Tuesday, May 6, 2008

Warren Buffett Says The 'R' Word

Source : The Business Times, May 6, 2008

Housing woes seen hurting bank results for a couple of years

(OMAHA, Nebraska) Warren Buffett, the world's richest person, said on Sunday that the US economy is in recession, putting him at odds with a government report that showed weak growth.

Mr Buffett offered his assessment during a wide-ranging news conference, a day after a record 31,000 shareholders of Berkshire Hathaway Inc attended the insurance and investment company's annual meeting in Omaha.

Last Wednesday, the Commerce Department said that the US economy grew at a 0.6 per cent annual rate in the first quarter. But Mr Buffett said that the nation's population also grew, making the real growth rate lower.

He also said that even if the data did not show the economy retracting, people felt as though it was.

'The US is in recession as I define it,' he said. 'I would define that as a situation where people are doing less well than they were three months, six months or eight months earlier and most businesses find themselves in that position too.'

Housing remains a critical problem, he said, as hundreds of thousands of US homeowners find their mortgage payments heading higher, or that their homes are worth less than they owe.

While Mr Buffett said that the government could help borrowers who were misled on what they would owe, he opposed helping people simply because their home values had dropped, or investors who bought mortgage securities without understanding the risks.

Borrowers, he said, 'shouldn't be penalised for being misled, but shouldn't be protected against mistakes'. He estimated that more than 80 per cent of borrowers with 'option' or 'pick-a-payment' mortgages that let them pay less than the principal due, in fact did so, and that many now owe more than their homes' values.

Mr Buffett said that housing problems would weigh down bank results for 'a couple of years' and the industry's large losses and write-downs due to bad debts were not over 'by a long shot'.

'There's going to be more pain, sure,' he said.

Alluding to a large stock offering last week by Citigroup Inc, which lost close to US$15 billion over the last two quarters, he said: 'Citigroup is replenishing its stock at US$25 when it was buying it back not too long ago at US$50. Many institutions not only grew the Kool-Aid, but drank it ... They paid a price, but the price was really paid by shareholders.'

He said that banks needed better risk management.

He also said that he recently considered the prospects of a large investment bank, which he did not identify, by reading its 270-page annual report. He highlighted 25 pages where he did not understand what he had read.

'I decided not to pick that one,' he added. -- Reuters

K-Reit's Free-Float Falls Below 25% After Rights Issue

Source : The Business Times, May 6, 2008

But number of free-float units more than doubles

K-REIT Asia's free float of units will fall to 24.9 per cent from 27.1 per cent following the subscription by the Keppel Group for rights units not taken up by minority shareholders.

The trust's rights issue of 396.9 million units priced at $1.39 per unit - which was 96.3 per cent subscribed, inclusive of excess rights applications - became fully subscribed after Keppel Corp and Keppel Land mopped up 14.9 million rights units, or 3.7 per cent of the issue, not taken up by minority shareholders.

While the free-float percentage will decline following the rights issue, the absolute number of free-float units will more than double from 67.7 million units to 161.2 million units.

Of the 14.9 million units, Keppel Corp took up 6.3 million units and Keppel Land 8.6 million units in line with their undertakings.

The rights issue will leave Keppel Land with 43.6 per cent of K-Reit's enlarged equity base of 647.2 million units, and Keppel Corp will control 31.5 per cent. Prior to the rights issue, Keppel Land held 42.6 per cent of K-Reit's total 250.2 million units, while Keppel Corp had 30.3 per cent.

K-Reit's rights issue, which closed on April 25, will raise gross proceeds of about $551.7 million that will partly refinance the $942 million bridging loan K-Reit has taken from Keppel Corp to finance the trust's acquisition of a one-third interest in One Raffles Quay. K-Reit bought the stake in One Raffles Quay from Keppel Land last year.

The $941.5 million acquisition price for the new Grade A office development works out to $2,109 per square foot (psf) of net lettable area. Stripping out income support of up to $103.4 million provided by seller Keppel Land through 2011 to K-Reit Asia reflects a lower net purchase price of $1,877 psf.

In a release yesterday, K-Reit said that based on gross proceeds of about $551.7 million from the rights issue, the trust's aggregate leverage will be reduced from 53.9 per cent to 27.7 per cent and create for K-Reit about $679.8 million funding capacity based on 60 per cent leverage limit.

In late March, the trust manager's CEO, Tan Swee Yiow, said in an interview with BT that management will look at a variety of options, including convertible bonds, commercial mortgage-backed securities and straight debt, to raise balance funds needed to repay the bridging loan.

K-Reit said yesterday the rights units will be listed on the Singapore Exchange from 9am on May 8. On the stock market yesterday, K-Reit ended six cents lower at $1.44.

Greenspan: US Is In An 'Awfully Pale Recession'

Source : The Business Times, May 6, 2008

Continued stagnation this year may be the best the US can hope for

(WASHINGTON) Former Federal Reserve chairman Alan Greenspan said the US has slipped into an 'awfully pale recession' and may continue to languish for the rest of the year.

Mr Greenspan: Recovery won't begin until US home prices show signs of stabilising

'We are clearly receding', with economic growth now at about zero per cent, he said in an interview with Bloomberg News.

Mr Greenspan, who now consults for clients including Deutsche Bank AG, also said it was too soon to declare the end to the credit crisis stemming from the collapse in the US sub- prime mortgage market.

The former Fed chief's assessment echoes figures in the past month that show declines in the manufacturing and housing industries, though fewer job losses than economists forecast.

Mr Greenspan's successor, Ben Bernanke, and his colleagues indicated last week that they are ready for a pause in interest-rate cuts after seven reductions since September.

Mr Greenspan spoke the day before the Federal Open Market Committee's April 30 statement, where it dropped a previous reference to 'downside' risks to growth and noted 'uncertainty' about the outlook for inflation.

While declining to comment on monetary policy, Mr Greenspan said the US economy is returning to a more inflation-prone period. Import prices are rising, as are wages overseas, adding to pressures already caused by soaring costs of food, energy and other commodities.

Mr Bernanke was scheduled to speak on mortgage markets yesterday at 8.30pm in New York.

Mr Greenspan, 82, portrayed the US economy as being caught in a 'tug-of-war' between cash-rich businesses on the one hand and money-losing financial institutions on the other.

'This is a very unusual situation,' he said. 'Neither side is obviously winning the battle.'

The US economy grew at a 0.6 per cent annual rate over the last two quarters, the slowest pace since the 2001 recession.

Mr Greenspan said that continued stagnation for the rest of this year may be the best the US can hope for and might even be the most likely outcome. 'That's certainly the most benevolent scenario,' he said. 'It's not all that far from being the most probable.'

'We're in a recession,' he said. 'But this is an awfully pale recession at the moment. The declines in employment have not been as big as you'd expect to see.'

The former Fed chief said a recovery won't begin until home prices show signs of stabilising, relieving pressure on financial firms to write off mortgage-related losses.

'Until there are stabilised prices of homes - and I think they have a good way to go down - you still have prospective losses' for financial companies and investors. 'It's too soon to tell' if the worst of the credit crunch is over, he added.

'It is possible, not probable, that prices could bottom out' towards the end of the year, Mr Greenspan said.

He saw the US economy reverting to the period prior to the 1990s, when inflation was more of a threat.

'The trade-off between inflation and growth is clearly turning adverse,' he said. 'We're going back to where we were before the end of the Cold War.'

Mr Greenspan in the past had argued that the expansion of the global labour force brought on by the collapse of the Soviet Union and the rise of China was a powerful force bringing down global inflation. That trend is now fading as workers in the emerging markets obtain higher wages. -- Bloomberg

CityDev Falls On Credit Suisse Downgrade

Source : The Business Times, May 6, 2008

Shares of City Developments (CityDev) extended losses for a second day after Credit Suisse downgraded its investment rating to 'underperform'.

Southeast Asia's second-largest property developer fell as much as 3.4 per cent to an intraday low of $11.92 (US$8.76) with over 1.2 million shares traded. CityDev had lost 1.3 per cent on Monday.

'Being a proxy to the Singapore property market we believe it (CityDev) is vulnerable to further negative news flow within the sector,' said Credit Suisse analyst Tricia Song, who set a target price of $10.20 for the firm.

The US weakness is still not completely factored in, so except for rental prices, it will still take some time for the property markets here to take off again,' a dealer said.

UOB Q1 Profit Up, Loan Growth May Slow

Source : The Business Times, May 6, 2008

United Overseas Bank, Singapore's second-biggest lender by assets, posted a 2.1 per cent rise in quarterly profit, broadly in line with market forecasts, but the bank warned that loan growth could slow this year.

UOB's January-March net profit rose to $529 million (US$389.5 million) from $518 million a year ago

The first quarter saw double-digit loan growth that helped offset a drop in fee income from volatile global markets, but analysts warned the second half would be challenging amid a possible slowdown in the Asian economies.

'Amidst current market volatilities we expect loan growth to moderate this year,' said chief executive Wee Ee Cheong in a statement on Tuesday.

Analysts said that the result was a good omen for Singapore's other two lenders, DBS Group Holdings and Oversea-Chinese Banking Corp, who will announce earnings on Wednesday.

'It's not a bad start to the season,' said David Lum, an analyst at Daiwa Institute of Research. 'I think the most bullish aspect is the net interest income was very strong on loan growth as well as margin expansion.'

Singapore bank loans grew at 24 per cent in the first quarter from a year earlier, accelerating from 20 per cent growth in 2007.

UOB's January-March net profit rose to $529 million (US$389.5 million) from $518 million a year ago. Analysts had predicted net profit of $522 million, according to an average forecast from six analysts polled by Reuters.

UOB took $43 million worth of fresh provisions for credit derivatives, which it said fully provided for its exposure to asset-backed collateralised debt obligations - complex instruments that pool loans or bonds and that were badly hit by the US sub-prime crisis.

UOB, controlled by chairman Wee Cho Yaw and his family, is considered the market leader in Singapore's loan market for small- and medium-sized businesses, and has benefited from demand for construction projects.

'While Singapore banks are not insulated from the global slowdown, the infrastructure projects that have been committed in the domestic economy should, in our view, provide a cushion against recession,' said Jaj Singh, an analyst at UBS, before the results.

UOB's net lending grew 19.4 per cent in the first quarter from a year earlier, slowing slightly from 20.5 per cent in the fourth quarter.

Net interest income rose 11.8 per cent to $852 million from a year earlier and 14.6 per cent from the fourth quarter, while non-interest income, which includes commissions and fees, fell 4.1 per cent from a year earlier to $414 million.

UOB shares dropped 3.8 per cent in January-March, better than a 13 per cent fall in shares of sector leader DBS Group, but underperforming third-ranked Oversea-Chinese Banking Corp's 2.3 per cent fall. UOB shares have gained almost 41 per cent since hitting a low of $15.38 on Jan 22. -- REUTERS

HK Sales Fall With Fewer Luxury Apartment Deals

Source : The Business Times, May 6, 2008

(HONG KONG) Hong Kong's home sales fell the most by value in 18 months in April as the market for higher- priced apartments cooled, according to government data.

Cooler market: Home sales revenue declined 30% from a year earlier to HK$27.6b last month, after gaining 49% in March - the biggest drop since October 2006

Revenue declined 30 per cent from a year earlier to HK$27.6 billion (S$4.8 billion) last month, after gaining 49 per cent in March, the Land Registry said yesterday on its website. The drop was the most since October 2006. April sales fell 26 per cent from March.

'High-end properties have cooled and dragged transactions down dramatically,' Kevin Lai, senior economist at Daiwa Institute of Research here. 'Speculators are more cautious because of the financial turmoil. Plus, luxury prices have gone up quite a lot in the past year or two, so a correction isn't unusual.'

The price of dwelling units with a floor area of at least 1,000 square feet (one definition of luxury housing in Hong Kong) gained 26 per cent in the 12 months through February, according to real estate agency Colliers International.

The mass market, of smaller apartments, is still 'pretty healthy and well supported' because of low interest rates and rising family incomes, driven by Hong Kong's improved job market, Mr Lai said in a phone interview yesterday.

The number of units that changed hands in April was 9,047, down 5.1 per cent from a year earlier and 5.3 per cent from March, the statement said. -- Bloomberg

DBS Group Research - Property Sector

Source : The Business Times, May 6, 2008

MASTER Plan 2008 preview: The Master Plan, to be exhibited in its draft form in late May this year as part of a review every five years, is the statutory land use plan aimed to assist in guiding the physical development of Singapore in the medium term, over the next 10 to 15 years.

The key interest in the Master Plan is that it shows the permissible land use and density for every parcel of land in Singapore. Any significant increases in plot ratios for developer-owned land would thus bring about an immediate increase in valuations for the developers.

However, as analysed through the newsflow over the past year or so, we can quite safely infer that hopes for an island-wide upgrade in plot ratios to cope with the anticipated increase in population will likely be dashed upon the public exhibition of the draft Master Plan. There will be changes in land use and increases in plot ratios, but these will be selective and focused on growth areas - both from the economic as well as geographical perspectives - rather than a widespread upgrade in densities.

Instead, we see Master Plan 2008 as more of a strategic blueprint in laying down the future growth sectors and strategic areas in the medium-term economic development of Singapore.

Beneficiaries from strong fundamentals: We have identified the Property sector as a key and obvious beneficiary. Stronger planning initiatives and an improved sense of fundamentals will bring foreign investment into Singapore, directly benefiting developers over time. Also standing to benefit from this strategic outline are the Hotel, Aerospace, Healthcare, Transport and Construction sectors.

- Compiled by CHOW PENN NEE


EPS - earnings per share
Ebit - earnings before interest & tax
Ebitda - earnings before interest, tax, depreciation & amortisation
FY - fiscal/financial year
H1, H2 - first or second half
NAV - net asset value
9M - nine months
P/B - price/book value (ratio)
PE - price/earnings (ratio)
Q1, Q2, Q3 - first, second, or third quarter
q-o-q - quarter-on-quarter
ROE - return on equity
RNAV - revised net asset value
TP - target price
y-o-y - year-on-year
YTD - year to date

Disclaimer: All analyses, recommendations and other information herein are published for general information. Readers should not rely solely on the information published and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

Renowned US Firm And S'pore Partner Appointed To Design New Cruise Terminal

Source : The Straits Times, May 06, 2008

A HIGH-PROFILE architectural firm from the United States and its Singapore partner have been appointed to design the International Cruise Terminal at Marina South.

The job goes to Bermello, Ajamil & Partners, whose portfolio includes highly prestigous projects like Dubai's The World, Dubai Maritime city and the New York City Cruise Terminal, and RSP Architects Planners & Engineers.

Mr Koh Chwee, JTC's Director of Engineering Planning Group said: 'JTC will leverage on our expertise in major ports and marine infrastructure construction and embark on this challenging International Cruise Terminal project. -- ST FILE PHOTO

Another local firm, Maunsell Consultants (Singapore), has been appointed the engineering consultant for the same project, said a joint statement on Monday from the Singapore Tourism Board and JTC Corporation, the government agency overseeing the overall development of the new cruise terminal.

They were picked by an evaluation panel of key executives from STB and JTC.

The Marina South terminal is intended to boost the existing cruise facilities and infrastructure to accommodate the new generation of larger cruise ships.

The architectural design will incorporate a terminal building alongside two berths, designed for operational efficiency and a seamless visitor experience.

It will also have all other facilities necessary to accommodate the largest ships currently in service, as well as those currently under construction.

Three firms - BEA International and CPG Consultants Pte Ltd, Bermello, Ajamil & Partners and RSP Architects Planners & Engineers and DMJM Design and DP Architects Pte Ltd - with the requisite experience were invited to participate in a limited tender, said the statement.

Besides having had prior experience in cruise terminal planning, each firm was required to choose a Singapore partner and participate as a consortium.

At the close of the tender on March 7, three proposals were submitted from the invited consortia. Mr Chew Tiong Heng, STB's Director for Leisure Planning & Cruise, said: 'All three invited bidders submitted strong proposals, reflecting a keen interest in the project. The evaluation panel eventually chose a winning consortium which stood out not only for its track record and experience in cruise terminal planning and design, but also a concept that best met the needs and functional requirements of the International Cruise Terminal.'

Four engineering consulting firms with the specialist knowledge and experience in marine engineering were invited to submit proposals for the engineering of the terminal.

At the close of the tender on Feb 22, all four firms - Jurong Consultants, Maunsell Consultants (Singapore), Parsons Brinckerhoff and Surbana Corporation - submitted proposals.

Maunsell Consultants was selected based on a combination of factors, including its technical experience and strong track record in handling similar projects in the past, said JTC.

Maunsell will oversee all the engineering aspects of the project, including the engineering designs of the berths and buildings, till completion.

Mr Koh Chwee, JTC's Director of Engineering Planning Group said: 'JTC will leverage on our expertise in major ports and marine infrastructure construction and embark on this challenging International Cruise Terminal project.

'We endeavour to provide innovative and leading-edge solutions to fast track the implementation of the project and complete it on time. JTC will work with STB to make this cruise terminal the next iconic feature in Singapore.'

JTC said with the appointments, the International Cruise Terminal is on schedule to be completed in 2010. Piling and construction works for the berth deck are expected to start in the second half of the year, and an operator for the terminal is targeted to be appointed by STB in the third quarter of this year. The final design for the cruise terminal and other details will be announced later.

Why The Negative Assumptions?

Source : TODAY, Tuesday, May 6, 2008

Hasty judgments should not be made just to prevent speculative property buying

Letter from Wong Siong Yan

I AM extremely taken aback by a recent media report highlighting the negative impact the deferred payment scheme (DPS) will have on the property market.

The headline "Deferred payment scheme: Up to 4,200 homes may be dumped" was used to capture readers' attention.

In the absence of concrete data and evidence, we should not jump to the conclusion that speculators who bought homes under the DPS will panic and dump their units below market prices before the temporary occupation permit (TOP).

On the contrary, it can be argued that this is unlikely to happen because:

• Out of the estimated 4,200 homes bought by speculators under DPS, many have already been resold.

Since most developers do not extend DPS to sub-purchasers, the majority of these buyers would already have backed their property purchases with bank loans.

• Under a typical DPS sale, buyers need to fork out 20 per cent of the purchase price at the outset. This in itself is a substantial amount of money.

Anyone who can afford this sum must have substantial financial muscle and credibility to begin with. It is therefore unfair to speculate that such individuals will not be able to obtain a bank loan or fork out additional cash upon TOP.

• Since completed properties are capable of generating rental income, it will be easier to obtain financing from banks upon TOP. Hence the possibility of panic selling due to the inability to secure a bank loan come TOP is remote.

• Not all short-term property investors are speculators. Many of them are "specu-vestors" ie. people who buy in the hope of flipping their property for a quick profit, failing which they still have the means to hold it for long term investment.

• As the property bull run lasted for more than a year before the sub-prime crisis dampened sentiment, a sizeable number of speculators would already have locked-in substantial profits. Thus, their holding power for any remaining properties will be greatly enhanced.

When viewed in this holistic context, the number of "distress sales" will be lower than the purported 4,200. Moreover, since these homes are scheduled to be completed over a span of three to five years, any negative impact will be spaced out and significantly watered down.

Particularly disturbing is the fact that although the various analysts interviewed were divided in their views, the title and tone of the report was clearly biased towards a negative outcome.

This pessimistic stance was premised upon the assumption that the property market would remain stagnant for an extended period of time. However, given that strong fundamentals continue to prevail, who is to say that an upswing is not round the corner?

In our attempt to guard against speculative property buying, let us not commit a greater sin by indulging in speculative forecasting and reporting.

Tussle Over Katong Houses

Source : TODAY, Tuesday May 6, 2008

High Court to determine whether two properties should be returned to mother and son

Almost 30 years ago, when Mr Loo Chay Sit was going through a divorce after just a few years of marriage, he transferred a piece of newly-bought property at Margate Road near Katong to the name of his younger brother Chay Loo.

Years later, in 1986, his mother, Mdm Tan Chan Tee, registered another property in Seraya Lane, also in Katong in the name of Chay Loo's wife, Madam Chen Tsui Yu.

Mr Loo Chay Sit(left) and Madam Chen Tsui Yu(right)

Now, Mdm Tan, 80, and her elder son, who is 57, is suing Mdm Chen, 53, to recover the two homes, following Chay Loo's death in San Francisco in May 2005 at the age of 51. Earlier, he had tried to commit suicide while in police custody, following an apparent murder-and-suicide bid.

Following his death, both Mdm Tan and Mr Loo secured default judgments which transferred both properties back to them. Mr Loo then sold the Margate Road house for S$4.8 million.

However, a year later, both judgments were set aside.

The case is now before the High Court for Justice Judith Prakash to determine who had bought and paid for the two properties and if the properties should be returned to Mr Loo and his mother.

In his opening statement, Mr Loo's lawyer Low Chai Chong said his client bought the Margate Road property in 1978 for S$195,000 using his own funds, but later transferred it to his younger brother's name when he was going through a divorce.

Said Mr Low: "Loo Chay Loo knew that the house was conveyed in his name only for the sake of convenience. He did not pay for the house or make any contribution towards the purchase price at all."

In transferring ownership of the home to his younger brother before his divorce came through, Mr Loo had not broken any laws since the courts at that time would not divide assets because of the brevity of the marriage, said Mr Low.

The Seraya Lane property, he added, was transferred to Mdm Chen at her husband's suggestion.

Countering, Mdm Chen's lawyer, Mr Daniel Tan, said the Seraya Lane property was conveyed in his client's name after Mdm Chen and her late husband approached Mdm Tan in 1987 for help to raise a sum of money when they were setting up a travel agency.

The mother has to-date not produced any documentary evidence to support her claim that she paid for the Seraya property, said Mr Tan.

The property, he added, had in fact been sold to Mdm Chen in April 1987 for $550,000.

The older Mr Loo has never demanded for a transfer of the Margate Road property to himself when his younger brother was alive, the lawyer added.

"It was only when the deceased fell into a coma that Mr Loo hastily commenced proceedings and claimed that the Margate Road property was held in trust for him," said Mr Tan. "His sudden claim is not only baseless and unsupported by evidence, but also suspect and lacking in good faith."

Both Mdm Chen and Mr Loo were in court on Monday but exchanged few glances. Mdm Tan was not in court. The hearing is set for 10 days. - TODAY/ar


Loo Chay Loo and his wife, Taiwan-born Chen Tsui Yu, moved to San Francisco after they were involved in a Commercial Affairs Department probe in 1993 regarding shares transactions.

Mr Loo took on the name Charles, and his wife, Wendy.

The couple adopted a son, Benson, and years later, Mdm Chen gave birth to Jackson six years later. The family reportedly lived in the posh beachfront district of Hillsborough.

In September 2004, Mr Loo was arrested for the murder of Benson, who was found at home with stab wounds. Mr Loo, who was under severe depression, had also tried to commit suicide by slashing his wrist, but failed.

While in custody, he attempted to take his life again. This time, he fell into a coma. According to his wife, Mdm Chen, Mr Loo had signed a living will that stated he did not wish to be placed on a life support system.

The plug to his life support system was pulled and he died on May 16, 2005.

S'pore REITs Holding Up For Now, But Consolidation Likely This Year

Source : Channel NewsAsia , 05 May 2008

The real estate investment trust (REIT) market appears to be holding up for now, despite the current cautious sentiment in the property market.

Strong dividend yields, on the back of rising inflation, continue to make Singapore REITs attractive to investors.

But industry watchers said these REITs are starting to feel the impact of the global credit crunch.

Marjan Van Der Weijden, Head, Structure Finance (Asia Pacific) Fitch Ratings, said: "We think that there's potential for some of the REITs to leverage further, but it will have an impact on their income at the moment, because it's simply more expensive to attract the funding."

This is expected to weigh on the performance of smaller players in the market.

Analysts said that REITs with higher dividend yields are more likely to feel the heat.

Marjan Van Der Weijden, said: "REITs that are generating yields of up to 10 percent will find it harder to expand in the current environment because, generally, they only expand when they can find properties that generate yields to match that."

First REIT, Cambridge Industrial Trust and K-REIT were among the trusts that had the highest dividends in the last 12 months, paying between 9 and 12 percent each.

Given the current credit crunch, analysts said it is unlikely that any new REITs will be launched this year. Instead, they expect some consolidation in the industrial REIT space.

Wong Yew Kiang, Property Research Analyst, CLSA Singapore, said: "I think the current environment is quite conducive because a lot of the REITs are trading at very high yields, and I think REIT managers are finding it very hard to give back shareholders more yield-accretive acquisitions."

Smaller industrial REITs, that give up to 9 percent dividend yields, are expected to be possible targets for acquisitions.

Going forward, analysts said retail REITs are expected to outperform the rest of the REIT market. This comes as the space continues to be boosted by strong tenancy rates and long leases.

There are currently 20 REITS listed on the Singapore Exchange. - CNA/ms

Consortium Chosen To Design International Cruise Terminal

Source : Channel NewsAsia, 06 May 2008

The government has chosen the consortium of Bermello, Ajamil & Partners and RSP Architects Planners & Engineers to design the new International Cruise Terminal at Marina South.

Maunsell Consultants (Singapore) has been appointed the engineering consultant for the project.

This was revealed in a joint news release by the Singapore Tourism Board (STB) and JTC Corporation (JTC) on Monday.

It said the architectural design will incorporate a terminal building alongside two berths. The new terminal will also have all other facilities needed to accommodate the largest ships currently in service, as well as those currently under construction.

Three firms had been invited to participate in a limited tender. Among the criteria were prior experience in cruise terminal planning, inclusion of a Singapore partner and forming a consortium.

Besides winners Bermello, Ajamil & Partners and RSP Architects Planners & Engineers, the other submissions were made by BEA International and CPG Consultants, as well as DMJM Design and DP Architects.

An evaluation panel, made up of STB and JTC executives, selected the winning consortium because it stood out for its track record and had a concept that best met the requirements of the new terminal.

As for engineering consulting firms, four companies with experience in marine engineering had been invited to submit proposals. Besides winners Maunsell Consultants, the other bidders were Jurong Consultants, Parsons Brinckerhoff and Surbana Corporation.

The panel selected Maunsell Consultants because of its technical experience and strong track record in handling similar projects.

Piling and construction works for the berth deck are expected to start in the second half of the year, and STB will appoint an operator for the terminal in the third quarter of this year.

The project is scheduled to be completed in 2010. JTC said it will work with STB to make the new cruise terminal "the next iconic feature in Singapore". - CNA/ms

New Master Plan Expected To See Selective Changes

Source : The Business Times, May 6, 2008

Key sectors seen benefiting include hotels, aerospace, healthcare, transport

URBAN Redevelopment Authority's Master Plan 2008 - which will be exhibited soon - will see changes in land use and increases in plot ratios, but these will be selective and focused on growth areas, rather than a widespread upgrade in densities, DBS Vickers Securities said in a report dated yesterday.

The strategic initiatives from the Master Plan will filter down to improved growth fundamentals for various economic sectors. While the property sector will be a key and obvious beneficiary, also standing to benefit from the strategic outline are the hotels, aerospace, healthcare, transport and construction sectors, the report said.

More land will be provided for development of the aerospace industry and the establishment of a designated hub near Seletar Airport will continue to provide strong fundamentals for the sector's continued growth. For the healthcare sector, DBS Vickers sees a medical hub developing around the Novena area and 'we could see rezoning of land parcels in this area to facilitate the development of this medical hub'.

It also suggests plot ratio increases in some mature HDB estates, as part of the rejuvenation plan. With Jurong and Paya Lebar earmarked as new business hubs outside the CBD, 'we are likely to see a concentration of Government Land Sale projects in these two areas in the medium term'.

Noting that the authorities have revealed plans for new residential enclaves such as the area around Marina South Gardens and Kallang Basin, it said, 'we expect rezoning and plot ratio adjustments in these areas'.

'We expect much of the key significant land use and plot ratio changes to be concentrated in certain strategic areas - Seletar (aerospace industrial use), Jurong (new regional centre), Paya Lebar (commercial hub near city fringe), Marina Bay (white sites and residential), Novena (medical and healthcare), Kallang Basin (residential) and Ophir-Rochor (mixed development).'

The report added: 'With the phased opening of the Circle Line from 2009 onwards, we also expect to see an increase in plot ratios for undeveloped state land sites that are close to Circle Line MRT stations, and in particular those that intersect with existing MRT stations.'

'With interchange stations planned at Paya Lebar, Serangoon, Bishan, Buona Vista, Harbourfront and Dhoby Ghaut, we believe that the highest potential for plot ratio changes could come at the Paya Lebar and Serangoon stations, given that the area around the remaining interchange stations are already relatively built up,' DBS Vickers said.

JLL Re-Entering Housing Project Sales Business

Source : The Business Times, May 6, 2008

JONES Lang LaSalle (JLL) is poised to re-enter the Singapore residential project sales business after a hiatus of about seven years.

It has clinched appointments to market Floridian, a 336-unit freehold condo development in Bukit Timah by Far East Organization and Wing Tai Holdings, as well as Lippo's Centennia Suites at Kim Seng Road.

It is also marketing 34 units at the completed 99-year leasehold Amaryllis Ville condo in the Newton area on behalf of Goodearth Hotel group of Australia. Goodearth - controlled by the family of the late Teo Lay Swee, who used to own the Cockpit Hotel site - bought the 34 units from the project's developer, Wing Tai, about two years ago and is expected to sell the units for about $1,500 per square foot (psf).

JLL will focus on the upper end of the Singapore residential market, rather than the mass market. 'As well as marketing Singapore residential projects here, we'll market them through our international office network,' JLL managing director (Southeast Asia) Chris Fossick said in a recent interview with BT.

'I believe that with an increasing number of overseas buyers in the local market, the benefits of an international marketing campaign will grow in importance. We believe we can stay ahead of the game because we already have successful residential project sales businesses in Hong Kong, Jakarta and London, and a large presence in India, China, Korea, Japan and the UAE - we can mine our database of international investors in these places when marketing Singapore residential properties.'

'We believe the proportion of foreign buying in the Singapore housing market will continue to increase. Singapore is a destination for people to want to be in; it's becoming an exciting place,' Mr Fossick added.

He views the current slowdown in housing sales here as a temporary thing, 'driven by sentiment, not fundamentals'.

'The fundamentals for Singapore and Asia remain very strong. But we're being somewhat sidetracked by the goings-on in the world credit market.'

The property consulting group will also step up investment sales of Singapore residential properties - for instance, by matching foreign property funds/ institutional investors with local developers buying land for housing projects here, or helping these investors purchase stacks of apartments in new projects.

'The other idea we have for our residential business is to help Singaporeans who want to diversify into overseas property investments. The UK market, for instance, has been so high for so long and the currency so strong, we feel that for the last five years, UK has not been overly attractive. But that could change over the next 12 months.

'The pound has been coming off against the Sing dollar. But I think UK home prices have to come down further, but may be in 12 months, UK property might start looking reasonably attractive.'

Helping JLL achieve some of its new business plans is Julian Sedgwick, who joined as a local director in JLL Singapore's residential investments department earlier this year. He used to work with Chesterton London, where he marketed homes and condos in Central London.

'He brings an international flavour, and some new ideas on how they do project sales in London versus how we do it here. He will be quite helpful to Jacqueline Wong, who heads our Singapore residential business,' Mr Fossick said.

In a separate development, JLL regional director and head of investments Lui Seng Fatt is leaving the group. Mr Fossick confirmed Mr Lui's departure. 'He made a decision to move on. We're grateful for his contributions in the success of our investment business and wish him the best on his new ventures,' he added. Mr Lui, who is overseas, could not be reached for comment.

Meanwhile, Mr Fossick is expected to oversee the investments department. 'We've got a big team; we might as well find somebody within that team to take the helm.'

Low Interest Rates Not Likely To Help Housing

Source : The Business Times, May 6, 2008

Income growth a better driver of housing price trends: Citi

LOW or negative real interest rates are often cited as one factor supporting housing prices. But Citi believes that in today's market, negative real interest rates will at best be a 'cushion' in the near term.

Optimistic view: Negative or low interest rates may eventually prove 'supportive of housing demand' if they coincide with a rebound in incomes and sentiment that many expect with the launch of the integrated resorts, according to Citi

In a report on the Singapore market, Citi analyst and vice-president (Asia Pacific Economics & Market Analysis) Kit Wei Zheng said: 'Negative real interest rates, in and of themselves, are unlikely to be sufficient to drive housing prices, especially if income growth and sentiment are weak.'

In his analysis of property prices and real interest rates, Mr Kit noted that while a correlation was 'maintained' during the Asian financial crisis, this correlation broke down during the 2001 recession.

'Between 2001 and mid-2004, property prices continued to fall even as real interest rates fell and eventually turned negative,' he said. He also pointed out that between mid-2004 and 2007, property prices soared despite rising real interest rates.

'Finally, property price inflation has moderated in the past two quarters, despite increasingly negative real interest rates,' he added. Mr Kit believes income growth probably has a 'stronger explanatory power in explaining housing price trends'.

He noted that a strong labour market not only improves housing affordability but lifts rental demand from foreigners, thereby increasing rental yields and the attractiveness of residential property as an investment.

Citing the Monetary Authority of Singapore's Macro-economic Review, he also noted that on average, the boost to asset prices from a one percentage point fall in foreign interest rates - which would affect domestic interest rates - is less than half of the income effect from a positive one per cent foreign demand shock.

The bad news, however, is that Mr Kit believes employment growth here may have peaked. 'Total employment growth will likely fall short of the record 238,000 jobs created last year, more likely in the range of 120,000-150,000, with attendant slowdown in payroll growth,' he said.

Nevertheless, Citi is 'not inclined to be overly bearish and do not anticipate a collapse' in the property market.

Negative or low interest rates may eventually prove 'supportive of housing demand' if they coincide with a rebound in incomes and sentiment that many expect with the launch of the integrated resorts.

Mr Kit also believes that official figures for new housing supply could be over-estimated. He said that in the context of 'heightened construction bottlenecks and spiralling material costs, actual supply in 2009 and 2010 will more likely be in the range of 18,000-19,000 units', less than two-thirds of the 30,296 projected.

Also on the optimistic side, he said a recent MAS survey showing a fall of the value of mortgages in negative equity suggests that households 'remain flush with cash'.

Affordability is also in check. For example, Mr Kit said the median price of a 110 sq m condo is about 23 times the average annual wage per person, which is still below the 25 times in 2000 and more than 33 times before the 1996 bust.

Two Industrial Sites, Good Class Bungalow Up For Sale

May 6, 2008

Source : The Business Times, May 6, 2008

TWO freehold industrial sites - at 18 Howard Road and 27 New Industrial Road, in the north-eastern part of Singapore - are for sale by tender at indicative prices of $30 million ($272 per sq ft per plot ratio) and $14 million ($278 psf ppr) respectively.

Charles Hoon, director of investment properties at marketing agent CB Richard Ellis, said the sites are zoned Business 1 under Master Plan 2003. This means 40 per cent of gross floor area can be used for purposes such as offices, showrooms or workers' dormitories.

'While industrial capital values and rents have recovered, industrial space still presents an attractive option, compared with office space, for businesses to relocate their backroom operations.'

The two sites are conveniently located and of regular shape, he said. And their freehold tenure is an 'added advantage'.

The 18 Howard Road site is a 44,000 sq ft vacant plot in Macpherson Industrial Estate. The 20,000 sq ft 27 New Industrial Road is in the New Industrial Road cluster.

Separately, DTZ Debenham Tie Leung is marketing a 999-leasehold Good Class Bungalow (GCB) site in Yarwood Avenue. The 69,540 sq ft site, close to Binjai Park, has been put up for sale through an expression-of-interest exercise at an indicative price of $750-$800 psf.

According to DTZ, it has redevelopment potential to accommodate four GCBs. It now houses a single storey detached house with an outhouse, swimming pool and tennis court.

Shaun Poh, DTZ's senior director for investment advisory services and auction, said: 'This is a rarely available large plot of land in a prime location, offering a myriad of possibilities.'

Recent transactions of GCB land in the area include sites on Kilburn Estate for around $860 psf and Binjai Park for around $850 psf, he said.