Tuesday, August 28, 2007

More Ways To Top CPF Accounts For Family Members

Source : AsiaOne News, Tue, Aug 28, 2007

Tthe Central Provident Fund (CPF) top-up scheme has been expanded so family members have more ways to take care of each other.

The top-up limit has been raised and CPF members can now inject funds into more family members' accounts.

These were among the key changes to the CPF Act passed in Parliament yesterday.

Manpower Minister Ng Eng Hen cited an increase in retirement needs as the population ages as a rationale for such changes.

He stressed that the family remains the main source of financial support in old age.

To encourage families to help each other save, the top-up limit has been raised to the Minimum Sum level at the time the top-up is made, not at the time when the recipient turned 55, reported The Straits Times.

This also addresses the issue of CPF members who turned 62 last year not meeting their Minimum Sum requirement when they reached the age of 55 in 1999.

The Minister provided some statistics in response to Ms Josephine Teo, MP for Bishan-Toa Payoh GRC:

Of the 22,600 CPF members who turned 62, 7,600 - or 34 per cent - were able to meet their Minimum Sum, which in 1999 was set at $60,000.

The remaining 15,000 members who did not meet the Minimum Sum had a median shortfall of $49,300.

Of the 9,700 entitled to draw down their Minimum Sum in the first half of last year, 3,800 - or 39 per cent - delayed doing so by at least one year.

Dr Ng said that as CPF rules differ for each year's cohort, it was simpler to provide data on the most recent group.

He said many members fell short of the Minimum Sum because the current rule allows them to withdraw half of their CPF savings at age 55.

The Minimum Sum is the amount people must keep in their retirement accounts after withdrawing their CPF at age 55. It is meant to ensure those who live beyond 62 will get monthly payouts for 20 years.

The Minimum Sum will be raised in stages until it hits the target $120,000. The current sum is $99,600.

To date, some of the rules have been changed.

In 2003, it was stated that in future, members can make withdrawals only if they have more than the Minimum Sum and the Medisave minimum sum.

These measures, together with the broad range of changes to the CPF system announced by the Prime Minister in his National Day Rally speech, will further increase retirement savings for members, said Dr Ng.

PM Lee Hsien Loong announced two weeks ago that the draw-down age for the Minimum Sum will be deferred from 62 to 63 in 2012. It will then be gradually raised to 65 by 2018.

Key changes to the CPF Act CPF top-up scheme:

-Top-up limit raised to prevailing Minimum Sum at time of top-up, rather than when the recipient turns 55.

-Top-ups of siblings' Retirement Accounts allowed.CPF savings, not just cash, can be used to top up grandparents' Retirement Accounts.

-Top-ups to CPF Special Accounts of spouses and siblings below age 55 allowed.

Division of CPF monies in divorce cases:

-Immediate transfer of CPF monies to the former spouse's CPF account if spouse is a citizen or permanent resident (PR). No need to first set aside Retirement or Medisave Minimum Sums or wait until the member turns 55.

-Immediate transfer of matrimonial home to the former spouse if spouse is a citizen or PR. No need to wait until refunds are made to the member's CPF account. But if home is sold, CPF monies must be refunded to the member's CPF account.

On The Cards: Summary Of Key Proposed Changes Affecting Collective Sales

Source : The Straits Times, Tue, Aug 28, 2007

Additional consent requirement

Additional approval required from owners of units forming at least 80 per cent of area if the development is more than 10 years old and 90 per cent of area if the development is less than 10 years old.

Formation of sales committee

Sales committee to be formed, and its members elected, at a general meeting before the signing of a collective sale agreement can start. More general meetings to be held to consider key issues such as appointment of lawyer and consultant or agent, apportionment of sales proceeds, contract terms and so on.

Collective sale agreement

Lawyer to be present to explain legal terms and liabilities when an owner signs the collective sale agreement. But the owner can change his mind within a five-day cooling-off period after signing the collective sale agreement for the first time.

Mode of sale

A collective sale launch must be made by public tender or public auction. As well, an independent valuation is to be obtained on the date of the close of the tender and bids to be revealed to the owners as soon as practicable.

STB empowered to raise proceeds

The Strata Titles Board can increase the amount that minority owners can get from sales proceeds if it finds that these owners have not been treated fairly. This proposed increase will be at least $2,000, or at most, 0.25 per cent of the sale proceeds for each unit.

Return of monies in management fund and sinking fund Upon sale completion, the money in the condominium's management fund and sinking fund to be distributed to owners.

Investments Crowded Out?

Source : TODAY, Tuesday, August 28, 2007

CPF interest rate hike could hurt financial institutions: Analysts

THE Government’s decision to increase the Central Provident Fund (CPF) interest rate from 2.5 per cent to 3.5 per cent for the first $20,000 in the Ordinary Account (OA) and up to $60,000 on all other accounts may be good news for its members —but could be a cause of concern for private investments.

In a weekly report, Citi economists said the higher guaranteed rates of return “could crowd out investments in the CPF Investment Scheme (CPFIS) … hurting financial institutions currently offering units and insurance products under the scheme”.

As of the end of June, about $113.5 billion was available for investment under CPFIS, but only 28 per cent or $32.1 billion from the CPF-OA and Special Account (SA) was used.

Of the amount, nearly 68 per cent is in insurance products and 16 per cent in unit trusts.

Changes to the CPF have led many research houses to look at the impact on the financial sector.

According to Citi, experts said the new scheme, which redistributes “subsidies” from the upper middle class and above to the lowerincome segments, ironically could also hurt older Singaporeans who have built up larger balances —mostly over and above their OAs — in their Special, Medisave and Retirement Accounts (SMRA).

The Government will peg the rate for those accounts to the yield on a long bond.

Now, CPF pays 4 per cent on SMRA, and it will be 30 per cent less based on the 2.8 per cent yielded by the 10-year bond, Citi said.

Thus, a CPF account with $20,000 in OA and $40,000 in SMRA would earn an effective interest rate of 3.7 per cent or about $120 higher under the new scheme, compared to the existing 3.5 per cent.

But for members who have the Minimum Sum of $99,600 in their SMRA and $20,000 in the OA, the effective interest rate would be only 3.3 per cent, or $590 less under the new scheme.

Thus, while the higher rate may encourage account holders to leave their money in their CPF, the lower SMRA rates could spur them to seek market investments to offset the lower returns on those accounts, especially during recessionary conditions when bond yields typically fall.

The C Footprint

Source : TODAY, Tuesday, August 28, 2007

How it can be used to offset COE and ERP charges


THE Government might have overlooked other holistic and long-term solutions to road congestion and traffic problems, other than the current tried-and-tested Certificate of Entitlement (COE) and Electronic Road Pricing (ERP) approach.

Singapore has an opportunity to transform the current COE/ERP transport model into a national green movement. Today, it’s very easy to calculate how much carbon (C) emission a vehicle will emit based on its brand, model, engine capacity and mileage.

If the Government imposes a fixed C emission quota per vehicle and uses this C quota model to complement the COE quota and ERP pricing usage model, there will always be road users who will over-drive (beyond the C emission quota) or underdrive. Immediately, that creates an opportunity for trading in C offsets, which can occur on say, a local eBay-like platform or on a new transportation-based C exchange.

Singapore is a recent signatory to the Kyoto Protocol and if this idea is implemented, it will be a good demonstration of its support for and belief in combating global warming, while managing the traffic congestion problem by indirectly influencing the road usage behaviour. It also creates an entirely new retail product, unique to Singapore. Even green buildings, such as those with say, solar panels on their roofs, may produce sufficient C offsets for the frequent drivers to purchase on the C exchange.

Because the scale of the C emission generated, or C footprint, is tied to the road usage behaviour of the individual drivers, it becomes a natural complement to the ERP charges and pricing model. The Government can then afford to moderate the ERP charges as the C offset charge or credit is nationwide, not restricted to those roads with ERP gantries.

The fees tied to the exchange trading activities will also create revenue for the Government which may be placed in a National Carbon Trust to fund and promote more sustainable and environmentally friendly projects. In addition, being a national model, the products traded on this C exchange may evolve into other environmentally related derivatives and energy-related commodities, spawning a new investment asset class, invented and made in Singapore.

Parents in lose-lose race

Letter from CONNIE KUM

I COULDN’T agree more with Mr James Teo in his letter “Are ERP hikes the only way?” and Mr Loke Yue Chong in his letter “Cost isn’t just to the wallet” (Aug 27). They have both pointed out exactly what we heartlanders are facing every single day.

As working parents without any help from parents, my husband and I face the challenge of racing with time every day. A typical day for us starts at 6am, leaving the house by 7am, dropping off our kids at school and rushing to beat the ERP at the Pan-Island Expressway, towards Changi which commences at 7.30am. More often than not, we lose the battle against time due to heavy traffic as every parent is doing the same thing at the same time.

The new ERP operating hours will be an even bigger challenge for us to cope. This leads me to my next question: Will the ERP hikes really help to ease the traffic? On the contrary, I see many immediate ill effects.

For one, road users will have to bear heavier costs. With ERP gantries now operating longer hours, families without children going to school may decide to leave home earlier and come home later just to beat the traffic and the higher ERP charges, hence compromising their family time together.

For families with children going to school, we do not have a choice but to leave the house at the usual time and face the same traffic — while having to bear higher ERP charges. It is definitely a lose-lose situation for families in such a predicament.

Leaving for work at 6am?

Letter from JENNIFER LEM

WITH the ERP hours starting at 7am, more drivers will set off on their journeys earlier. To beat the ERP, congestion and jams will start on the Cental Expressway (CTE) from 6.30am or even earlier.

If one has to use the CTE, no matter how much the toll is raised or how early the
operation hours start, such a motorist will continue to use that route. The problem will never be solved. If I have to pay the ERP rate and still get stuck in traffic, what is the rationale of having to pay more?

Starting ERP early will penalise people living in Punggol and Sengkang. For them, to get to town, the only route is by the CTE instead of via Hougang and Serangoon Road as there are bottlenecks along the way up to Bendemeer Road. What is the point of promoting the new estate when living there means having to leave home early at 6am to get to work at 9am? The new Kallang-Paya Lebar Expressway will not help much either.

Perhaps the authorities should build an expressway from Ang Mo Kio Ave 5 that only exits at Outram.

DBS Falls 3% On Risky Debt Exposure

Source : The Business Times, August 28, 2007

SINGAPORE - Shares in Singapore's DBS Group Holdings fell almost 3 per cent on Tuesday after the bank said it was injecting cash into a special-purpose vehicle that invests in risky debt such as collateralised debt obligations (CDOs).

The move came after investors balked at providing the $1.4 billion (US$921 million) vehicle with more short-term funding by rolling over their investments, amid turmoil in global credit markets.

The DBS vehicle, 'Red Orchid Secured Assets', which includes $1.1 billion of CDOs with the rest in loans and bonds, leaves the bank with nearly double the exposure to CDOs that it had initially declared.

Analysts said that as the debt matures and investors do not roll it over, the exposure comes back on to DBS's books.

'Banks provide liquidity when they cannot find third parties to finance such structures. Then the parent bank has to come in to provide liquidity,' said Thilan Wickramasinghe, an analyst at CLSA.

Last week, CLSA said in a client note that DBS would have to provide liquidity to the vehicle because investors holding the asset-backed commercial paper would not renew their investment due to credit market turmoil.

A spokeswoman for DBS, South-east Asia's biggest bank by assets, said the bank had already injected some funds into the vehicle. She did not provide details.

DBS said it had not shown the commercial paper in its direct exposure to CDOs in an earlier disclosure because it believed it would continue to be funded by investors. It said total exposure to CDOs made up only 1 per cent of its overall assets.

DBS's share price fall added to losses on Friday, when DBS first confirmed to Reuters its extra exposure to the CDO market, and it took the stock down 12 per cent since the start of the year, versus a 12 per cent gain in the Straits Times Index .

JPMorgan said in a note to clients that DBS was among the stocks it is recommending investors to avoid.

'Singapore banks and Taiwan insurers appear to be the most at risk, and we see no merit in owning these stocks,' JPMorgan analyst Sunil Garg said.

Singapore's United Overseas Bank fell nearly 2 per cent and Oversea-Chinese Banking Corp dropped 0.6 per cent.

On Friday, Singapore's central bank told banks for the second time this month to take a close look at their books.

JPMorgan said that, with DBS's corporate bond portfolio of over $10 billion classified as 'held for trading', mark-to-market losses could impact third-quarter earnings significantly.

On Tuesday Goldman Sachs cut its ratings for DBS to 'neutral' from 'buy' and lowered its 12-month price target to $24 from $31, citing the bank's exposure to CDOs. The stock was quoted at $19.80 at 0827 GMT.

Goldman analyst Bok Chuan Tan said in a note to investors that while he believed DBS's fundamentals remained strong and the share price correction was overdone, he saw no near-term catalysts to mitigate the bank's CDO exposure overhang. -- REUTERS

No Effort Spared In Ensuring Safe F1 Race: DPM

Source : The Business Times, August 28, 2007

Mr Wong: Attention is also being paid to the threat of terrorism

NO effort is being spared to make sure that next year's Formula One Grand Prix in Singapore is conducted safely, Deputy Prime Minister and Minister for Home Affairs Wong Kan Seng told Parliament yesterday.

The race will take place on a street circuit around Marina Centre on Sept 26-28, probably at night.

'At this stage, the various plans and details are still being worked out between the various government agencies, the race promoter, Singapore Grand Prix Pte Ltd (SGPPL), and the Federation Internationale de l'Automobile (FIA), which is the international governing body for all motor racing events,' Mr Wong said in response to a question from Ellen Lee, MP for Sembawang GRC.

The Ministry of Home Affairs will be working with relevant agencies, SGPPL and FIA to implement the various safety and security measures for 2008 and succeeding years. Attention is also being paid to the threat of terrorism, as the F1 event is expected to draw a huge crowd, including a large number of foreigners, Mr Wong said.

Safety and security measures include lining up barricades around the perimeter of the race circuit, similar to the arrangement adopted by most countries hosting F1 races, and deploying police for crowd control and conducting checks on bags and personal belongings at designated access points to prevent smuggling of any weapons or prohibited items. Vehicle movement will be restricted in sensitive areas.

Changes To The En Bloc Sales Legislation

Source : The Business Times, August 28, 2007

S'pore To Tighten Property Redevelopment Rules

Source : The Business Times, August 27, 2007

SINGAPORE - Singapore said on Monday it would tighten rules on collective home sales - a move that is likely to further cool Singapore's frenzied redevelopment.

Under Singapore law, private housing estates can be sold collectively with the approval of owners representing at least 90 per cent of the value of buildings less than a decade old and those with 80 per cent of the value of buildings over 10 years old.

S. Jayakumar, Singapore's Minister of Law, told parliament that rules on future collective property sales would be amended to require additional owner consent.

The new rules will require that sales in addition have approval from owners of at least 90 per cent of a development's area space for buildings under 10 years old and 80 per cent for older buildings. Also individual owners will be able rescind on agreement to sell their homes within five days of signing.

The proposals come a month after Singapore raised a re-zoning tax on developers.

'The government has also accepted a number of additional changes that will further enhance transparency and procedural clarity as well as offer better protection to the owners of affected developments,' he said.

A consortium of developers led by Hotel Properties is suing some 250 home owners for $4 million (US$2.6 million) each after a botched collective sale of their housing estate. -- REUTERS

Simon Cheong In Spat Over Aussie Board Make-Up

Source : The Straits Times, Aug 28, 2007

PROPERTY developer Simon Cheong is engaged in a war of words with investment group Guinness Peat Group (Australia) (GPG) over board membership.

Mr Cheong, chairman and chief executive of SC Global Developments, is also chairman of Australian developer AVJennings, the company at the centre of the dispute Down Under.

Yesterday, he wrote to AVJennings shareholders to rebut recent comments by investment company GPG on the company's prospects.

Last month, GPG, which has an 11.1 per cent stake in AVJennings, requested a general meeting to propose the election of its two board nominees - Mr Graeme Cureton and Mr Jason Ters.

AVJennings set the meeting for Sept 14 and recommended that investors reject GPG's nominees as they would create a conflict of interest.

GPG, it noted, held a majority stake in a rival home builder, Canberra Investment Corp.

GPG responded by writing to AVJennings shareholders on Aug 17, saying that its nominees were 'outstanding people'. Among other things, it also pointed out that AVJennings had reduced dividend payout both this year and last year.

Mr Cheong replied yesterday, saying that GPG 'has provided nothing' to support its contention that its nominees should be elected. He also noted that GPG's share price has dropped by about 15 per cent over the last year, when Australia's All-Ordinaries Index had risen by around 20 per cent.

He also addressed the issue of reduced dividend payouts, saying that the cyclical nature of the property industry had an impact on the company's results.

AVJennings investors, he said, had been told that earnings in these years had been affected by a general downturn in residential building in the eastern Australian states, particularly New South Wales.

Mr Cheong further pointed out that rival company Canberra Investment reported a 46 per cent drop in revenue and a 78 per cent decline in net profit last year.

He said AVJennings will continue to focus on strategies to deliver long-term results and urged shareholders to back its directors.

Law Society Must Ensure Law Firms Are Insured To Protect Clients’ Money

Source : The Straits Times, 28 Aug 2007

I CANNOT agree more with Mr Heng Cho Choon’s letter, ‘Law Society should pay clients of errant lawyers’ (ST, Aug 25).

The Law Society of Singapore should make it compulsory for law firms to have proper insurance coverage to protect clients’ money.

The society could ensure that law firms hold proper insurance coverage before it renews the practising certificate of lawyers. The quantum of coverage could be based on the annual business turnover of the law firms.

A potential client could ask to see a law firm’s insurance coverage before deciding to engage its services. If the coverage is inadequate, he could ask for an enhanced coverage or go to another law firm that could provide him with one.

It is time for the society to look into this suggestion or come up with other solutions for compensating clients who have lost huge sums of money owing to the acts of dishonest lawyers.

Nelson Quah

Why Flat Buyers Should Approach Sellers Directly

Source : The Straits Times, 28 Aug 2007

I READ with interest the article, ‘Complaints against unethical housing agents on the rise’ (The Sunday Times, Aug 26). Allow me to share my recent experience.

I put up my HDB flat for sale two weeks ago, with the intention of handling the transaction myself.

Since then, I have received tonnes of calls from property agents and some of the tactics they employ are an eye-opener for me.

The most common calls are from agents who ask to co-broke. When they realise that I am the seller, they ask for details of the flat before ending with their most important question - whether I will be paying them a commission should they bring potential buyers for a viewing.

Some never call again when I reply ‘no’, while others will still bring the buyers in.

If a buyer expresses interest in my flat, the agent asks for the final asking price. Say I quote a figure of $300,000. The agent then asks if I will agree to reflect a price of $303,000 in the documents and pay him $3,000, as ‘the buyer needs to show a higher price for loan purposes, and is willing to pay the commission on your behalf’.
Common sense tells me that this is untrue. Chances are the buyer will simply be told that the seller is asking for $303,000 and, if the deal is sealed, the agent ends up with commission from both sides.

Another tactic - an agent even put up an advertisement for the sale of my flat, even though I have not engaged one.

I discovered this when I posed as a buyer and pretended to make a viewing appointment.

It is interesting that PropNex’s CEO called for the Government to step in, as this case involved a PropNex agent.

I strongly urge all buyers to consider bypassing agents and approach owners directly where such an option is available.

Otherwise, their viewings will be limited to properties that the agents have ’shortlisted’, which are likely those where sellers are willing to pay a commission.

Worse, the price that they pay may have been inflated to build in the seller’s commission.

Tan Bee Hong (Ms)

No More Wait For Ex-Spouse’s CPF

Source : The Straits Times, 28 Aug 2007

WOMEN who go through a divorce and are granted a share of their husband’s Central Provident Fund (CPF) monies will receive the funds immediately.

Previously, they had to wait until their husbands reached 55 and only after the Minimum Sums in their Retirement and Medisave Accounts were set aside.

The change in the CPF Act, passed yesterday, is meant to ensure a smooth and equitable division of CPF assets in divorce cases, Manpower Minister Ng Eng Hen said.

It also applies to husbands who are awarded a share of their former wives’ CPF monies.

But the immediate transfer applies only to spouses who are Singaporean or permanent residents and the funds will go into their CPF accounts.

The changes will also allow the former spouse to keep the matrimonial home, after the divorce. Should she choose to sell the house later, the amount her former husband took from his CPF savings to buy the house will be returned to his CPF account.

Dr Ng said the amendment gave the courts ‘the liberty to decide who gets what in a divorce’.

MPs who rose to speak on the issue were mostly supportive of the change.

Madam Halimah Yacob (Jurong GRC) said it would provide sounder protection for women and children in divorce proceedings.

But Mrs Josephine Teo (Bishan-Toa Payoh GRC) warned that newly divorced women could become targets of men who wished to cheat them of their newly acquired property.
More must be done, she said, to inform women of their financial obligations to their former husbands should they choose to sell the house.

Madam Ho Geok Choo (West Coast GRC) asked if it was appropriate to compel a member to transfer his CPF monies to his former spouse, hence neglecting his own retirement needs.

Dr Ng said it was up to the courts to decide how best to divide the CPF assets.


Learning To Tie The Policy Hands

In recent weeks, it has become clear that the red-hot property market has made the government uncomfortable, even as ministers strenuously deny any plans for demand-side intervention. Instead, 'non-interventionist measures' such as releasing more information and ramping up land sales have been mooted.

Two fundamental rules are generally accepted in the formulation of good economic policy. Firstly, less discretion may be better, especially in circumstances where policy conflicts might arise. Secondly, too much change in policy might not be optimal when there is a high level of uncertainty regarding policy outcome.

Set in this context, one could postulate that the recent escalation of property prices might have been avoided if policies had been more consistent and if policy-makers had less discretion to tinker with the market situation as it evolved.

Macroeconomic Stability versus Reserves Protection

To advance the argument, let me propose that the two main roles of the government are: (1) a macro manager of the economy (2) a custodian of our national assets.

Boom and bust cycles create real adjustment costs for the economy. Over- or under-valued asset prices result in the misallocation of resources for the economy. It is therefore natural that the economy's macro manager be concerned about asset price bubbles and busts.

What about the government as a custodian? During downturns, asset prices are low. Selling land (or other national assets) during these periods would attract low bids, which would be tantamount to diluting the country's reserves. As recent as two years and half years ago, the government was still refusing to release land that did not match its reserve price [1]. Conversely, during a market boom, the custodian has the temptation to sell as much land as possible so as to boost reserves.

Trouble is, there is a lead time of 12-18 months from the release of land, the completion of bidding, and finally to the launch of a project. After the launch, it is another 2-4 years before the project is completed. All in all, it takes around 4-5 years from the release of land to when the housing units are finally made available to the market. The property market works in these very long cycles, which to a large extent explains why the pipeline of housing supply often does not coincide with demand.

Given this lag structure in supply, the release of large amounts of land during a boom could potentially store up for a bust later. Releasing land now does nothing to address current shortages. By the time the completed units become available 4-5 years into the future, the market would have presumably corrected itself. The glut of housing units then simply accentuates the down cycle. As mentioned, current shortages could have stemmed from the reluctance to sell land at lower prices earlier in the cycle [2]. The policy reaction of the custodian can therefore come into conflict with the macro-manager.

Use of CPF and Pro-Cyclical CPF Contributions

Let me turn to the use of CPF for private housing purchases. Those who understand finance will know that there is effectively a call option with the deferred payment scheme. With deferred payment, only a 10 per cent down payment is required to purchase a property with no further payment required until TOP. A 30 per cent appreciation in property prices therefore translates into a 300 per cent capital gain (before factoring in cost).

In mid 2005, the government further relaxed the use of CPF for housing purchases, reducing the cash up front from 10 to 5 per cent. It marked the start of the current property boom. Though the policy change looked minor, its effect was not trivial. In essence, cash needed up front was in effect reduced by 50 per cent. A little cash with deferred payment now allows one to take a speculative position into the market upside. Since speculators often need to cash out before TOP, should we be surprised that the number of sub-sales is increasing? As the government ramps up land sales today, should we not be worried about what would happen to the market when the large number of units reach TOP in a few years time?

Even though CPF is meant for the long-term objectives of retirement and housing, contribution rates are almost always used to adjust short-term business costs. The government as even used it as a signaling device to manage business costs [3]. Employer's CPF contributions are often cut during recessions and subsequently restored during booms. The use of CPF contribution rates as a tool to manage short-term business cost adds another reinforcing factor to the cyclicality of the housing market. CPF contributions are a pro-cyclical source of liquidity in the property cycle.

Unexpected Policy Changes and Timing Difficulties

Discretionary policies often have unintended consequences. Take the sudden hike in development charges recently as an example. The increase in development charges, which is effectively to an increase in land cost, should actually cause prices to go up (not down). Though the policy rational was explained, the market perceived the move as a government reaction to rising property prices. As the market now cannot discount further policy changes , it becomes more erratic even as the government works to stabilise it.

The concession on stamp duties, introduced during the downturn to stimulate the property market, were suddenly removed a couple of months ago. The market can only speculate on what the government will do next to cool the property sector

Often, it is difficult to get the timing of discretionary policies right. The anti-speculative measures of 1996 came on the eve of the Asian Financial Crisis. Instead of a property market correction, we witnessed a multi-year rout. The recent DC hike also came just before the stock market correction. In volatile trading, property and bank stocks have fallen sharply. Policy makers, often compelled to act at the peak of the cycle to check asset prices, can end up correcting too much too late.

Now, this is not to say that one should not be concerned about sharp asset price appreciation. How to identify an asset price bubble, let alone deal with it, remains a fiercely debated question among academics and policy-makers [4] alike.

Clearly, the best policy would be to prevent an asset bubble from forming in the first place. To achieve that would require more consistent rather than discretionary policy. As an example, a less discretionary land sales or CPF policy might just go some way towards achieving this.

Tying of the Hands

Unpredictable policy changes, even those made with the best of intentions, must count as a risk factor to citizens, investors and businesses. As with so many things in life, even U-turns are sometimes necessary when unforeseen circumstances arise. But economic cycles are just that - cycles - periods of ups and downs. Good policies, particularly those that influence the long-term competitiveness of the economy like CPF, housing and land policies, require some consistency and predictability. Too much discretionary control could end up compromising long-term objectives. Some credible hand-tying could actually be good in the long run.


1 "Singapore won't release any land sites on confirmed list in 1H2005" Channel NewsAsia, 7 Dec 2004. "The Singapore government has said it won't release any land sites for private residential, commercial and hotel developments through the confirmed list in first half of next year. Sites would only be made available for sale via the reserve list. . . . The government offers land for sale through a confirmed list and a reserve list. Under the reserve list system, the government will only release a site for sale if an interested party submits an application to have the site put up for tender with an offer of a minimum purchase price acceptable to the government."

2 "Sale of Exec Condo Halted as Home Price Slide" Straits Times 26 June 2004. "A slide in prices of private homes in recent years has prompted the Government to refrain from offering any executive condominium (EC) building site for sale for the rest of the year."

3 "CPF Changes a Bold Signal to Investors" Straits Times, 3 Sep 2003. "Acceptance of tough new moves proves Singaporeans' adaptability and shows 'we have a great people', says PM Goh"

4 The former Federal Reserve Chairman Alan Greenspan noted just how difficult it was to check asset price bubbles. The current chairman Bernanke essentially supports this view, but many economists remain highly skeptical about this 'do-nothing' approach. Many economists now blame Alan Greenspan for cutting interest rates too aggressively post dot-com bubble, creating a potentially more dangerous housing bubble in the process

Some May Slip Through The HDB Safety Net

Source : The Business Times, 28 Aug 2007

IT is a sensible policy to encourage home ownership. Secure housing, one of our most basic needs, also provides the place where we connect with the wider community through education, employment and community networks. In addition, owning one's home provides stability and makes for sound financial planning.

As Prime Minister Lee Hsien Loong said in his recent National Day Rally speech: 'Home ownership through an HDB flat is the best form of social welfare for citizens, as it gives every Singaporean a stake in Singapore's success. When we help you to buy a house and give you something which is valuable and which is rooted in Singapore, when Singapore grows, property values go up, your flat value goes up.'

A big part of the social support system in Singapore is centred on helping Singaporeans own an HDB flat. The public housing board will assume an even bigger role with the changes announced by Mr Lee in his speech.

To help more of the lower-income own their own homes, the government will give a more generous housing grant, raising it to $30,000 from $20,000. Meanwhile, more people will also become eligible for the grant as the household income limit will be increased from $3,000 to $4,000. The government will also be helping elderly flat owners to unlock the value of their flat and convert it into a stream of income to supplement their retirement expenses by offering a form of reverse mortgage. HDB will buy back the tail end of the flat's lease and leave the individual with a shorter lease of 30 years. HDB will then pay a lump sum to the owner and monthly payments for the rest of his or her life which will serve as a form of annuity. These new policies will reinforce the unique Singaporean HDB-centric social support system.

As noted in a report by Citigroup economist Chua Hak Bin yesterday, already the current distribution of social support or transfers is heavily skewed towards the decision to buy an HDB flat. The most generous of the subsidies are HDB housing grants of $30,000-$40,000 and a 20 per cent price discount for the purchase of new flats. Mr Chua posed the question of whether, over the longer term, Singapore's social support system should shift towards a more Workfare-centred one rather than the current HDB-centred one.

He said: 'Tying the most generous social support to home ownership may penalise those who are too poor to purchase an HDB flat and encourage the assumption of a heavier debt burden than otherwise. Should lower-income households who do not exercise their privilege to buy an HDB flat be given the lump-sum cash grant equivalent to $30,000-$40,000 (perhaps deposited into their CPF accounts) upon reaching a certain age instead? Such an option may produce an outcome where the social transfers are more a function of need rather than a decision tied to home ownership.'

Singaporeans who don't own HDB flats may number 200,000 or less. Not that large a group, but they are most likely the ones who need help most. Hence the suggestions are definitely worth considering.

Grange Residences

Grange Residences occupies a prime location in the residential heart of Singapore, at the junction of Tanglin Road and Grange Road – two of the most desirable residential address in the city. There is also the added benefit of being just a short walk from the magnificent Botanic Gardens and the myriad attractions of Orchard Road.

Grange Residences remains a special and remarkably private address, enhancing the experience of living in an exclusive neighbourhood. Spreading over 167,000 square feet of land, Grange Residences provides a liberating sense of space and light that spans over spectacular views of both the city and greenery.

Grange Residences is one of Singapore best condominium development with a luxurious design, both on the interiors and exteriors. Its impeccable design and clean lines is a prominent landmark in the Tanglin Road vicinity. Its location makes it a preferred choice by many buyers and expats who enjoy a short walk to the Tanglin Mall, Tanglin Post Office or Botanic Gardens. Consisting of two 18-storeys and an 8 storey block, all units in this condominium have high ceilings, private lift lobbies and a good sized balcony.

Map Source : http://www.streetdirectory.com

Location : 91, 93, 95 Grange Road (District 10)
Developer : Wheelock Properties Ltd
Tenure : Freehold
Year of Completion : 2004
Total Units : 164 in 2 towers of 18-storey and 1 tower of 8-storey
Unit Types : 4 + 1 bedrooms - 2486, 2583, 2669, 2852 sqft

Asking Sale Prices: Average $2800psf
Asking Rent Prices: From $18,000 per month

-State-Of-The-Art Gym
-Lush Landscaped Gardens
-Two Outdoor Glass pavilions
-40-Metre Lap Pool
-Play Pool
-Children’s Play Area
-Tennis Court

-High Ceiling Foyer At the Entrance of Each Tower
-Private Lift Lobby in Each Tower
-Separate European and Asian Kitchens
-Leicht Kitchen System
-Gaggenau Hobs and Hoods, dishwasher, microwave oven and multifunction oven
-Amana Refrigerator
-Transtherm Wine Cooler
-Designer Brands in Bathrooms: Philippe Starck Edition 2; Villeroy and Boch

The distinctive style of Grange Residences is accentuated within each home by clean, linear interior architecture. Coupled with well-planned layouts and top-of-the-line home fittings, the home itself becomes a work of modern art.

Representing timeless modernity, Grange Residences possesses a design that is destined to make an arresting and articulate visual statement in one of the most covet residential districts of Singapore.

Revised En Bloc Law Fixes Imbalances In Mixed Estates

Source : The Straits Times, 28 Aug 2007

HOME owners who live in mixed developments - which have both apartments and shops or offices - will now get a bigger say if their estates go en bloc.

This is thanks to a proposed law change which will require another layer of consent from an estate’s owners for a collective sale.

Consent is granted now if owners who hold at least 80 per cent of a development’s share values vote in favour of a sale. If a development is less than 10 years old, the requirement is 90 per cent.

But the upcoming change will add another condition to en bloc sales regardless of whether the estate is mixed or not: The owners who want to sell must also have units that make up at least 80 per cent of the development’s total area. Again, this is upped to 90 per cent if the estate is less than 10 years old.

This change was made to address the imbalance in share values in a mixed development. Share values are assigned when a unit is first sold, and help determine what each owner pays in maintenance fees and how many voting rights he has in an estate’s management.

Although share values are partly determined by unit size, owners of commercial units generally get more share values than home owners. For every one share value given to a home owner, an office owner in the same estate gets four and a shop owner, five.

This has led to complaints from residents in mixed developments who are reluctant to sell their estate en bloc but who may not have a choice.

The proposed change has itself been tweaked since March, when the Ministry of Law first considered a second layer of consent.

Its initial proposal was based on the total number of an estate’s units, rather than its total area. But after feedback from the public and experts, the ministry changed its mind.

Property consultants yesterday said the new rule will make things more equitable for home owners.

‘The original plan to go by number of units would have been unfair to owners of large units, because they would have paid more for their units but would have only one say,’ said Mr Karamjit Singh, executive director of property firm Credo Real Estate.

Mr Lui Seng Fatt, head of investments at Jones Lang LaSalle, warned that this new rule may make it harder for mixed developments to go en bloc. ‘Also, owners with a larger floor area may now have a bigger say, not only in voting but also in how to split the sale proceeds,’ he added.

But the change may not have much impact on the en bloc market - 90 per cent of deals done since last year were in purely residential estates, said Mr Nicholas Mak, director of research and consultancy at Knight Frank.

Collective Sales Of Homes To Be More Transparent

Source : The Straits Times, 28 Aug 2007

Home owners to get more say with proposed changes to Land Titles (Strata) Act

HOME owners faced with the momentous decision of selling their home en bloc will soon benefit from a clearer, fairer sales process - and the right to change their minds within five days.

Amid a record number of collective sales in the past two years, some home owners have been left unhappy at the sale process over issues such as how the sales committee is formed.

En-bloc sellers have been plagued by rumours and a lack of clear information on sale procedures. Some home owners with strong emotional attachments to their homes have felt pressured to sell.

In one high-profile dispute, the sale of Horizon Towers for $500 million was blocked on a technicality - the paperwork was not in order - by the Strata Titles Board, after action was taken by owners who were opposed to the sale. They had disputes over issues including the transparency of the sale process. The developers have now taken the sellers to the High Court for failing to see the sale through.

One of the proposed changes will give more power to the board, which can disregard any technical irregularity if it is satisfied that it will not prejudice any owner’s interest.

Another key change is the introduction of strict guidelines on the currently unregulated process of setting up an en-bloc sales committee to oversee a sale. For instance, owners can only form a sales committee and elect members at a general meeting.

Another major change will provide for a five-day ‘cooling off’ period after a collective sale agreement is signed during which a home owner may change his mind.

The proposed changes are contained in an amendment to the Land Titles (Strata) Act, introduced to Parliament by Deputy Prime Minister and Minister for Law Professor S. Jayakumar yesterday.

He first outlined some of the changes in March. More proposals were added after public consultation in April and May - which attracted hundreds of suggestions - and talks with industry experts.

Prof Jayakumar said the extra changes will further enhance transparency and procedural clarity, and offer better protection to affected home owners. There are more than 30 proposed amendments to take effect as soon as early as October.

One change addresses an imbalance in voting rights in some mixed retail, office and residential developments - by adding a new level of owner consent by floor area, before a sale can proceed.

To ensure owners are kept in the know, general meetings must be held to look at issues such as appointing lawyers and consultants, or dividing sales proceeds.

Also, a lawyer must be present to witness the signing of the collective sale agreement, and to explain the legal terms and liabilities. Observers say this move will prevent owners from complaining that they were forced to sell under duress.

To assure owners the best price is reached, a collective sale launch must be made by public tender or public auction. If this method fails, the sales committee can follow up and negotiate with any bidder. Still, a sale by private treaty must be concluded within 10 weeks of the close of the tender or auction.

And an independent valuation has to be obtained on the date the tender closes with bids to be revealed to the owners as soon as practicable - to help them decide if the bids are favourable.

Another change will return any remaining money in a condo’s management and sinking funds to owners - not the purchasing developer.

The Strata Titles Board can increase the amount a minority owner gets from sales proceeds if, say, he spent a lot to do up his home before finding about the sale.

‘All the changes will give owners more say in a collective sale,’ said Mr Nicholas Mak of consultancy Knight Frank. ‘But they come at a price as the sale process will most likely be lengthened.’

Also, professional fees will inevitably rise, said Credo Real Estate’s managing director Karamjit Singh.

On the cards
SUMMARY of key proposed changes affecting collective sales

Additional consent requirement

Additional approval required from owners of units forming at least 80 per cent of area if the development is more than 10 years old and 90 per cent of area if the development is less than 10 years old.

Formation of sales committee

Sales committee to be formed, and its members elected, at a general meeting before the signing of a collective sale agreement can start. More general meetings to be held to consider key issues such as appointment of lawyer and consultant or agent, apportionment of sales proceeds, contract terms and so on.

Collective sale agreement

Lawyer to be present to explain legal terms and liabilities when an owner signs the collective sale agreement. But the owner can change his mind within a five-day cooling-off period after signing the collective sale agreement for the first time.

Mode of sale

A collective sale launch must be made by public tender or public auction. As well, an independent valuation is to be obtained on the date of the close of the tender and bids to be revealed to the owners as soon as practicable.

STB empowered to raise proceeds

The Strata Titles Board can increase the amount that minority owners can get from sales proceeds if it finds that these owners have not been treated fairly. This proposed increase will be at least $2,000, or at most, 0.25 per cent of the sale proceeds for each unit.

Return of monies in management fund and sinking fund Upon sale completion, the money in the condominium's management fund and sinking fund to be distributed to owners.

Reflections @ Keppel Bay

The Daniel Libeskind showcase

Daniel Libeskind’s first residential showcase in Asia has its platform in Singapore in Keppel Bay. His iconic design for Reflections at Keppel Bay will put Singapore on the world map for luxury waterfront homes.

Reflections at Keppel Bay comprises a total of 1,129 luxurious waterfront condominium units housed in six glass towers of 24 storeys and 41 storeys as well as 11 blocks of 6- to 8-storey villa blocks. It offers choice units of 1- to 4-bedroom apartments and penthouses with sizes ranging from 700 sqft to a super penthouse of 13,300 sqft. The Libeskind development will sit on a land size of approximately 84,000 sqm with an extensive shoreline of 750 m.

The towers will all be topped with sky gardens on sloping roof lines. Sky bridges will connect each pair of towers, providing pockets of open spaces high above the ground and platforms for appreciating the panoramic views of the sea and the lush surroundings.

This iconic development will feature a sculpture-like clubhouse with a full range of recreational facilities to meet the lifestyle of discerning homeowners. Every detail and aspect of design will optimise interaction with the sea and the commanding views of its scenic surrounds including Mount Faber, Keppel Club Golf Course, Labrador Park, Sentosa Island and its upcoming integrated resort, and the city skyline.

Homeowners of this exclusive development will enjoy a 10-year complimentary membership to the 170-berth Marina at Keppel Bay when it is completed and opened in December 2007. Located on Keppel Island and linked to the mainland by a landmark cable-stayed bridge that will be completed in mid-2007, Marina at Keppel Bay will be able to accommodate yachts of between 100 and 200 ft long.

Members will enjoy lifestyle facilities that include a clubhouse with a member's lounge, gourmet restaurants, recreational amenities and leisure charter services to access neighbouring islands.

Location : Keppel Bay (District 4)

Tenure : 99-year Leasehold w.e.f 15 March 2006
Expected TOP : 2013
Total Units : 1,129
Building : 6 Tower Blocks (combination of 41/24 storeys) & 11 Low Rise Villas (Combination of 6/7/8 Storeys)

Unit Types:
1BR + study ~ 732 to 800 sqft (6 units)
2BR & 2BR + study ~ 743 to 1,001 sqft & 947 to 1,335 sqft (398 units)
3BR ~ 1,109 to 2,142 sqft (589 units)
4BR & 4BR + study ~ 1,938 to 2,831 sqft & 2,530 to 2,874 sqft (132 units)
Penthouse ~ 3,488 to 12,900 sqft (35 units)

-Double storey clubhouse
-Landscaped sky bridges
-Full-length Olympic Pool
-Children's Pool
-Lap Pool
-Two Tennis Courts
-Water Features including a 100,000 sq ft Reflecting Pool

Signature waterfront living in Keppel Bay to attract world luxury home collectors

Home-grown multi-national corporation, Keppel Corporation, through property arm, Keppel Land, continues to contribute to shaping Singapore’s skyline and fabric of city living in Singapore’s next phase of growth.

Keppel Bay is set to put Singapore on the world’s prime real estate map as a true waterfront precinct comprising an iconic residential development designed by world renowned architect, Daniel Libeskind; the FIABCI-award winning condominium, Caribbean at Keppel Bay; a world-class marina, Marina@Keppel Bay; and the new landmark cable-stayed bridge linking the mainland to the marina.

Located just a five-minute drive away from the Central Business District, Keppel Bay is part of the vibrant waterfront city in southern Singapore comprising Sentosa and the upcoming Sentosa Integrated Resort, Harbourfront and VivoCity, Singapore’s largest entertainment and recreation hub.

Keppel Bay enjoys the rare confluence of location strengths – of being near the city yet within one of Singapore’s best-loved nature and recreation enclaves. Combining the best in waterfront and urban lifestyles, Keppel Bay redefines premier waterfront living befitting Singapore’s position as a vibrant global city.

Property, Financial Boom Drives Growth In Services

Source : The Straits Times, 28 Aug 2007

SINGAPORE’S services sector racked up a robust second quarter, thanks to the booming property and financial sectors.

Overall business receipts for the three months ended June 30 were up 15.6 per cent over the same period last year, according to the Department of Statistics.

Financial services, real estate and business services were among the sectors that enjoyed bumper growth but economists were not optimistic that such robust expansion will be sustainable.

Fortis Bank strategist Joseph Tan said: ‘The main question is how the sub-prime activity in the United States will affect the market. If it is risk-averse, we will be negatively affected if trading volume falls.’

Financial services led the way with a 35.6 per cent rise in turnover, thanks mainly to brisk business in banks, stock brokers, funds managers and investment advisors.

The related field of insurance rose 28.2 per cent. If the financial and insurance sector figures were stripped out of the overall picture, services industry growth in Singapore was still 10.5 per cent.

United Overseas Bank economist Alvin Liew believes, however, that those two sectors are still key to further strong expansion. ‘Growth without financial services remains rather strong, but because financial services registered strong growth, if it slows, the overall robust growth seen here might not be sustainable.’

Real estate, excluding developers, grew by 27.2 per cent, which, in turn, came on the back of robust 19.2 per cent first-quarter growth.

The bumper figures stemmed from the dramatic recovery in the housing market but experts are divided over whether the good times will roll for much longer.

Mr Liew feels real estate ‘can be expected to do well over the next 12 to 18 months’, while Mr Tan believes demand could dry up.

‘A lot of the positive vibes in the property markets have been driven by gains in the equity markets,’ he said.

‘If activity in the markets slow down, real estate activity could slow down too.

‘But there are two trends in the sector. Fundamental demographic demand, such as with the integrated resorts and inflow of migrants, will continue to drive demand over time. But cyclically, we can expect retardation of demand as speculative buying and positive sentiments slow.’

Leasing services, a related field, also enjoyed a good quarter, with receipts up 12.7 per cent, thanks mainly to more business for firms leasing land and water transport gear.

Education services were up 15.9 per cent while business services rose 15.6 per cent. This sector covers fields such as legal and architecture but it was the 36.8 per cent surge in market research and management consultancy firms that really gave the sector a boost.

Transport saw growth across all sectors reflecting the higher returns from freight as regional trade boomed. Receipts in storage and supporting services rose 12.4 per cent.

Economists expect the services sector to grow fairly strongly for the rest of this year and into 2008.

Rents, Wages Up But S’pore Cheaper Than HK, Tokyo

Source : The Straits Times, 28 Aug 2007

EVEN though property costs and wages are on the rise, Singapore remains cheaper than global cities in the region such as Hong Kong and Tokyo, said Trade and Industry Minister Lim Hng Kiang.

Nevertheless, the Republic cannot afford to be complacent, said Mr Lim. ‘We have to maintain vigilance over our costs, as excessive cost increases will dampen our growth prospects,’ he said.

Mr Lim was speaking in Parliament yesterday in response to MPs’ concerns about the impact of rising business costs on Singapore’s economic competitiveness.

In response to questions on this issue from Mr Liang Eng Hwa (Holland-Bukit Timah GRC), Mrs Josephine Teo (Bishan-Toa Payoh GRC), Dr Muhammad Faishal Ibrahim (Marine Parade GRC) and Madam Halimah Yacob (Jurong GRC), he laid out proactive steps that the Government has taken to address supply constraints.

Also, citing as examples London and New York, which are thriving hubs despite their high costs, Mr Lim said ‘competitiveness is more than offering low costs alone’, but also about value creation. In this respect, Singapore has attributes that economies in the region cannot easily replicate, such as its livability.

Also Mr Lim pointed out that in the past three years, the consumer price index has increased at an annual rate of 1 per cent, while overall unit labour cost actually declined at an annual average rate of 2.2 per cent. ‘However, in recent quarters, we have seen increases in property prices and rentals, as well as wages,’ he noted.

He cited recent moves to release land for temporary office space as well as provide more public flats for rental.

The Ministry of National Development (MND) also released additional information on property prices and rents ‘to allow the public and businesses to make more informed decisions on property purchases and rentals’.

And the MND has been putting out an ample supply of land with more than 42,000 private residential units and 640,000 sq m of office space to be completed by 2010.

The Government is also looking at ways to help more Singaporeans such as older workers and women take advantage of the strong employment market and rejoin the workforce.

Despite media reports of ’sky-high’ office rentals, Mr Lim said although the median prime office rent in the second quarter was $9.50 per sq ft per month, the median rent in other locations, accounting for about 80 per cent of office space here, was less than half of that.

Mr Lim also quoted studies which showed that Singapore remains cheaper than other global cities in the region.

A survey on global office market rentals by consultants CB Richard Ellis showed that Singapore was 30 per cent cheaper than Hong Kong, and 50 to 60 per cent cheaper than Tokyo.

Inflation Expected To Be 1-2% In ‘07: Hng Kiang

Source : The Business Times, 28 Aug 2007

DESPITE soaring property prices and good wage increases, inflation is expected to come in at between one and 2 per cent this year, Minister for Trade and Industry Lim Hng Kiang said yesterday in response to parliamentary questions on the Singapore economy.

While this expected inflation rate is an increase from the average annual rate of one per cent for the past three years, Mr Lim said that inflation is ’still very reasonable’ seeing that Singapore has been enjoying practically 16 quarters of growth.

‘The current cost pressures are reflective of our competitiveness and resultant strong economic growth,’ Mr Lim said, noting that the economy is projected to grow by 7 or 8 per cent this year. The growth has been apparent in both the manufacturing and services sectors. Overall unit labour cost increased by 5.8 per cent year-on-year in the first half of 2007 while unit business cost for manufacturing increased by 2.6 per cent.

Mr Lim also pointed out that the government had taken steps to combat immediate space constraints by introducing a supply of interim office space, along with HDB flats for rent. The ministry of national development has also published additional information on property prices and rents to keep the public and businesses better informed. More than 42,000 private residential units and 640,000 square metres of office space will be available by 2010, to help meet demand.

With regards to manpower, the minister explained that the government is planning to help more Singaporeans - like women and older workers - rejoin the workforce so as to benefit from the robust employment market. ‘Our focus is to create better jobs for Singaporeans and better opportunities to attract global talent,’ he said.

Mr Lim cited Singapore’s ranking this May by the World Competitiveness Yearbook as the second-most competitive economy overall among 55 countries, as showing that Singapore remains an attractive destination for investors, talent and tourists, even in the face of increased costs.

Amendment To Land Titles (Strata) Act

Source : The Business Times, 28 Aug 2007

It will extend en bloc sale by majority consent to five more developments

A proposed amendment to the Land Titles (Strata) Act will extend en bloc sale by majority consent to five developments not covered by current legislation - Goldhill Plaza, Goldhill Shopping Centre, Katong Plaza, Roxy Square Shopping Centre and Bukit Timah Shopping Centre.

Strata title certificates were issued for the projects but the original landowner/developer retained the title certificates and instead gave long leases - at least 850 years - to buyers of units.

Owners of such units can only do an en bloc sale with unanimous consent - and the approval of the original developer, who owns the reversionary interest in the property.

But the ministry of law proposes to allow them to proceed with an en bloc sale by majority consent.

And the original developer’s consent will not be required, because if the Strata Titles Board approves an en bloc sale, he will lose all rights to the land.

Law May Alter The Pace Of En Bloc Sales

Source : The Business Times, 28 Aug 2007

Amendments could see sales surge in near future, but sites may take longer to launch later

Proposed changes to the law will make the en bloc sale process more transparent and include safeguards to ensure that the various stakeholders get a fair deal.

Sales committees will have to be properly formed and elected. Collective sales agreements (CSAs) will be witnessed by lawyers who can clarify doubts and explain terms and liabilities. Even after they sign, potential sellers will have a five-day ‘cooling-off period’ during which they can change their minds. Even the definition of majority consent has been tweaked.

In the immediate future the changes, which are expected to become law in early October, could serve as a catalyst to speed up the signing of CSAs, says CB Richard Ellis executive director Jeremy Lake. ‘Otherwise it appears that everything may have to be unwound and the process restarted under the new law,’ he added.

But in the longer term, the pace at which en bloc sites have been galloping into the market may slow. This is largely because new rules and procedures - including how sales committees conduct their business - mean it could take a longer time to launch a site for sale. However, the pace of collective sale deals sealed will still depend largely on market conditions, reckons Credo Real Estate managing director Karamjit Singh, who welcomed the spirit of the changes that promote greater transparency.

Law firm Rodyk & Davidson’s partner Norman Ho said lawyers’ fees for collective sales, usually $3,000 to $4,000 per unit, could double or triple because of the extra work involved - primarily because lawyers will now be required to witness signatures and certify the monthly updates on the consent level. ‘This will also aggravate the current shortage of en bloc sale lawyers,’ Mr Ho reckons.

Agreeing, Credo’s Mr Singh said requiring lawyers to witness signatures will ‘create a bottleneck in the process’.

Like many in the industry, Mr Ho questioned the need to get lawyers to witness signatures, especially since a cooling-off period is also being introduced.

A key amendment is an additional requirement for the definition of majority consent for en bloc sale, to be based on the area of the units in the development.

The existing condition, that requires consent from owners controlling at least 80 or 90 per cent of a development’s share value - depending on whether it is more than 10 years old or less, respectively - will still apply. But a second condition will now require consent from owners of units that form 80 or 90 per cent of area in the development - again depending on its age.

This is different from the Ministry of Law’s earlier proposal in March, which had sought to peg the second condition of consent on 80 or 90 per cent of the number of units owned in the development. Feedback showed that basing the second requirement on area will mitigate bias against residential owners in a mixed development - who typically have lower share values. At the same time, the requirement would not work against commercial unit owners, especially those whose units have much larger floor areas.

Another big section in the Land Titles (Strata) (Amendment) Bill tabled for first reading in Parliament yesterday by Deputy Prime Minister and Law Minister Prof S Jayakumar governs the formation, composition, constitution and proceedings of en bloc sales committees.

A sales committee will have to be elected by more than 50 per cent of owners present at a general meeting of the management corporation before signing of the CSA may begin. Eligibility criteria of committee members are listed and the sales committee will have to convene general meetings to consider key issues such as the appointment of the property consultant and lawyer, apportionment of sales proceeds and the terms and conditions of the CSA.

The sales committee will also have to provide monthly updates - instead of every eight-weekly currently - of the consent level, to keep owners better informed.

Every launch for sale must be through a public exercise like a tender or auction. However, the sales committee can engage in follow-up negotiations with any bidder, especially if the tender/auction fails to achieve the desired price. But a sale by private treaty must be concluded within 10 weeks of the close of the tender/auction. Otherwise, the tender will have to be relaunched for sales efforts to resume.

Credo’s Mr Singh welcomed the 10-week deadline, saying it ‘instils discipline as the market has shown itself to be very dynamic’.

‘In fast-moving markets, private treaty negotiations do not give you comfort that you are dealing with the best buyer. But a tender does, because you are inviting more participants to the negotiating process rather than limiting yourself to one or two,’ he added.

A MinLaw spokesperson said: ‘The proposed amendments to the Land Titles (Strata) Act are to provide additional safeguards and to ensure more transparency for all owners, that is, the minority and majority owners, but in a way that does not make it unduly onerous to bring about an en bloc sale.’

Property Players Can Be Trend-Setters In Going Green: Analysts

Source : Channel NewsAsia, 27 August 2007

Singapore property developers and retail mall owners have been urged to think beyond just energy efficiency or cheaper utilities when it comes to being environmentally responsible.

Experts say there is a lack of suppliers and contractors with the green mindset and skills.

And so, local players who go green as a way of life can become trend-setters.

According to international architects, going green goes beyond using natural lighting and energy-efficient water heaters.

And, they say, this means business opportunities for Singapore firms.

Toby Bath, Managing Director, HOK International (Asia Pacific), said: "The responsibility lies with the team from the beginning - from the design team and the owner and the operator.

"So we have to pick sustainable forest if we're going to use forestry. We have to try to recycle any of the construction material that's coming off the demolition of the site.

"There is a tremendous opportunity because of Singapore's position geographically for it to become a centre for sustainable green building design. Most of the projects are connected to transit, which is a fundamental starting point."

However, a major challenge lies in the limited number of service providers who can handle the green development process from cradle to cradle.

Mr Bath said: "You need to have design professionals who are very familiar with the procedure you have to go through in a collaborative design approach. There're very few of those here in Singapore at the present time.

"And the contracting industry also isn't quite yet geared up to doing a green sustainable design building. They need to avoid the use of landfills, they need to recycle all the materials and source materials from special sources. So that's a very new thing."

The Building Construction Authority (BCA) is now working on passing a law to make all new buildings in Singapore meet the basic environment requirements, after introducing a Green Mark award in 2005 to urge local players to go green.

John Keung, CEO, BCA, said: "We have probably 60 buildings that's under green mark. So green mark buildings are energy efficient buildings and also make use of clean energy, it saves water, it is processed in its operation. Going forward, we have a series of programmes to raise the awareness further."

The agency announced earlier this week that some local buildings will be used to test and develop environmentally-friendly technologies as part of the government's initiative to invest S$17 million over the next 5 years for new ideas in the field. - CNA/ch

MacarthurCook acquires Jurong East business park for S$91m

Source : Channel NewsAsia, 27 August 2007

SINGAPORE : MacarthurCook Industrial REIT has made its first acquisition since listing on the Singapore Exchange.

It is buying a business park complex in Jurong East from Eurochem Corporation for S$91 million in a sale and leaseback arrangement.

The acquisition, funded fully by debt, will increase the size of MacarthurCook's portfolio to S$407 million.

Eurochem will sign a lease for 10 years with an option to extend for another five years.

The lease will start from the date of completion, which is scheduled for December 2009.

Eurochem is a Singapore-based company operating in the petrochemical sector. - CNA/ch

DBS Confirms Exposure Of S$2.4b To CDOs

Source : Channel NewsAsia, 27 August 2007

SINGAPORE : DBS has again assured investors that it only has minimal exposure to the US sub-prime mortgage market.

In a statement out on Monday, the bank confirmed that it had a total exposure of S$2.4 billion to collateralised debt obligations (CDOs).

This is S$1.1 billion more than S$1.3 billion exposure it had declared in early August.

DBS said the additional S$1.1 billion exposure came from CDOs held by an asset-backed commercial paper conduit called Red Orchid Secured Assets (ROSA).

It explained that this was not included earlier because it had assumed that the conduit would continue to be funded by investors.

But this assumption could not hold, given the recent market volatility.

Still, DBS said, ROSA's total assets of S$1.4 billion can be fully funded by a liquidity facility provided by DBS.

It stressed that the CDOs in ROSA are not directly exposed to the US sub-prime mortgage market.

DBS said that out of its total S$2.4 billion holdings in CDOs, only 12 percent directly references some exposure to US sub-prime mortgages.

Its total CDO exposure makes up only 1 percent of its overall assets.

CDOs are financial instruments that pool bonds, bank loans and credit derivatives into new high-yielding securities. - CNA/ch

Proposed Changes To En Bloc Sales Rules Likely To Cool Market

Source : Channel NewsAsia, 27 August 2007

SINGAPORE : Market watchers say the slew of changes governing en bloc sales is likely to cool the en bloc market.

They say the move to have two levels of consent - one based on share value and another on floor area - is in favour of those who do not wish to sell.

They also add that it puts residential owners on a more level playing field, as commercial units now have much higher share value.

It may also deter speculative investors.

Lee Liat Yeang, Lawyer, Rodyk and Davidson, said, "I think these amendments will cool the market both in the short term and the medium term. In particular, I think property consultants and lawyers will have to actually take more time to actually review the impact of the changes in the laws and procedures to see how they can actually fine-tune their actual processes that they are doing right now to make it in line with the new laws and regulations."

As for the changes governing the setting up of sales committees and their proceedings, the law ministry says this will make the process more transparent.

Analysts say this will make it more onerous.

Mr Lee said, "There's also a requirement that the lawyers be present to explain and to witness the signing of the collective sale agreement. This would also be very difficult, because it will be harder to organise signing sessions where lawyers are present. This might result in higher professional costs."

Industry watchers say developers may have more difficulty finding good en bloc acquisition deals as the new rules will mean that potential sellers will have a harder time fulfilling the 80 percent criteria for consent. - CNA/ms

55% Of CPF Members Met Minimum Sum Requirement At Age 62 in 2006

Source : Channel NewsAsia, 28 August 2007

SINGAPORE : Fifty-five percent of the 7,100 active CPF members who turned 62 last year managed to meet the Minimum Sum amount of S$60,000.

This was the amount set when they turned 55 in 1999.

And about 42 percent of them decided to delay drawing down the money by a year.

As for those who could not meet the Minimum Sum, the median shortfall faced was about S$34,500.

Manpower Minister Dr Ng Eng Hen, who was responding to questions raised in Parliament on Monday by MP for Bishan-Toa Payoh GRC, Ms Josephine Teo, explained why many could not meet the Minimum Sum requirement.

Dr Ng said, "Currently, members are allowed to withdraw 50 percent of their CPF savings at age 55. And this is in fact one important factor why many members fall short in their Minimum Sum. As announced in 2003, the withdrawals (draw down) of Minimum Sum...will be progressively raised up from 2009 to 2013. These measures together with the broad range of changes to the system as announced by the Prime Minister in the National Day Rally will further increase retirement savings." - CNA/ms

All Possible Measures Taken To Ensure Safety Of F1 Race: DPM Wong

Source : Channel NewsAsia, 28 August 2007

Singapore is making sure all possible measures will be in place to ensure public safety when the Formula 1 Grand Prix comes to the country in September next year.

Deputy Prime Minister and Home Affairs Minister Wong Kan Seng says the international governing body for all international motor racing events, the FIA, is the authority on this.

And Singapore will be working with them and the race promoter.

But Mr Wong cautions that apart from safety issues concerning the race itself, attention must also be paid to the threat of terrorism.

The Deputy Prime Minister was responding in Parliament to a question by Sembawang GRC MP Ellen Lee on the safety and security measures to be put in place.

Apart from erecting safety barricades along the perimeter of the circuit, the organisers are exploring the deployment of CCTV cameras and restrictions on vehicle movements.

Mr Wong said checks on bags and belongings of spectators will be conducted at designated points.

And in the event of a major incident, unarmed guards and auxiliary police officers will assist the police in evacuation of spectators.

Adequate medical services and facilities will also be set up. - CNA/ch

CPF Scheme Amended To Allow Family Members To Support Each Other

Source : Channel NewsAsia, 27 August 2007

SINGAPORE : The CPF scheme has been amended to provide more ways for family members to support one another financially.

In addition, the changes will also allow a smooth and equitable distribution of CPF monies for divorcing couples.

The amendments were announced by Manpower Minister Dr Ng Eng Hen in Parliament on Monday.

Building a strong family support structure is key in today's ageing society.

So the CPF amendments will allow grandchildren to transfer funds from their Ordinary Account to their grandparents' Retirement Accounts, subject to both meeting the top-up criteria.

This will be effective from October this year.

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CPF scheme amended to allow family members to support each other

The scheme now only enables the members to top up accounts using cash and not their CPF funds.

Another amendment will help singles and those without children to build up their retirement savings.

Dr Ng said: "We'll also now allow, as a new initiative, members to top up their siblings' retirement accounts, with savings from their own CPF accounts or in cash.

"In addition, we will allow top-ups to spouses and siblings below the age of 55 using CPF or cash. Previously, it was only above 55; we're now allowing below the age of 55.

"The top-ups can be made into the members' Special Accounts. In keeping with the intent of the scheme to build up the CPF of recipients for long-term needs, the top-up monies can only be used to provide a steady income stream during the recipients' retirement and cannot be withdrawn as a lump sum."

This top-up scheme will be effective from January next year.

Dr Ng said at present, about one in four CPF members, aged 40 to 55, are potential donors.

He also announced changes to the CPF over the division of matrimonial assets for divorcing couples.

One amendment is to allow an immediate transfer of CPF monies to the ex-spouse's CPF account. Another is the immediate transfer of immovable property to the ex-spouse.

The ex-spouse must be a Singapore citizen or permanent resident.

Dr Ng said: "Under the current Act now, even if the member, who's a male, wants the property to be transferred to the ex-spouse, the current CPF doesn't allow that.

"What we're doing now is to amend it, to say you can transfer it - the house - but we place a charge on the amount that was used to buy that house so that when she sells it later, that money is refunded back to the member's account."

On top-ups of CPF retirement accounts, some Members of Parliament asked if it can be extended to include top-ups in the Medisave accounts.

But Dr Ng pointed out that this is not necessary because members are already allowed to use their Medisave accounts to pay for their family members' hospitalisation and MediShield insurance premiums. - CNA/ch

Stiffer Rules Proposed To Improve Safety At Worksites

Source : The Strait Times, 28 August 2007

THREE years after the Nicoll Highway collapse, the Government is mooting a host of changes to the Building Control Act to raise construction quality and safety standards.

The Building Control (Amendment) Bill, which was introduced in Parliament yesterday, seeks to license all building contractors as well as those doing specialised structural work.

Currently, only those who work on government projects need to to be registered with the Building and Construction Authority.

Major underground work, as well as temporary earth-retaining structures used in excavations, will be more strictly regulated.

Under the proposed Bill, temporary structures will be treated like permanent ones and will require approval before they are built.

Builders will need to have special staff supervising structural work and independent parties will be needed to check designs and supervise or monitor work as well.

Some parties who breach the Building Control Act will face stiffer fines while developers will be legally bound to report a builder for violating rules.

The changes were spurred by the 2004 collapse of the Nicoll Highway, which occurred during tunnelling work on the MRT Circle Line. Four people were killed.

In the same Bill, the Government is also seeking to require facility owners to maintain disabled-friendly features after they are built.

This would mean, for example, that they will not be allowed to use a public toilet meant for the disabled as a storeroom.

This is a common complaint among wheelchair users now.

The ministry is also laying the groundwork for minimum standards on environmental sustainability in construction. This would require a minimum level of energy efficiency of buildings, among other things.

The proposed changes will be discussed in a future session of Parliament.

MI-Reit To Expand Into Offices And Technology Parks

Source : The Business Times, 28 August 2007

THE fourth listed industrial real estate investment trust (Reit) - MacarthurCook Industrial Reit (MI-Reit) - is extending its investments into offices and technology parks.

MI-Reit yesterday announced that it has agreed to buy Plot 4A, International Business Park from Eurochem Corporation (a member of Tolaram Group), for $91 million.

This is a 13-storey office park building with a basement car park located in Jurong East's International Business Park.

MI-Reit's first investment in offices or technology parks brings it a 20 per cent exposure to the sector.

According to Jones Lang LaSalle Research's Asia-Pacific Property Digest for Q2 2007, business park rents grew 30 per cent in the quarter while capital values grew 8 per cent.

'The strongest rental growth of all industrial sub-sectors will be in this sub-category, principally as a result of the tight office supply situation causing a spillover effect as Central Business District tenants relocate to suburban office parks such as the International Business Park,' said Chris Calvert, CEO of MacarthurCook Investment Managers (Asia), which manages the Reit.

Under this sale and leaseback arrangement, Eurochem - a Singapore- based company in the petrochemical sector - will sign a head lease over the entire facility for 10 years, with an option to extend for another five years.

This will start from the date of completion, scheduled for December 2009.

Mr Calvert added that the acquisition will increase the size of the portfolio from the initial value of $316.2 million at the time of listing in April, to $407.2 million upon completion of the acquisition.

MI-Reit said the purchase will extend its average weighted lease expiry duration from 6.3 years to seven.

To be funded wholly by debt, other alternative funding sources will also be considered, said the manager.

MI-Reit's gearing level will increase from its current 8.6 per cent to 29.1 per cent, assuming 100 per cent debt financing and that there are no other acquisitions between now and settlement of the property.

MI-Reit's initial portfolio comprised 12 industrial assets across Singapore, the largest of which is UE Technology Park, which was acquired for $115 million.

At the date of listing, the initial properties in MI-Reit had a combined value of $316.2 million.

The Reit invests primarily in industrial real estate assets in Singapore, Japan, Hong Kong, Malaysia and China.

Last month, the Reit reported a distributable income of $3.9 million for its first quarter ended June 30 - 2.9 per cent higher than the forecast $3.8 million.

Distribution per unit (DPU) also beat expectations, coming to 1.52 cents, which was 3 per cent higher than the forecast DPU of 1.47 cents.

Changes To Rules On En Bloc Sales Will Protect Owners’ Interest

Source : Channel NewsAsia, 27 Aug 2007

A slew of changes to the rules governing en bloc sales has been proposed to improve transparency and protect owners’ interest.

This follows a Law Ministry review of the relevant legislation and consultation with the public and industry players.

The amendments to the Land Titles Strata Act were tabled in Parliament on Monday.

The collective sale of Devonshire Lodge, worth S$37.2 million, is set to go before the Strata Titles Board in the weeks ahead.

Like many other cases, it has not been free from objections.

Some owners were unhappy about its valuation and the performance of the marketing agent handling the deal.

Jeffery Lai, Minority Owner, Devonshire Lodge, says: “Actually the whole team is new and they don’t know what to do about it, how to go about doing the so-called the Collective Sales Agreement, or CSA, and things like that…so it turns out that they’ve never done the DC charge on the units and I think they are very close to the buyers.”

Such complaints will be addressed by the proposed changes to the law.

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Changes to rules on en bloc sales will protect owners' interest

Sales committees will be required to call for a general meeting to discuss issues like the appointment of a lawyer, property consultant and marketing agent.

The measures also seek to improve transparency in the en bloc sales process by providing regular updates on bids received and how sales proceeds will be divided.

Lawyers say these measures may address some issues, but more can be done.

Philip Fong, Partner, Harry Elias Partnership, says: “There are no regulations as to how much information is actually given to the owners, so they know enough to raise questions. So in that sense, what I think would be worthwhile to consider is for the appropriate authority to come up with a code of best practices and if there are deviations from these practices, then they must be justified by the sales committee.”

Owners will also be more involved in deciding who sits on the sales committee.

Under the new ruling, it must be formed by elected home owners at a general meeting of the management corporation.

And they have to declare any vested interests related to the deal.

Industry watchers say they favour regulations that help owners better understand the legal implications of en bloc sales.

These include having a lawyer present to clarify doubts when the owner signs the Collective Sales Agreement, and for key terms and clauses to be listed upfront in the legal document.

Owners who change their minds after signing the deal can also do so but only once and within a 5-day cooling off period.

The Law Ministry says the proposed amendments aim to provide additional safeguards, without making the en bloc sales process unduly onerous. - CNA/ch

Investors Smiling, Even As Inflation Set To Rise

Source : TODAY, Tuesday, 28 Aug 2007

STELLAR economic growth in the past year may have investors smiling, but the Government is keeping a “tight watch” for potential signs of “overheating”— even as it revised its inflation forecast upwards.

Last month, the Monetary Authority of Singapore said inflation this year was expected to be at the upper half of its 0.5-per-cent-to-1.5-per-cent forecast range, and possibly as much as 2 per cent next year.

But yesterday, Trade and Industry Minister Lim Hng Kiang predicted that consumer prices could rise by between 1 and 2 per cent this year.

He said this yesterday while responding to five Members of Parliament’s (MPs) questions on the impact of rising business costs on Singapore’s competitiveness.

Citing last month’s “very high” inflation rate, Jalan Besar GRC’s Lily Neo wanted to know the impact of continued high inflation on Singapore’s economy and asked if restraining measures were in place. Holland-Bukit Timah GRC MP Liang Eng Hwa wondered if business costs would continue to rise “given the tight labour market and office space shortages”.

Mr Lim assured the House that the Republic remained well-positioned — with its lower costs vis-à-vis regional competitors — to attract foreign investments.

It also had a “very strong” pipeline of projects, particularly in the manufacturing sector where new chemical plants and wafer fabrication facilities are slated, he said.

For the first half of the year, inflation averaged between 0.5 and 1 per cent. But the Consumer Price Index (CPI) shot up in July by 2.6 per cent — a “blip” Mr Lim attributed to the impact of the Goods and Services Tax hike.

And even as inflation is set to rise for the second half of the year, it must be seen in context of the low inflation in the previous years — including the difficult economic conditions from 2001 to 2003.

Said Mr Lim: “If you ask me candidly, I’d say we have been enjoying practically 16 quarters of growth. In fact, I’m surprised our inflation numbers are as low as they are.”

Drawing comparisons to the pre-911 economic boom, Mr Lim pointed out that while unit labour cost rose by 5.8 per cent year-on-year in the first six months, it is “still 13-per -cent lower than in 2001″. Similarly, unit business cost for manufacturing increased 2.6 per cent year-on-year — which is still 11 per cent lower compared to six years ago.

“In the past three years, our CPI increased at an average annual rate of 1 per cent, while overall unit labour cost actually declined at an annual average rate of 2.2 per cent,” he pointed out.

Citing recent international surveys, Mr Lim added that Singapore “remains cheaper compared to other global cities in the region” such as Hong Kong and Tokyo.

“More importantly, competitiveness is more than just offering lower costs alone; it is about value creation. London, Tokyo and New York are high-cost locations, but they are thriving global hubs because they offer good value for businesses.”

In this regard, Singapore — with its pool of highly skilled talent, secure environment and “increasingly, vibrancy as well” — has many attributes “not easily replicated by other regional cities”, said the Minister.

Nevertheless, the Government has adopted a “proactive approach” to address the upward pressure on property prices and office rental rates, said Mr Lim, citing the efforts by the Ministry of National Development to increase transparency and supply.

Policy-makers are also working to contain the rising wage costs by not just easing the quota on imported labour, but also tapping female and mature workers.

Said Mr Lim: “The Government will continue to keep a tight watch on business costs. And most importantly, strengthen our competitive advantage and value creation to investors for Singapore to remain on its growth path.”

In a statement to the media, a Monetary Authority of Singapore spokesperson reiterated that “underlying inflationary pressures remain generally well-contained for the current advanced stage of the business cycle”.

The spokesperson added: “MAS’ monetary policy stance of a modest and gradual appreciation of the Singapore Dollar Nominal Effective Exchange Rate policy band remains in place.”

It will continue to “monitor closely the price and cost developments” and review the policy stance in October.