Wednesday, March 12, 2008

CBD - Twice As Big In 15 Years

Source : TODAY, Tuesday, March 11, 2008

Singapore will double the size of its financial district over the next 15 years, after demand for offices surged last year with the city-state seeking to become a centre for business in Asia.

The city will add 2.82 million sq m of office space, the equivalent of Hong Kong’s Central district, the government’s Urban Redevelopment Authority (URA) said in an e-mailed statement yesterday.

Occupancy of Singapore offices rose to a record last year, as banks including Standard Chartered and Deutsche Bank added staff. Demand for offices increased to 260,000 sq m a year between 2005 and 2007, exceeding the average of 160,000 sq m between 1995 and 2004, the URA said today.

“To continue attracting investments, we are planning to ensure we have sufficient land and infrastructure to support our robust economic growth,” URA director of land administration Choy Chan Pong said in the statement.

New developments to be added over the next few years include the Marina Bay Financial Centre, located in an area that will include Singapore’s first casino-resort built by Las Vegas Sands, the world’s biggest gaming operator.

The government will sell more land in the Marina Bay area over the next five to six years to meet demand, the URA said today.

URA Says Bonjour To Major Developers

Source : TODAY, Tuesday, March 11, 2008

New Ophir-Rochor land parcel marketed at premier property event in Cannes.

A PRIME land parcel enveloping Parkview Square in Bugis may soon draw more top developers to Singapore, just as the Beach Road and Marina View parcels did last year.

The 2.74 ha site, along Rochor and Ophir Roads, will comprise office and hotel space, said the Urban Redevelopment Authority (URA), which is pitching it to an international audience in France over the next three days.

The site could be worth $1.2 to $1.48 billion, according to property analysts.

Marketing it at a premier property event - the annual Marche International des Professionals de L’Immobilier in Cannes - is “good branding and also a move to see if there are large investment funds interested in developing Singapore’s streetscape”, said Mr Ku Swee Yong of Savills Singapore.

The land parcel, which will be up for sale in June, is the first in the new Ophir-Rochor corridor to be launched under the Government’s land sale programme.

Plans were earlier announced for this vibrant growth area - comprising financial and business institutions, hotels and residential facilities in a park-like setting - that will complement the financial district at Marina Bay and Raffles Place.

More land parcels in the Ophir-Rochor area will be released for development over the next five to 10 years “in tandem with market demand”, said the URA.

About 40 per cent of the first development could be commercial space, while 60 per cent of it could be devoted to hotel and retail space, said Mr Ku, Savills’ director of marketing and business development.

It may consist of a 500-room hotel on par with the nearby Intercontinental, with retail outlets on the lower levels and 1.2 million to 1.4 million sq ft of office or commercial space, said Mr Donald Han, managing director of Cushman and Wakefield.

Mr Han deemed it as attractive as last year’s Beach Road site, which was clinched for $1.69 billion by a three-nation consortium led by City Developments.

While South Beach at Beach Road is “more prestigious” as it straddles Suntec City and Raffles City, the Ophir-Rochor site is “equally attractive” for being on the fringe of the Central Business District, its good waterfront views and proximity to Bugis MRT, he said.

Marketing it at the present time would also give new investors time to do due diligence of the Singapore market before the parcel is launched for sale, he said.

URA has been marketing prime sites more aggressively to international players for the past three to four years, said a spokesperson.

Last year, major investors like Dubai’s Istithmar Group, the United States-based El-Ad Group and Macquarie Global Property Advisors (MGPA) ventured into Singapore’s land tender market. Istithmar and El-Ad were part of South Beach’s winning consortium, while MGPA, partly owned by Australia’s Macquarie Group, clinched the Marina View plots.

Mr Ku said that he would like to see more developments in Singapore by renowned companies from Japan and Europe to “give a better international flavour to our landscape”.

Ophir-Rochor Corridor Site To Be Marketed In France

Source : The Business Times, March 11, 2008

THE Urban Redevelopment Authority (URA) will market the first site in the new Ophir-Rochor corridor at the ‘Marche International des Professionals de L’Immobilier’ (MIPIM), a premier international property event in Cannes, France.

The site will be launched for sale under the Confirmed List of the Government Land Sales Programme in June.

In a statement yesterday, URA said the 2.74-hectare parcel is at Rochor Road/Ophir Road, adjacent to Parkview Square.

It also said the developer will have to include a minimum amount of office and hotel space to cater to the growth of Singapore’s financial and business services sector and tourism.

Depending on market demand, URA will release more redevelopment sites in the Ophir-Rochor area over the next five to 10 years. URA will be exhibiting plans for development of the Ophir-Rochor corridor at MIPIM Cannes.

A team led by URA, and comprising public sector agencies and private companies, will showcase investment opportunities, including key recent and upcoming developments, at the Singapore Pavilion.

‘With some of the most prominent upcoming developments and strategic sale sites that Singapore has to offer in Marina Bay and Ophir-Rochor, I am confident we will continue to attract international investors,’ said URA’s director of land administration Choy Chan Pong.

Besides plans for the Ophir-Rochor corridor, URA will exhibit plans for the extension of the existing financial district at Marina Bay.

As part of the plan to rejuvenate and grow the existing Central Business District, URA has released more plans for the Ophir-Rochor corridor to complement the Marina Bay area, featuring mixed-use developments with offices, hotels, residential and other complementary facilities in a park-like environment.

It is expected to be developed over the next 10 to 15 years.

URA To Market Ophir-Rochor Site At Global Property Fair

Source : The Straits Times, Mar 11, 2008

SINGAPORE’S urban planner is going international to market the Ophir-Rochor district - touted as the nation’s next development hot spot.

The Urban Redevelopment Authority (URA) said yesterday that it will market a major site in this ‘new growth area’ at a renowned annual global property event in Cannes, from today till Friday. The 2.74ha site for office, hotel and other uses could fetch up to $1.4 billion, a property analyst estimates.

A URA-led team of local agencies and companies such as the Housing Board, Singapore Tourism Board and property developer City Developments (CDL) will exhibit and showcase property investment opportunities at the fair - the Marche International des Professionnels de L’Immobilier.

The Government last year unveiled plans to rejuvenate the hotchpotch Ophir-Rochor area with its mix of commercial buildings and old shophouses.

This is part of a masterplan to double the size of Singapore’s financial district to that of Hong Kong at about 2.82 million sq m of office space, National Development Minister Mah Bow Tan said in Parliament last month.

The Ophir-Rochor corridor will complement the financial district at Marina Bay and Raffles Place, surrounded by a vibrant arts and entertainment scene, said the URA.

The site, between Rochor and Ophir roads and surrounding Parkview Square, will go on sale in June, and is expected to yield 495 hotel rooms and 139,740 sq m of commercial space.

The URA said the site will have a minimum requirement for office and hotel use, and is the second to be released in the district.

Last September, a CDL-led consortium that included Middle East investors won the tender for a 3.5ha site at $1.689 billion to build an eco-friendly mixed-use project - South Beach - designed by world- renowned British architect Norman Foster and his partners.

Property analysts say the upcoming site is likely to garner international interest.

Savills Singapore’s director, Mr Ku Swee Yong, said the site is the ‘best piece this year’ - likely to get at least five bids. He estimates the land cost, based on certain assumptions, to be up to $1.4 billion, or $700 to $800 per sq ft per plot ratio.

Chesterton International head of research and consultancy Colin Tan said the property fair will keep Singapore’s property scene on the global radar, but he expressed concerns about big projects adding to the current strain on resources.

The URA has been participating in the French fair since 2002. It is one of the world’s largest real estate exhibitions, attracting about 26,000 delegates from 74 countries each year.

MPs Seek Steps To Prevent ‘Magic Dollars’ Flat Scam

Source : The Straits Times, Mar 11, 2008

Greater flexibility in HDB loan rules for downgraders may help, say some.

THE emergence of a new scam by HDB flat sellers has prompted calls by some MPs for a review of loan rules for flat downgrading.

Housing agents say sellers who resort to the so-called ‘magic dollars’ scam often face financial difficulties and may be having a hard time in downgrading to cheaper flats.

Some MPs noted that greater flexibility in downgrading rules could help these people.

Property agents have recently seen an increase in deals where the seller and buyer collude to under-declare the sale price to the Housing Board.

The buyer pays the difference between this and the real price to the seller in cash, often in return for a discount.

These sellers are likely to have bought their homes at the previous market peak, leaving the flat in negative equity, where the mortgage is more than the property ’s value.

This means that any sales proceeds will go towards repaying the seller’s loan and the money taken from the Central Provident Fund (CPF).

This would leave him with no cash in hand.

The scam provides vital extra cash - indirectly from the seller’s CPF monies - in a buoyant HDB market with high resale prices.

Some families struggle to fork out the cash-over-valuation amount for a new flat.

Several MPs told The Straits Times that help could be given to such sellers so they do not flout the law.

Those caught in the scam could face jail and/or fines.

One agent said he has spoken to sellers seeking such deals. They are desperate for cash and stuck with a large flat they can no longer afford.

C&H Realty’s managing director Albert Lu added that sellers are unlikely to put themselves at risk of a jail term unless they have a strong motivation to do so, such as a need to avoid financial trouble.

A recent HDB market recovery - with prices up 17.5 per cent last year - has prompted sellers to offload properties .

But many who wish to downgrade are unable to get HDB loans which are less risky and have lower interest rates than bank loans. HDB does not give loans for downgrading.

Some MPs raised the issue in Parliament two weeks ago.

Mr Teo Ser Luck (Pasir-Ris Punggol GRC) said some families do not qualify for bank loans and are not eligible for rental flats.

‘If these families genuinely need help, could we then consider making the policy for downgrading more flexible?’ he asked.

Mr Charles Chong (Pasir Ris-Punggol GRC), chairman of the Government Parliamentary Committee for National Development, also supported a policy review.

Mr Masagos Zulkifli (Tampines GRC), however, said he felt the Government should not bail out those who had made mistakes. ‘That’s not the right thing to do,’ he said.

Ms Indranee Rajah (Tanjong Pagar GRC) said there is a need to distinguish between those who resort to the scam for extra cash and those driven to it by real need.

Ms Irene Ng (Tampines GRC) said one possible solution is to allow downgraders to take out HDB loans, especially if they have previously had only one housing subsidy.

The current policy is a ‘disincentive’ for families to downgrade, she said.

National Development Minister Mah Bow Tan had explained in Parliament that the HDB does not offer concessionary loans to downgraders as most would have benefited from selling their flats.

Mr Mah added, however, that ‘those who downgrade because of genuine financial difficulties do get special consideration from HDB. For such cases…HDB will continue to be flexible’.

Mr Teo said many families who approach him are in a dilemma. ‘Perhaps it’s desperation that makes them resort to such scams,’ he said.

‘The question is: Is it the strictness of our policy that has caused them to do that?’

Still, he noted that current policies are made for the majority’s benefit and ‘we have to work out the genuine cases and not let the exception become the rule’.

How the scam works

THE seller gets the buyer to agree to declare to the Housing Board that the flat was sold for a much lower price.

The buyer then pays the seller the difference between the actual price and the declared price in cash.

The seller gives the buyer a discount on the market value of the flat.

Kuwait Fund Pulls Out Of Bulk Purchase Of High-End Homes

Source : The Straits Times, Mar 11, 2008

It allows options for 97 condo units at Goodwood Residence to lapse.

A KUWAIT bank fund that agreed in December to buy 97 units at posh Goodwood Residence for $818.4 million has let the purchase option lapse.

Kuwait Finance House has given no reason for the move, which could result in the firm having to pay developer GuocoLand multimillion-dollar penalties.

It could also be the first time a foreign institutional investor in Singapore has pulled out of such a deal, raising concerns that the property market, already hit by weaker sentiment, may be heading into a downturn.

‘While the current market is cautiously optimistic, news of such a pullout might cause it to turn more cautious,’ said Cushman and Wakefield managing director Donald Han.

GuocoLand did not provide a direct reason for the lapse but said in a statement yesterday that the private residential market in Singapore appears cautious.

The developer also said it is in talks with Kuwait Finance House, an Islamic investment bank, with ‘a view to a grant of fresh options for units in the development’.

The firm declined to comment further, citing ongoing talks. Kuwait Finance House also declined comment for the same reason.

Kuwait Finance House’s huge deal was for 97 four-bedders ranging from 2,500 sq ft to 3,900 sq ft at the former Casa Rosita site in Bukit Timah Road, near Newton Circus.

The condo has 210 freehold units on a large 24,845 sq m site fronting Goodwood Hill. The Kuwait fund’s purchase would have been the single-largest purchase of residential units under construction in Singapore.

Kuwait Finance House had agreed to buy the units at a median price of $3,200 per sq ft (psf), which would have set price benchmarks for the area. Industry sources said the price was way too high, considering that bulk purchases typically come with a discount.

‘If it were to have bought at an average of, say, $2,700 psf last December, it would still be a record for the Newton Circus area,’ said an industry source who declined to be named.

‘If it had held on for 15 to 20 years and leased the units for up to a 5 per cent yield, it may have been able to justify the deal. But if it had wanted to buy and sell, why didn’t it bargain for a rock-bottom price as the property had not been launched?’

It is believed that Kuwait Finance House was keen on flipping the units as they were marketed in Dubai recently, but the sale campaign was unsuccessful.

Another industry source, who declined to be named, said: ‘The pullout may be due to the terms of the deal. The buyer could have realised that it had bought at a higher-than-expected price, had problems flipping the units and wanted to cut its losses.

‘It could also reflect the current market and the possibility that the property market may stagnate in the next two to three years.’

The stale market appeared to have led GuocoLand to put off the launch of Goodwood Residence, scheduled initially for the first quarter.

Many developers are following suit, delaying launches until keen interest returns to the sector, which is in the doldrums with buyers and sellers staying on the sidelines.

A GuocoLand spokesman said: ‘We would be tapping selected overseas markets when we decide to launch Goodwood Residence at a later date.’

It added in its statement that the expiry of the options will not have any material financial effect on its net tangible assets per share or earnings per share for the financial year ending June 30.

Opting out

Kuwait Finance House’s $818.4 million deal was for 97 four-bedders ranging from 2,500 sq ft to 3,900 sq ft at the former Casa Rosita site in Bukit Timah Road, near Newton Circus.

It had agreed to buy the units at a median price of $3,200 psf, which would have set price benchmarks for the area. Sources say the price was too high, considering that bulk purchases typically come with discounts.

It is believed that Kuwait Finance House was keen on flipping the units as they were marketed in Dubai recently, but the sale campaign was unsuccessful.

Interest Absorption Scheme: New Form Of Deferred Payment - But With A Catch

Source : The Straits Times, Mar 1, 2008

Property developers and banks revive old scheme that involves interest absorption.

IN A bid to tempt home buyers back into the cooling property market, banks are teaming up with developers to bring back deferred payment - or something like it.

They are resurrecting an older scheme known as interest absorption, which also allows buyers to postpone the bulk of their payments on new homes.

This decade-old plan had been phased out over the last few years in favour of the more popular deferred payment. But it is now making a comeback after the Government pulled the plug on deferred payment plans last October, saying they encouraged speculation in the then red-hot property market.

Though interest absorption may sound like deferred payment, here’s the catch: The home buyer has to take up a bank loan at the point of purchase, with a specific bank that has tied up with the developer to offer the scheme.

In contrast, the deferred payment scheme did not require a buyer to take a loan until the home was fully built. This was thought to encourage speculation, as one could buy and resell many unbuilt homes without taking a single loan.

Interest absorption plans offer two extra deal sweeteners. First, the developer absorbs interest payments on the loan until completion. Depending on the loan amount and tenure, this could work out to a few tens of thousands of dollars.

Another perk: Most units sold under interest absorption schemes do not cost more than those under normal payment plans. Developers used to charge slightly more for units sold with deferred payment.

Industry experts say interest absorption plans were introduced in the late 1990s to spur home-buying in the downturn. Then, not all plans had a deferred payment component - in some, developers just absorbed interest until completion.

Only United Overseas Bank (UOB) and OCBC Bank offer interest absorption plans with a deferred payment feature. They have tied up mainly with smaller developers and projects. One is Cosmo in Guillemard Crescent, which is almost fully sold. While final figures are not in yet, developer Fission Development expects about half to opt for interest absorption. ‘It’s a good arrangement for everyone as the bank does a credit assessment of the buyer…so that takes a lot of the risk out of the equation for the developer,’ said Fission managing director Melvin Poh.

UOB is believed to have provided interest absorption with deferred payment for at least five projects launched in the last three months. A bank spokesman said the response ‘has always been positive…even before the abolishment of deferred payment’.

OCBC is offering the plan at a few other developments, but declined to comment, citing competitive reasons.

On the whole, interest absorption schemes shift the risk of buyer default from the developer to the bank, said director of marketing and business development Ku Swee Yong, at Savills Singapore.

‘I would expect the bank’s interest rate to be marked up slightly to account for the extra risk,’ he said, adding such plans would help genuine home buyers who may have needed the deferred payment scheme to buy a new home.

Meanwhile, boutique developer Roxy Homes will absorb stamp duty for buyers who pick up a unit at its Ambrosia project in East Coast Road this weekend.

How interest absorption scheme works:

A buyer makes a down payment, typically 20 per cent.

He defers the rest of the payments until the property is completed.

But he has to take up a bank loan at the point of purchase. The interest, however, is absorbed by the developer.

If the buyer resells the property before completion, he will have to pay a penalty to redeem or cancel the loan.

How prohibited deferred payment scheme worked:

Home buyers need not take a loan until the home was fully built.

This was a boon to speculators who could buy and resell unbuilt homes without taking a loan.

All Eyes On Government Land Tenders This Month

Source : The Business Times, March 11, 2008

$500m site above Serangoon MRT, 3 suburban housing plots on offer.

AMID the current quiet market, all eyes will be on four 99-year leasehold suburban Government Land Sale site tenders that close this month.

They comprise three private residential sites including one for landed housing, and a ‘white’ site above the Serangoon Circle Line MRT station that could potentially be worth more than $500 million.

The action kicks off today, with the closing of a tender for a landed housing parcel in Westwood Avenue, Jurong West, big enough for about 50-60 landed homes.

Cushman & Wakefield managing director Donald Han reckons the 151,759 sq ft plot could fetch about $200-250 psf of land area. The plot is next to the landed housing area at Westville.

Those looking for clues on how developers read the suburban mass-market residential sector will have to train their eyes on tender closings for two plots this month, both boasting scenic locations.

One is at West Coast Crescent next to Blue Horizon condo and faces West Coast Park and overlooks the sea. The other is in Yishun, fronting Lower Seletar Reservoir and close to Singapore Orchid Country Club/Golf Course. It is also near Khatib MRT station.

Property consultants polled by BT in January, when the tenders for the two sites were launched, indicated bids of about $200-300 psf per plot ratio (ppr) for the Yishun plot.

Mr Han reckons the winning bid will be closer to $300 psf ppr, reflecting a breakeven cost of about $550-600 psf and a possible average selling price of $700-800 psf for the new condo.

As for the West Coast plot, consultants earlier indicated a wide range of bids - $260-400 psf ppr.

Mr Han estimates the plot’s value at the higher end of that range, around $380-400 psf ppr as ‘it is near parks, recreational facilities and the sea’, translating to selling prices of about $850-950 psf for a new condo on the site, on a project-average basis.

He expects the Yishun and West Coast condo sites to attract at least five bids each, while the landed housing plot at Westwood Avenue could draw more bids, about five to eight.

‘Developers may be willing to look at smaller profit margins because these are sure-sell markets, given pent-up demand in the mass market. However, buyers are still price-sensitive,’ he said.

While some analysts and consultants still feel the mass-market will be relatively resilient this year, City Developments executive chairman Kwek Leng Beng recently offered a different perspective.

‘The mass market will do well, but selectively. It’s not going to be what you’ve seen before. . . people queuing up,’ he said, noting that the Housing & Development Board provides a credible alternative to mass- market private housing.

The Serangoon Central site was quietly launched in December by the Land Transport Authority.

The 269,180 sq ft plot can be developed into an estimated maximum potential gross floor area (GFA) of about 850,000 sq ft excluding a bus interchange that the successful bidder will have to build. The developer will be reimbursed the cost of building the interchange.

The site can be developed into any combination of commercial, hotel, residential, and sports and recreational use.

Cushman’s Mr Han said that assuming 30-40 per cent of the GFA is for retail use and the rest for residential, the plot could be worth about $400-450 psf ppr, or a total of around $340-380 million.

‘So the breakeven cost would be about $700 psf for the residential component and the developer might be able to achieve selling prices of say $900-1,000 psf on average. The retail component will break even at about $1,200-1,400 psf,’ he reckons.

However, other property insiders say that assuming an all-retail development, which would be the ‘highest and best use’ of the site, land bids could come in closer to the $600-700 psf ppr mark (about $500 million to $600 million in total).

‘Suburban malls are generally valued at about $1,800-2,000 psf of net lettable area currently,’ one player pointed out.

However, another major player countered that sentiment today is subdued, and said the challenge of securing bank finance for such a big project with a likely total investment of about $1 billion or more will put a dampener on bullish bidding for this site.

The action and market watching continues next month, with at least two interesting offerings at state land tenders - a private condo site at Toa Payoh Lorong2/3, and a 1.56-hectare site in Choa Chu Kang for residential development that comes with the existing Ten Mile Junction mall.

Investors Eye Real Estate After Tough 2007

Source : The Business Times, March 11, 2008

Asian property and niche sectors are attracting assets

Many investors in alternative assets plan to invest more in real estate after poor returns from the sector in 2007, a PricewaterhouseCoopers (PwC) survey showed yesterday.

John Forbes, UK real estate leader at PwC, said some investors had been lured back to UK property after prices fell sharply.

Growth areas such as Asian property and niche sectors such as student housing were also attracting assets, he said.

PwC's global survey, which polled 226 institutional investors and alternative investment providers in the fourth quarter of 2007, showed a gross 41 per cent of investors plan to increase real estate allocations over the next three years.

That compares with 40 per cent for private equity, 35 per cent for commodities and 33 per cent for hedge funds.

However, 21 per cent of investors planned to reduce their allocations to real estate, compared with 16 per cent for hedge funds, 15 per cent for commodities and 11 per cent for private equity.

Forbes said: 'UK real estate capital values are down perhaps 20 to 25 per cent from the top of the market. For some types of investors that will discourage them.

'But for opportunistic investors, who have been out of the UK market for the past two to three years, the UK is starting to look cheap so they are coming back.'

UK commercial property delivered a total return, which combines rental income and capital growth, of -3.4 per cent in 2007, as the credit crisis bit and investor sentiment soured.

The survey also showed less than half of respondents were satisfied with the performance of hedge funds, while nearly a fifth were dissatisfied.

That compares with private equity, where two- thirds were satisfied and only 7 per cent dissatisfied, or real estate, where 57 per cent were happy with performance and 11 per cent unhappy.

The survey follows a strong year for hedge funds. According to Credit Suisse/Tremont they returned 12.56 per cent in 2007.

Rob Mellor, UK financial services tax leader at PwC, said hedge funds had to become better at managing investor expectations and explaining how they achieved returns, especially when conditions turn.

Some may have feared the credit crisis would hit hedge fund returns harder than it eventually did, he said. -- Reuters

Opportunistic Investors Recoil From Asia Property

Source : The Business Times, March 11, 2008

They see more scope for picking up cheaper properties in US, Europe; loans in Japan tougher

Opportunistic investors are pulling back from Asian property because they see more scope for picking up distressed assets in the United States and Europe, and loans are harder to get in Japan, one of their favourite markets.

Hedge funds have stopped dabbling in property in the region, fund managers say. And although private equity players will continue to develop property in India and China, they are more likely to buy buildings on the cheap in the West than in Asia.

'Six months ago, it was quite straightforward. We didn't have to answer questions about why to invest in Asia,' Guy Cawthra, Asia fund strategist at Morley Fund Managers, told a recent conference in Hong Kong. 'Now investors say 'we might not want to invest in Asia; we want to invest in Europe, the UK and the US'.'

In the wake of the 1997-98 economic crisis, Asia - in particular, Japan and South Korea - drew a raft of investment from funds run by the likes of Morgan Stanley, General Electric and private equity firms such as Carlyle Group .

Many made fat profits on a revival by Asian property markets, which are now mostly strong because of a shortage of new supply and still buoyant economies.

Researchers at consultants Jones Lang LaSalle forecast Tokyo office prices will steady this year after a 28 per cent jump in 2007, while Seoul, Hong Kong, Singapore and Shanghai are still on the up.

Better opportunities now lie elsewhere for investors who think they can spot a market trough and ride a recovery.

Because of tight credit and a worsening economy, US commercial real estate values could fall by 20 per cent in the next five years from their 2007 peak, JPMorgan analysts forecast, causing losses of about US$120 billion, including on commercial mortgage-backed securities.

London office values have dropped 12 per cent from a peak in the middle of last year, and they will be pressured further by forecasts of a 10 per cent decline in rental values through 2009.

'I think a lot of investors will return to home markets,' said Bart Coenraads, head of real estate at Fortis Investments. 'Some will try to buy distressed core and refinance it. They could make good returns.'

Last year, total direct investment in the Asia-Pacific region jumped 27 per cent to US$121 billion - a sixth of the global total - with about half invested in Japan, which has been popular for its rock-bottom interest rates.

However, Japanese banks are getting cold feet on property, analysts say, giving loans worth only 60-70 per cent of a building's value, compared to 80-90 per cent a couple of years ago.

Lower debt gearing is likely to crimp returns for equity investors. But having spent years setting up teams, private equity funds are unlikely to withdraw completely from Asia, said Tim Bellman, global head of strategy for ING Real Estate.

Many, such as Morgan Stanley Real Estate Funds, no longer see themselves as 'opportunistic', and are in Asia for the long haul.

'Funds have been raised and platforms are set up, and they don't want to unwind them overnight,' Mr Bellman said. 'But at the margin, opportunistic investors who looked at Asia are finding those opportunities back home.'

Morgan Stanley is building housing in China and taking stakes in Indian developers in a high-risk, high-return strategy. But the US investment bank also bought the Tokyo headquarters of Citigroup last month, indicating it is still interested in 'core' assets that are low risk but give modest returns. -- Reuters

Boon Keng Development Puts In Top Bid For Westwood Ave Site

Source : Channel NewsAsia, 11 March 2008

Developer Boon Keng Development has put in the top bid of S$11.8 million for a landed housing site at Westwood Avenue.

The price for the 150,700 sq ft site, which is being sold on a 99-year lease, works out to be S$78 per sq ft.

Only two bids were received by the Housing and Development Board (HDB) for the plot. Sunway Concrete Products put in the lower offer of S$10.3 million.

Property consultants CB Richard Ellis said the bid amounts were conservative, reflecting the current cautious sentiment in the property market.

But it said the terrace houses to be built on the site can still fetch between S$900,000 and S$1 million each.

These prices are slightly higher than the current prices being transacted for nearby developments like Westwood Park and Westville. - CNA/so

Singapore Voted Cleanest Asian Economy In PERC Survey

Source : Channel NewsAsia, 11 March 2008

Singapore has received the thumbs-up from expatriate businessmen in the region as the cleanest Asian economy.

In a latest survey by the Political and Economic Risk Consultancy (PERC), both Singapore and Hong Kong retained their top spots of first and second, respectively.

Over 1,400 expatriates were asked to rank 13 Asian economies between January and February this year.

The 13 economies were China, Japan, Macau, Hong Kong, Singapore, South Korea, Malaysia, Taiwan, India, Vietnam, Indonesia, Thailand and the Philippines.

The survey had excluded countries notorious for corruption, such as Myanmar and Bangladesh.

Poll results showed that Philippines had the worst score out of the 13 economies. It was cited as an example where its government lacked the political will to tackle the problem, despite huge economic progress.

Thailand was ranked 12th after Indonesia, which had made improvements under President Susilo Bambang Yudhoyono. But the report said the perception of a corrupt bureaucracy remained strong among businessmen.

Malaysia retained its sixth ranking, but achieved a worse score compared to last year's survey.

- CNA/so

Scoring System
- On a scale of zero to ten, zero being the best possible score.
- Last year's scores are in brackets.

1. Singapore 1.13 (1.20)
2. Hong Kong 1.80 (1.87)
3. Japan 2.25 (2.10)
4. Macau 3.30 (5.18)
5. South Korea 5.65 (6.30)
6. Malaysia 6.37 (6.25)
7. Taiwan 6.55 (6.23)
8. India 7.25 (6.67)
9. Vietnam 7.75 (7.54)
10. China 7.98 (6.29)
11. Indonesia 7.98 (8.03)
12. Thailand 8.00 (8.03)
13. Philippines 9.00 (9.40)

Public Housing Demand Continues To Be Brisk In 2008

Source : Channel NewsAsia, 11 March 2008

The demand for public housing continues to be brisk. HDB's first build-to-order project this year at Punggol Spring is already four times oversubscribed.

New flats aside, property agents have also described the HDB resale market as the kingpin for the real estate sector in 2008.

Punggol Spring

The application for Punggol Spring, where 494 units of four-room flats will be built, will not close until 17 March, but the project is already oversubscribed with 2,093 applications.

Punggol Spring is part of the 4,500 new flats that the Housing and Development Board (HDB) has committed to build for the first half of this year. Prices of the Punggol Spring flats range from S$204,000 to S$259,000.

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Apart from this build-to-order development, HDB's bi-monthly sale of four-room and larger flats in February also drew overwhelming response, with over 10,000 flat buyers vying for just 278 units.

Eugene Lim, associate director of ERA, said: "They are usually the first timers and they do not have so much cash with them, so as the norm is cash over value for the resale market, so inevitably, they are being pushed to the new flat market where they don't have to come up with as much cash or don't need to come up with any cash at all."

Still, transaction volume in the HDB resale market is expected to remain strong. Industry players project 30,000 units to be sold in 2008, 1,000 more than last year.

Price-wise, it is estimated to increase by about ten per cent in 2008, compared to over 17 per cent in 2007.

Property agents said the spike was partly due to the sharp rise in cash over valuation (COV). But they added this is likely to change as buyers have hit a threshold when it comes to forking out more cash.

Propnex CEO Mohamed Ismail said: "The central areas were getting as high as S$100,000 for Queenstown, Bukit Merah, Toa Payoh, but such prices are not sustainable in the long term. Therefore, I do foresee (for) the very high-end side in the central location, the COV (will) dip quite drastically."

Some property agents said the COV for flats in the central region will dip by 20 per cent within the next three months. As of the fourth quarter of last year, the average COV for the area was about S$35,000 to S$40,000.

Despite the high demand for flats, agents are confident there will be enough to go around, whether it is for families or singles.

They also welcome HDB's new incentive to offer an extra S$9,000 grant to singles who buy a resale flat and live with their parents.

The scheme, however, is unlikely to have any impact on the market, given the small segment it serves. - CNA/ac


《联合早报》Mar 11, 2008



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