Monday, September 17, 2007

MPs Support And Offer Suggestions On CPF Changes

Source : Channel NewsAsia, 17 September 2007

Picture : MP for Jalan Besar GRC, Ms Denise Phua

More than ten Members of Parliament have spoken up in support of the CPF changes on Monday, and have also suggested ways to improve the policies.

Most of them focused on the compulsory annuity scheme and the re-employment of older workers.

Financial independence for those who live beyond the age of 85 is the key objective of the compulsory annuity scheme.

But how this will be implemented got many Singaporeans talking.

MPs said some have become suspicious of the intention behind the scheme.

Halimah Yacob, MP of Jurong GRC, said: "They fear that the government is transferring its responsibility of taking care of the poor and needy to Singaporeans. The government has explained that this longevity insurance is a form of risk pooling.

"This is well and good, but Singaporeans are asking why is it that they have to carry all the risks themselves and what is the government's contribution to this risk pooling – in other words, where is the social risk pooling element? They feel that it would be more palatable if the government could contribute something by injecting some funds into the pool."

Denise Phua, MP of Jalan Besar GRC, said: "There are rumours that the government is running out of money; that the whole CPF exercise is leaving the people to fend for themselves and so forth.

"And questions of where the additional GST revenues have gone to need to be addressed. Many of these perceptions may be untrue, but perceptions are realities and must be addressed and crucial dialogues, not monologues, must take place."

On helping Singaporeans to work beyond the age of 62, one MP suggested that the government help two groups of citizens – the lower-income Singaporeans and the housewives or ad-hoc employees.

Dr Ahmad Magad, MP of Pasir Ris-Punggol GRC, said: "One measure that could be considered is to extend an M or mother bonus in the CPF accounts of mothers who are working part-time.

"This will encourage more women to join the workforce, pave the way for contributions to be made to their CPF savings, and still leave them sufficient time to tend to their children and household chores."

As women tend to leave their jobs early to have children, many do not have enough CPF savings.

Cham Hui Fong, Nominated Member of Parliament, said: "I'd also suggest that we make it mandatory for the husbands to top up their wives' CPFs... at least to pay for the basic longevity insurance if the husband has met his minimum sum scheme."

Another suggestion is to create a National Pension Plan.

Inderjit Singh, MP of Ang Mo Kio GRC, said: "If we decide to create this national scheme through the annuity system, contributions through CPF could start much earlier than the age of 55.

"It should be broad-based, so that even young people can contribute to it. The asset base will therefore be broader and there will be more time for it to be accumulated, which will result in a higher payout for all.

"The amount of the contributions can then be set at a lower, more affordable sum and every Singaporean will benefit from it in their later years."

Many MPs said they are glad the government is not waiting out on the issue of retirement savings. But they urged the policy makers to hear the people's concerns and address them first before deciding on the final outcome.

More MPs are expected to speak on the changes to the CPF in Parliament over the next few days. - CNA/so

Local Banks' Exposure To US Sub-Prime Market Is Small: Tharman

Source : Channel NewsAsia, 17 September 2007

As the exposure of Singapore banks to the US sub-prime mortgage market came under the spotlight in Parliament on Monday, Second Minister for Finance Tharman Shanmugaratnam assured lawmakers that the local banks' exposure is small, relative to their capital base.

He said: "One of the local banks, DBS Bank, has also stated that it has a contingent line of liquidity support to a legal vehicle holding CDOs and that this facility has since been drawn upon. It has also stated that this vehicle does not have underlying assets comprising US sub-prime mortgages.

"While the CDO portfolios of our local asset management companies contain some US sub-prime mortgages, these are managed on behalf of their clients, who are mainly institutional investors. The investment risks are borne solely by the latter, with no legal recourse to the companies."

CDOs are collateralised debt obligations – a type of asset-backed security that uses a pool of bonds or loans as collateral.

Singapore banks have exposure to CDOs, but their amount would be about 1 percent of their capital base. - CNA/so

MTI Keeps 2007 Growth Targets Despite Market Turbulence

Source : Channel NewsAsia, 17 September 2007

The recent turbulence in the financial markets has not shaken the government's economic forecast for the year.

Speaking in Parliament on Monday, Minister of State for Trade and Industry S Iswaran said that his Ministry was standing by its forecast of 7-8 percent economic growth this year.

He noted however that Singapore is not immune to a slowdown in major economies such as the US and Europe.

"If growth slows in these major economies, Singapore will be affected," he said. "Strong growth in the region and diversity of our export markets will provide some buffer, but we are not immune to a slowdown in the major industrial economies."

Still, the government is keeping a close watch and ready to step in.

Mr Iswaran said: "The current shakeout in the financial markets, if well managed and contained, can yield some positive outcomes. If it results in more realistic risk assessments and stronger credit standards, it will make for healthier markets and more sustained growth.

"Governments and central banks are working together to minimise the fallout and help bring about a smoother adjustment in credit markets. Restoring confidence to financial markets is the key.

"Like central banks around the world, the MAS (Monetary Authority of Singapore) has been closely monitoring the situation and stands ready to inject additional liquidity if necessary. To date, our markets have been functioning in an orderly fashion." - CNA/ir

More Private Residential Units Launched, Sold In August

Source : Channel NewsAsia, 17 September 2007

Despite the market turmoil in recent months over the US housing credit crisis, property developers are still seeing strong demand for new residential units.

Numbers out from the Urban Redevelopment Authority (URA) on Monday showed that property developers not only launched more units in August than in July, but they have also made more sales.

Nonetheless, market watchers said sentiment has been weighed down by the US sub-prime mortgage crisis.

Out of 1,874 residential units that were launched by developers during August, about 1,720 – or more than 91 percent – were snapped up.

This was higher than the 1,378 units sold in July.

Colin Tan, director of Chesterton International, said: "Actually, from June to July to August, it's always been increasing, but for August, we realised it is due to two projects - The Soleil at Sinaran and The Parc Condominium at West Coast Walk. That did very well."

The two projects alone accounted for more than 1,000 units sold or 61 percent of the total for the month.

The month-long Hungry Ghost Festival, which began in the later part of August, did not bring down the number of buyers. Developers said that was because most of them were foreigners.

But a bigger concern was how the sub-prime crisis would affect the industry.

Mr Tan said: "Partly because of the sub-prime, sentiment has generally been affected. There has been a slowdown in activity. It's not worrying. It hasn't come to a standstill, but it has come down to more sane levels. Prior to the sub-prime, we were actually really up to our necks with work."

Property consultant CB Richard Ellis estimated that the total number of new home sales for the third quarter would be around 4,000 units – about 20 percent lower than the 5,129 units sold in the previous three months.

It said the drop may be due to the more cautious mood of home buyers.

Meanwhile, Knight Frank said the lower volume could be seen as a slight market correction or a breather for the market, which has been experiencing exceptional sales levels. - CNA/so

New Committee Formed To Study Annuity Scheme

Source : Channel NewsAsia, 17 September 2007

A new committee will be set up to study the National Longevity Insurance Scheme, which is better known as "annuity".

Manpower Minister Dr Ng Eng Hen said in Parliament that this committee will be chaired by National Wages Council Chairman Professor Lim Pin, and members will include academics, grassroots leaders, unions and non-governmental organisations.

The committee is expected to come up with a report in six months.

Related Video Link -
New Committee Formed To Study Annuity Scheme

Dr Ng said longevity insurance is the cheapest way to ensure that Singaporeans do not run out of savings prematurely, so the government wants to put into place a national scheme that provides basic longevity protection for CPF members.

He said: "When you buy a longevity insurance, which is a deferred annuity, you will receive a monthly income from a pre-determined age... for as long as you live.

"It is right to require CPF members to make financial provision for the eventuality that they live longer than expected. By then, they certainly will not be able to work and may have no family members to depend on. This is the basic goal in devising a national longevity insurance scheme."

So the government will require CPF members to take up some form of annuity, or longevity insurance scheme, by using a small part of their retirement account.

Premiums will be adjusted according to risks. - CNA/ac

Average Age Of Developments In Collective Sale Is 25.9 years

Source : Channel NewsAsia, 17 September 2007

The average age of all developments which applied for collective sale from January 2005 to end-August 2007 was 25.9 years.

This was revealed by Deputy Prime Minister and Law Minister Professor S Jayakumar in a written answer to questions from Nominated Member of Parliament Mr Siew Kum Hong.

Professor Jayakumar said the average percentage of owners who had signed the collective sales agreement at the time of application was 89.2 percent.

He pointed out that about half of these developments received a consent level of 90 percent and above.

But the minister added that the common reasons for objections raised by minority owners to the Strata Titles Boards were that they would suffer financial loss and that the transaction was not done in good faith.

In another update, since 1 January 2005, a total of 3,700 private residential units have been issued Strata Titles Board orders for collective sale.

The orders also grant the purchasers permission to start developing the units.

This is according to National Development Minister Mah Bow Tan, who also gave a written answer.

Just last month, the Ministry of National Development tabled a slew of changes in Parliament to the rules governing en bloc sales to improve transparency and protect owners' interest.

The Land Titles Strata Amendment Bill is slated to be debated in Parliament this week. - CNA/so

All CPF Members To Receive Higher Interest Payments

Source : Channel NewsAsia, 17 September 2007

Under a new system announced in Parliament on Monday, all CPF members will receive higher interest payments.

Manpower Minister Dr Ng Eng Hen said about 70 percent of all CPF members will benefit from a new scheme in which a 1 percentage point additional bonus interest will be paid on the first S$60,000 in a CPF member's combined accounts.

Up to S$20,000 of this amount may be from the Ordinary Account.

Related Video Link -
All CPF members to receive higher interest payments

In a wide-ranging ministerial statement, Dr Ng revealed more details on how the government would help Singaporeans save more for their old age through their CPF savings.

Key among the changes is the re-pegging of interest rate for the CPF Special, Medisave and Retirement Accounts (SMRA).

Dr Ng said from 1 January next year, the SMRA interest rate would be re-pegged to the yield of 10-year Singapore Government Securities (SGS), plus 1 percentage point. And as before, this SMRA rate will be set quarterly.

Dr Ng added that to help CPF members adjust to the floating SMRA rate, the government will keep the 4 percent floor for the SMRA rate for the first two years.

This 4 percent floor will also apply to the extra interest tier in the very unlikely event that the 10-year SGS rate falls below 2 percent.

After two years, the 2.5 percent floor rate will apply for all accounts as prescribed under the CPF Act.

Dr Ng said: "Some have asked if this system is fair. Are rates of return set too low or too high? Why is the extra interest only 1 percent more? Why not apply extra interest on an amount greater than S$60,000?

"The CPF system is not meant to be subsidised. Subsidies should be given in other ways and even then only to those who need them. We have put in place a long-term framework which provides a fair rate of return on CPF monies that compares well with any offer from private pension plans.

"Most importantly, our CPF system minimises the financial risk to members. The new system has to be justified to the president, that the government can afford it and that it will not draw on past reserves."

The minister also gave details on the one-off deferment bonus for those affected by changes to the draw-down age of CPF savings.

For those aged between 50 and 57, who will be most affected by the change, Dr Ng said the government would give this group a one-off deferment bonus to help them.

The amount will be based on the balances of up to S$30,000 in their retirement accounts and will range between 3 and 5 percent.

There will be larger bonuses for older workers as they have a shorter time to adjust to the new draw-down age.

For those who wish to voluntarily defer their draw-down, there will be a voluntary deferment bonus.

For each year of deferment, Singaporeans will get 2 percent on balances up to S$30,000 in their retirement account.

57-year-old Mr Tan, who earns S$1,200 a month, probably has about S$21,000 in his Retirement Account now.

By working one more year after the age of 62, coupled with higher Workfare bonus, CPF interest, and draw-down deferment bonus, he can accumulate S$11,000 more in his CPF savings.

And if Mr Tan works till the age of 65 and draws down his minimum sum at that age, he will have S$60,000 in savings - S$24,000 more than at age 62 under the old system.

Dr Ng said Workfare and the higher CPF interests would cost the government more than S$1.1 billion each year.

And the one-off package of deferment and voluntary bonuses would cost another S$1.2 billion.

Dr Ng said: "Singaporeans must come to terms with our longevity, both individually and as a nation. And the quicker we do this, the better because whether we are ready or not, the inevitable consequences from increasing needs as more grow old within our society will be upon us soon.

"We must therefore tackle this challenge now, as we have done with other national issues which can affect our nation's well-being and future. We must not construct a national plan for our retirement needs based on how long each individual thinks he might live or on anecdotal incidents or wild theories – it would be seriously flawed.

"We must build our retirement framework on solid facts, not subjective opinions. We must rely on actuarial data that the insurance companies use and reliable information from the Department of Statistics (DOS) that is updated constantly to give the true picture of how long Singaporeans are living as a whole."

Dr Ng also announced that the Chairman of the National Wages Council, Professor Lim Pin, will chair a committee to study the issue of a National Longevity Insurance Scheme, better known as 'annuity'.

The committee will recommend the best way to provide basic, affordable and flexible longevity protection for all CPF members.

Dr Ng added that the recommended plans should provide various options to members and allow them to opt in to this scheme early when it is less expensive to do so.

He said: "The changes we are making will strengthen the CPF system further. Longevity insurance is the missing critical piece that we are now putting into place. It plugs a gap in our CPF system and will give security for the many Singaporeans who are expected to live very long."

The committee's report should be ready within six months. - CNA/so

Greenspan Expects US Housing Slump To Deepen

Source : The Business Times, September 17, 2007

Mr Greenspan said he would expect 'as a minimum, large single-digit' percentage declines in US house prices from peak to trough, the Financial Times reported.

WASHINGTON - Former Federal Reserve Chairman Alan Greenspan said in an interview published on Sunday that the US housing slump is likely to deepen more than many analysts expect, recording as much as a double-digit drop.

Mr Greenspan said he would expect 'as a minimum, large single-digit' percentage declines in US house prices from peak to trough, the Financial Times reported. The former Fed chair said he would not be surprised if the the drop was 'in double digits'. The US central bank meets on Tuesday and is widely expected to cut benchmark federal funds rates by at least a quarter-percentage point to help the economy weather the housing downturn and a credit crunch.

Mr Greenspan said the Fed should be careful not to cut rates too aggressively because the risk of an 'inflationary resurgence' is greater now than when he was chairman, the newspaper reported.

However, Mr Greenspan also said on Sunday that US home prices have not yet hit bottom but turmoil in housing and credit markets does not look like it will produce a broader economic downturn.

'There is an underlying strength in the United States,' he said in an interview on the CBS programme 60 Minutes. And indeed, when you look around the world, even with this extraordinary credit problem, the economies seem to be holding up. But for the moment it does not look sufficiently severe that it will spiral into anything deeper.'

Recession probability 'more than 1/3'
Mr Greenspan said the probability of a US recession was now 'slightly more than a third', after he earlier in the year put the chances at one-third, The Wall Street Journal reported in its online edition on Monday.

He said there was a 'very large' inventory of unsold, newly built homes putting pressure on builders to sell them quickly, the Journal reported, citing an interview with him.

As a result, 'we have the capability of far bigger pricedeclines', which will pinch home equity, lead to more defaultson subprime mortgages and pressure consumer spending, hesaid. -- REUTERS

ADB Raises 2007 Growth Forecast For Asia To 8.3%

Source : The Business Times, September 17, 2007

MANILA - Asia's developing economies, the fastest growing nations in the world, will expand much more this year than previously expected, but a credit crunch in the West may take a toll in 2008, the Asian Development Bank (ADB) said on Monday.

The Manila-based multilateral agency said growth in Asia, excluding Japan, should average 8.3 per cent in 2007, up from a forecast of 7.6 per cent just six months ago. The region grew 8.5 per cent last year.

Related link -
ADB Asian Development Outlook 2007

The ADB forecast growth of 8.2 per cent in 2008, up from an earlier prediction of 7.7 per cent, but left open the possibility of downward revisions amid concerns of overspill into other markets from recent losses in the US subprime mortgage sector.

'It is still early days and events in credit markets and the broader economy have become more difficult to predict,' it said in its updated annual economic outlook. 'It is not clear whether the storm has blown itself out or merely paused. It would certainly be rash to assume that growth in developing Asia, particularly in 2008, would be immune to these unfolding processes.'

But the ADB also said Asia was in a strong position to withstand external shocks, including a recession in the United States, the main market for its export-led economies.

'If a recession of recent median depth and duration occurred in the United States - an event that has a low but rising possibility - a deceleration of growth in developing Asia by 2.0 percentage points would be at the upper end of plausible estimates,' it said, adding that a 1.0 percentage point slowdown was more likely.

'This could possibly prune growth to a range of 6-7 per cent from a baseline prediction of 8.2 per cent in 2008.'

The ADB said growth in the region this year will be spearheaded by rapid expansion in China and India, which together account for about 55 per cent of regional GDP.

It forecast growth in China at 11.2 per cent in 2007, up from its March forecast of 10 per cent, and at 10.8 per cent in 2008.

India's economy will expand 8.5 per cent in 2007, up from the previous forecast of 8.0 per cent, and grow another 8.5 per cent in 2008. -- REUTERS

S'pore Sticks To 2007 GDP Forecast Despite Sub-Prime Crisis

Source : The Business Times, September 17, 2007

Singapore's government said on Monday that its economic growth forecast for 2007 remains unchanged at 7-8 per cent despite the recent global market turbulence triggered by the US sub-prime mortgage crisis.

'It is too early to assess with any degree of certainty (the impact of the sub-prime problem),' Mr S Iswaran told Parliament on Monday.

He said the Monetary Authority of Singapore was ready to inject additional liquidity into the market if necessary.

Singapore Prime Minister Lee Hsien Loong said in August that the Government was keeping an eye on turbulent markets because the trade-dependent economy could be hit by worsening consumer confidence in the United States.

The central bank had reminded banks twice in August to take a close look at their exposure to the US sub-prime mortgage crisis. -- REUTERS

S'pore Property Investment Seen At Record US$33b This Yr

Source : The Business Times, September 17, 2007

SINGAPORE - Investment property sales could hit an all-time high of $50 billion (US$33 billion) this year, fuelled by robust government land sales and housing redevelopment, property consultancy CB Richard Ellis said on Monday.

A total of $12.7 billion worth of real estate investment deals were recorded since the beginning of July to date, swelling the value of transactions in the first nine months this year so far to $37.9 billion, exceeding 2006's full-year figure of $30.6 billion.

Private sector deals made up 84 per cent of property investment to date, which includes the collective sales of housing estates as well as building sales.

CB Richard Ellis said robust government land sales contributed to strong public sector property sales, which made up the remaining 16 per cent of total real estate investment in the year-to-date.

Transactions involving office buildings accounted for 24 per cent of total property investment sales so far, while residential property investment generated the lion's share of 63 per cent.

'The investment sales market is likely to remain active for the rest of the year, with significant contributions likely from public sector sales,' the consultancy said.

The figures include private housing transactions above $5 million but not residential property deals below that.

Office rentals and home prices have surged in Singapore, fuelled by a supply crunch. But some analysts say private home prices, which are at 10-year highs, are headed for a correction as a building boom could flood the republic with new homes by 2009. -- REUTERS

Fed Independence Will Be Tested In Next 25 Years: Greenspan

Source : The Business Times, September 17, 2007

(NEW YORK) The Federal Reserve may have to double its benchmark interest rate to at least 10 per cent by 2030 to stem inflation, sparking a political showdown that could challenge its independence, according to former chairman Alan Greenspan.

Slowing productivity and rising wages abroad will probably cause US inflation to accelerate in the next quarter century, Mr Greenspan wrote in his book The Age of Turbulence: Adventures in a New World, to be published by Penguin Press today. His outlook included a reversal of many of the trends that aided the success of his own tenure at the Fed.

There are already some signs that political scrutiny is rising. Democrats including Barney Frank of Massachusetts, who heads the House Financial Services Committee, called two weeks ago for a 'meaningful' cut in interest rates.

'Federal Reserve independence is not set in stone,' wrote Mr Greenspan, 81, who led the Fed for 18 years until January 2006. 'The dysfunctional state of American politics does not give me great confidence in the short run' and there may be 'a return of populist, anti-Fed rhetoric', he wrote.

To keep inflation under 2 per cent, 'the Fed, given my scenario, would have to constrain monetary expansion so drastically that it could temporarily drive up interest rates into the double-digit range not seen since the days of Paul Volcker', Mr Greenspan wrote.

Mr Volcker was Mr Greenspan's predecessor, and faced criticism from members of Congress as he lifted borrowing costs to contain prices, sending the economy into a recession in 1980 and 1981.

Now, chairman Ben Bernanke, who took the Fed's helm in February last year, faces some pressure to cut rates after a housing recession spurred a sell-off in credit markets and the first loss of jobs in four years.

The economy will probably slow to a pace of under 2.5 per cent on average from now until 2030, Mr Greenspan forecast in the book. Consumer prices, which increased at an average annual rate of 3.1 per cent during Mr Greenspan's tenure, is likely to climb by 4.5 per cent or more a year in the future, he wrote.

The former chairman built his projection on three economic shifts. First, the 1990s boom in productivity, which allowed Americans to produce more goods and services without pushing up prices, is fading. Second, the disinflationary impact from the inclusion of China and other emerging economies into the global trading system is ending. The third source of inflation pressure is US government budget deficits, which absorb private savings, using them for less productive purposes, thus imparting 'a bias toward inflation', Mr Greenspan wrote. -- Bloomberg

Fed Faces Tough Call On Rates Due To Recession Fears

Source : The Business Times, September 17, 2007

Analysts expect benchmark rate to be cut by 25-50 basis points

(WASHINGTON) Federal Reserve policymakers face tough choices as they debate interest rates amid rising recession risks, as well as concerns about inflation and a 'bailout' of real estate speculators, analysts say.

The Federal Open Market Committee (FOMC), which meets tomorrow, is widely expected to act in the face of the worst housing slump in decades, which has led to rising mortgage defaults and a tightening of credit standards that threatens the overall economy.

A growing number of analysts said they expect the FOMC, which has held its federal funds rate at 5.25 per cent since June 2006, to cut the benchmark rate by 25 or 50 basis points.

Of key importance is the message sent to financial markets. Chairman Ben Bernanke wants to ease economic stress while averting a return to easy money conditions that, according to some critics, fuelled the real estate boom-bust cycle.

'The Fed does not want to cut the fed funds rate, but it may well be forced to because of the inevitable slowdown in US economic activity arising from the subprime-induced credit crunch,' said Sherry Cooper, chief economist at BMO Nesbitt Burns in a note to clients.

'But Ben Bernanke has made it very clear that he will not bail out imprudent lenders and investors (read hedge funds) by aggressively easing monetary policy.'

Ms Cooper said the most likely scenario is for the Fed to cut by 25 basis points and wait to see if credit conditions return to normal. She said other actions - such as injecting liquidity into markets and easing conditions for the Fed's discount window - may continue or intensify.

Joseph Balestrino, analyst at Federated Investors, agreed that the Fed is likely to use an 'incremental' approach but that more rate cuts may follow in the coming months. 'Over the near-term, as adjustable- rate mortgages reset, defaults and foreclosures are likely to rise', he said.

'This should generate still more daunting headlines, keeping markets on edge. That also should keep the Fed in the game, signalling its readiness to act as necessary to keep the economy on track. This probably means a series of additional quarter-point rate cuts.' - AFP

Nomura Eyes Property To Grow In Asia

Source : The Business Times, September 17, 2007

It forms unit to develop Reit business in S'pore

Property pull: China's real estate boom is attracting investment banks, and Nomura is the latest to join the race

(HONG KONG) Nomura Holdings, the top brokerage in Japan but a smaller player elsewhere in Asia, has launched a property investment business and is investing in companies before they go public to help build up its equities business in the region, a top banker said.

Philippe Espinasse, who joined Nomura as co-head of Asian equity capital markets two months ago, said that the brokerage wants to grow beyond selling deals to Japan's vast investor base. 'We're definitely expanding the focus beyond the Japanese distribution channel,' said Mr Espinasse, who was previously head of Asia equity capital markets at Macquarie Bank .

Nomura ranks far down the league table this year in 70th place for equity capital markets deals in Asia-Pacific outside Japan, well below its 16th and 15th place finishes for 2006 and 2005, respectively, according to Thomson Financial.

'As one of the very top investment banks in Asia including Japan, definitely, I'd like to get back in the Top 10 for Asia ex-Japan ECM,' said Mr Espinasse, who has spent a big chunk of his first months on the job flying around the region to meet clients.

Nomura is looking to put more of its own capital to work by investing in companies ahead of their initial public offerings (IPOs), which would put it in pole position for underwriting mandates. 'You have to select your niches, go after transactions in sectors where you have a competitive edge,' he said.

Powered by China and India, Asia is a growth engine for global investment banks and Nomura is battling established players in the region such as UBS, Goldman Sachs and Morgan Stanley, as well as banks that have been recently beefing up operations in the region, such as Lehman Brothers and Bear Stearns.

'At the end of the day, it's about being more aggressive and confident, going on the road and meeting clients and explaining how and where Nomura can add value,' Mr Espinasse said.

Nomura, which has said that it is weighing acquisitions to enter the booming stockbroking business in India, was one of five banks to help India's HDFC Bank Ltd raise US$698 million through an American Depositary Share issue.

Mr Espinasse said that while Nomura would continue to take advantage of its distribution capability in Japan, where cash-rich retail investors are increasingly buying overseas assets, the brokerage also wants to leverage its network of 340 global sales staff who focus on Asia outside Japan. 'The key for my side of the business is to significantly expand the business beyond our highly successful Japanese primary equity distribution franchise.'

To that end, the brokerage in July started its Asia Asset Finance unit in Singapore, which will invest in property around Asia and develop a real estate investment trust (Reit) business.

'That is something we are keen to do more of in Asia ex-Japan,' said Mr Espinasse, who has Reit experience from his stint with securitisation specialist Macquarie. He said that the property arm would grow to about a dozen people.

Singapore is the top property trust market in the Asia-Pacific after Japan and Australia. -- Reuters

CapitaLand Sells Its Stake In Hong Kong's AIG Tower

Source : The Business Times, September 17, 2007

The developer will book S$260.7m gain on completion of the divestment

Valuation: CapitaLand's AIG Tower deal values the 999-year leasehold asset, which was completed in 2005, at HK$8.1 billion

CAPITALAND has sold its entire 45 per cent effective stake in AIG Tower in Hong Kong in a deal that values the asset at HK$8.1 billion (S$1.6 billion).

Upon completion of the divestment - due on or around Nov 30, 2007 - CapitaLand will recognise a gain of about S$260.7 million in its group consolidated accounts.

The HK$8.1 billion valuation reflects a price of HK$22,042 per square foot (psf) based on AIG Tower's net lettable area of 366,072 square feet. The Grade A office building at No 1 Connaught Road, Central has 999-year leasehold tenure and was completed in 2005. It was developed on the former Furama Hotel site that the former Pidemco Land bought a stake in from Lai Sun Group in 2000.

Pidemco, which later merged with DBS Land to form CapitaLand, subsequently sold half of its stake in the site to American International Assurance Company (AIA).

AIA is also the party that is buying CapitaLand's 45 per cent effective stake in the building under the latest deal announced yesterday. This will boost AIA's stake in the property to 90 per cent with Lai Sun holding the remaining 10 per cent.

Major tenants in the building, which is fully leased, include AIA, Bank of Tokyo-Mitsubishi, Royal Bank of Scotland and Wachovia Bank.

CapitaLand has also been divesting some of its Singapore office assets. Late last month, it sold its 50 per cent stake in Chevron House along Raffles Place in a deal that valued the asset at $730 million, or $2,780 psf of net lettable area.

Earlier last month, CapitaLand also paid $590.3 million for the remaining 50 per cent stake in Eureka Office Fund, which owns One George Street. This valued the award-winning office block at $1.2 billion, or about $2,700 psf.

In March, CapitaLand divested its effective 90.04 per cent stake in Temasek Tower, which was sold for $1.04 billion or $1,550 psf.

During the group's first-half results briefing on July 31, CapitaLand Group president and CEO Liew Mun Leong stressed that the Singapore office sector will remain 'a core holding' to the group but that it will restructure its portfolio by divesting some existing office assets and investing in new developments.

He cited as an example of the latter the group's bid for the former NCO Club and Beach Road Camp grounds. Last week, the Urban Redevelopment Authority awarded the site to a consortium led by City Developments.

Asian Banks Relatively Safe From CDO Contagion

Source : The Business Times, September 17, 2007

But they need to start building good business practices: expert

Small impact: Mr Dallara said that Asian investors have little exposure to sub-prime debt, are not facing a credit crunch and are backed by strong fundamentals

Financial contagion to Asian banks from the ongoing credit crunch emanating from the troubled US mortgage finance market is likely to be minimal, said Charles Dallara, managing director of the Institute of International Finance (IIF), a global association of financial services institutions based in Washington DC.

Speaking at a luncheon address to the IIF Asian CEO Summit last Friday, Mr Dallara pointed out that Asian banks have not been leaders in developing the collateralised debt obligations (CDOs) and other asset-backed instruments that have come under the most pressure.

Asian investors, including banks, are also at relatively early stages in investing in these instruments and therefore do not have a lot of exposure to them. Nor do Asian banks face the funding constraints currently affecting US and European banks.

Increasing defaults on US sub-prime mortgages in recent weeks have led to very tight liquidity conditions in the US and Europe. But this has not yet spread to Asia, although there has been some increased volatility in regional equity markets.

Mr Dallara pointed out that Asia's relative immunity might also stem from Asian economies being underpinned by strong fundamentals: the IIF forecasts that the region's economies (outside China and India) will grow at a healthy 5.1 per cent this year and 5.4 per cent in 2008.

In addition, Asia will be the biggest beneficiary of private capital flows to emerging markets, which the IIF projects will hit a record US$600 billion in 2007 and then US$570 billion the following year. Asian central banks also have record levels of reserves.

Talking about the strains in the global financial markets and what lies ahead, Mr Dallara said that funding in the commercial paper markets remains tight, although it has eased slightly of late. 'There's a huge amount of paper that needs to be rolled over,' he said. 'A lot of this is asset-backed, but not a lot is sub-prime.'

However, markets are cautious, he said. For many investors right now, 'the risk of getting into something they don't want is much greater than the benefits of higher returns'.

Earnings reports from US banks over the next few weeks will be crucial, he added. And markets will be watching what banks will reveal about valuations and/or losses in their loan portfolios. The more they reveal, the more reassured markets will be.

Down the road, Mr Dallara said that banks will need to take a 'hard look at some of their business practices'. He said that it is better for banks to be proactive about this and lead the process rather than wait for regulators to act, because that could mean fewer market-friendly regulations.

In particular, he said, banks should move to develop best practices in the following areas:

* Valuation practices: as far as possible, investment instruments should be 'marked to market'.

* Transparency: many investors have problems determining their exposures to CDOs, and the contents of CDOs.

* Credit ratings: credit assessments have been inadequate, especially in fixed income markets.

* Risk measurement and management: risk assessment has tended to happen in 'silos'. For example, while banks have a lot of expertise in credit risk, liquidity risk and market risks, there is little understanding of how risks migrate from one 'silo' to others. In reality, higher credit risk in the sub-prime sector quickly led to more liquidity risk.

Mr Dallara said that in future there would also be tighter official regulations over sub-prime lending as well as more oversight covering institutions such as mortgage lenders, many of whom operated outside the regulatory net. Financial institutions are also likely to face more lawsuits from investors, he said.

Singapore 'CDO Queen' Surveys A Battered Field

Source : The Business Times, September 17, 2007

Ms Goh: Managers who are not very good in this business will be wiped out

She was in the business long before it made newspaper headlines that reverberated around the world.

Goh Mui Hong runs two fund management companies that take care of some $6.7 billion of assets. Of these, about $5.3 billion are collateralised debt obligations or CDOs - complex financial products that probably need no introduction by now.

Heading ST Asset Management (STAM) as its president and chief executive, Ms Goh is also president of Vertex Venture. Both are Temasek Holdings companies managing third-party funds. But her work with CDOs goes way back to the 1990s to her days at OUB and UOB Asset Management.

Ms Goh says her CDOs are profitable, and she has to date launched 19 issues, 12 under her present employer. 'So far, my experience in CDOs, in OUB, UOB Asset Management and here, has been positive.'

The annual internal rate of return from December 2002 to August 2007 is currently 19 per cent, including fees for the amount from the CDOs that is invested by STAM.

With such an enviable track record, what does Singapore's queen of CDOs think of the current troubles in the CDO markets?

'I look at this as a cyclical thing - it will wipe out managers who are not very good in this business.'

'A lot of managers came into CDOs, although they have no experience - for us it was a lot of competitors,' she says frankly.

On her work, she says that the companies under her and her 99-strong team posted after-tax profit of $43 million for 2006.

STAM and Vertex, the latter of which invests in high-tech companies, earn fees by managing money for offshore investors. STAM invests a small amount of its own money in CDO funds to give investors confidence, and in the most risky bits at that.

'We invest (to give) comfort (to investors) and always take the most risky tranche - everybody has the profit I have,' she says.

Ms Goh, who introduced CDOs to Singapore in 1998 under the then OUB Asset Management, says the huge size of hedge funds and their leveraging is part of the current problem gripping banks that have been funding hedge funds to buy CDOs: 'It's because hedge funds borrow from banks - the CDO itself is not leveraged.' Leveraging by hedge funds is not new; the problem is that five years ago the hedge fund industry was not so big, she says.

But she thinks the current crisis has created great opportunities. Prices are now even lower than at the 1998 Russian crisis when one could buy commercial paper at nine cents to the dollar, she says. Panicked investors are now selling CDOs at their coupon or interest rate as if there is no principal left, she adds.

Meanwhile, she's continuing to blaze the CDO trail. Last year, she launched the world's first all-Indian corporates US$300 million CDO. She has just completed raising US$195 million for two global corporates CDO and is now going for an all-Asian corporates CDO of US$125 million.

But investors are skittish, with bad news coming out every other day, and it is difficult getting their money, she says. 'As fund managers, we want new money at market lows; at market highs, you're only happy for a short time.'

As to Singapore's fund industry, she thinks it is doing well because many players are conservative and the industry enjoys a good reputation from its many qualified professionals. 'While the new fund managers believe in borrowing . . . I discourage clients from borrowing,' she says. Describing herself as old-fashioned, she says she dislikes managing borrowed funds. 'I prefer to manage surplus funds,' she says, adding, 'We're very, very careful.'

Fed’s Autonomy May Be Threatened By Inflation, Warns Greenspan

Source : TODAY, Monday, September 17, 2007

The Federal Reserve Bank may need to double its benchmark interest rate to at least 10 per cent by 2030 to contain inflation, sparking a political showdown that could challenge its independence, former Chairman Alan Greenspan said.

Slowing productivity and rising wages abroad will probably cause US consumer prices to climb in the next quarter century, Greenspan said in his book, The Age of Turbulence: Adventures in a New World. His outlook includes a reversal of many of the trends that aided the success of his own tenure at the Fed.

There are already some signs that political scrutiny is rising. Democrats called last week for a “meaningful” cut in interest rates.

“Federal Reserve independence is not set in stone,” said Mr Greenspan, who led the Fed for 18 years until January 2006. “The dysfunctional state of American politics does not give me great confidence in the short run” and there may be “a return of populist, anti-Fed rhetoric”.

To keep inflation under 2 per cent, the Fed “would have to constrain monetary expansion so drastically that it could temporarily drive up interest rates into the doubledigit range not seen since the days of Paul Volcker,” Mr Greenspan said. Mr Volcker, his predecessor, was criticised for lifting borrowing costs to rein in prices, sending the economy into a recession in 1980 and 1981.

Chairman Ben Bernanke, who took the Fed’s helm last February, faces pressure to cut rates after a housing recession spurred a sell-off in credit markets and the first loss of jobs in four years. — BLOOMBERG

S’pore Shares Up

Source : TODAY, Monday, September 17, 2007

Asian sentiment remains strong; all eyes on Fed rate cut

SINGAPORE shares are likely to extend their upward trend after Wall Street reported one of its best weeks in months, ahead of a widely-expected interest rate cut in the United States.

News last week that UK mortgage lender, Northern Rock, had asked the Bank of England for emergency funding failed to dent sentiment in Asia, although this suggested a broadening of the fallout from the US sub-prime crisis.

“While dramatic-sounding, this is really just a bit more of the same,” said Mr Greg Gibbs, ABN Amro’s director of foreign exchange. Said DBS Vickers Securities retail strategist Yeo Kee Yan: “All eyes will be on the Fed meeting.”

The Straits Times Index rose 1.36 per cent to 3,536.40. Average daily volume last week totalled 2.40 billion shares worth $2.14 billion, compared with 2.19 billion shares valued at $1.87 billion the week before.

At home, participants will be looking out for August trade numbers, due at 1pm today. Expectations are for buoyant pharmaceutical shipments to buffer the electronics industry, which remained weak even as other regional economies posted healthier figures, economists said.

“Singapore seems to really keep lagging and it’s not clear whether the problem is cyclical or structural,” said Mr Matthew Hildebrandt, an economist at JP Morgan.

Parliament sits today and questions about the impact of the US sub-prime crisis are expected from MPs. — AGENCIES

Will New Bond Peg End Up 'Hurting The Old'?

Source : TODAY, Monday, September 17, 2007

(Picture) Manpower Minister, Mr Ng Eng Hen

IT IS designed to enhance the retirement nest egg, but if market conditions have their way, some economists and finance professionals wonder how re-pegging Central Provident Fund (CPF) interest rates to government bonds will help the older generation.

In a recent market weekly report, Citi economist Chua Hak Bin mapped out a scenario in which the younger generation may benefit, but the older generation may get lower returns than now, if their Special, Medisave and Retirement Accounts (SMRA) are pegged to a long-term bond.

The 10-year government bond has a current yield of 2.8 per cent compared to the SMRA's 4-per-cent guaranteed rate, he said. The Ordinary Account (OA) attracts an interest of 2.5 per cent.

Going by this, he calculated that younger individuals with a CPF account of $20,000 in their OA and $40,000 in SMRA would earn an effective interest rate (weighted average) of 3.7 per cent, or $120 more a year, compared to the current 3.5-per-cent effective rate.

The calculation includes the 1-percentage-point additional interest the Government plans to give on the first $60,000 in CPF accounts — up to $20,000 in the OA and the rest in the SMRA.

Still, an older cohort with the Minimum Sum of $99,600 in their SMRA and $20,000 in their OA would earn a lower 3.3 per cent, or $590 less a year, with the bond peg, Dr Chua calculated.

This is because a lower long-term bond yield could dominate the 1-percentage-point interest rate for those with larger sums in their SMRA.

Individuals who previously transferred their savings into the SMRA from the OA would also see the interest rate gap narrow substantially under the new peg.

"Not everybody will benefit. The younger generation benefits as they have only started to save and would most likely put their savings within the first $60,000. But if you are of the older generation who would have a larger proportion of your CPF savings in the SMRA, rates there are actually lower in the long run. Ironically, you are hurting the older generation you are trying to help," Dr Chua told Today.

A recession or financial crisis could also bring down the SMRA interest rate.

Manpower Minister Ng Eng Hen, who will explain in Parliament today how the Government will re-peg the CPF interest rates, said last month that the new SMRA rate will be lower initially, but should do better over time.

Economists have told Today they expect Singapore government bonds to be the reference point, while Society of Financial Service Professionals president Leong Sze Hian expects rates to be pegged to a composite benchmark of two or more indices, such as part Singapore bond index and part global bond index, to give higher returns.

Most, however, are sceptical about the chances of yields crossing the 4-per-cent threshold over time.

"I don't think pegging CPF to a government bond will get high rates above 4 per cent, at least until the end of 2008," said Mr Alvin Liew, former economist at UOB Treasury Research.

With long-term bond yields generally dependent on the outlook of the economy, which grew at 7.9 per cent last year, there are questions about whether Singapore's medium-term economic growth estimate of 4 to 6 per cent can sufficiently bump up yields.

Mr Leong added that bond rates fluctuate and depend on various factors like interest rates, expectations and default risks. "There is no basis for saying that the rate is going to be higher in the future. The fact is, nobody knows," he said.

Besides the impact on older folks, if rates are lower, it might cause a shortfall in Medisave accounts. Said Mr Liew: "In recent months, you have seen healthcare costs going up quite substantially in the Consumer Price Index. The lower-income group will be more affected by lower returns."

Sharing the same concerns, Member of Parliament Ong Kian Min said that, historically, CPF members have enjoyed guaranteed returns regardless of how the economy performs. This move marks a fundamental shift.

"Investing in bonds may subject CPF savings to lower rates. This can only be a good start provided the Government also considers, in future, investments other than bonds that may yield a higher return," he said.

These are some of the questions and suggestions the manpower minister will have to address today.

Make Money? No, We're Just Saving Money

Source : The New Paper, September 17, 2007

Deacon says in long run, it is cheaper than renting or building a church

IT doesn't seem like what a church would normally do.

Investing $280 million to build a mega-complex that has a lifestyle, entertainment and cultural theme.

And New Creation Church raised more than just eyebrows a week ago when its business arm, Rock Productions, announced that it would partner CapitaLand to develop the mega-mall at Buona Vista.

For the project, public-listed CapitaLand will pump a further $380 million into the retail and entertainment zone.

Such a big commercial venture is probably a first for any religious organisation in Singapore.

While other churches have bought and sold properties and land, such transactions are rare, and not known to exceed $50million. Past reports also showed that no church has actively sought to develop a commercial development.

When contacted by The New Paper on Sunday about the project, Rock Production's director Matthew Kang, who is also a deacon at New Creation Church, said the church does not see the project as a way to make heaps of money.

'If we were really into profit maximising, we would have taken over the retail side too, instead of passing it on to CapitaLand.'


The new complex will be split into two different functional zones.

The church will concentrate on the civic and cultural zones, the highlight of which will be a state-of-the-art auditorium that can seat 5,000.

Mr Kang said he considers this significant investment a practical move.

The church, he said, has chosen to remain 'homeless' since it started in 1984, in favour of investing its money elsewhere.

In 1999, Rock Productions started running the 1,200-seater Rock Auditorium at Suntec City, using it for church services and renting it out for seminars and performances.

In 2001, it acquired the East Coast Recreation Centre for $10 million and turned it into Marine Cove, a recreational centre housing food and beverage outlets.

These venues generate income for the church, which also takes donations from members. It also runs a travel agency and early education centres.

Mr Kang's team had decided on One-North after surveying several locations.

He said: 'We had a few options. First, continue using the Rock Auditorium and several other spillover venues for our members, such as the Suntec City Convention Centre. Second, build a church. And third, develop a larger auditorium in a commercial complex that can also be rented out for events.

'In the end, we found that the third option was the most practical and sensible. We have a ready anchor tenant in New Creation Church.

'Instead of paying rent to others for using their venues like we are doing now, the rental will come back to us.

'With 15,000 members, we will also provide the numbers for retail and food and beverage outlets.'

Mr Kang did some number-crunching to show the rationale behind the decision.

He said: 'Currently, with the Rock Auditorium and other venues we use, we pay $477,000 in total rent a month. In 60 years, we'll have paid more than $340 million.

'Renting the Indoor Stadium for one Sunday costs $160,000, including sound and video equipment. Over 60years, that will come up to more than $460 million.

'Now we have a 60-year lease on the land at Buona Vista, and the auditorium is ours, 24/7, unless it's rented out.

'It's just a practical decision.'

And it was not a hasty one, he stressed.

The church had hired IMG Artists, an international arts management firm, to do a feasibility study more than two years ago.

IMG Artists' director of Asia Pacific operations, MsMindy Coppin, said her firm had surveyed venue hirers and event promoters to find out what they want. The firm concluded that there is a regional demand for a mid-size auditorium venue away from the city with a 5,000 capacity.

Ms Coppin said: 'There are acts bypassing Singapore, for example, because there is no such suitable mid-size venue.' The Indoor Stadium is suitable for audiences numbering about 10,000, while the Esplanade seats about 2,000.

To keep it flexible, the new auditorium will be designed for a quick change-over between events, with movable stages, equipment and seating, she added.

Besides the performance venue, there will also be two banquet halls, each able to seat 900 people, and several smaller meeting and function rooms. Smaller rooms will cater to the changing, rehearsal and make-up needs of performers.

Mr Kang said the church held an extraordinary general meeting with its members a few months before submitting the bid for the Buona Vista plot.


'There was overwhelming support for it, because they know we wouldn't do this if we weren't sure of the feasibility,' he said.

'They know that whether we do this or not, we have to sink a sum of money into renting venues for our services, or building a church. It's admittedly a huge investment, but in dollars and cents, this is the best option.'

The church is happy to share the venues with others who want to rent it for their own events, Mr Kang said, noting that organisations such as banks and companies had rented the Rock Auditorium in the past.

'We won't dominate the new venue. We hope to use it the whole of Sunday and during one weekday but, if there is demand for the auditorium, we'd be happy to have our services elsewhere on that particular date.'

Mr Kang was quick to add that the church is not interested in competing with other available performance venues.

'We are not out to cannibalise. There is just a demand for something like this, and we are in a position to fill it.'


12 floors, 54,000 sq m
JTC Corp awarded tender to Rock Productions to build, lease and operate integrated hub with civic, cultural, retail and entertainment zones.

Venue: Vista Xchange, One-North, near Buona Vista MRT Station

Land lease: 60 years

Completion year: 2011

Rock Productions invests $280m to develop civic and cultural zones

CapitaLand invests $380m to develop retail and entertainment zones; build 1,000 carpark lots

Space: 54,000 sq m, with outdoor amphitheatres and rooftop garden

Floors: 12 - eight for civic and cultural zones; four for retail and entertainment (two above and two underground)

Entertainment and retail zone to replicate atmosphere of Clarke Quay, featuring gently sloping spiral walkway linking four floors

Building design: Futuristic, irregularly shaped

Designer: Andrew Bromberg of architectural firm Aedas Hong Kong.

Access: Buona Vista MRT station, future Circle Line MRT station.

Fed Faces Tough Call On Rates As Recession Fears Mount

Source : Channel NewsAsia, 17 September 2007

WASHINGTON : Federal Reserve policymakers face tough choices as they debate interest rates amid rising recession risks, but also concerns about inflation and a "bailout" of real estate speculators, analysts say.

The Federal Open Market Committee, which meets Tuesday, is widely expected to act in the face of the worst housing slump in decades, which has led to rising mortgage defaults and a tightening of credit standards that threatens the overall economy.

A growing number of analysts say they expect the FOMC, which has held its federal funds rate at 5.25 percent since June 2006, to cut the benchmark rate by 25 or 50 basis points.

Of key importance is the message sent to financial markets.

Chairman Ben Bernanke wants to ease economic stress while averting a return to easy money conditions that, according to some critics, fuelled the real estate boom-bust cycle.

"The Fed does not want to cut the fed funds rate, but it may well be forced to because of the inevitable slowdown in US economic activity arising from the sub-prime-induced credit crunch," says Sherry Cooper, chief economist at BMO Nesbitt Burns in a note to clients.

"But Ben Bernanke has made it very clear that he will not bail out imprudent lenders and investors (read 'hedge funds') by aggressively easing monetary policy."

Cooper says the most likely scenario is for the Fed to cut by 25 basis points and wait to see if credit conditions return to normal.

She says other actions - such as injecting liquidity into markets and easing conditions for the Fed's discount window - may continue or intensify.

Joseph Balestrino, analyst at Federated Investors, agrees that the Fed is likely to use an "incremental" approach but that more rate cuts may follow in the coming months.

"Over the near-term, as adjustable-rate mortgages reset, defaults and foreclosures are likely to rise," he said.

"This should generate still more daunting headlines, keeping markets on edge. That also should keep the Fed in the game, signalling its readiness to act as necessary to keep the economy on track. This probably means a series of additional quarter-point rate cuts."

Economists continue to downgrade their forecasts amid weak economic data.

One report showed the US economy lost 4,000 jobs in August in the first labour market contraction in four years.

A slowing of job creation is likely to dent consumer spending, the main driver of economic activity.

The UCLA Anderson School of Business, in its most recent report, said current conditions represent "a near recession experience," with growth holding around one percent for the fourth quarter of 2007 and early 2008, with a return to normal growth of around 3.0 percent delayed until 2009.

Financial markets are effectively pricing in a rate cut of 25 basis points and some traders are expecting more. Ironically, some analysts say the Fed may want to show it is not yielding to market pressure.

"The nearly universal belief that the Fed will cut rates next week is a little worrisome since there still is a viable argument for the FOMC to hold rates where they are," said Gregory Drahuschak at Janney Montgomery Scott.

He said it remains unclear "whether the market will view whatever the Fed does as being enough. A quarter-point cut, for example, might be viewed as not being enough.

A 50 basis-point cut might be viewed as a panic reaction."

Economist Diane Swonk at Mesirow Financial said that with housing woes deepening, Bernanke and his colleagues will not want to risk pushing the economy into a prolonged recession.

"Bernanke is ultimately as risk hedger, which means that he would rather overstimulate the economy than risk a recession by not acting at all," Swonk said.

"Remember, this is the same man who in 2003 reassured markets that he would drop money from helicopters if necessary, to avoid deflation." - AFP/ch

New Generation Of Flats For Dawson's Estate In Queenstown

Source : Channel NewsAsia, 17 September 2007

Dawson's Estate in Queenstown is getting a new lease of life.

Construction of a new generation of flats at the 54-year-old estate will start in three to four years' time.

Architects working on their design concepts say new features will include sky gardens, lush landscaping and creative facades.

The future of HDB flats will be high - at 40 storeys and above - and surrounded by lush greenery.

This is just one of the design concepts created for Dawson's Estate by three private architects for the HDB.

Three plots of land are up for redevelopment. The largest is at the Queenstown Town Centre Square.

The architects plan to build 1,300 units around the old Angsana trees, retain the old market building, and put in a 600-metre-long green stretch of garden in the form of a "Green Ribbon" running through all the blocks.

Low Cher Ek, Architectural Director of Surbana International Consultants, said:
"It's actually about a whole community whereby heritage is present. And also the new buzz is there for the new generation of housing that is being introduced into these parts of Queenstown."

Sky gardens will also feature heavily in the other two designs.

One of them will even have 2,000 square metres of solar panels to power the homes.

Richard Hassell, Founding Director of WOHA, said: "We are looking at a buy- sell arrangement with the power grid, where during the day we can sell power when people are at work. And then at night, and in the morning when they are using a lot of power they actually draw power back. But overall at the end of the month, they end up with a net zero power balance."

The third design has flats with high ceilings and walls that can be taken down to create new spaces.

But these are not the features that will cost more to build.

Chan Soo Khian, Design Principal of SCDA, said: "We also tend to spend a little bit more on landscaping on the public areas. To all those different courtyards going to different levels. But the building structures should be within the budget."

HDB says all three architects have managed to design within the given strict budget.

Costs aside, the Singapore Institute of Architects says getting private architects to design public housing is not enough if Singapore wants more vibrant homes.

Tai Lee Siang, President of Singapore Institute of Architects, said: "Previously there was this idea of getting private developers to come in to take part in public housing. That idea have not been explored further.

"Private architects in their global experience in dealing with private housing as well as housing outside Singapore can then start to bring back new ideas."

"For example, the sky-rise gardens, that is actually starting to be very common in private condominiums. And this is something quite unique to Singapore. It is not even commonly practiced overseas."

There are currently 3,000 HDB units in Dawson's Estate but no private residential developments.

The area is also served by several schools, churches and an MRT station.

HDB says the regeneration is expected to add 10,000 public and private residential units to the area. - CNA/de

Kopitiam making way for tunnel

Source : The Strait Times, 17 September 2007

THE popular 24-hour Kopitiam at the junction of MacPherson Road and Tai Thong Crescent will roll down its shutters for good after Sunday.

Parts of the Jackson Centre will be torn down, said the Land Transport Authority (LTA), to build a tunnel from MacPherson Road to Bendemeer Road. The tunnel is part of the upgrading of the Woodsville Interchange to improve traffic flow in the area.

The Kopitiam MacPherson at Jackson Centre has been a popular eating spot for the past decade or so, with 30 hawker stalls at its peak.

But when The Straits Times visited the place last week, only 16 stalls were open.

Hawkers interviewed said about half the stalls had vacated the Jackson Centre ahead of its last day of business on Sunday.

Some of the hawkers are moving to other Kopitiam outlets while others have moved to coffee shops near the Jackson Centre.

However, hawkers like Mr Francis Yeo, who runs the Tian Jin Hai Seafood stall at the centre, are sad to go.

For one thing, the Jackson Centre is where Mr Yeo made a 'comeback'. He lost $2 million running a restaurant in Ulu Pandan previously, but rebuilt his business since setting up shop at the Jackson Centre 10 years ago.

The Kopitiam MacPherson at Jackson Centre occupies the first level of the former MacPherson Road Market, built in the 1950s. In 1990, the market closed down and two years later, the Kopitiam group started a 24-hour coffee shop there.

Construction work on the Woodsville Interchange, located at the intersection of Serangoon, Upper Serangoon, MacPherson and Bendemeer roads with connecting slip roads to and from the Pan-Island Expressway, is slated to start in the fourth quarter of this year.

Three new tunnels and a flyover will be built.

CapitaLand Reaps $261m From Selling HK Tower

Source : The Strait Times, 17 September 2007

CAPITALAND will book a gain of about $260.7 million from selling a 45 per cent stake in a prime office building in Hong Kong.
The property developer, South-east Asia's largest, said yesterday that it had sold its share of AIG Tower, located in the territory's central business district.

The deal values the building at HK$8.1 billion (S$1.57 billion), which works out to HK$22,042 per sq ft of net lettable area.

CapitaLand's share of the building is worth about HK$3.6 billion, including the repayment of shareholder loans.

The stake was sold to American International Assurance (AIA), a unit of American International Group (AIG), the largest insurer in the world.

The transaction will add to AIA's existing 45 per cent interest in the high-rise building. The remaining 10 per cent stake is held by Hong Kong's Lai Sun Group, which is involved in property development and investment.

The 999-year leasehold property was built in April 2005 and is currently fully occupied.

Major tenants include AIG, Bank of Tokyo-Mitsubishi UFJ, CapitaLand, Kohlberg Kravis Roberts & Co, Lai Sun Group and Oaktree Capital Management.

CapitaLand's sale of its stake in AIG Tower comes after it sold a 50 per cent interest in Chevron House for a record price last month. It booked a gain of about $150.8 million from the deal.

Allow Direct Flat Purchase By Middle-Income Group

Source : The Straits Times, Forum, Sep 17, 2007

RECENT changes to public housing rules, including increasing the subsidy for the low-income group and the balloting chances for newly married couples, have served to better meet the objectives of the HDB.

It is perhaps time to review the policy of restricting the middle-income group from applying for a flat directly from the HDB. The current policy restricts households with incomes greater than $8,000 a month from doing so.

Firstly, household income may not be a good comparator on housing affordability. This is because the middle-income family may incur higher expenses, as they are likely to have children, may employ domestic help as the mother is also working, and is also more likely to incur expenses in maintaining retired or aged parents.

Compare this with a young graduate couple, earning say $5,000 a month, with little family needs.

Secondly, the middle-income family with two children, domestic help and aged parents would have a greater need for a bigger flat as compared with a young couple, for whom it is more of a luxury than a need.

It does not take an investment guru to advise newly married couples to apply for a new five-room or bigger flat in the mature estates, as they stand to potentially gain a good sum after five years, not to mention benefits such as CPF housing grant and low- interest HDB housing loan.

However, the middle-income family will have to pay up at least $100,000 more - being the price difference between a resale and a new flat, with no housing grant and a higher interest on the loan. That too for a second-hand flat, with a shorter lease.

There are good reasons why many middle-income families would choose to stay in an HDB flat in the mature estates such as being close to parents and proximity to schools. Newer, better designed HDB flats also provide value for money.

The needs of the middle-income group would be better served if the HDB made it eligible for them to purchase a flat directly.

Heng Kwee Tong

Fed Ready To Lower Rates This Week

Source : The Straits Times, Sep 17, 2007

WASHINGTON - FOR the first time in more than four years, the Federal Reserve appears ready to lower interest rates to prevent a housing meltdown and a painful credit crunch from driving the US economy into a recession.

A rate cut would affect millions of American borrowers, with the intention of getting them to spend and invest more, which would revitalise the US economy.

In one of their most important and anxiously awaited decisions, Fed Chairman Ben Bernanke and his central bank colleagues meet on Tuesday to determine their next move on interest rates. Those policymakers are widely expected to cut an important rate, now at 5.25 per cent, by at least one-quarter of percentage point. Some analysts predict a bolder step, a half-point reduction.

If the Fed drops the rate, then the prime lending rate that commercial banks charge many individuals and businesses would fall by a corresponding amount. It now is at 8.25 per cent.

Mr Bernanke repeatedly has pledged in recent weeks to 'act as needed' to keep the housing and credit mess from sinking the economy.

'Bring out the big gun'
'It seemed like the Fed was behind the curve. Now it is going to bring out the big gun' on Tuesday and cut its most important rate, the federal funds rate, said Scott Anderson, economist at Wells Fargo.

The last time the funds rate, which is the interest that banks charge each other, was lowered was in late June 2003. The rate is the Fed's main tool for influencing the economy. On Aug 17, the Fed slashed its lending rate to banks and issued a more grim assessment of the economic climate.

'It's no longer a debate over whether they will ease but by how much,' said Mark Zandi, chief economist at Moody's

'The economy is soft and getting softer,' and the Fed has come under economic and political pressure to act.

Should the Fed go with a quarter-point cut, analysts expect policymakers will lower the rate again in October and in December, their final meeting of the year.

Fed action would mean that borrowers who can obtain credit would see rates drop on a variety of loans. It would become less expensive for people to finance certain credit card debt and for homeowners to take out popular home equity lines of credit, which often are used to pay for education, home improvements or medical bills.

Help some homeowners
Also, it should help some homeowners whose adjustable-rate mortgages reset in the fall.

'Borrowers facing a rate reset Oct 1 might see their ARM rates adjust to 6.7 per cent, for example, rather than the 7.5 per cent that a borrower whose loan adjusted back on July 1 experienced,' said Greg McBride, senior financial analyst for 'Still a big increase, but not the knockout punch it could have been,' he said.

Less immediate would be relief for America's economic health. An expected series of rate decreases could take three months to nine month before rippling through the economy and bolstering activity.

'It's like taking an antibiotic. After you take the first dose, you don't feel immediately better. But after a series of dosages accumulate, there will be a more positive effect,' explained Stuart Hoffman, chief economist at PNC Financial Services Group.

Psychological boost
Over the short term, a rate cut would provide an important psychological boost. It could make investors, businesses and others less inclined to clamp down or make drastic changes in their behaviour that would hurt the economy.

Fears that the deepening housing slump and a spreading credit crisis could short-circuit the six-year-old economic expansion have shaken Wall Street over the past few months. Stocks have swung wildly, with sharp drops reflecting investors' bouts of panic.

A recent government report showing that the economy lost jobs for the first time in four years delivered a fresh jolt. The biggest fear is that individuals and businesses will cut back on spending, throwing the economy into a tailspin.

Former Federal Reserve Chairman Alan Greenspan, in an interview broadcast Sunday on CBS' '60 Minutes,' said he believes the economy will be able to weather the financial storm.

'For the moment it does not look sufficiently severe that it will spiral into anything deeper,' he said. 'We're going to get through this particular credit crunch. We always do. This is a human behaviour phenomenon, and it will pass. The fever will break and euphoria will start to come back again.' By Mr Zandi's odds, there now is a 40 per cent chance the US economy will fall into a recession - the highest probability since the last recession, in 2001. Just two months earlier, Mr Zandi believed there was only a 12 per cent chance.

So far, though, American consumers have not cracked. Retail sales rose a modest 0.3 per cent in August, after a 0.5 per cent gain in July, the government reported on Friday.

Analysts expect the economy will slow to a rate of about 2 per cent in the current quarter, from July through September. That would be just half the rate of the three previous months. Growth in the final three months of this year could turn out even weaker.

Jobless seen rising
The employment climate is starting to deteriorate. Employers eliminated 4,000 jobs in August, intensifying calls by politicians and others for the Fed to cut rates. The unemployment rate, now at 4.6 per cent, is expected to climb close to 5 per cent by the year's end.

The weakness in employment was troubling because job and wage growth have served as shock absorbers for people coping with the housing slump.

After a five-year boom, the housing market went bust more than a year ago. Higher interest rates and weaker home values clobbered homeowners, particularly 'subprime' borrowers with spotty credit histories or low incomes. Foreclosures set records and late payments spiked. Lenders were forced out of business. Hedge funds and other investors in subprime-related mortgage securities took a huge financial hit.

A credit crisis ensued, spreading beyond the subprime market to more creditworthy borrowers. -- AP

Greenspan Warns On Sharp Fed Rate Cuts

Source : The Straits Times, Sep 17, 2007

WASHINGTON - FORMER Federal Reserve Chairman Alan Greenspan said his successors at the United States central bank should act cautiously in lowering interest rates because of inflation risks, according to an interview published on Sunday.

Mr Greenspan said the Fed should be careful not to cut rates too aggressively because the risk of an 'inflationary resurgence' is greater now than when he was chairman, the Financial Times reported.

The US central bank meets on Tuesday and is widely expected to cut benchmark federal funds rates by at least a quarter-percentage point to help the economy weather a housing downturn and a credit crunch.

Mr Greenspan said the US housing slump is likely to deepen more than many analysts expect, recording as much as a double-digit drop.

The Fed is currently weighing the adverse impacts of the housing downturn on the broader economy, and recent report employers shed 4,000 jobs in August raised warning flags.

Mr Greenspan said he would expect 'as a minimum, large single-digit' percentage declines in US house prices from peak to trough, the newspaper reported. The former Fed chair said he would not be surprised if the the drop was 'in double digits'.

Underlying strength
But Mr Greenspan, who is promoting a memoir that hits bookstore shelves on Monday, said that while home prices have not yet hit bottom, turmoil in housing and credit markets does not look like it will produce a broader economic downturn.

'There is an underlying strength in the United States,' he said in an interview on the CBS programme 60 Minutes.

'And indeed, when you look around the world, even with this extraordinary credit problem, the economies seem to be holding up. But for the moment it does not look sufficiently severe that it will spiral into anything deeper,' he said, according to a transcript made available before air time.

Mr Greenspan warned in the the interview that it won't be clear for a while whether the housing downturn and turmoil in credit markets from a wave of delinquencies among mortgages to borrowers with blemished credit will hurt the broader economy economy or not.

'This is fundamentally, originally caused by the flattening out of home prices. And that is only now just beginning,' he said.

But he expressed confidence the credit crisis would recede.

'This is a human behaviour phenomenon and it will pass. The fever will break and euphoria will start to come back again,' he said. -- REUTERS

HDB Move To Cut Concrete Use Pays Off

Source : The Business Times, September 17, 2007

It adopts alternative materials and techniques following Indonesian sand ban

STEEL, aluminium and even glass are to be the new concrete for many of the Housing and Development Board's latest projects.

Materials and techniques which might not have been cost-effective in the past have become increasingly viable following the rise in the price of concrete caused by January's ban on exports of sand from Indonesia.

The HDB says that initiatives it has already taken, such as using steel instead of concrete to construct lift shafts, have already achieved positive results.

The HDB told BT that using steel in a conventional 12-storey block has reduced the amount of concrete needed for lift shafts by 90 per cent. 'This leads to an overall cost savings of about 20 per cent and a shortening of construction time by 20 per cent,' a board spokesman said.

A conventional 12-storey concrete lift shaft can require up to 90 cubic metres of concrete.

This new method of construction was piloted in projects in Yishun, Jurong East and Marsiling and the HDB says that since April, use of the technique has been extended. Another upside of the new method is that an additional 250 blocks which previously exceeded the budget for the Lift Upgrading Programme now become eligible.

Using steel instead of concrete to build lift shafts shortens construction time and leads to overall savings by 20%.

Following the sand ban, the HDB - probably Singapore's biggest developer - said that it would try to cut the use of sand by as much as 30 per cent. By volume, sand is the main ingredient of concrete.

'While engineers work towards economising on materials and designs, architects will continue to ensure that the outcome retains its desired aesthetics and functionality,' said the HDB.

Building layouts and structures are being fine-tuned to optimise concrete usage. But some of the new architecture-led initiatives include the simple tweaking of previous HDB design guidelines.

One new idea involves providing much larger glass windows. The HDB has been providing bay windows in flats since 2004. 'Taking this a step further to improve economy and reduce sand use, we now provide three-quarter and full-height glass windows for bedrooms and living rooms respectively,' the board said.

Other simple solutions include changing the design of concrete parapets along corridors. Since 2000, most parapets have been built using perforated aluminium panels. HDB says that all HDB buildings tendered from June onwards will have parapets designed with slits or perforations to reduce the concrete use - or simply have metal parapets.

Other solutions involve replacing concrete designs with metal ones. For new shelters and linkways, HDB plans to use steel columns instead of concrete.

Modular steel ramps were tried out at Woodlands Street 83 and will be introduced to more HDB estates in line with its Barrier Free Access initiative.

The HDB said: 'As the industry exploits new materials, methods and technology in our move towards sustainable construction, we believe home buyers will also grow more receptive to the use of these new materials and designs.'

Tan Chong's Property Assets Catching Guoco's Eyes

Source : The Business Times, September 17, 2007

TAN Chong International appears now to be more of a property play than a seller of motor vehicles. That's why several analysts, including Singapore's Kim Eng Research, are calling a buy on the stock at current prices - on Friday, it closed 2.5 Hongkong cents lower at HK$2.325.

Kim Eng on Sept 5 set a target for the stock at HK$3.62 - 4 per cent down from an earlier target of HK$3.77. It attributes the downward revision to the recent change in development charges, which it said affected its valuation of Tan Chong, as it had earlier factored in the combined redevelopment of Tan Chong Motor Centre and The Wilby Residence, both off Bukit Timah Road.

Kim Eng said: 'The higher DC rates resulted in a higher development charge and consequently our valuation for the company's investment properties has decreased from HK$2,591.1 million to HK$2,293.8 million.'

Although the property scene in Singapore has been somewhat dampened by the hike in development charges and the more recent changes in en bloc rules, most property players and observers are still bullish on the sector's long-term outlook.

It's Tan Chong's property assets that have perhaps also attracted Malaysian business tycoon Quek Leng Chan to increase his stake in the company through his Guoco Group. Guoco increased its stake in Tan Chong from 11.02 per cent at the end of last year to 12.11 per cent at end-June this year.

Everyone knows that Mr Quek is a shrewd investor and he perhaps also sees an opportunity to increase his stake even further, given market talk about the house of the Tans who currently control Tan Chong.

According to previous media reports, there is little love lost between the Singapore and Malaysian side of the founding family - between Singapore-based company chairman Tan Eng Soon and his uncle Tan Kim Hor.

In recent years, the chairman appears to have consolidated his position, with the latest annual report showing he has 16.66 per cent of the company. In total Tan Chong Consolidated, the holding company of the founding family, owns 45.34 per cent.

While the trigger point for a compulsory general offer for a listed company in Hong Kong is 35 per cent, this should pose little difficulty for a takeover artiste like Mr Quek, nor is he short of the resources to make a takoever offer for a company with a market capitalisation of under $1 billion.

In the meantime, the company's car sector is doing less well as sales of its main line - Nissan - continue to decline in the face of fierce competition from the likes of Toyota and Honda and from parallel importers. Sales of Nissan fell from 10,045 units in 1H06 to 6,746 in 2H06 and to 6,106 in 1H07.

Things are brighter, however, at its Subaru and Nissan heavy commercial vehicle divisions, with sales of the former rising from 1,836 units in 1H06 to 2,323 units in 2H06 and to 3,185 in 1H07.

Kim Eng's target price is based on the sum-of-the-parts of Tan Chong's vehicle distributorship business, its high net cash position of about HK41 cents a share, and the estimated market values of its investment and held-for-sale properties.

Details like these must surely have not escaped the eyes of Mr Quek and his advisers.

A takeover attempt by Mr Quek would be a boost to the fortunes of weary minority investors.

Drop In Subsales Points To More Stable Prices Ahead

Source : The Business Times, September 17, 2007

Speculation window seen closing, with prices in high-end sector peaking

Orchard Residences: Most expensive property in Singapore at $5,500 psf

The number of property subsales - an indicator of speculative activity - appears to be stabilising, possibly even falling.

Some industry players even believe that this could mark the beginning of more stable prices in the months to come.

Official property statistics for the third quarter will not be out until next month but monthly figures tabulated by CB Richard Ellis show a surprising dip in the number of subsales between the months of June and July.

The July figures will be updated in time but the drop is still likely to be an estimated 5-10 per cent. This comes after numbers that have been rising consistently for the three months in the second quarter of 2007.

One explanation for this could be that the window of opportunity for speculators is closing, with prices in the high-end sector peaking.

CB Richard Ellis executive director Li Hiaw Ho said: 'If you don't have sharp increases in prices, you don't have property speculation.'

Speculators could also be discouraged by the volatility in the global markets. 'Because of the sub-prime crisis, a lot of buyers are exercising caution,' said Mr Li.

Another indication that speculators could be cooling off is that the number of returned options to buy new condos also appears to be dropping.

In January, the high-profile launch of One Shenton attracted many punters hoping to flip units before exercising their options. And even though it was fully booked within days of the launch, industry watchers believe that as much as 15-25 per cent of the options were returned in the following months when speculators failed to get their target prices.

Since then, there have been several more high-profile launches. Among the most notable ones were Orchard Residences - which has since set the record for the most expensive property in Singapore at $5,500 psf - and Scotts Square.

Both developers declined to reveal the number of options returned. But persistent talk in the market has it that 'many' options were returned for Scotts Square.

A source said that the figure was closer to about 5-10 per cent, which in comparison is perhaps not as high as might be expected for such a prime location.

CapitaLand's Seafront on Meyer was launched in Q2 and saw queues of buyers forming at its showflat. Now 80 per cent sold, CapitaLand said that only 3 per cent of the options were not exercised.

One Rochester, another hot property launched in Q2, also saw queues at its showflat. Developer United Engineers Ltd (UEL) said that it was surprised that only 10 per cent of the options for the fully sold condo were returned.

UEL CEO and group managing director Jackson Yap said: 'Initially, we had some concerns about the number of returned units as the option period coincided with the sub-prime crisis. We are rather happy that the number of returned units eventually stabilised at 10 per cent, which reflects a high proportion of genuine buyers who are confident of the strong fundamentals of the development.'

Speculators are very much a part of the market and do actually have a function as they help set the threshold prices that buyers are willing to pay.

UEL's Mr Yap added: 'We are in no urgency to sell the returned units, although there is a waiting list of genuine buyers, in this current market. We have more than covered our costs through the rest of the sales, and feel there is a need to protect the selling prices for a high-quality development like ours.'

One Rochester was sold at a price ranging between $900 psf and $1,600 psf. Whether these prices will go up could depend on how gung-ho speculators will be in the coming months.

The Soleil @ Sinaran was launched last month and is almost fully sold. Developer, Frasers Centrepoint Homes said that to-date, 42 per cent of its buyers have exercised their options. The remaining 58 per cent have until the end of the month to exercise theirs.