Wednesday, March 5, 2008

US Bank Regulators Wary Of Next Set Of Credit Woes

Source : The Straits Times, March 5, 2008

WASHINGTON - UNITED States regulators said they are watching credit cards and commercial construction loans for signs they may be the next trouble spots as strained financial markets constrain credit.

The housing downturn, with its epicentre in the subprime mortgage market, remained atop the list of concerns. But banking regulators and Federal Reserve officials on Tuesday expressed concerns that credit risks may extend beyond mortgages.

Federal Reserve Chairman Ben Bernanke said credit-weary banks may be better off accepting lower home loan principal amounts rather than the bigger losses that would come from foreclosures. He warned that mortgage delinquencies and foreclosures would likely rise as house prices fall further.

'This situation calls for a vigorous response,' Mr Bernanke said in a speech to the Independent Community Bankers of America in Orlando, Florida, referring to government and private-sector initiatives to slow the rate of home loan failures.

'Measures to reduce preventable foreclosures could help not only stressed borrowers but also their communities and, indeed, the broader economy,' he said.

US stocks fell while prices of safe-haven US government bonds rose and the long-suffering dollar traded around an all-time low against a basket of currencies as investors braced for more bank losses. The financial sector was among the weakest, down 2.1 per cent in mid-afternoon trading.

Mr Bernanke's second-in-command, Mr Donald Kohn, said at a Senate Banking Committee hearing that the Fed was also keeping a close eye on credit card, home equity and commercial real estate loans as banks cope with a widening range of credit risks.

'Federal Reserve supervisors are monitoring these consumer loan segments for signs of spillover from residential mortgage problems, particularly in regions showing homeowner distress, and are paying particular attention to the securitisation market for credit card loans,' he said.

Mr Kohn added that commercial real estate is 'another area that requires close supervisory attention'. He noted that while personal bankruptcy rates remained below levels prior to bankruptcy law changes implemented in 2005, they ticked higher over the first nine months of 2007 and 'could be a harbinger of increasing delinquency rates on other consumer loans'. Despite those strains, Mr Kohn said the financial sector remained sound and he saw no threat to banks' viability.

Risks to fed forecast
The credit mess that began with failing US subprime mortgage loans has left banks saddled with tens of billions of dollars in bad debts, prompting them to tighten lending standards. That has slowed the flow of cash to companies and consumers who power the US economy.

US Comptroller of the Currency John Dugan echoed concerns that the credit troubles may spread beyond mortgage loans.

Mr Dugan's office regulates about 1,700 of the largest banks.

'Although credit card earnings have been fairly robust and portfolios are currently strong, we have a heightened level of concern in this area, even before the numbers confirm any significant deterioration,' Mr Dugan said.

'We expect losses from home equity loans to continue to escalate as, unlike first mortgages, these assets are largely held on banks' balance sheets,' he said.

In a separate speech at an economics conference, Fed Governor Frederic Mishkin said he was concerned that the US economy could deteriorate even more than the sluggish pace that the Fed has forecast for this year.

In addition to the housing troubles and subsequent credit tightening, he raised concerns about a weakening labour market and rising inflation, along with evidence of slower spending by consumers and businesses.

'I see significant downside risks to this outlook. These risks have been brought into particularly sharp relief by recent readings from a number of household and business surveys that have had a distinctly downbeat cast,' Mr Mishkin said.

In a sign of how the Fed is conflicted in combating the competing threats of slowing growth and rising prices, another Fed official stressed that inflation was his top concern.

'Containing inflation is the purpose of the ship I crew for,' Dallas Federal Reserve President Richard Fisher said in remarks to a conference in London.

'If a temporary economic slowdown is what we must endure while we achieve that purpose, then it is, in my opinion, a burden we must bear, however politically inconvenient,' he told the Society of Business Economists. -- REUTERS

'Magic Dollars' Scam Lets HDB Flat Sellers Pocket Cash

Source : The Straits Times, Mar 5, 2008

They declare a lower price, thus keeping the difference instead of returning funds to CPF

A NEW scam involving HDB flats has surfaced, this time allowing flat sellers to pocket extra cash by craftily getting around the rules.

The so-called 'magic dollars' scam involves reporting a falsely low sale price to the HDB - an offence which is punishable by a jail term and/or a fine.

Agents say they are seeing these cases pop up on a more regular basis, but it is not rampant yet.

This is how it works.

The seller is typically a flat owner who bought his HDB flat at the peak of the last property boom, so he has made significant paper losses despite the recent run-up in prices.

If he sells the flat, the proceeds may be barely enough to cover the balance of his mortgage and any leftover will probably have to go back into his CPF account. So he ends up not getting his hands on any ready cash at all.

To pocket some cash or what is sometimes known as 'magic dollars', he strikes a deal with the buyer of his flat.

He gets the buyer to agree to declare to the HDB that the flat was sold for a much lower price. The buyer then pays the difference between the actual and declared price to the seller in cash.

To sweeten the deal, the seller usually gives the buyer a discount on the market value of the flat.

The scam is crafty because, on paper, these transactions can look flawless and are hard to detect.

Privately, the agent drafts a 'letter of undertaking', binding the buyer to pay the seller cash - sometimes under the pretext of paying for furniture and fixtures.

When the buyer pays up and the deal is done, the agent destroys the document and any paper trail. Neither the HDB, property agencies or lawyers will ever see it.

Everyone is a winner. The buyer gets a good deal and the seller gets some cash. But the catch is: The scam carries a jail term and/or a fine.

The deal is illegal because the seller is indirectly siphoning off money in advance from his CPF.

The HDB told The Straits Times that it was a 'serious offence' to declare false resale prices, adding that if there was sufficient evidence, the case would be referred to the police.

Conviction could bring fines of up to $5,000 or jail of up to three years.

Such scams are not new to the market and HDB flat owners sometimes resort to them when they want to unlock cash.

In 2001, a 'cash-back' scheme was exposed, which involved over-declaring the agreed selling price.

It allowed the buyer to get a higher loan either from a bank or the HDB, with the 'extra' cash divided out among those involved.

Agency bosses told The Straits Times that they strictly discourage agents from handling these sales.

But despite the risk of getting caught, agents say such deals are popular in estates such as Simei, Pasir Ris and Bishan, which commanded high prices in the previous boom.

Some say the deals started surfacing as early as last April, when the HDB market started to pick up.

Resale prices rose 17.5 per cent last year after years in the doldrums, prompting more flat owners to think about selling their flats.

An agency boss, who declined to be named, has heard of up to 30 such cases.

PropNex chief executive Mohamed Ismail said it was hard to determine exactly how many such deals are being done, but he estimated that about 80,000 - or 10 per cent - of HDB homes are still in negative equity.

Negative equity means a flat owner's mortgage is worth more than the home's value now. Owners of these flats are more likely to take part in such deals.

Another agent said he is approached at least once a month to take part in such deals but he turns them down. 'This is my rice bowl. Why would I want to risk going to jail for just a sale?' he said.

'Magic dollars' scam

LET'S say a seller has a five-room flat that cost $450,000 in 1996, but which is now valued at $350,000.

At an average of $30,000 cash over valuation (COV) for a five-roomer, according to HDB data, the flat can sell for $380,000. But that is still significantly below the $450,000 the seller paid.

This means the sale proceeds will likely be used to pay off the seller's loan and replenish monies used from his CPF account, leaving him with no cash in hand.

So the seller colludes with the buyer to declare falsely to the HDB that the sale was transacted at a lower value, often at valuation price, in this case $350,000.

As for the $30,000 COV, a $10,000 discount could be given to the buyer, who pays the seller $20,000 in cash.

This amount can vary up to tens of thousands.

'Cash-back' scam

THIS is not the first time that illegal sales have struck the HDB market.

In 2001, a 'cash-back' scheme involved over-declaring the agreed selling price of a property.

This happened at a time when HDB valuations were falling in a flat market.

By over-declaring, a buyer could get a higher loan, either from a bank or the HDB. The 'extra' cash was then distributed among the seller, buyer and agent.

At least one agent was convicted and fined $8,000 in 2005. The HDB stopped these deals by changing the rules to allow only an HDB-appointed valuer to value an HDB flat.

Great Eastern To Sell Stake In Straits Trading

Source : The Straits Times, Mar 4, 2008

Tan family’s offer turns unconditional as its shareholding crosses 50% mark.

AFTER weeks of uncertainty, the battle for control of The Straits Trading Company is now virtually over.

Major shareholder Great Eastern Holdings said last night it would sell its 19.92 per cent stake in the commodity and property development firm to the family of the late Tan Chin Tuan, a former OCBC Bank head honcho.

The move came just a day after the rival bidder, OCBC major shareholder and founder the Lee family, withdrew its $6.55 a share bid and said it would sell its stake to the Tans.

Last night, Mr Tan’s grand-daughter, Ms Chew Gek Khim, said she was ‘very happy’ at the development which paves the way for the Tans’ offer of $6.70 a share to turn unconditional, now that it has crossed the 50 per cent mark.

Including the stakes of the Lees and Great Eastern, the Tans, who made the initial bid in January, will own more than 60 per cent of Straits Trading.

Now, the remaining shareholders must decide whether to accept the offer. Some substantial investors say they are swayed to sell since Great Eastern has accepted the bid.

The Tans have said if they get more than 50 per cent of the company, they will work with the board and management to review Straits Trading’s business. ‘I don’t think it’s beyond them to asset-strip Straits Trading. They may sell off all its Malaysian properties ,’ said Kim Eng analyst Tan Chin Poh.

When contacted, one of the remaining larger shareholders, OCBC, reiterated it was still evaluating the matter.

However, observers believe there are compelling reasons why OCBC, the parent of Great Eastern, will accept the only offer left on the table.

One is that OCBC would cease to command a ‘control premium’ from any strategic buyer, after the Lees’ decision.

Indeed, this was a key argument put forward by the bank when it rejected the earlier offers. Despite having only a 6.2 per cent stake, OCBC said when combined with those of Great Eastern and the Lees, its 33.4 per cent could command a significant control premium from any strategic buyer.

OCBC also saw the potential for the trio to ‘exercise their influence’ on the Straits Trading board to continue or accelerate plans to unlock value for all shareholders.

‘But now with the Lees and Great Eastern exiting, there will not be any control premium,’ said a source. ‘The takeover bid is now unconditional, making it difficult for OCBC to say ‘no’.’

Observers believe OCBC laid its cards on the table. The bank, with Credit Suisse, has also been helping out as financial advisers to the Lees.

A dealer noted: ‘If OCBC tells the Lee family to sell its stake to the Tans, surely it applies to itself as well.’

Still, within financial institutions, a Chinese wall is said to exist between different functions, especially where a conflict of interest may exist.

OCBC’s corporate finance unit performs the role as financial adviser, while the decision concerning the bank’s Straits Trading shares is ‘undertaken by a board sub-committee appointed by the OCBC board’, OCBC spokesman Koh Ching Ching said yesterday.

Green Developers Get $20m Fund

Source : TODAY, Tuesday, March 4, 2008

Fund will cushion cost of integrating solar panels into new Green Mark buildings

DEVELOPERS of new and green buildings can now tap into a $20 million fund set up by the Government - a decision that is certain to sit well all-round as oil prices continue to surge.

The fund will partly offset the cost of integrating solar panels into new buildings “which attain a certain level of Green Mark standard”, Mr S Iswaran (picture), the Minister of State for Trade and Industry (MTI) told Parliament yesterday.

Under a 2005 scheme, buildings that meet environment sustainability standards will be Green-Mark-certified by the Building and Construction Authority of Singapore.

“This (Solar Capability Scheme) is a grant-based incentive, to spur more innovative approaches and capability development, in the architecture, design and system integration of solar panels as part of green buildings,” he said, adding that more details would be released soon by the Economic Development Board.

It is part of the Republic’s drive to encourage the adoption of renewable energy amidst concerns of high-energy costs fuelled by spiralling oil prices.

While the Government will encourage the use of solar energy through incentives and lowering grid connection fees, Mr Iswaran stressed that it will, however, stop at subsidising the cost of renewable energy through feed-in tariffs (Fit).

Fit is a form of energy subsidy where renewable energy companies are guaranteed contracts for energy produced at higher prices as compared to those from traditional sources.

The issue cropped up recently when Today ran a story on how the business community had urged MTI to consider Fit to promote the energy sector. MTI had argued against it, citing distortion to market and a possible increase in electricity prices.

Responding to a query from Nominated Member of Parliament Eunice Olsen as to how much more it would cost consumers with the adoption of Fit, Mr Iswaran said compared to a pool price of 22 cents per kilowatt, solar energy produced under Fit would be as high as “two to three times the cost, perhaps a little lower because oil prices have gone up now”.

He added that it was not an “optimal strategy because what we are effectively doing is encouraging solar”.

“The question is why solar when it can be bio-energy, bio-diesel and so on … why not subsidise others as well?” he asked.

Asked by Ms Olsen if MTI’s insistence against Fit for renewable energy is a reflection of its low priority for developing the industry, especially when tax credits are granted for expensive commodities like green cars, Mr Iswaran explained that the promotion of solar energy, or any other industry, can be done through other means.

Citing research and test-bedding initiatives such as the recently launched Solar Energy Research Institute of Singapore and the $170 million allocated to the Research, Innovation and Enterprise Council for Solar Research and Development that aim to develop alternative energy technologies, Mr Iswaran said such approaches “give better returns in the long run”.

“The right strategy is to help the industry get into a position of competitiveness vis-à-vis existing supplies of energy, but to subsidise it is to distort the market in terms of production and consumption decisions and we don’t think that’s the right thing to do,” he said.

Amid the ongoing debate, Singaporeans were hit again by the impact of higher oil prices - which hovered around US$102 per barrel yesterday - as Caltex raised its price for petrol and diesel by 4 cents a litre.

JTC Will Still Provide Affordable Industrial Space: Hng Kiang

Source : The Business Times, March 4, 2008

THE JTC Corp is not deviating from its role to provide affordable factory space, said Minister for Trade and Industry Lim Hng Kiang yesterday in response to a question on whether JTC is shifting its focus with its recent plans to divest its industrial properties into a real estate investment trust (Reit).

This concern was triggered by the recent appointment of Mapletree Investments Pte Ltd (Mapletree) to establish and manage a proposed Reit which will acquire some $1.4-1.6 billion worth of JTC’s high-rise ready-built properties .

Member of Parliament Inderjit Singh raised the concern that this move will further raise the costs of industrial space here. He questioned the role of JTC, saying the earlier spinning off of Ascendas Reit has led to an increase in prices for industrial space. A-Reit, Singapore’s second Reit, was set up by JTC unit Ascendas five years ago and has since expanded by acquiring industrial buildings.

‘If we allow market forces to determine our industrial land prices, then businesses engaged in certain strategic sectors may no longer be able to compete with companies in competing economies which may not be at our stage of development and may offer companies more attractive land costs,’ Mr Singh said. He gave the example of China, where industrial land is more attractively priced.

In response, Mr Lim said: ‘JTC’s role remains the same. You must look at JTC’s role in two key areas - land and prepared industrial estates like flatted factories.’

For the flatted factories space, JTC is a small player in the market with a market share of around 20 per cent and hence takes its pricing cue from the market.

‘It is this sector that we are divesting because we believe that industrial space in Singapore is a fairly competitive market,’ Mr Lim added. ‘So JTC need not stay in this area. JTC will concentrate on land.’

While the pricing of JTC’s industrial factory space is determined by the market, the pricing for land is benchmarked against competitive locations.

Mr Lim said the JTC is very careful ‘to make sure that we do not price ourselves out of the market.’

Straits Trading Within Tans' Reach As Great Eastern Accepts Offer

Source : The Business Times, March 4, 2008

With over 50% stake, Tans' $6.70 offer will become unconditional

The takeover saga involving two of Singapore's most illustrious business families and one of its oldest companies is finally headed for a resolution.

Great Eastern Holdings (GEH), which holds a 19.92 per cent stake in Straits Trading Company (STC), announced yesterday that it would accept the offer of $6.70 a share from the Tan family's The Cairns.

Together with the Lee family's acceptance and further open-market purchase of a 4.91 stake by The Cairns yesterday, the Tan family's stake will now cross the 50 per cent mark, which will make its offer unconditional. Events have moved quickly in a matter of just around 24 hours.

On Sunday, the Lee family, which founded OCBC Bank, withdrew its own offer for Straits Trading and accepted the one made by the family of the late Tan Chin Tuan - who helmed the bank for many years.

Yesterday, GEH - an OCBC subsidiary - also broke its silence and decided to take up the Tans' offer. Its announcement came on a day when a commentary in BT had said it should spell out its stand.

GEH said a special committee it set up had carefully examined the offers that had been on the table - until the Lees withdrew theirs. 'The decision not to make any announcement earlier was deliberate due to the strategic nature of the group's shareholding in Straits Trading, as any premature announcement could influence the outcome of the competing offers,' it explained.

But it has now decided to accept the offer made by The Cairns, a subsidiary of Tecity which is a holding company of the late Tan Chin Tuan's family.

'Following careful and extensive deliberations and taking into consideration, inter alia, the advice of the (financial adviser) FA, the special committee has decided in the best interests of the GEH Group's policyholders and shareholders to accept The Cairns Pte Ltd (TCPL's) offer at the offer price of $6.70 per share,' the insurance firm said in a statement yesterday.

Earlier, in withdrawing its offer of $6.55 per share of the tin-mining company and accepting the competing offer from The Cairns, the Lee family had said: 'This has increased total STC shareholder value by approximately $326 million. Taking into account the foregoing as well as the current volatile market conditions, the offeror and the Lee family companies holding in aggregate approximately 7.1 per cent of the total number of issued shares, have decided to realise their investments in STC and accept the Cairns offer at $6.70 per share.'

All eyes are now on the Oversea-Chinese Banking Corp - the other major shareholder which owns 6.21 per cent of Straits Trading.

It said yesterday that it is still reviewing its options. OCBC last month rejected the takeover offers for its shares in Straits Trading, saying it could extract greater value for itself by staying put and adopting a more pro-active role in the company. The bank also noted that Straits Trading has a cash surplus of $347 million and a real estate portfolio worth at least $1.33 billion. It also said it would seek board representation at Straits Trading as well as request the board to appoint a financial adviser to study ways to unlock value and enhance shareholders' value.

Aberdeen Asset Management, which owns about 2.5 per cent of Straits Trading, said last week that it would choose the option that would realise the maximum value in Straits Trading.

OCBC Accepts Straits Trading Bid, Gains $128m

Source : The Business Times, March 4, 2008

Oversea-Chinese Banking Corp said on Tuesday it will accept a bid for commodities and property firm Straits Trading, which will net it a one-time gain of about $127.5 million (US$91.73 million).

OCBC, Singapore's third largest lender, said it will sell its 6.2 per cent stake in the firm to Tecity, drawing the curtains on a two-month takeover tussle involving two families with close ties to the bank.

'The 6.2 per cent shareholder held by OCBC Bank would have lost the added value of being part of the combined stake of 33.4 per cent' held by the bank and related firms, the lender said in a statement explaining its decision to sell.

The fight for Straits Trading began on Jan 6 when Tecity, a firm controlled by the family of late OCBC chairman Tan Chin Tuan, offered to buy the firm for $5.70 a share, valuing the takeover target at $1.86 billion.

The Lee family that controls OCBC countered with a higher offer, sparking a bidding war that ended when Tecity raised its offer price to $6.70 a share, or about 18 per cent above its original bid.

OCBC's insurance arm Great Eastern Holdings said on Monday it would sell its 19 per cent holding in Straits Trading to Tecity, while the Lee family conceded defeat and said it would accept its rival's bid on Sunday.

Straits Trading is one of Singapore's oldest firms with interests in tin mining, smelting and metals trading as well as hotels and property. -- REUTERS

SHK Prop Chief Forced To Take Leave: Director

Source : The Business Times, March 4, 2008

Feud among Kwok brothers prompted mum to intervene, says Lee Shau-kee

A BOARD member of Hong Kong property giant Sun Hung Kai Properties has confirmed that chairman Walter Kwok Ping-sheung was forced by his mother to take leave from the company, fuelling suspicion of a family rift.

Speaking in Shanghai, family friend and non-executive director of the firm Lee Shau-kee told reporters over the weekend that Mr Kwok's friendship with a woman had triggered a clash between his two younger brothers, causing the mother to take action.

The chairman took a sudden leave of absence from Sun Hung Kai last month, prompting speculation of a feud among the brothers. Mr Kwok cited pressing travel arrangements for his decision.

Mr Lee says he took part in a board meeting via a teleconference in which the three brothers clashed. This then led the mother to step in and ask the elder Kwok to move aside.

'I took part at the board meeting,' Mr Lee was quoted in the South China Morning Post as saying. 'I would not say they quarrelled. It is normal that people have different views. But then their mother stepped in and asked Walter to take leave and take a rest. She just did not want to see the brothers' relations strained.'

The local press in Hong Kong has been in a frenzy since the news broke, printing graphic details of Mr Kwok's alleged relationship with the female friend.

The reports would come as a blow to the Kwok family, well known for its conservative public presence and values, as well as its good standing in the community. Some members of the Kwok family are known as regular churchgoers, and the family has always shied from controversy.

The family manages to stay relatively low key in a city where tycoons are treated like movie stars.

Walter Kwok took over as Sun Hung Kai group chairman in November 1990 following the death of his father, Kwok Tak-seng. Today, the Kwok brothers rank as third on Forbes' Greater China rich list, with an estimated net worth of US$14 billion.

Mr Lee said Mr Kwok's female friend had no formal role in the company. He said, however: 'She sometimes gives Walter advice. It was inevitable some gossip would come out.' It is allegedly the woman's role in the company which has angered the two other brothers, vice-chairman Thomas Kwok Ping-kwong and managing director Raymond Kwok Ping-luen.

Mr Lee said: 'Sometimes, your friend can influence you more than your mother.' Other tycoons waded into the fray at the weekend, with casino magnate Stanley Ho Hung-sun quoted in the Hong Kong Standard as offering advice to the troubled chairman.

Mr Ho was reported as saying that the elder Kwok should listen to his mother and patch up the relationship with his brothers.

The scandal seems to have had minimal effect on the company, with analysts expecting things to work out in the future. BOC International research director Allan Ng said: 'I don't think it will have any serious impact ... the mother is still there, so she can obviously keep things under control. She's obviously very much still in the driving seat.'

Walter Kwok remains an executive director in a number of other listed companies, and is a standing committee member of the National Committee of the Chinese People's Political Consultative Conference.

The tycoon was reportedly one of several billionaires kidnapped in 1997 by notorious gangster Cheung Tze-keung, otherwise known as 'Big Spender'. These reports have never been confirmed by the family.

SHK Results May Not Reflect HK Property Frenzy

Source : The Business Times, March 4, 2008

Company holding back most project launches, analysts say

An upswing in Hong Kong home sales and prices is boosting big developers but will hardly register in earnings to be reported by Sun Hung Kai Properties this week, as the firm held back on project launches.

With rising wages and falling interest rates sparking one of the city's legendary frenzies for property, analysts are mostly upbeat about the likes of top developer Sun Hung Kai and rival Cheung Kong (Holdings).

A correction has made stock valuations more attractive after a share price surge last year inspired by the US Federal Reserve's aggressive rate cuts. Sun Hung Kai is trading at a 20 per cent discount to forecast end-2008 net asset value (NAV), compared to an average historical discount of about 10 per cent.

However, analyst forecasts for underlying earnings for the six months to Dec 2007 are spread widely and evenly between HK$4.7 billion (S$841 million) - which would be down 11 per cent on a year ago - and HK$6.1 billion.

'They had no new launches except for Harbour Place,' said Eva Lee, whose forecast for the interim half-year earnings was at the low end of the range. 'So probably we can expect second-half sales to pick up.'

The 1,000 apartments put up for sale at the Harbour Place project, in the city's Kowloon district, were quickly snapped up, but the profits will be booked in the second half of Sun Hung Kai's financial year, which starts in July.

Sun Hung Kai's earnings announcement, due on Thursday, will be the first time executives will have faced the media since the company's chairman stepped down temporarily early this month.

Analysts have said Walter Kwok's decision is unlikely to affect the company's future performance.

Sun Hung Kai's share price soared 76 per cent in the second half of calendar 2007, as Hong Kong's currency peg led authorities to follow US interest rate cuts despite rising inflation and a local economy spurred by booming China.

But the stock has fallen 20 per cent this year and was trading at HK$133.60 at the close yesterday.

JPMorgan analyst Raymond Ngai, who expects an interim profit of HK$6.1 billion, has an overweight rating on the stock with a year-end price target of HK$159.

He expects full-year net profit to rise 35.7 per cent to HK$15.16 billion as apartment sales rise.

But Goldman Sachs analysts Anthony Wu is much more cautious, and has a neutral recommendation, believing that apartment prices may have already peaked, having gained 10 per cent in the first two months of this year.

'The rising risk of a prolonged global economic slowdown leads us to believe that the property market up-cycle has probably ended,' Mr Wu wrote in a recent note.

'Negative ripple effects will likely hurt Hong Kong's wage growth, which is far more important than interest rates in driving property demand.'

Hong Kong apartment sales have picked up in the last few months as owning is almost as cheap as renting, and people expect tight supply to lift prices.

According to CLSA analysts, only about 14,000 new apartments will hit the market in each of the next three years, compared to an annual take-up of 20,000 when the economy was in a downturn between 1998 and 2003.

Affordability is back to 2005 levels because of interest rate cuts. So someone who rents a flat worth HK$5 million would pay on average HK$16,700, while a mortgage on 70 per cent of the value would typically mean a monthly repayment of HK$19,000. -- Reuters

Hong Leong Bank Eyes 10% Home Loans Growth

Source : The Business Times, Narch 4, 2008

It is confident of hitting target for cash-back product

Hong Leong Bank is aiming for 10 per cent growth this year in its housing loans segment, which currently has about 130,000 clients.

As part of its efforts, the bank yesterday introduced a cash-back home loan product which it said enables customers to save more on interest payment.

Chief operating officer for personal financial services, Moey Tan, said the bank was confident of achieving the target of RM1 billion (S$436 million) receivables for the new product by year-end as it was the only one in the local market to give cash rebates to home loan customers.

'The 10 per cent cash-back will automatically be credited into the customer's savings or current account annually from year six onwards,' she said. Ms Tan said for a RM200,000 loan, the first payment is RM1,000 and each year the customer will receive a percentage of the cash-back amount until the end of loan tenure.

The cash-back home loan features include a repayment option and up to 90 per cent margin of financing, applicable for completed properties with a minimum loan amount of RM200,000.

Hong Leong Bank's group managing director Yvonne Chia said housing loans today accounted for 58 per cent of total household debt and the commitment was long term, averaging from 20 to 30 years.

'The cash-back concept was tested and validated through independent research. . .' she said. -- Bernama

OCBC Sells Its 6.2% Stake In Straits Trading To Tecity

Source : Channel NewsAsia, 04 March 2008

Oversea-Chinese Banking Corp (OCBC) says it will accept Tecity's bid for Straits Trading.

It will sell its 6.2% stake, generating proceeds of S$135.3m. The announcement comes just days after the Lee family, which controls OCBC, pulled out of the bidding war for Tecity.

And on Monday, insurer Great Eastern Holdings also announced that it was selling its stake to Tecity.

OCBC had been quoted earlier as saying that it was considering the offer.

Explaining its decision to sell, OCBC said its 6.2% stake would have lost the added value of being part of the combined shareholding of 33.4% held by the bank and related firms.

Analysts agreed, saying that the decision is reasonable given that OCBC's 6.2% stake is comparatively small.

Tecity said that as at 5pm on March 3, it had garnered control of a 41.11% stake in Straits Trading.

Add to that, Great Eastern's and OCBC's stakes, and Tecity would have control of nearly 68% of Straits Trading.

This will make the offer unconditional.

Shares in Straits Trading have been jumping since early this year, thanks to the bidding war.

The counter closed almost half a percent lower on Tuesday, at $6.67 a piece. - CNA/ir

Survey Finds S'pore The Best Place To Live For Asian Expats

Source : Channel NewsAsia, 04 March 2008

When it comes to work and play for Asian expats, Singapore is the number one choice.

This is according to a recent survey by ECA International, a global human resources organisation.

Singapore has maintained the top spot for ten years now but regionally, it is getting tough competition from Japan and even Hong Kong.

The survey found that Singapore's infrastructure, low crime rate and lack of social and political tensions were the main factors behind its draw.

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"For us, it's very peaceful and we don't feel any hassle or difficulties. So I think for us it's the best place," said an expatriate.

"Growth is planned. That's one of the reasons we feel we have more value for money here," said another.

But there are some factors that Singapore needs to address if it wishes to remain at the top spot.

Firstly, it has to counter the haze issue caused by forest fires in neighbouring countries.

It also has to make sure that property and rental prices are affordable for Asian expats.

"It's pretty good to work here and earn money but not for retirement," said an expat.

"It's not like Australia is any worse than Singapore, so I would say it's personal choice at the end of the day," said another.

Sydney came in second in the rankings, while Melbourne and Kobe tied in third place.

Hong Kong went up the rankings by eight spots to reach the 15th position this year.

Most Chinese cities, like Beijing, while they are not in the top 100, they have risen quite rapidly in the rankings over the last five years.

But this progress may soon plateau. Lee Quane, ECA International's general manager in Hong Kong, explained: "Pollution levels in mainland Chinese cities are consistently high....the highest among the cities which we include in our rankings."

Air quality is one factor considered in the rankings. - CNA/ir

Survey Ranks Singapore As Best Place To Live For Asian Expats

Source : Channel NewsAsia, 04 March 2008

Singapore is the best city in the world for Asian expatriates to live in due mainly to its quality of life and low crime rate, a survey released Tuesday by ECA International showed.

Singapore's famed Merlion statue

Sydney was rated second in the survey, with third spot shared by Melbourne and Kobe in Japan, the human resources firm said.

Rounding out the top 10 list for Asian expatriates was Copenhagen in fifth spot, followed by Canberra and Vancouver. Wellington and Yokohama shared eighth spot, with Dublin next.

ECA said Singapore, Southeast Asia's most advanced economy, was also ranked above the other cities because it offered Asian expatriates a similar feel to their home countries.

"Since quality of living is relative to where someone comes from and to where they are going, our scores take into account the home and destination country," said Lee Quane, ECA International's general manager in Hong Kong.

Hong Kong, Singapore's long-running regional rival as a business hub, was ranked 15th in the global cities list, with the territory's air pollution cited as a drawback.

Among Chinese cities, Shanghai was seen as the best place for top Asian professionals while Xian ranked as the worst location, according to the survey, which compared living standards in 254 locations worldwide.

Beijing, host of the 2008 Olympic Games in August, fared worse than other Chinese cities such as Nanjing and Tianjin because of its notorious air pollution, the survey showed.

ECA International's annual survey is based on categories such as climate, air quality, health services, housing, political tension and personal safety.

Within Asia, Hong Kong and Tokyo were ranked joint fourth behind Singapore, Kobe and Yokohama, the survey said.

Trailing in sixth spot was Taipei, followed by Macau and Bangkok, with Malaysia's Kuala Lumpur and Georgetown cities sharing ninth spot while Shanghai and Seoul were in 11th and 12th places, respectively.

Brunei's Bandar Seri Begawan was in 13th place in Asia and 89th place globally.

Manila was ranked 24th in Asia and 133 globally, while Jakarta was in 39th place regionally and 190th worldwide.

Chennai was the highest ranked Indian city within Asia, in 26th spot, with Mumbai in 30th and New Delhi 37th. - AFP/ir

Expats Vote Singapore, Copenhagen Best For Living

Source : The Business Times, March 4, 2008

Asian expatriates have ranked Singapore as the best place to live in the world for its safe and clean environment, while Europeans chose Copenhagen, a survey showed on Tuesday.

Asian expats chose Singapore over Hong Kong (15th place) and Shanghai (78th place) and placed Sydney, Melbourne and Canberra as well as two Japanese cities Kobe and Yokohama in their top ten list of favourite locations, said ECA International, a human resource consultancy for multinationals.

Lee Quane, general manager of ECA International, said that Singapore's solid infrastructure, low crime rate and clean air made it a favourable place to live.

'While Hong Kong has seen an improvement in some categories, such as personal security, air pollution remains the biggest cause for its lower rankings relative to Singapore,' he said in a statement.

Singapore is competing with Hong Kong as a location for banking and financial services.

For locations in China and India, Shanghai and Chennai (138th place out of a total of 300 locations) came in top for Asian expats, said the annual survey.

European expats ranked Copenhagen as their top choice to live in the world. They placed three Swiss cities - Geneva, Basel and Bern - and three German cities - Dusseldorf, Bonn and Munich - in their top ten.

East European cities such as Bratislava and Bucharest have made improvements in this year's survey because of advances in security, housing and health, the survey said.

European expats rated Bratislava, the capital of Slovakia, as their 20th choice and Romania's capital of Bucharest in 14th place.

In the Middle East, Manama, the capital of Bahrain, ranked top in the region along with Dubai and Muscat. Baghdad, in last place globally, lost marks for poor security, the survey said.

Top 10 best locations in the world for Asian expats

1. Singapore - Singapore
2. Australia - Sydney
3. Japan - Kobe
4. Australia - Melbourne
5. Denmark - Copenhagen
6. Australia - Canberra
7. Canada - Vancouver
8. Japan - Yokohama
9. New Zealand - Wellington
10. Ireland - Dublin

For Sale: 18th Floor Of Peninsula Plaza At $17.5m

Source : The Straits Times, Mar 5, 2008

NOVELTY Department Store Pte Ltd, part of the Novelty Group, has put the entire 18th floor of Peninsula Plaza up for sale, with a price tag of about $17.5 million or about $2,050 per square foot (psf) of strata area.

Peninsula Plaza is a 999-year leasehold building near Raffles City. DTZ is marketing the property.

The 18th floor comprises six strata units adding up to 8,514 sq ft - all of which are leased. Tenancies for five units are up for renewal/expiry later this year, while the lease on the sixth unit runs out in mid-2009.

The $17.5 million price tag reflects a passing net yield - that is based on existing contracted rents - of about 2 per cent.

However, DTZ notes that current monthly asking rents for offices in the building range from $7 psf to $8 psf.

Assuming an average rental of $7.50 psf, the $2,050 psf asking price reflects a net yield of about 3.5 per cent.

'The potential buyer may also further capitalise on this investment opportunity and subsequently offer to resell the six strata units individually to take advantage of rising capital values of smaller strata office space,' said DTZ senior director (investment advisory services and auction) Shaun Poh.

The property provides an opportunity to invest in 'good quality and well maintained office space', he said. 'Strong demand and rising rental rates for office space in the Central Business District are expected to continue, providing income growth from the asset.'

DTZ is marketing the property through an expression of interest exercise that closes on April 1.

In December, a first-storey freehold office unit at United House, behind Le Meridien Singapore Hotel at Orchard Road, fetched $2,497 psf of strata area at an auction.

Far East Organization is said to have sold an entire office floor last year at The Central, a 99-year leasehold development above Clarke Quay MRT Station, for $3,050 psf.

Novelty Group is involved in the property and department store businesses. Its upcoming residential developments include i Residences, a freehold development with 70 apartments in the Irrawaddy Road area, and the 35-unit Evania at Upper Paya Lebar Road.

Singapore Tops Among Asian Expats: Survey

Source : The Straits Times, Mar 5, 2008

The Republic is the best place for them to live worldwide; Baghdad ranks last

The Republic ranks as the best place for Asian expatriates to live worldwide, according to the latest survey by human resources consultancy firm ECA International.

Singapore surpasses cosmopolitan cities such as Sydney, Melbourne and Copenhagen in Asian expatriates' view, the survey showed. These cities are ranked second, third and fifth respectively in the top 15 locations for Asian expatriate living.

Meanwhile, Kobe (joint third with Melbourne), Yokohama (eighth), Tokyo and Hong Kong (both 15th) are the only other Asian destinations that made it to the top 15 list.

Conducted annually, the Location Ranking Survey compares living standards in 254 locations globally, taking into account climate, air quality, health services, housing and utilities, isolation, social network and leisure facilities, infrastructure, personal safety and political tensions.

'High quality infrastructure and health facilities, combined with low health risks, air pollution, crime rates and a cosmopolitan population, make Singapore a very appealing location for Asians to live in,' said Lee Quane, general manager of ECA International.

'Although we did see a small deterioration in some factors, such as air quality and accommodation in 2007, it still retains its status as being the location with the best quality of living for assignees in this region.'

He explained that Singapore 'was much more affected by haze in 2007' compared with the preceding year, causing it to lose points in the air quality category. Meanwhile, 'recent market developments in en bloc (property sales) had an impact on the supply of standard accommodation'.

Nevertheless, Singapore has consistently been ranked the best location for Asian expats to live for a decade, said Mr Quane, who believes that it will retain that spot despite 'Hong Kong moving up our rankings' this year after sliding for several years, due to improved personal security scores and the movements of locations around it.

'We now see the narrowing in quality of living between Singapore and Hong Kong, but it is unlikely that Hong Kong will match Singapore. The main reason is (Hong Kong's) air pollution, which is unlikely to go away any time soon,' he explained.

At the other extreme, Baghdad is the least favourable place for Asian expats to live in, followed by Kabul (Afghanistan), Karachi (Pakistan) and Port-au-Prince (Haiti), due to the locations' risk to personal security and their lack of suitable facilities, according to the survey.