Tuesday, January 22, 2008

Chip Eng Seng Wins S$188m HDB Contract To Build In Queenstown

Source : Channel NewsAsia, 21 January 2008

Chip Eng Seng has won a S$188 million contract from the Housing and Development Board (HDB) to build 1,394 flats in Queenstown.

The contract also includes the construction of a multi-storey carpark, link-bridges, a roof garden, an education centre and other facilities.

Work is expected to begin next month and to complete by 2011.

Chip Eng Seng expects its construction division to be busy with tenders and construction work this year.

As of June last year, Chip Eng Seng's construction order book stood at about S$590 million that would take the group through to 2011. - CNA/ac

CapitaMall Trust Reports Q4 Distributable Income Of S$62.3m

Source : Channel NewsAsia, 22 January 2008

CapitaMall Trust Management Ltd will pay S$62.3 million in distributable income, for the October-to-December period, or 2.34 Singapore cents per unit.

This compares with the distributable income of S$52.3 million it paid a year ago.

CapitaMall, which is 27-percent owned by Southeast Asia's largest developer CapitaLand, said its fourth-quarter distribution was 30 percent higher than forecast due to acquisitions and higher lease rates for existing properties.

Net property income of S$44.7 million was 15 percent higher than the forecast of S$38.8 million. - CNA/ch

Parliament - Condo-Style Flats Only A Small Part Of Public Housing, Says Mah

Source : The Straits Times, Jan 22, 2008

PRICEY condo-style flats will remain a small proportion of the total public housing supply with the Government pledging yesterday to continue providing affordable homes.

HIGH-END FLATS: The 714-unit City View@Boon Keng by Hoi Hup Sunway Development, drew about 3,500 applications for three- to five-room flats. Prices ranged from $349,000 to $727,000. -- ST PHOTOS: DESMOND LIM

Its assurance came as high-end flats in Boon Keng offered by private developers were launched recently for up to $727,000 for a five-room flat.

The flats come with interior layouts and fittings more commonly seen in private condominiums, such as bay windows in bathrooms, large balconies and built-in wardrobes.

Buyers are also concerned that prices of resale Housing Board flats shot up 17.4 per cent last year - the highest in a decade - and that sellers in coveted districts are demanding as much as $100,000 in cash over the valuation of their flats.

CONDO-STYLE FIXTURES: Some flats in City View will have wall-to-wall balconies in living rooms.

National Development Minister Mah Bow Tan told Parliament that high-end flats - built under the Design, Build and Sell Scheme (DBSS) - 'serve to fulfil the needs of a niche segment of the HDB market - those with higher aspirations and who can afford a higher price'.

Under the programme, developers are free to design and price the flats as long as they work within the rules of public housing. This means they have to sell flats to families earning no more than $8,000 a month - the limit for households buying public housing.

The first such project, the 616-unit Premiere@ Tampines by Sim Lian Land, drew almost 6,000 applications for its two-, four- and five-room flats with prices from $138,000 to $450,000.

The second, the 714-unit City View@Boon Keng by Hoi Hup Sunway Development, drew about 3,500 applications for three- to five-room flats. Prices ranged from $349,000 to $727,000.

The City View prices had prompted some to wonder if they were affordable to those earning $8,000 a month. Nominated MP Eunice Olsen asked if the income ceiling could be raised for such flats.

Mr Mah said no, because it could result in developers pricing their flats even higher.

The minister added that private companies taking part in the DBSS scheme develop the projects knowing there is an income cap on buyers.

He told Dr Ong Seh Hong (Marine Parade GRC), who asked why the HDB had 'shifted' from its original mission of providing affordable housing, that the board was, in fact, staying the course.

In recent years it had re-introduced new two- and three-room flats, while additional housing grants are also being offered to low- income earners, he said.

Besides, recent buyers of new HDB flats actually spend just 20 per cent of their monthly household income on housing. This is about half of the debt servicing limit typically used by financial institutions.

Mr Mah added that the HDB was monitoring resale prices, but urged buyers who cannot afford the cash-over-valuation sums demanded by sellers to postpone their purchases or apply for new - and cheaper - HDB flats instead.

Demand for such homes has been rising as well. Last month, 316 surplus flats in the outlying towns of Hougang, Sengkang and Punggol drew 5,147 applications.

Video Link - http://tinyurl.com/ysxc82
Public housing will remain affordable:Mah

The Government will not abandon mission of providing public housing for Singaporeans, assures National Development Minister Mah Bow Tan.

In response to questions from MPs, Mr Mah told Parliament that even with the rising popularity of more expensive condo-style flats - built and sold by private developers under the Design, Built and Sell Scheme (DBSS) - HDB's top priority is still providing traditional no-frills flats.

Service Apartments Seek Shorter Stays To Ease Hotel Room Crunch

Source : The Straits Times, Jan 22, 2008

Industry association proposes rule on stay of 7 nights or more be lifted

FOR 20 years, there has been a little-known rule governing service apartments: Guests have to stay seven nights or more.

ALMOST LIKE HOME: Facilities offered in service apartments, such as this Fraser Suites two-bedroom apartment outfitted with a kitchen to prepare meals, would 'help bridge the gaps for medical and family tourism'. -- BT FILE PHOTO

Now, with an eye on the current hotel room crunch, the Serviced Apartments Association proposes that this condition be lifted.

There are at least 3,500 service apartment units here, compared to more than 37,000 hotel rooms.

If the association gets the go-ahead, this will have an impact on the short-

stay accommodation market. Association president Alfred Ong told The Straits Times it is high time the rule was lifted - a rule he said is unique to Singapore.

He added: 'If Singapore wants to be a first-class city, then it should give customers the choice, whether it be service apartments, hotel rooms or budget accommodation.'

Although the association said it began preliminary discussions with the Singapore Tourism Board (STB) and the Urban Redevelopment Authority (URA) in 2006 and stepped them up last year, the two agencies said they have yet to receive a formal proposal to lift the rule.

Travel industry players said such a move will help ease the room crunch in Singapore where hotels have registered high average occupancy of more than 80 per cent.

This has led to higher room rates, which in turn have led to concerns over Singapore's competitive edge in the mass tourism sweepstakes.

The latest American Express market forecast on hotels in the Asia-Pacific, released last week, predicts that corporate rates in Singapore will go up by some 29 per cent this year.

This is higher than its projections on Hong Kong at 17 per cent, Beijing at 21 per cent and Kuala Lumpur at 20 per cent.

This is despite the 8,850 rooms added last year and this year.

Mr Prashant Aggarwal, head of American Express Consulting for Japan, the Asia-Pacific and Australia, cited increased demand with higher visitor arrivals as part of the reasons driving its projection.

However, Plaza Royal on Scotts hotel general manager Patrick Fiat said the industry should not be too concerned about the rates hike.

He told The Straits Times: 'For the past 10 years, hotel rates have been low. So, the current spike is just hotel rates catching up with rates elsewhere.' He expects levelling out by next year.

However, he is opposed to allowing service apartments to accept shorter stays.

But the service apartment industry sees the proposed move as complementary rather than competitive.

Ms Tonya Khong, general manager of Fraser Suites and Fraser Place, said: 'There may not be much impact on the industry's occupancy if the minimum duration of stay requirement is lifted.

'We foresee that this move can help bridge the gaps for medical and family tourism, as cooking and children-friendly facilities as well as spacious living space will mean a great deal to these visitors.'

Mr Ong said in other Asian cities, most service apartment guests are middle- to long-term guests. Only about 30 per cent are short-stay guests.

But he added that allowing shorter stays will mean more efficient use of service apartments, which always have some spare days between long-term guests.

Analysts See Asian Economies Weathering A US Recession

Source : The Business Times, January 22, 2008

Reason: Asia is now less dependent on the US economy

(BANGKOK) Asia would be able to weather any recession in the United States, analysts say, because rising trade and investment within the region make it less dependent on the US economy than in the past.

While a severe downturn in the US would drag on Asian growth by eroding demand for exports, a rapidly growing middle class is fuelling orders for cars, electronics and housing - much of which will be supplied from Asia itself.

Voracious demand for oil, iron ore and other commodities to build roads, sewage systems, and office buildings - especially in the booming economies of China and India - will also help sustain the region through any US slowdown.

'The US economy is not that important anymore,' Hans Timmer, a World Bank economist, said in Singapore earlier this month.

Excluding Japan, 43 per cent of Asia's exports go to other nations in the region, Lehman Brothers calculates - up from 37 per cent in 1995.

'China and India represent a bigger presence on the world stage than just a half dozen years ago,' said David Cohen, director of Asian forecasting at Action Economics in Singapore.

A drop of one percentage point in US economic growth would shave 1.3 percentage points from China's growth rate due to lower exports, Citigroup estimates.

Since China is growing so fast, that isn't likely to make much of a dent. China's economy will still expand 11 per cent this year, slightly slower than in 2007, Citigroup projects.

Lehman Brothers forecasts 2008 growth will drop to 9.8 per cent, still remarkably strong.

Most regional projections show some drop-off from 2007, but still reflect healthy expectations.

The UN Economic and Social Commission for Asia and the Pacific said 38 developing economies in the region - including China and India - will expand an overall 7.8 per cent this year, slightly lower than growth of 8.3 per cent in 2007.

Global growth, meanwhile, will moderate to 3.3 per cent in 2008 from 3.6 per cent last year, with any slowdown in the US largely offset by growth in developing countries, the World Bank projects.

But Rajeev Malik, an economist with JPMorgan Chase in Singapore, cautioned that growth in China and India could not make up all the slack of a US downturn.

'Demand in industrial countries is still pretty important for the rest of Asia,' Mr Malik said. 'While China, and to some extent India, offer some offsetting demand, there will still be some downshifting in activity if the US goes into recession.'

If the US economy does contract, India's growth will likely slow to 7 per cent from the current rate of about 9 per cent, he predicted.

Asian stock markets have tumbled in recent weeks amid worries that a slowdown in the US will hurt exporters' profits.

Still, some analysts say some stocks appear oversold and the drop may present a buying opportunity given the region's growth potential.

Japan, the world's second-largest economy, may suffer the most from a US contraction.

Ryutaro Kono, chief economist at BNP Paribas in Tokyo, predicts the nation's economic growth will drop this year to about half of the 2 per cent it has marked in recent years.

Lower demand for exports could even have a silver lining for China by restraining inflation, which has soared to the highest level in more than a decade.

'If China's exports slow down significantly, you definitely will see lower prices rather than inflation,' said Minggao Shen, an economist with Citigroup in Beijing.

But he did warn that weaker export demand could leave Chinese manufacturers with overcapacity problems. -- AP

Chip Eng Seng Wins $188m HDB Contract

Source : The Business Times, January 22, 2008

CHIP Eng Seng Corporation has been awarded a contract worth $188 million by the Housing & Development Board for the construction of 1,394 dwelling units in Queenstown.

The contract, won through wholly-owned subsidiary Chip Eng Seng Contractors (1988) Pte Ltd, also includes the construction of a multi-storey carpark, link bridges, a roof garden, an education centre and other facilities.

Building works are expected to begin next month and to be completed by 2011. This is Chip Eng Seng's first construction contract won this year.

With construction demand on the rise, Chip Eng Seng said it expects its construction division to be busy with tenders and construction work this year.

'After many lacklustre years, an upturn in the construction industry is in view. We are very positive about our prospects for 2008,' said Lim Tiam Seng, executive chairman of the group.

As at June 2007, Chip Eng Seng had a construction order book of about $590 million that will take the group through to 2011. The company is undertaking two other HDB housing projects. One is in Sembawang and the other is the Pinnacle @ Duxton, which features seven 50-storey residential blocks with skybridges, and communal and commercial facilities.

When completed, Pinnacle @ Duxton will be the tallest public housing in Singapore.

Chip Eng Seng, which is into property as well as construction, has undertaken a broad spectrum of construction projects in both the private and public sectors. It has also been actively acquiring and developing properties in Singapore, spanning residential, commercial and industrial properties.

State Land Sales In Demand As En Bloc Fever Cools

Source : The Business Times, January 22, 2008

Developers find pricing of GLS sites more in tune with market realities

Developers seem to be turning increasingly to state tenders instead of en bloc sales to restock their residential landbanks. This is because land pricing at state tenders is more responsive to the current bearish market conditions.

Also, the Government Land Sales (GLS) programme, with its staple of mass-market, suburban residential sites, is currently just what developers want, as this market segment is expected to shine after the steep run-up in high-end home prices last year.

Figures compiled by Credo Real Estate show that while collective sales languished in the last two quarters of 2007, sales of GLS residential sites spiked in Q4. Developers picked up slightly more than $1 billion worth of 99-year leasehold residential sites sold through the GLS programme in Q4 of last year alone, surpassing the $865 million of such sites they had bought in the first nine months of the year.

In contrast, only $1.28 billion of residential collective sale sites changed hands in Q4 last year, down drastically from $11.2 billion in the first nine months.

Credo Real Estate managing director Karamjit Singh says: 'En bloc sales have rigidity in their pricing mechanism; once the reserve price has been set in the collective sales agreement (CSA), it is difficult to lower it, as you'll have to go through all the majority owners who agreed to the sale to sign a supplemental CSA.'

'In contrast, the pricing for a state site offered through the GLS programme can be more reactive to the mood of the day, presenting an opportunity that developers are seizing today,' he added.

Knight Frank executive director Nicholas Wong says: 'Collective sales have a higher chance of success when the market is trending up as the reserve price in the CSA is always pegged to the last done transaction of a similar property. But when the market is flat or on a downturn, en bloc sales become more difficult to transact - unless the site boasts some unique propositions such as a landmark location, proximity to MRT stations, etc. Owners will have to price their sites reasonably to find buyers.'

Putting things in perspective, a seasoned market observer said: 'Because the market has slowed, the spread between what developers are willing to pay and en bloc owners' expectations has widened. En bloc sales involve many owners and it takes time for them to realise they have to lower their expectations.

'Whereas for state land tenders, the minimum pricing is decided by the Chief Valuer, who is on top of the market and is more nimble to changes in market moods and values.'

The usual government policy is to sell a site if at least 85 per cent of the Chief Valuer's price has been met.

For sites sold through the confirmed list, Chief Valuer's assessment is made on the tender closing date. For sites sold through the reserve list (which are triggered for release only upon successful application by a developer), the Chief Valuer's assessment is made before the government opens any application by a developer seeking the release of the site.

DTZ executive director Ong Choon Fah also says developers find it 'more straightforward' to pick up a site at a state tender, unlike the hassle of going through the Strata Titles Board and potential court hearings in the case of collective sales. 'Developers are also balancing their portfolios. After the run-up in high-end home prices, the mass-market is expected to shine this year,' Mrs Ong added. Residential sites in the GLS programme are largely in suburban locations, suitable for development into mass-market condos catering to upgrader demand.

Mrs Ong expects developers to continue preferring GLS sites to restock their landbanks in the months ahead - especially if the government offers more 99-year private condo sites in mature Housing & Development Board estates near MRT stations.

Credo's Mr Singh expects the volume of residential collective sales deals to ease from last year's record $12.5 billion to about $4-6 billion this year. With weaker market sentiment, owners will have to be more realistic about their pricing, especially in the suburban market where the GLS is a formidable source of alternative land supply for developers, albeit on 99-year leasehold tenure.

'But there will still be en bloc sales because they are the only credible source of prime sites right now. Previously, Sentosa Cove used to be an alternative source of supply of high-end residential sites. But land sales there have come to an end. En bloc deals involving prime sites will take place - if prices are realistic,' he added.

Once-Hot China Real Estate Sector Cools Down

Source : The Business Times, January 22, 2008

(SHANGHAI) After booming in recent years, China's real estate market is finally starting to feel the pinch from sagging demand and tighter controls.

One of China's biggest real estate agencies, Chuanghui Real Estate, has shuttered dozens of outlets in Shanghai and other cities, leaving angry customers and employees, after an ill-timed expansion just as the market was peaking. Many other agencies around the country have also closed down.

So far, the retrenchment appears to be mainly limited to property brokers. But the moves could herald the beginning of a broader slowdown in one of Asia's hottest real estate markets.

The government has been wrestling to get control of the property sector, worried that rising prices for housing are pushing poorer Chinese out of the market at a time when overall inflation is surging.

Regulators stepped up curbs on the property market last year, alarmed that 'bubbles' in property prices could collapse and trigger a financial crisis. Those efforts are starting to take effect. While urban housing prices last month rose 10.5 per cent from a year earlier, a sharp slowdown in sales transactions in recent weeks suggests a new trend.

In the first week of 2008, home sales in Beijing fell 20 per cent compared with the previous week, the state-run newspaper China Securities News reported. Sales were off 38 per cent in Shenzhen and 52 per cent in east China's Nanjing, it said.

Realtors say the slump started late last year but due to various reasons, like land supply and property hoarding by developers, the impact hasn't been seen yet in prices.

So far, there are no signs of a mortgage meltdown in China similar to that seen in the US, and experts don't foresee property prices to fall substantially. Strong economic growth and surging demand from upwardly mobile families are supporting demand.

But business is slowing, especially for the so-called 'second-hand' apartments, or existing, rather than newly built homes, that are the lifeblood of local realtors in this recently commercialised market.

'In 2008, we think property developers will face some liquidity problems and financing issues,' Matthew Kong of ratings agency Fitch Asia Corporates said recently. -- AP

Genting Confirms Talks To Build Hotel In Sports Hub

Source : The Business Times, January 22, 2008

Shatec signs pact to be master caterer of hub for 25 years

Genting International plc (GIL) yesterday confirmed a BT report that it is currently in preliminary talks with Singapore Sports Hub Consortium to build a hotel in the Sports Hub.

In an announcement on the Singapore Exchange, GIL said 'preliminary planning suggests the future hotel could have over 500 rooms which would significantly add to the managed room stock of the company's integrated resort on Sentosa when it is operational.'

This is not expected to have any material impact on the consolidated net tangible assets and earnings per share of the company for the financial year ending Dec 31, 2008, it added.

Representatives of its subsidiary Resorts World at Sentosa Pte Ltd were present at a celebration yesterday for the SSH consortium for being chosen as the preferred bidder for the Sports Hub - to be called Premier Park - from among three short-listed consortiums.

Krist Boo, deputy director of communications at Resorts World at Sentosa told BT that the proposed arrangement is for GIL to build and operate the hotel over the 25-year tenure but details on the hotel itself are still being worked out.

Resorts World at Sentosa, the integrated resorts project by Genting International, is building six hotels with a total of 1,830 rooms by 2010.

A BT report had quoted managing director of Dragages Singapore Ludwig Reichhold as saying that the consortium is in discussion with GIL to invest in a hotel in the Sports Hub, with a potential construction cost of $200 million.

The report added that the SSH consortium is in talks to team up with Frasers Centrepoint on the Sports Hub's retail space.

Talks with GIL and Frasers Centrepoint were already underway during the tendering process. An SSH booklet on the overview of its proposal contained logos of its team members including GIL and Frasers Centrepoint. A spokesperson for Dragages confirmed that discussions dated back to 2006.

Dragages Singapore is the lead partner in the SSH consortium and is a subsidiary of France-based Bouygues Construction, which has been involved in more than 30 public-private-partnership (PPP) projects world wide and developed infrastructures such as the Stade de France stadium in Paris and the Asia World Expo in Hong Kong.

Under the Public-Private-Partnership arrangement, the government will pay the consortium a total net present value of $1.87 billion to design, finance, build and operate the Sports Hub over the 25-year tenure. The construction cost of the Sport Hub is estimated to be some $1.2 billion.

The Sports Hub, which occupies a 35-hectare site in Kallang, is the first and largest sports facilities infrastructure PPP project in the world.

Another organisation set to ride the buzz surrounding the Sports Hub is the Singapore International Hotel and Tourism College (Shatec), which has signed an agreement with the SSH consortium to be the master caterer over the 25-year tenure.

Shatec will provide a complete set of lifestyle food and beverage catering solutions for all special events and activities at the Sports Hub.

'As the master caterer, Shatec will be part of all decisions on catering within the hub and will also be the primary operator of the central and satellite kitchens, corporate boxes and hospitality suites,' Shatec chief executive Steven Chua said. 'This in turn shall provide our students the best exposure to the spectrum of hospitality and tourism opportunities.'

The consortium's comprehensive sporting calendar guarantees at least 90 event days at the National Stadium and 46 days at the Singapore Indoor Stadium. Given the number of events to be held here, the demand for F&B catering at the Sports Hub is expected to be robust, he added.

To ensure timely and responsive on-site management operations, Shatec's F&B services will be delivered under a new corporate subsidiary, which will have overall purview over the entire hub except for the retail and commercial areas.