MacarthurCook Reit Delays Fund Raising Amid Volatility

Source : The Straits Times, Jan 19, 2008

THE recent volatility in financial markets has stymied a fund-raising plan by Singapore-listed MacarthurCook Industrial Reit (MI-Reit).

The real estate investment trust (Reit) said yesterday it would postpone plans to raise up to $200 million ‘until markets are more conducive’. It did not specify a target date.

It added, though, that this move would not hinder any plans that the Reit had for the additional funds.

The postponement comes amid the ‘current turmoil in the international capital markets’, said Mr Chris Calvert, chief executive of MacarthurCook Investment Managers, which manages the Reit.

He said in a statement that this decision would help ‘preserve the value of unitholders’ equity’.

MacarthurCook said last month it intended to issue more units of MI-Reit to raise gross proceeds of up to $200 million.

This would be used to buy some properties that MacarthurCook had its eye on and refinance some of the Reit’s recent property acquisitions in Singapore and Japan.

The potential acquisition properties , however, ‘didn’t come through’ anyway, so postponing the fund raising will cause ‘no disruptions’ to MI-Reit’s acquisition plans, said a MacarthurCook spokesman yesterday.

Also, the Reit’s gearing is still comfortably within its long-term target, so refinancing is not an urgent requirement, the spokesman added.

MI-Reit’s gearing is expected to be about 41 per cent after the expected completion of its acquisitions in its fourth quarter, which ends March 31. Its long-term gearing target is between 40 per cent and 50 per cent.

MI-Reit units closed down three cents yesterday at 90 cents.

A-Reit Distributable Income Up 15% In Q3

Source : The Business Times, January 19, 2008

ASCENDAS Real Estate Investment Trust (A-Reit) yesterday reported distributable income of $47.2 million for the three months to end-December, up 15 per cent from a year earlier.

Gross revenue for the third quarter of its financial year, which ends on March 31, rose 13 per cent to $80.2 million, due mainly to additional rental income from a string of completed acquisitions, including the Courts and Giant warehouse retail facilities in Tampines and the completed asset enhancement at The Alpha building in Science Park II.

A-Reit’s distribution per unit for the three-month period was 3.56 cents, 11 per cent higher than a year ago.

For the nine months ended Dec 31, A-Reit’s distributable income came to $138.3 million, up 14 per cent from the same period a year ago. Gross revenue rose 14 per cent to $237.8 million.

The trust’s annualised distribution per unit of 13.92 cents - based on the 10.44 cents for the nine months ended December - translates into a distribution yield of 6.4 per cent, based on A-Reit’s closing price of $2.19 yesterday. The counter ended nine cents higher in yesterday’s trading.

A-Reit’s spokeswoman declined to comment on market speculation that Australia’s Goodman Group is poised to exit Ascendas-MGM Funds Management, a 60-40 joint venture between Ascendas Pte Ltd and Goodman International that manages A-Reit.

A-Reit’s portfolio comprised 79 properties at the end of 2007, compared with 68 properties a year earlier. The trust’s portfolio includes logistics and distribution centres, business and science park buildings, and light industrial and high-tech industrial properties .

In Q3, A-Reit’s portfolio occupancy rate rose to a high of 98.7 per cent, from 96.1 per cent a year ago. The trust’s properties in the business and science park sector achieved a 46.1 per cent increase in renewal rental rates versus existing rental rates while lease renewals for its high-tech industrial properties were at rental rates 71.5 per cent above existing rents, said A-Reit in a statement.

A-REIT Posts 11.3% Rise In Q3 Distribution Per Unit To 3.56 Cents

Source : Channel NewsAsia, 18 January 2008

Ascendas Real Estate Investment Trust (A-REIT) on Friday said its distribution per unit (DPU) was 3.56 cents for its third quarter ending December.

This was an 11.3 percent rise over the DPU recorded in the same quarter of the last financial year.

The latest DPU figure represented an annualised yield of 5.66 percent based on A-REIT’s closing price of S$2.46 per unit on 31 December 2007.

All in, A-REIT is distributing S$47.2 million to unit holders, up 15 percent on-year.

With Singapore’s strong economic performance, A-REIT said its net property income rose 16.3 percent on-year to S$61.4 million. Gross revenue came in 13 percent higher at S$80.2 million.

A-REIT said it saw positive organic growth across all sectors.

It’s Business & Science Parks and Hi-Tech Industrial sectors registered double digit growth in renewal rates over prevailing rates.

Occupancy rates stood at a high of 98.7 percent across the portfolio and 97 percent for multi-tenanted buildings.

A-REIT said this was due to the strong demand for alternative quality office space outside the central business district and the continued influx of multinational companies setting up or expanding operations in Singapore.

The Trust said that if the positive economic and market conditions are sustained, A-REIT is poised for another year of stable returns for its unitholders.

MI-Reit Postpones Fund-Raising Exercise

Source : The Business Times, January 19, 2008

MACARTHURCOOK Industrial Reit (MI-Reit) is postponing its $200 million equity fund-raising exercise given the poor market conditions, the trust said yesterday.

‘We have taken into consideration the current turmoil in the international capital markets in reaching the decision to postpone the proposed equity fund- raising to preserve the value of unitholders’ equity,’ said Chris Calvert, CEO of MI-Reit’s manager.

The trust announced in December that it intended to raise up to $200 million in gross proceeds. But now, the proposed equity fund-raising will be postponed until ‘markets are more conducive’, the trust said.

MI-Reit had intended to use the proceeds of the exercise to refinance its recent property acquisitions in Singapore and Japan, thereby freeing up capital for further acquisitions.

Following the expected completion of its committed acquisitions in the fourth quarter ending March 31, 2008, the aggregate leverage of MI-Reit and its subsidiary and controlled entity Japan Industrial Property will be about 41 per cent - notwithstanding the equity fund-raising, the Reit said yesterday. ‘This gearing is comfortably within MI-Reit’s long-term target gearing of 40- 50 per cent,’ the trust said in a filing to the Singapore Exchange.

Stock markets across Asia have taken a beating this month on the back of turmoil in the global capital markets, brought on by the sub-prime loans crisis and fears of a recession in the United States.

In Singapore, the benchmark Straits Times Index has slipped 10.4 per cent since the start of the year. In contrast, MI-Reit’s stock has fallen 18.2 per cent, losing three cents to close at a one-year low of 90 cents yesterday.

Citi Regroups With ‘Ring-Fencing’ Tactic

Source : TODAY, Weekend, January 19, 2008

You take the troubled parts of the portfolio and move them into a separate area ... hived off from the good parts. — Citi’s country head for Singapore Piyush Gupta

THE sub-prime woes might have battered Citigroup into registering its heaviest loss in the fourth quarter of last year in its 196-year history.

But the world’s biggest bank is confident that it can stem the bleeding from sucking life out of its other markets, including the prized market of Asia, by “ring fencing” the crisis, as Citi’s country head for Singapore Piyush Gupta, puts it.

By doing so, its fast-growing Asian operations will remain intact — ditto for the jobs and bonuses — for its employees across the region, including Singapore, Mr Gupta assured at a hastily-assembled press briefing on Friday.

Said Mr Gupta: “When we run into a troubled situation, the first thing people do is to create a good bank and a bad bank. You take the troubled parts of the portfolio and move them into a separate area, put separate management around it, so that it does not distract you from the running of the rest of the business.”

“Servicing, securitisation and trading (the troubled parts) — we’ve put them together and all under one person. That part has been hived off from the rest of the good parts.”

On top of appointing Mr Vikram Pandit as its new chief executive, Citi has turned to Mr Richard Stuckey — who, in 1998, along with five other Wall Street executives rescued a giant hedge fund back from the brink of collapse — as the man to head its newly carved-out unit.

Mr Stuckey has his work cut out. Last Tuesday, Citi announced a fourthquarter net loss of US$9.83 billion ($14.1 billion) as surging defaults on home loans forced it to write down the value of sub-prime-mortgage investments by US$18 billion. It also said it would be handing the pink slip to 4,200 employees.

Press reports emerged soon after that some Singapore employees had already been laid off.

But Mr Gupta dismissed suggestions that the layoff had anything to do with the bank’s dismal fourth quarter results. It was normal attrition for the bank, which hires some 9,000 employees here.

In fact, Mr Gupta — who was bullish about the bank’s prospects to gain greater market share here — expects the bank to increase its headcount in the coming year.

While declining to be specific on the number of staff who had left the bank recently, Mr Gupta said: “The layoffs in Singapore are as close to zero as you can expect. Frankly, it’s no different from the layoff numbers of the last several years.”

There will be no bonus cuts, he said. “Good performers will continue to receive good bonuses. Staff will be paid salary increments.”

Trotting out impressive figures, including how Citi Asia Pacific had a record year with year-on-year revenues growing 33 per cent, Mr Gupta reiterated that the job cuts would be “concentrated principally in the United States and perhaps Europe”.

Said Mr Gupta: “The impact of any of these cuts on Asia is minimal and the impact on Singapore is even lower than minimal.”

With Asia taking over as the single largest contributor to Citi’s revenue last year, “the directive from HQ is that we should continue expanding in Asia”, he added.

Citi has taken active measures such as securing US$14.5 billion injection from outside investors, including sovereign funds from Singapore and Kuwait, and reducing its quarterly dividend. This gives Citi the financial muscle to grow its business, said Mr Gupta.

The fact that the Government of Singapore Investment Corporation (GIC) came on board is proof of investors’ confidence in the bank, said Mr Gupta, adding that the GIC “are no naïve investors”.

While he conceded staff morale has been affected, Mr Gupta said it was the same across the industry.

Recession Denial Is Over

Source : TODAY, Weekend, January 19, 2008

FUND managers across the world have turned “super-bearish” over the last month, abandoning hope that Europe and Asia can escape contagion from the United States housing crisis.














A Merrill Lynch survey found that a fifth of big investors now expect an outright global recession, an occurrence not seen since the 1930s. Some think the world is already in recession.

“The period of denial may be over,” said Mr David Bowers, who put together the closely-watched report.

“This month’s survey is the first in which investors have really started to recognise that the ‘credit crunch’ could lead to a major recession.

The vast majority expect profit margins to shrink in 2008.”

The report said global cash balances had jumped to 32 per cent of the average portfolio from 20 per cent as recently as November, with both bonds and equities falling out of favour. The survey covers 195 funds managing US$671 billion ($964 billion) across the three main regions.

The asset managers no longer want firms to take on more debt or pay out bigger dividends — the twin abuses at the height of the credit bubble.

They increasingly want them to batten down the hatches for a long storm by using cash flow to repair balance sheets.

What is striking is the broad perception that the US is no longer the sole epicentre of the crisis.

Indeed, most now think the US dollar is poised to rally as the trouble shifts increasingly to Europe.

A net 55 per cent view the euro as “overvalued”, and a net 61 per cent think the sterling is too high.

Asia is turning pessimistic as well. A net 29 per cent think China’s economy will slow and most are now underweight Chinese equities — preferring the Hong Kong stocks, which offers arbitrage opportunities against over-inflated Shanghai.

None of the regional managers thinks China’s growth rate will rise this year.

The Asian investors expect the region (excluding Japan) to face an unhealthy drift into stagflation, with growth slowing and price pressures rising at the same time. They are massively underweight on autos and media, but like staples and oil.

A net 50 per cent expect emerging markets around the world to deteriorate. A fifth seem to expect the bubble to burst altogether.

Bank and financial firms are the new pariahs.

Merrill Lynch’s credit strategist Barnaby Martin said the banks now faced much the same plight as telecom companies in 2002. “Their efforts to de-leverage will be bad for shareholders, but good for bondholders," he said.

One glimmer of light is the rising — if small — number who think a fresh cycle of global growth is already beginning, despite the near-panic mood among their peers.— THE DAILY TELEGRAPH

Ambrose Evans-Pritchard has covered world politics and economics for a quarter of a century

Singapore Sports Hub Wins Gold

Source : TODAY, Weekend January 19, 2008

Which One Will It Be? The decision on which Sports Hub design S'pore will pick will be announced on Saturday. Our reporter, Tan Yo-Hinn, makes his choice.

















Consortium's programming plan and calendar of events for the Sports Hub gets them the nod

An inaugural Asean Super League football tournament in 2012, an annual Singapore International Football Trophy, international cricket events, and 136 non-government financed events in 2012 – this was the Singapore Sports Hub's calendar of activities planned for the new Sports Hub, when ready at the end of 2011.

In the end, their integrated and comprehensive programming strategy tipped the scales in their favour as they edged out Alpine-Mayreder and Singapore Gold to win the rights to build and operate the 25-year Public-Private Partnership (PPP) project, estimated to cost $1.2 billion.

At a press conference to announce the preferred bidder for the Sports Hub project on Saturday, Minister for Community Development, Youth and Sports, Dr Vivian Balakrishnan said: "We have evaluated the project using four criteria – these are programming and events, design and functionality, financial and legal considerations, and facility management capability."Of the four criteria, programming and events was given the highest weightage as we believed that a programming-led strategy would bring about the project's success and long-term viability, as well as ensure that Kallang remains a vibrant area for sports and leisure activities."

The Singapore Sports Hub have dubbed the location at Kallang Basin – which includes the current area where the National Stadium -- as the Premier Park and it is the biggest PPP project in the world."The consortium displayed significant strengths in programming, team culture and partnership, functionality and layout," added Dr Balakrishnan"It also offered the best value for money solution for Singapore. Singapore Sports Hub provided a holistic strategy to promote sports participation, leisure, entertainment and lifestyle activities via a focus on community and grassroots sports."

The consortium's spokesperson, Christian Brezet, was ecstatic with the win, and he said: "This is a very big relief for all of us. It's an interesting project, bringing sports to the community and grassroots level and we're committed to bringing these events to Singapore."

The Premier Park will include a 55,000 to 70,000-seater national stadium with a lightweight retractable roof – one of the thinnest in the world – a 6,000-capacity indoor aquatic centre, 3,000-seater multi-purpose indoor arena, watersports centre, 41,000 square metres of retail and commercial space, a 7,000 square metre air-conditioned karting track, water leisure park, a whitewater pontoon and Olympic standard whitewater course, and the existing Singapore Indoor Stadium.There is an option to build a 528-room Premier Park Hotel.

Besides ensuring a steady stream of international and regional events, the consortium has guaranteed 90 event days at the national stadium and 46 event days at the Singapore Indoor Stadium.Community programmes such as the multi-sport Singapore National Games for nine days a year, and a youth development scheme will aim to build and enhance the sporting culture in Singapore.

A proposed Premier Park Foundation will also channel 75 per cent of the Sports Hub's commercial revenue into funding events, activities and facilities.

When documents for tender were presented in July 2006, the project was estimated to cost between $650 to $800 million.

With the increase in capital costs, construction costs and the addition of a watersports centre, the figure is now at $1.2 billion.

The cost will be borne by the consortium, with the government to pay a net present value for 25-years amounting to $1.87 billion.

The Singapore Sports Council said yesterday that minor details - such as the location of the whitewater rafting course – will be ironed out before the contract is inked at the end of March.The 34-year old National Stadium is expected to be demolished in April and the Singapore Sports Hub will take over operations of the Singapore Indoor Stadium from April.

Singapore Sports Hub's Premier Park (in box)

# 55,000-70,000 seater National Stadium
# Multi-purpose indoor arena, 3,000 seater
# Aquatic Centre, 6,000-seater
# 7,000sq/m air-conditioned Karting track with spectator area
# Action Zone and Skate park with four basketball courts and more than 2,500sq/m of ramps, tubes and ledges
# Water Leisure Park
# Watersports centre with a whitewater pontoon,
# an Olympic standard whitewater course with spectator stand,
# 500m course for dragon boat, kayak and rowboat racing
# Plaza/Retail
# 528-room Premier Park Hotel (optional)

When your office desk starts to feel like a prison-cell and "getting away from it all" implies a trip to Starbucks or California Fitness, then you know you're in need of adventure. And "adventure" doesn't have to mean extreme sports. While running-with-the-bulls in Pamplona, rallying to Dakar, or dating Naomi Campbell are all very well, sometimes the discerning traveller needs an adventure that's closer to reality than Reality TV. Enter three sports in three travel-spots that are sure to get your adrenalin pumping and blow off those workaday blues � and still leave you intact next week to tell your friends about it over a beer at Harry's.


Downhill Skiing in Whistler, Canada

Forget the Alps. And Lake Tahoe is so last decade. The place to ski these days is Whistler-Blackcomb in British Columbia, site of the upcoming 2010 Winter Olympics. Just an hour and a half north of Vancouver, Whistler village is home to two resorts, Whistler and Blackcomb, which make the ultimate winter sports combo. Whether you're a snowboarder or prefer downhill skis under your feet, with more than 3,000 hectares of runs and the biggest vertical rise in North America, you can ski or board until your legs scream in protest and still not feel you've hit the same mogul twice.

Standing above the snowy slopes in the morning, you'll fast forget Singapore's heat. And when gravity takes you down in a spray of white between those contours, you'll know the true adrenalin rush that comes with speed. For the veteran in need of a challenge, check out the double-black diamond Extreme Limits area. For beginners there are ski-schools and gentle slopes to ease you in. And after a day of hard skiing, what could be better than a little after-ski socialising in Whistler's many pubs and bars.

A two-day lift ticket starts at C$120 ($180) and Whistler's world-class hotels come with world-class hotel rates. Travel packages are the best way to go. The ski season at Whistler runs from mid-October to late March. And for those familiar with soggy west coast winters, remember that when it's raining in Vancouver, it's snowing at Whistler.

Ski information and snow reports:
www.whistlerblackcomb.com

Whistler hotel reservations:
www.whistler.com/hotels


Scuba diving in Malaysia

If skiing isn't your bag and a long plane flight clashes with your golf schedule, why not turn from sky to sea? Singapore basks on the doorstep of some of the best scuba-diving in the world � Australia, Indonesia and, nearest to home, Malaysia. It's cheap, it's close by and it's an alien world worth exploring. Fantastic diving can be found just a few hours up the coast from Singapore.

Tioman is fine for beginners, but hard-core scuba enthusiasts head north to Pulau Redang and the Perhentian islands. Not only do these gorgeous islands retain a rustic, laid-back feel, they lay claim to some of the most diverse and colourful reefs this side of the Red Sea. Here, you can float above giant Maori wrasses and black-tipped reef sharks, swim face to face with man-sized green sea turtles, or marvel at massive undersea coral mounts. It's the ideal weekend adventurer's getaway. And while these bath-warm waters are relatively free of dangerous predators, it is always wise to remember you're a stranger in a strange land: Keep a vigilant eye and always dive with someone else.

For those who have never tried diving but like the thought of it, resorts on Pulau Tioman or Pulau Rawa offer five-day intensive dive-and-holiday packages, which will leave you PADI-certified at the end of it. Accommodation tends to be basic, but the seafood is as fresh as it gets. Plus, the beach sunsets are unbeatable and the seas clear-as-glass turquoise.

Redang island resort:
www.redangisland.com

Scuba courses on Tioman:
www.tiomanscuba.com


Sea Kayaking in New Zealand

If you're happier above the sea than underneath it, a third option for adventure is sea kayaking. Not to be confused with its whitewater cousin, sea kayaks are longer, more stable, and offer foot-controlled steering. Some even come with sails. And if this doesn't sound plush enough, you can pack enough gear and food in the bulkheads to last a few weeks � that's hundreds of coastal kilometres, and the ultimate getaway!

New Zealand is one of the foremost paddling destinations. Its clear water, unspoiled landscapes, and a climate varying from near-tropical to temperate, offers the sea kayaker unparalleled variety. Start at Bay of Islands in the north, where sheep prance amid orange groves on the Scottish-type hills, and bottlenose dolphins swim playfully within reach. You can kayak full across the Bay in an hour or two, and be back to your bed & breakfast in time for tea. If this sounds too domestic, then head down to the cool aquamarine of Abel Tasman park in the South Island, the most popular kayaking destination in the country. And for the really adventurous, there are the chilly waters of Milford Sound on the west coast, whose magnificent fiords wouldn't look out of place in Norway.

Kayak rentals start at NZ80 ($90) and while the wildlife hazards are minimal, pay attention to tidal charts, bring a GPS along and water-proof your cellphone. As with scuba diving, it's always best to travel in tandem. Out on the sea, amid the waves and seabirds, you can't imagine a better escape from urban life.

Bay of Islands:
www.coastalkayakers.co.nz/bay-of-islands.html

Abel Tasman Park:
www.abeltasman.co.nz

Fiordland:
www.fiordlandadventure.co.nz

Owners Sue Regent En Bloc Buyers

Source : TODAY, Weekend, January 19, 2008

SINGAPORE has seen several ugly en bloc tussles but this is a first. The majority owners, having agreed to sell their condominium, are now suing the buyers.

A group of 25 at the 31-unit Regent Garden is alleging that developer Allgreen Properties has breached the sale and purchase agreement by grossly undervaluing the condominium.

The owners filed a claim last Monday with the High Court to declare that they are no longer bound by the agreement, which saw the condominium sold for $34 million last April.

On Friday, Allgreen struck back. It announced that it will “vigorously contest this action and the claims and allegations made by the majority vendors”, and has applied for a court order to force the majority owners to complete the transaction.

According to court documents obtained by Today, the dispute centres on two issues. The majority owners, represented by Senior Counsel Molly Lim, allege that Allgreen had overstated the development charge by more than $6 million, thereby depressing the sale price by that sum.

They also claim the developer gave “disproportionately high” proceeds to the six erstwhile minority owners to secure full consent. The latter have since agreed to the sale and have applied to withdraw their objections, set to be heard Jan 30 by the Strata Titles Board (STB).

Now it is the majority owners who want to be heard by the STB, which an experienced en bloc lawyer, who declined to be named, said puts the STB in an “interesting” position.

The law now gives STB power to hear all objections, but the Regent agreement was signed before the legislative change.

According to Knight Frank managing director Tan Tiong Cheng, he has “never come across a case where the majority owners sought to rely on the fluctuation in the development baseline gross floor area to renege on their agreement with the developer”.

“It is also my experience that it is not uncommon for the developer to contribute to the payment of a premium to minority owners in order to procure their consent to the collective sale,” he said in a court document.

Bernard and Rada Law Corporation associate director M Kumaran, who oversees his firm’s en bloc cases, said the majority owners would have a case if the buyers had misrepresented the development charges.

“This sort of matter has been taken up to court but not in the context of en bloc sales,” he said.

Regent Garden Owners Trying To Scrap Sale

Source : The Straits Times, Jan 19, 2008

Majority owners go to court claiming collective sale price undervalues site

ANOTHER collective sale dispute is brewing, but this time, those locking horns with the developer are the majority owners. Usually, the minority owners are the ones who take the lead in contesting such sales.

The majority owners of Regent Garden, a 31-unit development in West Coast Road, are trying to back out of a deal with Allgreen Properties .

Quite often, collective sale disputes have been triggered by unhappiness on the part of minority owners, as with the ongoing Horizon Towers case.

The Regent Garden owners inked a sales agreement in April last year to sell their property to mainboard-listed Allgreen for $34 million.

However, in a statement from Allgreen to the Singapore Exchange yesterday, the company disclosed that the majority owners are asking the High Court to release them from the agreement.

Alternatively, the owners want to get damages of between $5.7 million and $6.685 million from Allgreen.

Allgreen said in the same announcement that it intends to ‘vigorously contest this action, and the claims and allegations made by the majority vendors’. The firm maintains that the deal remains valid and binding at the original sale price of $34 million.

Allgreen has also gone to the High Court, to ask it to order the majority owners to complete the transaction by Feb 28.

According to documents seen by The Straits Times, the majority owners, who own 25 of the 31 units, signed the deal last April. By November, the minority owners had agreed to the deal and withdrawn the objections they had filed with the Strata Titles Board.

However, the majority owners, through their lawyers, wrote to Allgreen last month, claiming the sale price of $34 million was a ‘mutual fundamental mistake’.

It arose because the sale proceeds assumed a development charge payable of $7.2 million when the owners had expected a charge of only $950,000. So the sale price was at ‘a gross undervalue’.

The minority owners also appear to have been paid extra. But the majority owners say Allgreen has refused to give them these details.

To this, Allgreen points out that its bid of $34 million was the highest among all the bids. It was also $4 million higher than the reserve sale price.

It disagrees that a mistake was made. It says the sales committee had made a conscious decision not to obtain the actual baseline plot ratio - which affects the development charge - from the Urban Redevelopment Authority before the deal was struck.

According to Allgreen, it had even offered a floating sale price, which would be subject to the development charge, but the sales committee wanted to fix the price - in order to be guaranteed certainty of sale.

Only later did the majority owners ask a property consultancy to put together a valuation report using the actual baseline plot ratio. This resulted in a higher valuation of Regent Garden.

Allgreen says such assertions are ‘nothing more than belated attempts to rewrite the bargain in the hope of extracting a higher price for Regent Garden’.

HSBC Says Asian Economies To Grow By 10% To 12% In 2008

Source : Channel NewsAsia, 18 January 2008

Asian economies face a challenging year in 2008 but as a group they are still expected to show growth of 10 to 12 percent.

This is the forecast from HSBC in its latest report on the region.

However, a recession in the US could knock off a few percentage points off Singapore's economic growth.

With a US recession on the horizon and the US sub-prime mortgage crisis still taking its toll, HSBC is predicting a difficult year for Asia in 2008.

Economies such as Japan and Taiwan are expected to be most cyclically sensitive to the US slowdown. But emerging ones - led by China and India - are forecast to continue booming along.

Garry Evans, Pan-Asian Equity Strategist, HSBC, said: "Well, it's going to be a difficult year, there is no doubt about that. We've got the US slowing - credit crunch out there, everyone is focused on the bad news.

"I don't think it's going to be quite as bad as that though because governments are going to react to this bad news. The Fed is going to cut rates in the US - we've going to have a fiscal stimulus package there and I think Asian countries are going to grow reasonably stronger this year.

"You're not going to see that much of a slowdown, particularly in China and India - and if you do see a slowdown, governments here have also got room to cut rates and increase spending.

"So I actually see the Asian markets going up this year - ultimately 10 to 12 percent or something like that. I don't' see a bear market but I think it's going to be a year of ups and downs - your probably going to have to be a little patient to get a return."

Mr Evans added that inflationary pressure will settle.

He said: "Well, ultimately if we're seeing global growth slowing, then I think you're going to see inflation becoming less of a worry during the year. In general, in most places, inflation is still a food phenomenon, and it's not really showing much signs of coming though to any other areas in the economy.

"We're all a bit worried about inflation at the minute. Certainly the most worrying scenario is when you have high inflation and slowing growth - in a so called stagflation - and if we have that then we could be in for a very tough ride. But I think generally as growth slows, inflation will come off the radar scene as being a problem."

Here in Singapore, HSBC says the financial and property sectors will remain positive, but exports will remain susceptible to a US slowdown.

Peter Morgan, Chief Economist, Global Research Asia Pacific, HSBC, said: "Well we are fairly optimistic on Singapore - we think that the strength in loan growth and the strength in the property sector is having a positive impact.

"Growth in Singapore is likely to slow, and Singapore is still a fairly export sensitive country and if the US looses a couple percentage points of growth than that could knock off maybe 3 percentage points on Singapore's growth."

HSBC is forecasting the Singapore economy will grow 7.3 percent in 2008. - CNA/ch

S'pore Able To Dodge Recession In '08: Analysts

Source : The Business Times, January 19, 2008

SINGAPORE'S export-driven economy, which shrank in the fourth quarter, will feel the impact of a slowdown in the US but will just avoid recession, analysts said yesterday.

Weak export figures on Thursday suggested the government's Jan 2 advance estimate, showing the economy shrank in the fourth quarter at an annualised and seasonally adjusted rate of 3.2 per cent, would be downgraded when final figures are reported.

Since the advance estimate, US economic data has grown increasingly gloomy and on Thursday, the Singapore government reported that exports, the main growth driver, fell in December for the fourth consecutive month.

But economists said buoyant construction and services sectors and a pick up in drugs production should offset the impact from a weakening US economy in the first quarter, preventing a recession.

The standard definition for recession is two consecutive quarters of economic contraction.

Still, it will be a close call, they said. Out of eight economists surveyed, five said Singapore would avoid recession. Three said there was a risk of recession.

'The likelihood of a recession is in the low probability but high risk category,' said Song Seng Wun, an economist at CIMB-GK Research said. 'It all boils down to how pharmaceuticals will do.'

Exports of drugs fell in November and December, suggesting a rebound early this year, economists said. The industry produces about 10 per cent of Singapore's non-oil exports, the main measure of the country's trade performance.

But drug production is volatile because firms often switch products and shut down factories for periods to prepare for production of another drug. This can have an unpredictable impact on trade and growth.

The economy's contraction in Q4 2007 was the first since since 2003. But the economy hasn't suffered a recession since 2001 and 2002, when the US was also in recession.

Most economists expect the Singapore economy to grow between 4 and 6 per cent this year. -- Reuters

Successful Sports Hub Bidder Needs To Work Hard Before Deal Is Inked

Source : Channel NewsAsia, 18 January 2008

Saturday (19 Jan 2008) is D-Day for the three consortiums bidding for the Sports Hub project when the preferred bidder is named.

Singapore Gold's proposal

But there will still be more work ahead before the final deal is inked and construction starts.

The project will be the largest sports infrastructure built on a public and private partnership - or PPP - basis in the world.

Singapore Gold were the first to reveal their design in March 2007. Its "Lucky Horseshoe" shape will be the world's first waterfront-retractable roof stadium.

In November, the public got to see the other two designs. The "Wrapped" Stadium by Alpine Mayreder has a special fabric material which allows it to be lighted up in any colour.

And though conventional looking, the "Cool Dome" design by the Singapore Sports Hub promises air-conditioned comfort.

Singapore Sports Hub Group's proposal

However, design only constitutes a quarter of the evaluation criteria for the project. The bulk, or 40 percent, would depend on the programming - that is how much activity can be brought to the complex.

Financial and legal appeal constitutes 25 percent, while facilities management makes up the final 10 percent.

Related Video Link - http://tinyurl.com/2x8kn9

And even after the announcement, the government's preferred bidder will still have a few hurdles to cross.

Among the issues to be settled are the project's funding, legal documentation and even fine-tuning of the design. Only after these are sorted out, can the deal be considered signed and sealed.

Alpine Mayreder's proposal

Construction of the main hub will start after the existing National Stadium is demolished. Then the first piles will be driven into the ground and Singaporeans can look forward to the new S$800 million Sports Hub.

The new icon at Kallang is scheduled for completion by 2011. - CNA/ch

"Cool Dome" Design Wins Singapore Sports Hub Project

Source : Channel NewsAsia, 19 January 2008

The "Cool Dome" design, submitted by the Singapore Sports Hub consortium, will be Singapore's next iconic structure.

Singapore Sports Hub Group's proposal

The Singapore government on Saturday revealed the consortium as its preferred bidder for the Singapore Sports Hub project.

The consortium beats two other bids.

The winning team's strong programming line-up gave it the upper hand over their rivals.

These were the "Horse shoe shaped design" submitted by the Singapore Gold consortium and the "wrapped-Stadium design" submitted by the Alpine Mayreder.

The new sports hub will be completed by end 2011 and will cost some S$1.2 billion. - CNA/ir

Citigroup Allays Fears Of Layoffs In Singapore

Source : Channel NewsAsia, 18 January 2008

Citigroup has come out to clarify that Singapore will not be significantly affected by the group's global layoffs.

At a news briefing on Friday, it said that as far as Singapore is concerned, it expects the attrition rate to stay normal.

No bonus cuts are expected and staff will still be paid salary increments.

Citigroup said that overall, Asia including Singapore is positioned for good growth.

Like most big financial names in the US, Citigroup has been hit by the sub-prime mortgage crisis - taking billions of dollars in write-downs.

Citigroup said earlier this week that it was going to cut 4,200 jobs. That sparked speculation that it would reduce headcount in Singapore, but the group stressed that those fears are unfounded.

Piyush Gupta, Country Officer of Citi Singapore, said: "The truth is the large part of this reduction is likely to be in the Western world because growth in Asia has been spectacular and growth in Singapore particularly has been very strong."

Citi employs close to 375,000 staff worldwide - which means the cuts will affect only about one per cent of its global headcount.

It saw a 33 per cent jump in revenue from the Asia-Pacific in 2007, with profits climbing 46 per cent to US$4.6 billion.

For Singapore alone, revenue rose 35 per cent, while headcount increased by five per cent to 9,000 people. Citi said it is expecting to see growth rates of 20 per cent in Singapore in 2008. - CNA/vm

Citi Singapore Untouched By Global Storm: Country Head

Source : The Business Times, January 19, 2008

No job cuts here as growth remains strong; bonuses, pay hikes stay on track

Refuting reports on retrenchments and bonus cuts - in the light of Citigroup's well-documented problems in the United States - the head honcho for Citi Singapore said yesterday that its business here is still growing strongly.

'The layoffs in Singapore are close to zero,' said Piyush Gupta, Citi Singapore country officer. He added: 'There have been a finite number of layoffs and, frankly, that is no different from what we have had every year for the last several years.'

Citi had announced it would shed 4,200 jobs out of a global staff strength of 375,000. This comes on the back of US$9.83 billion net losses incurred for the fourth quarter, and US$18.1 billion worth of write-downs on sub-prime-related exposure.

Mr Gupta said that headcount cuts have been principally concentrated in the US and Europe. 'The impact on Asia has been minimal, and in Singapore, even lower than minimal.'

He also said there are no bonus cuts. 'Good performers will continue to receive good bonuses, staff will be paid salary increments.'

He did note, however, that staff morale across the industry has been affected, given huge write-downs in the big banks globally. 'There has been uncertainty at the macro level.'

But he said that, operationally, the business is able to now move on. 'We're more confident today than 3-4 months ago. A lot of the uncertainty has been taken out, and the problems of the sub-prime crisis have been boxed in and ring-fenced.'

Business in Asia and Singapore is growing very strongly, and headcount is expected to increase in line with this business growth, Mr Gupta said.

'We continue to hire, grow our workforce and continue to expand,' he said.

Citi Singapore saw its revenue increase by more than 35 per cent in 2007, compared to 2006, he said. The current staff headcount of about 9,000 is a 5 per cent increase from 2006.

'Given that our business is growing, we will see a headcount increase this year too, in line with this growth,' he said. 'Singapore will continue to be a growing hub, and we will continue to move more and more businesses to Singapore.'

Mr Gupta noted that the performance of the Singapore business will depend on what happens in the macro market. 'But even if the market slows down, we are fairly confident we can get growth rates of about 20 per cent,' he added.

Asia is an important part of the group's business, he stressed, and business has been growing strongly in this region. Citi's Asia Pacific business experienced revenue increase of 33 per cent year-on-year to US$13.78 billion last year. Net income was up 46 per cent to US$4.6 billion in 2007. 'Asia is the single largest contributor to Citi's business, outside the US, at 17 per cent last year,' Mr Gupta said.

Looking ahead, he said Citi will still look to expand in its consumer business, especially in wealth management and banking for the masses.

Regent Garden En Bloc Sale Contested

Source : The Business Times, January 19, 2008

Allgreen Properties' purchase of Regent Garden via a collective sale is now being contested by the majority sellers of the property, the company said in a filing to the Singapore Exchange yesterday.

BT understands that the majority owners, who together own 25 of the 31 units and over 80 per cent of the share value in Regent Garden, are saying that the sale price of $34 million was agreed to as a result of a mistake regarding the development charge.

Based on subsequent valuation reports - they claim that the true market value of Regent Garden should be between $39.7 million and $42 million.

BT understands that Regent Garden's sales committee did not officially ascertain the development charge before entering into the agreement with Allgreen.

There is also some unhappiness at the higher prices the minority owners walked away with.

The majority owners now want the High Court to declare that the collective sale is no longer binding.

Alternatively, they are asking that they be paid an additional sum of $5.7-$6.7 million, 'be placed in the same position' as the minority owners of the property', or be paid damages, according to Allgreen's statement.

Allgreen said that it intends to 'vigorously' contest the claims. 'The company's position is that the agreement is and remains valid and binding at the original sale price of $34 million,' it said.

Regent Garden's sales committee filed the originating summons in the High Court on Jan 10. Allgreen was served with the summons on Jan 14.

Allgreen had previously obtained unanimous consent to the sale of Regent Garden, it said.

Allgreen also said that it commenced legal proceedings in the High Court yesterday for an order that the majority sellers complete the transaction in accordance with the terms of the agreement. The minority owners, who have agreed to complete the transaction, have joined these proceedings 'because they have an interest in the matter', Allgreen said.

Allgreen is being represented by Davinder Singh of Drew & Napier, while the minority sellers are represented by Ang Cheng Hock of Allen & Gledhill.

The majority owners are being represented by Molly Lim of Wong Tan & Molly Lim LLC.

Singapore Holding Its Own

Source : Asia Today International, Jan 18, 2008

Is Singapore becoming price uncompetitive for foreign business? Rocketing office and housing rental prices over the last 12 months are raising this question.

With property costs now among the highest in East Asia after Tokyo and Hong Kong, there is more and more talk as to what impact they must now make on decisions by a foreign company to maintain or establish in the island city state. Various surveys of the foreign corporate sector and expatriate professionals by consulting companies underline the extent of Singapores rising property and living costs. International human resource consultant, Mercer, found in its annual cost-of-living survey for expatriates earlier this year that Singapore had risen to become the 14th most expensive city of 50 cities around the world, from 17th place the year before, and the most expensive in Asia after Seoul, Tokyo and Hong Kong.

New York, Sydney, Beijing and Shanghai were all below Singapore. And since the Mercer survey, announced in March, living costs have continued to rise in Singapore. Yet these cost-of-living headlines can still skew a true assessment of Singapore´s international economic competitiveness.

Income taxes are very low - 20 per cent in the top bracket - and there was a further cut in this year´s February budget in the corporate rate to 18 per cent. Singapore continues to be advantaged by efficient and low-cost infrastructure services, a well-educated workforce, English as the common language in business and government, and legal and regulatory certainty and transparency for commerce.

Setting up a foreign-invested company, including a fully-foreign-owned company, even if the sponsors are only small-scale businesses, is a very straightforward and rapid process, unlike almost anywhere else in Asia. These factors will continue to offset cost-ofliving rises for top-end foreign business - that is, those in the international banking, legal and business services, and high value R&D heavy manufacturing, such as biotechnology and pharmaceuticals, precision engineering and the sophisticated end of electronics and information technology.

And there is no question that Singapore is succeeding here, with growth of 7.9 per cent in 2006 and an anticipated 7.0 per cent in 2007, driven significantly by these industries, as well as (more recently) construction in response to property demand. Activity in construction is the highest for a decade, according to the Ministry of Trade and Industry. One effect of the higher living costs, though, may be to limit expatriate staff to the top executive level with more reliance on local professional and technical staff for mid-level positions as they will not want the higher salaries their equivalent foreign number would need to live on a temporary basis in Singapore.

The property market is the major driver of these rising living costs. While this is due to an obvious imbalance in supply and demand, the boom is also a result of the Singapore Government´s efforts to develop high-end economic sectors and industries, and the impact, then, on rental and office markets of new foreign companies establishing and expanding. To cool the market, the Government is now releasing more land and putting in place other measures, such as slowing the rate at which developers can pull down older midlevel- priced apartments to build high-end ones.

High property prices are also being felt by local Singaporeans and not simply in terms of owners and developers gaining from the boom Price increases in the private-condominium segment filter down to the public housing segment where the vast majority of Singaporeans live some 80 per cent and this impacts adversely on those lower- and middle-income households that rent, or are in the market to purchase an apartment. Combined with the overall economic restructuring taking place, this leaves significant numbers of Singaporeans vulnerable and hurting, especially the old and those lacking skills and education.

The problem of a widening income gap is something that the ruling Peoples Action Party does not deny, and how the Government intends to combat it through education and training measures, income support and housing estate renewal was a focus of Prime Minister Lee Hsien Loong´s National Day speech in August. But the question of social inequalities will continue to be a major issue for the Government in the years ahead, especially in the context of what seems a strategy of making the island city a base in the region for the worlds wealthy.

Inevitably there is the risk of social jealousies and resentment. Nowhere is this clearer than in the finance and banking sector. Singapore´s drive to become a larger international financial centre has led to increasing emphasis on private banking. And, with this has come upward pressure on the property market through an associated interest by wealthy foreign individuals and families with investments managed by Singaporebased private banks to purchase real estate and spend time living on the island state. One example is Charoen Sirivadhanabhakdi, one of Thailand´s richest men, who listed his whisky and beer firm Thai Beverage on the Singpopore exchange in 2006.

According to the local Business Times newspaper, in April this year be bought 47 of 48 flats in a new development for US$140 million, and four entire floors in another project for US$90 million.

Singapore aspires to be a Switzerland of Asia. There are now nearly 40 private banks with regional operations in Singapore. Both US Citigroup and UKs Standard Chartered maintain their headquarters for all private banking outside of their home countries in Singapore. Target clients range from the European and American wealthy to those in East Asia and India, the new millionaires of China, and the oil rich of the Middle East, who are turning more to East Asia as a place to invest since 9/11 and the Iraq war.

Singapore´s own rich should also not be forgotten, with the small State having more millionaire households as a percentage of total households than any other Asian economy, according to the Boston Consulting Group. Singapore, as has long been the case, argues its ability to act as a platform to manage investment throughout the region and beyond. More particularly, to encourage private banking, the Government has strengthened bank secrecy laws and tax incentives. For example, there is no taxation on an individual´s foreign income, including capital gains and interest income in Singapore.

Income tax is levied only on income earned from Singapore, and this tax is very low. Another factor helping growth of private banking is attractive trust laws. Other finance industry segments that are being encouraged along with the more traditional banking and stock market services are hedge funds, private equity firms and insurers. Overall, the finance sector is one of the strongest areas of the economy, growing by 17 per cent in the second quarter of 2007 on top of 14 per cent in the first quarter. And, as the Ministry of Trade and Industry notes in the release of these results, the wealth advisory cluster remained buoyant, riding on growing affluence in the region and continued demand domestically for professional fund management services.

Encouragement of private banking meshes with the Government´s new urban and tourist development thrusts, as well as promotion of Singapore as a world-class education centre. Thus, Singapore is not just a place in which to invest, live and play Singapore also can offer the best of education for their children. Evidence of this can be seen at the end of Sentosa Island, on Singapore´s inner west coast, not far from the CBD. Sentosa, better known to tourists as a theme park and once a British military base, is now being transformed into an exclusive residential estate.

Sites at what is called Sentosa Cove are reported to be selling from as much as US$9.9 million.

Sentosa Cove has a 400-berth marina with 10 spots for very large yachts, and two golf courses.

About 60 per cent of buyers at Sentosa Cove are foreigners. Sentosa will also feature one of Singapore´s two new casinos called integrated resorts being developed by the Government after a four decade ban and despite considerable community concern over their possible adverse social effects. Sentosas will be built and operated by Malaysia´s Genting group, while the other will be build by Las Vegas Sands of the US at the emerging Marina Bay office, hotel, exhibition and convention centre on reclaimed land opposite the core CBD. As one property agent told Reuters: "Its Monaco in the tropics."