Tuesday, May 13, 2008

Wing Tai Q3 Net Profit Drops 49% To $27.7m

Source : The Business Times, May 13, 2008

Nine-month net profit slips 4% to $133.1m

PROPERTY group Wing Tai Holdings yesterday posted a 49 per cent year-on-year drop in third-quarter net earnings to $27.7 million on a 63 per cent slide in revenue to $109.99 million. For the nine months ended March 31, 2008, net profit fell 4 per cent to $133.1 million, while revenue roughly halved to $320.8 million from $732.6 million from the year before.

The group attributed the smaller bottom line for the nine months to lower revenue and operating profit from property development. Revenue from development properties for the latest nine months was recognised mainly from units sold at The Riverine by The Park in Singapore, The Meritz and Sering Ukay in Malaysia and The Lakeside in China. The group's share of profit of associated and joint venture companies increased 63 per cent to $81.5 million for the nine months. 'This was due to higher contributions from VisionCrest and Casa Merah projects in Singapore,' Wing Tai's results statement said.

Also included in the latest Q3 and nine-month income statements was a $26.6 million gain from the disposal of available-for-sale financial assets.

Wing Tai said its net gearing ratio increased from 0.4 times at June 30, 2007 to 0.5 times at March 31, 2008. Cash and cash equivalents declined from $399.1 million at March 31, 2007 to $309.8 million at March 31, 2008.

Earnings per share fell from 7.53 cents for Q3 ended March 2007 to 3.27 cents for Q3 ended March 2008. Net asset value per share slipped from $2.07 at June 30, 2007 to $1.90 at March 31, 2008. The company's shares closed a cent lower at $2.06 yesterday.

Wing Tai said that 'new residential projects for sale will be launched at the opportune time'.

Wing Tai is also involved in the fashion retail business. And last Friday, subsidiary DNP Holdings Bhd's unit DNP Fashion Sdn Bhd launched South-east Asia's first Canali boutique at Kuala Lumpur's Pavilion shopping centre. The internationally known luxury menswear range is made in Italy.

It's A Landlord's Market In Geylang

Source : The Electric New Paper, May 13, 2008

LANDLORDS in Geylang are smiling all the way to the bank.

Mr Khoo Mui Hoon, 65, the previous landlord of Tanjong Rhu Pau, is all for the buzz and high traffic in the area.

He was happy to get $30,000 a month for the place and said his new tenant will run a coffee shop there.

The renovation work includes hacking down a wall at the back of the unit to enlarge it to 2,300 sq ft.

Mr Khoo said the tenant runs two other coffee shops nearby.

He claimed there had been five offers of more than $30,000 to rent the unit, and one of $400,000 to buy it.

'In choosing the tenants, it is not about the highest offer. I have to check their backgrounds, and make sure they are trustworthy, and will pay the rent on time,' he said.

Mr Khoo had purchased a corner unit coffee shop on Lorong 14 in 2006 for about $300,000, and sold it for about $400,000 a few months ago.

'I am always on the lookout for properties, and I set my eye on Geylang two years ago when I noticed many coffee shops were enjoying good business,' he said.

Commercial property agent Celia Chan, 45, said rentals were rising mainly for commercial properties.


'For residential properties, the demand is still weak because Geylang is a red-light district,' she said.

She said that in the stretch from Lorong 3 to 20, rents for commercial units are $10 to $15 per sq ft.

On average, a 2,000-sq-ft unit here can fetch a monthly rent of between $20,000 and $25,000.

In the stretch between Lorongs 20 and 30, rents are $6 to $10 per sq ft. Further out, in the stretch between Lorongs 30 and 40, the rent is only $4 to $6 per sq ft.

'Units along the side lanes which see a smaller volume of traffic are valued at 30 to 50 per cent less than those along the main road,' she said.

Along the hottest stretch of Geylang, corner units are more in demand because they can be used for coffee shops, the key business in the area.

While Miss Chan felt several factors are contributing to the boom in commercial property prices in Geylang, she acknowledged that the presence of the women from China has played a role in pushing up the prices.

She said: 'They create a buzz of activity and this in turn generates business for the coffee shops.

'That the presence of prostitutes can help drive up property prices is a phenomenon unique to Geylang.

This article was first published in The New Paper on May 11, 2008.

To Pay Or Not To Pay

Source : The Straits Times, May 13, 2008

ONE week after The Straits Times reported that housing agency PropNex was suing two independent home buyers for not paying its agent a fee, the firm withdrew its case.

The agent, Mr Ricky Low Yong Sern, had been hired by the seller of a $400,000 terrace house in Whampoa which marketing specialist Loh Yi Min and his wife, polytechnic lecturer Ariel Wee, bought last year. The couple had acted on their own without hiring an agent. They refused to sign the commission agreement to pay Mr Loh a fee equivalent to 1 per cent of the price of the property, which was classified as an HDB flat. Mr Low claimed he was entitled to the commission or a fee commensurate with the services that he said he had provided.

PropNex dropped its landmark suit as part of a confidential deal both sides reached through mediation last Tuesday. Given that the sum at stake - about $4,000 or less - would have been dwarfed by the roughly $10,000-per-day cost of a trial, it was surprising the case went as far as it did.

But the case is not unique in the HDB resale market, where a growing proportion of buyers and sellers is transacting without agents. Last year, 3.6 per cent - or 1,060 people - submitted their applications through the HDB's e-Resale system, which caters to buyers and sellers without agents. This figure has been creeping up - it was 2 per cent in 2003 and 3 per cent in 2005.

Growing awareness of consumer rights has given momentum to the debate over whether independent buyers need to pay a fee to sellers' agents. Adding to the controversy are rogue agents who mislead buyers into signing commission forms at the last minute by claiming it is a 'rule'.

Although the law does not stipulate who should pay the fee and how much is payable, it is common for sellers to pay their agents a sum equivalent to 2 per cent of the property's price, while buyers foot 1 per cent. If both sellers and buyers are represented by agents in an HDB flat transaction, both parties pay the fee to their own agents. This practice is known as co-broking.

Questions crop up when buyers act on their own - which is more common than sellers acting on their own. Many agents hired by sellers then try to claim a 1 per cent cut from buyers. This fee, peculiar to the HDB resale market, is levied because the quantum of commission on HDB deals is lower than that for private property deals, says the Institute of Estate Agents.

Agents and agencies cite other arguments:

Firstly, by advertising a property for sale, helping the buyer to make contact with its owner and negotiating the deal, the seller's agent provides a service to the buyer.

Secondly, when the deal is inked, the seller's agent has to do paperwork for the buyer, such as filling up the sale and purchase agreement and submitting the document.

Thirdly, since this 1 per cent fee is 'market practice', it is up to independent buyers to declare upfront they do not wish to pay it. If the buyer seals a deal without bringing up the matter, he would be tacitly agreeing a fee is payable.

But in the absence of a written commission agreement between an independent buyer and the seller's agent, these arguments hold little weight, say lawyers. Under Singapore law, commission deals can be verbal, so refusing to sign a form does not solve the problem. The bigger question is whether both sides are aware of the commission and agree that it should be paid at all.

Drew & Napier director Hri Kumar says that while the courts will take note of the prevailing 'market practice', an agent will find it difficult to prove that the buyer was aware of this 'practice' if the buyer is a layman.

Ramdas & Wong consultant Ellen Lee says the agents - deemed the 'experts' in this scenario - are obliged to inform the buyer upfront that they are levying a fee. 'If someone doesn't know (about the fee), he doesn't even know that he should say he is not paying it.'

But the buyer who is informed of such a fee and does not intend to pay has to object to it at the earliest possible instance. If he does not, he can be said to have agreed implicitly to pay, says Mr Freddi Lim, a partner at Trinity Law Corporation.

Awareness aside, what kind of acts can be considered 'services' that sellers' agents render buyers? The lawyers found it unlikely that introducing a buyer to a seller could be considered a service. Ms Lee points out that the seller's agent places a property ad and makes contact with potential buyers because he is duty-bound to market the home on behalf of his client. His role as a liaison does not give him an inherent right to claim a fee from the buyer. However, if that potential buyer subsequently asks the agent to, say, recommend suitable properties, he may be said to be soliciting the agent's services.

The question of whether handling paperwork constitutes a service to buyers is less clear-cut. This is because only one set of sale and purchase documents needs to be submitted to the Housing Board for the resale of a flat. Although the HDB does not stipulate which party should submit the form, the design of its online application system - through which most applications are made - places the burden of submission on the seller's agent if the buyer is not represented by an agent. This often means that sellers' agents fill up the form and submit the applications for both parties.

Assuming that the independent buyer has done his own checks to make sure he qualifies to buy the particular apartment, it is questionable whether a fee can be levied for such paperwork. Infinitus Law Corporation director Leo Cheng Suan, for example, feels such paperwork is simply part and parcel of the steps needed to complete a deal.

The HDB says: 'The submission mode should not be misused by housing agents as a basis for charging commissions (which), like payment for all types of services, are subject to negotiation.'

A large part of the validity of housing agents' claims hinges on what the agents disclose and when they do so in the dealings leading up to a sale. Unfortunately, many agents today produce commission payment slips only after a purchase is sealed. As Ms Wee says after settling her lawsuit with PropNex: 'Agents should state clearly the services they are providing to justify the fee they are charging.'

Until that happens, the industry will continue to be dogged by doubts over the ethics of its rank and file.

Bathe In A New Light

Source : The Straits Times, May 10 2008

Whether you are selling your home or staying put, a stylish loo is always welcome. So go on, make over your bathroom

ADMIT it: You're thinking about a facelift.

You've noticed the little lines forming here, darkened areas emerging there. Features once fresh and sparkling are looking worn and dull. When you switch on the light, it's all too clear that things are slipping over the hill.

No need to feel embarrassed. There's nothing wrong with wishing for a mini makeover - especially when you're talking about your bathroom.

CHANGE FROM THE TOP: Skylights are a popular feature in bathroom upgrading, among others such as spa-like showers as well as rain-head or body-spray shower nozzles. -- ST FILE PHOTOS

It is a maxim among real estate agents that, when it comes to home improvements, work done to bathrooms and kitchens are likely to bring the best return on investment.

'People typically assign value to a property based on what the bathrooms and kitchen look like,' says Ms Donna Evers of Washington realty company Evers.

A dreary, outdated bathroom can be a deal-breaker. But bathroom renovations get costly fast.

In the south Atlantic region of the United States, for example, the average price of remodelling a mid-range bathroom last year was US$14,445 (S$19,870), according to Remodeling magazine. But a few nips and tucks costing far less can go a long way to refreshing a bath.

Los Angeles designer Lytel Young, host of HGTV's Save My Bath, says there are three important things in a bathroom: 'Clean, simple and orderly. That's the key for every budget, whether it's US$500 or US$40,000.'

A fresh coat of paint and new lighting are easy improvements that have an immediate impact, he says, and a combination of natural and artificial light is optimal. But for bathrooms without windows, sconces on both sides of a mirror plus an overhead fixture on a dimmer will do the job.

Evers' recipe for a quick fix: Re-caulk around the tub and shower. Replace dated, inadequate light fixtures. Rip out the old-fashioned medicine cabinet and replace it with a mirror as large as you can make it.

If you're not going to do a full remodel, be careful about what you choose and how much you spend, cautions Mr Herbert Stanwood, senior project designer in the kitchen and bath division at Case Design in Bethesda.

Remember that while you keep an old tub or tiles because they are still in good shape, these can appear tired next to a new vanity, countertop, mirror and lights.

If you're concerned about payback, be conservative in your choices.

Resist the urge to express your love for unusual hues such as turquoise through bathroom tiles. Stick with a neutral base and introduce colour through towels and accessories that can be easily and inexpensively replaced.

Popular choices for today's remodels include frameless glass shower doors, stone countertops and vanities that are kitchen-cabinet height, and water-saving dual-flushing toilets. And, in a reversal of a trend from 20 years ago, home owners now want smaller tubs and larger showers.

'People don't have time to draw a bath, but they still want to indulge themselves,' Mr Stanwood says. 'They want luxury. They want a really nice shower.'

Luxury Home Prices Down 2.1%, Says Report

Source : The Straits Times, May 13, 2008

Number of foreign purchases fall; many buying homes in suburban areas

HIGH-END homes have become the first to buckle under the pressure of volatile market conditions and gloomy buyer sentiment.

Prices of luxury developments dipped in the first three months of this year, even as foreign buyers - a traditional source of demand for such properties - turned to cheaper options.

A report by property firm Savills Singapore released yesterday showed that prices of expensive homes fell 2.1 per cent in the first quarter, after a steady 21/2-year climb that saw values more than double.

Foreigners also began switching from the prime central districts to suburban areas, such as East Coast, Bukit Batok and Serangoon, said Savills.

Its analysis covered luxury developments located in districts 1, 4, 9, 10 and 11, which include Shenton Way, Sentosa, Orchard, Holland, Newton and Bukit Timah. The average price of these homes fell to $2,360 per sq ft (psf) in the period from January to March, from $2,410 psf in the previous three months.

At the very top end, the priciest condominiums registered a 2.9 per cent dip in prices to $3,577 psf in the first quarter, from $3,683 psf in the previous quarter, Savills said. These are developments that have crossed $2,500 psf.

While Savills would not disclose the names of the buildings it analysed, a check of caveats showed that luxury projects such as Ardmore Park and St Regis Residences in Cuscaden Road recently lodged sales at gradually lower prices.

Savills suggested that luxury condos might be more vulnerable to the global credit crisis.

On the bright side, foreign buying islandwide stayed strong despite the softening housing market, it added.

Foreign buyers took up 28 per cent of private homes in the first quarter, up from 25.9 per cent for the whole of last year.

But the total number of foreign purchases fell, in line with the general slowdown in market activity. Foreigners bought only 901 private homes from January to March this year, less than half the 2,245 homes they took up in the same period last year.

Surprisingly, many of the homes they bought were well away from their usual stronghold of districts 9 to 11.

Savills' report showed that areas as far-flung as Changi and Hougang made it to the most-bought list, while traditionally foreigner-friendly areas such as Shenton Way dropped out of the top 10.

This could be because more of the foreign buyers now are expatriates living here with their families, rather than investors looking for prime assets, said Mr Ku Swee Yong, Savills' director of business development and marketing.

'Rentals are still holding up at high levels, and many expats who are more price-sensitive may now be converting from leasing homes to buying them,' he said.

'Some of these expats postponed buying homes last year, but now they could be taking advantage of the slowdown in the market to get a good deal.'

This would explain the foreign demand for suburban areas, as expatriates are likely to buy homes in neighbourhoods that have good schools or where they are currently renting houses.

Bolstering this theory is a sudden drop in the number of leasing transactions this year, said Mr Ku. Based on leases that were signed in 2006, there should be a lot more renewals this year than had actually taken place, he explained.

Savills expects private home prices to grow a moderate 5 per cent to 10 per cent this year.

Asia Food & Properties Posts Q1 Net Profit Of S$45m

Source : Channel NewsAsia, 12 May 2008 2008

Asia Food & Properties has returned to the black in the first quarter of this year. The firm reported a profit of S$45 million, overturning a loss of S$2.7 million in the year-ago period.

Revenue rose 9.5 percent to S$195 million, mainly from its China property business and its food operations.

Asia Food & Properties said the outlook for the commercial and hotel sector of the China property business remains competitive, despite positive foreign investment interest and buoyant business activities.

Increasing corporate demand is expected to bolster the Grade A office market. But the company expects demand in the residential market to be affected by government policies on residential market in China.

As for its food business, the firm said its priority is to focus on higher margin products and increasing its sales volume to stay competitive in China.

Meanwhile, its palm oil unit Golden Agri-Resources has posted sterling results for the first quarter.

Net profit doubled on-year in the first quarter to US$443 million, thanks to higher crude palm oil (CPO) production and a surge in CPO market prices of close to 100 percent.

Revenue was also a record US$747 million, up 172 percent on-year. - CNA/ms

Shaw House, Shaw Centre May Undergo Major Revamp Next Year

Source : Channel NewsAsia, 12 May 2008

Another landmark near Orchard Road may soon get a facelift. Channel NewsAsia understands that Shaw Organisation is considering a major redevelopment of Shaw House and its neighbouring Shaw Centre.

According to some sources, an official announcement is expected by August. The news comes even as some tenants have moved out in recent months following a spike in rentals.

Shaw House has been a major landmark near Orchard Road for years - but it may soon take on a different look.

According to sources, plans are in the pipeline to expand Shaw Organisation's Lido Cineplex, and to add more retail space.

Channel NewsAsia understands that Shaw Organisation is currently in talks with various architects on its redevelopment plans. However, it has not decided if this would include its office and retail spaces in Shaw Centre.

The tenants have not been informed officially, although they have heard word on the grapevine. They declined to be interviewed.

The present Shaw House opened in 1993, and includes anchor tenant Isetan. It adjoins Shaw Centre, which has retail, F&B and office space, as well as a bank.

Retail rentals there have jumped from S$6 a square foot to as much as S$16 a square foot in recent months, and a number of tenants have moved out.

Market watchers said that it is likely the new site may even include new residential spaces.

Nicholas Mak, Director, Consultancy and Research, Knight Frank, said: "I think that if any residential development were to be redeveloped on that site, and if it is priced reasonably, demand would be quite strong."

But they do not expect the re-development to have a major impact on retail space and shop rentals along Orchard Road.

Mr Mak said, "In about 12 months or so, we're going to see some new developments coming up on Orchard Road. So, if a major retail mall were to temporarily be taken offline, I think that vacuum could be filled by some of these new malls."

Channel NewsAsia understands that re-development is likely to start in the second half of next year. - CNA/ms

Wing Tai Reports 49% Fall In Q3 Net Profit To S$28m

Source : Channel NewsAsia, 12 May 2008

Property developer Wing Tai Holdings on Monday said its third-quarter net profit fell 49 percent to about S$28 million.

This came on a 63 percent drop in revenue to S$110 million.

For the nine months, its net profit declined 4 percent to S$133 million.

The company said the drop was due to lower revenue and operating profit from its development properties division.

It noted that the US sub-prime crisis and global economic uncertainties have affected the property market in Singapore.

It also hinted that it will be holding back property launches, saying that new residential projects for sale will be launched at the opportune time. - CNA/ms

Chip Eng Seng Reports 40% Rise In Q1 Net Profit To S$8m

Source : Channel NewsAsia, 12 May 2008

Construction firm Chip Eng Seng has reported a 40 percent rise in first-quarter net profit to S$8 million.

Revenue rose 33 percent to about S$60 million, boosted mainly by its construction business. Chip Eng Seng's revenue from construction projects jumped 74 percent to S$52.5 million in the first quarter.

But its other two divisions, property development and property investment, faired less well with revenues falling on-year in the first three months.

The group's gearing ratio increased to 1.14 as at 31 March this year, compared to 0.53 as at 31 December last year. This was due to additional bank borrowings taken to finance a property development project in Pasir Ris.

On its outlook, Chip Eng Seng said demand for private residential properties in Singapore had been affected by global uncertainties and credit crunch triggered by the US sub-prime crisis.

The company said it will continue to remain cautious with its investment in property development. However, with continued increase in construction demand for the rest of 2008, the company expects its construction division to be busy with tenders and construction work.

Its outstanding order book for construction contracts as at 31 March stood at S$632 million, which will keep the the firm's construction activities busy up to 2011.

Barring unforeseen circumstances, Chip Eng Seng said it remains positive about its prospects for 2008. - CNA/ms