Monday, February 4, 2008

GIC Plans To Buy Westin Tokyo Hotel: Report

Source : TODAY, Monday, February 4, 2008

THE Government of Singapore Investment Corporation (GIC) will buy the Westin Tokyo luxury hotel (picture) for 77 billion yen ($1 billion) from Morgan Stanley, the Nikkei business daily reported yesterday.

The parties plan to complete the deal by the end of the month, having agreed on a basic outline on the purchase of the land and the building located in Tokyo’s prime Ebisu district, the newspaper said.

GIC will likely have the hotel continue its current operations and aim to increase the asset’s value by making it a longterm investment. The purchase indicates that Japan’s real estate market is relatively attractive even as the property sector around the world is suffering from the fallout of the US subprime mortgage crisis, Nikkei said.

GIC is one of the world’s largest sovereign wealth funds, with more than US$200 billion ($283 billion) in assets under management, the report said. Last year, it acquired Hawks Town, a commercial complex in Fukuoka, western Japan. In December and January, GIC announced it would invest $14 billion into UBS and almost $10 billion into Citigroup.

Morgan Stanley purchased the Westin Tokyo for about 50 billion yen from Japanese brewer Sapporo Holdings in 2004. — AGENCIES

F&N Looking For New Investments

Source : The Business Times, February 1, 2008

WHILE the current stockmarket turmoil and high prices of raw materials are sources of concern, they also provide opportunities for investment, and Fraser & Neave is on the lookout for such opportunities, the company's new chairman said yesterday.

Former SingTel CEO Lee Hsien Yang, in his first appearance before shareholders as F&N's chairman at its annual general meeting yesterday, was responding to a shareholder's question on the impact of the current market volatility and high oil and other raw material prices on F&N.

Mr Lee said these were risks for any company and F&N mitigates the impact in several ways including securing part of its supplies at reasonable cost ahead of time, through proper foreign exchange management and by passing on part of the costs to customers.

'Sometimes turbulence means opportunities to make investments at good prices, and F&N is looking for new investments, especially in the food and beverage sector,' he said.

As he had done at SingTel, Mr Lee effortlessly dealt with a slew of questions. He must have been pretty convincing, as all nine resolutions - including one to combine his consultancy fee of $1 million together with his normal fees of $250,000 as chairman - were passed without a single opposing vote from any of the 200-odd shareholders present.

As Securities Investors Association of Singapore (SIAS) president David Gerald put it: 'He is now chairman of F&N, one of Singapore's largest conglomerates . . . F&N is a leading pan-Asian F&B company with 125 years of heritage. It has a ready and fantastic platform to globalise its business . . . With the amount of work he is going to do as chairman, you just have to remunerate him sufficiently . . . If his past record at SingTel is anything to go by, shareholders should watch this space for things to happen and F&N's transparency to improve markedly.

'During the transitional period, pending the appointment of the new CEO, Mr Lee is undertaking the huge task of acting CEO and chairman of the group. The fees of $1 million payable to him is, therefore, not commensurate with his expected contributions and efforts. He deserves more.'

Mr Gerald also felt that the $3 million paid to board member Nicky Tan's company nTan for broking Temasek Holdings' investment in F&N was proper, as the company got a good deal.

Mr Lee assured shareholders that the company would improve its corporate governance, which he described as a 'constantly evolving' process.

On the ongoing case against subsidiary Asia Pacific Breweries by two European banks which are seeking to recover some $100 million in loans made to a former finance manager, Chia Teck Leng (who has since been convicted and jailed for defrauding the two banks and two others of millions of dollars), F&N said no provisions had been made other than for legal fees. Mr Lee said the company would 'vigorously' defend itself against the banks' accusations.

No shareholder expressed interest in the company's quest for a new CEO. But Mr Lee told reporters after the AGM: 'I have no desire to stay on as acting CEO or executive chairman for long.' He said the company would announce a new CEO in 'due course'.

As to why he joined F&N instead of taking up any of the numerous other offers, he quipped: 'I thought it would be a fun company to join.'

Survey Shows M'sians Hot On Property Trail

Source : The Business Times, January 31, 2008

MALAYSIANS are keen property purchasers, and many are still on the lookout for investment opportunities, according to a recent survey.

Real estate website said that a significant 88 per cent of those polled online over six weeks in November and December expressed an intention to acquire a property within the next 12 months. Nearly half or 48 per cent of the 2,066 respondents claimed that they had purchased at least one property over the past 24 months, and 10 per cent said that they had acquired two or more.

Given the current economic uncertainties, developers who were concerned about weaker demand would be heartened to know that a fair number of Malaysians are apparently still hot on the property trail and planning to maximise loan arrangements.

More than three-quarters of respondents told iProperty that they would fund their properties by taking loans that provide 80 to 100 per cent financing. This practice allows the buyer greater disposable income to invest in other assets, Robert Kiyosaki, an investor and self-help author, told BT.

An investor who declined to be identified has acquired three apartments over the past three years and regularly attends new launches.

In his books, Mr Kiyosaki advocates investing in assets that generate passive income so that one can eventually live off those sources of funds.

In general, locals continue to show an interest in residential units over high-rise development.

iProperty said that 62 per cent of respondents, citing potential capital appreciation gains as the main reason - corresponding with their primary attraction to the property investment - indicated their preference for landed units.

This is consistent with other surveys. Over the past three years, property consultants CH Williams' CEO opinion survey has revealed Malaysian investors to be most interested in terraced/link residential units, followed by semi-detached/detached houses. In comparison, residential condominiums/apartments are top of the property list for foreign buyers.

Buyers prefer landed properties as they tend to appreciate more over the longer term than apartments, but that is because the scarcity of land in Klang Valley, for example, has resulted in fewer houses being built.

Still, some residential apartments in prime areas are selling like hot cakes as evidenced by the following:

Over the past month, 65-70 per cent of the 318 units of Twins Damansara in the upmarket suburb of Damansara Heights, which retails from upwards of RM700,000 (S$307,160), has been sold. In November, 90 per cent of the 90-unit One Jelatek condominiums situated 10 minutes from an LRT station in Ampang were signed up in less than two hours.

Within a week of its launch this month, Gaya Bangsar saw 95 per cent of its 285 units priced between RM350,000 and RM900,000 snapped up. The developer expects the units, which were sold at an average RM550 per square foot, to appreciate by 20 to 30 per cent in the next three to four years.

The Internet is increasingly the medium used in property searches, with half of iProperty's respondents turning to it first, and up to 86 per cent using it primarily for its speed and convenience.

CapitaLand Contracts Active On Share Plunge, Bond Issue

Source : The Straits Times, Feb 04, 2008

THE recent plunge in CapitaLand shares and news that the company is offering a convertible bond issue are drawing traders into fresh positions on warrants for South-east Asia's biggest developer.

CapitaLand shares fared better than other property plays during the recent sub-prime selldown, but they took a beating last week. They plunged 73 cents for the week, ending 10 cents down at $5.80 with 37.3 million units done last Friday.

Mr Ooi Lid Seng, Societe Generale's (SG's) vice-president of structured products for Asia excluding Japan, said: 'The counter has dropped about 12 per cent in the last five trading days.'

One reason was the recent slew of analyst reports urging investors to exercise caution with property stocks. For example, Citigroup cut target prices for CapitaLand and City Developments last week, citing an expected moderation in office and residential prices.

Also last week, CapitaLand announced plans to raise $1.3 billion via a 10-year convertible bond issue. With a conversion price of $8.614, the bond pays a coupon rate of 3.125 per cent a year.

Mr Ooi highlighted a CapitaLand call warrant offered by SG for those who hold a positive view of the company. It has a strike price of $6 and expires on July 14. No trades were done last Friday.

Last Friday, the most active SG CapitaLand contract was a call warrant with an exercise price of $6.22 that lapses on July 7. That contract closed 2.5 cents lower at 21.5 cents with 5.07 million units done.

Another active SG CapitaLand contract was a call warrant that expires on March 10 with a strike price of $6.70. Last Friday, it ended one cent down at two cents with 150,000 units traded.

In Mr Ooi's view, the short-term outlook for CapitaLand shares is negative. He added: 'The counter is likely to retest the $5.92 level should it rebound with minor support at $5.40.'

A call warrant lets an investor buy into a stock or index at a preset price over a period of three to nine months.

A put warrant allows an investor to sell the stock or index at a preset price over a fixed period of time.

Twice As Costly, But Residents Still Want To Return

Source : The Electric New Paper, February 04, 2008

Bedok Reservoir en-bloc residents book units in new development

FIRST you sell your apartment in an en-bloc sale.

Then you wait for a new condo to come up on the same spot and buy a unit in it.

That is what some have been doing at an estate on Bedok Reservoir Road.

The good thing for them: Their new home will be in a location they know and love.

The not-so-good thing: Prices have soared.

According to a spokesman for Frasers Centrepoint Homes, one of the developers for Waterfront Waves, there are at least five former owners who have bought a total of six units there.

Since the launch, 80 of the 148 units have been sold.

The spokesman said: 'Former residents return as they feel a sense of belonging in the neighbourhood after living there for years.'

She said owners from the old estate, Waterfront View, were given a day for an exclusive preview and to select units ahead of invited guests. But she added that there would be no discounts for former owners.

These residents will have to pay around twice the sum they got from their en-bloc sale, if they choose to buy a similar-size apartment.

Depending on size and location, the new apartments cost $690 to $870 psf.

Said 71-year-old businessman OhBin Cheng, a former resident who visited the Waterfront Waves showroom two weeks ago: 'The timing was terrible. We went en bloc before the property boom when property prices were still low.

'Then, when we got the money for the collective sale and wanted to buy, housing prices started soaring.'


Not content to live in a smaller apartment, Mr Oh, who got $660,000 for his 1,600 sqft Waterfront View apartment, decided to buy an HDB flat in Tampines for the time being.

Because Mr Oh is fond of his old estate, he hopes to buy a two-bedroom unit about half the size of his old apartment, which, he said, costs almost $700,000.

He said: 'I hope prices will drop so that I can come back here to live.'

Another resident, a 54-year-old retiree who declined to be named, also found himself paying more, just to live in the same estate.

He made a down payment for a 1,600 sq ft, four-bedroom unit, which costs $1.27 million, more than twice the $630,000 he received for his old unit.

Worth it: Former Waterfront View resident Oh Bin Cheng will be returning to the site of his old home. - File Picture: The Straits Times

But unlike other former residents, he is not complaining.

He said: 'I am glad that they released the East Wing first, which is where my former block, 736, used to be.

'What's even better, this time, my view of the reservoir is not blocked. I'm looking forward to watching all the water activities.

'Where else can you get a unit so near the water, except at Sentosa or Marina Bay, where it is so expensive?'


Indeed, so eager was he to return that he was among the first few to visit the showroom.

For now, his family is living in another condominium just two streets away. He had bought a unit there earlier.

But he will have to sell that apartment to pay for his new home when it is ready in three years' time.

'Still, I'm happy with my purchase, I can get back many of the memories from living there,' he said.

Some property agents The New Paper on Sunday spoke to, however, felt that most residents would welcome a change, and prefer not to return to new developments on the sites of their en-bloc sale estates.

Property agent Andrew Lin, 28, said: 'It's not really common for former residents to return. Most of them settle down well in their new homes.

'The only reason for them to return would be if there was any additional discount given to them by the developer.'

Bad Experiences With Unprofessional Housing Agents

Source : The Straits Times, Feb 4, 2008

I WOULD like to highlight some unpleasant experiences with housing agents in Singapore and, hopefully, I might find someone who shares the same problem as I do.

These happened while I was looking for an apartment to rent.

One housing agent advertise an apartment as renovated, but when we reached the apartment, we found that renovation had not been done, and that it would depend how much we had to offer.

Last week, an agent from PropNex advertised an apartment for rent. The ad stated the size of the flat and I even called to confirm the size and was also told that there was a maid room. But when we arrived, there was no maid room and the size of the flat was about 300 sq ft smaller.

I have written to PropNex about this incident, but have yet to get a reply.

Is there any real estate association in Singapore that governs these agents?

Melvenie Rasmussen (Mrs)

Plans For New Group To Lift Standards Of Housing Agents

Source : The Straits Times, Feb 4, 2008

Accreditation Scheme

A GROUP of property agencies plans to form a new association to raise standards in response to growing complaints about estate agents.

The group, which will be separate from the Institute of Estate Agents (IEA), will work closely with an ongoing accreditation scheme to lift the industry's game.

Complaints about agents have shot up in the past two years amid a property boom, prompting disquiet among some about the sector, which remains largely self-regulated.

Unlike the IEA, which has individual agents as members, the new body will involve estate agencies, said the chairman of its interim committee, property consultant David Ong.

The new body is likely to be linked to the Singapore Accredited Estate Agencies Scheme (SAEA), which last year was reported to have vetted more than 7,000 agents out of the 30,000 or so working in the industry.

It is understood that more than 10 agencies - including HSR Property Group and KF Property Network - will be joining the group. KF Property is the agency division of Knight Frank.

More details are expected soon, but the director of KF Property, Dr Tan Tee Khoon, told The Straits Times that the new body would allow the agency heads to share information about rogue agents as well as host seminars and conferences to raise standards.

A register of agents from member agencies could also be set up.

The group could rival the efforts of the IEA, which introduced a registry in 2006. That registry lists about 350 agencies with almost 21,000 agents.

Dr Tan denied that the new group would rival IEA, saying rather that it would help curb the problem of errant agents. 'We are really trying to cover more ground. Members of the public are free to choose whether they want to use an IEA agent or an agent with the new association,' he said.

His firm was among a group of agencies that raised concerns about IEA's practising certificate scheme when it was launched last year.

The certificate was given to IEA members - which number about 1,400 now - who pledged to abide by its code of conduct. The dissenting group, which included HSR, DTZ Debenham Tie Leung and Global Real Estate, felt the certificate could confuse the public and called instead for the industry to support the SAEA.

One agency chief, Mr Chris Koh from Dennis Wee Properties, said the new group could work if it united all the industry's head honchos. But IEA's first vice-president and the chief executive of Propnex, Mr Mohamed Ismail, felt it would divide the industry instead and spread resources too thinly.

There were 1,717 housing agencies in Singapore as at the end of last year. The largely unregulated property sector has had a bad reputation over the years. The Consumers Association of Singapore (Case) received 1,113 complaints last year, up from 991 in 2006.

Case said the complaints involved agents misrepresenting facts, failing to honour promised terms and providing unsatisfactory services, among other things.

Industry veterans say the problem lies in the fact that only agencies are licensed, so agents sacked for unethical conduct can simply practise in another firm.

The Government, however, has consistently shied away from regulating agents.

Case is working with IEA to look into setting up another accreditation system for housing agencies.

Inflation This Year Could Go Past 5%, Says PM Lee

Source : The Business Times, February 4, 2008

Govt will have something to distribute in Budget, but realism needed

Prime Minister Lee Hsien Loong cautioned yesterday that inflation in the first half of the year could be high.

Speaking at the Chinese New Year Celebrations at Teck Ghee Community Centre, Mr Lee said: 'Last year, inflation was about 2 per cent. This year, it could be 5 per cent, maybe even more. Especially in the first half (of the year), it is going to be high.'

Earlier government estimates last November had put inflation at between 4 and 5 per cent for the whole of the first quarter of 2008.

Speaking to an audience of local residents and grassroots leaders, Mr Lee said what was happening was a global phenomenon produced by increased demand, disease, adverse weather and even the diversion of crops towards fuel production.

But he added that unlike some neighbouring countries, the government would not move to control food prices. Nor would it subsidise 'essentials'.

Touching on next week's Budget, he said that while the government would have something to distribute, especially to the poor and the elderly, there is a need to be realistic. 'We cannot just distribute money and make the problem go away,' he said.

Instead, Mr Lee recommended practical measures, including diversifying the nation's food sources and buying generic house brands which are cheaper and offer 'better value'.

He added: 'Most importantly, we need to grow the economy so that incomes will go up. Last year, we had a good year, so wages, bonuses went up. And NTUC did a survey and found that last year, the bonuses which workers were getting were the highest bonuses in any year since 1990 - which means nearly in 20 years, we have not had such good bonuses.'

For its part, the government will help lower-income families through the Workfare Income Supplement scheme. To date, Mr Lee said $150 million had been paid out in Workfare to 290,000 low-income workers for the month of January alone.

The PM also revealed that the Ministry of Community Development, Youth and Sports (MCYS) is reviewing the Public Assistance Scheme.

The next few years are, however, expected to be challenging. Mr Lee said that Singapore would need to stay competitive and grow. 'Then, whether it is the Year of the Rat (2008), or the Ox (2009) or Tiger (2010), we will have the resources to deal with the challenges that come our way.'

Giving an idea of how high inflation could rise, Citigroup economist Chua Hak Bin said that 'it would not be out of the question to see inflation hit 7 per cent in February or March'.

He explained that earlier estimates did not take into account the spell of bad weather in China that will certainly put a strain on food prices imported here.

Dr Chua was, however, optimistic that the upcoming Budget will be a 'pro-people Budget' as opposed to the 'pro-business Budget' of last year.

Apart from rebates, he also expects to see the restoration of CPF cuts. Noting that the middle class is also feeling the pinch, Dr Chua also expects to see income tax cut by a percentage point this year, and perhaps followed by another cut next year.