Property Highlights of Singapore: 04 October 2007

Thursday, October 4, 2007

CapitaLand In JV Talks To Develop 60-Acre Site In India: Report

Source : Channel NewsAsia, 04 October 2007

CapitaLand is reported to be in talks to develop a 60-acre site in India.

The Economic Times of India said in a report that CapitaLand will invest 7 billion rupee (S$250 million) in a joint venture to develop the land.

It said the equal joint venture will involve Indian-based D.S. Kulkarni Developers.

Other reports have said half of the land will be developed into residential property, with the remaining to be used for a special economic zone.

In response, CapitaLand informed the Singapore Exchange that it is currently sourcing for various opportunities in India.

The developer said it will make an announcement if there are any firm developments. - CNA /ls

We Could've Handled CDO Disclosure Better, Says DBS

Source : The Business Times, October 4, 2007

It hurt bank's effort to be transparent, says CFO

DBS Group Holdings said its efforts to be transparent had been hurt by the manner in which it went about disclosing its exposure to collaterised debt obligations (CDOs).

Ms Wong: DBS' chief financial officer said the mistake was to think credit risks on CDOs held by its conduit Rosa would stay as third party risks

A candid Jeanette Wong, DBS chief financial officer, was replying this week to a question from BT on what the bank had learnt from the incident, which according to one analyst had hurt its credibility.

'We have acknowledged to investors and analysts that the manner of our recent disclosure on CDOs could have been better,' said Ms Wong.

The bank had initially claimed that it had investments, including CDOs, amounting to US$850 million.

Then, on Aug 7 it said that it had made third-party sales amounting to US$1.7 billion - S$2.6 billion. What it did not make clear was that this amount included the CDOs held by Red Orchid Secured Assets (Rosa), a DBS conduit.

'At the time, Rosa was still being funded by short-term commercial paper (CP) holders, who bore the credit risks,' said Ms Wong. 'Our mistake was thinking that this would remain as third party (CP holders') risks when clearly we hold the residual risks if the CP holders do not roll over their funding.'

Rosa needed DBS funding as skittish investors declined to renew or roll over their holdings because of turmoil in credit markets caused by the fallout from US sub-prime mortgage defaults.

'We have always acknowledged that Rosa belongs to DBS when asked by analysts and investors. We realised our oversight in not including the conduit's CDO investments as ours when the focus subsequently shifted to conduits/SIVs (special investment vehicles),' said Ms Wong.

To make things clearer for all market participants, DBS shifted Rosa's CDOs from third-party sales to include it as own holdings in a further press release on Aug 27, she said.

'We recognise that this two-step disclosure has hurt our efforts to be transparent. Our intention has always been to be transparent but the way in which we disclosed our CDO exposure could have been better,' said Ms Wong.

The two-step disclosure led to downgrades by some analysts. Goldman Sachs moved the counter from 'buy' to 'neutral', saying DBS, despite its long-term value, had one of the highest exposures to CDOs among Asian banks, excluding Japan's. It added that DBS was the only local bank yet to make any provisions.

JPMorgan Chase also said that DBS was a stock to avoid.

But others felt that DBS had been more open about its CDO exposure.

Said Ms Wong: 'Some investors and analysts however felt that we have been more open about our conduits' CDO exposures, as they have been unable to obtain similar information elsewhere. UBS analyst Jai Singh said in a Sept 20 note on DBS: 'We believe the exposure and risk associated with the CDO is well documented and is firmly in the price.'

CapitaLand In Talks To Develop Site Near Pune, India

Source : The Business Times, October 4, 2007

CapitaLand, Southeast Asia's biggest developer, is in talks with an Indian company to develop a piece of land near Pune in India, a source familiar with the negotiations said on Thursday.

The source's comments follow a report in India's Economic Times that the Singapore company will invest around Rp7 billion in a 50:50 joint venture with India's DS Kulkarni Developers to develop 60 acres of land.

CapitaLand said in a regulatory statement following the news report that it was sourcing for various opportunities in India, and will make an announcement if there are firm developments. -- REUTERS

Banyan Tree To Double Global Assets By 2010

Source : The Business Times, October 4, 2007

It plans to move into Latin America, the Caribbean, Middle East, Mediterranean

BANYAN Tree, a leading manager and developer of premium resorts, hotels, spas and galleries, is on an aggressive expansion push to more than double its global portfolio by 2010.

Banyan Tree Mauritius: The project is scheduled to be completed in 2010. This Banyan Tree branded residences project is architecturally designed by Fosters & Partners of the UK with the resort villas designed in collaboration with Architrave Design & Planning, Banyan Tree's in-house design division

Banyan Tree executive chairman Ho Kwon Ping said it is moving into new markets in Latin America, the Caribbean, the Mediterranean and the Middle East, in addition to stepping up its presence in South-east Asia, the Indian Ocean and North-east Asia (China and Korea).

The group's investments will involve new projects as well as organic growth as it continues to improve and add capacity to existing properties, he said in an interview on the sidelines of celebrations to mark its 20th year in Phuket.

On Phuket island, where the flagship Banyan Tree resort is located, plans are afoot for a new project adjacent to the existing 600-acre Laguna Phuket which houses six properties that are built on land which has been rehabilitated from a polluted abandoned tin mine.

Banyan Tree subsidiary, Laguna Resorts and Hotels, has just concluded a joint-venture agreement with a prominent local Phuket businessman Kanit Yongsakul to develop the 7 million sq ft plot for housing, retail and commercial uses (including office space), plus a hotel.

To be called Laguna Lake, the project is expected to reach the peak of development in three to four years.

The potential revenue contributions from this development could be S$400 million to be realised over a medium-term period, the company said.

The residential portion of the development will offer upscale condominium units, bungalows and townhouses.

Mr Ho: 'It's being where we need to be to remain among the best of the best'

Mr Ho also revealed that within Laguna Phuket, the group plans to add a seventh hotel. This one will be under its Angsana brand. Room rates will be the second highest after the flagship Banyan Tree Phuket.

Construction of the 150-room property will start next year and is scheduled to be completed in 2009. It will cost 1.5-2 billion baht (S$70-93.4 million).

The group's first hotel to open in Laguna Phuket in 1987 was the Dusit Laguna. This was followed by the other five properties, Laguna Beach Resort, Sheraton Grande Laguna Phuket and The Allamanda (all suites), Banyan Tree Phuket and the Laguna Holiday Club (time-share units).

Laguna Phuket has become the reference point for the group's projects elsewhere, such as Laguna Vietnam whose construction will start early next year near Hue in central Vietnam. Mr Ho hopes this project will replicate the success of Laguna Phuket.

On Banyan Tree's global expansion plans, Mr Ho said: 'We want to have strong growth in the next one to three years. Given the strong pipeline of projects that we have - over 40 new hotels (compared with our current existing portfolio of 22) and at least 55 spa projects, we are confident of our growth plan.

'The key drivers will come from three core segments - hotel investment income, fee-based income (such as hotel, spa and design management fees) and property sales. Based on existing signed and sealed contracts that we have, we would have about 60 hotels and resorts by 2010. This is bearing in mind that we will continue to work on increasing this figure.'

Banyan Tree adopts a practical approach in its quest to spread its roots. Its strategy is to further expand into low-cost locations close to its key customer markets.

Mr Ho elaborated: 'In some of these so-called 'low-cost' regions, such as China and Mexico (Latin America), we have managed to leverage on the growth in the tourism sectors there to accelerate our growth there. These regions account for over 20 existing projects in development and continue to present more opportunities for growth.'

Mr Ho is a firm believer in nurturing a brand instead of relying on cost competitiveness. He said: 'One prevalent business model in Asia is to use low cost labour - with many companies manufacturing for other people, as opposed to developing their own brand. My view is that this is not a sustainable business model because someday someone cheaper will come along.

'The key to success is to invest in a brand and build it - like what we have done with Banyan Tree. We need to compete on brand, not cost competitiveness, which takes long-term commitment and mindset, and to be close to the market,' he said.

'Banyan Tree is all about creating unforgettable, deeply personal and cherished memories. It is about the romance of travel and connecting people with a 'sense of place' through the design and architecture of our resorts, that promotes the uniqueness of indigenous cultures of the place. As we have our own full-time in-house design capabilities, we are therefore able to graft the 'Banyan Tree' experience onto our real estate offerings from the ground up.'

'Banyan Tree's business model is to be in exotic destinations, and places like China and Latin America offer a plethora of such destinations. One of the reasons for Banyan Tree's success is that we have stayed in our niche. It's like within this 'sandbox', as long as we are the King of the hill, we could be No 1.'

He added: 'In our space, going global is not about having a few hundred hotels and resorts, but a necklace of jewels that span the globe with a representation in every key market. It is not about being everywhere, but being where we need to be to remain among the best of the best.'

Property Transactions With Contract Dates Between 10-15th Sept, 2007

Sleepy Baby

A Hungry Baby

Pine Grove - Residents May Try To Sell For Record $1.4b

Source : The New Paper, October 04, 2007

LET us sell your estate for about $1.4 billion.

That's what property consultancy CB Richard Ellis (CBRE) is trying to persuade Pine Grove residents to do.

If the residents agree and CBRE manages to find a buyer, it will overshadow current record-holder Farrer Court, which was sold to CapitaLand for $1.33 billion in June.

The $1.4b price tag for the 893,000sq ft estate in Ulu Pandan means an average payout of $2m per unit.

There are 660 units in this 23-year-old estate. They are of different sizes.

Residents had already rejected the $1.2m per unit price tag in February as only 50 per cent voted for the en-bloc sale - well below the required 80 per cent.

A second attempt in May, with an upped price tag of $1.75m per unit, also fell through. Only about 50percent voted for the sale.

Last Saturday, some 500 Pine Grove residents held a meeting with CBRE at NUS Cultural Centre to sign the collective sale agreement (CSA).

CBRE is still collecting signatures from owners.

Close to 50 per cent of the residents have already signed the agreement.

They hope to push for the sale before the proposed changes to the Land Titles (Strata) Act take effect this month, CBRE's executive director Jeremy Lake said.

The various safeguards in the new rules are expected to increase the time taken to get en-bloc sites ready for launch, industry watchers said.

Some of the changes include having a lawyer to be present when an owner signs the CSA.

Madam Debra Lee, who owns a unit in Pine Grove, said: 'The first offer was simply too low for me to even consider. I don't think it was enough to look for a replacement home.

'But the recent payout seems more reasonable. I like this estate but if the offer is good, why not? Who knows when the property bull-run will end?'

The last transacted price for a 1,700plus sq ft unit there was about $1.3m in April, according to recent URA figures.

Another Pine Grove resident, who only wanted to be known as Lawrence, snubbed the latest offer.

He told The New Paper: 'Even with $2m, I don't think I'll be able to find a good replacement unit in this area. Yes, it may be a bit old but the location is great.'

He wants to hold out for $3m.

But Mr Lake believes the $2m individual payout is appealing enough to push the sale through.

He said: 'We are still in the midst of collecting signatures and we believe there's a very good chance we can get the pre-requisite 80 per cent by the end of this month.

'If we don't get the 80 per cent before the new legislation kicks in, it'll be a more prolonged process.'

He said that once they get more than 50 per cent signatures, they'll do some soft marketing and sound out one or two developers to see if they're keen.

'The general view is that the mass market is moving, so there should be no problems finding a buyer,' he said.

But if the estate's reserve price is not met, it could potentially mean going back to the drawing board to get the requisite 80 per cent approval for a lower price, industry watchers said.

Chesterton International's head of research and consultancy Colin Tan said that the increased price is not surprising.

He explained: 'In this instance, holding out for more may have benefited the residents.

'But it remains to be seen if they will really achieve that price. When the market moves, the en-bloc sellers may get more but prices of replacement units will also go up.'

Industry Weighs New En Bloc Rules

Source : TODAY, Thursday, October 4, 2007

Players note changes protect minority owners, improve sales proceedings

CHANGES to regulations governing collective property sales — which take effect today — favour the minority owners, said lawyers and property experts at an en bloc property seminar yesterday.

They could get a higher sales price if their objections to the sale are valid, while the provision for a change of mind following the signing of the collective agreement is generous, they said. Lawyer Sim Bock Eng from Wong Partnership said: “This five-day cooling-off period excludes weekends and public holidays, allowing minority owners to review their decision and alleviate any pressure.”

The event comes at a time when the en bloc frenzy shows little sign of easing despite government measures.

Referring to reports of souring relationships, Mr Chan Kok Hong, CKH Strata Management managing director, said: “Director Royston Tan can make a movie from this.”

Ms Sim said the raft of requirements for setting up a sales committee protects minority owners. Before the changes, a one-man committee could be set up; now, at least three owners are needed. And members of the committee have to be elected at a general meeting and must declare any relationships with developers, marketing agent or legal firms that might incur a possible conflict of interest.

The new provisions also improve en bloc proceedings, which typically take 31 months to complete, noted Mr Chan.

Meanwhile, the Law Ministry has advised that ongoing en bloc sales without a majority of owners’ consent — 80-percent (for developments 10 years old or older) or 90-per-cent (below 10 years old) — have to comply with the new provisions. Those with the majority consent are exempted.

Raffles City Goes To Other Cities

Source : TODAY, Thursday, October 4, 2007

CapitaLand to build 8 more properties over the next 5 years

CAPITALAND will capitalise on its core strengths in property development to grow the Raffles City branding, with at least eight more developments sprouting up worldwide over the next five years, said CEO and president of the CapitaLand Group Liew Mun Leong.

Speaking to reporters a day after Raffles City Singapore celebrated its 21st anniversary on Tuesday, Mr Liew said CapitaLand’s ability to build and manage successful integrated mixeddevelopments with retail, office and hotel components, will give it an edge.

While many developers are able to build malls, not many share CapitaLand’s ability to fill them with suitable tenant-mixes to sustain growth, he said.

Besides Raffles City Singapore, there is a Raffles City Shanghai in China. Under construction are three similar projects with the Raffles City name in Beijing, Chengdu and Bahrain, due to be completed over the next two years. CapitaLand aims to add five more Raffles City developments in the next five years, and more if there are opportunities to do so.

“We have many cities now approaching us to have a Raffles City built in their city,” said Mr Liew. “If Singapore with a population of about 4.5 million can have one Raffles City, there are many more such cities in a country like China.”

Mr Liew said among the interested gateway cities in emerging markets such as Russia, India, the Gulf Cooperation Council region, and Vietnam, China is most likely to have two or three more such integrated developments in the near future.

Developed economies like Japan have also expressed interest in a Raffles City development, but Mr Liew said the challenge is finding a site big enough in “a mature, congested city”.

CapitaLand may also inject Raffles City developments into a specially-created Raffles City real estate investment trust (Reits) when the developments are stable and delivering good yields. The Singapore-based developer reaffirmed its aim to manage 10 Reits eventually, possibly within “a relatively short time”.

OCBC Cashing In On Mobile Banking

Source : TODAY, Thursday, October 4, 2007

Its facility is secure, but other banks say users ‘not ready'

GOING mobile is the future for retail banking, and with a mobile phone penetration level higher than Singapore’s population, this can prove to be a very attractive and viable option for banks in expanding its reach.

Research firm Frost & Sullivan, in a commentary yesterday, said the mobile device is “building up to become the preferred medium of tactically reaching out to a targeted audience”. Experts say this trend augurs well for content providers for mobile advertising and mobile banking.

A check with the three big Singapore and four foreign banks with retail operations showed the majority offer customers access to Internet banking on mobile devices such as mobile phones and personal digital diaries (PDAs) via GPRS.

A UOB spokesman said the bank does not provide mobile banking, and added: “However, the bank constantly seeks to improve its range of services to facilitate customers’
transactions.” Maybank said it is “likely to offer the service through a different mobile platform and for improved customer experience”. This will be “more integrated” with its online banking.

Currently, only OCBC is offering a full suite of banking services on a dedicated stand-alone mobile banking platform that is seamlessly integrated with its hall and internet banking services on the back-end.

Following the successful adoption of Internet banking in Singapore several years ago, most banks have looked to mobile banking as the next logical step. However, after some trials, most have deemed the platform not secure enough for financial transactions, while others believe customers are not ready for the technology.

In June last year, OCBC Bank bucked the industry trend by implementing its own mobile banking platform that it developed from scratch. The service is available on all three local mobile networks in Singapore— M1, SingTel and StarHub — and can be accessed through more than 90 per cent of the popular mobile phone models.

Since its launch, OCBC’s mobile banking user base grew by 160 per cent as of August this year.

“Transaction dollar value has increased 180 per cent in the same period,” said Mr Patrick Chew, OCBC Bank’s head of delivery. “We have seen the transaction value grow from tens of dollars in value to the ten thousands as customers transfer funds or pay their bills via the mobile phone.”

The bank believes its customers are transacting more frequently with mobile devices as confidence in the platform grows.

“Surveys conducted by OCBC found that 80 per cent of our users found mobile banking relevant to their daily lives, while 70 per cent found the OCBC Mobile Banking platform easy to use and said they would recommend it to their friends,” said Mr Chew.

Account enquiries, bill payments and fund transfers are the most popular secured mobile banking services, said OCBC. New features such as the downloading of Vouchers, dining search and rewards redemption are also gaining acceptance.

The biggest hurdle OCBC faced at first was convincing users the facility is safe and secure. To overcome this fear, OCBC offered the mobile phone as a physical security
token on top of the two-factor authentication (2FA) token and one-time password (OTP) received via SMS for transactions. “We introduced end-to-end encryption to secure both the transmitted data and the customer’s PIN, similar to what we provide in Internet banking,” said Mr Chew.

Anuuities - The Numbers Tell The Story

Source : TODAY, Thursday, October 4, 2007

Statistics show annuities’ risk-pooling model may disadvantage poor old-old

Letter from DR VINCENT CHIA WEI MENG

I REFER to the compulsory annuity scheme. I would like to point out that there is good statistical evidence to support a strong correlation between socio-economic status and life expectancy in developed countries. As such, the compulsory annuity scheme should take this fact into consideration.

It is well-known among sociologists and epidemiologists that social class or socioeconomic status is a prominent life expectancy indicator, and is assessed through occupation, income, housing or educational level.

We can begin by looking at epidemiological data from the United States. From the paper published last year by Gopal K Singh and Mohammad Siahpush in the International Journal of Epidemiology, entitled Widening Socioeconomic Inequalities in US Life Expectancy, 1980–2000, it is clear that life expectancy for less-deprived groups is notably higher than that for more-deprived groups.

An extract states: “Those in less-deprived groups experienced a longer life expectancy at each age than their counterparts in more-deprived groups. Between 1980 and 1982, the overall life expectancy at birth was 2.8 years longer for the least-deprived group than for the most-deprived group (75.8 years versus 73.0). By the 1998 to 2000 period, the absolute difference in life expectancy at birth increased to 4.5 years (79.2 years vs 74.7).”

Singh and Siahpush concluded that: “Between 1980 and 2000, those in higher socioeconomic groups experienced larger gains in life expectancy than those in more-deprived groups, contributing to the widening gap.”

Thus, there is not only a greater life expectancy for those with a higher socioeconomic status but the gap in life expectancy between the higher and lower socio-economic groups is progressively widening.

Not surprisingly, we see a similar trend in the United Kingdom. A paper by its Office for National Statistics (ONS) gives figures on trends in life expectancy by social class in England and Wales between 1972 and 2001.

The data shows that while life expectancy at birth for both the higher and lower social classes have improved, it is evident that life expectancy at birth for those from a higher social class is significantly better than those from the other end of the spectrum. There is likewise an increasing gap in life expectancy between the two classes.

Apart from life expectancy, it is interesting to note that socio-economic status is an important determinant of disability among older Asians. The effect of socio-economic characteristics is also strongest when predicting perceived health. According to the National University of Singapore’s Department of Sociology and the Asia Research Institute, sociologists have discovered that perception of income adequacy is the most important predictor of health.

Closer to home, The Old-Old in Singapore, a paper published by Ang Seow Long and Edmond Lee from the Singapore Department of Statistics, suggests a similar link between socio-economic status and life expectancy.

The old-old refers to those 85 years and above. If the home of an old-old Singaporean is any indication of his socio-economic status, then it is significant that in 1999, 43.5 per cent of the old-old live in HDB fourroom or larger flats. In comparison, 29.1 per cent of old-old Singaporeans live in HDB three-room flats, while the remaining 11 per cent live in HDB one- or two-room flats.

In other words, a large proportion of those who live to 85 years and beyond do not live in one- or two-room flats. Close to half of them, in fact, live in four-room or larger flats.

If it is true that a majority of the old-old are from higher socio-economic groups, there might be a weakness in the compulsory annuity scheme. As it works on the principle of risk pooling, CPF members who die early may not live to see the benefits of the scheme. In fact, their premiums may go towards paying the annuity payouts of other members.

We must ensure that lower socio-economic groups are not unduly burdened with the care of old-old from higher socio-economic sectors. Only then can the annuity scheme be of greater aid to those old-old Singaporeans who are truly in need of such payouts.

Horizon Towers - Legal Exchange Rivets Gallery

Source : TODAY, Thursday, October 4, 2007

Majority owners of Horizon Towers get their day in court

IN CONTRAST to the thunder and fury of the past few days, the legal dispute surrounding the botched Horizon Towers en bloc sale ended on a muted note yesterday —less than 45 minutes after it started in the High Court.

Nevertheless, it was a day the packed courtroom — comprising mainly the condo's residents — relished, going by their obvious delight when Senior Counsel K Shanmugam, who represents the prospective buyers, was repeatedly denied the chance to address the court.

The majority owners are appealing against the Strata Titles Board's decision to abort the proposed $500-million deal on technical irregularities — three pages containing the signatures of three majority owners were missing from the documents.

Yesterday, the majority owners' lawyer, Senior Counsel Chelva Rajah, was finally given the chance to respond to points raised by the lawyers for the minority owners, who hope to sink the deal for good.

But before the hearing began, Mr Shanmugam asked Justice Choo Han Teck for permission to speak after Mr Rajah. Justice Choo's response that he would decide after listening to Mr Rajah drew cheers from the gallery.

Mr Rajah reiterated that the sale order application was "not invalid", since two of the missing pages were actually tendered to the STB in a separate bundle, while the third page was submitted before the board's hearing ended.

While lawyers for the minority owners had argued that the latest changes to the law for en bloc sales, which empower the STB to disregard technical or procedural irregularities, meant it lacked this authority previously, Mr Rajah argued otherwise.

He said: "The fact that Parliament is putting up the Bill doesn't mean it had a change of mind. It's far more likely that Parliament all along intended the board to have the power."

In his written submission, he said that even without the three signatures, the consent level for the sale was 82.51 per cent — above the required 80 per cent.

As soon as Mr Rajah was done, Mr Shanmugam, who is also a Member of Parliament, requested to take the judge through parliamentary reports to show that the legislative amendments "in fact show Parliament's true intentions". He also wanted to highlight an earlier court case to illustrate the STB's jurisdiction to amend applications.

But Senior Counsel Michael Hwang, who was representing a minority owner, objected to this "second bite of the cherry". If the judge allowed Mr Shanmugam's request, said Mr Hwang, the other lawyers had to be given the chance to respond as well.

Justice Choo gave them the choice of either "five minutes" each to address the court again or to respond in writing to a written submission of Mr Shanmugam's additional points.

While Mr Shanmugam wanted the first option, Mr Hwang chose the second and the other four lawyers present agreed with him. The judge went with the majority and gasps of "yes" were heard from the gallery.

Justice Choo is expected to give his ruling next week.

SLA Rides The Bulls

Source : TODAY, Thursday, October 4, 2007

IN A testament to the bullish property sector, it has been a year of records for the Singapore Land Authority (SLA).

Its latest annual report revealed that revenue collected from State land sales has reached a nine-year record high of $6.3 billion, up from $5.5 billion the previous year.

Private sales in major projects such as the Marina Integrated Resorts, Southern Sentosa Cove and the Civic, Cultural and Retail Complex at One North accounted for more than half SLA's total land proceeds, with takings totalling some $3.5 billion in the financial period ending in March. This is up from $3.3 billion previously.

The public sector too bought their fair share of state land. Sales to entities such as the Singapore Tourism Board, Sentosa Development Corporation and JTC contributed to $2.7 billion in takings, up from $2.2 billion the previous FY, marking another record high.

Analysts, such as director of Dennis Wee Properties, Mr Chris Koh, said these figures are not surprising. "The last financial year, the Government has been releasing more land for sale in light of the brighter economy, so it explains the takings," said Mr Koh.

And in a bid to alleviate the CBD crunch, the SLA released 13 landmark State properties for dedicated office space between April last year and this March for "adaptive reuse".

It's likely that more such plots will be opened up for office use in the coming months, said Mr Koh as the demand for office space is still very strong. "Lots of foreign companies are still coming in and the Government has to ensure that there is enough office space to curb soaring rentals as this will have the detrimental effect of driving business away from Singapore."

SLA last year also tendered and awarded — for $1.75 million — three plots totalling 7.8ha in Lim Chu Kang for agri-tainment purposes in a bid to create a recreational countryside featuring a mix of agriculture, recreation and entertainment elements like farm stays and fishing and rock-climbing.

Non-profit organisations were not forgotten. One beneficiary, the Animal Concerns Research and Education Society (Acres), got a three-month rent-free period on a 2-ha site in Sungei Tengah for its wildlife rescue centre.

According to the annual report, SLA's total income increased from $80.8 million to $88.6 million, and its agency fee incomes achieved new highs, increasing 8 per cent from $50.8 million to $54.8 million.

Major Land Sales FY 2006/2007
.Marina IR (picture) ($1.2b)
.One North Civic, Cultural and Retail Complex ($180m)

Private land sales proceeds
.FY02 1.2b FY03 684m FY04 290m FY05 $3.3b FY06 $3.5b

Public land sales proceeds
.FY02 784m FY03 $1b FY04 $1.7b FY05 $2.2b FY06 $2.7b

Stockbroker Team Eyeing More Deals

Source : The Business Times, Thursday, October 4, 2007

David Loh, Han Seng Juan who won Kovan site may also rope in partners.

Mr Bin: Says the Kovan condo may launch in the second half of next year

THE ‘David and Han Team’ of top stockbrokers that has been awarded a condo site in Kovan for $290.02 million, is looking at more property ventures in Singapore and the region across various sectors, including residential, office and hotels.

The Kovan condo will be the duo’s maiden property development project, and they are expected to rope in some ’strategic partners’, including a construction firm for the project.

‘The condo is likely to have around 500 to 600 units, and could be launched sometime in the second half of next year. We’re looking at an average selling price above $850 per square foot, but of course if the market goes up, we’ll be very happy,’ says Tony Bin, CEO of Duchess Development, the holding company of Duke Development, the vehicle that Han Seng Juan and David Loh Kim Kang used to bid for the 190,000 square feet site next to Kovan MRT Station at a state tender that closed on Tuesday.

The $290.02 million bid for the Kovan site reflects a unit land price of $437 psf per plot ratio, and based on this, market watchers reckon the breakeven cost for the new condo works out to around $730-750 psf.

Mr Han and Mr Loh work at UOB-Kay Hian and are also well known as pre-IPO China investors. ‘They are diversifying into property,’ as Mr Bin puts it.

The two men will only be investors/shareholders and not be involved in the management of Duchess Development, which will be left to a professional team, added Mr Bin, who was formerly general manager of the property division of Guthrie GTS.

Market watchers reckon that given Mr Han’s and Mr Loh’s strong interest in China, it would not be surprising if they could also be looking at property ventures in that market.

CapitaLand CEO Targets One New Raffles City A Year

Source : The Business Times, Thursday, October 4, 2007

The company also aims to manage 10 Reits eventually.

CAPITALAND group president and CEO Liew Mun Leong yesterday set the company the target of developing at least one new Raffles City every year.

Mr Liew, who was briefing the media on the group’s plans for the Raffles City brand, said CapitaLand aims to have five more Raffles City developments within the next five years, making a total of 10.

He also said that CapitaLand may inject the Raffles City developments into a Raffles City real estate investment trust (Reit), once all the developments are stable and deliver good yields.

He added that CapitaLand aims to manage 10 Reits eventually, possibly within ‘a relatively short time’.

The news comes after the announcement on Tuesday that CapitaLand hopes to double the number of current Raffles City malls to at least 10.

Even this number could increase. ‘At CapitaLand, we like to double our targets,’ Mr Liew said, only half in jest.

China, which already has three Raffles Cities in different stages of development, could have two or three more.

Other countries and gateway cities that have expressed interest in having CapitaLand develop a Raffles City development include India, Vietnam, Japan, and gateway cities in countries such as Russia and in the Gulf Cooperation Council (GCC) region.

Although the Raffles City model is anchored by a large mall, it is in essence a ‘branded integrated development’ with a combination of possible office, hotel and retail segments.

CapitaLand owns the Raffles City trademark, and Mr Liew said: ‘If you have a good product and don’t take advantage of it, someone else will copy it.’

In terms of strategic business unit performance, CapitaLand Commercial registered revenue of $43.2 million in the second quarter of this year, up almost 50 per cent year-on-year.

CapitaLand said this was due mainly to the consolidation of revenue from Raffles City Shanghai which became a subsidiary in September 2006 and higher property management fee income.

Separately, CapitaLand announced yesterday that it had established two indirect wholly owned subsidiaries incorporated in China: Xinyun Investment Management (Hangzhou) Co and Beijing CapitaLand Xin Ming Real Estate Development Co.

Hertford Mansion, Holland Hill Lodge Up For En Bloc Sale

Source : The Business Times, October 4, 2007

HOME owners are going ahead with collective sales, with Colliers International marketing two new freehold sites.

One site, Hertford Mansion, is located at Hertford Road/Bristol Road, near Farrer Park, and the indicative price for the 11,527-square-foot plot is $12 million or $744 per sq foot per plot ratio (psf ppr).

The other site, Holland Hill Lodge, is expected to fetch $16 million. This works out to $1,108 psf ppr for the 9,033-sq-ft site.

Home owners' price expectations may have been affected by the resent US sub-prime mortgage crisis as well as new requirements for collective sales. Colliers executive director (investment sale) Ho Eng Joo said: 'Sellers have to be more realistic in the event that the en bloc sales slow down. It's always a two-way traffic.

'Every owner would, of course, like to sell their property at a price as high as possible. But, they also need to take into consideration whether developers are willing to pay the price.

'Developers will be watching very closely the launches of new projects in order to price their costs of acquisition.'

With the process of organising an en bloc sale likely to be slower than before, Mr Ho expects the buying interest of developers could turn towards the city fringe and/or suburban areas where prices are lagging behind the high-end market.

The break-even cost for Hertford Mansion is about $1,100-$1,200 psf.

Mr Ho believes that given the flat contour and the regular shape of this site, the successful bidder could redevelop it into a boutique residential development with a five-storey block accommodating 20 units of 900 sq ft each.

The break-even price for Holland Hill Lodge is approximately $1,500-$1,600 psf. Mr Ho said: 'Given that all the owners have already consented to proceed with the sale, there is no need for approval from the Strata Titles Board. As such, the legal process of transferring the ownership can be expected to complete within three months.'

There is no development charge payable for either site.

Wise Not To Ignore Market Risks

Source : The Business Times, October 4, 2007

SINCE the US Federal Reserve's somewhat surprising 50-basis points interest rate cut on Sept 18, investors all over the world have piled back into stocks with much gusto. Wall Street on Monday rose to a new all-time high while most Asian markets continue to set records of their own.

The mood is once again bullish, restored by a seemingly unshakeable confidence that the Fed can be relied upon to cut rates further to keep the ball rolling. While the momentum is clearly positive however, over-eager investors have to be mindful of making the same mistake as before - ignoring risks while focusing solely on returns.

Although the Federal funds futures market is pricing in a further 25 basis points cut at the end of this month, this is by no means a certainty. September's rate lowering has seriously undermined an already-weak US dollar - which has now declined even against currencies such as the Turkish lira, Saudi rial and Canadian dollar - and over time, this cannot be good for an-already slowing economy labouring under the burden of a crashing housing market. Moreover, various Fed governors warned this week that more rate cuts can only be justified if the economy shows signs of very drastic weakness, which means that perversely, investors are buying stocks today in the hope that growth worsens significantly tomorrow - Monday's Wall St record for example, was set after release of a weak manufacturing report that showed new orders dropping for the third consecutive month. This is an anomalous state of affairs. While it might last for a while, eventually reality will prevail.

Speaking of reality, the full extent of the sub-prime mess may not have been revealed yet. US and European banks have only just started to show alarming profit weakness stemming from sub-prime losses and there is doubt over whether rate cuts are sufficient to reverse losses.

That said, markets could continue to rally in the short term. One likely explanation for the strong bounces seen over the past fortnight is that they have come from widespread programme trading - with markets as interconnected as they are today, the big money has to employ sophisticated computer-driven trading strategies in order to react quickly enough and capitalise on shifts in economic and sentiment indicators.

As such, once certain parameters are met, powerful momentum forces take over and markets move almost as one. Invariably, the targets are always the largest stocks - that is why in Singapore at least, while the Straits Times Index has very rapidly regained new ground, the broad market has lagged.

The real danger however, is that the same momentum shifts work equally effectively on the downside. Given that volatility has not subsided over the past few months - it has in fact increased - and given that the chances of a US recession are quite real, it would be wise for investors to be as cognisant of risks as they are of returns.

Emerging-Market Gains Replace US Housing, Mortgage Woes

Source : The Business Times, October 4, 2007

Investors flock to Asia and developing countries in wake of Fed's recent rate cut

(LONDON) The bursting of US housing and mortgage market bubbles has suddenly been replaced by emerging markets inflating, and world equities have got pumped up into the bargain.

With the herd mentality of global investors ever sharper, the US Federal Reserve's decision two weeks ago to combat a US credit market seizure with lower interest rate has stampeded investors to Asia, Latin America and elsewhere in the developing world.

Investment flows to emerging equity funds hit an 85-week high of US$5.53 billion last week, with redemptions from developed market funds providing most of this cash, according to EPFR Global, which tracks funds with US$10 trillion in assets globally.

Non-Japan Asia received 53 per cent of the total.

And the price action echoes that. MSCI's index of emerging market equities has accelerated more than 13 per cent to record highs since the Fed cut on Sept 18 and has clocked up a whopping 36 per cent gain so far in 2007. China's main bourse has more than doubled this year.

Brazil is up some 60 per cent.

'I worry about emerging markets looking into next year. They are the next bubble in this environment - especially if the Fed decides to take back its insurance rate cut,' said Phil Suttle, director of Global Macroeconomic Analysis at the Washington-based Institute for International Finance.

Mr Suttle said the Fed ease replayed a now almost routine response to Western banking stress and looked set to perpetuate a cycle of market bubbles that moved from Asia in the mid-1990s to technology at the end of the decade and housing post-2001.

But emerging markets are particularly prone to bubble behaviour because they are small compared with the deep and mostly liquid equity and bond markets of the world's major economies.

Analysts at Merrill Lynch estimate that equity markets in Brazil, Russia, India and China represent only 4 per cent of world market capitalisation compared with 44 per cent for the US equity market alone.

'The short and intermediate risks to emerging market equity prices remain skewed to the upside and we continue to think that an asset bubble seems likely, led by BRIC markets,' Merrill told clients this week.

The fear is that when money starts to leak from developed to developing markets it supercharges already-elevated assets and stokes inflationary and systemic problems down the road.

'Global emerging markets are still small so asset managers' switch to emerging markets has a disproportionate impact,' said Richard Batty, investment director at Standard Life Investments.

'And there is still a lot of liquidity out there,' said Mr Batty, adding up to 65-70 per cent of leveraged corporate bond investor holdings are in cash right now and need to reinvest.

But the unleashing of a new wave of global liquidity comes just at a time when many policy-makers and central bankers are urging caution about inflation and commodity-price pressures.

Managing those pressures will now be trickier as money sloshes around the system and surfaces in unintended places.

Fundamental factors driving funds into emerging markets are well documented.

Economies there continue to boom. The International Monetary Fund (IMF) expects developing country growth, at 7.5 per cent this year, to be three times that of the developed world.

This boom, in turn, is fuelling world commodity prices and dropping massive windfalls in commodity-rich emerging nations.

But, perhaps most powerfully, the US dollar is falling sharply on the back of a US economy being weakened further by housing and credit problems. The Fed cut heaped on the pressure.

This dollar weakness has tempted more US funds offshore and flooded the coffers of emerging market central banks intent on preventing a greenback slide undermining their exports.

'Mutual funds are switching away from the US to emerging markets,' said Mr Batty, adding some of the US$700 billion of US equity which was dumped last year leaked straight to emerging markets.

But why in the face of recession fears and a falling currency has Wall Street too powered to a record high on Monday? Two big reasons are related to emerging markets too.

The first is that rising hard currency reserves in emerging markets - US$4.3 trillion at the IMF's last count - are partly being channelled into so-called sovereign wealth funds and are expected to be reinvested over time in world markets such as US and European equities among others.

Investment banks estimate the total size of these sovereign funds could climb as high as US$12 trillion by 2015.

And another reason for US and European equities being drawn into the slipstream is transnational firms there are increasingly dependant on earnings growth from overseas. -- Reuters

Horizon Towers Saga - Owners: Missing Pages Are A Minor Defect

Source : The Business Times, October 4, 2007

Judge Choo to deliver judgment on appeal next week

Yesterday's penultimate Horizon Towers appeal session was a decidedly tamer affair.

Horizon Towers: At the heart of the appeal in the case is whether the Strata Titles Board was right, in August, to throw out Horizon Towers' application because it was missing three signature pages of the collective sale agreement

Still, Senior Counsel K Shanmugam of Allen & Gledhill (A&G), acting for the Hotel Properties consortium, was not spared heckling by majority owners seated in the public gallery when he sought permission from the court to address submissions made by the minority owners the day before.

Senior Counsel Michael Hwang, representing one of the minorities, opposed the move vigorously, arguing that only the applicants for the appeal - that is the majority owners, represented by the sales committee and their lawyers, Tan Rajah & Cheah - be allowed to reply to earlier submissions.

Judge Choo Han Teck proposed a middle ground: he will accept a written reply from Mr Shanmugam, but not an oral rebuttal, after the session.

Overall, the session was relatively calm, with Senior Counsel Chelva Rajah of Tan Rajah & Cheah, representing the majority owners, replying to submissions made by the minorities.

Mr Rajah rebutted the minorities' claims that three missing pages could render an entire collective sale application null and void. At the heart of this appeal is whether the Strata Titles Board (STB) was right, in August, to throw out Horizon Towers' application because it was missing three signature pages.

'There has to be some proportion to this,' Mr Rajah exhorted. He said that if the missing pages were substantial, then he would agree that it could be considered invalid. But, in the case of Horizon Towers, the three signature pages of the collective sale agreement - appended to the application - were only accidentally left out.

'And it's not really three pages, because one of the pages was there - but it was a copy of the faxed version, rather than the original - so it's actually just two missing pages in question,' Mr Rajah added. 'Nothing can be more minor than this.'

He also cited the case of Dragon Court's en bloc sale in 2003. The case went to court on a similar issue of missing disclosure. In that case, it was not disclosed that some of the owners were linked to the buyer. But the High Court allowed that application to stand, because the non-disclosure was subsequently made to the STB during the hearing.

Leaning on that judgment, Mr Rajah pointed out that Horizon Towers' majority sellers had done the same - they had brought the missing pages to the attention of the STB during the August hearing.

He also argued against the minorities' claims that the board - which heard the Horizon Towers' application - had no power to amend the defective application. The minorities said the board was not properly constituted because the application, which leads to the constitution of the board, was defective.

But Mr Rajah said that regulations - and the Parliament's recent amendments to en bloc rules - clearly show that the board was properly constituted, upon receiving the application, and had the power to cure any defects.

He concluded by asking the court to consider the facts of this case and decide if an entire application could be rendered invalid because of two missing pages.

Justice Choo adjourned the hearing to next week, at a date to be set later, when he will deliver his judgment on the appeal.

Land Authority's Sales Soar To Nine-Year High

Source : The Straits Times, Oct 4, 2007

It chalks up sales revenue of $6.3b on the back of red-hot property market; rental income rises a third

THE booming property market sent sales revenue at the Singapore Land Authority (SLA) to a nine-year high of $6.3 billion.

Its bumper result was still well shy of the record return achieved in the 1997 financial year, when the red-hot market pushed sales revenue to $14 billion.

The SLA manages state properties and also sells them to private companies and other government agencies at market value.

Its annual report out yesterday showed that it sold $3.55 billion worth of land to the private sector in the 12 months ended March 31 - about 8 per cent higher than in the previous year.

Some of this land included plots in Lim Chu Kang, which the SLA specially designated for agricultural and entertainment use.

A further $2.75 billion came from land sold to other government agencies, such as the 21ha plot for the Marina Bay integrated resort. This was bought by the Singapore Tourism Board for $1.2 billion and later taken over by developer Las Vegas Sands.

Rental revenue grew 33 per cent to $514 million, bolstered by takings from the booming Tanglin Village food and beverage cluster and the lease of the former Pearl's Hill Primary School, which is being turned into a boutique hotel.

Tanglin Village, in the Dempsey Hill area, is a thriving development of upmarket restaurants, bars and other businesses that have sprouted on the refurbished former military buildings managed by the SLA.

The authority helped to make the cluster more appealing by adding entrance and building markers, as well as creating an outdoor space for events.

Another state property adapted for new purposes is the former Changi Hospital, which the SLA tendered for use as a spa and resort development. The 7,900 sq m property is undergoing a $20 million makeover.

The authority's recent business-friendly moves have been noticed by property consultants such as Mr Ku Swee Yong.

The director of marketing and business development at Savills Singapore suggested that the SLA could try extending the leases of its rental properties so that businesses would be more inclined to sink money into refurbishing state real estate.

Many of the SLA's properties are rented on three-year leases, which can be renewed up to nine years, but this may not be enough for a business to make a profit from its investment, said Mr Ku.

The SLA's operating surplus grew by 35 per cent to $17.1 million.

Meanwhile, another state agency, the Urban Redevelopment Authority (URA), collected $2.7 billion from land sales in the financial year ended March 31.

Although the URA sold 16 sites in that period, compared with nine the year before, sales revenue dropped by 5 per cent because last year's takings were bolstered by high-value sites such as the business and financial centre in Marina Bay and the commercial plot at Orchard Turn.

The URA's operating surplus more than tripled to $14.8 million, helped by higher agency fees from selling sites and income from processing more applications for development.

Sales Of State Land Fetch $6.3b For Year To March

Source : The Business Times, October 4, 2007

Bulk of bumper takings comes from sales to private sector for $3.55b

THE government collected $6.3 billion selling state land during the year ended March 31, up from $5.5 billion in the preceding year - but still shy of the record $14 billion for the year ended March 31, 1998.

SLA reported 39% increase in net surplus to $13.67m, on the back of a 9.7% improvement in total income to $88.6m

The bulk of the latest year's bumper takings came from selling land to the private sector for a total of $3.55 billion, up from the previous year's $3.3 billion, according to the Singapore Land Authority's latest annual report.

The SLA also sold $2.75 billion of land to statutory boards such as Singapore Tourism Board, Sentosa Development Corporation and JTC Corp under public sector sales in the latest year, higher than the previous year's $2.2 billion.

Rental collections for state land and properties (including Temporary Occupation Licence fees) amounted to $514.3 million for the year ended March 31, 2007, up from $387.3 million in the preceding year.

The SLA reported a 39 per cent increase in net surplus to $13.67 million, on the back of a 9.7 per cent improvement in total income to $88.6 million. Operating income from land sales agency fees as well as title registration and related fees went up 10 per cent.

To meet competing demands for space for office, business, educational and commercial uses during the past year, the SLA stepped up to meet increased demand for state properties. In January to September, 13 state properties were turned into dedicated office space to help ease the supply crunch in this market.

The occupancy rate of state properties managed by SLA rose to 86 per cent in the latest year, up from 82 per cent in the preceding year, while the utilisation rate of state land managed by the SLA rose to 77.8 per cent from 76 per cent previously.

As custodian of state land and properties, the SLA manages about 14,000 hectares of state land and about 5,000 state buildings that have been put to use as offices, education centres, restaurants, recreational, retail and hospitality space. Its stock of buildings includes about 700 colonial 'black and white' residential bungalows.

New En Bloc Rules Kick In Today

Source : The Straits Times, Oct 4, 2007

Changes meant to make sale process more regulated and transparent

NEW collective sale regulations will kick in today - a few weeks earlier than many in the industry had expected.

The rules, which were passed in Parliament two weeks ago, were expected to take effect this month, but a date had not been specified.

The much-anticipated announcement, which came yesterday, took some en bloc players by surprise.

'We thought it was going to be later, and expected the Government to give more lead notice as well,' said Mr Jeremy Lake, executive director of investment properties at property firm CB Richard Ellis (CBRE).

He added that 'initial indications were that they were likely to kick in only at the end of the month'.

The changes are aimed at making the sale process more regulated and transparent.

They require more conditions to be fulfilled, such as adhering to stricter requirements on setting up a sales committee and providing a five-day cooling-off period for owners to change their minds after signing the collective sale agreement.

The changes will apply to all developments that, as of today, have not obtained consent from enough owners to go en bloc - 80 per cent of owners by share value, or 90 per cent for estates less than 10 years old.

It will be back to the drawing board for the owners of these developments, who will have to start the collective sale process all over again and do so by the new rules.

Most property firms said they each had 'two or three' en-bloc estates that will be affected by today's changes.

But CBRE's Mr Lake expressed relief that there was clarity on when the rules would finally kick in.

Indeed, for the last few weeks, a few projects had been suspended because no one knew when the changes would take effect, said Mr Tan Hong Boon, executive director of Credo Real Estate.

'Most lawyers were also not prepared to quote their fees for new en-bloc projects because they didn't know how much more work they would have to do under the new rules,' added Mr Tan.

Some consultants scrambled last night to get the last one or two signatures.

Mr Steven Ming, director of investment sales at Savills Singapore, said he had expected to have 'one or two more weeks to get the last few signatures'.

'I guess I will have to work overnight,' he joked.

Other consultants, such as Jones Lang LaSalle's head of investments, Mr Lui Seng Fatt, said they have been advising would-be en-bloc sellers to follow the new rules since last month.

'Fortunately, none will have to start all over again,' he said.

CAUGHT BY SURPRISE

'We thought it was going to be later and expected the Government to give more lead notice as well.'

MR JEREMY LAKE, executive director of investment properties at property firm CB Richard Ellis, on the announcement that new collective sale regulations will take effect from today

Hostile End To Horizon Towers Hearing

Source : The Straits Times, Oct 4, 2007

TENSIONS ran high at the already prickly Horizon Towers hearing yesterday, as lawyers fought over who would have the last word.

The heated exchanges lasted less than an hour but they were more hostile than any of the previous day-long sessions since last Friday.

They brought to a close the appeal over the estate's bungled collective sale - an appeal peppered by barbed comments between highly paid lawyers and regular jeers and boos from the public gallery.

The only lawyer scheduled to speak yesterday was Senior Counsel Chelva Rajah of Tan, Rajah and Cheah. He represents the condominium's majority owners, who have asked the High Court to overturn the Strata Titles Board's (STB's) dismissal of their collective sale application in August.

Mr Rajah was to reply to arguments made by the minority owners' lawyers on Tuesday. The minority owners want the STB decision upheld.

But even before he could speak, Senior Counsel K.Shanmugam - representing the Horizon Towers buyers - attempted to have the final say. He asked Justice Choo Han Teck for '10 to 15 minutes' after Mr Rajah's speech to address some of the 'new' points raised on Tuesday.

Barely had Mr Shanmugam finished his request when Senior Counsel Michael Hwang and Senior Counsel K.S. Rajah, who each represent a different group of minority owners, were on their feet to object.

Although Justice Choo stayed the conflict by asking Mr Chelva Rajah to proceed with his remarks, Mr Shanmugam rose again once Mr Rajah was finished.

His plea to be allowed a response was interrupted by Mr Hwang, who said it would be 'unfair' to allow Mr Shanmugam 'a second bite of the cherry when he should have said all this in the first place'.

Justice Choo proposed two peace options: either Mr Shanmugam got five minutes to speak, or all the lawyers were to read his new points and respond in writing within the day.

Mr Hwang opted for the second option almost at the same time that Mr Shanmugam chose the first. It all looked quite comic to the tittering public gallery but the tension in the courtroom remained high, prompting Justice Choo to close the session without allowing Mr Shanmugam's speech.

In the end, only Mr Rajah had a say yesterday. He noted that Parliament will soon formally give the STB powers to ignore technical flaws - such as the three missing pages in Horizon Towers' collective sale application - showing that the STB was always intended to have these powers.

Is The Sub-Prime Crisis Really Behind Us?

Source : The Business Times, October 4, 2007

THE fact that the world - its richer countries at least - has been living through a bubble economy period financed by junk (sub-prime) mortgages and funny money (carry trade) borrowing should be obvious enough to anyone observing events over the past few weeks.

But anyone who doubts it need only consider the startling fact that the number of millionaire families in the world grew by no less than 14 per cent to 9.6 million in the space of last year alone. These super-rich individuals now control one third of the estimated US$100 trillion in global financial wealth, according to the Boston Consulting Group in a new study on the subject this week. This is obviously a massive indictment of the failure to distribute wealth more evenly. But the way in which the stunning jump in the number of millionaire families came about is also something that should set alarm bells ringing.

Most of the new wealth came about through increases in the value of stocks, bonds and other financial instruments as global stock markets rose in value on average by 20 per cent, with the strongest wealth gains accruing in America where the equity cult is most entrenched. Not only the super-rich but also the merely 'better off' had a ball in 2006, as total assets held by households with US$100,000 or more leapt from US$51 trillion to near US$85 trillion.

If all this isn't evidence of a bubble, then it is hard to know just what is. But what goes up must come down, and bubbles burst as surely as they form. Or have we discovered some new form of gravity-defying wealth creation mechanism now - an infinitely inflatable bubble?

Looking at the behaviour of markets this week, it appears that the more credulous among investors are being lulled into believing that we have. In this promised land of milk and honey there is no such thing as a financial burst or bust. Descending bubbles simply float down to earth, bounce lightly off the ground and soar skywards again like hot-air balloons being given a fresh charge from the gas jet. Only in this case, the hot air is replaced by financial liquidity supplied in abundant quantity by kindly central bankers who never want to see a hard landing.

Markets are climbing again, as though the sub- prime mortgage market crisis and all its attendant horrors - in the shape of seized- up money markets, runs on banks or other financial institutions, massive mark-downs of un-tradeable financial assets and balance sheet damage all round - had suddenly become a thing of the past. Central banks have taken care of things by covering the ugly debris in a sea of fresh liquidity. Time to party again.

Amidst this new euphoria, an odd and rather worrying thing happened the other day when no fewer that three Japanese government ministers all warned at the same time that fallout from the sub-prime mortgage market debacle might not be over yet. It was not so much what they said as the fact that they said it. Such people usually see it as their job to utter bland, confidence-boosting statements, so when they do say what others of a sane turn of mind already suspect, something clearly is afoot.

It seems likely that the trio - Finance Minister Fukushiro Nukaga, Financial Services Minister Yoshimi Watanabe and Economics Minister Hiroko Ota - were flagging concerns that there may be more nasties yet to come for Japanese banks and other financial institutions, in the shape of write-downs from the sub-prime fiasco.

If there is one thing more risky, or plain daft, for investors to do than to pile back into equities as if there were no yesterday and no tomorrow, it is to build fresh speculative positions by shorting the yen against other currencies (the carry trades). The yen has nowhere to go but up in the medium term, while the US dollar is already on the skids and the Australian and New Zealand dollars favoured by carry trade enthusiasts will slide again against the yen.

Meanwhile, back in the never-never land of sub-prime mortgages, things are not looking good. Sales of second-hand homes dropped by a surprisingly large (to some) 6.5 per cent in August. Morgan Stanley has announced that it will cut 600 jobs in its residential mortgage division, a quarter of the workforce. Anyone who thinks that is a detail should note that two million of the seven million new US jobs created in recent years were connected with real estate.

As the housing sector turns down, along with consumption-financing equity withdrawal by US home owners, the danger of a US recession will grow and with it a slowdown in the world economy and in global capital flows. Irrational exuberance will evaporate in stock markets around the world and liquidity will drain away like so much milk and honey. The only consolation is that a lot of those new paper millionaires will find themselves joining the world or ordinary mortals once more at the new dawn of reality.