the ballot, compared to just one previously.

Those unsuccessful in previous ballots will also be given additional tickets.

First-time HDB flat buyer Low Chai Huat has been married for almost two years.

He has a son and is ready to get a place of his own.

While Mr Low welcomes the additional chance with the new scheme, the careful buyer has his concerns when it comes to getting a choice unit.

"It's good, but the problem is some of the houses have already been selected and I don't want those on the lower floors – the air is not so good," he said.

Under the new scheme, HDB said at least 90 percent of the new flats would be allocated to first-timers since they get two ballot tickets.

First-time applicants getting a flat near their parents, and vice versa, get a total of four tickets, while second-timers in the same situation get two tickets.

First-timers who did not get selected in previous ballots also get additional tickets – one extra ticket for four failed attempts and two extra tickets for five failed attempts.

HDB said the number of unsuccessful attempts would be tabulated from January 2002, when the first balloting exercise was launched.

Related Video Link- http://tinyurl.com/2joyln
First-timers get double chances to buy new HDB flats


But given that demand always exceeds supply in the balloting exercises for new flats, few are hopeful of their chances.

"Considering that there are like a few hundred units left and there are thousands applying (for them), I think chances are like 50 percent or 40 percent," said Hazli Ismail, a first-time HDB flat buyer.

Punggol Vista is the latest series of new flats to be launched under HDB's Build-to-Order scheme.

Property agents expect these units to be hot-sellers since the project offers some 100 two-room flats.

While these flats are about 20 percent cheaper than resale flats, property agents said buyers should not discount the resale market altogether.

Instead, they should make use of housing grants to offset the price difference between a new flat and a resale flat.

CEO of PropNex, Mohamed Ismail, said: "There are also advantages in the resale market because one would be able to choose a specific kind of unit with certain renovation and location.

"Most of the time, in a Build-to-Order or a balloting exercise, your choices are limited – there is a limited number (of units) to choose from."

Agents said newlyweds would also appreciate the additional balloting chances since most cannot afford the cash upfront for resale flats, which now stands at S$10,000 to S$50,000.

The improved scheme applies only to HDB's Build-to-Order and balloting exercises, not for the bi-monthly sale of existing HDB flats. - CNA/so

ECB Pumps 7.7b Euros Into Money Market (The Business Times)

Source : The Business Times, August 14, 2007

FRANKFURT - The European Central Bank (ECB) on Tuesday injected 7.7 billion euros (US$10.5 billion) into the money market to calm liquidity fears in the wake of the crisis in the US home loan sector.

The Frankfurt-based ECB, which sets monetary policy in France, Germany, Italy and the 10 other nations that use the euro, had already injected more than 200 billion euros into the market over the last three trading days.

The fresh cash allows commercial banks to borrow from the central bank to meet their liquidity needs. -- AFP

CityDev Q2 Profit Soars 333%

Source : The Business Times, August 14, 2007

SINGAPORE - City Developments (CityDev), Southeast Asia's second-largest developer, said on Tuesday that its quarterly net profit more than quadrupled on stronger home sales and higher office rentals in Singapore.

Looking ahead, the property giant said it expects Singapore's economy to perform well and that the real estate market would be one of the main beneficiaries.

Related links:

City Developments' half-year financial report
http://tinyurl.com/2a52ap

Financial statement
http://tinyurl.com/2heq2p

Consolidated corporate results table
http://tinyurl.com/237ges


The firm, which is controlled by billionaire Kwek Leng Beng, earned $194.4 million (US$127.7 million) in the April-June period, up from $44.9 million a year earlier.

For the six months ended June, net profit was $320.5 million up from $86.1 million a year ago.

CityDev, which didn't pay an interim dividend last year, said it would pay a special dividend before tax of 10 Singapore cents for the first half of 2007.

'The group has achieved the best results in its history,' CityDev said in its earnings statement.

For the half year to June, property development accounted for 56 per cent of pretax profit, up from 38 per cent in the first six months of 2006, while hotels contributed 30 per cent, compared with 53 per cent previously.

CityDev has a 53-per cent stake in London-based hotels group Millennium & Copthorne, which last week posted a 44 per cent jump in second-quarter pretax profit to US$71.6 million.

CityDev said it sold 1,315 residential units worth $2.4 billion in the first half, compared with 386 units valued at $815 million in January-June 2006.

It also said the office market performed strongly with rents increasing by 11 per cent in the second quarter and capital values gaining 8.9 per cent.

The company said that as it has relatively little debt, it is in a 'prime position not only to undertake large-scale projects but also seize any acquisition opportunities as they arise'. -- REUTERS

Ho Bee's Profit In Q2 Jumps Five-Fold To $125.1m

Source : The Business Times, August 14, 2007

PROPERTY developer Ho Bee Investment's net profit for its second quarter surged five-fold to $125.1 million - boosted by a $71 million fair-value gain from its investment properties.

Mr Chua: Earnings for next two quarters will be underpinned by progressive income recognition from projects

The net earnings for the three months ended June 30 compare with $24.4 million for the corresponding period last year.

Turnover for the three months rose 31.5 per cent to $160.0 million, from $121.7 million a year ago as the developer recognised income from sales at three of its high-end residential projects - Orange Grove Residences, The Coast and Paradise Island at Sentosa Cove. Q2 earnings per share rose to 17.0 cents, from 3.4 cents a year ago. Ho Bee announced an interim dividend of 1.0 cent per share. With this payout, the company would have fully utilised its Section 44A tax credits that will expire in December this year, it said.

Related links:

Ho Bee Investment's press release
http://tinyurl.com/yu4tbb

Financial statement
http://tinyurl.com/2gfn9l

Other corporate results reported on Aug 13
http://tinyurl.com/23nenl

Consolidated corporate results table
http://tinyurl.com/237ges


For the first six months of 2007, Ho Bee's net profit rose 416.7 per cent to $194.2 million. Turnover for the company's first half climbed 132.6 per cent to $405.8 million.

Chua Thian Poh, chief executive of Ho Bee, expects earnings and revenue for the next two quarters to be underpinned by progressive income recognition from residential projects the company has launched.

To date, five of the group's seven projects under development are 100 per cent sold. The remaining two, Paradise Island and Orange Grove Residences, are 96 per cent and 95 per cent sold respectively.

Ho Bee also expects good take-up rates for the residential projects it intends to launch over the next 12 months in the core central region. The developer could launch another 648 units within the next year - the 91-unit Waterfront Collection and the 151-unit Seaview Collection (jointly with IOI Land) projects at Sentosa Cove, the 72-unit condominium at Orange Grove Road, the 150-unit condominium at Newton Road and the 184-unit condominium at Holland Hill (jointly with MCL Land), it said.

Ho Bee's shares closed unchanged at $1.85 yesterday. The stock has climbed some 27.6 per cent since the start of the year