Saturday, May 31, 2008

Raffles Hotel Deal Is Off After All

Source : TODAY, Weekend, May 31, 2008

A CONSORTIUM :led by former Credit Suisse banker Mark Pawley that was to have bought the grand dame has called the deal off, :The Business Times: (BT) reported on Friday.

“We regret to say that the sale will not be completed as planned,” a consortium spokeswoman was quoted as saying. “The consortium is very disappointed with the current outcome as we had hoped for a win-win solution involving all parties.”

A spokeswoman for Raffles Hotel confirmed the news with Today. Both parties declined to give reasons for the deal being called off, citing confidentiality clauses.

The spokeswoman for the buyers, according to BT, also rebuffed suggestions that the consortium might have faced funding problems, saying: “We have the money. To say otherwise is baseless.”

The hotel sale, including the adjoining shopping arcade, was announced on May 8. The deal was reported to be in the range of $650 million.

Fairmont Raffles Hotels International — controlled by Saudi billionaire Prince Alwaleed Talal and American-based private equity firm Colony Capital — had bought over the iconic hotel for $1.7 billion only in 2005. They would have continued running the property through a management contract if the sale had gone through.

S'pore Is 9th Most Expensive Office Market

Source : The Straits Times, May 29 2008

SINGAPORE has emerged as the ninth most expensive office market in CB Richard Ellis's (CBRE) latest semi-annual Global Market Rents survey.

Singapore was ranked 11th in the last survey in November last year and 24th in the May 2007 survey, The Business Times reported on Thursday.

The last time it was one of the 10 expensive office markets in the survey was 1991, when it ranked sixth.

However, on a brighter note - for those concerned about Singapore's competitiveness - the latest survey shows that the island no longer holds the title of posting the highest increase in occupancy costs over a 12-month period.

That 'honour' went to Ho Chi Minh City, which posted a 94.4 per cent jump in office occupancy costs - in local currency - over the 12 months ended March 31, 2008. It was followed by Moscow (up 92.7 per cent) and Singapore (86 per cent).

In the previous survey, published in November last year, Singapore posted the highest 12-month increase in occupancy costs, while in the May 2007 study it took fifth spot.

'The pace of rental growth in Singapore is moderating and we sense that the peak of the market is close at hand,' said CBRE's executive director (office services) Moray Armstrong.

'With significant new office supply coming on stream through the next few years, we are confident that Singapore's medium- to long-term term competitiveness in premises costs is assured.

'It's also noteworthy that the range of alternative lower-cost premises options (for example, business park space) has been bolstered. This is a sign of the commercial property market's growing maturity in response to Singapore's status as a global business city.'

CBRE figures show the average monthly Singapore prime office rental rose 92.3 per cent last year to $15 psf in Q4 2007, after appreciating 50 per cent in 2006.

For Q1 this year, the average monthly prime office rental was $16 psf, up 6.7 per cent from the preceding quarter.

CBRE projects that the figure will edge up to $17 psf by end-2008 and $17.50 psf by end-2009.

CBRE's latest Global Market Rents survey shows London's West End retained its position as the world's most expensive office market, while Moscow climbed to second spot, followed by Tokyo's Inner Central Five Wards, Mumbai's Nariman Point and Tokyo's Outer Central Five Wards.

'Office occupancy costs are continuing to defy sluggish economic conditions and the credit crunch, as they rise faster than global inflation,' noted CBRE's global chief economist Raymond Torto.

'These cost increases are dominated by emerging markets, caused by both supply and demand imbalance and the depreciation of the dollar relative to local currencies. In some of these emerging markets, Class A office space is seriously lacking.'

Overall, Europe, Middle East and Africa dominated the list of markets with the fastest-growing occupancy costs, accounting for five of the top 10 and 19 of the top 50 markets.

Worldwide, 88 per cent of the 173 office markets monitored posted higher occupancy costs.

CBRE said that its definition of occupancy costs covers rent, plus local taxes and service charges.

The occupancy cost figures are adjusted to reflect different measurement practices from market to market.

Raffles Hotel Won't Be Sold After All

Source : The Straits Times, May 31, 2008

Consortium that inked in-principle deal declines to say why sale fell through

A PLAN to sell the historic Raffles Hotel again has fallen through.
The Business Times (BT) yesterday reported that a consortium led by former Credit Suisse banker Mark Pawley, which had inked an in-principle deal to buy the hotel earlier this month, was 'very disappointed' with the outcome.

WHAT A PITY: 'This would have involved an assured distinct identity for Raffles Hotel as a flagship for Singapore in the international hospitality industry and a rejuvenation of the hotel.' - SPOKESMAN FOR THE CONSORTIUM, expressing disappointment over the failure to buy Raffles Hotel (above) -- ST FILE PHOTO

Its spokesman confirmed that the deal was off.

'This would have involved an assured distinct identity for Raffles Hotel as a flagship for Singapore in the international hospitality industry and a rejuvenation of the hotel,' the paper quoted her as saying.

Citing confidentiality clauses, she declined to give reasons why the deal soured.

But she denied that there was any issue with the source of the funding, which is believed to be a family trust linked to a European family.

If the deal had gone through, the 121-year-old historic hotel and its adjoining shopping arcade would have changed hands for the second time in three years.

The agreed price was reportedly about $650 million - more than triple the $200 million paid by its American and Middle Eastern owners in 2005.

This was seen as a reflection of the strong boost in demand for hotel space in Singapore in recent years, with the country's fast-growing visitor arrivals.

Mr Pawley is the chief executive of Singapore-based Oxley Capital Group, a private investment house focusing on real estate and private equity.

While he was head of the Asian real estate, gaming and lodging business at Credit Suisse Investment Banking in Asia, he was involved with the $1.7 billion sale of the entire Raffles Holdings' hotel portfolio - including Raffles Hotel in Singapore - to United States-based private equity firm Colony Capital in 2005.

Colony later merged that portfolio with Fairmont Hotels & Resorts' assets to create Fairmont Raffles Hotels International (FRHI). Colony reportedly holds about a 40 per cent stake in FRHI, while Saudi Prince Alwaleed bin Talal's Kingdom Hotels International owns the rest.

On May 8, FRHI announced that it had reached an in-principle agreement to sell off Raffles Hotel. But as with its past real estate transactions, any hotels sold would continue to be part of the company's hotel collection.

FRHI's hotel management arm, Raffles Hotels & Resorts, also secured a long-term management contract to manage the hotel, reportedly for 40 years.

Market watchers told BT that most existing hotel groups would think twice about buying a hotel with a long-term management contract from the seller. They speculated that this clause might have scuppered the deal.

$17m Widening Of CTE To Begin On Monday

Source : The Straits Times, May 31, 2008

1st phase to last till end-2009, but delays to traffic will be minimal

WORK will begin on Monday to widen the Central Expressway (CTE), but officials say the construction will cause minimal delays on Singapore's busiest thoroughfare.
The Land Transport Authority (LTA) will add a fourth lane on both sides of a 1.5km stretch between Ang Mo Kio Avenue 1 and Ang Mo Kio Avenue 3.




















The work, which will cost $16.9 million, is scheduled to last till the end of next year. The LTA said for most of that time, the expressway's six lanes will remain open.

However, it will close after 11pm on some nights for repaving and to remove an overhead pedestrian crossing.

This is the first phase of a plan to ease congestion on the CTE, which is plagued by traffic jams during morning and evening peak periods.

The Ministry of Transport hopes the work, together with the opening of the Circle Line, Kallang-Paya Lebar Expressway and North-South Expressway, will ease congestion on the north-south stretch.

The LTA also plans to expand another 5.5km section of the CTE from the Pan-Island Expressway to Yio Chu Kang Road by 2011.

As part of the project, a new sheltered overhead bridge - replacing the old uncovered bridge - will be built to connect Housing Board blocks with the Serangoon Gardens private estate.

To keep the racket down, the LTA will use noise reduction blankets on its hoardings and put noise guards on machinery.

The authority will also use, for the first time, a more costly method of installing pipes running under the roads.

Unlike the usual 'cut-and- cover' method, where motorists have to be redirected to their lanes, the pipes are laid underground without the need to tear up lanes.

Singapore's Sovereign Credit Rating Remains Stable

Source : Channel NewsAsia, 30 May 2008

International ratings agency, Moody's, said it has no immediate plans to review its sovereign credit rating for Singapore as the country has strong credit fundamentals, including robust external assets.

Singapore has the highest triple-A sovereign rating from Moody's, and this is likely to remain so for the next 12 to 18 months.

Last year, Moody's upgraded the rating for six Asian economies – China, Indonesia, Korea, Japan, Hong Kong and Macau. But so far, there have been no such revisions this year, given the slow economic outlook.

Moody's said it is keeping a close eye on rising inflation in Asia.

Thomas Byrne, senior vice president of Sovereign Risk Unit at Moody's Singapore, said: "If inflation is a temporary phenomenon, then it won't have any effect on the ratings.

"However, if it's persistent and it starts to undermine the government's fiscal position, and if it leads to a loss of confidence and therefore external investors or even domestic investors are less willing to finance government budget deficits, then that perhaps would have rating implications if it were strong enough.

"Another factor – which we see elsewhere and not so much in East Asia – is the political instability that comes from higher inflation. There have been food riots in Egypt and also in some other countries in South Asia.

"But we haven't seen any serious political side effects of high inflation in Asia. It's something we're monitoring, but we haven't seen it yet."

Inflation in Vietnam hit more than 25 percent in May and Fitch has already lowered its outlook for the country's sovereign rating from 'stable' to 'negative'.

Moody's said it is still looking at its numbers and, for now, it maintains a positive outlook for Vietnam.

But other economies in the region are also seeing inflationary pressures and economists said rising prices may threaten the likes of Indonesia and the Philippines.

The Philippine government has been seeking to balance its budget by this financial year, but rising inflation could derail that target, which could have a bearing on its sovereign ratings. - CNA/so

Stretch Of CTE Between Ang Mo Kio Ave 1 And 3 To Be Widened

Source : Channel NewsAsia, 30 May 2008

The Land Transport Authority (LTA) will be widening various stretches of the Central Expressway (CTE).

This was announced by LTA when it gave details of the first stretch to be widened - the section from Ang Mo Kio Avenue 1 to Ang Mo Kio Avenue 3. The existing three lanes will be widened to four.

LTA said this is to enhance connectivity and cater to the future population growth in the northeast.

Construction will begin next Monday and it is scheduled to be completed by the end of next year.

Meanwhile, LTA will put up signs about some of the road closures so that motorists can be diverted to alternative routes.

LTA also said three more stretches of the CTE will be widened by the end of 2011 and these fall between the Pan-Island Expressway and Yio Chu Kang Road.

LTA will be calling for contracts to widen these three stretches by the end of the year. - CNA/ms

Houses At Cornwall Gardens Road Monitored For Cracks

Source : Channel NewsAsia, 30 May 2008

Channel NewsAsia understands that the Land Transport Authority (LTA) is monitoring some cracks in the houses at Cornwall Gardens Road, where there was a big cave-in last week.

Contractors are doing minor works to ensure that the houses in the area are safe.

LTA, which reopened one lane on Friday, has back-filled the entire road.

Residents living directly opposite the major dent had to move out for two days because the cave-in had cut their water supply and Internet connection.

No one was injured, but the road had to be temporarily closed to traffic, after part of the road caved in on Saturday.

LTA said the crater measured 8 metres by 7 metres, and was 3 metres deep. It is just above a tunnel boring machine where tunnelling works for Circle Line 4 are being carried out.

The area is located between the future Holland and Farrer Road MRT stations. - CNA/ms

Friday, May 30, 2008

Pacific Star To Buy MEAG Stake In PRMH

Source : The Business Times, May 30, 2008

SINGAPORE-BASED Pacific Star has agreed to buy the 25 per cent stake held by MEAG Munich Ergo AssetManagement GmbH (MEAG) in Prime Reit Management Holdings Pte Ltd (PRMH).

PRMH owns 100 per cent of Macquarie Pacific Star Prime Reit Management Pte Ltd, the manager of Singapore Exchange-listed Macquarie MEAG Prime Reit (MMP Reit). It is also the sole owner of Macquarie Pacific Star Property Management Pte Ltd, the property manager of MMP Reit.

Pacific Star's existing stake in PRMH is held through its associated company Investmore Enterprises Ltd. The purchase will increase Pacific Star's interest in PRMH to 50 per cent, the same level as the interest of the Macquarie group.

Said Alfred Lim, chief corporate officer of Pacific Star: 'Reit management is a core business of Pacific Star. The purchase reaffirms Pacific Star's firm commitment to the growth of the Singapore Reit industry.'

Pacific Star manages a suite of funds, namely the 1.2 billion euros (S$2.45 billion) Asia Real Estate Income Fund (Areif), the US$600 million Baitak Asian Real Estate Fund (a joint venture between Pacific Star and Kuwait Finance House), the US$750 million Asian Real Estate Prime Development Fund which invests in prime development projects in key Asian cities and the US$500 million PS Arrow Vietnam Fund (a joint venture with Alony Hetz of Israel).

Pacific Star recently announced plans to launch the US$2 billion Pacific Star Fund Select Concept targeting Asian real estate under an umbrella fund structure. Earlier this year, Pacific Star acquired Singapore Power Building for Areif.

Wheels Come Off Raffles Hotel Deal

Source : The Business Times, May 30, 2008

Proposed sale to consortium fails to materialise

The proposed sale of Raffles Hotel is off.

A spokeswoman for the consortium led by former Credit Suisse banker Mark Pawley that was to have bought the Singapore icon confirmed yesterday: 'We regret to say that the sale will not be completed as planned. The consortium is very disappointed with the current outcome as we had hoped for a win-win solution involving all parties.















'This would have involved an assured distinct identity for Raffles Hotel as a flagship for Singapore in the international hospitality industry and a rejuvenation of the hotel. We will continue to actively explore other opportunities to contribute to Singapore.'

She declined to give reasons for the deal not being completed, citing confidentiality clauses. The deal was reported to have been in the range of about $650 million and would have included the adjoining shopping arcade. But when asked about talk that there might have been some issues with the source of the money for the purchase, she replied strongly: 'The source of the money has always been the same. This has never been an issue and there is no basis for these allegations.'

On suggestions that the consortium might have faced funding problems, the spokeswoman said: 'We have the money. To say otherwise is baseless.'

BT understands that the completion of the sale was expected yesterday. The in-principle agreement for the deal was announced on May 8.

Fairmont Raffles Hotels International (FRHI), the owner of the landmark hotel and adjacent shopping arcade, was to have secured a very long-term management contract, reportedly for 40 years, to manage the hotel under its hotel management arm, Raffles Hotels & Resorts.

Colony Capital holds about 40 per cent in FRHI while Saudi Prince Alwaleed bin Talal's Kingdom Hotels International owns the rest.

FRHI's May 8 statement had said that similar to its past real estate transactions, any hotels sold would continue to be part of the company's hotel collection and managed under long-term management contracts. Industry observers say that this is crucial to FRHI's plans to spin off and float a hotel management arm.

'Most existing hotel groups would be reluctant to purchase a hotel with a long-term management contract from the seller. And frankly, Fairmont Raffles would jealously guard their proprietary management systems from any potential hotel owner that is also in the business,' a market watcher said.

Raffles Hotel NOT Sold

Source : AsiaOne, May 30, 2008

The deal is off.

The in-principle agreement to sell Raffles Hotel to a consortium led by former Credit Suisse investment banker Mark Pawley was announced on May 8. However, in just three weeks, it was confirmed that the deal will not be completed as planned.

A spokeswoman for the consortium told The Business Times that: "We regret to say that the sale will not be completed as planned. The consortium is very disappointed with the current outcome as we had hoped for a win-win solution involving all parties.

'This would have involved an assured distinct identity for Raffles Hotel as a flagship for Singapore in the international hospitality industry and a rejuvenation of the hotel. We will continue to actively explore other opportunities to contribute to Singapore.'

She also strongly rejected rumours that the reason for the non-completion of the sale is due to the source of the money, or the lack of it.

'The source of the money has always been the same. This has never been an issue and there is no basis for these allegations.'

She added, 'We have the money. To say otherwise is baseless.'

However, she refused to divulge any reasons for the sale fallout, citing confidentiality clauses.

Pacific Star Increases Stake In Prime REIT To 50%

Source : Channel NewsAsia, 29 May 2008

Singapore-based real estate investment house Pacific Star Group has agreed to buy the 25 percent stake held by MEAG Munich Ergo Asset Management in Prime REIT Management Holdings.

Prime REIT owns 100 percent of listed Macquarie Pacific Star Prime REIT Management. It is also the sole owner of Macquarie Pacific Star Property Management, which is the property manager of MMP REIT.

The purchase will increase Pacific Star's interest in Prime REIT to 50 percent. Pacific Star's existing stake in Prime REIT is held through its associated company Investmore Enterprises.

Pacific Star said the purchase reaffirms its commitment to the growth of the REIT industry in Singapore. - CNA /ls

One Raffles Quay Wins Prestigious FIABCI Award

Source : Channel NewsAsia, 29 May 2008

The International Real Estate Federation or FIABCI has named Singapore's One Raffles Quay as the winner of the excellence award in the office category.

FIABCI held its 17th annual Prix d'Excellence Awards ceremony in Amsterdam on Thursday.

The award recognises One Raffles Quay for excelling in all aspects of development, including construction, brokerage, facilities management and marketing strategy.

Developers for One Raffles Quay are Cheung Kong Holdings, Hongkong Land, and Keppel Land.

Officially opened in March 2007, the building houses renowned tenants such as ABN AMRO, Barclays Capital, Credit Suisse and Deutsche Bank. - CNA/so

HDB Resale Price Growth Expected To Remain Low

Source : The Business Times, May 30, 2008

Moderate 4-10% growth seen for 2008: Knight Frank

THE rate of price increase of Housing and Development Board (HDB) resale flats will further decelerate in the next six to nine months, resulting in a relatively moderate 4-10 per cent growth for the whole of 2008.

Knight Frank director (research and consultancy) Nicholas Mak added: 'If the local economy were to slip into a recession in 2008, overall prices of HDB resale flats could vary between a 2 per cent contraction and a 3 per cent growth for the year.'

Knight Frank's projections are based on HDB's resale price index, which increased in Q1'08 by 3.7 per cent over the previous quarter. But Mr Mak explained that price movements in the resale market are difficult to project because data on average valuations are not available even if median prices, which is likely to include cash-over-valuation (COV), is.

As such, Mr Mak expected that median COV of all resale flats, which fell to $21,000 in Q1'08 from $22,000 in Q4'08, could continue to fall this year.

Another possible cause for lament is that potential HDB upgraders - a significant factor in private mass market housing - could disappear in sync with falling HDB resale transactions.

In Q1'08, transactions fell about 6 per cent to 6,358 units from 6,748 units in Q4'07.

Knight Frank also believed that HDB upgraders have been supporting the private secondary market, which saw 3,521 units transacted in Q4'07.

While it did not have precise numbers of HDB upgraders buying into the secondary market, it noted that in Q4'07, the greatest number of private secondary market transactions occurred in the Outside the Central Region (OCR), and was 'attributable to the HDB upgraders bracket'.

And Knight Frank believed that there could be an emerging resistance to swelling home prices.

In January, Knight Frank noted that City View @ Boon Keng, under HDB's Design, Build and Sell Scheme (DBSS), pushed prices to $727,000 for a five-room unit. While the launch generated a lot of buzz, at end March 2008, 250 of the 714 flats available were still unsold.

'The issue that arises is the validity of the pricing of such DBSS flats. Keeping in mind that there are more of such developments proposed in places like Ang Mo Kio, Bishan, Toa Payoh, Simei and Bedok, and given that they are still bound by public housing rules such as the income ceiling of buyers, one could begin to wonder about the intrinsic affordability of public housing initiatives,' Mr Mak said.

阳台直通泳池、私人派对俱乐部、专用按摩亭……新推出私宅设施斗豪华

《联合晚报》May 29, 2008

冲凉房可变蒸气房、设有厨房的私人派对俱乐部、专用按摩亭……这些豪华设施正悄悄地闯入我国私人住宅。

本地房市开始降温,新推出的私宅项目却更加豪华;不少新项目纷纷投入资金,增添亮点设备,以便强攻市场。

Aston Residence洋房的阳台直接通往游泳池。

刚于上个月推出、位于巴西立的Aston Residence,其120米长、10米宽的大型泳池就让人眼前一亮。住户甚至可从自家阳台旁的私人按摩池,直接游入游泳池。

远东机构在武吉知马的Jardin永久地契公寓更是每隔一层楼就设有花园,让高楼住户的家门也能绿意盎然。

负责销售Aston Residence的HSR房地产经纪行董事刘凯丽说:“去年行情好,每个月都有三四个新的豪华住宅推出,但近期却每几个月才一个。

“就因市场欠佳,近期推出的房产更需有超强吸引力,设施也就更豪华和独特。”

Jardin公寓每隔一楼就有公园。(远东机构提供照片)

因此尽管价格不菲,有意购买者依旧络绎不绝。平均售价约268万元的28栋Aston洋房,短短数星期就已售出17栋;尺价约1700元的Jardin,销售情况也非常理想。

让出大量空间、打造高尚居住环境

讲究品味,新私宅项目让土地大量留白。

发展商近几年不断推陈出新,打造新颖高尚居住环境。

乌节史格园的宴会厅有私人厨房。(远东机构提供照片)

远东机构营运总裁谢文华就说:“除了设施,我们希望发展项目的特色能帮住户实现期待已久的生活方式。”

为此,一向最懂得充分利用每一角落的发展商,甘心让空间留白。例如乌节史格园的建筑只占土地面积的25%;卓锦豪庭公寓也让出庞大空间,建设俱乐部与私人派对厅。

如此趋势并不局限于高尚住宅,中档公寓西湖园,就加入度假村才有的设施——专用按摩亭,打造类似SPA的生活时尚。

Thursday, May 29, 2008

Transforming Singapore

Source : The Business Times, May 29, 2008

Regardless of the market sentiment, the three "L's" - Location, Location, Location - will always remain fundamental to the property sector. As such, it pays to know where the best real estate locations are likely to be.

And with the Draft Master Plan 2008 having outlined new key growth areas, hot spots and hubs, there is no guesswork required.


Tian Hock Wins Choa Chu Kang Drive Tender

Source : The Business Times, May 29, 2008

THE Urban Redevelopment Authority (URA) yesterday awarded the tender for a residential site at Choa Chu Kang Drive to Tian Hock Properties.

Tian Hock Properties, a unit of Far East Organization, was top bidder for the site at $116.01 million, or $203 per square foot per plot ratio (psf ppr).

The 99-year leasehold site has a maximum gross floor area of 572,600 sq ft.

On Monday URA closed the tender for the site, which attracted four other bids from companies such as Sim Lian Land.

Market watchers' estimates of the breakeven cost of a new development on the site range from $550-$600 psf, translating to a selling price of $610-$650 psf.

Investors Flee Emerging Property Markets: Survey

Source : The Business Times, May 29, 2008

LONDON - Cash-thirsty investors are being forced to abandon plans for investment in emerging property sectors because of persistent problems in global money markets, the Royal Institution of Chartered Surveyors said on Thursday.

In its quarterly Global Commercial Property Survey, RICS said investor appetite for risk had plunged since the onset of the credit crunch, squeezing transaction volumes in emerging Europe, Asia and Latin America.

'A beacon of credit crunch resilience in the second half of 2007, it seems investors are now less sure of the potential higher returns on offer in emerging markets,' the report said.

Respondents were also less than confident about resilience of commercial property values in developed Asia, North America and Australasia in the second quarter of 2008, with prices forecast to fall at almost double the pace of western Europe.

'With prime yields across some emerging European cities now on par with those in developed markets, it is little surprise that investors have turned cautious on a relative valuation basis when risk is factored into the equation,' said RICS Senior Economist Oliver Gilmartin.

'Tenant demand is still rising across emerging markets although at a more muted pace as multinationals feel the pinch from tougher economic times,' Mr Gilmartin said.

RICS said African and Middle Eastern markets were likely to buck this trend as fast-growing petrodollar businesses based in cities such as Dubai and Doha spurred demand for commercial property space. -- REUTERS

US Equity Funds Building Up War Chest To Target Hotels

Source : The Business Times, May 29, 2008

They anticipate fire sales by those who bought properties a year ago at the peak

(NEW YORK) A US$200 million resort hotel does not exactly resemble a suburban home. But scratch the surface of the sales market for each property category, and they look remarkably similar today.

Choice trophy: The fundamentals of the hotel business will worsen over the next two years, say analysts

The number of hotel deals in the United States during the first quarter plummeted by more than 40 per cent, to 127. There is a gaping spread between what sellers are asking for hotels and what buyers are willing to pay. And lenders are writing much smaller mortgages at higher interest rates than they were a year ago.

And yet several private equity firms have quietly managed to raise cash to buy hotels in recent months, said Warren Marr, a hotel consultant at PricewaterhouseCoopers. 'It may take a bit longer than it did two years ago, but the money is there,' he said.

Some hotel industry experts contend that this is an excellent time to raise cash, because they see fire sales on the horizon. Mr Marr said that some investors who bought hotels a year ago, at the peak of the market, and used financing to cover as much as 85 per cent or 90 per cent of the purchase price, might be forced to sell soon.

'You could call these distressed assets - not physically distressed, but financially distressed,' he said.

HEI Hotels and Resorts, based in Norwalk, Connecticut, is the latest company to raise cash for a new private equity fund.

This is the third fund raised by the company, which also manages the hotels in its portfolio. The new fund has more than US$500 million to invest in hotel properties.

Gary Mendell, chief executive of HEI Hotels and Resorts, said that across the industry, it is harder to raise capital now than it was a year or two ago. But he attributed his ability to raise US$500 million now to the number of repeat investors.

The company focuses exclusively on raising money from university endowments, and six of the 16 investors in the new fund also invested in both of HEI's earlier funds, which closed in 2004 and 2006.

There is little doubt that hotel sales have plummeted since the credit squeeze took hold late last summer. For example, buyers spent US$4.1 billion on hotels in this year's first quarter, less than half of the US$8.6 billion spent in the first quarter of 2007, according to Real Capital Analytics.

There are also far fewer big spenders. Only eight investors bought more than US$100 million worth of hotels in the US in the first quarter, down from 27 buyers who did so a year earlier, the firm reported.

Buyers are also starting to demand a little better return on their investment. Capitalisation rates - or the initial rate of return on a property, expressed as a ratio of the current income relative to the purchase price - are rising for all types of commercial real estate.

But Dan Fasulo, the director of market analysis at Real Capital Analytics, wrote in a report about hotel sales last week that the 'large gap between asking prices and current bids indicates that buyers think cap rates should be even higher.' Mr Fasulo said the average cap rate for all US hotel deals in the first quarter was around 8 per cent.

Mr Mendell said the HEI fund would probably buy fewer hotels than it might have two years ago, simply because lenders are demanding more equity.

Noble Investment Group, which is based in Atlanta and owns and operates hotels through similar private equity funds, raised its latest fund in early 2007. Mit Shah, the chief executive, said the company had invested about 40 per cent of this US$310 million fund so far and was focused on investing the rest, rather than on raising capital for a new fund.

Mr Shah said he thought the main reason so few hotels were on the market today was that most sellers were unwilling to part with their properties at current prices. 'If you don't have to sell, you won't sell in this market,' he said.

But he added that the pool of buyers was much shallower than it was a year ago, so he hoped to pick up some good deals soon. 'There is a significant amount of capital on the sidelines,' he said.

David Loeb, a hotel analyst at Robert W Baird & Co, an investment bank in Milwaukee, predicted that the fundamentals of the hotel business would worsen over the next two years.

He said this was only partly because of the lagging economy. He said a significant amount of new hotel construction was in the works, which had been financed before the credit markets soured.

He estimated that the number of hotel rooms in the United States would increase 2.5 per cent this year, and possibly another 2 per cent to 2.5 per cent next year.

Mr Loeb said he thought this was a smart time to be raising money to buy hotels. 'There will be owners who can't afford to keep their hotels anymore,' he said, because they bought them in highly leveraged deals a year or so ago.

He added that some trophy properties might even change hands.

'Luxury properties do not come on the market often,' he said. 'But in this market, you will absolutely see some of them sell.' - NYT

Japan's property industry downgraded by Morgan

Source : The Business Times, May 29, 2008

Condominiums put up for sale in the Tokyo region dropped in April

(TOKYO) Japan's real estate industry was downgraded to 'in-line' from 'attractive' by Morgan Stanley, which cited credit tightening after the sub-prime market collapse in the US and a slowdown in the national condominium market.

Mitsui Fudosan Co and Mitsubishi Estate Co, Japan's two biggest developers, also were cut to 'equal-weight' from 'overweight' by Tomoyoshi Omuro, an analyst at Morgan Stanley.

The collapse of the sub-prime market in the US has made it harder for Japanese developers and funds to borrow.

Condominiums put up for sale in the Tokyo region dropped for an eighth month in April, as rising prices discouraged potential buyers.

'We believe office rent hikes ahead and higher margins on construction of new buildings are already in share prices for the three majors, leaving little good news to come,' said Mr Omuro in his report.

'Credit tightening due to sub-prime issues, correction in property prices and a worsening condo market must also be weighed.'

Mitsui Fudosan has gained 2.5 per cent and Mitsubishi Estate has risen 2.6 per cent so far this year, compared with a 7.4 per cent decline for the six-member Topix Real Estate Index. -- Bloomberg

Stansfield Wins Tenancy Auction Of Its Premises

Source : The Business Times, May 29, 2008

STANSFIELD Group yesterday won a Singapore Land Authority (SLA) tenancy auction, allowing it to continue leasing its existing eight-storey premises at 11 Penang Lane from SLA for a further period of up to nine years.

Stansfield's winning bid was for $270,000 monthly rental for a three-year lease term, with options to renew for another two terms of three years each.

However, lease renewals for the second and third terms will be at market rentals at the time.

The $270,000 monthly works out to $7.96 per square foot (psf) based on the building's gross floor area of 33,905 square feet.

Stansfield leased the building from SLA in May 2003 after the group won a public tender for a 3+2 year tenancy.

Before that, the building had been used by National Council of Social Service.

Knight Frank conducted the auction for the tenancy on behalf of SLA.

The $270,000 monthly rental that Stansfield will pay SLA for the next three years is over six times the $40,000-plus it was paying SLA under the lease that has just expired.

The group was prepared to bid high to 'spare our students the inconvenience and disruption that would have resulted had we moved to new premises', Stansfield CEO Ramel Ang said when contacted by BT yesterday.

'We are committed to the students and want to ensure continuity for them,' he added.

Stansfield is suing the Consumers Association of Singapore over an alleged breach of an agreement governing insurance payments that hampered its ability to bring in foreign students.

Since Stansfield's existing 3+2 year lease for 11 Penang Lane expired on May 19 this year, the group has been occupying the building under a Temporary Occupation Licence issued by SLA.

Bidding for the building's tenancy at yesterday's auction began at a monthly rental of $76,000.

A total of 10 parties took part in the bidding, including other private schools and investors, some of whom were keen to convert the building into a hotel, BT understands.

Separately, Knight Frank also sold two properties at its auction yesterday at Amara Singapore.

One was a four-storey building at 466 Serangoon Road, which was sold on behalf of its liquidator, for $3.2 million.

The 999-year leasehold property, which is currently tenanted, has a shop on the ground level and apartments on the upper floors. The total net lettable area is 7,061 sq ft.

The other property sold was a 1,399-sq-ft ground-floor shop unit at the freehold Tembeling Centre in the East Coast area, that fetched $1.31 million.

Property Transactions With Contract Dates Between May 12th - 17th, 2008

S'pore Ranked 9th On Costs Of Office Occupancy: CBRE

Source : The Business Times, May 29, 2008

Highest increase in occupancy costs over 12 months is Ho Chi Minh City

AFTER the sharp increase in prime office occupancy costs, Singapore has emerged as the ninth most expensive office market in CB Richard Ellis's (CBRE) latest semi-annual Global Market Rents survey.

Singapore was ranked 11th in the last survey in November last year and 24th in the May 2007 survey.

Mr Armstrong: 'Pace of rental growth in S'pore is moderating and we sense the peak is close at hand.'

The last time it was one of the 10 expensive office markets in the survey was 1991, when it ranked sixth.

However, on a brighter note - for those concerned about Singapore's competitiveness - the latest survey shows that the island no longer holds the title of posting the highest increase in occupancy costs over a 12-month period.

That 'honour' went to Ho Chi Minh City, which posted a 94.4 per cent jump in office occupancy costs - in local currency - over the 12 months ended March 31, 2008. It was followed by Moscow (up 92.7 per cent) and Singapore (86 per cent).

In the previous survey, published in November last year, Singapore posted the highest 12-month increase in occupancy costs, while in the May 2007 study it took fifth spot.

'The pace of rental growth in Singapore is moderating and we sense that the peak of the market is close at hand,' said CBRE's executive director (office services) Moray Armstrong.

'With significant new office supply coming on stream through the next few years, we are confident that Singapore's medium- to long-term term competitiveness in premises costs is assured.

'It's also noteworthy that the range of alternative lower-cost premises options (for example, business park space) has been bolstered. This is a sign of the commercial property market's growing maturity in response to Singapore's status as a global business city.'

CBRE figures show the average monthly Singapore prime office rental rose 92.3 per cent last year to $15 psf in Q4 2007, after appreciating 50 per cent in 2006.

For Q1 this year, the average monthly prime office rental was $16 psf, up 6.7 per cent from the preceding quarter.

CBRE projects that the figure will edge up to $17 psf by end-2008 and $17.50 psf by end-2009.

CBRE's latest Global Market Rents survey shows London's West End retained its position as the world's most expensive office market, while Moscow climbed to second spot, followed by Tokyo's Inner Central Five Wards, Mumbai's Nariman Point and Tokyo's Outer Central Five Wards.

'Office occupancy costs are continuing to defy sluggish economic conditions and the credit crunch, as they rise faster than global inflation,' noted CBRE's global chief economist Raymond Torto.

'These cost increases are dominated by emerging markets, caused by both supply and demand imbalance and the depreciation of the dollar relative to local currencies. In some of these emerging markets, Class A office space is seriously lacking.'

Overall, Europe, Middle East and Africa dominated the list of markets with the fastest-growing occupancy costs, accounting for five of the top 10 and 19 of the top 50 markets.

Worldwide, 88 per cent of the 173 office markets monitored posted higher occupancy costs.

CBRE said that its definition of occupancy costs covers rent, plus local taxes and service charges.

The occupancy cost figures are adjusted to reflect different measurement practices from market to market.

New Flats Under Stricter Rules In Hot Demand

Source : The Straits Times, May 28 2008

DEMAND has been strong for the latest batch of Housing Board (HDB) flats - despite new rules designed to prevent frivolous applications.

As at 5pm yesterday, 2,397 applications had poured in for the 1,485 premium flats launched by HDB just last Thursday.

The latest built-to-order exercise for new flats - Punggol Sapphire (above) and Compassvale Pearl - has received overwhelming response, notwithstanding the new criterion imposed by Housing Board. -- PHOTO: HDB

Housing experts say demand looks likely to stay healthy, although the total number of applications may drop as HDB's new rules begin to deter time-wasting and frivolous applications.

The latest flats are likely to be three times oversubscribed, they say - a drop from comparable sales earlier this year, which were about five times oversubscribed.

HDB's two newest projects - Compassvale Pearl in Sengkang and Punggol Sapphire - are being offered under HDB's build-to-order (BTO) system, where flats are built only when a certain level of demand has been reached.

HDB tweaked its application process last week to address concerns over relatively low take-up rates for new flats despite thousands of applications.

Under the new rules, a first-time buyer who rejects an offer to buy a flat twice at HDB's BTO or balloting sales exercises will lose his first- timer priorities for a year. That effectively puts him at the back of the queue with the second-timers.

The new rules raised fears that buyers offered leftover flats will be penalised. HDB has since said it may exercise flexibility if applicants at the back of the queue have good reasons for rejecting available flats.

Market watchers such as Prop- Nex chief executive Mohamed Ismail told The Straits Times he estimates applications will drop by 40 per cent under the new rules.

'But as new HDB flats are still the cheapest option for newlywed couples, demand should still be at the 70 per cent take-up rate,' he said.

ERA Realty Network's assistant vice-president Eugene Lim agreed. 'The new rules cut out the time- wasters...what's left is real demand.'

Earlier this year, BTO projects Punggol Spring and Jade Spring @ Yishun Phase 2 were about five times oversubscribed, HDB figures show. Mr Ismail said the latest projects are likely to be about three times oversubscribed, based on yesterday's figures.

So far, Punggol Sapphire is the more popular, with 1,824 applications for 1,065 homes, compared to 573 for 420 homes at Sengkang.

First-timers such as IT officer Chua Yong Kiat, 28, said it will not be a surprise if total numbers drop.

'I'll definitely only apply if I'm sure I would buy a flat at that location. If not, getting that dream home becomes much harder if you lose your first-timer priorities,' he said.

New Vision For Kallang Riverside

Source : The Business Times, 29 May 2008

The area is set to evolve into the next prime area at the edge of the city, say NICHOLAS MAK and TEO JUNRONG

THE Kallang planning area, positioned along the picturesque Kallang River and within close proximity to the Central Business District (CBD), has enormous development potential. Made up of nine sub-zones, it covers a land area of about 920 hectares that includes 101 hectares of water body.

Taking sports to a new level: When the $1.2 billion Singapore Sports Hub is completed by 2011, it will add vibrancy to Kallang Riverside due to its close proximity to the area

Since the announcement of the 1998 Master Plan, planners have envisaged the Kallang area as an urban waterfront district. This vision includes it being a centre for sports, recreation and leisure with residential developments flanking the riverbanks. There were also plans to transform the Kallang planning area into a major commercial centre to capitalise on its proximity to the Central Area.

In particular, under the 1998 Master Plan, Kampong Bugis, a sub-zone of the Kallang planning area, was slated to be a transition between the Central Area and the sports and recreation areas at Kallang Basin.

High-density residential buildings along with recreational facilities will be orientated towards the river to take advantage of the waterfront view. Some of these plans have already materialised. Waterfront residential developments, such as Pebble Bay and Camelot, can now be found facing the Kallang Basin.

The latest Master Plan aims to build on the earlier vision for Kallang. The new planning sub-zone will be the Kallang Riverside, which refers to the areas on both sides of the Kallang River, bounded by Nicoll Highway, Kallang Road and Sims Way. With a total land area of 64 hectares available for development, Kallang Riverside is to be transformed into a new lifestyle district, offering waterfront homes with an exciting mix of retail and entertainment facilities.

In addition, the area will also be developed into a commercial hub outside the city centre, providing various business alternatives and employment opportunities. Kallang Riverside will embrace the nationwide vision to make Singapore a great city in which to live, work and play.

Work

As mentioned earlier, Kallang Riverside aims to become a major commercial hub outside the city centre. There will be over 200,000 square metres of new office space added to the area. Its proximity to the CBD will be an advantage, as it will provide an alternative location to the existing CBD. The resulting projected increase of 21,000 office workers in Kallang could provide the necessary pool of demand for the upcoming retail and entertainment outlets.

Live

Homes with waterfront views usually command a premium and the prices of some of these homes fall within the high-end price segment in Singapore. Distinctive waterfront homes within a lush park setting are planned to be developed on the western side of the Kallang River.

The proposed 4,000 new waterfront homes will have a range of heights to ensure that scenic views of the beachfront will not be obstructed. For instance, there will be varying residential plot ratios of 3.5 to 5.6 under the 2008 Master Plan for the area to the west of the Kallang River. Future developments can also adopt a resort-style design, to take advantage of the beaches and water edge location. These new homes could also be relatively more affordable and could be priced in the mass market and mid-tier segments.

In order to allow the water features and landscaping elements to seamlessly extend the lush park setting, developments here will be encouraged to go 'fenceless'. This will be similar to one-north Residences, where such a fenceless environment was created to enable pedestrian connectivity and interaction among the community.

This will also pose challenges and opportunities for architects, as they need to create this seamless environment for the developments in Kallang Riverside without compromising on the security of the residents.

With the presence of the various live-work-play elements, together with its waterfront location and proximity to the CBD, these developments are likely to be attractive to homeowners and investors.

Kallang Riverside will also take advantage of its distinctive tropical character and surrounding water features by forming a substantial hotel cluster to cater to family and business travellers. Under the 1998 Master Plan, the area to the east of the Kallang River had been zoned for residential purposes. Under the 2008 Master Plan, the zoning has now been changed to hotel and white sites.

The hotel zoning will have plot ratios ranging from 2.1 to 3.5 while the white sites zoning will have plot ratios ranging from 1.5 to 4.9. There are plans for up to 3,000 hotel rooms available along the banks of the Kallang River.

Due to tourism initiatives such as the Formula One race, Youth Olympics and the integrated resorts, the number of visitors to Singapore is anticipated to rise over the medium term from the 10 million in 2007 to about 17 million by 2015. As a result, more hotels are needed to meet the rising demand. Tourists should find hotels along the Kallang Riverside an attractive choice, with their scenic views, proximity to the CBD as well as major tourist attractions.

Play

Kallang Riverside will go through a metamorphosis to become a new lifestyle hub, with a vibrant mix of retail, food and beverage outlets, and entertainment facilities. It is close to key attractions such as the Sports Hub and the Illuma entertainment centre.

Costing some $1.2 billion, the Singapore Sports Hub would be completed by 2011. The integrated complex includes a 55,000-seat capacity stadium with a retractable roof, a 6,000 capacity aquatic centre, a multi-purpose arena and over 41,000 square metres of commercial space. It will be Singapore's premier land and sea sports, entertainment and lifestyle hub, hosting major international events and playing a critical role in taking sports in Singapore to a new level. Due to its close proximity, the Sports Hub is likely to add vibrancy to Kallang Riverside.

Illuma, located in the Bras Basah-Bugis district, is slated to be Singapore's first urban entertainment centre. Spanning a site area of 8,921 sq m, the complex aims to provide an exciting mix of arts and entertainment facilities all in one location, drawing both locals and tourists alike.

Within the development, public spaces will be provided to serve as venues for street performances, bazaars and open-air concerts. Likewise, this upcoming project would be something that the residents in Kallang can look forward to.

With its sandy beaches, waterfront views, and close proximity to the city, Kallang Riverside is indeed situated in a unique spot in Singapore. As the Master Plan gradually materialises, Kallang Riverside will evolve into the next prime area at the edge of the city. The growing population in the area would provide the critical mass to support these upcoming residential and commercial developments. In time to come, Kallang Riverside might become one of the places in which residents can truly live, work and play.

The writers are with Knight Frank's Research & Consultancy Department

Creating More Buzz In The Central Area

Source : The Business Times,29 May 2008

OF ALL the changes made in the recent announcement of the new draft Master Plan 2008, those being effected within the Central Region in general and within the Central Area in particular would have the most telling impact on commercial land use in Singapore.

Marina Bay Financial Centre: About 44 per cent of the supply of new office space in Singapore will be in the new commercial area of Marina Bay, and would be of Grade A quality

The Central Area lies at the heart of the Central Region and includes the sub-zones of the Downtown Core, Singapore River, River Valley, Outram, Museum, Rochor, Newton and Orchard, as well as new areas for development comprising the sub-zones Marina East, Marina South and Straits View.

In the years since the last Master Plan in 2003, the Central Area has been evolving from a land use that was predominantly commercial to include a wider diversity of other uses, such as residential, lifestyle/entertainment and recreation. Yet, despite the influx of uses that were not typical to the Central Area 10 years ago, it is the commercial elements (especially the office sector) within the Central Area that look poised to grow in terms of both quality and quantity.

The confirmed supply of new office space in Singapore in the next five years is estimated to be about 10.2 million square feet and about 44 per cent of these new office buildings (Marina Bay Financial Centre, Marina View North Tower and Marina View South Tower) would be in the new commercial area of Marina Bay, and would be of Grade A quality.

In addition, 64 per cent of the future office supply islandwide would be Grade A buildings, undoubtedly raising the quality of office stock in the Core CBD, thereby contributing to the attractiveness of the city-state as a major financial centre.

At the same time, the Draft Master Plan 2008 provides the quantity of development space, as an additional 6.4 million sq m (69 million sq ft) of commercial space is planned for the Central Area in 10-15 years.

Rail network

A glance at the sites from the Draft Master Plan in the Marina Bay area shows that almost all the sites are 'white' sites, where mixed-used developments can be constructed.

Moreover, the plot ratios of the undeveloped sites range from 8.0 to 25.0, with most of the sites having a plot ratio of 13.0. These would mostly comprise modern office buildings, while at the same time suggesting that Marina Bay would have a diversity of uses that should see complementary retail space as well as residential homes. Therefore, offices with large floorplates, homes overlooking the 101-hectare Gardens by the Bay, or shops within walking distance of the entertainment highlights at the soon-to-be-completed integrated resort look set to transform Marina Bay.

In anticipation of these exciting changes, the government is also investing in significant infrastructure. In the LTA's Land Transport Masterplan, the rail transit network would increase from the present 138 km to 278 km by 2020.

Not only will this make the rail network comparable to those in cities like New York and London, it would facilitate the injection of even more activity into the Central Area. It is envisaged that commuters would have access to a rail transit station within 400 metres, or five minutes' walk, from any location in the Central Area, bringing people to an array of activities in the new downtown.

Not all the action will be in Marina Bay though as the Tanjong Pagar area south of the existing CBD will also be rejuvenated, and the Beach Road/Ophir-Rochor Corridor will house a number of varied mixed-use developments. The development of these areas would provide another tier of commercial facilities on the fringe of the CBD, supporting businesses that do not require a Core CBD location.

The writer is a director of CBRE Research

Paya Lebar Master Plan Is Long Overdue

Source : The Business Times, 29 May 2008

We owe it to ourselves to give this culturally rich area our best shot - and preserve part of our heritage, says COLIN TAN

NOT many Singaporeans, especially younger ones, would know that Paya Lebar Central - the Master Plan area unveiled last week - was once a booming commercial hub.

Those of us who grew up in the area remember the old wet market at Geylang Serai as the heart of all the bustling activity. So it was amusing to see the area described in the weekend newspapers as a sleepy industrial estate. Apart from the city centre, it was one of the earliest and busiest commercial hubs in Singapore's early history.

















In the late 1960s and early 1970s, Paya Lebar boasted one of Singapore's earliest department stores - operated by Emporium Holdings at the Haig Road-Geylang Road junction, next to the Lion City Hotel. The area was teeming with people - especially at night. It was lit by gas-filled halogen lamps from the stalls of street hawkers, which bathed the entire area in a warm, golden glow.

Although Singapore's car population back then was minuscule compared with today, there were frequent traffic jams in Paya Lebar, even though most people either walked to where they wanted to go or took a trishaw.

The area was also home to Singapore's first 24-hour supermarket at Tanjong Katong complex. But the concept was way ahead of its time. And once the novelty wore off, the supermarket drew fewer and fewer shoppers.

And time stood still in Paya Lebar as the forces of change started to exert themselves elsewhere in Singapore. The population of Paya Lebar was slowly relocated to new housing estates such as Chai Chee and Bedok, and onwards to Tampines. Shorn of its population base, the area went into a slow decline. So in a sense, the unveiling of the Master Plan for Paya Lebar Central is long overdue. The area has been forgotten for far too long.

Its key strengths are its proximity to the city, its cultural heritage and the fact that it will have an MRT interchange. Its main weakness is the absence of a large population base. The nearest housing estates are at Geylang East and Eunos, which are small compared with the likes of Bedok, Tampines and Ang Mo Kio. As such, Paya Lebar is not a natural hub.

Having an MRT interchange helps, but it is no longer such a big deal. Soon there will be many more interchanges - all competing for the same market. Similarly, being close to the city is an attraction, but there are plenty of competing areas that are even closer, such as Kallang and Lavender. On the other hand, places like Novena have a huge head start.

Where will companies locate their backroom operations at Paya Lebar? If it is too expensive to be in the city, why stop at the edge of the city where rents are only a shade cheaper? Why not go all the way to Tampines or Jurong East, where rents are not just affordable but way cheaper? Is Paya Lebar a place for SMEs? Maybe. If property prices shoot up with all the upgrading and new improvements, as some analysts suggest, we can forget about SMEs setting up offices there.

The edge that Paya Lebar Central has over other areas is its cultural heritage. Geylang Serai - which maybe the Master Plan area should have been named - can be to the Malay Muslim community what Chinatown and Little India are to the Chinese and Indians. Ironically, what gives these two areas their vibrancy is the presence of the large number of work permit holders from India and China. It lends the area much-needed authenticity. Many Singaporeans are Westernised, preferring Starbucks or McDonald's instead of the traditional coffee shops or sarabat stalls.

Paya Lebar's cultural heritage also means it has strong tourism potential. At the moment, the celebrations during the month of Ramadan attract few tourists. It is mainly a local event. The number of non-Muslim local visitors is dismal. Singapore and STB have already achieved a difficult task - getting the numbers to even come to Singapore. And if the two integrated resorts and the hosting of global events such as the Formula One race and the Youth Olympics mean many more people will come to Singapore, the next step then is to increase their average length of stay. Increasing the number of must-see attractions is one way.

While it has been decided to do away with the Malay Village, there should be efforts to find an alternative. Having a civic centre with designs inspired by traditional Malay stylistic elements is good. But expecting it to take off like it did in Toa Payoh may not be realistic, as there is not much of a population base in the area. We do not want the place to be alive only during Ramadan. The tourists, if they come, will help supplement the market.

Maybe a museum celebrating Malay culture and heritage in the region - similar to the Peranakan museum at Armenian Street - can be set up. In fact, the Peranakan museum may be relocated to Paya Lebar Central, as the nearby Joo Chiat area was once an area populated by Peranakans. Chinatown and Little India are slowly coming back despite the pace of Singapore's modernisation. In the case of Paya Lebar Central or Geylang Serai, it will not be easy. But we owe to ourselves to give it out best shot - and preserve part of our heritage.

The writer is head of research and consultancy at Chesterton International

Plans To Improve Urban Spaces

Source : The Business Times, 29 May 2008

CHUA YANG LIANG gives an overview of the proposals in the Draft Master Plan 2008 and presents a wish list to planners

BESIDES the three strategic commercial hubs of Jurong Lake District, Kallang Riverside and Paya Lebar Central, which will strengthen the CBD alongside with development plans for Tanjong Pajar and the Beach Road/Ophir-Rochor corridor, there were no major changes or surprises to the zoning, plot ratio and planning directions in the 2008 Draft Master Plan. This observation is based on our brief review of three areas in particular - Buona Vista, Paya Lebar, and Harbourfront (which includes Telok Blangah) that will house the interchanges of two major transit lines (existing and the future Circle Line).













The 2008 Draft Master Plan maintains the time-tested planning vision that focuses on improving the overall quality of life, supported by a pro-business environment. It maintains the central planning philosophy found in the 2003 Master Plan - that of improving the quality of urban spaces and supporting general economic growth. This vision is inherent within the four key thrusts of 'home of choice, magnet for business, exciting playground, and home to cherish' and the zoning maps that developed from there.

Market trends

This planning deliverable is a highly practical one and focuses on concretising market trends that are conducive to improving the quality of living spaces and favourable to the overall business environment in Singapore.

The 2008 Draft Master Plan has not only respected the organic development trends, such as supporting the interim uses of vacant government buildings and sites, for example, Dempsey Road and Wessex Estates, it has also formally accepted and recognised other key market forces that would help improve the overall quality of living in Singapore. For example, a notable change in Buona Vista was the re-zoning of a popular area in Holland Village from 'Residential with commercial at first storey only' and 'Commercial and Residential' to purely commercial use.

The continual agglomeration of retail and commerce activities in this neighbourhood over the past few years has permitted retail activities to reach a threshold level thereby strengthening the area's image and attractiveness as an F&B neighbourhood that is well patronised by foreigners and young locals. Coupled with the upcoming Holland Village MRT station and the one-north intellectual cluster located slightly further south, re-zoning to permit full commercial activities within this area is practical and will further enhance the overall quality of living in and around the immediate vicinity.

Similarly, taking its cue from current market trends, the 2008 Draft Master Plan has also proposed more housing in key areas where demand has been strongest. The urban planners have proposed an additional 300,000-plus housing units (both private and public) islandwide with an emphasis on 'water-fronting'. This is similar to that proposed in the 2003 Master Plan where over 300,000 housing units were also suggested.

The largest increase is in the central and north-east regions where some 39 per cent and 38 per cent of additional housing units (over the existing stock) have been proposed. Likewise, in terms of the distribution of total new supply, the central and north-east regions again topped the list at 40 per cent and 24 per cent respectively. This can be expected given the strong residential demand as reflected in the recent surge in property values in these regions. This proposed new supply should help ease the values in these areas in the longer term horizon.

Echoing this trend is Buona Vista, which witnessed several residential sites being introduced. A site in Holland Drive, which was previously zoned for a civic and community institution, was re-zoned as a residential site with a plot ratio of 4.2, while sites at Slim Barracks Rise and Dover Close East, which were initially zoned white, are now zoned residential. The re-zoning of these three sites will support the area's growing prestige as an education and research hub in Singapore.

For the other planning regions, new housing has been proposed around existing water bodies, for example, reservoirs in Bedok and Lower Seletar, and the proposed 4.2 km waterway in Punggol. This concept of urbanising Singapore's waterways is not new but it has been given a greater push with the strong market response to developments in the Sentosa and Harbourfront area over the past two years. This emphasis on providing more waterfront homes would greatly enhance social equity by making such homes more affordable to the regular guy on the street and not just limited to the affluent.

Shifts in preferences

However, the danger of following market trends is sudden shifts in preferences. Just like dark undercurrents are a result of changing tides, a sudden turn in market preference may send urban plans out of orbit. The secret is providing sufficient free play to accommodate such shifts. In line with the evolving landscape of Buona Vista as an R&D and education hub, a site next to Buona Vista MRT station, which was initially zoned commercial, has been re-zoned White. This gives the future developer more flexibility in its development, providing the free play that could potentially eliminate any shifts in market preferences and possibly enhance the area further.

Likewise, the Harbourfront has seen a similar trend in providing more 'planning flexibility'. Notable changes in the region were the shift in sites at Telok Blangah Road that were initially zoned 'Subject to detailed planning - Residential' to 'Reserve' sites.

The 'planning flexibility' in this instance is not accorded to the private market but given to the statutory planners. The 'Reserve' zone effectively buys the planners some extra time to evaluate and deliberate on the optimal land use zones on these sites.

This shift in zoning could also be a reflection of the evolving market dynamism in the area, i.e. the shift in demographic profile in the surrounding neighbourhood, particularly in light of current developments such as Resorts World at Sentosa, Reflections at Keppel Bay, VivoCity and the HarbourFront offices.

Coupled with the government announcing its intention to create a leisure and recreational destination along the Southern Ridges by introducing a 2.2 km linear park along the Southern Ridges Park, this could potentially be an indication of future alternative plans for the area other than simply residential. Whatever the intention, we do know that the statutory planners are deliberating on the potential uses and are not ready to disclose the plans for these areas as yet.

Urban sustainability

While the 2008 Draft Master Plan has clearly articulated the medium-term planning objectives, it could be further enhanced with an expression of how our statutory planners perceive and support the issue of environmentalism, particularly on the concept of urban sustainability, which stems from greater environmental awareness today. Increasingly, we have seen more private occupiers demanding, and developers providing, environmentally friendlier buildings.

Urban sustainability is more than just green buildings; it contains the same basic principles of social, economic and environmental sustainability but applied to a bigger spatial context, i.e. the urban conurbation in which sub-systems such as transportation, housing, retail, education and tourism should be duly considered.

We have the first ever Leisure Plan that would see to the tripling of existing park connectors, providing residents 150 km of round-island access 24 hours a day. Could we see an Urban Sustainability Plan that sets the targets, deliverables and specific actions of each sub-system, all towards a sustainable urban environment?

The writer is the head of research, South-east Asia and Singapore, Jones Lang LaSalle

Tenants Cashing In On Rental Flats

Source : The Straits Times, May 29, 2008

Heavily subsidised HDB units, which are much in demand, are often sub-let to foreigners

SOME tenants in heavily subsidised HDB rental flats have been illegally sub-letting their homes to cash in on surging demand for cheap accommodation.

There are no official figures but tenants in some estates say that as many as one in five rental flats is rented out to foreign workers - a clear breach of HDB rules.

The flats are often leased to workers from Malaysia, China and India - who are either unaware that they are renting illegally or do so because the units are the cheapest option.

Property agents and tenants told The Straits Times that there is an increasing number of such flats put up for rent by people keen to cash in on foreign workers' demand for cheap housing.

A Malaysian, who declined to be named, told The Straits Times that she leases a two-room HDB rental flat in Toa Payoh with a friend for $700 a month.

That could be as much as $650 more than the subsidised rent - a tidy profit for the original tenant.

Their 'landlord' told them to keep windows shut and not to answer the door. The 35-year-old said she knew the deal was illegal but she was 'desperate for cheap housing', adding in Mandarin that 'If I didn't rent this flat, I can't afford anything else'.

The abuse of HDB rental flats comes amid soaring demand for such homes, which are meant for needy Singaporean families.

The waiting list has shot up by at least 30 per cent over the past few months, with about 4,000 applicants in the queue. This translates to a 15-month wait, which is double the time in 2006.

Eligible Singaporeans can apply for HDB rental flats and pay $26 to $205 for a one-roomer and $44 to $275 for a two-roomer, depending on household income and other factors. The HDB manages about 43,000 such flats and plans to add 20 per cent more.

A Member of Parliament for Ang Mo Kio GRC, Ms Lee Bee Wah, told The Straits Times that residents had complained about the problem when she visited Teck Ghee last month.

'People tell me their neighbours are renting their flats out. They should not be hogging the flats if they have an alternative place to stay,' said Ms Lee.

When The Straits Times called five property agents last week, four said they had one- and two-room flats available for rent. Most of these flats would be rental units, said HDB.

And it is not just low-paid foreign workers renting such flats.

A Singapore permanent resident from Malaysia said he used to rent such flats as they were the cheapest on the market.

The 28-year-old finance executive rented a two-room subsidised flat in Owen Road for $550 in 2006. A similar unit on the open market would cost at least $1,000. Now, government-subsidised flats can fetch $1,000 in good locations, he added.

When The Straits Times visited Toa Payoh rental blocks last week, some tenants said they noticed an increasing number of workers from China and Bangladesh living in their blocks.

Coffeeshop worker Poh Lee Tee, 45, said her neighbour frequently rented out his flat to Indian workers, who kept her up when they came home from work.

'But I don't want to report my neighbours, in case I get into trouble,' said Madam Poh.

Mr Wu Mu Song, 74, who has lived in one of the rental blocks for the past 30 years, estimated that two out of 10 flats are rented out illegally. 'This is unfair; there are others who need these flats more,' he said in Mandarin.

Although abuse of rental units is on the rise, Mr Wu said it was hard to catch illegal tenants as they often ignore visitors - including HDB officers.

Tenants illegally renting out their home can lose the flat and face a five-year ban from renting or buying HDB property.

The HDB recovered 17 flats in 2005 and 27 last year. The increase was due 'to better public awareness and feedback', it said.

It also conducts inspections at least once a year and carries out regular 'enforcement blitzes'.

One blitz recovered 57 rental flats in three months in 2003 and 35 in a crackdown that began last year in areas like Tampines, Ang Mo Kio, Toa Payoh and Bukit Merah.

Anyone aware of illegal renting can contact the HDB at flw1@hdb.gov.sg. or call 6490 2410.

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Cases of illegal sub-letting






Blk 63 TOA PAYOH LORONG 5

When The Straits Times visited this HDB rental block last week, we identified one unit where voices in a heavy Chinese accent could be heard. The windows were shut, save for a panel at the top where we could see a light and a suitcase. When we knocked on the door, the voices fell silent and, even after repeated knocks, nobody answered the door.

HDB also cited two recent case studies of tenants illegally sub-letting their rental flats.

Blk 3 JALAN BUKIT MERAH

A one-room flat at Block 3, Jalan Bukit Merah, was leased by the HDB to the tenant and her two children. An inspection in January revealed that the flat was sub-let to five Chinese nationals at a monthly rental of $900. The tenant was working in Malaysia while her two children were living with relatives.

Blk 805 KING GEORGE'S AVE

A two-room rental flat was leased to the tenant and his two children. An inspection by HDB revealed that the flat was sub-let to Chinese nationals for $800 per month. The tenant and his family were living with his mother at Chai Chee.

In the latter two cases, the units were recovered in January and February, and the tenants banned from renting HDB flats for five years.

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What's the penalty?

Tenants who illegally sub-let their flats will have their units recovered by HDB, and banned from buying or renting a flat from HDB for five years, while any unauthorised occupier (above 18 years old) will be barred for 2-1/2 years.

Canopy Wins Jury's Vote

Source : The Straits Times, May 29, 2008

DESIGN OF NATIONAL ART GALLERY

Studio Milou's winning concept is the favourite of the public as well

FRANCE'S Studio Milou Architecture, in collaboration with Singapore's CPG Consultants, has won the competition to design the upcoming National Art Gallery, housed in the former Supreme Court and the City Hall.

The design features a linear, draped canopy linking the two historically significant buildings at roof level. A new basement connecting the two buildings will also be built, which will showcase local and South-east Asian art when it is opened in 2013.

Dr Lee Boon Yang, Minister for Information, Communications and the Arts, announced the choice at a news briefing yesterday.

An international jury panel of seven picked three winning designs from 111 entries in a design competition which began last February. The shortlist was unveiled last August.

The jury nominated Studio Milou's concept as top among the three. The design also won over the public.

An exhibition of all the 111 entries was held at City Hall last October, and more than half of 332 visitors interviewed picked Studio Milou's design as their favourite.

PUSHING BOUNDARIES: A new glass roof structure will provide a spectacular exhibition space bathed in filtered natural light. The mesh-like canopy will link the former Supreme Court and the City Hall at the roof level. -- ARTIST'S IMPRESSIONS: STUDIO MILOU

Mr Koh Seow Chuan, chairman of the National Art Gallery Executive Committee, said that the public's continued support is needed 'to build a world-class institution and one that all Singaporeans will be proud of'.

Other factors that determined Studio Milou's win included technical evaluation, track records of the firm and cost evaluation. 'Studio Milou's estimated development cost was within the $320-million budget,' said Dr Lee.

The National Art Gallery was initially scheduled to be completed by 2012. Dr Lee explained that delaying the project by a year will avoid the current resource squeeze in the construction industry.

The Singapore Art Museum (SAM) is assisting the Art Gallery in content development. SAM's director Kwok Kian Chow said the design shows a good understanding of how the art pieces, the buildings' architectural heritage and contemporary design will build the character of this new museum.

Local architectural experts also approve of the design.

Dr Milton Tan, director of the DesignSingapore Council, said: 'This is the one that pushed boundaries and offers new experiences expected of modern art galleries today.'

Architect Mink Tan of Mink Tan Architects felt that though the canopy is 'flamboyant', its mesh-like, floral design will appeal to the public. 'It will be a good gesture to bring in crowds to an art gallery,' he added.

The other two shortlisted architectural firms were Taiwan's Ho + Hou Studio Architects, which proposed building a framework in wood laminate, and Singapore's Chan Sau Yan Associates, which suggested building another level on City Hall's roof.

The jury included Professor Tommy Koh, Singapore's ambassador-at-large and chairman of the National Heritage Board, Dr Jean-Francois Jarrige, president of the Guimet Musee National des Arts Asiatiques in France, and Dr Kenson Kwok, director of the Asian Civilisations Museum.

Mr Jean-Francois Milou, lead partner of Studio Milou, said his design will 'give Singaporeans a sense of being at home while at the Art Gallery.'

Ho Chi Minh City Overtakes S'pore As Having World's Fastest Growth In Office Rrentals

Source : Channel NewsAsia, 28 May 2008

Vietnam's Ho Chi Minh City has overtaken Singapore as having the world's fastest growth in office occupancy cost.

The cost of renting office space in Ho Chi Minh City grew 94 percent in the last six months, according to a global survey by consultants CB Richard Ellis.

Skyscrapers in Singapore's Central Business District

Moscow was second at 93 percent, while Singapore took third spot with an 86 percent growth rate.

Still, Singapore made its debut among the 10 most expensive markets, coming in 9th, with office rentals averaging US$139 per square foot per month.

Dubai was another new entrant, taking tenth spot, with rents hitting US$128 per square foot per month.

Despite this, CB Richard Ellis said Singapore's growth in office occupancy cost is not expected to remain as strong in the coming years. It said the market peak is close at hand and rents could come down with the supply of new office space in the next few years.

London remains the most expensive office market, with rents hitting as high as US$300 per square foot per month, followed by Moscow at US$232 and Tokyo at US$220. - CNA/ir

Property Analysts Say Muted Property Market Situation Is Temporary

Source : Channel NewsAsia, 28 May 2008

Investors have been cautious about the property sector amid expectations that the muted residential property market will weaken further. However, some property consultants are taking a slightly more positive stance, saying that this situation is temporary.

Transaction volumes for private homes have been thin, with developers holding back launches or cutting prices. And recently, there have been a slew of bearish reports from the likes of JP Morgan and Nomura, which are further dampening sentiment.

They said that private home prices could drop by as much as 35 per cent in the upper-end segments of the private residential property market by 2010 due to excess supply and poor sentiment.

They argue that marginal speculative sellers are likely to drive prices lower amid low transaction volumes and higher unsold pre-sale inventories.

Lower rental expectations and a large increase in supply are also seen compounding the situation in the longer term. Some also said the middle and low-end segments will not be spared.

But there are some property consultants who said that while things are slow now, dynamics will change going forward.

While the consensus view is that prices will continue to remain under pressure for the rest of the year and into 2009, some consultants said that the main reasons for falling prices are external.

Chua Chor Hoon, Senior Director, Research, DTZ Debenham Tie Leung, said: "It's mainly the external factor, because of what's happening in US, so sentiments are really weak now.

"(It's also) partly because prices have gone up quite a lot last year - especially after the deferred payment scheme has been removed that made buyers more cautious. It's a combination of factors, but I believe it's the US economy that has a greater impact."

She believes that prices will continue falling for the rest of this year and even into the year ahead, but a glimmer of hope exists.

Ms Chua said: "Prices are likely to fall for the rest of this year and they could continue to fall next year depending on how the US economy pans out.

"But we have a lot of good things coming up in 2010 - Youth Olympics, integrated resorts. So our fundamentals are quite strong. When the US economy picks up, I believe sentiments will follow suit."

And some point out that the bearish reports are due to an over-estimation of supply numbers.

Ku Swee Yong, Director, Marketing & Business Development, Savills (Singapore), said: "The differences arose because of variance in the interpretation of a very basic set of data - the supply numbers - how many apartments will be completed in the next three years.

"We believe that the supply numbers have been overstated because there have been many projects filed and we know that these projects have been delayed."

What is clear though is that shares in property developers have been taking a hit amid concerns over the property outlook. Most of them closed lower on Wednesday. - CNA/vm

Wednesday, May 28, 2008

Govt Rolls Out Two Industrial Sites

Source : The Business Times, May 28, 2008

THE government continues to roll out new sites for sale against the backdrop of a quieter market.

The latest to be offered are two industrial sites - a confirmed list plot in Woodlands with Business 2 zoning being launched for tender, and a smallish plot at Kallang Pudding Road for Business 1 use that is now open for application under the reserve list.





















Both sites are being offered on 60-year leasehold tenures and have 2.5 plot ratio (ratio of maximum potential gross floor area to land area).

Colliers International director (industrial) Tan Boon Leong predicts the 61,757 sq ft Kallang Pudding site, located in the established MacPherson/Al- junied industrial belt, will attract more attention with bids likely to be around $90-100 per square foot of potential gross floor area.

In contrast, the 180,835 sq ft plot at Woodlands Industrial Park E5 may fetch bids of only about $20 to $25 psf per plot ratio (psf ppr), Mr Tan reckons.

He notes that a 30-year leasehold site next door was sold last year for about $28 psf ppr but that was with a lower plot ratio of 1.0.

'The latest plot has the highest plot ratio for an industrial site offered by the government in the Woodlands area since 2000. Industrialists generally don't like operating in high-rise industrial facilities - because of the inconvenience and time consumed in moving goods and people up and down - especially in outlying areas like Woodlands and Tuas.

'So the developer of this site may not be inclined to build up to the maximum plot ratio of 2.5, especially given rising construction costs. Any potential bidder will ask himself: 'Should I bid high for the land and take a risk to build something industrialists may not like?'

With a Business 2 zoning, the site can be developed for a wide range of uses such as clean/light industry, general industry and warehouse.

'The site is near established industries specialising in auto parts, hardware, furniture, scrap metal and waste management,' Urban Redevelopment Authority said.

The tender for the Woodlands plot closes on July 22.

The Kallang Pudding Road plot, despite its triangular shape, is expected to be hotly contested.

'It is suitable for development into an upscale flatted factory and sold on a strata-titled unit basis. The plot is very close to the main trunk road in the area - Aljunied Road,' Mr Tan said.

The Business 1 zoned plot can be put to clean and light industrial, and warehouse use.

Parkway Life To Acquire Nursing Homes In Japan

Source : The Business Times, May 28, 2008

A MONTH after making its maiden foray in Japan, Parkway Life Reit has agreed to buy another two properties there for a total of 2.62 billion yen (S$34.3 million).

The target acquisitions are a nursing home in Yokohama City and another in Osaka's Ibaraki City. Both are owned by vendor ZECS Community Co, which has agreed to lease them back for 15 years with an option for a further five years. Its parent company Zecs Co will guarantee the leases.

At a price of 1.44 billion yen, the Yokohama facility has a net operating income yield of 6.1 per cent. The freehold, five-storey building is next to a scenic canal. It has 74 lettable units spread over a gross floor area of 3,273 sq m.

The Ibaraki nursing home is in a four-storey, 50-year leasehold property beside the University of Osaka and Ibaraki Country Club. It has a lettable area of 3,706 sq m and 94 units. At 1.18 billion yen, its net operating income yield is 6.7 per cent.

Explaining the acquisitions, Justine Wingrove, CEO of the Reit's manager Parkway Trust Management, said demand for quality nursing homes in Japan will grow with the ageing population. 'By 2050, it is estimated that one in three Japanese will be over 65,' she noted.

Rents at both properties are index-linked to Japan's inflation rate on an upward-only basis. Rents may also be revised by mutual agreement at five-year intervals.

Expected to be completed this month, the investments will be made through special purpose vehicle Parkway Life Japan2, a wholly owned subsidiary of Parkway Life Reit. They will be funded by debt, raising the Reit's gearing to 11 per cent from 8 per cent.

ZECS Community operates 30 nursing homes in Japan under the Bon Sejour brand. The leases are also protected by a back-up agreement with Japan Care Service Co, another operator of nursing homes.

Parkway Trust Management did not say how much the acquisitions will add to the Reit's distribution per unit (DPU). 'As the deal size is only $35 million, the increase to DPU is not significant,' said Ms Wingrove.

Last month, the Reit made its first investment in Japan - a pharmaceutical warehousing and distribution facility in Chiba that cost 2.59 billion yen.

Following yesterday's announcement, Parkway Life Reit ended one cent higher at $1.23.