Monday, March 10, 2008

Transformation Of Punggol River Begins

Source : The Sunday Times, March 9, 2008

$7.13 million project to create reservoir park with man-made island will be ready by 2010

WORK to transform the Punggol River into a scenic reservoir park, complete with a man-made island, got off the ground on Sunday.

Artiste's impression of Sengkang Floating Island, the first piece of which has been released by Prime Minister Lee Hsien Loong. -- PHOTO: PUB

Prime Minister Lee Hsien Loong, who was at the official opening of the adjoining Anchorvale Community Club in Sengkang, symbolically released the first piece of the floating island - a clump of soil and grass - into the water.

For its design, the $7.13 million project will draw inspiration from a nearby fruit park being developed by the National Parks Board. Its pavilions will be shaped like mangosteens and its benches, like limes.

Work will be completed by 2010.

Punggol River is the first of five sites to be improved this year under the Active Beautiful, Clean (ABC) Waters Programme.

Launched by national water agency PUB in 2006, the $200 million programme is an ambitious island-wide revamp of 28 waterways.

The aim is to rejuvenate Singapore's drainage and water-supply infrastructure, including the canals and reservoirs, and turn it into a scenic network of streams, rivers and lakes where people can enjoy water activities and even commute.

Giving a preview of the projects during the Budget debate last month, Minister for the Environment and Water Resources Yaacob Ibrahim said, for example, that the Lower Seletar Reservoir would sport a heritage bridge, featuring story panels which will tell of the area's kampung history.

Work on the pilot projects of Kolam Ayer and the Bedok and MacRitchie reservoirs is in its final phases and will be unveiled this year.

'With these projects, we hope to bring waterfront living to the heartland, improve the quality of our living environment and enhance property values,' said Dr Yaacob.

ADB Chief Sees US Escaping Recession Despite Slowdown

Source : The Business Times, March 10, 2008

Asian growth will slow moderately, he adds; inflation will be biggest concern

THE US economy should be able to escape recession this year despite accelerating signs of a slowdown there and continuing turmoil in financial markets, according to Asian Development Bank (ADB) president Haruhiko Kuroda.

In an interview with The Business Times, he also predicted that growth in Asia would slow only moderately this year while inflation would be the most serious concern for policymakers.

The ADB head delivered a strongly upbeat assessment of prospects for the region's 'emerging' economies (excluding Japan), arguing that domestic demand is likely to remain robust even as external demand from the Group of Seven (G-7) industrialised economies continues to slow.

And he urged central banks in emerging Asia to maintain tight monetary conditions, or even tighten further, in the face of growing upward pressure on prices.

Mr Kuroda dismissed the idea that Asia could encounter another crisis on the scale of that which occurred 10 years ago. 'At this stage, I don't see any of our developing member countries as likely to be seriously hit by the problems in the global economy or financial turmoil,' he said.

And, 'if necessary, we can shift priorities and reshuffle projects and programmes so as to match with new needs which might arise'.

'I do think that America can escape recession,' said Mr Kuroda, 'although in the first half of the year the growth rate will be very low, maybe one per cent or less. But in the second half of the year, the US economy will recover, with probably 1-2 per cent growth,' he predicted, adding that overall US growth of around 1.5 per cent for the year should be possible. 'This is a significant slowdown, but it is not a recession.'

While being more positive than many others in his assessment of US economic prospects, the former vice-finance minister for international affairs in Japan also rejected suggestions that emerging Asian economies could slow sharply in the wake of the US sub-prime mortgage crisis and associated financial and currency turbulence.

'Domestic demand in developing Asia is still very strong,' Mr Kuroda noted. 'As intra-regional trade has increased substantially in the last several years and domestic demand has also been very strong, developing Asia as a whole can sustain relatively high growth.'

The baseline trend is still very strong, he said, and overall growth is likely to moderate only to 7.5-8 per cent this year compared with 8-8.5 per cent last year. This will still be a 'respectable' rate of growth similar to that enjoyed by developing Asia in 2006, Mr Kuroda said.

'I am more concerned about inflationary pressures in some countries in Asia,' Mr Kuroda told BT in his office at the ADB headquarters in Manila.

'In some countries, inflation has accelerated in recent months and in other countries, asset price inflation has accelerated,' citing the cases of China and Vietnam in particular.

'The global commodity boom and external factors have increased inflationary pressures in many countries including China,' he pointed out. 'But some domestic overheating exists and a slowdown in the Asian economies could help in containing inflationary pressures.'

Nevertheless, 'central banks will be well advised to maintain tight monetary conditions and, if necessary, they should tighten further'.

ADB chief economist Ifzal Ali also told BT in Manila that rising food prices in Asia are likely to be a major, ongoing contributor to inflation in the region from now on. Growing demand for food coupled with inadequate investment in the region could see prices continuing to rise by 5-6 per cent a year on average, he suggested.

'I think we are on the cusp of a major structural shift' whereby more resources will have to be devoted to raising agricultural productivity in Asia from now, Mr Ali added.

HDB Ceiling Doesn’t Factor In Late Marriages

Source : The Straits Times, Mar 8, 2008

THERE have been calls for the Government to review the $8,000 income ceiling for new HDB flats. I would like to state the realities of life as a typical (lower) middle-income Singaporean.

Life was rosy until we decided to look for a roof to start our new family. A check on the HDB website showed a new four-room flat in Punggol selling for about $230,000.
However, we exceeded the $8,000 income ceiling by about $1,000.

We exceeded the HDB cap not because we are high fliers but because we found each other only after some years of work. We were in our early 30s by the time we were ready to settle down. Not to worry, the Government says, there are options for us:

Resale Flat

The resale price for a four-room Punggol flat is about $310,000. This means we have to fork out an additional $80,000. This is not a small sum. Furthermore, it was an old flat and we were wary about loan sharks calling on the former owners. We would also have had to spend more money on refurbishment.

Executive Condominium

We thought we could try for executive condominiums as our combined income was still below the $10,000 cap for this category. To our shock, we found that the units were selling for at least $650,000 (in suburban Choa Chu Kang and Woodlands). Should we fork out thrice the amount of money for a new HDB flat, just because we exceeded the Housing Board flat cap by $1,000?

Private Condominium

I shan’t go into this because the prices are just ridiculous for couples like us. At this point, our feelings are a mixture of unhappiness and helplessness.

The initial excitement about starting a family has been dampened. The moral of the HDB limit appears to be: don’t fall into the ‘in-between’ income group.
You either have to settle for an old flat which costs about $100,000 more, or spend the rest of your life paying for a new executive or private condominium.

And you wonder why there are no ‘in-between’ choices. Some say this is the Government’s way of persuading us to marry early.

If that is so, the Government should be realistic enough to note this rising trend among Singaporeans in marrying later, and failing to qualify for a new flat because of it.

Xu Zhilin (Ms)

Mortgage War Breaks Out As DBS And UOB Offer New Rates

Source : The Straits Times, Mar 8, 2008

Banks focusing on specific targets, waging battles without fanfare.

THE mortgage war finally erupted, as Singapore banks responded to a dramatic rate cut by Maybank three weeks ago - with one even offering a zero per cent package.

That attractive deal comes from United Overseas Bank (UOB), which has relaunched a package with a teaser first-year rate at rock-bottom.

DBS Group Holdings has also rolled out new rates on several packages, including a fixed-rate deal that claims to be the lowest of its type here in Singapore.

Unlike the fanfare that marked the rate war in 2003, though, the battle now is focused on specific targets and is being kept under the radar.

Banks are quietly offering promotional rates on a case-by-case basis and tend to target clients with loans of well over $300,000. While the market for new mortgages
has softened, banks are still busy.

‘A lot of customers are looking to refinance their loans taken less than a year ago, when interest rates were much higher,’ Mr Bryan Ong of mortgage consultancy said.

Maybank sparked the war with an aggressive three-year, fixed-rate package at 1.68 per cent for the first year. This promo, which ends on Monday, has sent customers ‘rushing to submit loan applications’, said Maybank consumer banking head Helen Neo.

About 80 per cent of the applications were for buying private properties with an average loan size of about $675,000. Maybank is now ‘reviewing the rates’.
Other banks have not taken the move lying down. Most have tacitly matched - or undercut - Maybank’s rates.

DBS has a new three-year, fixed-rate package with an aggregate rate of 7.64 per cent - lower than Maybank’s 7.74 per cent. It offers a 1 per cent cash rebate in the first year.

UOB has revived its FirstZero Home Loan - a three-year, fixed-rate package available ‘only for a limited period’. The bank launched this in 2003, but it was quietly taken off the market last year amid interest rate volatility.

FirstZero is now back with a zero per cent rate on the first year, 3.6 per cent on the second and 4.5 per cent on the third, making a three-year aggregate rate of 8.1 per cent.

It has hefty penalty charges and a three-year lock-in period.

Standard Chartered Bank (Stanchart) actually moved before Maybank, cutting its three-year, fixed-rate package from 3.58 per cent to 2.98 per cent in January. It also cut its two-year package by 0.55 of a percentage point to 2.88 per cent.

DBS countered this week with a 2.88 per cent average annual rate for a three-year package and a 1 per cent cash rebate on the first year.

This three-week promotion is only for customers with loan quantums of at least $300,000.

OCBC Bank had not joined the fray, with chief executive David Conner saying last month that a mortgage rate war was unlikely.

OCBC said ‘from time to time, it offers loan packages with promotional rates that are highly competitive compared to other players’.

The most popular packages now are those linked to transparent rates, like the Singapore Interbank Offered Rate (Sibor) or swap offered rate (SOR), comprising the Sibor plus a bank’s lending costs.

These are official, regularly published industry rates customers can check to see how their packages are structured.

Riding on this interest, DBS has just cut by half its rate for its 12-month, two-year, Sibor-linked loans to 0.5 per cent for the first year.

Nearly 80 per cent of Stanchart’s new customers in recent months have taken up its package offering SOR plus 0.5 per cent for the first year.

The SOR has dropped from about 3 per cent last year to about 1.5 per cent currently.
Stanchart’s head of consumer banking, Mr Ajay Kanwal, said: ‘With the interest rate environment expected to soften further, customers of SOR-linked packages will benefit even more.’

Banks are quietly offering promo rates on a case-by-case basis and tend to target clients with loans of well over $300,000.

The most popular packages are those linked to transparent rates, as customers can check to see how they are structured.

Creative Cheats

Source : The Sunday Times, Mar 9, 2008

SOME Singaporeans are creative - or is crafty a more apt word? - when it comes to cheating the system. The latest scam uncovered involves sellers of Housing Board flats who collude with their buyers to declare a falsely low sale price to the HDB, so that the sellers can pocket extra cash.

A buyer pays the seller the difference between the actual and the declared price in cash, and in return he gets a discount on the market value of the flat.

It is win-win for both parties, as well as the property agent who is often the instigator of the scheme. But the deal is illegal because the seller is indirectly siphoning off money in advance from his CPF account.

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

But this is not the first time that HDB transactions have been manipulated for extraneous private gain. There was the ‘cash-back’ scheme that came to light in 2001, in which buyer, seller and agent over-declared the agreed price of a flat.

The purpose was to obtain a bigger loan from a bank or the HDB. The extra cash was distributed among the conspirators. These deals were stopped only when the HDB changed the rules to allow only an HDB-appointed valuer to value a flat.

At least one agent was convicted and fined.

The new scam is not easy to detect. Reviewing transacted prices that are unusually much lower than the market profile for a specific period and a specific location is one way.

But getting the evidence that will stand up in court won’t be easy. The HDB nevertheless has to be thorough in its surveillance.

The chief culprit in such cases is often the real estate agent who initiates the scam and drafts the letter of undertaking binding the buyer to pay the seller cash. Obviously, there’s no honour among thieves.

When the deal is done, the document is destroyed. If any party deserves to be punished the most severely, it is the agent.

Demand For Single Office Units Still Going Strong In Quiet Market

Source : The Sunday Times, Mar 9, 2008

Investors turn more cautious, but small firms still interested in strata-titled offices.

ALL has turned quiet on the housing front, but some other segments of the property market appear to have escaped that fate.

Still going strong in particular are sales of single office units in larger commercial buildings. Known as strata-titled offices, these properties recorded active demand in the fourth quarter last year, even as home sales were taking a breather.

A healthy 13 transactions of strata offices occurred between October and December, up from only five in the previous quarter, according to data from CB Richard Ellis (CBRE).

Most of the properties were in the city area - Suntec City, Tong Building in Orchard Road, Springleaf Tower in Anson Road - and changed hands at well above $2,000 per sq ft (psf), CBRE said.

Altogether, $750.8 million worth of strata offices were sold in the fourth quarter, bringing the total for last year to $1.7 billion - more than four times the figure for 2006.

Prices also rose solidly throughout the year. At Suntec City Tower 1, a favourite strata-office location, unit prices climbed about 50 per cent from just above $1,500 psf in January to almost $2,400 psf in December - the highest level in two years.

The steady take-up of single units is due largely to the wider boom in Singapore’s office market. A shortage of offices, even as expanding businesses push up demand for space, has boosted prices and rents across the board, drawing much interest from investors, said CBRE’s executive director of investment properties , Mr Jeremy Lake.

But in recent months, even investor demand for offices has slowed as the United States sub-prime mortgage problems spread and sentiment in the market grew more cautious.

This has hit sales of entire office buildings, but strata offices have been less affected, said Mr Shaun Poh, a senior director of investment advisory services and auctions at DTZ Debenham Tie Leung.

He attributes this to the smaller businesses that are the other main source of demand for single office units. These businesses plan to occupy the space themselves rather than lease it out for rental income.

‘Smaller units, of the $1 million to $3 million variety, are more digestible for some buyers,’ he said. ‘They appeal to end-users who are moving from renting to buying now that rents have risen so fast.’

DTZ is marketing a floor of offices at Peninsula Plaza near the City Hall area, consisting of six strata units with a total floor area of about 8,500 sq ft. The units are tenanted at about $4 psf, but rents in the building have moved up to between $7 and $8 psf, said Mr Poh.

The indicative price for the floor is $17.5 million, or about $2,050 psf. At this price, with a projected $7.50 psf rental, the net yield works out to about 4 per cent, he added.

Since the property went on the market earlier this week, DTZ has received ‘more than 10 enquiries’, Mr Poh said.

‘Some are investors looking to buy the whole floor, but we’ve also seen interest from end-users in electronics or shipping firms who are interested in buying just one or two units.’

In general, however, experts feel that strata-office sales might not be as strong in the first quarter of this year as last year.

Colliers International has not yet sold any strata offices at auction this year, after selling one a month between October and December. In December, a 3,003 sq ft unit was sold at United House, for a healthy $2,497 psf.

But Mr Poh said that, while sales might slow, prices are unlikely to fall any time soon.

‘Prices have not gone up, but neither have they come down,’ he said.

‘If they can be maintained in such an environment, and if things get a bit more optimistic, prices could even go up 10 to 20 per cent over the next year.’

Who Inherits Flat Depends On Type Of Home Co-Ownership

Source : The Sunday Times, Mar 9, 2008

Q I HAVE a Housing Board (HDB) flat that I had applied for together with my father before my marriage. Should anything happen to me, will the flat go to my wife or my father, who is a co-owner of the flat?

My wife has her own income but ever since we got married, she has not contributed a single cent to the household. I feel she does not deserve to get anything should I suffer any mishap.

What can I do to protect my assets from her? I want my father to at least have the bigger share of my assets, including the flat.

A IT IS important to first ascertain how the HDB flat is co-owned by your father and you. Co-ownership can be in the form of a joint tenancy or a tenancy in common.

Joint tenancy basically means the owners own the whole flat together. Tenancy in common would mean that each owner has a stipulated share in the said flat, for example, you might own 70 per cent while your father owns 30 per cent.

In the case of a joint tenancy, upon the death of one owner, the other, surviving joint owners will retain the flat in their own names. This is the right of survivorship.

Joint tenants cannot will their share in the flat. If they do so, the will becomes ineffective.

In the case of tenants in common, the share of the deceased owner will not go to the surviving owner but will instead be inherited by the estate of the former.

If you and your father own the flat as joint tenants, then should you die before your father, your share will go automatically to your father and he will become the absolute owner of the flat. Your wife will not get any share.

Similarly, if your father dies before you, you will become the absolute owner.

Should you die later on, your estate will inherit the flat. If you have made a will, the flat will be inherited by the person to whom you have willed it.

If you die without a will, your flat will go to your estate under the laws of intestacy. In other words, your wife and children, if any, will inherit the said flat, in accordance with the Intestate Succession Act Cap 146.

If you do not want your wife to inherit the flat, you can make a will stating whom you want the property to be inherited by, if your father dies before you.

If your father and you own the flat as tenants in common, you can make a will to state who is to inherit your share of the flat, should you die.

If you die without a will, then your share of the flat will go to your estate under the laws of intestacy, that is, your wife and children, if any, would inherit the said share of the flat, in accordance with the Intestate Succession Act Cap 146.

Sharanjit Kaur
Partner, Khattarwong

Advice provided in this column is not meant as a substitute for comprehensive professional advice.

Who gets the flat?

In a joint tenancy, upon the death of one owner, the other surviving joint owners will retain the flat in their own names. In the case of tenants in common, the share of the dead owner will be inherited by his estate.