Wednesday, December 19, 2007

US Housing Crisis Reverberates Worldwide

Source : The Straits Times, Dec 19, 2007

Banks, investors could lose hundreds of billions as lending is scaled back drastically

WASHINGTON - FEW people knew at the start of this year the meaning of 'sub- prime' home loans or how they might affect the United States and global economies.

Today, worries are growing that the crisis that began with mortgage failures and spread to banks and brokerages may push the US economy into a downturn and put the entire global economy at risk.

Sub-prime loans flourished at the end of the US housing boom, as lenders offered mortgages to people with shaky credit in an effort to cash in on surging prices.

These loans were packaged into securities that were sold to investors around the world, with little regard to what would happen when low 'teaser' rates were reset to increase payments from home owners.

When a wave of defaults began to hit, US and global banks began to see billions of dollars in losses on their balance sheets. The lenders had to tighten credit, crimping consumer and business spending and threatening the overall economy.

Goldman Sachs economist Jan Hatzius says his 'back-of-the-envelope calculation' now suggests 'losses of around US$400 billion (S$582 billion)' for global banks and investors.

Although this may not seem large in the overall economy, he says the effect is magnified because banks need to scale back their lending to keep capital ratios intact after accounting for the losses. As a result, he says, lending could be cut by US$2 trillion.

'Even if this occurs gradually, and even if there are some offsets from reduced credit demand and increased lending by other sectors, the drag on economic activity could be substantial,' said Mr Hatzius in a note to clients.

Adding to the woes from housing are near-record energy prices and a weak US dollar that could fuel inflation and hurt business confidence. Some experts say a recession is a possible scenario.

'The US is on the precipice of its first consumer recession since 1991, which was the last time the market suffered from a confluence of high energy prices, weakening employment conditions, real estate deflation and tightening credit,' said Mr David Rosenberg, Merrill Lynch's chief North American economist.

While debate is raging on whether the US economy will avert a recession, another question is how much a slowdown will affect the global economy.

Some experts say there has been a 'decoupling', meaning the rest of the world is less dependent on the US. But any slump in the US is still likely to have a global impact.

'We think 2008 will be the year of recoupling,' said Mr Peter Berezin, a Goldman Sachs global economist.

'The mortgage meltdown in the US has clearly affected global financial markets,' he noted, adding that 'the weakness in the US housing market is starting to raise concerns that the global housing market may suffer a similar fate'.

Mr Paul Sheard, an economist at Lehman Brothers, is guarded, saying: '2008 is shaping up to be more challenging for the global economy than 2007 was. We expect growth to be lower.'

'If the US slows and other developed economies follow, these economies will not be able to escape knock-on effects via the trade channel in particular, but also via financial and confidence channels,' he said.

'We expect growth in Asia ex-Japan and in emerging markets to decelerate but to maintain a healthy clip, given strong growth momentum, particularly in China and India.'

In a more upbeat outlook, Societe Generale global economist Brian Hilliard in London says the worst may be over for the US and global economies, even if the impact from housing and credit was bigger than initially expected.

'We remain more optimistic about the ability of the world economy to withstand the shock from this liquidity event,' he said.

'Our forecast for US growth of 2.6 per cent in 2008 is higher than consensus. The Fed has signalled that is less keen to make further rate cuts because the real economy looks in relatively good shape but it is flexible.'


St Regis Picks 3 Bentleys To Ferry Guests

Source : The Business Times, December 19, 2007

Luxury hotel says British marque complements its brand

THE St Regis Singapore has chosen three Bentley luxury limousines to grace its driveway.

At your service: St Regis expects the three cars to meet guests' needs for a start but will monitor demand and increase the fleet if necessary

The five-star hotel on Tanglin Road opens this Saturday and its well-heeled guests will be chauffeured to and from the property in the customised Bentley Continental Flying Spur saloons.

Only one other hotel here uses a Bentley - The Raffles. The single Continental Flying Spur joined the iconic hotel's classic Daimler and long-wheelbase BMW 7 Series models in May 2006.

The St Regis fleet comes with customised details, with the cars having paintwork to match the unique gold/bronze shade that is the St Regis brand's corporate colour.

Other features include discreet St Regis badges on the door pillar and St Regis embroidered monograms on the back of the front headrests. There are also deep-pile carpets for guests to bury their feet in and a wine cooler tucked away in the centre armrest of the spacious rear seats to store chilled drinks and towels.

The hotel says it chose Bentley because the British marque complements the St Regis brand.

'With matching beliefs in the importance of heritage, prestige and the promise of providing a memorable lifestyle experience, Bentley was the perfect choice for the hotel's limousine service,' explains St Regis Singapore's general manager, Yngvar Stray.

The hotel is the first St Regis to open in south Asia and the first new internationally branded luxury hotel to open in Singapore in 11 years.

Apart from its bespoke service with personal butlers, another distinctive feature of the St Regis Singapore will be its artwork, said to be one of the largest private collections in Asia.

Over 40 original pieces by world famous artists such as Joan Miro, Marc Chagall, Fernando Botero, Le Pho, Fernand Leger, Gu Gan, Chen Wen Hsi and Georgette Chen have been selected to complement the hotel's elegant interiors.

Mr Stray says the Bentley fleet will be used to chauffeur guests to the hotel as well as for other transportation requests.

He believes that the three cars will be able to cater to his guests for a start but 'we will monitor the demand and increase the fleet if necessary'.

St Regis Singapore has declined to reveal the cost of the luxury limousines but the price of a standard Flying Spur is about $730,000. With the special options, the final price tag could come up to as much as $800,000.

For now, the St Regis Bentleys will be the most expensive cars to be used by a hotel here. Later next year, that honour will go to the Capella Singapore resort.

When it opens its doors in the fourth quarter of 2008, the Norman Foster-designed resort on Sentosa will have a pair of Rolls-Royce Phantom ultra-luxury limousines. The standard-wheelbase models cost $1.5 million each and will be used to ferry guests of the Pontiac Land Group hotel.

Kuwait Fund Buys 97 GuocoLand Homes For $818m

Source : The Straits Times, Dec 19, 2007

A FUND to be managed by Islamic investment bank Kuwait Finance House has paid GuocoLand about $818.4 million for 97 units in the developer's Goodwood Residence.

The huge deal for the units - all four-bedders ranging from 2,500 sq ft to 3,900 sq ft - in Bukit Timah Road near Newton Circus has set new benchmarks.

GuocoLand's group president and chief executive officer, Mr Quek Chee Hoon, said the sale at the 210-unit estate 'is the singlelargest purchase of residential units under construction'.

Market sources say the price works out to slightly more than $3,000 per sq ft (psf), above levels achieved by nearby developments.

The 40-unit Sui Generis in nearby Balmoral Crescent has achieved a median price of $2,474 psf and a high of $2,713 psf.

A little farther away, new developments within a 2km radius of the Orchard MRT Station are priced from $3,000 psf to $4,500 psf.

The deal comes amid weak sentiment in the property market largely due to ongoing concerns over the sub-prime woes in the United States.

Savills Singapore's director of marketing and business development, Mr Ku Swee Yong, said foreign investors remained optimistic about Singapore's growth story.

These investors have more advantages when buying as they can leverage on tax savings and potential foreign exchange gains, he said.

GuocoLand plans to launch the rest of the freehold Goodwood Residence in the first quarter of next year. The date and prices will hinge on market conditions.

The estate also has 22 deluxe four-bedders - these are a bit bigger than the 97 units sold - and 81 two- and three-bedders.

There are 10 penthouses, eight with pools, ranging in size from 5,000 sq ft to 12,000 sq ft. The smallest will cost at least $15 million and the largest possibly up to $40 million.

The 210 apartments are housed in two 12-storey blocks, and the 24,845 sq m estate shares a 150m boundary with the lush Goodwood Hill park.

Landscaping and facilities will take up almost 80 per cent of the estate grounds.

Datuk K. Salman Younis, managing director of Kuwait Finance House (Malaysia), said: 'The charm of Goodwood Residence lies not only in its setting a new benchmark for luxurious residential living in Singapore but also in its unique location next to 20ha of green reserve at Goodwood Hill.'

Goodwood Residence is on the former Casa Rosita site, which GuocoLand acquired for $280 million, or $706 psf of potential gross floor area, in a collective sale in April.

The developer expects to launch its 270-unit Sophia Residence on the former Sophia Court site later next year.

In 2009, it will launch a project to be built on another collective sale site, Leedon Heights, which it purchased for $835 million.

Kuwait Finance House, which is listed on the Kuwait Stock Exchange, previously joined hands with a unit of Malaysian trustee company Amanah Raya to set up a fund to purchase two low-rise waterfront villa apartment blocks for $286 million.


'The charm of Goodwood Residence lies not only in its setting a new benchmark for luxurious living in Singapore but also in its unique location.'

DATUK SALMAN, on why a fund to be managed by Kuwait Finance House purchased units at the estate

5,000 Apply For 316 Flats

Source : The Straits Times, Dec 19, 2007


OVERWHELMING demand for the latest batch of new Housing Board (HDB) flats suggests newlyweds are now looking at outlying estates they once shunned.

A total of 5,147 applications had been made yesterday by the close of the HDB's latest sale of just 316 flats in the far-flung areas of Hougang, Punggol and Sengkang.

That is 16 would-be buyers for every flat - a big jump in demand since June when 922 flats in the same areas attracted 3,955 applicants, or about four buyers for every flat.

Market watchers say only mature estates used to experience such high demand.

But the latest figures suggest new trends in which couples are turning increasingly to new HDB flats as resale prices rise - and to estates further away from the city.
The August and October sale of flats in established towns, and in the north and west zones, saw a 100 per cent take-up rate for the first time, the HDB said last week.

Earlier this year, applications for mature towns such as Bukit Merah were seven to 13 times the flats offered, while in newer estates such as Sengkang, this number was a lower 1.8 to 4.7 times, said the HDB in answer to queries from The Straits Times.

Housing experts The Straits Times spoke to said the limited flat supply means couples cannot afford to be too picky as competition is tough.

Associate Professor Tu Yong of the National University of Singapore's department of real estate said the buoyant economy is fuelling demand as more people get married.

The booming HDB resale market has priced homes out of reach of many buyers, so it is no surprise more people are turning to new, cheaper flats.

Resale home prices grew by 11 per cent in the first nine months of this year.

The HDB's latest sale offers flats from $142,000 for a four-room flat in Hougang where the median price is $250,500 in the resale market, and from $278,000 for an executive flat in Sengkang compared to $346,000 for a resale unit.

New flats can be paid for with Central Provident Fund monies or a home loan, unlike in the resale market where couples typically have to fork out cash to get a flat. Typically too, the more established the town, the higher the sum of cash needed upfront.

The problems faced by newlyweds in finding homes was flagged in Parliament last month by Aljunied GRC MP Cynthia Phua, who said she gets appeals from distressed couples every week.

IT consultant Goh Jhin Hin, 29, has tried to get a flat nine times in the past year - and rejects the notion that couples are too choosy.

He has applied for a range of locations from Toa Payoh to Sengkang - all without success. 'Getting a flat now is like gambling - it all depends on your luck,' he said.

Last month, National Development Minister Mah Bow Tan said the HDB will offer 7,000 new flats in the next seven months. He also urged newlyweds not to be too choosy, adding that it was not realistic 'for the HDB to offer only new flats in mature estates in the heart of the city'.

First-timer Leonard Tan, 27, widened his net and got lucky. He bagged a Bukit Panjang executive flat earlier this year, after failing to get his dream Ang Mo Kio home.

Property agency PropNex's chief, Mr Mohamed Ismail, said outlying, less mature estates such as Punggol and Sengkang are now seen as more attractive by young couples - hence the higher demand.

Mr Goh said build-to-order flats - which are built only if a certain level of demand is reached - are not a solution for him as the flats will be ready only in four to five years time.

Islamic Bank Fund Buys Up Condo Units For $818m

Source : TODAY, Wednesday, December 19, 2007

A fund managed by Kuwait Finance House has bought all 97 luxury apartments of Phase 1of Goodwood Residence from developer Guocoland for $818 million.

The four-bedroom apartments, located in one of the most exclusive addresses near the prime Orchard Road area, are each between 2,500 sq ft and 3,900 sq ft, and commanded slightly more than $3,000 per sq ft on average, said Singapore-listed Guocoland. The temporary occupation permit for the 210-unit Goodwood Residence project is expected in October 2010.

Last month, investors bought 20 units in 8 Napier for about $3,500psf and 44 units in Cliveden at Grange for about $3,700psf.

"The international fund investment appetite is still strong," said Mr Donald Han, Cushman and Wakefield managing director.

"It's a good price for Guocoland. If you look at the sales volume last month, developers are holding firmly on their price. They will not do a block deal unless there is a good offer on the table."

According to data from the Urban Redevelopment Authority, the number of transactions in private residential units increased modestly in the last three months as property prices held firm.

Mr Han expects more investment purchases as the high-end residential property sector is seen as one of the preferred plays because of potential rental appreciation.

A Heady Feeling As Flyer Fun Gears Up

Source : TODAY, Wednesday, December 19, 2007

It's all in the spin.

Behind the much-publicised boom in bookings for the Singapore Flyer, well in advance of its March 1 opening next year, is a host of package ideas by its management.

Several corporates have already signed up, while charities will also be on board.

JPMorgan Chase will hold a traditional lo hei function there on Feb 19 to mark Chinese New Year. This is, in fact, the Flyer's first corporate group function — the financial services firm has booked all 28 capsules, each of which can hold 28 people.

It will cost as much as $8,888 to book a Flyer capsule during the festive period — the normal price is $2,000.

JPMorgan Chase started talks with the attraction in July and will invite its corporate clients to the event. "Singapore is an important location for us, and it is a good chance to thank our clients and highlight the country and promote tourism here," said its executive director for regional MNC Corporate Banking, Toi Gaik Poh.

The Flyer is also working with a mobile phone-maker to invite adopted charity beneficiaries at a discounted rate before the official opening on Apr 15.

Ideas to drive interest in the 165-m observation wheel at Marina Bay are also based on special events such as the National Day period, when fireworks enthusiasts can stake out the area, and of course, the Singapore Grand Prix race on Sep 28, for which ticketing and package prices are being finalised.

"The opening of the Flyer will mark a new chapter for tourism in Singapore," said Ms Patsy Ong, managing director of Adval Brand Group, the sales, marketing and ticket distribution agent for the Flyer.

Some 60 per cent of capacity has been booked online by travel agents and individuals, while 20 per cent will be set aside for walk-in visitors. In June, the Flyer will have packages targeted at families.

More than 80 full-time and 50 to 100 part-time employees have been recruited, while retail space for the terminal building is almost fully let.

Slots on the Flyer's inaugural flights from Feb 11 to 13 have already been fully snapped up. But Feb 14 is still open to the public: The Flyer's special Valentine's Day package, at $399 per couple, will feature champagne, roses and chocolates.

S'pore Becoming A Magnet For The World's Wealthy

Source : The Business Times, December 19, 2007

Non-residents' deposits rise, fuelled by strong S$, private banking drive

As wealth from across the globe seeks new homes, a growing chunk is finding its way to Singapore. In fact, more rich people who live elsewhere have decided to let their money reside in the Republic.

According to the Monetary Authority of Singapore, deposits by non-residents grew 46 per cent to almost $30 billion at end-October from a year ago. This is almost three times the $10.6 billion parked here in 2002.

Singapore's strong fundamentals and its growing reputation as a private banking hub have obviously proved to be a strong magnet. Most of the money - $20.4 billion - is in longer-term fixed deposits. The rest is in short-term demand deposits and savings and other deposits.

Domestic resident deposits were up a more sedate 20 per cent at $232 billion in October.

Bankers and economists say that Singapore's efforts to be a private banking hub are paying off. Much of the money piling up here is from rich individuals in the region, the Middle East and even as far away as Russia, they say.

Standard Chartered Private Bank this year became the first international bank to make Singapore its global private banking headquarters.

More boutique private banks are also setting up shop here. Lombard Odier Darier Hentsch, a Geneva-based institution with a history going back more than 200 years will open a Singapore office next month. Its target clients are predominantly family entrepreneurs from Singapore, Malaysia, Indonesia, Brunei and Thailand.

'It shows that people are comfortable putting money in Singapore,' said Citigroup economist Chua Hak Bin. In addition, an explicit policy change towards steeper appreciation of the Singapore dollar has led many private bankers to recommend that clients hold more Sing dollars, he said. The forecast is for the Sing dollar to rise about 5 per cent against the US unit by the end of 2008.

'It has become a store of value, and it has helped that interest rates have not come off despite the Fed cuts,' Dr Chua said.

The US Federal Reserve this month cut interest rates. But interest rates globally, including Singapore, did not slide because of a continued liquidity squeeze in the credit markets.

Singapore's economic fundamentals, well-regulated markets and stable currency are also attractive for wealthy entrepreneurs.

Standard Chartered economist Alvin Liew believes much of the increase in non-resident deposits here is from the growing ranks of wealthy individuals and the level of wealth in the non-Western world, from Asia to Middle East to Eastern Europe.

Standard Chartered global head of private bank Peter Flavel said: 'From our research, the majority of wealth is in cash or near cash, and a lot of wealth created in Asia is relatively recent - first or second generation.'

Singapore's strong regulations, good infrastructure and government support for the wealth management business are magnets, he said. These factors, coupled with an attractive tax environment and a stable currency, have made it a top place to do business. Interest on non-resident funds deposited here is tax-exempt.

Some non-resident deposits could be parked here before the money is invested in property, though some is also used by those betting on the appreciation of the Chinese renminbi.

The Singapore unit is the best proxy for investors betting on renminbi appreciation, according to United Overseas Bank's head of economics and treasury research, Jimmy Koh.

'The Sing dollar has the least restrictions and is the most liquid currency in the region,' he said.

Chip Eng Seng Makes Top Bid For Pasir Ris HDB Site

Source : The Business Times, December 19, 2007

99-yr leasehold plot can be developed into a condo with about 380 units

CHIP Eng Seng has emerged as the top bidder for a condominium site at Pasir Ris, HDB said yesterday.

The 99-year leasehold site on Bernam Street/Tanjong Pagar Road and next to Amara Hotel, has a land area of some 49,125 sq ft and a maximum gross floor area of 288,860 sq ft.

The developer beat two other bidders with its offer of some $104.0 million - or $228 per square foot per plot ratio (psf ppr) - for the 152,054 sq ft site on Elias Road.

The bid was slightly lower than the $260-$300 psf ppr analysts expected the site to fetch when it was launched in late October.

Ku Swee Yong, director of marketing and business development at Savills Singapore, said that the price offered by Chip Eng Seng was 'reasonable'.

'The launch price should start around $650 psf,' said Mr Ku. 'We anticipate strong demand for the project given the growing demand for mass-market homes.'

Analysts expect prices of mass-market homes to climb about 15 per cent next year on the back of strong demand - outstripping the price performance in the high-end residential segment, where home prices are expected to increase by less than 10 per cent.

Chip Eng Seng's bid was just 4 per cent higher than the second highest bid of $100.4 million - or $220 psf ppr - put in by GuocoLand. The developer's bid was also 12 per cent higher than the lowest bid of $93.0 million - or $204 psf ppr - from the Sim Lian Group.

Experts said that the 99-year leasehold site can be developed into a condominium with about 380 units averaging 1,200 sq ft.

Separately, the Urban Redevelopment Authority (URA) said that a hotel site on the government's reserve list is now open for application.

The 99-year leasehold site on Bernam Street/Tanjong Pagar Road and next to Amara Hotel, has a land area of some 49,125 sq ft and a maximum gross floor area of 288,860 sq ft. The maximum building height is 35 storeys.

The site is one of the four new hotel sites which are scheduled to be released for application on the reserve list in the government's land sales programme for the second half of 2007.

Under the reserve list system, a site is only offered for public tender if the government receives an application from a developer who commits to bid for the site at a price which is deemed acceptable.

The site in Tanjong Pagar is an attractive location for a new hotel as established hotels are found there, said URA.

Good Class Bungalow Prices Surge 40%

Source : The Business Times, December 19, 2007

Huge wealth creation, high networth PRs cited for hike; smaller gains likely next year

The demand for gracious bungalow living is chugging along quite nicely.

In fact, average prices of Good Class Bungalows (GCBs) are expected to appreciate by about 10 to 15 per cent next year. This appears even more impressive if you consider that this year, they have already climbed by nearly 40 per cent to $710 per square foot of land area.

The expected appreciation could propel the total value of GCB transactions to increase slightly in 2008, although the number of transactions may be slightly lower, Savills Singapore director (Prestige Homes) Steven Ming predicts.

The first 11 months of this year saw a total of 96 GCB transactions adding up to $1.28 billion. The value is an all-time record and has surpassed slightly the $1.24 billion achieved for the whole of last year. However, the number of GCB transactions from January to November this year is still shy of the 118 for the whole of 2006, according to an analysis by Savills Singapore based on caveats data from Urban Redevelopment Authority's Realis system.

'I don't expect the number of GCB transactions to increase next year, because prices have gone up quite rapidly in the past 12 to 15 months. The GCB market is generally restricted to Singaporeans and Permanents Residents with special approval to buy landed homes.

'Some of these potential buyers may have bought GCBs at much lower prices in the past and may take time to adjust to higher prevailing prices now. But having said that, there's been a lot of wealth creation over the past few years as seen in the reasonable number of record prices being set,' Mr Ming said.

Credo Real Estate managing director Karamjit Singh, too, predicts moderate price upside for GCBs for next year, despite forecasting overall flat property prices. 'GCB values will benefit from the enormous wealth created from the economic boom, and the influx of high networth individuals who become permanent residents (PRs), while supply remains scarce,' he adds.

While demand-supply fundamentals remain sound next year for Singapore's real estate sector as a whole, including GCBs, the crucial factor is how the currently-shaky sentiment pans out, Mr Singh said.

Record prices were set for two adjacent bungalows at Nassim Road in the past few months - 32G Nassim Road, which was sold for just under $20 million or $1,504 psf of land in September, followed by 32H Nassim Road in October at an even higher $1,899 psf.

Raffles Education founder and chairman Chew Hua Seng is believed to have picked up 32H Nassim Road, for which he paid $25.5 million. Mr Chew is said to own a few other bungalows nearby.

The prices achieved for 32G and 32H Nassim Road surpassed the previous record for GCBs, of $1,308 psf set only in August this year, when Hong Kong group Wharf (Holdings) sold Glencaird, a conservation bungalow at 15 White House Park, for $28.8 million.

However, market watchers highlight that for the 32G and 32H Nassim Road transactions, each property's land area is just slightly over 1,200 sq metres - lower than the minimum 1,400 sq metres (or 15,070 sq ft) plot size stipulated under Urban Redevelopment Authority guidelines for GCBs. Savills' Mr Ming argues nonetheless that these two properties will be bound by GCB regulations if they were to be redeveloped. This means that they cannot be more than two storeys high, their built-up area is limited to 35 per cent of the total land area, and the plots cannot be subdivided further.

The year has also seen quite a few GCBs being flipped. 21 Cluny Hill was bought for $15 million in January and changed hands again for $20.2 million in June. 46 Mount Echo Park was sold for $10 million in January and again for $12.8 million in March.

'Some savvy bungalow investors with deep pockets, saw value in investing in freehold GCBs earlier this year, when their prices were lagging quite a bit behind those of 99-year bungalows on Sentosa Cove. The gap has since narrowed and these investors have been able to offload their GCB investment for a handsome profit,' Mr Ming said.

Over at Sentosa Cove, seafronting bungalow sites have fetched as much as $1,696 psf this year. These are vacant sites sold by the precinct's master developer, Sentosa Cove Pte Ltd, to buyers to build their dream homes on them.

The supply of completed bungalows for sale in the upscale waterfront housing locale is still limited, but Savills' director of business development and marketing Ku Swee Yong says that owners are asking for $1,800 psf to $2,400 psf depending on the direction they face. 'The main reason for higher bungalow values on Sentosa Cove than in mainland Singapore is because of expedited approval for foreign buyers of landed property on Sentosa Cove. This has been a great draw for those who want to be PRs in Singapore and park a fraction of their wealth here,' Mr Ku said.

Kuwait Finance House Buys 97 Units In Goodwood Residence

Source : Channel NewsAsia, 18 December 2007

Kuwait Finance House is pumping another S$818 million into Singapore real estate.

Artist's impression of Goodwood Residence

This time, it is buying 97 units in Goodwood Residence – a high-end residential development at Orchard Road.

This is the single largest purchase for a residential development still under construction.

Singapore-listed Guocoland is the developer behind Goodwood Residence.

Artist's impression of Goodwood Residence clubhouse

The 97 apartments are of the four-bedroom type, ranging from 2,500 to 3,900 square feet each.

Altogether, Goodwood Residence will have 210 apartments.

The project was conferred the Green Mark Award (Platinum) award earlier this year because of its green features.

Artist's impression of Goodwood Residence covered walkway

Kuwait Finance House is a market leader in the Islamic banking industry in Kuwait.

In August, it paid S$286 million for 56 units in Keppel Land's waterfront development, Reflections at Keppel Bay. - CNA/so

Kuwait Outfit Snaps Up 97 Apartments In $818m Deal

Source : The Business Times, December 19, 2007

Purchase of units in GuocoLand's condo under development in Bukit Timah is biggest of its kind

Foreign institutional investors continue to bulk buy apartments in new residential developments in Singapore.

Money spinner: GuocoLand's pre-tax profit from the sale of the 97 units alone works out to around $500 million. The company bought the former Casa Rosita site in April 2006 for $280 million or $706 psf per plot ratio

The latest deal - and biggest such transaction to date - is Kuwait Finance House's $818.4 million purchase of 97 four-bedroom apartments in GuocoLand's freehold condo, Goodwood Residence. The property is being developed on the former Casa Rosita site.

The average unit price is understood to be slightly over $3,000 per square foot. This is a new high for the prime Bukit Timah area; it is about 25-30 per cent above the $2,500 psf average price that Sui Generis is fetching at nearby Balmoral Crescent.

At over $800 million, the deal is the 'single largest purchase of units in a Singapore residential project under construction', says GuocoLand group president and CEO Quek Chee Hoon.

Industry observers' back-of-the-envelope calculations show that GuocoLand's pre-tax profit from the sale of this first batch of 97 units alone works out to around $500 million.

The four-bedders bought by a fund managed by Kuwait Finance House (Malaysia) Berhad range from 2,500 sq ft to 3,900 sq ft, GuocoLand said.

The Singapore property arm of Malaysian tycoon Quek Leng Chan is likely to release the remaining 113 units in the 210-unit freehold condo for sale in the first quarter next year, depending on market conditions. The development includes apartments with two and three bedrooms, as well as penthouses.

The largest penthouse, a duplex unit of about 12,000 sq ft with a rooftop pool, is expected to go for nearly $40 million. The WOHA Architects-designed project also includes 15 cabana-styled apartments.

This is not KFH's first such investment in the Singapore property market. A few months ago, an Islamic real estate fund set up by KFH and the Malaysian government-owned Amanah Raya Berhad, picked up two blocks (with a total of 56 apartments) at Reflections at Keppel Bay for about $286 million.

Other recent foreign bulk purchases of apartments in new projects here include Macquarie Global Property Advisors's $136 million acquisition of 19 units at 8 Napier, at an average price of $3,550 psf.

A Spanish private-equity fund is believed to have bought 20 apartments at The Cascadia, further down Bukit Timah Road, at about $1,600 psf.

While Singapore developers and property consultants are cautious about prospects for high-end residential prices next year - most are expecting modest gains of up to 10 per cent, after a nearly 50 per cent spike this year - the outlook appears rosier to foreign investors, market watchers say.

'From the perspective of these foreign funds, they must place out monies they have raised. If they look at US, there are sub-prime and credit squeeze problems. Growth in Europe is slow. Frankly, they may not have a lot of options but to look to Asia,' the research head of a property fund management outfit said.

Also, Singapore appears an island of calm in a sea of turbulence, he said. 'It's relatively stable, will soon have the integrated resorts and F1 attractions, and the island has positioned itself as a wealth management hub - these are still important factors drawing foreign institutional money to Singapore property.'

Goodwood Residence, which will comprise two 12-storey blocks, is slated for completion in 2010.

The development has received the Building and Construction Authority's Green Mark Award (Platinum). Goodwood Residence will have more than 500 trees (including 58 preserved trees) planted in the estate. In addition, the development site shares a 150-metre-long boundary with the lush Goodwood Hill.

GuocoLand bought the former Casa Rosita site in April 2006 for $280 million or $706 psf per plot ratio.

Other upcoming Singapore condo projects by GuocoLand include Sophia Residence, with about 270 units, which the group plans to release around Q3 next year, and an upscale development on the Leedon Heights site that is slated for launch in 2009.

KFH is also co-sponsor - together with Singapore's Pacific Star Group - of the Baitak Asian Real Estate Fund, whose major investments include a stake in KL Pavilion, a mega development with luxury residential, mall, office and hotel components in the prime Bukit Bintang area of Kuala Lumpur.

Global Economy Facing Threat Of Stagflation

Source : The Straits Times, Dec 18, 2007

Growth may slow to 4-year low and inflation could hit 10-year high

WASHINGTON - THE world economy is facing the risk of stagflation - the double whammy of suffering both recession and faster inflation.

Global growth this quarter and next may be the slowest in four years, while inflation might be the fastest in a decade, say economists at JPMorgan Chase.

The worst United States housing slump in 16 years, coupled with a tightening of credit by banks, have brought the world's largest economy 'close to stall speed', according to former US Federal Reserve chairman Alan Greenspan.

At the same time, rapid growth in China and other emerging markets is driving energy and food prices higher worldwide.

'What lies ahead is a period of stagflation - slow or no growth combined with rising inflation - in the advanced economies,' says Morgan Stanley co-chief global economist Joachim Fels.

Harvard University economist Martin Feldstein is among those who say it would be just a mild case of what the world endured in the 1970s and early 1980s, when a tenfold increase in oil prices drove both unemployment and inflation above 10 per cent.

Mr Feldstein, who heads the national bureau that serves as the arbiter of when US recessions begin and end, said the combination of a stalled economy and rising inflation could be seen as a form of stagflation.

'It depends on how you want to define it,' he said. 'If you say an inflation rate of 3.5 per cent and a recession is stagflation, then we could have stagflation.'

Mr David Hensley, director of global economic coordination at JPMorgan, sees global growth of 2.4 per cent this quarter and next, and inflation at 3.5 per cent.

That is a far cry from the bad old days more than a generation ago, when world growth slowed to just 0.7 per cent in 1982 while inflation ran at an annual rate of 13.7 per cent, according to data compiled by the International Monetary Fund.

Even so, no less an authority than Mr Greenspan himself expressed concerns.

Speaking on ABC's This Week programme aired last Sunday, he said a period of 'remarkable disinflation' is ending.

'We are beginning to get not stagflation, but the early symptoms of it,' he said.

The situation poses a dilemma for the Fed and other central banks as they struggle to decide which problem they should tackle first. How they respond will go a long way in determining which danger proves to be bigger: a slumping global economy or rising prices worldwide.

For now, traders in futures markets are betting the Fed will remain focused on supporting growth, even after the latest government inflation reading last week showed consumer prices rose last month at the fastest pace in more than two years.

As of last Friday, investors put a 74 per cent probability on another quarter percentage-point cut in the Fed's benchmark overnight rate next month, down from 100 per cent the day before.

If the global economy faced only the risk of faster inflation, the policy prescription would be clear: higher interest rates.

Yet, with growth slowing in the US and Europe, central banks remain under pressure to cut rates