Tuesday, October 23, 2007

Credit Crunch Puts Global Growth At Risk: IMF Chief

Source : The Business Times, October 23, 2007

Champions of super fund to rescue mortgage market seen losing case

(WASHINGTON/ZURICH) World credit markets 'have lived through an earthquake' and the question is now whether the global economy has reached a turning point after five years of strong growth, the head of the International Monetary Fund said yesterday.

Mr Rato: 'We expect a slowdown in growth but not a recession in the US, and a smaller slowdown in other advanced countries'

Addressing the IMF's 185 member countries, IMF managing director Rodrigo Rato warned of aftershocks in markets, saying the full effects of the credit crunch, which began in the US sub-prime mortgage market, were still not fully understood.

'We already know that we should not try to regulate crises out of existence: that would be like trying to ban earthquakes,' he said. 'But the weaknesses in our infrastructure that have been exposed need to be addressed.' Mr Rato added: 'The question is now whether the global economy is at an inflection point.'

The outgoing IMF chief noted that in developed countries, corporate balance sheets were strong and labour markets generally healthy.

'For these reasons, we expect a slowdown in growth but not a recession in the United States, and a smaller slowdown in other advanced countries,' Mr Rato said, adding that emerging economies had become a source of stability in the global economy.

Mr Rato said risks to global growth were higher than just six months ago and the market turmoil was a warning that good times may not last forever.

Further disruption in financial markets and falls in housing prices could lead to a steeper global downturn, he warned.

So far, movements in exchange rates have been orderly and in line with fundamentals, Mr Rato said, further warning that if the dollar should abruptly fall, it could provoke a loss of confidence in dollar assets.

There was also a risk that the rise of other currencies, such as the euro, could hurt those regions' growth prospects, he added.

Furthermore, there was a risk that emerging economies that have relied on external financing to fund large current account deficits could be tipped into crisis by a combination of reduced demand for their exports and tighter financial market conditions.

Meanwhile, whether a US$75 billion fund to rescue the battered mortgage-backed securities market takes off or not, its sponsor US Treasury Secretary Henry Paulson seems to be losing the argument over its merits, strategists and economists said.

The fund, announced recently by Citigroup, Bank of America and JP Morgan with Mr Paulson's support, aims to prevent structured investment vehicles (SIVs) from making panic sales of bonds linked to US sub-prime mortgages.

Many of the SIVs - off-balance sheet vehicles holding some US$370 billion in assets that rely on short-term financing to make a return - are struggling to stay afloat as investors shy away from buying their commercial paper.

The plan has faced a rising tide of criticism, not least from former Federal Reserve chairman Alan Greenspan, who said last Friday the super fund may do more harm than good.

Financial strategists contacted by Reuters said time is running out for the plan's champions to regain the initiative and the fund risks being still-born.

'I think they are losing the intellectual argument,' Ian Harnett, a director at financial consultancy Absolute Strategy in London said yesterday.

The fund was nevertheless more likely than not to go ahead because of the potential embarrassment for the three US banks and for Mr Paulson himself if the idea is scrapped, said Mr Harnett.

'I would still put it at 70 to 30 that it does happen because of the reputational risk,' he said.

A global credit crunch, originating from huge losses in US sub-prime mortgage lending, has put acute pressure on SIVs, as demand dried up among investors for the short-term paper SIVs issue to fund investments in high-yielding asset-backed securities with longer maturities.

A fire-sale of assets by the SIVs, set up mainly by banks, would force banks into a fresh round of writedowns of securities held on their balance sheets and result in them granting fewer of the loans that are the life-blood of the global economy. -- Reuters

Developing Markets Little Hit By Turmoil: World Bank

Source : The Business Times,October 23, 2007

Central bankers see need for multilateral talks to strengthen risk management

(WASHINGTON) The impact of recent turbulence in financial markets on developing countries has been limited, and global economic growth remains strong, the World Bank said on Sunday.

Conferring: Mr Zoellick (left) with Mr Paulson at the World Bank's policy-setting Development Committee meeting on Sunday. Mr Zoellick, the bank's new president, faces a stiff challenge as he develops a new strategy

Finance ministers and central bankers agreed at weekend meetings that while the global economy was on the mend after recent turbulence, they will need to pay close attention to prevent future crises from erupting.

They also said the turmoil demonstrated how interconnected economies across the world are and the need for multilateral discussions to strengthen risk management.

'The consensus was that markets are better than in August,' US Treasury Secretary Henry Paulson told reporters. 'It has been slowly improving, but it is going to take awhile.'

The World Bank called on donor governments to meet their commitments to boost aid for development and said countries with fast-growing economies and mounting currency reserves could bring new resources to the effort.

In a statement, the bank's policy-setting Development Committee said its members agreed that more support for the inclusion and empowerment of the poorest countries, especially in sub-Saharan Africa, and more engagement in conflict-afflicted countries are key.

The bank also should help developing countries deal with the causes and impacts of climate change, it said.

The committee session followed a meeting of the bank's sister institution, the International Monetary Fund. In a lecture sponsored by the IMF, former US Federal Reserve chairman Alan Greenspan warned that rising protectionism could undermine the ability of the US to deal with large deficits.

'If the pernicious drift toward fiscal instability in the United States and elsewhere is not arrested and is compounded by a protectionist reversal of globalisation, the current account deficit adjustment process could be quite painful for the United States and our trading partners,' he said.

Committee members welcomed the commitment by the bank's new president, Robert Zoellick, to develop a new strategy for the bank. Mr Zoellick, who took over on July 1, has called on the developed countries to 'translate their words from summit declarations into serious numbers' and contribute to the bank branch that makes low-interest loans to poor countries. He hopes to raise US$33 billion by early 2008.

He said South Africa had already set a good standard by pledging a 30 per cent boost in its contribution to the loan facility.

At a news conference, Mr Zoellick and the head of the IMF, Rodrigo de Rato, said they were exploring ways the fund could work on reducing debt for Liberia. 'This is a country that is helping itself and deserves to be helped by the international community,' Mr de Rato said.

In February, the US forgave US$358 million that West African country emerging from civil war owed it and pushed for further action at the IMF-World Bank meetings.

Liberia's inherited debt to international institutions totals US$1.6 billion, including US$740 million to the IMF. Its total international debt is US$3.7 billion.

Mr Zoellick's strategy faces a stiff challenge because in recent years, wealthier countries have preferred to channel their aid to poor countries directly through their development agencies or through foundations that specialise on issues such as malaria.

South African Finance Minister Trevor Manuel welcomed Mr Zoellick's emphasis on helping to overcome poverty and promote sustainable growth in poor countries, particularly those in sub-Saharan Africa.

The strategy would have the bank fight poverty, especially in Africa, help countries emerging from wars and promote regional cooperation to combat disease and climate change.

Based in Washington, the 185-nation World Bank lends US$24 billion a year for projects in the developing world such as building roads, schools and health clinics. But its role as a lender has been declining as middle-income countries have access to financing from other sources. -- AP

Asian Markets Tumble Over Rising US Gloom

Source : The Business Times, October 23, 2007

Sub-prime shadow still lurks but analysts expect Fed to cushion impact

Wall Street's resurgent fears over its sub-prime crisis and the likely impact on the US economy and corporate earnings reverberated around Asian stock markets yesterday, bringing the sellers out en masse.

Led by a 1,091-point or 3.7 per cent plunge in Hong Kong's Hang Seng Index, all major indices closed sharply lower, with the local Straits Times Index suffering a 105.34 or 2.8 per cent drop to a four-week low of 3,642.64.

All sectors were hit, led by the banks, SingTel and property stocks. The Singapore Exchange's shares, which had been largely instrumental in propelling the index to fresh all-time highs earlier this month, collapsed 70 cents or 4.7 per cent to $14.20.

Elsewhere in region, trading screens were also awash in red - the Philippine Composite closed 4 per cent down, the Jakarta Composite lost 4.3 per cent and Japan's Nikkei was 2.3 per cent weaker.

US stocks last Friday closed sharply lower following below-par earnings reports and/or lowered forecasts released by big names such as Caterpillar and 3M that cast doubt on the strength of the economy. Analysts also said the market has likely underestimated the impact of the sub-prime mortgage crisis on growth and earnings. During Asian trading hours the December futures contract on the Dow Jones Industrial Average traded at an 80-point loss, suggesting the US market would open Monday trading sharply weaker.

Most analysts, however, do not expect a repeat of Oct 19, 1987 when stocks crashed by 22 per cent in one day.

In US newspaper Barron's Oct 15 issue, US strategists gave several reasons for this, among them that the US Federal Reserve has repeatedly signalled a willingness to cut interest rates at the first sign of trouble, there is plenty of liquidity support and, unlike 20 years ago, China and India have emerged as world economic powerhouses.

However, analysts have pointed to a few potential sources of trouble that could continue to destabilise markets - record high oil prices, a collapsing US dollar and an overheating China stock market.

On the subject of oil prices, research outfit Ideaglobal said it does not expect this to inhibit the US Federal Reserve from cutting interest rates. 'We are expecting the Fed to cut by another 25 basis points on Oct 31,' said Ideaglobal. It expects the European Central Bank to keep rates on hold, 'before possibly cutting in the middle of next year'.

On the subject of US earnings, Reuters news agency yesterday said S&P 500 companies' third quarter growth number fell to 1.8 per cent on weaker-than-expected earnings reports.

'The pre-announcement activity for all publicly-traded US companies remains negative for Oct 2007 month-to-date. These companies have reported 144 positive forward-looking guidance statements and 226 negative outlooks,' said Reuters.

Yesterday, the Dow was down 45.11 points, at 13,476.91 in late morning trade. The Standard & Poor's 500 Index was down 2.85 points, at 1,497.78. The Nasdaq Composite Index was up 10.80 points, at 2,735.96.

Since reaching an all-time closing high of 3,875 on Oct 11, the ST Index has now fallen 233 points or 6 per cent in less than two weeks. Of this 167 points have come over the past two trading sessions. The Hang Seng, in the meantime, has lost 1,167 points or 4 per cent from its own record of 29,540.

Ascendas Reit Rises On Broker Upgrades

Source : The Business Times, October 23, 2007

Shares of Ascendas Real Estate Investment Trust (A-Reit) rose as much as 5.1 per cent to $2.48 (US$1.69) with over TWO million shares traded after two foreign brokers upgraded its target price on strong second quarter results.

UBS raised the 12 month price target for A-Reit to $3.31 from $3.18 and maintained a 'buy' rating on the stock.

UBS said in a client note that A-Reit's current development projects are expected to yield between 7 and 8.5 per cent on completion within the next three years.

On Monday, Macquarie Research also raised its rating for A-Reit to 'outperform' from 'neutral' and increased the property trust's target price to $3.17 from $2.84.

Macquarie also said it expects A-Reit's distribution per unit to grow 12 per cent this year.

A-Reit reported on Friday a 15 per cent increase in revenue for the second quarter ending Sept 30 over the same period last year. The firm will pay out a distribution per unit of 3.51 Singapore cents on Nov 29. -- REUTERS

CapitaCommercial's Q3 income up 52% to $29.6m

Source : The Business Times, October 23, 2007

Property trust CapitaCommercial Trust said on Tuesday its quarterly distributable income rose 52.4 per cent due to higher returns from its office properties portfolio.

The trust, Singapore's second-biggest property trust by market value, said it earned net distributable income of $29.6 million (US$20 million) for the three months ended September, higher than the $19.4 million it had earned in the year-ago period.

CapitaCommercial Trust, controlled by developer CapitaLand, will pay unitholders 2.14 Singapore cents per unit for the quarter. -- REUTERS

Related Link -
CCT's news release

Financial statement

Presentation slides

S'pore Economy More Diversified Than Decade Ago: Official

Source : The Business Times, October 23, 2007

Singapore's economy, the most advanced in Southeast Asia, has become more diversified over the past decade as growth of the biomedical and chemical industries cut dependence on electronics, a trade official said on Tuesday.

Minister of State for Trade and Industry, Lee Yi Shyan, said that as the republic's economic base diversifies, growth will become more stable and sustained.

Tourism, financial, business and transport services have become strong growth engines, while new industries such as energy, environment and water technologies and digital media are emerging, Mr Lee said in parliament.

Singapore's economy grew 9.4 per cent in the third quarter to September, faster than the 8.7 per cent expansion in the second quarter.

Mr Lee allayed concerns raised by a fellow member of parliament that the strong third quarter expansion may not be sustainable because it relied much on the performance of the construction industry.

'On the contrary, economic performance has been broad-based, with healthy growth by all major sectors,' he said.

'Singapore's economy is more diversified than it was 10 years ago. The growth of the biomedicals and chemicals industries has helped to reduce our dependence on electronics,' he said.

Singapore is a major base for the manufacture of active pharmaceutical ingredients used in a wide array of medicines worldwide.

The government says Singapore is on track to meet its full-year target of 7.0-8.0 per cent growth, but some economists project 2007 growth could be even better.

The economy expanded 7.9 per cent last year, one of the fastest growth rates in Asia. -- AFP

Keppel Land Says Q3 Net Profit Doubles to $82m

Source : The Business Times, October 23, 2007

Keppel Land, Singapore's third-largest property developer by market value, said on Tuesday its third-quarter net profit more than doubled on strong luxury home sales and higher office rents.

The firm, partly owned by conglomerate Keppel Corp, said it earned a net profit of $81.8 million (US$55.8 million) in the July-to-September quarter this year, up from $38.5 million in the same period last year.

Like rival developers CapitaLand and City Developments , Keppel Land has benefited from Singapore's resurgent property market, which has seen luxury apartments sold at record prices.

Keppel Land controls K-Reit Asia, a property trust based on Singapore office buildings. -- REUTERS

Related Link -
Keppel Land's press release

Financial statement

Presentation slides

URA To Launch The Tender For The Reserve Site At Jalan Sultan In Two Weeks' Time

Source : Urban Redevelopment Authority (URA) News Release, 23 October 2007

The Urban Redevelopment Authority (URA) announced today that it has accepted an application from a developer to put up the commercial site at Jalan Sultan for public tender.

The Land Parcel at Jalan Sultan was made available for sale through the reserve list system on 25 September 2007 (http://www.ura.gov.sg/pr/text/2007/pr07-101.html). Under the government's reserve list system, the government will put up a reserve site for public tender if it receives an application from a developer who commits, by signing an agreement and paying a deposit of 5% of the bid price, to bid for the site at or above a minimum price which is acceptable to the government.

URA has received an application from a developer who has committed to bid for the Jalan Sultan site at a price of not less than $7.8 million for the site. In accordance with the procedures of the reserve list system, URA is making public this minimum price. However, the identity of the applicant will not be released.

URA will launch the public tender for the site at Jalan Sultan in about two weeks’ time. The launch date will be announced later and a tender period of about 12 weeks will be allowed for this site.

Sale site at Jalan Sultan

The sale site at Jalan Sultan has a site area of 0.14 ha and consists of 17 units of existing two-storey conservation buildings to be restored. The successful tenderer is required to restore and reconstruct these conservation shophouses in accordance with the Tender Conditions and Conservation Guidelines for Historic District. The sale of the Land Parcel will facilitate the early restoration of the conserved shophouses in the area and add vibrancy to Kampong Glam Historic District. As the 17 units of shophouses are sold as a single Land Parcel, it is very suitable for any investor who wants to develop the shophouses for hotel or office use.

The details of the site are at Annex A-1 and the location plan at Annex A-2. More details of the site are available on URA website at http://www.ura.gov.sg/sales/KgGlamSep07/KgGlamSep07-main.html.

Details of the launch of the tender will be announced later.


For media enquiries, please contact:

Ms Serene Tng
Manager, Public Relations
DID: 6329 3224

Lippo-Mapletree Indonesia Trust Plans IPO Here

Source : TODAY, Tuesday, October 23, 2007

Lippo-Mapletree Indonesia Retail Trust, controlled by Indonesia’s Lippo Group, plans to raise up to US$390 million ($572 million) in an initial share offering in Singapore.

Shares will be sold at between 78 and 91 cents each, according to BNP Paribas, joint arranger of the sale.

The trust, which offers a yield of between 6.4 and 7.5 per cent, is expected to start trading in Singapore on Nov 21.

Lippo Karawaci, Indonesia’s biggest publicly-traded real estate developer by assets, will hold 27 per cent of the trust after the share sale, while Singapore’s Mapletree Investments will own 12 per cent.

Asian Markets Jittery

Source : TODAY, Tuesday, October 23, 2007

RENEWED worries about the health of the global economy sent shudders through the region’s markets yesterday, with stock markets from Hong Kong to Japan closing 1 per cent to 4 per cent lower.

Although the markets were mostly off intraday lows, analysts expect volatility to continue to mark trading in the near term.

On Friday, United States shares sold off sharply after industrial equipment maker Caterpillar warned that the US economy would be “near to, or even in, recession”
next year.

Over the weekend, the Group of Seven richest nations added to the bleak mood when it enforced the International Monetary Fund’s cut in Japanese growth forecasts, reinforcing expectations that Japanese growth was likely to slow further.

In Singapore, the Straits Times Index (STI) shed 2.81 per cent to close at 3,642.6. volume of 2.53 billion shares traded, worth $2.61 billion, compared with 2.1 billion shares worth $2.31 billion on Friday. Losers overwhelmed gainers 795 to 173.

Among losers were banks. United Overseas Bank and DBS Group Holdings shed 80 cents and 70 cents to $21.30 and $20.70 respectively. Oversea-Chinese Banking Corp lost 1.7 per cent to $8.85.

Uni-Asia Finance Corp dropped nearly 21 per cent to $1.26 after the Singapore Exchange said it was investigating allegations of manipulation of the shares. On Friday, 33 retail investors demanded an explanation from some brokerages which had imposed trading curbs on the stock, triggering price falls and margin calls on investments.

Said Mr Najeeb Jarhom, senior vicepresident of AmFraser Securities: “We have re-entered the stage of instability which we went through in August, but it’s unlikely
that we’ll see the same scale of fall. That time, the index lost about 20 per cent from 3,688 to 2,962. Strong support should be between 3,500 and 3,600. The old high of 3,688 should be the new, minor resistance.”

With the US dollar at record lows against the euro and crude oil prices heading towards the US$100-a-barrel level, “there will be many anxious people debating whether another buying opportunity has presented itself this week or should they cash in their chips because global economic health is finally being threatened by the sharply higher oil prices — crude oil prices are now finally at levels where in
real-term (adjusted for inflation) they induced the previous global recession”, said
CIMB-GK Research.

For the year to date, the STI is still up some 26 per cent, CIMB noted.

Frasers Centrepoint First Year’s Earnings Beat Forecasts

Source : TODAY, Tuesday, October 23, 2007

FRASERS Centrepoint Trust’s (FCT) distributable income for the fourth quarter ended Sept 30 was $10.3 million, or 1.67 cents per unit. This was 13.6-per-cent higher than its 1.47-cent forecast, due to strong rental reversion, with new leases and renewals recording a 12-per-cent rise.

The real estate investment trust, which listed on the Singapore Exchange in July last year, has a distribution per unit (DPU) of 6.55 cents for the full financial year, up 12 per cent from the 5.85-cent forecast.

“This demonstrates the trend for strong and sustainable rents for FCT’s malls, and our asset enhancement initiatives will benefit tenants and pave the way for further rental growth,” said FCT asset management chief executive officer Christopher Tang.

“We are firing well on all cylinders.”

The trust, which owns Causeway Point, Northpoint and Anchorpoint, is lining up a list of malls to add to its assets, and is also planning overseas expansion.

Gross revenue for the year was $77.5 million, or 2.7-per-cent higher than forecast revenue of $75.4million.

FCT units closed unchanged at $1.50 yesterday.

Unknown Buyers Snap Up Units For $1.1m - Why Pay Premium For Old Apartments?

Source : The New Paper, October 23, 2007

THE building is over 40 years old, the paint is peeling and it does not have a swimming pool or other facilities.

- Picture: KENNETH KOH

But why are apartments there being snapped up at above-premium prices?

Who are the buyers?

That is the intriguing mystery surrounding freehold Tong Chuan Mansion, a private apartment building along Joo Chiat Road, next to Katong Mall.

Construction company and developer Tiong Aik Group initially wanted to buy it enbloc because it is bang in the middle of three other plots bought by the developer recently.

But the en-bloc attempt in June failed because it fell short of the 80 per cent majority consent required. 79 per cent voted in favour.

Failure to acquire the building means the developer's parcel is cut in two which would only allow it to build two small separate buildings instead of one big block.

The four plots, all freehold, have a combined area of about 100,000 sq ft - about the size of two-and-a-half football fields.

There are plans to build up to 19 storeys in one of the plots there.

In recent weeks, a mysterious group of buyers has entered the fray by snapping up units in Tong Chuan mansion.

At least 15 units have been snapped up for about $1.1 million each as of last week, according to residents we spoke to.

There are a total of 24 units there.

A total of 20 units (five more than the 15already bought by the mystery buyers) is needed to secure the 80 per cent majority consent to push for an en-bloc sale.

Property agents estimate that current price for an old walkup apartment in that area is about $600,000.

So, who is paying a premium for these old flats? And why, if not for the en-bloc potential?


Some residents are unhappy with what seemed like a group of buyers trying to muscle in on them.

One resident, who only wanted to be known as Madam Lee, asked: 'What are they (the buyers) trying to do by buying up the units here? If the residents don't want to sell, they should get the message.'

Her family has been living there for the last 30 years.

The residents claimed they did not vote for the en bloc because of sentimental reasons.

Another resident, retiree K P Ang, 74, also turned down the initial en-bloc estimate.

He said: 'My family has lived here for the last 40 years. We're close to Parkway Parade, the beach and the coffee shops.'

His main worry is finding another unit in that area given the soaring property prices. His apartment measures about 1,200 sq ft.

Residents who have sold their units recently, like businessman Lee Chiang Poh, are puzzled by the latest interest.

Mr Lee, who is in his 60s, sold his two units there for $1.1 million each earlier this month. The initial en-bloc offer was $1.25 million.

He was also the chairman of the sales committee who had pushed unsuccessfully for the en-bloc sale in June.

He said in Mandarin: 'I'm very curious to find out who is trying to buy up all the units. The agent won't tell me and the lawyers won't tell me either. It's all very secretive.

'Even the name on the cheque given to me was not a company name, just an individual's name.'

Mr Lee, who has lived there for over 30years, said he cannot remember the name on the cheque.

Residents are speculating that Tiong Aik is buying up the units because of their vested interest there.

But those who sold their units recently said the names on cheques issued to them had the names of individuals, not the company.


A Tiong Aik director, Mr Neo Tiam Boon, said neither the company, nor related parties is buying units there.

He would only confirm that they were keen to buy the place en bloc in June but failed to do so. He declined further comment.

But one seller we spoke to showed us a cheque which had the name Neo Tiam Boon on it.

We could not confirm if it belonged to the same director we spoke to.

Property agent Ms Katherine Woo, who said she is acting on behalf of a group buying up units at Tong Chuan, would not say if it was a Tiong Aik-related group buying up the units.

Ms Woo said she brokered the other property transactions for Tiong Aik in that area.

Tong Chuan is sandwiched between Sea Breeze Apartment and Chin Bee Mansion. An old 10,000 sq ft bungalow stands next to Chin Bee Mansion.

Sea Breeze was sold for about $54 million to Grovehill, whose directors are linked to the Tiong Aik Group, reported The Business Times in January this year.

The 56 owners there received just under a million for each unit.

Chin Bee Mansion, which has 18 units, was sold for around $18 million last month to a Tiong Aik-related company, Ms Woo said. Each unit was sold for about $1 million.

She also said the bungalow was sold for $11.8 million to the same company.

Wall Street's Plunge Spooks Asian Markets

Source : The Straits Times, Oct 23, 2007

ASIAN stock markets tumbled yesterday in response to a plunge on Wall Street last Friday over fresh United States recession fears.

Bourses from Hong Kong to Australia to Singapore were battered as fund managers sold their holdings to cover US losses.

Likewise, retail investors also headed for the exit in anticipation of a correction.

Last Friday, the Dow Jones Industrial Average plunged 367 points, or 2.6 per cent, as record high oil prices, banking woes and slower corporate earnings revived fears of a US recession.

It was no different when Wall Street opened for trading yesterday. The Dow, which fell by more than 100 points in early trading, slid 12.92 points, or 0.10 per cent, to 13,509.10 at press time.

When Asian markets opened yesterday, they quickly went into a tailspin.

At home, the Straits Times Index (STI) sank by 105.34 points, or 2.81 per cent, to close at 3,642.64.

Japan's Nikkei dropped 2.24 per cent, China's Shanghai Composite dived 2.59 per cent, while South Korea's Kospi slumped 3.36 per cent.

Said CIMB-GK research head Song Seng Wun: 'Regional markets felt the jitters from last Friday, and the selldown level was within expectations.

'But there's still quite a lot of liquidity floating around, and investors may be looking to pick up stocks on the bargain. We could be in for a rollercoaster ride this week - down, then up.'

The selldown was most severe in Hong Kong, which reopened yesterday after a holiday last Friday.

The Hang Seng Index plunged a whopping 1,091.42 points, or 3.7 per cent, to close at 28,373.63 points. That was its biggest single-day drop in points in more than seven years.

Analysts said the Hong Kong market was ripe for a correction after its recent bull run.

Even before Wall Street's nosedive, the writing was on the wall for Hong Kong stocks last week. US investment bank Morgan Stanley warned of a 30 per cent correction in the next three months as stock valuations had become 'untenable'.

Said a local dealer: 'We simply mirrored Hong Kong's dive. Despite the general selldown, we also saw several attempts by investors to buy in throughout the day.'

Spooked by Wall Street's plunge, the STI lost over 100 points in the first hour, before rebounding to the 3,667.66 mark at mid-day. But the selldown resumed post-lunch when European markets opened, sending the index down to its close of 3,642.64 points.

It was a sea of red among local blue chips with only two of the STI's 48 constituent stocks in positive territory.

While market experts warn of bumpy rides till the end of the month, they do not expect a repeat of the 20 per cent dive triggered by the US mortgage crisis in August.

Said AmFraser Securities senior vice-president of research Najeeb Jarhom: 'We're looking at another period of uncertainty, which will be less severe than the August correction.'


SLA Sells Rosewood @ Woodlands On Confirmed List

Source : Singapore Land Authority (SLA) Press Releases, 23 October 2007

The Singapore Land Authority (SLA), has launched for sale today, a parcel of land for a residential development at Woodlands Avenue 2/Rosewood Drive. "Rosewood at Woodlands: Where the Good Life Blooms", has a land area of 16,000 sq m or 172,223 square feet with a gross plot ratio of 1.4. The successful tenderer can potentially build a condominium of up to five storeys with a Gross Floor Area (GFA) of 22,400 sqm or 241,112 square feet.

Rosewood at Woodlands is easily accessible from the Seletar Expressway and close to the Woodlands MRT station and bus interchange. The site is also close to social amenities such as the Woodlands Regional Library, Woodlands Sports Hall, Woodlands Swimming Complex, Woodlands Civic Centre, as well as shopping malls - Causeway Point, Woodlands North Plaza and 888 Plaza.

It is also within close proximity of established educational institutions such as the Singapore Sports School, Singapore American School, Innova Junior College, Si Ling Primary School and Republic Polytechnic. The completed development is expected to attract HDB up-graders in the Woodlands and Sembawang areas and cater to the expatriate community.

SLA, as the Government land sales agent, has prepared the site for sale under the confirmed list system and appointed international property consultant, Colliers International, to provide marketing services for the sale of the residential site.

According to recent media reports, rents in the Woodlands and Mandai area have surged between 25% and 30% in the 3rd quarter of 2007, recording one of the highest growth rates. This is due largely to the Singapore American School being located within the area. Property consultants like Colliers, had also commented that expatriates are prepared to pay a premium to stay near international schools. Hence, suburban and outlying areas like Woodlands are drawing strong interest.

More details and the confirmed list system are available at www.sla.gov.sg/land_sales/ls_index.htm or www.colliers.com/singapore. The location map and an aerial photo of the site can be found at Annex A and Annex B respectively.

The tender for condominium will remain open for 4 weeks and close on 20 November 2007. Information of the sale has been published on Gebiz. More information can be found in the developer’s packet. They can be purchased at $100 (inclusive of Goods and Services Tax) from Colliers International (Singapore) Pte Ltd at 50 Raffles Place #18-01 Singapore Land Tower, Singapore 048623, from Monday to Friday between 9am and 6pm.

Annex A: Location map

Annex B: Aerial photo of site

Singapore Balmoral Rd Site Sold At Record Price For The Area

Oct 23, 2007

A freehold site at Balmoral Road was recently sold for 138 million dollars via an ebloc sale.

This works out to a whopping 1,870 dollars per square foot per plot ratio -- a record price for the Balmoral area.

Property consultancy Newman & Goh brokered the deal and the buyer was the joint venture between Hiap Hoe and Superbowl.

The apartment development called The Aspine now sits on the saite, but Newman says a new development with 12 storeys and about 50 units can be re-built on the 46 thousand square feet site.

It expects units at the new development to fetch about three thousand dollars per squsre foot per plot ratio.

Newman also said it recently sold a freehold site in Yio Chu Kang, which now houses Toho Garden, for 62.5 million dollars or about 594 dollars per square foot per plot ratio.

The buyer was a unit of Singapore-listed GuocoLand.

Singapore Rich East Gdns In East Coast Being Put Up For Enbloc Sale

Oct 23, 2007

A residential site along Upper East Coast Road that now houses Rich East Gardens, is being sold via ebloc sale.

Property consultancy Credo Real Estate says the site can fetch about 90 million to 95 million dollars, which translates to a land rate of about 620 dollars per square foot per plot ratio.

The 105 thousand square feet site can be built up to 5 storeys, if the new developer forks out another 776 thosuand dollars for the development charges.

Credo says the site can then be turned into a development with 100 apartment units with an average size of 1,400 square feet each.

It says the new developer could also choose to build 3½-storey strata mixed landed houses on the site.

The tender closes on 21st of next month.

Singapore Govt Used Two-Envelope System In Former NCO Club Tender

Oct 23, 2007

Singapore Govt used two-envelope system in former NCO Club tender for specific objective.

The Singapore government adopted a two-envelope approach in its tender of the former NCO Club along Beach Road, as it wanted to achieve a specific development outcome for the commercial site.

National Development Minister Mah Bow Tan told Parliament today that the approach would allow the site to be developed into a high-quality development which can add value to the city, and at the same time, achieve a competitive price.

Mr Mah added the conventional price-only approach cannot ensure the quality of the new development as a whole.

The Beach Road site offers a unique opportunity to realise a large scale, high-quality, landmark development for our city centre. The developemt promises to be a major element of the city sky-line. It will be highly visible, at the same time the site poses a number of design challenges.

Under the two-envelope system, tenderers are required to submit two evelopes -- the first containing the concept proposal, and the other, containing the bid price.

The concept proposals are evaluated first, by a Concept Evaluation Committee, that contains both private and public sector experts.

Only proposals deemed acceptable are then moved into the second stage, where the second envelopes for these proposals are opened.

The site will be awarded to the tender with the highest bid, provided this the government's minimum reserve price.

Mr Mah said proposals for the Beach Road site were evaluated based on four criteria -the appropriateness of context, quality of architecture, composition and and placement of use, and track record of the tenderer and design team.

But Mr Mah assured that the government will continue to apply the two-envelope system very selectively.

The government had used it only twice before -- one for the Urban Entertainment Centre site at Victoria Street in 2005 and the Collyer Quay site in 2006.

Demand-Management Policies Required

Source : The Straits Times, Oct 23, 2007

AT A Singapore Economic Policy Forum organised by the Department of Economics of the National University of Singapore (NUS) on Oct 18, I presented a paper with the title, ‘Singapore’s property market and the macroeconomy’. This was reported in The Straits Times the following day under the headline, ‘No bubble in property market: NUS study’.

The title of the report may have created the misperception that current increases in property prices are all fundamental and policy intervention is not necessary. Some clarification is necessary with regard to the findings of the research and its policy implications.

In our analysis, the long-run demand for housing is determined by the growth of resident population, foreign population, per-capita disposable income, per-capita CPF balances (a proxy for financial wealth) and an adjustment factor to account for what is known as the user cost of housing. If the housing stock grows in line with the growth of the long-run demand, house prices should stay the same in the long run.

The current surge in house prices is largely a result of the housing shortage that was caused by the crash of the price bubble in 1996 and the prolonged slump in the property sector. Large imbalances in demand and supply create conditions for bubbles and subsequent crashes.

Based on data available up to the second quarter of this year, our model predicted that house prices should increase by 18 per cent in 2007 purely due to the fundamental demand-supply imbalance. We know that house prices by now have increased well above this rate. In the third quarter of this year the average price level had gone up by at least 27 per cent over the third quarter of 2006. Price persistence (panic buying when prices rise and waiting when prices fall) and speculation are the key drivers of the short-run price acceleration.

Although price bubbles are usually attributed to speculation, large gyrations in property prices are unhealthy for the economy. As housing supply cannot keep pace with demand because of construction delays and land scarcity, demand-management policies, especially with respect to investment demand, have to be in place.

Author: Associate Prof Tilak Abeysinghe

Hiap Hoe SuperBowl JV Buys The Aspine

Source : The Business Times, October 23, 2007

It pays $138m for the Balmoral site; GuocoLand successfully bids $62.5m for Toho Garden.

HIAP Hoe and sister company SuperBowl Holdings have jointly bought a freehold site at Balmoral Road for $138 million, the two companies said yesterday.

Sold: GuocoLand plans to develop a five-storey condo with about 100 units on the Toho Garden site (above), while Hiap Hoe SuperBowl JV is looking to build 39 luxurious boutique apartments on The Aspine siteThe price paid for The Aspine in a collective sale works out to $1,870 per square foot per plot ratio (psf ppr).

The site has a land area of 46,100 sq ft and a 1.6 plot ratio, giving it a potential gross floor area of 73,800 sq ft.

Hiap Hoe and SuperBowl are looking to build 39 luxurious boutique apartments averaging 1,800 sq ft to 2,000 sq ft per unit, they said. Up to 12 storeys can be built.

The developers bought the site through their joint venture vehicle Hiap Hoe SuperBowl JV. Hiap Hoe and SuperBowl hold 60 per cent and 40 per cent of the JV company respectively.

Hiap Hoe and SuperBowl count Hiap Hoe Holdings Pte Ltd as a major shareholder. Hiap Hoe Holdings Pte Ltd held 73.6 per cent of Hiap Hoe and 69.6 per cent of SuperBowl as at March 12, 2007.

SuperBowl’s share of the tender price comes to $55.2 million and will be financed through internal resources and/or borrowings, the company said.

This tender is the second successful joint bid between Hiap Hoe and SuperBowl. The two companies partnered each other in the past and won the tender for Goodluck View for $73.3 million about four months ago.

‘The Balmoral area is attractive for its close proximity to highly popular schools and Orchard Road, and we believe that there is still good upside for re-developed properties in this vicinity,’ said Hiap Hoe managing director Teo Ho Beng.

With this latest acquisition, Hiap Hoe’s land bank will increase to more than 600,000 sq ft of gross floor area.

Separately, GuocoLand said on Sunday that it has successfully tendered for the en bloc purchase of Toho Garden near the Serangoon Gardens area for $62.5 million.

The price works out to some $594 psf ppr including a development charge of $9.8 million.

The freehold Toho Garden has a land area of 86,900 sq ft and a 1.4 plot ratio, giving it a potential gross floor area of 121,600 sq ft.

The purchase marks GuocoLand’s fifth land acquisition since 2006. Together, the five sites will boost the developer’s land bank in Singapore to just under two million sq ft of gross floor area, it said.

For Toho Garden, GuocoLand proposes to develop a five-storey condominium with about 100 apartments.

Both projects were marketed by Newman & Goh.

First Reit Posts Distributable Income Of $4.61m For Q3

Source : The Business Times, October 23, 2007

Trust confident of boosting value of assets to $500m before end-2009

SINGAPORE’S first healthcare real estate investment trust (First Reit) said yesterday that its third-quarter distributable income came to $4.61 million - 5.4 per cent higher than forecast - due to rental contributions from newly acquired properties.

First Real Estate Investment Trust (First Reit) bought Pacific Healthcare Nursing Homes at Bukit Merah and Senja in April, The Lentor Residence in June and Adam Road Hospital in July.

Dr Tan: 'The regional macro-economic environment ... remains positive for 2007. As such, we are confident of exceeding our forecast DPU of 6.51 cents for the full year.'

Distribution per unit (DPU) came to 1.72 cents for Q3 ended Sept 30, ahead of a 1.6 cents forecast. Net property income totalled $7 million, or 15.6 per cent higher than forecast.

Ronnie Tan, chief executive of Bowsprit Capital Corporation, which manages the Reit, said: ‘The regional macro-economic environment, including Indonesia and Singapore, where we have the bulk of our properties, remains positive for 2007.

‘As such, we are confident of exceeding our forecast DPU of 6.51 Singapore cents for the full year.’

The trust is confident of boosting the value of its assets to $500 million before end-2009, Dr Tan said.

First Reit now has eight properties worth $328 million. Its net asset value per unit came to 0.88 of a cent as at Sept 30.

The Reit recently ventured into China, where it agreed with hospitals in Wuxi, Shanghai and Jiangsu province to ‘explore potential acquisitions’.

Earlier this month, First Reit signed a memorandum of understanding to acquire the 90-bed Wuxi New District Phoenix Hospital. In August, it said that it was investing in a 500-bed hospital property in Jiangsu province.

Then, the following month, it agreed to invest in the property assets of the 200-bed Shanghai Woman and Child Healthcare Hospital and the proposed Hengshan Urology Hospital, both in Shanghai.

First Reit said that it is continuing to explore potential acquisitions with its sponsor Lippo Karawaci in Indonesia.

First Reit’s shares closed half a cent down at 77 cents yesterday, with 112,000 shares changing hands.

Related links:-
First Reit's press release

Financial statement

Mandarin Oriental Benefits From Upgrading

Source : The Business Times, October 23, 2007

THE Mandarin Oriental hotel here has enjoyed a significant increase in the number of international corporate and free and independent travellers (FITs) since it was upgraded and rebranded as a member of the worldwide Mandarin Oriental Hotel Group.

'After the hotel was relaunched in 2005 we saw a two to three-fold increase in the number of business travellers in 2006, compared with 2004 and 2005,' says Rajesh Jhingon, general manager of the Mandarin Oriental, Singapore.

'Demand for rooms will continue to increase as the hotel is constantly upgrading its facilities and service.'

Guests have responded positively to the transformation of the hotel and the improved facilities, he said.

The hotel, previously The Oriental, Singapore, was renamed Mandarin Oriental, Singapore on Sept 25 to align it with the Mandarin Oriental Hotel Group, which is in the process of developing 17 new hotels worldwide.

The multi-million-dollar upgrade of the Singapore hotel - which included all rooms and suites, dining and meeting facilities, public areas and the fitness studio - is one of the most significant since the hotel opened in 1987.

The hotel was closed for refurbishment for three months from end-August 2004 until December 2004, when it reopened softly.

'However, renovation works were still going on and we relaunched the hotel in May 2005,' says Mr Jhingon. Upgrading of facilities continued after that, the latest being the renovation of the fitness studio, which was completed in June this year.

There will be further renovations in 2008 to the hotel's rooms, including new furniture and the latest audio visual facilities in every room.

US Housing Slump May Extend Into 2009

Source : The Business Times, October 23, 2007

There's a 50 to 60% chance of a recession as consumers curb spending: analyst

(CHICAGO) Ivy Zelman's view of the US housing market is gloomy, but it's probably the most realistic.

A veteran Wall Street analyst, Zelman, chief executive of the research firm Zelman & Associates, says it's unlikely the US housing market will recover before 2009, adding there's a '50 to 60 per cent chance of a recession', as the housing slump curbs consumer spending.

Ms Zelman paints a much darker picture than Federal Reserve chairman Ben Bernanke, who said last week that housing will be a 'significant drag' on the economy into next year.

When you consider the huge home inventories and tight-as-a-drum mortgage restrictions, it's easy to conclude that the housing slump could extend well past 2008. Unless financing loosens up and buyers return, her prophecy will become a reality.

'I've never seen the market as bad as this,' Ms Zelman said. 'And it could get worse. The home-price decline could range from 16 per cent to 22 per cent.'

Monitoring inventory, builder incentives and demand, Ms Zelman is also watching adjustable-rate mortgage resets. Homeowners with these loans will automatically face higher monthly payments that they may not be able to afford, another trigger for foreclosures or sales. Some US$500 billion of these loans will re-adjust through 2008, Ms Zelman says.

While foreclosures have declined somewhat from August to September, they still doubled from a year ago, according to RealtyTrac Inc, which monitors the housing market. Since more homes are coming on the market, Ms Zelman says that will only add to the misery.

'These are the worst inventories we've seen as a nation,' she says. Ms Zelman originally presented her report Oct 10 to the Home Improvement Research Institute, a Tampa, Florida-based trade group.

Ms Zelman's words carry some weight because she was one of the few major Wall Street analysts to warn of a housing decline months before it began late last year.

She was alarmed that home prices far outpaced personal-income increases during the boom, which is how the economic disconnect began. A bubble created artificially high demand that had to deflate sometime. Now economists and analysts are trying to assess the collateral damage of the bust and sub-prime mortgage meltdown.

Meanwhile, builders are stuck with thousands of new homes they can't sell and potential buyers are cancelling in droves or are unable to get a mortgage. Housing starts fell to a 14-year low in September.

Mass psychology

'Builders are desperate now and blowing through inventory,' says Ms Zelman of homebuilders who are doing anything they can to sell homes. 'Their revenues are shrinking so fast, they can't keep up.' The mass psychology that amplifies and spreads the angst of home sellers will put a brake on overall consumer spending, Ms Zelman predicts.

'Some 74 per cent of consumer expenditures are correlated to housing. I don't think the consumer will hold up. They will cut back on things like buying cars and vacations.'

While Ms Zelman forecasts that sales will drop for the next two years, she isn't as optimistic on home prices, which she says may continue falling until 2010 or 2011.

'We'd be better off if prices corrected all at once. It will get worse before it gets better.' Places where sales were strongest and speculators were most active before the bust will be bedevilled by high home inventories for more than a year.

Not every market will get pummelled, though. Manhattan seems to be holding up for certain kinds of housing. Prices of co-op apartments with four bedrooms or more, for example, rose 19 per cent in the third quarter from a year earlier.

'Boston is pretty moderate in terms of risk,' says Mike Ela, president of the service. 'Lenders have pulled back aggressively.'

Don't expect to land properties at bargain-basement prices. One assumption is that the best values will be in areas glutted with properties. Yet many sellers will be holding out for prices that they saw at the peak of the boom. Motivated property owners, though, may be willing to deal.

If you are buying a second home or investment properties, keep in mind that your credit record should be up-to-date. You may also find it easier dealing with institutions that sell 'real-estate-owned' homes, or properties that went into foreclosure.

Mr Ela, who has 'low-ball offers' pending on two bank-owned properties, prefers dealing with institutions 'because you're not dealing with the emotion of the seller. It won't take too long to get a decision.'

Because lending standards have tightened, if there are any errors on your credit report that show missed payments or outstanding balances, you should get them corrected.

Don't open any new lines you won't use and pay your bills on time. These variables will affect your score and may disqualify you from obtaining financing.

Keep in mind that job growth and consumer spending bear close scrutiny. If Ms Zelman is right about a recession coming, then prices may fall more, plunging the housing market into an even sorrier state. -- Bloomberg

Emerging Asia: Positive Outlook Despite Pitfalls

Source : The Business Times, October 23, 2007

Beware uncertain global economy and riskier financial environment, says DAVID BURTON

EMERGING Asia's economies have been among the most dynamic in the world in the last decade. Today, the region accounts for almost half of global economic growth. Much of this success stems from broad reforms by these countries in the last 10 years.

Encouraging picture: During the recent turbulence over the US sub-prime crisis, emerging Asia's equity markets initially fell along with other emerging markets, Asian currencies experienced downward pressure and financial conditions tightened. But what is striking is the speed with which emerging Asia recovered from this initial shock.

These reforms have led to healthier financial and corporate sectors and more robust macroeconomic policy across the region. But the recent financial turbulence, still playing out across the globe, highlights the question of just how vulnerable the region remains to developments in the United States and other industrialised countries.

What, therefore, are the key strengths and vulnerabilities for the region today? And what challenges are Asia's policymakers likely to face in the period ahead?

The International Monetary Fund's (IMF) Asia and Pacific Department addresses these issues in detail in its Fall 2007 Regional Economic Outlook (www.imf.org).

The year 2007 has been another good one for the region so far. Economic growth has exceeded expectations. China and India have led the way, with growth rates in the first half of the year of 11.5 and 9.25 per cent respectively. The trend has been positive for others as well. Exports remain buoyant and growth is becoming somewhat better balanced in many countries, with private consumption and investment making an increasing contribution.

For the year as a whole, we project that emerging Asia will achieve economic growth of nearly 9.5 per cent. Moreover, inflation continues to remain in check. While a recent modest pick-up in headline inflation in the region requires close monitoring, this rise mainly reflects higher food prices, especially in China, and is not expected to generate large second-round effects.

The region weathered well the recent global financial turbulence, when concerns over rising defaults in the US sub-prime market led to increased volatility in equity and credit markets worldwide.

Emerging Asia's equity markets did initially decline along with other emerging markets, Asian currencies did experience downward pressure, and financial conditions did tighten. However, what is striking is the speed with which emerging Asia recovered from this initial shock.

Capital inflows to the region have returned, and its equity markets are now about 10 per cent higher than before the summer's turbulence. Reflecting this resilience, the IMF foresees only a modest slowdown in 2008, to about 8.5 per cent, resulting from lower external demand for Asia's exports, and an assumed effective policy tightening in China.

The sub-prime crisis has, however, increased uncertainty about the outlook for the global economy - and for emerging Asia. First, it remains uncertain whether we have seen the worst of the global financial turbulence or if there are additional shocks ahead. The region's apparently small exposure to sub-prime mortgages and structured products more generally has helped moderate the impact of the sub-prime crisis on Asia. This in itself reflects the relatively unsophisticated nature of the financial sector in much of the region.

But another bout of global financial volatility could have significant spillovers for the region. It could reverse recent inflows and make financing more difficult for a number of sovereign and corporate borrowers.

But perhaps the main risk to the region is that of a sharp slowdown in the US and the euro area, resulting from the persistent US housing doldrums and associated global financial problems.

Despite the view being expressed that Asia has 'delinked' from the US and other industrialised countries, the truth is that the region remains significantly dependent on exports to the rest of the world. While an increasing share of exports are within the region, much of this still reflects the integrated production processes within Asia, with much of the final demand still in the industrialised world.

So, how big an impact would a US or global slowdown have on Asia? It would likely not be as big as during the dotcom bust of 2001-02. Then, the decline centred on information technology products, which are of particular importance for emerging Asia.

Nevertheless, IMF staff estimates that a one percentage point decline in US economic growth could reduce growth in emerging Asia, through lower exports, by up to 0.4 percentage point. While sizeable, this would, however, not have a dramatic impact on emerging Asia's economies.

Overall, then, the outlook for emerging Asia remains positive, but the economic environment will, as always, present a number of policy challenges.

First, policymakers need to be ready to respond to a slowdown in the global economy including - in countries where inflation expectations are low and well-anchored - through more accommodative monetary policy.

Second, the volatile global environment has raised uncertainty regarding capital flows to the region. Countries will need to continue to be pragmatic and allow for greater exchange rate flexibility to create two-way risk in foreign currency markets and promote a rebalancing of growth where necessary. This is especially pertinent in China, where the current account surplus has continued to grow and the currency remains considerably undervalued relative to medium-term fundamentals.

Finally, the sub-prime crisis, while so far largely skirting the region, will provide a number of lessons for Asia, as its financial systems become more sophisticated. This is likely to include the need for enhanced financial supervision.

At the same time, countries will also likely need to strengthen reporting and disclosure requirements, and pricing and provisioning rules to deal effectively with complex financial products, and the cascading system of risks they imply.

The author is director of the International Monetary Fund's Asia and Pacific Department

Willyn Ville - Holland Village Site Seeks $2,153 psf ppr

Source : The Business Times, October 23, 2007

AS the collective sales push powers on, a new benchmark for the Holland Village area could be set if Willyn Ville achieves its asking price of $120 million.

Willyn Ville: About 25 units of 2,200 sq ft each can be built on the 39,802 sq ft freehold site which is close to the Holland Village MRT station now being built

This works out to about $2,153 per square foot per plot ratio (psf ppr) for the 39,802 sq ft freehold site with a 1.4 plot ratio and gross floor area of 55,722 sq ft. No development charge is payable.

The breakeven price for the future development would be around $2,500 psf, putting it clearly in the luxury league of homes, said Dev Raj, senior manager of investments at Chesterton International, which is marketing Willyn Ville.

The collective sales market may not be showing signs of a full recovery since the US sub-prime crisis put a damper on investor confidence but Mr Raj says: 'We have tested the asking price with both local and overseas investors - mainly from the Middle East - and the interest has been strong.'

The asking price is higher than other developments in the area also for sale, including Villa delle Rose at $1,758 psf ppr and The Estoril for $1,536 psf ppr.

However, anyone going to Holland Village will have noticed Willyn Ville's extremely close proximity to the upcoming Holland Village MRT station and Mr Raj believes this is one of the site's key attributes.

He estimates that about 25 units of about 2,200 sq ft can be built. This puts the asking price of each unit at about $6 million, based on the indicative price.

Over in the East Coast, on Upper East Coast Road, Credo Real Estate is marketing Rich East Garden for collective sale and the indicative price is between $90 million and $95 million. This works out to about $619 to $653 psf ppr (including development charge) for the 105,000 sq ft site with a 1.4 plot ratio.

Credo managing director Karamjit Singh estimates that the site may be configured into about 100 apartment units with an average size of 1,400 sq ft.

According to a study by an architect Credo commissioned, the developer of the site could also choose to build 3½-storey strata mixed landed houses, with a combination of strata terraces, strata semi-detached and strata detached houses.

The property was put up for sale by tender earlier in July and Mr Singh said that there were a number of interested parties. But market sentiment had turned due to the volatility in the local and global stock markets then. This has impacted the new indicative price $95 million slightly. It was $92 million previously.

'Now that sentiment has improved significantly, and with the launches of other redevelopment sites recently at relatively high asking prices, we feel that developers will find Rich East Garden to be an attractive proposition,' he added.


(AS the collective sales push powers on, a new benchmark for the Holland Village area could be set if Willyn Ville achieves its asking price of $120 million.)

SMALL SIZE-Affordable to ALL developers. Confidence to price it at 60%

BIG SIZE - Only affordable to the TOP 30% developers. Need on to price it at
10% profit!

Hozion Towers Saga - Buyers Not Allowed To Participate In Strata Titles Board Hearing

Source : The Business Times, October 23, 2007

Buyers of Horizon Towers - the subject of a high profile en bloc dispute - will not be allowed to participate in the hearing by the Strata Titles Board (STB).

The buyers - Hotel Properties Ltd (HPL) and its partners - had expressed their interest to be made parties to STB's hearing tentatively scheduled for Oct 30 and the first three weeks of November.

The board allowed lawyers for the majority and minority owners to comment on HPL's application last week, and denied the application yesterday.

The hearing will be a resumption of the previous hearing which ended on Aug 3, when the board threw out Horizon Towers' application on the basis that it was defective because of three missing pages.

But the High Court ruled earlier this month that STB was wrong to dismiss the application. This is because it was not a substantial omission that prejudiced the minority owners.

This means that STB will continue hearing the application from where it left off, including the objections to be made by the minority owners, and the merits of the case, before deciding whether to allow the collective sale.

In the previous STB hearing, HPL and its partners represented by Allen & Gledhill were not allowed to participate.

The saga began in February when HPL and its partners agreed to buy the Leonie Hill development for $500 million.

But the deal turned sour when several owners were said to be unhappy with the sale price, after neighbouring developments started going for much more.

HPL and its partners have accused the owners of not doing their best to ensure that a proper application was filed to the STB and is looking to sue them for up to $1 billion if the sale does not go through.

Heftier Property Tax Bills For Hotels From 2008

Source : The Business Times, October 23, 2007

Taxman's new formula simplifies rules but means big tax hike for major hotels

The property tax bills for many hotels here will go up by at least 33 per cent starting next year as the taxman tweaks his calculations.

The rate for hotels remains at 10 per cent of annual value (AV). But the formula to calculate the AV itself is set to undergo a change.

Starting next year, the AV for the rooms component of all hotels will be calculated as 20 per cent of their previous year's gross room receipts. And from 2009, this rate will be raised further to 25 per cent of the preceding year's takings.

Effectively, it means that most major hotels will shell out more, said industry watchers. Currently, the AV for gazetted hotels that have not been leased out by their owners - apparently the majority of big hotels in town fall in this category - is 15 per cent of the previous year's gross room receipts. When this rate is raised to 20 per cent next year, it straightaway means that the AV for rooms alone will work out to a third more than it is now. There will be a further jump in 2009.

That's not all. From next year, estimated market rent will form the basis for determining the AV for a hotel's food & beverage (F&B) areas. Currently, the AV is calculated as 5 per cent of the preceding year's gross F&B receipts. Other lettable areas in a hotel will continue to be assessed based on estimated current market rent.

The new formula for determining AV will apply uniformly to all licensed hotels, whether they are gazetted or not and let out or not, a spokeswoman for the Inland Revenue Authority of Singapore (IRAS) told BT. Currently, the AV for some categories of hotels is based on the estimated current market rent for rooms, F&B areas and other lettable areas.

So from next year the rooms component of property tax for gazetted hotels that are not leased out will increase by 33 per cent, assuming the same gross receipts, said the IRAS spokeswoman. But some hotels in the other category may see a slight drop in property tax.

'However, the actual impact on each hotel's property tax bill may vary depending on its gross receipts,' she added.

Industry players said that the increase in AV for F&B areas could be even steeper. This will especially be the case for five-star properties with substantial ballroom and function-room facilities.

'This is because the ballrooms will now be assessed for property tax, regardless of whether they are occupied or not,' explains the CFO of a major hotel in the Orchard Road belt, who forecasts a 200 per cent increase in AV for the F&B areas of his hotel under the new formula.

Or as DTZ Debenham Tie Leung executive director (consultancy and statutory valuation) Ng Poh Chue puts it: 'The market-rent approach does not give consideration to low-occupancy periods for ballrooms and function rooms.'

The CFO of the major Orchard Road hotel estimates that on the whole (rooms, F&B and other areas), the AV for his hotel will go up by nearly 60 per cent from next year and by more than 90 per cent from 2009 - other things remaining the same.

Some market watchers say that the hikes will eat into hotel owners' bottom lines at a time when operating costs including labour have also been on the rise.

The Singapore Hotel Association said it is currently gathering feedback from its members.

IRAS's spokeswoman said that both the Ministry of Trade and Industry and the Singapore Tourism Board were consulted and their feedback was taken into account, including phasing in the change over a two-year period instead of an immediate change.

She pointed out that the current formula to compute AV of hotels was introduced in 1986. 'The 15 per cent on room receipts and 5 per cent on F&B receipts were found to be a close proxy to the standard valuation method, that is, estimated current market rent. This is the method of determining AV for other classes of property, such as residential, commercial and industrial.

'However, given the passage of over 20 years, an update in the formula for computing hotels' AV is needed to ensure it reflects an AV that does not vary too widely from one that is based on standard valuation method, as analysed from rentals paid for hotels that have been let,' she explained.

As for changing the method of assessing AV for F&B areas to estimated market rent instead of a percentage of F&B receipts, IRAS said: 'Restaurants and food outlets are widely tenanted today. So the AVs of such properties are easily determined from comparable market rents.'

However, Jones Lang LaSalle Hotels (Asia) EVP Chee Hok Yean had a different take. 'The change will likely introduce more room for dispute due to the fact that most hotel F&B outlets are not leased to third parties, so there may not be (enough) precedent rentals. F&B outlets in hotels don't enjoy the same traffic flow as restaurants in malls, hence there must be a distinction when comparing current market rents in these two types of properties,' Ms Chee reasons.

Another issue is that not all hotel F&B space such as banquet halls and meeting rooms will be used on a daily basis and the authorities will have to allow for vacancy for these unoccupied periods. 'That will create more admin work for the hotels when making submissions to IRAS,' she added.

IRAS collected $37.3 million property tax on hotels for the year ended Dec 31, 2006, up from $33.4 million in the preceding year.

FCT To Pay Up To $170.5m For Northpoint 2

Source : The Business Times, October 23, 2007

It will acquire the upcoming shopping mall from its parent firm in Q4 2008

FRASERS Centrepoint Trust (FCT) has entered into a put and call option agreement to acquire the upcoming shopping mall Northpoint 2 for between $139.5 million and $170.5 million, it said yesterday.

The mall, which is being developed by Frasers Centrepoint, will be completed by August 2008. FCT will then acquire it from its parent company in the fourth quarter of 2008.

Mr Tang: FCT is entering the put and call option agreement to acquire the retail centre now so that it can obtain a certainty of ownership

'We are doing this (entering the put and call option agreement) now so that we can get a certainty of ownership,' said Christopher Tang, chief executive of FCT's manager.

Related Link -
Frasers Centrepoint Trust's press release

Financial statements

FCT has plans to integrate the upcoming mall with Northpoint, which is already part of its portfolio.

The $30 million asset enhancement programme is expected to be completed by end-June 2009. Together, the two malls will have a combined net lettable area (NLA) of some 232,000 sq ft, an increase of some 56 per cent over Northpoint's current NLA.

FCT said that the mid-point of the agreed price range for Northpoint 2 - $155 million - is based on an open market valuation. The actual purchase price will be determined by taking the average of two valuations - one each by FCT and Frasers Centrepoint - nearer to the time of the transaction.

FCT also reported its financial results for the fourth quarter ended September 30, 2007 yesterday.

The trust said that distributable income for the three months came to $10.3 million, 13.5 per cent higher than the forecast of $9.1 million as new and renewed leases as well as higher occupancy rates in its malls contributed to increased revenues.

Distribution per unit (DPU) for the quarter came to 1.67 cents, up 13.6 per cent from forecast of 1.47 cents.

Net property income came to $12.8 million, some 2.6 per cent higher than the forecast of $12.5 million.

For its full financial year, FCT reported distributable income of $40.4 million, 11.1 per cent higher than its forecast. DPU came to 6.55 cents, 12.0 per cent higher than forecast. And full-year net property income came to $51.7 million, 3.2 per cent higher than its forecast.

There are no comparable figures for the previous corresponding periods as FCT was only listed on July 5 last year.

FCT has three more Singapore malls awaiting injection into the Reit - Yew Tee Point, Bedok Mall and The Centrepoint.

Yew Tee Point will be injected in early 2009 and Bedok Mall in 2010, Mr Tang said. He added that there is no timeline at present for Centrepoint's injection. The four malls together will double the trust's current portfolio.

The trust will also look at China and Australia for growth together with Malaysia, where it already has a presence through its stake in Hektar Reit, Mr Tang said.

FCT's shares closed unchanged at $1.50 yesterday.

Yishun Mall To Get Bigger, Better With New Northpoint 2

Source : The Straits Times, Oct 22, 2007

Extension is one of three malls Frasers Centrepoint will inject into its trust

YISHUN residents, who for years managed with only Northpoint to meet their shopping needs, will get a retail shot in the arm next year.

Frasers Centrepoint Trust (FCT), a real estate investment trust (Reit) that owns retail malls including Northpoint, plans to integrate the mall with upcoming Northpoint 2.

Northpoint 2 is set to be completed next year. Once it is fully integrated with Northpoint, it will create a single shopping mall with a total net lettable area of 232,000 sq ft.

FCT says the enlarged mall will be the 'heartbeat of the north, infusing new life and vibrancy into the community that the mall has been serving over the past 14 years'.

The trust yesterday turned in a bumper maiden set of full-year financial results. Its distributable income for the year ended Sept 30 was $40.4 million, a hefty 11.1 per cent above forecast.

For the full year, distribution per unit came to 6.55 cents representing a yield of 4.4 per cent, based on yesterday's closing price of $1.50.

For the quarter, distributable income was $10.3 million, while distribution per unit was 1.67 cents.

As the economy keeps thriving, new and renewed leases at malls such as Causeway Point, Northpoint and Anchorpoint have been sealed at 12 per cent above previous rates.

The trust's growth strategy includes enlarging its portfolios. Three malls have been acquired by Frasers Centrepoint and are ready to be injected into the trust: Northpoint 2 in the fourth quarter next year, Yew Tee Point and Bedok Mall.

These three new malls, together with Centrepoint shopping centre, will double the trust's portfolio.

FCT will enhance its malls 'to benefit tenants and pave the way for further rental growth', said Mr Christopher Tang, chief executive of the trust's manager.

One example is Northpoint. There is also Anchorpoint's makeover into a village mall concept that is due to be completed next month.

Other than new food and beverage tenants such as a new Tung Lok concept Zhou's kitchen, Anchorpoint will feature a cluster of factory outlets from Charles & Keith and G2000 for example.

Yesterday, health-care Reit, First Reit, reported its third-quarter results.

Its distributable income was $4.61 million for the third quarter ended Sept 30. With 1.72 cents as a distribution per unit, the annualised figure of 6.7 cents gives a distribution yield of about 8.65 per cent based on last Friday's close of 77.5 cents.

The distribution per unit for the quarter exceeded its forecast by 7.5 per cent.

First Reit has four health-care facilities in Singapore.

Dr Ronnie Tan, chief executive of the trust's manager, said: 'Leveraging on the buoyant regional health-care markets, coupled with our strong acquisition pipeline, we are confident of raising our asset portfolio to $500 million before the end of 2009.'

70% Of Jurong Point's Uncompleted Wing Leased Out

Source : The Straits Times, Oct 22, 2007

JURONG Point, which is set to be Singapore's largest suburban mall, says its new extension is already 70 per cent taken up more than a year ahead of the wing's completion.

One of the main tenants, supermarket retailer NTUC Fairprice, will open a FairPrice Xtra, its hypermarket brand.

It will take up more than 70,000 sq ft on the third floor of the new wing, said the mall's development and marketing manager, Starmall Property Management.

The first Fairprice Xtra - a 77,000 sq ft outlet - opened late last year in Ang Mo Kio Hub. The second one is in Hougang Point.

Another anchor tenant is Popular Book Company, an existing tenant which has agreed to double its retail space and relocate to a unit of about 18,000 sq ft. It will also open a Harris bookstore of more than 8,000 sq ft in the new wing.

Department store Yue Hwa Chinese Products, which has three outlets in Hong Kong, will set up a 5,000 sq ft shop in the mall. It now has one store in Singapore, in Chinatown.

Property consultancy Knight Frank's deputy managing director, Mr Danny Yeo, said the good take-up is expected as there is a dearth of good-quality suburban malls. 'There is very strong interest in suburban malls, particularly large ones near MRT stations, where there is a lot of transient traffic.'

Analysts say rents at Jurong Point could be $11.50 to $12 per sq ft on average.

Opened in 1995, Jurong Point in Jurong West has 220 tenants occupying 410,000 sq ft of lettable area. The new wing - slated to be opened before Christmas next year - has 290,000 sq ft, of which 70 per cent has been leased out.

The combined 700,000 sq ft enlarged mall will be the largest suburban shopping centre in Singapore. It is part of a $720 million integrated project, which includes an air-conditioned bus interchange and a 610-unit condominium above the new wing.

The 99-year leasehold The Centris was released in late September last year and was fully sold by May.

Jurong Point will also have about 43,000 sq ft of non-profit space for charities and other similar bodies, which will pay a service charge, instead of market rents.

Under a government scheme, Jurong Point is granted extra lettable space - which it will use for a 24-hour eatery and a medical centre - in return for the donation of non-profit space.