Wednesday, April 30, 2008

US Home Values Plunge Sharper Than Apparent: Mortgage Market Pioneer

Source : The Business Times, April 30, 2008

(BEVERLY HILLS) The man credited with developing the financing of the modern US mortgage industry says home values have fallen more than their listed prices suggest but they could hold steady with the help of a bill in Congress.

Relief for families: Mr Ranieri says the key to success for lenders is keeping people in their homes

'I think the actual price declines are bigger than the indexes are showing, since so little is being sold,' Lewis Ranieri, CEO of Ranieri & Co, said in an interview on the sidelines of the Milken Institute Global Conference.

Credited as the 'father' of the market for bundling mortgages and selling them on Wall Street as debt investments, Mr Ranieri backs a bill by US Representative Barney Frank, a Democrat from Massachusetts, that would make lenders accept losses on teetering home loans in exchange for government guarantees.

'What he is trying to do is part of what really needs to be done,' he added.

Mr Frank's bill would allow the Federal Housing Authority to insure US$300 billion of home loans. Lenders would erase some of the original loan amount and could even loosen loan terms in order to win the government backstop.

'At this point in the crisis, those of us who are practitioners would take what we can get. I wouldn't turn down less! Because we need a re-performing programme, which is what in effect the Frank bill is.' Mr Ranieri said the key to success for lenders was keeping people in their homes and his main concern was to make sure that the relief targeted lower- and middle-income families buying homes to live in rather than helped investors.

The inventory of homes for sale swelled by 40,000 to 4.06 million homes in March, or a 9.9 months' supply at the current sales pace from 9.6 months in February, according to the National Association of Realtors.

Meanwhile, the median national home price declined 7.7 per cent from a year ago to US$200,700.

Mr Ranieri, who helped create the mortgage 'securitisation' market while at Salomon Brothers, also favours new regulation of those involved in selling loans.

From mortgage brokers selling loans to home buyers to Wall Street banks who sold the securitised bundles of mortgages to investors, no one in the mortgage industry had a legal duty to work in the best financial interests of the person taking out the loan, he said.

That is in contrast to Wall Street rules on selling appropriate products to investors. 'The whole system could sell (a) person the biggest investment he ever had, his house, in an inappropriate structure, and it was fine. It makes no sense. It is on its surface patently nuts,' he said. -- Reuters

MCL Land Q1 Profit Jumps To US$5m

Source : The Business Times, April 30, 2008

THANKS to a turnaround in its joint ventures, MCL Land yesterday reported a first-quarter net profit of US$5 million, up from just US$1 million in the year-ago period. Earnings per share rose to 1.36 US cents from 0.27 US cents.

Revenue for the three months to March 31 was US$365,000 - compared with US$393,000 for the year-ago period.

However, the property firm was helped by contributions from joint ventures which stood at US$4.94 million, against a loss of US$355,000 a year earlier.

The firm said its Q1 revenue arose primarily from rental income from its investment properties.

Also, the underlying profit for the period was US$5 million, compared with US$0.2 million in the first three months of 2007. 'This improvement was due mainly to the completion in March of The Grange, the group's joint-venture project in Singapore, and the sales of the remaining 12 shops at the Kuala Lumpur Suburban Centre in Malaysia.'

MCL added that construction work on its development projects is progressing well. 'The Grange obtained its Temporary Occupation Permit in March 2008, and The Esta and Mera Springs are expected to complete in the second half of the year.'

The group secured a 99-year leasehold land parcel in Yishun Avenue 1 in March. Its purchase of another site - Casa Nassau at Upper East Coast Road - is expected to be completed in July.

Looking ahead, MCL said financial market uncertainties and the global economic slowdown could affect the residential property sector here in the short term.

'However, favourable economic fundamentals should mean that the longer term prospects remain positive. The expected completion of Mera Springs and The Esta in Singapore should benefit MCL Land's overall performance in 2008.'

Its shares rose 5 cents to close at $1.98 yesterday.

More Flatted-Factory Leases Terminated In Q1

Source : The Business Times, April 30, 2008

23% of firms cited poor business as a factor for termination: JTC

TERMINATION of leases of JTC flatted-factory space, which is supported by manufacturing and services, hit 37,000 sq m in the first quarter of 2008 - 22 per cent higher year on year and 14 per cent higher quarter on quarter.

According to JTC's quarterly facilities report for Q1, gross allocation of flatted-factory space, at 63,100 sq m, was 9 per cent down quarter on quarter but 122 per cent up year on year.

Net allocation was positive for a fourth straight quarter, though growth, at 28 per cent, was lower than in the preceding quarter.

JTC's report also shows that 23 per cent of companies cited 'poor business' as a factor for termination, up from 7 per cent in Q4 2007. Only 35 per cent cited 'consolidating operations', compared with 54 per cent a quarter earlier.

Termination of ready-built facilities, which include flatted factories, increased 13 per cent year on year to 51,100 sq m.

But net allocation of ready-built facilities was six times higher year on year at 38,400 sq m, though this was almost 50 per cent down from the preceding quarter.

Overall occupancy increased 1.3 percentage points, raising the overall occupancy rate for ready-built facilities to a record 93.9 per cent.

Net allocation of technopreneur increased a modest 100 sq m in Q1. Demand was 12,900 sq m, while supply was unchanged at 15,100 sq m.

Gross allocation of business park space was 5,800 sq m, or 19 per cent lower year on year. Termination was 2,500 sq m, or 2 per cent lower year on year. As a result, net allocation was 3,300 sq m.

Gross allocation of standard factory space rose to 10,500 sq m while termination was flat at 2,300 sq m, resulting in net allocation of 8,200 sq m.

For stack-up factory space, demand and supply remained largely unchanged in Q1. Net allocation was 800 sq m. Gross allocation was 9,700 sq m while termination was 8,900 sq m.

Net allocation of prepared industrial land was 8 per cent lower quarter on quarter but 20 per cent higher year on year.

A larger proportion of gross allocation of prepared industrial land in Q1 was for manufacturing and supporting sectors.

The service and chemical sectors contributed 59 per cent and 22 per cent respectively to total gross allocation.

Year Of Uneven Growth, Price Worries Ahead

Source : The Business Times, April 30, 2008

MAS says financial services, IT sector vulnerable but core activities insulated from US

Global headwinds have gathered speed in recent months, but domestic and regional support should prevent the Singapore economy from sliding into a sharp downturn in 2008, says the Monetary Authority of Singapore (MAS).

While it still expects Singapore's GDP growth to come in at around 4-6 per cent this year, 'barring a sharp downturn in the US economy', the central bank says the economic outlook in 2008 will vary significantly from industry to industry, with certain sectors more vulnerable to the US downturn.

















And in the event of a protracted US recession, along with a widespread decline in global and regional economic activity, Singapore's growth will be more severely hit, as even the more resilient activities will not go unscathed, MAS warns in its latest Macroeconomic Review. In any case, even in the baseline scenario, Singapore's growth momentum is expected to ease from its double-digit sequential pace in Q1 over the next few quarters.

Advance estimates based only on January and February data have the Singapore economy growing almost 17 per cent in Q1 over the preceding Q4 2007. In year-on-year terms, the flash Q1 GDP growth was a robust 7.2 per cent.

The slowdown this year, after four years of above-7 per cent growth, will bring the economy closer to its potential output path, with the output gap narrowing markedly by 2009, MAS says. The economy has racked up a positive output gap, having expanded above its 4-6 per cent medium-term trend potential over the last four years.

MAS remains broadly optimistic about Singapore's growth outlook, as a good 30 per cent of the economy - core activities such as construction, marine transport and pharmaceuticals - are relatively insulated from the US.

Another big core of activities, accounting for some 37 per cent of GDP, enjoy strong domestic and regional support. But even these sectors - transport hub services, tourism-related activities, business services - would be affected if the US downturn deals Asia a tough hand.

But the most vulnerable to a US and global downturn are 'sentiment-sensitive' financial services such as the wealth advisory, equities, brokerage and treasury markets, as well as the IT-related cluster. They account for about one-third of the economy.

And while the growth outlook is a little murky, inflation remains the bigger concern, with further upside risks to global oil and food prices. MAS expects inflation in Singapore to stay high in 2008 'due to a confluence of external and domestic factors'.

Consumer price inflation could average above 6 per cent in the first half of 2008, and ease to about 4 per cent in the second half, partly as the GST hike effect wears off, it estimates.

'On a sequential basis, inflation should moderate over the rest of the year and come closer to its historical average rate of increase of 0.3 per cent,' it adds. MAS expects the 2008 inflation rate in the upper half of the 4.5-5.5 per cent forecast range, with underlying inflation - minus private accommodation and private road transport - coming in at 3.5-4.5 per cent.

The central bank also reiterates that its latest monetary policy decision to re-centre the policy band will help to ease inflation pressures and provide support to the economy as it slows to a more sustainable growth pace.

The half-yearly Macroeconomic Review also cites empirical evidence of first signs of a 'weak synchronicity' in economic activity between the US and Asia - as opposed to a full decoupling.

Latest trade data, it says, suggest there is some short-term substitution as regional exporters seek out opportunities in the growing China and Middle East markets to partially offset the drag in US demand.

One economist who was a little surprised by the MAS' latest assessments is HSBC Bank's Robert Prior-Wandesforde - he reckons the central bank is a bit hopeful about the inflation forecast for the year. He thought the 4.5-5.5 per cent inflation forecast range should have been revised up, and that the economy would quite easily hit the top end of the 4-6 per cent GDP growth forecast.

S&P Report Says Asian Economies Will Stay On Track

Source : The Business Times, April 30, 2008

The economic engines of India and China will help keep Asia-Pacific economies on track amid a global slowdown, but a protracted US slump and rising inflation pose possible hazards, a report said on Wednesday.

The most significant threat to the region's macroeconomic stability is inflation, in particular the recent surge in food and oil prices, according to the report by Standard & Poor's Ratings Services.

'There are some visible threats to the region in the form of food and energy prices, which may adversely affect performance over the next couple of years,' said S&P Asia-Pacific chief economist, Subir Gokarn, according to a statement. The most important challenge facing regional policy makers was managing inflation while sustaining economic performance, Mr Gokarn said.

The region's economies are expected to grow more slowly this year and in 2009, although they will maintain a relatively fast pace on the back of strong regional drivers, the S&P report said.

China and India, two of the three largest economies and the fastest growing, will together continue to grow at about 8 percent or more over the next two years, it said.

'This momentum will help sustain a positive growth environment for Asia-Pacific as a whole,' S&P said. 'The ability of the region's economies to insulate themselves against a U.S. recession is enhanced by their ability to exploit the opportunities in the region through greater economic integration.' Japan's return to positive growth is another factor in the region's resilience, although the economy is predicted to slow compared to the expansion rates of more than 2 per cent in the past two years, the report said.

'Japan's growth, in turn, reinforces the growth impulses in other countries in the region,' S&P said. The report forecasts Japan's real gross domestic product to be above 1 percent this year and as much as 2.2 per cent next year.

The report said that Asian economies were also more resilient because they have become less dependent on exports to the US as recent efforts to expand regional integration start to bear fruit.

'Asian countries have been extremely active in entering into trade and broader commercial agreements, both within and outside the region,' the report said. 'Fast-growing neighbours, particularly those whose growth is driven from within, offer enormous opportunities for all these countries - and they are all trying their best to exploit those opportunities.' S&P said, however, that sustained Asian growth depended on the US recession being moderate and brief.

'A prolonged slump in the US economy and the effect it will have on demand for imports, particularly of consumer goods from the region, will impact on wage incomes and investment activity in the region,' it said. -- AP

CapitaLand Unlikely To Match Last Year's Results

Source : The Business Times, April 30, 2008

Chairman cites lack of revaluation gains this year

CAPITALAND said yesterday its 2008 earnings were unlikely to match last year's $2.8 billion due to a lack of revaluation gains.

Mr Liew: Because we are well capitalised, we are ready to capitalise on opportunities that arise

The firm should, however, perform better at the operating level, chairman Richard Hu said in response to shareholders' queries at the firm's annual general meeting (AGM).

About $1.1 billion of CapitaLand's profit last year was from gains in the value of properties and investments it still holds.

The other $1.7 billion came from selling apartments, trading properties, rent and managing real estate funds.

The developer will report its first-quarter earnings today.

According to an average estimate of three analysts polled by Reuters, CapitaLand's net profit likely fell 59 per cent to $247 million compared with the first three months of 2007, when earnings received a boost from divestments.

The smaller bottomline will also reflect slowing apartment sales in Singapore due to a global economic slowdown and government measures to cool the city-state's property market.

For the whole of 2008, the firm is expected to post a net profit of $1.04 billion, according to a Reuters Knowledge poll of 19 analysts.

'CapitaLand will probably continue to book some revaluation gains this year, but most of the increments would already have been booked in 2007,' Kim Eng property analyst Wilson Liew said.

CapitaLand's chief executive Liew Mun Leong told shareholders at the AGM that the firm will be able to weather the current economic uncertainties as it is well diversified geographically and can still raise funds amid tight credit markets.

The company made inroads into Vietnam, India and the Middle East last year and it successfully raised $4 billion in the first three months of 2008, he said.

'Because we are well capitalised, we are ready to capitalise on opportunities that arise,' he said.

Singapore property firms have so far reported disappointing earnings for the quarter ended March 2008, partly due to slower sales in the local market.

The city-state's number three developer Keppel Land posted a 3.5 per cent fall in net profit, while GuocoLand and Allgreen reported earnings declines of 93 per cent and 65 per cent respectively. -- Reuters

S'pore Economy Faces Dark Storm Clouds: PM

Source : The Business Times, April 30, 2008

The United States is probably in a recession and the Singapore economy will be more severely affected if the turmoil in global financial markets worsens, Singapore's prime minister said on Wednesday.

The Southeast Asian country was ready to respond if the situation in the United States worsens, said Lee Hsien Loong in a statement to mark May Day.

'Dark storm clouds have gathered... A US recession has probably already started,' Mr Lee said.

'We must watch closely how the situation in the US unfolds, and be ready to respond if things take a turn for the worse. We have the resources and the ability to do so.'

Mr Lee acknowledged that the rising cost of living in the Republic was a major issue but said Singapore could not be completely insulated from rising global inflation.

'We need not worry about a food shortage, because we have adequate supplies, and can buy what we need from many sources,' he said.

Mr Lee said that the central bank's policy to allow the Singapore dollar to rise had moderated the impact of imported inflation.

Singapore's central bank earlier this month tightened monetary policy by allowing a rise in the Singapore dollar, its main policy tool .

Inflation in the city-state accelerated to a 26-year high of 6.7 per cent in March. The central bank expects inflation to hit the upper-end of a 4.5-5.5 per cent range this year, although some economists said inflation for the year could average 6 percent.

Mr Lee reiterated the government's official forecast that the economy would grow at 4-6 per cent this year.

Booming construction, tourism and marine engineering will help lessen the impact of a US recession on Singapore, he said.

Mr Lee also said the labour market would remain tight, and that more jobs will be created as the country builds two multi-billion dollar casinos, the first of which is set to open late next year.

Singapore's unemployment rate rose to a seasonally adjusted 2 per cent in the first quarter amid mounting uncertainties in the global economy, advance government estimates showed on Wednesday, and analysts warned the jobless rate may climb higher in the months ahead. -- REUTERS

IHG To Launch 30 Hotels Over 3 Years

Source : The Business Times, April 29, 2008

INTERCONTINENTAL Hotels & Resorts (IHG) is launching 30 new hotels - predominantly in China - over the next three years in the Asia-Pacific region, banking on strong domestic markets as well as inter-Asia travel to bolster revenue.

Five hotels and resorts are slated to open this year, of which four will be in the Chinese cities of Beijing, Qingdao, Huizhou and Dalian. The 16-storey, 337- room InterContinental Beijing Beichen, for one, is located close to the National Olympics Stadium and seeks to open its doors in June, just in time for the Olympic Games.

IHG expects to increase its portfolio of hotels in China from the current nine to 24 by 2010.

'In Asia, there's huge opportunity, given such strong domestic markets and strong inter-Asia markets,' said Gary Rosen, senior vice-president of sales and marketing for IHG Asia Pacific.

He added that the Asia-Pacific operations were generally protected from the effects of the economic turmoil overseas as they were not reliant on travellers outside Asia for significant business.

Other Asia-Pacific markets that IHG is expanding into include Ho Chi Minh City, New Delhi and Melbourne, adding to the 35 hotels currently owned across the Asia-Pacific region.

For its Singapore branch, demand stems largely from South-east Asia. InterContinental Singapore reported an average occupancy rate in the high 80s.

With regard to rising costs, Mr Rosen said IHG would 'act as a unified system' and leverage on its various hotels to keep costs competitive when it came to managing its supply chain and logistics.

Finding quality staff to fulfil its expansion needs was also a challenge. 'We want to make sure we continually fill our network with great people,' added Mr Rosen.

IHG chalked up a total gross revenue of £9 billion (S$24.5 billion) for the FY2007 ended Dec 31, up 14 per cent from the previous fiscal year.

Net profit fell 43 per cent to £231 million from £405 million due to reduced property sales.

Other hotel brands owned by the group include Crowne Plaza & Resorts and Holiday Inn Hotels & Resorts.

CapitaLand Says 2007 Profit Hard To Match

Source : The Business Times, April 29, 2008

Singapore's CapitaLand, Southeast Asia's largest developer, said on Tuesday its 2008 earnings were unlikely to match last year's $2.8 billion (US$2.06 billion) due to a lack of revaluation gains.

The firm should, however, perform better at the operating level, chairman Richard Hu said in response to shareholders' queries at the firm's annual general meeting (AGM).

About $1.1 billion of CapitaLand's profit last year was from gains in the value of properties and investments it still holds.

The other $1.7 billion came from selling apartments, trading properties, rent and managing real estate funds.

The firm will report its first-quarter earnings on Wednesday.

According to an average estimate of three analysts polled by Reuters, CapitaLand's net profit likely fell 59 per cent to $247 million compared with the first three months of 2007, when earnings received a boost from divestments.

The smaller bottomline will also reflect slowing apartment sales in Singapore due to a global economic slowdown and government measures to cool the republic's property market.

For the whole of 2008, the firm is expected to post a net profit of $1.04 billion, according to a Reuters Knowledge poll of 19 analysts.

'CapitaLand will probably continue to book some revaluation gains this year, but most of the increments would already have been booked in 2007,' Kim Eng property analyst Wilson Liew said.

CapitaLand's chief executive Liew Mun Leong told shareholders at the AGM that the firm will be able to weather the current economic uncertainties as it is well diversified geographically and can still raise funds amid tight credit markets.

The firm made inroads into Vietnam, India and the Middle East last year and it successfully raised $4 billion in the first three months of 2008, he said.

'Because we are well capitalised, we are ready to capitalise on opportunities that arise,' he said.

Singapore property firms have so far reported disappointing earnings for the quarter ended March 2008, partly due to slower sales in the local market.

Singapore's number three developer Keppel Land posted a 3.5 per cent fall in net profit, while GuocoLand and Allgreen reported earnings declines of 93 per cent and 65 per cent respectively. -- REUTERS

URA Releases 2 Residential Sites For Sale

Source : The Business Times, April 29, 2008

The Urban Redevelopment Authority (URA) has made available two 99-year leasehold residential sites for sale.

One is a site in Woodleigh Close, a short walk from the Potong Pasir MRT station, or the yet-to-be opened Woodleigh MRT station.

The 1.08 ha site has a maximum gross floor area of 30,167 sq m for 260 to 290 apartments.

The tender for this land parcel will close on June 24.

The other in Upper Thomson Road is close to Bishan Park and Lower Peirce Reservoir Park.

On the reserve list, the site will be put up for sale, only if a developer were to indicate his interest by committing to a minimum bid.

The 2.08 ha Upper Thomson Road site can have a gross floor area of 43,758 sq m.

Hague Court Ruling May 23 On Pedra Branca

Source : The Business Times, April 29, 2008

THE HAGUE - The International Court of Justice will rule on May 23 on jurisdiction over islands claimed by both Singapore and Malaysia, the tribunal announced on Tuesday.

The two neighbours asked the court in The Hague in 2003 to decide on sovereignty over the tiny island of Pedra Branca, and its rocky outcrops, Middle Rocks and South Ledge.

Hearings began here last November and both countries have pledged to abide by the court's decision.

The final ruling by the ICJ, the UN's highest judicial organ, will not affect ties between the neighbours, the two countries said this month.

The issue of Pedra Branca is one of many to be resolved by the two nations.

Bilateral ties have sometimes been stormy since Singapore was ejected from the Malaysian Federation in 1965 over ethnic issues.

They have undergone a marked improvement since Malaysia's Prime Minister Abdullah Ahmad Badawi took office in 2003. -- AFP

世邦魏理仕大中华区总裁:对中国房地产价格 奥运效应不如想象中大

《联合早报》Apr 30, 2008

奥运效应对中国房地产价格的影响并不如一般人想象那么大,短期内或对北京楼市供应量,以及奥运比赛项目举办城市的酒店房价会有一定的影响,但对楼市基本面不会有决定性作用。

世邦魏理仕(CBRE)大中华区总裁兼首席执行官蒲敬思(Chris Brooke)昨天在本地接受采访时表示:“很多人认为北京奥运会是一个关键因素,我们却有不同的看法。中国房地产无论是住宅或办公室的零售价格,都是由地方性市场需求所推动的。”

“像北京奥运会或上海世博会这样的特大盛会,短期内对酒店客房价格和楼市零售价格会有影响,但不会改变房地产的基本面。”

“奥运效应对北京楼市新楼盘推出时机或有影响,例如为了赶在奥运会开幕之前完成建设项目,许多工程进度都被提前,使得市场供应量增加。另外,天津、青岛这些有举办奥运比赛项目的城市,楼市价格受影响影响的程度,要大过上海、成都或华南地区等非奥运举办城市。”

蒲敬思认为,中国经济发展的前景依然受看好,他预期从今年到明年中国楼市仍会有稳定增长,不过增长速度会放缓。“这或许比较健康,因为市场脚步需要放慢一点,再重新调整。”

今年第一季度,广州、深圳的住宅商品房价向下调整,成交量也减少。蒲敬思认为,这主要是中国政府信贷政策收紧,购买超过一套房子的首期付款比例比以前更高。不过这也只是个别城市现象,在其他区域,有些供不应求,一些又供大于求。整体来看,中国楼市价格仍有向上走的趋势。

一些中国舆论和评论员将楼市价格高涨,归咎于外资涌入炒房。对此,蒲敬思指出外资看好人民币的升值空间,以及中国楼市最少有20%的利润空间,对进军中国楼市兴趣浓厚,可能使商业地产价格有所提升。但他不同意外资是推高中国房价的“元凶”,当地居民的住房需求才是房价居高不下的主因。

中国总理温家宝表示,将大力发展廉租房等保障型住房,这是否会撼动现有房价?蒲敬思指出,廉租房是为解决低收入者的住房需求,经济适用房是为因应城镇化发展带来城市人口增长的问题,形成一个全新的市场领域,面向的是完全买不起商品房的社会群体,因此对整体楼市的影响有限。

中国政府一再宣示,宏观调控的政策目标是建立长期性、可持续发展的房地产市场。蒲敬思认为,宏观调控针对供应、需求和信贷采取措施,在调节市场和让市场自行成长之间取得良好平衡,有效降低了市场投机心理,“在很大程度上相当成功”。

去年北京、上海、广州、深圳等主要大城市楼市价格明显上涨了许多,蒲敬思认为成都、天津、杭州或许是下一阶段值得投资注意的焦点,青岛、大连、武汉、沈阳、长沙、南昌也有投资潜力。“这当然与中国经济区域发展战略有关,这些人口介于500万到1000万人口的城市,对新住宅需求仍然有待满足。”

Three S'pore Residential Plots Up For Sale In Quiet Market

Source : The Straits Times, Apr 30, 2008

One exec condo site and two 99-year leasehold suburban sites open for bids

BUYING interest in private homes may be relatively low now, but the Singapore Government is offering developers three new residential sites to consider buying.

Two are 99-year leasehold suburban sites, and the other is an executive condominium site.

The first - in Woodleigh Close - is seen as an attractive site by property consultants, as it is a short walk from the Potong Pasir MRT station and the yet-to-be-opened Woodleigh MRT station.

Developers can build 260 to 290 apartments on the 1.08ha site, which has a maximum gross floor area of 30,167 sq m.

Property consultants expect the site to attract bids of $300 to $370 per sq ft (psf) of gross floor area. The apartments may then sell for between $800 psf and $880 psf, they said.

CBRE Research executive director Li Hiaw Ho said the site is close to the city and amenities in the Potong Pasir HDB estate and Upper Serangoon Road.

'It is likely to be a popular location, as two freehold projects in the vicinity - Blossoms @ Woodleigh and Parc Mondrian - launched last year were fully sold,' said Mr Li.

Recent caveats lodged for the 240-unit Blossoms @ Woodleigh have hovered between $770 psf and $922 psf.

The 100-unit Parc Mondrian sold for between $650 psf and $720 psf last April.

The tender for the Woodleigh Close site will close on June 24. The site is on the confirmed list, where sites are put up for sale on specific dates.

But the second site in Upper Thomson Road, close to Bishan Park and Lower Peirce Reservoir Park, is on the reserve list.

This means that it will be put up for sale only if a developer commits to a minimum bid acceptable to the authorities.

The site is not near any MRT station, but it is in an established private estate.

A developer could build 380 to 420 apartments on the 2.08ha Upper Thomson Road site, which can have a gross floor area of 43,758 sq m.

To attract buyers, developers may want to consider developing a condo with eco-friendly features, which is in line with the surrounding serene environment, said Mr Nicholas Mak, Knight Frank's director of research and consultancy.

If triggered, this site could attract bids of $200 psf to $240 psf of gross floor area, and the apartments could sell for $650 psf to $700 psf, he said.

The third site, in Sengkang, is a 17,000 sq m executive condo site on the reserve list.

This 99-year leasehold site is the third executive condo site the HDB has made available for sale in the first half of this year.

The other two are in Jurong West and Yishun Avenue 11.

GOOD LOCATION

'It is likely to be a popular location as two freehold projects in the vicinity...launched last year were fully sold.'
MR LI HIAW HO, CBRE Research executive director, who adds that the Woodleigh Close site is close to the city

EXTRA FEATURES

To woo buyers, developers may want to consider a condo with eco-friendly features on the Upper Thomson Road site, said Mr Nicholas Mak, Knight Frank's director of research and consultancy.

URA Releases Two More GLS Sites

Sourc : The Business Times, April 30, 2008

THE Urban Redevelopment Authority (URA) has released two more residential sites through the Government Land Sales (GLS) programme. And while interest is expected to be good, profit margins for developers will be slimmer.

A 1.08 ha site at Woodleigh Close, with a maximum permissible gross floor area of 30,167 sq m (324,714.5 sq ft), is up for sale via the GLS confirmed list. Cushman and Wakefield managing director Donald Han reckons the potential profit margin for a developer could be about 12 per cent.

Click here for URA's news release
http://www.ura.gov.sg/pr/text/2008/pr08-48.html


This is based on a land price of $350-$380 per sq ft per plot ratio (psf ppr), factoring in construction costs and an estimated selling price based on current project launches. In the vicinity, Mr Han says Parc Mondrian and Blossoms at Woodleigh are going for $700-$850 psf. Noting that profit margins were 30-40 per cent until the effects of the US sub-prime crisis and global credit crunch took hold late last year, Mr Han said: 'In bad times, profit margins can fall into single digit figures.'

The point, however, is that profit can still be made. 'It's a matter of who can control costs better,' he said. 'Construction companies can control costs better, so for them, even a baseline profit margin of 8 per cent is feasible.'

Reflecting market volatility, Knight Frank director (research and development) Nicholas Mak believes the land price for the Woodleigh site could be $300-$370 psf. 'If the market turns bearish within the next two months, the bids will be at the lower end,' he said. He expects four to eight bidders will take part in the tender, including major developers.

URA has also released detailed sale conditions for a 2.08 ha reserve list site in Upper Thomson Road, close to Bishan Park and Lower Peirce Reservoir Park, for residential development. The site has a maximum permissible gross floor area of 43,758 sq m (471,006.7 sq ft).

Mr Han said new projects in the area are going for about $850 psf. Factoring in construction costs and a developers' profit of 10-12 per cent, he expects bids to be $380-$400 psf ppr.

Separately, the Housing and Development Board has made available a reserve list site at Sengkang East Avenue and Buangkok Drive for an executive condominium. The 17,000.8 sq m site has a permissible gross floor area of 51,002.4 sq m.

Income, Not Interest, Led To Property Boom

Source : The Business Times, April 30, 2008

The recent climb enjoyed by equity and property prices was driven more by strong economic growth than by low interest rates, according to a study by the Monetary Authority of Singapore (MAS).

Empirical research by MAS shows that economic activity exerts a larger influence on asset prices in Singapore than borrowing costs.

'Asset price inflation reflects an underlying increase in income growth augmented in part by favourable sentiment towards domestic assets,' says the study, featured in the MAS macroeconomic review report released yesterday.

The MAS report also says: 'This linkage has been misunderstood by some analysts, who expressed concern that the increase in domestic liquidity, in and of itself, has fuelled the run-up in asset prices.'

Private housing prices increased by 31.2 per cent for 2007 as a whole, and some market analysts had felt that the central bank should raise interest rates to rein in property inflation.

This was because while overseas investors were driving property prices up, the inflow of foreign funds continued to add to domestic liquidity and kept borrowing costs low.

But as the MAS report mentions, 'the factors behind the increase in liquidity are much more complex in view of Singapore's monetary policy framework'.

Domestic interest rates have dropped since September last year as US interest rates fell and the Singapore dollar grew stronger.

The benchmark three- month domestic interbank rate fell by 144 basis points from August 2007 to 1.31 per cent at the end of March 2008.

As interbank rates fell, banks also started offering cheaper and more innovative mortgage packages.

Plans For $200m Hotel In S'pore Sports Hub Shelved For Now

Source : The Business Times, April 30, 2008

Analysts believe business decision is behind the move

Plans for a $200 million hotel in the new Singapore Sports Hub appear to have been canned, even though preferred bidder Singapore Sports Hub (SSH) consortium said options to build the hotel at a later stage remain open.

Genting International, which was in discussions with the consortium about the proposed hotel, said in an announcement yesterday that it has 'discontinued discussions with the consortium for the proposed construction of the hotel as it has been informed that the Singapore Sports Council (SSC) has decided not to have a hotel in the Singapore Sports Hub at this point in time'.

A Genting spokesman declined to comment beyond saying that 'the ball now lies in their court' regarding the proposal.

This is the first time news has broken that the hotel option would not be included in the deal. SSC did not respond by press time.

SSH consortium head Ludwig Reichhold said the proposed hotel was only an option and was 'not confirmed' at the time of bidding. 'We are busy finalising the main contract with them now and as things were already running ahead with the main contract, negotiating more with the hotel factored in would have delayed the work,' he added.

Analysts believe a simple business decision is behind the move. While there have been reports of strong demand for rooms, there are also a lot of hotels in better locations coming up in the years ahead. The floor area available could be much better used as retail space.

Hotels are a bit more complicated to run than retail and office space, Knight Frank director (research and consultancy) Nicholas Mak pointed out. Sharply fluctuating rates and branding and operational costs all add to the business risks. In the end, they need to make a 'balanced decision', he said.

The Sports Hub, whose construction was originally scheduled to begin last year, is already running late.

According to reports, the reason for the delay is that the paperwork for the nearly $2 billion public-private partnership project has not been completed. The latest sudden revelation suggests that more work is in store.

Earlier reports estimate the completion date will stretch from the end-2010 original date to at least 2012.

Market Street Car Park Set To Stay - At Least For Now

Source : The Business Times, April 30, 2008

CCT defers decision on redeveloping site into office building

CapitaCommercial Trust (CCT) has decided to defer its decision on the redevelopment of Market Street Car Park (MSCP) into an office building that could cost up to $1.5 billion.

Asked if the huge supply of new office space after 2010 was a determining factor, Lynette Leong, CEO of CCT manager CapitaCommercial Trust Management Ltd (CCTML), said: 'No, the main reasons are the significant size of the redevelopment, rising construction costs, present volatility in financial markets and the unknown development premium amount, which have caused us to defer the decision on the planned redevelopment, such that it will not be made any earlier than mid-2009.'

Ms Leong also added that CCTML is 'carefully evaluating the financial viability of and the funding structure for the redevelopment'.

'We are not concerned about the new office supply after 2010 given that statistics show that office demand for good-quality office space is still strong and that the lease pre-commitments for the new supply have also reached a high level. For example, about 52 per cent of the office space at Marina Bay Financial Centre has been pre-committed three years ahead of its completion,' added Ms Leong.

Apart from obtaining the necessary approvals, including the approval of CCT's unitholders, if required, Ms Leong said that the decision to redevelop the site will always be subject to the financial viability of the project, which includes the amount of development premium payable based on the payment of 100 per cent of the enhancement in land value (instead of the standard 70 per cent).

She said: 'We do not have any indication of the amount of development premium payable right now. However, it is expected to be a major component of the total redevelopment cost of MSCP.'

When the project was first announced in January, CCT said that the total project cost, depending on the development premium, could range from $1 billion to $1.5 billion.

On rising construction costs, Ms Leong said that this has increased by 10-15 per cent since the beginning of the year and that CCTML had also sought quotations from the construction companies.

Ms Leong said it would continue to take the necessary steps to obtain the planning permission (PP) from the Urban Redevelopment Authority, and assist its retail tenants in relocation. It would also 'continue operating the car park to serve our season and hourly car park users', she added.

While the potential loss of 704 car parking lots at MSCP was a prickly issue with many of its current uses, CCTML said that the provision of car parking lots was not an issue in getting PP.

Cushman & Wakefield managing director Donald Han said the deferment was 'excellent news', not least because occupancy costs, which factor the cost of car parking, would have increased.

He also reckons that the deferment could be linked to MSCP historically being designed to serve the CBD until new lots are provided. However, new restrictions limiting the number of lots in new buildings will have an impact on the number of available lots.

Knight Frank director (research and consultancy) Nicholas Mak believes deferring the project could be a strategic move to see if construction costs and rates for development charges could fall in the future.

But he believes the project will not be deferred for too long. 'Reit's have to constantly look for a growth story or it won't seem interesting to investors.'

Market Street Carpark To Stay As It Is, For Now

Source : TODAY, Wednesday, April 30, 2008

THE planned redevelopment of the Market Street carpark has been deferred.

In January, CapitaCommercial Trust (CCT) was granted an outline planning permission to redevelop the property into a Grade A office building. Since then, it has been working with its appointed architect and consultants to finalise and submit design plans to the Urban Redevelopment Authority.

CCT said it does not expect a plan for the redevelopment to be made before mid next year. This is after considering the significant size of the project, rising construction costs and volatile financial markets, reported Channel NewsAsia.

The delay will be welcomed given the tight carpark space situation in the Central Business District. Analysts added that the deferment is prudent, given the bulk of office supply coming on stream between 2010 and 2012, and there is no hurry for CCT to redevelop the property amid rising construction costs.

CCT said it will continue to operate the carpark and take steps to obtain the provisional permission from the authorities.

Meanwhile, the 25-year-old Smith Street food centre at Block 335, in Chinatown, will reopen tomorrow, after 22 months of upgrading work costing $17.3 million. Given a facelift under the Hawker Centres Upgrading Programme, the building's architecture has been transformed with a new oriental façade, more seating and disabled-friendly features.

CapitaLand Q1 Profit Down

Source : TODAY, Wednesday, April 30, 2008

CAPITALAND'S first-quarter profit fell 59 per cent after one-time gains that boosted income a year earlier were not repeated.

Net income fell to $247.5 million in the three months ended March 31, from $608.1 million in the year-earlier period, the Singapore-based company said today in a statement to the local stock exchange.

Sales fell 1 per cent to $631.3 million. Profit in the first quarter of last year included a fair-value gain of $426.8 million from the sale of Temasek Tower. — bloomberg

CapitaLand Profit Slumps As Expected, Outlook Cautious

Source : The Straits Times, Apr 30, 2008

CAPITALAND, South-east Asia's top property developer, met expectations with a 59 per cent slide in quarterly profit due to lower sales in Singapore and the absence of one-off gains, and said buyers would remain wary amid the credit crisis.

CapitaLand earned net profit of $247.5 million (US$182 million) in the three months to the end of March, compared with $608.1 million from a year ago

The developer earned net profit of $247.5 million in the three months to the end of March, compared with $608.1 million from a year ago, in line with the average forecast of $247 million by three analysts polled by Reuters.

CapitaLand said on Wednesday the 2007 first-quarter results included a $426.8 million fair value gain from one of its office buildings in Singapore.

'Market sentiment in the property market is expected to remain cautious until a sustained recovery in the financial markets and economic conditions can be foreseen,' CapitaLand said in a statement.

'Nevertheless, the group is confident that it will be profitable in 2008,' said the group, which is partly owned by state investment firm Temasek Holdings.

The developer's Chairman Richard Hu said on Tuesday that its 2008 earnings were unlikely to match last year's $2.8 billion due to a lack of revaluation gains.

Private home prices in Singapore, CapitaLand's biggest market, recorded a second straight quarter of slower growth in the first quarter of 2008 as property sales slumped to the lowest in five years, government figures showed on Friday.

About $1.1 billion of CapitaLand's profit last year was from gains in the value of properties and investments it still holds. The other $1.7 billion came from selling apartments, trading properties, rent and managing real estate funds.

Singapore property firms have so far reported disappointing earnings for the quarter ended March 2008, partly due to slower sales in the local market.

The city-state's number three developer Keppel Land posted a 3.5 per cent fall in net profit, while GuocoLand and Allgreen suffered earnings declines of 93 per cent and 65 per cent respectively.

CapitaLand shares rose 1.3 per cent in the first quarter, outperforming rivals City Developments whose shares lost 22 per cent while KepLand is down 24 per cent. The broader Straits Times Index fell 13 per cent in the same period. -- REUTERS

Genting No Longer In Talks To Build Hotel At Sports Hub

Source : Channel NewsAsia, 29 April 2008

Genting International has said it is no longer in talks with the Singapore Sports Hub Consortium to build a hotel in the Singapore Sports Hub.







In a statement to the Singapore Exchange (SGX), Genting said the Singapore Sports Council has decided not to have a hotel in the hub "at this point in time".

Genting added that the subject matter of this announcement is not expected to have any material impact on the consolidated net tangible assets and earnings per share of the company for the financial year ending 31 December 2008.

It was reported earlier this year that the Singapore Sports Hub Consortium was in talks with Genting International to build a hotel at the new National Stadium and Sports Hub in Kallang. - CNA/ir

JTC Achieves Record Occupancy Level For Ready-Built Facilities In Q1

Source : Channel NewsAsia, 29 April 2008

JTC has achieved a record occupancy level for its ready-built facilities in the first quarter of 2008.

Net allocation was 38,400 square metres, six-fold higher than the same period last year.

In its quarterly report, JTC said this helped to boost the occupancy level for ready-built facilities by 1.3 percentage points to 93.9 percent.

Termination level, however, has gone up as well - to 51,100 square metres in the first quarter of this year, compared to 45,300 square metres in the first quarter of 2007.

However, the net allocation for prepared industrial land remained strong - at 114.9 hectares - due partly to the general expansion across the manufacturing sector for 2007.

Looking ahead, more ready-built spaces are expected to come on stream with Phase 2 construction of Fusionopolis, which is set to be completed by the third quarter of 2010. - CNA/ms

URA Releases Two Residential Sites For Sale

Source : Channel NewsAsia, 29 April 2008

The Urban Redevelopment Authority (URA) has launched a residential site at Woodleigh Close for sale by public tender.

At 1.08 hectare, market watchers said about 260-290 apartment units can be built on the plot of land, which is located near to the Potong Pasir MRT station.

A new 99-year leasehold project in the location is expected to fetch prices of around S$800 psf. This will translate to a possible land price of around S$300-350 psf per plot ratio for the site.

The tender will close at noon on June 24 and selection will be based on the tendered land price only.

Separately, the URA also released the detailed sales conditions for the residential parcel at Upper Thomson Road, which is estimated to offer 380 to 420 new homes.

The site is on URA's reserve list and developers who are interested in buying it can apply for the plot to be put up for tender.

Under the reserve list system, the site will only be put up for sale if a developer's minimum bid price is acceptable to the government.

Analysts expect this site at Upper Thomson Road to fetch S$200 to S$240 psf per plot ratio, which will translate into a possible selling price of S$650 to S$700 psf. - CNA /ls

CapitaLand Says Q1 Profit Down 59%

Source : Channel NewsAsia, 30 April 2008

Singapore property developer CapitaLand said on Wednesday net profit in the first quarter fell 59 percent year-on-year to 247.5 million Singapore dollars (181.9 million US).

The decline came mainly from an absence of exceptional gains, said CapitaLand, the largest developer in Southeast Asia.

Last year's first quarter profit of 608.1 million dollars included an exceptional gain of 426.8 million dollars from the sale of an office tower in the central business district, it said.

Revenue in the March quarter was 631.3 million dollars compared with 637.0 million dollars a year ago.

CapitaLand said it remained in a strong position to expand further in the region, despite widespread worries about the global economy stemming from a crisis which originated in the US sub-prime or higher-risk mortgage sector.

"The continuing global credit crunch would have, as expected, caused uncertainty in the general economic and business environment in Asia," said Richard Hu, chairman of CapitaLand.

"However, the group has strengthened its financial footing and is well-positioned to capitalise on any opportunities that may arise," he said.

Chief executive Liew Mun Leong said the company would continue to concentrate in Asia.

"We will continue our geographic growth and Asia focus as we believe that Asian economies will grow faster than the global average for the foreseeable future," he said.

CapitaLand sees "vast opportunities" in Vietnam, where it is building 6,000 residential units over the next three years, said Liew.

CapitaLand is 40 percent owned by Singapore's investment firm Temasek Holdings. - CNA/so

MMP REIT Posts S$17m Distributable Income For Q1

Source : Channel NewsAsia, 29 April 2008

Mainboard-listed Macquarie MEAG Prime REIT (MMP REIT) has booked a distributable income of S$17 million for the first quarter, up nearly 22 per cent compared to the same period a year ago.

MMP REIT said that its earnings were driven by attractive acquisitions, tenancy remix as well as asset enhancement initiatives.

The REIT saw strong rental rates in Singapore. Its retail space was at full occupancy, while offices were 98 per cent occupied.

MMP REIT is proposing to pay out 1.76 cents for the first quarter, up 20 per cent on year. - CNA/vm

CCT Decides To Defer Redevelopment Of Market Street Carpark

Source : Channel NewsAsia, 29 April 2008

CapitaCommercial Trust (CCT) has decided to defer the planned redevelopment of the Market Street car park.

In January 2008, CCT was granted an outline planning permission by urban planners to redevelop the property into a Grade A office building.

Since then, it has been working with its appointed architect and consultants to finalise and submit design plans to the Urban Redevelopment Authority.

In a statement on Tuesday, CCT said it does not expect a plan for the redevelopment to be made before mid-2009. This came after taking into consideration the significant size of the project, rising construction costs and the present volatility in financial markets.

Industry watchers said the decision is unlikely to dampen the market. The delay may, in fact, be welcomed due to the tight car parking space situation in the Central Business District.

Property analysts added that the deferment is a prudent move, given the bulk of office supply coming on stream between 2010 and 2012.

They said there is no hurry for CCT to redevelop the property in a climate of rising construction costs, which could also pose some challenges in getting construction firms to work on the project.

CCT said it will continue to take necessary steps to obtain the provisional permission from the authorities, as well as assist retail tenants in relocation and continue to operate the car park. - CNA/vm

HDB To Launch Executive Condominium Site At Sengkang

Source : Channel NewsAsia, 29 April 2008

The Housing and Development Board (HDB) will launch on Wednesday a land parcel at Sengkang East Avenue for executive condominium development under the Reserve List System.

HDB said the 17,000 square metre plot will have a permissible gross floor area of over 51,000 square metres.

Property consultants estimate that the 99-year lease site could fetch about 450 to 500 units, with a land price of S$110 to S$130 per square foot per plot ratio.

As developers are still fairly confident of the mass market property segment, market watchers said the land parcel will attract moderate interest from developers, with up to six bids for the site. - CNA/ms

MAS Expects S'pore Inflation To Cool To 4% In Second Half

Source : Channel NewsAsia, 29 April 2008

The Monetary Authority of Singapore (MAS) has said it expects inflation, now at a 26-year high of 6.7 percent, to cool to an average 4 percent in the second half of this year.

Singapore's central bank also said on Tuesday that economic growth will slow in 2008, but the expansion will likely remain at a healthy level even under a tighter monetary policy.

"Full-year gross domestic growth of between 4%-6% is still achievable, barring a sharp downturn in the US economy," the MAS said in its semi-annual macroeconomic review, available on its Website www.mas.gov.sg. "The slower rate of expansion will bring the economy closer to its potential output path."

Earlier in April, the MAS unexpectedly tightened its monetary policy by allowing the Singapore currency to rise at a faster pace to keep a lid on import costs.

The central bank manages the local dollar within an undisclosed currency band, which it shifted higher at its meeting on April 10.

"The re-centering of the policy band... will help to alleviate inflation pressures and provide support to the economy as it eases to a more sustainable growth rate," the MAS said.

First-quarter GDP growth came in unexpectedly strong, running at an annualised seasonally adjusted rate of 16.9%, and economists said the data had calmed fears that the weakness of the US economy would drag on Singapore, giving the MAS room to tighten policy.

Singapore's economy grew by 7.7% in 2007, when consumer prices rose 2.1%.

A recent jump in food costs has been a key driver of inflation across Asia, and a further acceleration in commodity prices could not be ruled out, the MAS said.

"Even if (food and oil) prices were to level off, upward pressure on wages and rentals, reflecting domestic capacity constraints, is likely to remain," it said.

The MAS predicted inflation will peak at around 7% in the middle of the year before averaging in the upper half of a 4.5%-5.5% range for all of 2008.

Different sectors of Singapore's economy will feel varying impacts from a global downturn, the MAS said.

"In contrast to last year's broad-based growth story, the outlook for the Singapore economy in 2008 will vary significantly from industry to industry, depending on their exposure to the U.S.," the authority said.

The construction sector will be relatively protected, with a steady pipeline of contracts, including S$24.5 billion in work awarded in 2007.

"This suggests a possible surge in construction activity over the next two to three quarters, as work on projects progresses into the phase where the bulk of payment streams occurs," the central bank said. "Future demand should also remain firm, with contracts for major projects such as the integrated resorts yet to be fully awarded."

Las Vegas Sands is expected to open the Marina Bay Sands resort in 2009, and a unit of Genting International will open Resorts World at Sentosa in 2010.

The MAS said the economy should also be supported by most of the services sector and selected manufacturers such as pharmaceuticals firms and offshore oil rig makers.

However, the electronics industry will be highly exposed to an external economic slowdown, likely preventing the sector from posting a meaningful expansion.

The financial sector is also expected to weaken if markets remain in a slump, leading to lower revenues from wealth management and brokerage services.

The MAS expects the job market to remain tight, with the unemployment rate holding beneath 2 percent. - CNA/ir

Tuesday, April 29, 2008

S'pore Inflation To Stay High, Cool In H2: MAS

Source : The Business Times, April 29, 2008

Singapore's central bank said on Tuesday that inflation would cool to an average 4 per cent in the second half of 2008, after it hit a 26-year high above 6 per cent in the first six months of the year.

In its twice-yearly Macroeconomic Review, the Monetary Authority of Singapore (MAS) said its economic growth target of 4-6 per cent this year was intact and was based on a gentle downturn in the United States' economy.

But it warned trade-dependent Singapore could be considerably hit by a more widespread slowdown.

'Inflation will stay high in 2008 due to a confluence of external and domestic factors, although it should moderate somewhat in the second half,' it said in its report, available on its website.

'However, there are upside risks to global oil and food prices. Even if these prices were to level off, upward pressure on wages and rentals, reflecting domestic capacity constraints, are likely to remain.'

Reacting to the inflation threat, Singapore's central bank earlier this month tightened monetary policy by allowing a rise in the Singapore dollar, its main policy tool.

The market is looking for clues on whether policy could be tightened yet again at the next review in October. The Singapore dollar has risen 5.4 per cent against the US dollar since the start of the year.

'The April monetary policy decision provides affirmation that the exchange rate path is consistent with the prevailing macroeconomic conditions in the economy,' the MAS said in its review on Tuesday.

It also said that gross domestic product growth would likely weaken over the next two to three quarters.

'This baseline forecast is predicated on a mild US downturn for 2008. However, if there is a more widespread decline in global and regional economic activity, Singapore's GDP growth will be more significantly affected.'

First-quarter GDP growth came in unexpectedly strong, running at an annualised seasonally adjusted rate of 16.9 per cent, and economists said the data had calmed fears that the weakness of the US economy would drag on Singapore, giving the central bank room to tighten policy.

Manufacturing accounts for about a quarter of economic output and the republic would be hit by any global economic downturn because of its heavy reliance on exports to Europe and the United States.

The MAS also pointed out that the cost of doing business in Singapore, a base for international companies and their families in Asia, had risen.

It said the unit business cost index for the manufacturing sector - which measures changes in the cost of producing one unit of manufacturing output after accounting for productivity changes - rose 4.5 per cent in the fourth quarter from a year ago, the seventh straight quarter of growth and the most rapid rate of increase since the fourth quarter of 2001.

This mainly reflected a sharp rise in unit labour costs as well as government rates and fees. -- REUTERS

Genting Stops Talks With S'pore Sports Hub Consortium

Source : The Business Times, April 29, 2008

KUALA LUMPUR - Genting International announced on Tuesday that it has discontinued discussions with Singapore Sports Hub Consortium in relation to the proposed construction of a hotel in the Singapore Sports Hub.







Its managing director Justin Tan Wah Joo said in a statement this was because the company has been informed that the Singapore Sports Council has decided not to have a hotel in the Singapore Sports Hub at this point of time.

'The subject matter of this announcement is not expected to have any material impact on the consolidated net tangible assets and earnings per share of the company for the financial year ending Dec 31, 2008,' he said.

Genting had announced the start of discussions on Jan 21 this year. -- BERNAMA

Older UK Homes Weather Market Strains Better

Source : The Business Times, April 29, 2008

Personal finance website expects property prices to fall 20% this year

(LONDON) Houses bought four years ago or more are best placed to weather the property market downturn, research shows.

Personal finance website Fool.co.uk expects property prices to tumble 20 per cent this year, taking the average British property value to £153,400 (S$416,000) from £196,000 - the same level as spring 2004 levels.

That means that, on average, people who have bought since then will be sitting on a capital loss.

House-hunt: Home prices have been falling monthly since the end of last year as the credit squeeze has exacerbated affordability pressures after a decade-long boom

Not all, however, will face negative equity, as some will have taken out a mortgage of less than 100 per cent or more of the purchase price.

'It is vital to differentiate between capital loss and negative equity,' said David Kuo, head of personal finance at Fool.co.uk.

'While a capital loss is beyond the control of homeowners, mortgage borrowers can overcome negative equity by reducing the size of their outstanding mortgage compared to the value of the property.'

He added that falling house prices were not 'disastrous', as they would narrow the gap between the value of a property and those further up the housing ladder, making up-sizing more affordable.

The West Country is most vulnerable to a property downturn, while those in Scotland and Ireland are the least so, the figures show, as prices there have more than doubled in the past four years, compared to a 20 per cent increase nationally.

House prices have been falling on a monthly basis since the end of last year as the credit squeeze has exacerbated affordability pressures after a decade-long boom.

The downturn appears to be gathering pace. Halifax, Britain's biggest mortgage lender, said house prices fell last month at their fastest pace since 1992 when the country was in the grip of recession.

The Bank of England unveiled an ambitious plan this week to swap banks' hard-to-trade mortgage assets for government securities in a bid to cushion the economy from the global credit squeeze.

It has also cut interest rates three times since December.

Its scope to deliver further rate cuts, however, is being limited by rising price pressures. -- Reuters

Biggest Drop In 3 Years In British House Prices

Source : The Business Times, April 29, 2008

(LONDON) UK house prices fell the most in more than three years in April as a dearth of credit and concern that the property slump is deepening deterred prospective homebuyers, Hometrack Ltd said in a statement yesterday.

Sign of the times: House prices in London, home to 1-in-8 of the British population, fell 0.7% in April

The average cost of a home in England and Wales dropped 0.6 per cent - the most since December 2004 - to £173,100 (S$468,300), the London- based research company said in a statement. Prices declined 0.9 per cent from a year earlier.

A surge in borrowing costs has prompted banks to withdraw their best mortgage offers, worsening the housing decline. Falling home prices are sapping consumer confidence and held economic growth to the slowest pace since 2005 in the first quarter.

'Weak confidence is effectively resulting in a 'buyers strike',' Richard Donnell, director of research at Hometrack, said. 'The current downward pressure on prices will only start to be reversed once there is a turnaround in buyer confidence' that will 'revolve around greater stability in the financial markets and an improved economic outlook'.

The report is based on a survey of 3,500 real estate agents and surveyors, calculating average values using judgments of achievable prices rather than sale prices alone. Prices fell in all 10 of the regions Hometrack follows. East Anglia and the West Midlands led declines, with a 0.8 per cent drop. Prices in London, home to 1-in-8 of the UK population, fell 0.7 per cent.

The findings add to evidence that the housing slump is deepening. House prices declined 2.5 per cent last month, the most since 1992, according to HBOS Plc, the largest UK mortgage lender. The Royal Institution of Chartered Surveyors' measure of sentiment in the UK housing market fell to the lowest since records began in 1978.

Mortgages approved by banks fell 46 per cent in March from a year earlier to the lowest level since 1997, the London-based British Bankers' Association said last Wednesday. The Bank of England is due to publish estimates of mortgage advances by all lenders today at 9:30am in London.

Falling property prices make Britons feel less wealthy and reduce the amount of equity owners can tap for spending. A threefold increase in home values over the past decade has helped the UK economy expand for 63 quarters.

The slump has put the economy on course for its worst performance in 16 years, with the International Monetary Fund predicting growth of 1.6 per cent this year. Growth was 0.4 per cent in the first three months of the year, the Office for National Statistics said last Friday.

The Bank of England, backed by the Treasury, last Monday offered to swap around £50 billion in government bonds for mortgage-backed securities in an effort to kick-start lending.

Higher money-market funding costs are making lenders reluctant to pass on three Bank of England interest rate cuts since last December to homeowners. Royal Bank of Scotland Group Plc and HSBC Holdings Plc have led writedowns among UK banks on securities tied to US sub-prime mortgages. Losses worldwide total almost US$309 billion. -- Bloomberg

Berlin Property Market Holds Huge Investment Potential

Source : The Business Times, April 29, 2008

But for it to materialise may take a long time

(BERLIN) Frank Roszak, a good-humoured Berlin butcher with a friendly smile, bought a spacious 10-room house in a pleasant suburb just west of the German capital for US$1.3 million about 16 years ago.

Two years ago he put the two-storey house with its leafy 1.5 hectare garden on the market for 500,000 euros (US$790,000).

It has been months since the last prospective buyer left - without making an offer.

His is not a tale of suddenly slumping house prices: It is the property market in Berlin. Other cities may be smarting from softening prices but Berlin, like many parts of Germany, never had a boom and has long been a veritable black hole for investors and a nightmare for homeowners.

'Berlin is a metropolis with provincial prices,' said Christine Schaefer, a property analyst at DZ Bank in Frankfurt.

Of course, there are some advantages to this: There is no turmoil from the broad market slump and talk at dinner parties rarely centres on real estate. Also, as real estate agents and some economists note, it gives the market huge potential.

'Isn't it better to buy into a market that's come down for a decade than invest in a market where the party's over?' said Tobias Just, a real estate analyst at Deutsche Bank.

One problem: to realise that potential looks like taking a very long time. Hopes rise, but the market does not.

As real estate values in countries including Britain, Spain and the United States spiralled higher in the last decade, in Germany's biggest city and the former Communist east prices for new houses and apartments fell by an average of one per cent per year. Prices for existing houses and apartments fell 2 per cent per year, according to banking data.

The situation is only marginally better in the more populous and prosperous west, where housing prices have risen by an annual average of less than one per cent in the last decade.

Many factors have weighed on German prices: relatively weak economic growth, a shrinking population, a traditional low rate of home ownership and cheap rent, generous pensions, risk-averse banks, high closing costs, and - completing the circle - the poor rate of return.

Noting prices in some cities such as Munich have risen steadily if unspectacularly, Mr Just said that the future for weak spots may not be as dim as the past - especially in Berlin where unemployment is gradually retreating, the oversupply of housing is slowly shrinking and economic growth is picking up.

At Lehman Brothers, the real estate team issued a report in March entitled Finally the comeback of Berlin? which - sceptically - highlighted an above-trend rate of rent increases of almost 10 per cent over the past four years in the city.

But the fundamental drivers for a market upturn are hard to find in Bohemian Berlin.

While cheap housing has attracted tens of thousands of students, overall the population has remained stagnant at 3.4 million. It has become the home of thousands of artists, actors, film-makers, musicians and even poets delighted to find such cheap places to live and work in.

Yet there is hardly any industry left - many big companies such as Siemens moved away after World War II and during the Cold War. The banking industry resettled in Frankfurt. Also, many government jobs stayed in Bonn.

The unemployment rate in Berlin is 15 per cent, nearly double the national average, and income levels are below average.

On top of that, just 13 per cent of Berliners own their own homes - well below an already low German rate of 40 per cent.

The high level of public-owned housing and accompanying low rents - and high vacancy rates - also depress property prices.

There was an ephemeral rise in the days immediately after the fall of the Berlin Wall in 1989, but even the federal government's move back to Berlin in 1999 - creating some 20,000 jobs - failed to halt the price erosion.

Another false dawn has been foreign bargain-hunters.

Thousands have come - from Britain, Ireland and Scandinavia - to snap up homes at what appeared to be breathtakingly cheap prices. Some agents have taken English courses to cope with the undiminished demand from abroad.

Despite this, the prices are still breathtakingly cheap. -- Reuters

Slowdown Looks Unlikely In China

Source : The Business Times, April 29, 2008

Urbanisation, desire for better housing will put pressure on prices: think tank

(BEIJING) China's real estate market will not see a major slowdown in 2008 despite Beijing's intensified efforts to cool excessive price rises, the top government think-tank said in a report published yesterday.

Still going up: Inflows of speculative capital from overseas would increase during the first half of the year, says think tank

Urban property prices rose less rapidly in March than in the first two months, and the property outlook index, which covers price and investment trends, continued to decline in March after peaking in November.

But the Chinese Academy of Social Sciences (CASS) said that it was still premature to draw the conclusion that the market was heading south.

'Although transaction volumes have been declining in some cities since 2007 and more buyers are now waiting on the sidelines, that does not necessarily indicate the approach of a turning point,' it said in a report summarised by the official China Securities Journal.

China's urbanisation and residents' desire for better housing, compounded by the scarcity of land and the government's tightened grip on land supply to curb investment, would put continued pressure on prices in the long run, it said.

The National Development and Reform Commission, China's top economic planner, also said recently that upward pressure on property prices would increase in the second quarter as more people put their money in property to avoid the erosion of returns faced by bank deposits.

CASS said that inflows of speculative capital from overseas would increase during the remainder of the first half of the year, as investors sought shelter from global economic turbulence and bet on continuing appreciation of the yuan.

To brake increases in property prices, Beijing would continue its tightening campaign, including by curbing land supply and loan growth and giving further policy incentives aimed at increasing the supply of more affordable housing, it said.

CASS said the government also needed to curb the hoarding of land by developers, raise the downpayment requirement for second homes, which is currently 40 per cent, and start to levy a general property tax. -- Reuters

Will Property Hunters Hit Jackpot?

Source : The Electric New Paper, April 29, 2008

Some are buying Marine Parade flats, speculating MRT station will be here

TALK about planning ahead.

News of the Eastern Region MRT Line was released only three months ago and the location of its 12 stations have yet to be announced.

The line is expected to be completed only in 2020, a good 12 years away.











Some people are speculating that the new Maride Parade MRT station will be at the side occupied by the NTUC FairPrice outlet.

But some property hunters are already hoping to cash in by speculating on the location of one of the stations at Marine Parade.

They are buying up flats in the area in anticipation of possible capital and rental gains.

The line will connect Changi to Marina Bay via Marine Parade.

The coffee-shop talk is that the station will be built at the former Marine Parade Community Library site near Parkway Parade shopping mall.

This site is now occupied by an NTUC FairPrice outlet.

Housing agents contacted by The New Paper said that since the Land Transport Authority (LTA) announcement in January, some flats there have been snapped up by locals and Singapore permanent residents hoping to cash in.

Some buyers have anticipated that prices of flats nearest the MRT station will appreciate when the station is up and running, said housing agent Victor Lee.

He said these buyers were just guessing where the proposed station would be and 'are buying to invest, either to sell at a higher price or for good rentals when the station is ready'.

He said he has received a few calls enquiring about flats in the area.

'I know some units around that area have been sold partly based on that speculation. But this area has always been popular, whether or not there's an MRT station here.

'People like this area for the proximity to East Coast Park, the sea and Parkway Parade.

'The new MRT station will definitely be a bonus, of course,' said Mr Lee.

Housing agent Sam Lew of ERA, who specialises in that area, said that since the estate is quite small, it's not difficult to pin down where the station is likely to be.

Said Mr Lew: 'It should be in the central area because it's near Parkway Parade, the market and all the other HDB blocks there. That's the only piece of land that can logically accommodate an MRT station.'

PRICE INCREASE

He said there has been a slight price increase for flats there since the MRT line was announced, but this was muted partly because of the economic uncertainty and slowdown in en-bloc activity.

He estimated the price increase was about 5 per cent.

Said Mr Lew: 'The market has slowed down considerably because of the sub-prime issues. In the past, it took us about a month to sell a three-room flat. But now it'll take us about three months instead.'

The 21-km, 12-station line will extend to the residential estates of Tanjong Rhu, Marine Parade, Siglap, Bedok South and Upper East Coast which are currently not served by theMRT.

NOT FAR OFF

And those who speculate on the Marine Parade station may not be far off the mark with their predictions based on density factors.

For an MRT station to be commercially viable, several conditions need to be considered, said transport economist Michael Li of the Nanyang Business School.

These include future population growth, the catchment of the existing human traffic there and the density of the area, which includes residential, commercial and retail developments.

He said: 'Generally, if the property is near an MRT station, the value will appreciate and the rental will be good. But in this case, the timing of the construction could be many years later especially if the network is planned for year 2020.

'Some of these home-buyers may be there for the initial gains. They may get rid of their flats quickly to the next buyer while the news is still hot.'

When contacted, LTA said the site of the proposed Marine Parade station had not been determined yet.

The alignment of the line and station location will be determined only upon completion of the engineering studies, it said.

STUDIES TAKE YEARS

Said an LTA spokesman: 'Such studies typically take several years to complete because we need to ensure that the subsequent construction works are carried out properly and safely, with minimal inconvenience to commuters as well as businesses and residents along the (Eastern Region) line.'

Mr Eric Cheng, HSR's executive director, said he had heard rumours about an upcoming MRT station there about two years ago.

But he warned against buying property based on such rumours.

Said Mr Cheng: 'Consumers should ask for black-and-white proof that the MRT station is really going to be at that location because they'll be paying a premium for the place based on those rumours.

'The loss could be a fair bit if the station turns out to be somewhere else. Marine Parade Road is quite long. Things could change.'

CapitaLand Says 2007 Profit Will Be Hard To Match

Source : The Straits Times, Apr 29, 2008

SINGAPORE'S CapitaLand, South-east Asia's largest property developer, said that it will be unlikely to match 2007's earnings this year because of a lack of revaluation gains.

The firm should still do better at the operating level, including buying and selling property and managing property funds, said chairman Richard Hu at the firm's annual general meeting on Tuesday.

CapitaLand last year posted profit of $2.8 billion, of which about $1.1 billion was due to revaluation gains. It reports first quarter earnings on Wednesday. -- REUTERS

PropNex Takes Home Buyers To Court Over Fee Dispute

Source : The Straits Times, Apr 29, 2008

Case hangs on whether flat buyers who deal without agents should pay a commission, too

A COUPLE who bought a home and refused to pay the seller's agent the 1 per cent commission are being taken to court by a property company.

PropNex associate director Ricky Low Yong Sern is seeking about $4,000 in commission or a service fee in a case that is likely to turn the spotlight on the issue of whether home buyers should pay a fee to sellers' agents.

He was the exclusive agent handling the sale of a terrace house in Whampoa built over 30 years ago and classified as a Housing Board flat.

Marketing specialist Loh Yi Min, 29, and his wife, polytechnic lecturer Ariel Wee, 33, bought it for $400,000 in April last year. They had acted on their own without engaging an agent.

In documents submitted to court, Mr Low claimed that he had a right to collect a commission as he had exclusive rights to market the property. He also claimed that he had provided services to the buyers.

However, the couple refused to sign the commission agreement when they inked the sale last year. They claim they had made no deal to pay him a fee in the first place.

Both sides will attempt to reach an agreement when they attend a court dispute resolution session next month.

This is the first lawsuit of its kind started by eight-year-old PropNex.

The issue of commissions payable by independent buyers, or buyers who deal without agents, has been hotly debated in recent years.

While there is no law fixing the fees payable, property sellers typically pay their agents a 2 per cent fee, while buyers pay their agents a 1 per cent fee.

Many agents marketing HDB flats also charge independent buyers a 1 per cent fee, but this is not practised in private property deals. Property veterans said this disparity was due to the lower prices of HDB flats, which amount to a lower commission for agents.

Some independent buyers have complained that sellers' agents inform them that they have to pay a commission just before the purchase documents are signed, leaving them with little time to find out about their rights.

Once the buyers sign the commission agreements, they are bound to pay the fee.

However, agents have countered that independent buyers often leave the paperwork to the sellers' agents but refuse to pay a service fee.

Major real estate agencies contacted by The Straits Times have varied responses to such situations, although all maintain that independent buyers of HDB flats should pay a fee.

HSR property group chief executive Patrick Liew said his company takes three to four independent buyers to the Small Claims Tribunal each year for similar claims and has won payment each time.

ERA Singapore's assistant vice-president Eugene Lim said his company does not take independent buyers to court when no commission agreements are signed.

Meanwhile, the Consumers Association of Singapore has, in recent years, questioned the practice of agents taking commissions from both buyer and seller in the same transaction, citing a possible conflict of interest.

Singapore Banks Likely To Ride Out Challenges Ahead

Source : Channel NewsAsia, 28 April 2008

Global ratings agency, Fitch Ratings, sees a more challenging operating environment for Singapore banks going forward.

According to its latest report, Fitch expects the three local banks – DBS, OCBC and UOB – to see a slowdown in investment banking and capital market-related income over the next two years.

Loans growth is seen to be moderating, while loan-loss provisions are rising. However, Fitch said it is confident Singapore's Big Three will be resilient enough to ride out the challenges.

Ambreesh Srivastava, Senior Director, Financial Institutions, Fitch Ratings, said: "Singapore banks have taken fairly prudent levels of mark-to-market write-downs, close to 90 percent on account of CDOs (collateralised debt obligations) on subprime-related exposure.

"That is the main reason why all banks reported higher provisioning charges in 2007, compared to 2006 and previous years – more than 100 percent for DBS and OCBC; 66 percent for UOB.

"We do expect Singapore banks' loan-loss provisions to rise modestly from exceptionally low levels. Coming back to banks' structured investments, net exposure is quite modest, ranging from 1 percent for UOB to 5 percent for DBS."

And while fee income will continue to show good momentum, Fitch said non-interest income growth at the Big Three will be weighed down by decreasing capital market-related income.

A slowing property market also means interest income will likely moderate in the form of smaller loans growth, despite being buoyed by increasing borrowing activity in the construction sector.

Overall, Fitch remains positive about the outlook for Singapore banks due to their regional forays.

Mr Srivastava said: "We believe these banks have strong domestic franchises, the strongest bank credits in Asia, healthy financial conditions and improved management capabilities. All this is reflected in high-credit ratings.

"After several years of benign credit conditions in Singapore, the operating environment going forward will be more challenging. This is reflected in slower economic growth and moderation in asset prices.

"Banks' regional forays increase risk profile somewhat, but the disciplined manner (in which) they pursue this strategy, together with strong loss absorption indicators, makes banks reasonably resilient to challenging times ahead. Generally speaking, we are quite appreciative of this strategy."

This confidence is boosted by what Fitch calls "strong solvency positions" by the banks.

"The net non-performing loans – defined as gross NPL minus specific reserves – as a percent of equity is negative for all banks, underscoring strong solvency positions. Write-downs on such investments may dent earnings somewhat but not solvency issue for banks," said Mr Srivastava.

However, there remains a small chance that all this optimism could be derailed.

Mr Srivastava said: "In the unlikely event of a deep and prolonged recession in the US, which may impair consumer confidence globally, the property sector in Singapore and in the rest of Asia will be affected significantly...

"Given the banks' high-credit ratings, upward pressure is limited. Downward pressure may arise from event risk – large acquisition in less creditworthy institution or country."

Fitch has an AA- rating on all three local banks.- CNA/so

CapitaLand Completes Compulsory Acquisition Of Ascott

Source : Channel NewsAsia, 28 April 2008

Property developer CapitaLand has completed the compulsory acquisition of the Ascott Group, a serviced-apartments operator.

From 28 April, Ascott becomes an indirect wholly-owned subsidiary of the company.

It will be delisted from the Singapore Exchange with effect from 29 April.

CapitaLand said the privatised Ascott will enhance the company's competitive advantage of having a fully integrated real estate and financial services value chain across sectors.

It will also increase cost savings through greater sharing of services and resources with CapitaLand's other unlisted business units. - CNA/vm

Banyan Tree To Launch China Development Fund By End-2008

Source : Channel NewsAsia, 28 April 2008

Luxury resorts and spa operator, Banyan Tree, has announced aggressive plans to expand its global operations.

The company believes that China-led growth will be a defining feature of global travel over the next few decades. So it is expanding its operations in the Chinese mainland to 12 locations from the current four.

To support the expansion, Banyan Tree said it is planning to launch a new US$400 million China development fund.

Ho Kwon Ping, Executive Chairman, Banyan Tree, said: "We recognise that there is a clear window of opportunity for us as a player in this space that we've identified. Suddenly this space has opened up, it's become a global space. There are no global players there. Only regional players like us."

The China development fund which is expected to be introduced later this year is similar to the company's existing IndoChina Hospitality Fund.

The company expects the new fund to mature within seven years. Banyan Tree plans to use the funds to further expand into other growth areas around the region.

Mr Ho continued: "In each of the funds that we set up, Banyan Tree will be the cornerstone investor with about 15 per cent. It will be the general partner (and) the hotels will be branded Banyan Tree or Angsana."

The mainboard-listed company also plans to open 47 new hotels over the next five years and expects to grow by up to 60 per cent annually. This follows a 142 per cent jump in net profits in 2007.

Banyan Tree also expects total global headcount to triple to 24,000 over the next four years. - CNA/vm