Thursday, June 26, 2008

CapitaLand Acquires 62% Of KL's Sungei Wang Plaza For S$250m

Source : Channel NewsAsia, 25 June 2008

Property developer CapitaLand has acquired about 62 per cent of Sungei Wang Plaza, one of the most established retail malls in Kuala Lumpur.

It paid about S$250 million for the purchase, which includes retail space and parking lots.

Sungei Wang is a prime freehold property along the main Bukit Bintang shopping precinct in the Malaysian capital.

The mall has close to 100 per cent occupancy and sees more than 24 million visitors annually.

CapitaLand said the acquisition will form the third seed asset for its proposed pure-play Malaysian retail real estate investment trust (REIT).

Its earlier acquisitions are the Gurney Plaza in Penang and Mines Shopping Fair in Selangor.

The three properties will have a combined asset size of about S$840 million.

CapitaLand said this will put it firmly on track to create its proposed pure-play Malaysian retail REIT by the end of this year. - CNA/ms

New 7th Storey Hotel To Make Way For Downtown Line Development

Source : Channel NewsAsia, 26 June 2008

One of Singapore's oldest hotels - New 7th Storey Hotel at Rochor Road - will be demolished to make way for the new Bugis MRT station for the Downtown Line.

The hotel's owner and occupants will have to move out of the premises by the end of December.

The quaint hotel was well-known in the 1960s and 1970s when its pub was one of the main nightspots to be seen.

Its iconic spiral staircase has been a favourite backdrop of photographers, and the hotel still has a lift which is manually operated.

The authorities say the demolition is unavoidable due to engineering constraints which cannot be avoided.

The new Bugis station is one of the six stations that make up the 4.3-kilometre Downtown Line One, which is scheduled to open in 2013.

Once completed, commuters will have more transport choices in the city as the Downtown Line One will serve existing and upcoming developments in the Marina Bay area, including One Raffles Quay, The Sail @ Marina Bay, Marina Bay Sands Integrated Resort and the Marina Bay financial centre. - CNA/ac

SLA To Auction 8 Infill Sites For Residential Developments

Source : Channel NewsAsia, 26 June 2008

The Singapore Land Authority (SLA) has launched another eight infill sites for residential use.

They will be offered through a public auction on August 21. The sites will be sold with fresh 99-year leases.

This will be the second time the SLA is offering such sites for public auction. In November last year, six infill sites were sold for over 30 million Singapore dollars.

As in the previous auction, a site within the Good Class Bungalow area is also being offered. It has a land area of about 1,400 sq m in Ridout Road, District 10.

Possible developments for the other sites include detached, semi-detached and terrace houses.

Some of the other sites are located within prime residential areas such as Holland Road and Carmichael Road. There is also a site at Upper East Coast Road, within walking distance of the popular Siglap and East Coast food haunts.

'Infill' sites are pockets of State land located in the midst of an established landed housing estate that have either been left untouched by nearby development, or are formerly used for public purposes that have since been phased out.

SLA's assistant chief executive for land operations group, Mr Simon Ong, said: "We were very encouraged by the strong response at the last auction. It attracted niche or boutique developers with expertise in building unique houses and 'dream homes'.

"This time, we have identified and released more sites and offering them through public auction for wider participation. The appeal of such sites is that they can be customised to suit the buyer's needs. This is also aligned with SLA's mission to optimise the use of vacant State land." - CNA/ir

SLA Offers 8 Infill Sites For Residential Homes

Source : The Straits Times, June 26, 2008

THE Singapore Land Authority (SLA) on Thursday launched another eight infill sites for residential use.

They include a 1,400 sq m site in Ridout Road, District 10, within the Good Class Bungalow area.

Some of the other sites are located within prime residential areas such as Holland Road and Carmichael Road. There is also a site at Upper East Coast Road, within walking distance of the popular Siglap and East Coast food haunts.

The sites, to be offered through a public auction on Aug 21 at M Hotel, can be developed for detached, semi-detached and terrace houses. They will be sold with fresh 99-year leases.

This will be the second time that SLA is offering such sites for public auction.

Last November, six infill sites were sold for over $30 million.

'Infill' sites are pockets of state land located in the midst of an established landed housing estate that have either been left untouched by nearby development, or are formerly used for public purposes that have since been phased out.

Assistant Chief Executive, Land Operations Group, Mr Simon Ong said: 'We were very encouraged by the strong response at the last auction. It attracted niche or boutique developers with expertise in building unique houses and 'dream homes'.

'This time, we have identified and released more sites and offering them through public auction for wider participation. The appeal of such sites is that they can be customised to suit the buyer's needs. This is also aligned with SLA's mission to optimise the use of vacant State land.'

For more information, please log on to and

Gillman Heights En-Bloc Sale To Move Ahead Following Court's Ruling

Source : TODAY, Wednesday, 25 June 2008

After three months of deliberation, Justice Choo Han Teck has delivered a 31-page judgment that - for now - signals the end of the Gillman Heights en-bloc saga.

However, it was not the outcome hoped for by the 22 minority owners seeking to scupper the S$548 million deal.

The judge said the specific issue was not one concerning protection for the minority, but "whether a privatised HUDC estate can participate in the benefits of an en-bloc sale if the requisite conditions are met".

Under current laws, a 90 per cent approval is required for estates less than 10 years old and 80 per cent for those older.

Some 87.5 per cent of the 608 unit owners had agreed to the sale of Gillman Heights, built in 1984.

On the issue of the estate's age, which the plaintiffs claimed was less than 10 years old since the condo only underwent privatisation in 1995 and acquired the Temporary Occupation Permits or Certificates of Strata Completion (CSC) in 2002, the judge ruled that the estate was more than 10 years old.

He said that there was also no bad faith and breach of natural justice due to the involvement of the National University of Singapore (NUS), which held 46.86 per cent share at the development.

Five months after the en-bloc sale was inked in February last year, it emerged that NUS was also a shareholder of Gillman Heights' purchaser Ankerite Pte Ltd.

While some owners claimed this was a conflict of interest, Justice Choo said NUS was entitled to exercise its right as a consenting subsidiary proprietor (CSP) to vote for the collective sale.

He added: "The minority CSPs were duly noted of the NUS vote and execution of the collective sale agreement about six weeks before the application for approval was submitted to the Strata Titles Board."

Futhermore, Gillman Heights was sold before property prices skyrocketed last year, so "it would not be appropriate for the Board or this court to assess good faith with regard to the sale price of the development through the lens of hindsight".

Despite the setback, one minority owner - who declined to be named - said he is not giving up the fight.

"Many of us are still disappointed by the conflict of interest and we will stick it out till the end and take this case to the Court of Appeals."

But Lee & Lee senior partner Quek Mong Hua, who represented the majority owners, said: "They have every right to appeal, but they have to consider if it is in their interest bearing in mind the cost."

For now, Mr Quek said his clients were happy the judgement is out and they are hoping to complete the sale. - TODAY

High Court Dismisses Appeal Against Gillman Heights Sale

Source : The Straits Times, June 26, 2008

THE High Court has dismissed an appeal by owners objecting to the collective sale of Gillman Heights Condominium, which means the $548 million sale can go ahead.

MOVING ON: CapitaLand can now proceed to complete its $548 million purchase of the Alexandra Road condo, unless the objecting owners take their case to the Court of Appeal. Yesterday, the High Court rejected all eight objections raised against the collective sale.

CapitaLand, the lead buyer of the 99-year leasehold Alexandra Road site, can now proceed to complete the deal, provided the objecting owners do not appeal against the High Court's decision.

Yesterday, about three months after the case was heard, Justice Choo Han Teck rejected all eight objections raised by the minority owners.

Among their contentions was a claim that the Strata Titles Board (STB) had made a mistake granting the order approving the sale, as the minimum consent rules did not apply to Gillman Heights, a former HUDC estate.

The judge said the requisite majority consent does apply to privatised estates such as Gillman Heights. For instance, the level of consent required is pegged to the age of the building, rather than the temporary occupation permit or certificate of statutory completion dates - neither of which applies to former HUDC estates.

The owners also objected to the fact that the link between the buyer and the National University of Singapore (NUS) - which owns 303 of the 607 units - was not disclosed to the STB, which approved the sale late last year.

NUS had taken a 15 per cent stake in the buyer Ankerite, whose other shareholders are CapitaLand, Hotel Properties and a private fund, after it agreed to the sale.

Justice Choo said he was not persuaded that the STB should hear the parties again on this issue.

He said there was no bad faith in this case, as the sale price was $20 million above the reserve level. The price works out to $363 per sq ft of potential gross floor area.

A minority owner, who wanted to be known only as Mr Kok, said he was still digesting the decision.

'We will have to discuss among themselves and with our lawyer to see whether we should take the case to the Court of Appeal.'

Yesterday, CapitaLand said it looked forward to developing the site into an 'innovative' residential project with about 1,200 homes.

Asia-Pac's Rich Bracket Outpaces The Rest

Source : The Business Times, June 26, 2008

Report projects region's wealth market growing at 7.9% annual clip to US$13.9t in 2012 - surpassing Europe as world's second wealthiest region

Asia and the emerging markets captured the top 10 rankings in terms of the fastest growing wealthy population in 2007, with Singapore in sixth place.

Merrill Lynch and Capgemini's latest wealth report finds that the number of Singaporean wealthy individuals rose 15.3 per cent to about 77,000. The average wealth per individual is estimated to have risen from US$4 million previously to US$4.9 million. This is higher than the global average wealth per high net worth individual (HNWI) of about US$4.04 million.

Merrill Lynch market managing director (South Asia) Kong Eng Huat says the Asia-Pacific wealth market is projected to grow at a 7.9 per cent annual clip over the next five years to US$13.9 trillion in 2012. '(The region) will surpass Europe as the second wealthiest region after North America.' Merrill and Capgemini have forecast in their report a growth rate of 7.7 per cent for global wealth markets to a total US$59.1 trillion by 2012, taking into account recent world developments.

Recent economic downturns in the US have been shorter, it said, thanks to increasingly effective monetary policy. Emerging markets have also outpaced analysts' expectations. High net worth portfolios have also become more diversified and mobile. 'As growth in one region or market slows, HNWIs can move freely, reallocating their funds to other areas - often more quickly than the troubled market itself can react and recover. Ultimately, this evolution will make HNWI investments less vulnerable to market downturns,' said the report.

Globally, the combined wealth of the world's high net worth individuals - defined as those with investible assets of US$1 million - rose 9.4 per cent to US$40.7 trillion in 2007. This is a shade paler than the growth in 2006 of 11.4 per cent, due partly to a slower pace of world economic growth. The world's real GDP expanded 5.1 per cent in 2007, against 5.3 per cent in 2006.

In terms of asset allocation, the wealthy have generally reduced their exposure to real estate, and moved to cash and fixed income assets. Asia's wealthy reduced their real estate weighting from 29 per cent to 20 per cent. Cash and fixed income have a combined 46 per cent.

Mr Kong said: 'The wealthy have retrenched to safer assets. Domestic market allocations also gained favour, which is a tactical move of caution as investors wait for movements in the global markets.'

Merrill Lynch Global Wealth Management investment strategist Stephen Corry sounded a note of caution on rising inflation. Merrill's inflation expectations have been raised 190 basis points, and yet global interest rates have declined from 5.5 to 5.1 per cent. Even excluding the US, the increase in average global nominal rates is just 16 basis points.

'A lot of inflation is generated in Asia. Asia is growing too quickly but central banks are slow to move rates higher . . . You don't want to be in Asian bonds; be selective on Asian equities. The best bet is Asian currencies.' He favours the Sing dollar and ringgit.

This year's report included a highlight on 'passion investments' including art, luxury cars, and wellness. Globally, luxury collectibles accounted for 16.2 per cent of passion investments, and fine art 15.9 per cent. Among Asians, however, the preference is for jewellery and watches, which took up 19 per cent of their 'passion' dollar.

Meanwhile, private bankers are optimistic on the continued growth of the Asian wealth market despite rocky stock markets, worries over inflation and slower economic growth.

Said Akbar Shah, Citi Private Bank's head of mega-wealth (Asia Pacific) and region head: 'Our expectation for general growth continues to be around 15-25 per cent. Business activity is still quite robust although (stock) markets have consolidated. Businesses and wealth creation are our leading indicators. We still foresee a fairly healthy continuation of growth.'

UBS managing director Yeong Phick Fui said the fundamentals of continuing wealth creation, particularly in China, and the increased need for professional advice will continue to drive growth. 'We believe that any uncertainty in the near term will be an aberration rather than a permanent deviation from the strong underlying trend.'

Deutsche Bank global head of private wealth management Pierre de Weck said the bank has seen 'phenomenal' growth in Asia-Pacific, where revenues have risen 25 per cent a year over the last five years. 'In the first quarter, we attracted over 4 billion euros (S$8.5 billion) of new money, equating to 9 per cent of our assets at the beginning of the year. This is in line with the target range of 8-10 per cent we have set ourselves for this year.'

Jan Richards, managing director of JP Morgan Private Bank in Singapore, said: 'We expect continued growth even though the market has been volatile. We'll see a healthy business growth by the end of the year, as the number of millionaires is increasing. We're just continuing to try to hire people to accommodate this.' The bank focuses on the ultra high net worth market.

RBS Coutts Singapore head of private banking Raj Sriram said Coutts' business grew over 50 per cent in 2007, and he expects 'healthy' growth in the medium term. 'We have been seeing continued growth in clients' funds under management despite market volatility, although growth is at a slower pace than previous years. At the macro level, wealth creation in Asia shows no signs of slowing.'

Citi Sees No Oversupply Of Homes In Next Two Years

Source : The Straits Times, June 26, 2008

It estimates only 60% of the 30,000 units forecast will be completed, so fall in prices will be modest

ANALYSTS from Citigroup have stuck their necks out to dismiss some market predictions of a crippling property glut in the next two years.

Official figures show that around 30,000 homes will be completed in the next two years, but Citi reckons only around 60 per cent will likely be ready.


If the bank's forecast is accurate, it could mean that downward pressure on prices will not be as great as some had feared.

Citi's report on Singapore property, which came out on Tuesday, pointed to where previous predictions may have got it wrong.

It stated that by the end of March, there were 6,000 collective sale units that had yet to be demolished.

Some of the delays are because of legal challenges over sales, as well as developers extending lease periods for owners due to the weak primary market, Citi said.

It estimated that there will be 8,200 units completed next year and 10,200 in 2010, assuming no further collective sales are done.

These numbers are way below market expectations of 12,500 units next year and 17,500 units in 2010, it said.

These higher supply numbers had led many experts to conclude that an oversupply was on the cards.

But Citi stated: 'We have always argued that such estimates are not always accurate and they often get revised downward over time.'

However, it did not elaborate further on the reasons for its lower supply projections.

Knight Frank director of research and consultancy Nicholas Mak said the direct impact of the supply completion figures on prices is limited because most of these homes would already have been sold.

But a large supply of homes for occupation would negatively affect rentals, and this would in turn hit prices, he added.

Savills Singapore also believes the supply figures released by the Urban Redevelopment Authority are too high.

Mr Ku Swee Yong, its director of marketing and business development, said completion delays in collective sales, as well as delayed launches, have not been factored in.

'There are insufficient construction resources, which means there will likely be delays,' he added.

'Prices of mid- to high-end properties will fall but not to the extent of the 30 per cent to 40 per cent drop predicted by some analysts.'

Banks like Credit Suisse and Barclays Capital have forecast drops of up to 40 per cent in rents and prices, but Citi tips a fall of up to 30 per cent, and largely only in high-end homes.

Citi expects this sector will suffer from falling demand, particularly as expatriates and locals keep downgrading.

That will put downward pressure on rents of prime homes and further pressure on prices, it said.

Citi also said a long downturn like the one that caught out many buyers in the late 1990s and early 2000s is unlikely.

This is because resale volumes are still at above average levels, reflecting strong genuine demand. There is no sign of overbuilding or an overall housing shortage.

Also, mass market homes remain highly affordable and are supported by high rental yields of more than 5 per cent, Citi said.

'Due to the sharp rise, we believe high-end residential is likely to suffer the brunt of the 20 per cent to 30 per cent price decline while the mass market should remain fairly firm.'

The mid-tier segment is likely to fall by 10 per cent to 20 per cent, it said. These are from a high base.

Luxury home prices have surged by 149 per cent since the troughs in 2004.

Prices in the mid-tier and mass-market segments rose by a still robust 79 per cent and 39 per cent respectively.

Analysts Backtrack On 'Worst Is Over' Claims

Source : The Business Times, June 26, 2008

Some say they were wrong in recommending to buy bank stocks; others cut ratings

(NEW YORK) Wall Street analysts who only weeks ago were telling investors to buy bank stocks because the worst of the credit crisis was over are now flip-flopping.

Goldman Sachs Group Inc reversed a call on financial stocks, saying on June 23 that its May 5 recommendation was 'clearly wrong'. Merrill Lynch & Co on June 17 cut its rating on Lehman Brothers Holdings Inc to 'neutral', just a week after telling clients to buy. Barron's, the weekly financial newspaper, said this week that its February advice to buy American International Group Inc (AIG) was a 'mistake'.

'Analysts probably have less credibility than they did 10 years ago,' said Charles Geisst, the author of 100 Years on Wall Street who teaches finance at Manhattan College in New York. 'This has just eroded it a little bit more.'

The mortgage-market rout that began last year and led to almost US$400 billion in bank writedowns and credit losses has lasted longer and cut deeper than bearish analysts predicted. Citigroup Inc, the biggest US bank by assets, and UBS AG, Switzerland's largest lender, have lost US$43 billion and US$38 billion, respectively.

Citigroup dropped 67 per cent since reaching a record US$56.41 in December 2006, the biggest decline since December 1991, when predecessor Citicorp fell 75 per cent to US$8.63 from the prior peak of US$35.13 in October 1989.

Bank, brokerage and insurance stocks fell 19 per cent from May 5 through June 20, more than any other group. The Standard & Poor's 500 Index slid 6.4 per cent in the period.

'Very few people, not even the people who were bearish, would have anticipated a complete shutdown and freezing of the credit markets that really began in July,' said Thomas Brown, CEO of hedge fund Second Curve Capital in New York and a former bank analyst at Donaldson, Lufkin & Jenrette Inc.

Goldman's team of financial services analysts said on June 17, prior to the reversal, that financial stocks would probably keep languishing. The deterioration of credit won't abate until next year, and raising capital has become more difficult because most completed deals have failed to generate positive returns for investors so far, the group said.

'We boosted our consumer discretionary and financials weights in May on the belief the sectors would benefit from bank recapitalisation and fiscal stimulus,' Goldman analyst David Kostin wrote in the June 23 note. 'Our thesis was clearly wrong in hindsight.'

Goldman spokesman Ed Canaday and Merrill spokeswoman Susan McCabe Walley declined to comment.

Merrill's Guy Moszkowski, the top-ranked brokerage analyst in Institutional Investor's annual survey, on June 11 changed his rating on Lehman to 'neutral' from 'buy' and cut his target price to US$28 from US$36. It was Mr Moszkowski's fourth call on Lehman this month. He shifted to 'underperform' from 'neutral' on June 2 and recommended investors buy the stock twice, on June 4 and then on June 10, the day before he moved back to 'neutral'.

Lehman, whose shares have dropped 63 per cent this year, has been hit by speculation mortgage- market losses will continue to drag down earnings. The fourth-largest US securities firm posted a US$2.8 billion second-quarter loss on June 9.

Shrinking fees from brokerage commissions mean fewer dollars for research and more pressure on analysts to hang on to paying customers such as hedge funds. Clients covet information gleaned from meetings with company executives - audiences that favoured analysts can deliver. 'There are many different ways to win' accolades as an analyst, Mr Brown said. 'The most common way is to provide a high level of contact to the largest buy-side clients.'

Barron's this week reversed its view on AIG, the world's biggest insurer, telling readers to sell the shares after recommending buying them in February. The stock has tumbled 40 per cent since the end of that month. Barron's made a 'mistake', the newspaper said. 'We'd bail right here.'

Judging by the latest batch of US economic statistics, any turnaround is still months away. On Tuesday, an index showed that confidence among Americans slid to the lowest in 16 years as housing prices fell by the most on record. -- Bloomberg

World Economy Grinding To A Halt: Researchers

Source : The Business Times, June 26, 2008

Ifo's World Economic Climate indicator hits its lowest in more than six years

(FRANKFURT) The global economy is coming to a halt, the Munich-based Ifo economic research institute said on Tuesday, amid slowdowns in Western Europe, the United States and China.

Ifo's World Economic Climate indicator fell 'to its lowest level in more than six years' in the second quarter of 2008 and the decline 'was particularly marked in North America and Western Europe', a statement said.

'The expansion of the world economy will decelerate perceptibly in the forecast period' of 2008/2009, it added.

'In the wake of the US real estate crisis and the turbulence on the international financial markets, the dynamics of world economic activity have weakened.'

In the United States, growth will remain weak as the US Federal Reserve adopted more restrictive monetary policy measures to fight inflation while growth would flatten out in the 15-nation eurozone, Ifo said.

Eurozone consumption would 'expand at only a restrained pace despite the favourable situation on the labour market', Ifo said.

Investment would lose momentum 'since the apex in the investment cycle seems to have been passed'. Asian growth 'will be dampened by inflationary developments, especially for food and raw materials', Ifo said. Weaker conditions worldwide would take some steam out of the Chinese economic expansion, as would more restrictive monetary policies.

In China, however, increased demand from private households could help offset any downturn.

In India, meanwhile, 'increasing interest rates will negatively affect the investment propensity of firms (and) also growth in private consumption demand'.

For Germany, the biggest European economy, the strong start to 2008 is coming to an end. 'A slight decrease in real GDP (gross domestic product) is expected for the second quarter,' it said.

Cooler world economic activity along with the stronger euro would dampen demand for German exports, while high energy costs would limit company profits and investment.

Ifo forecast 2008 growth in Germany at 2.1 per cent on seasonally adjusted terms and said 'real (inflation-adjusted) GDP will grow by one per cent in 2009'.

German employment was forecast to fall to 7.5 per cent this year, and to 7.1 per cent in 2009, assuming 'that the potentially economically active population will again decline'. -- AFP

UOL To Invest Up To $500m In Overseas Hotels

Source : The Business Times, June 26, 2008

It anticipates huge growth in the hospitality industry

SINGAPORE developer UOL Group said yesterday that it will spend up to $500 million over three years acquiring hotels in the United States, Australia and throughout Asia, in expectation of a boom in global travel.

'We see tremendous growth in the hospitality industry, especially from the Asia-Pacific where there is a growing group of new rich, and they all want to see the world,' said UOL's president and chief executive officer Gwee Lian Kheng at the Reuters Global Real Estate Summit in Singapore.

'Budget air travel is also growing, and we think that with all these factors, tourism in the world will continue to boom,' said Mr Gwee, whose firm owns the Pan Pacific global hotels brand and who also heads hospitality group Hotel Plaza.

The firm, which paid US$165 million in January for a Singapore residential land site, sees continued strength in the sector, even as first-quarter private home sales in Singapore dipped to a five-year low amid fears of a global recession.

'If you tell me that the market is dead, I disagree because we're still a fairly strong economy compared with other parts of the world,' said Mr Gwee, a 35-year property veteran.

UOL, whose largest shareholders are Singapore's number-two bank United Overseas Bank and its chairman Wee Cho Yaw, has a market value of about US$2 billion.

It is among the few developers to have continued to put up Singapore residential projects for sale this year, even as most large builders delayed sales to wait out a moribund market.

The firm's luxury Nassim Park project, launched in early June, is now 55 per cent sold and at average prices of about $3,000 per square foot, Mr Gwee said, but he acknowledged that sales have slowed significantly compared to a year ago.

UOL has moderated its asking prices due to weaker demand, but has been able to maintain its profit margins at well over 15 per cent, he said, adding that UOL will for the next three years focus on the low and mid-tier segments where demand is expected to be stronger.

'Prices in the luxury market could see a slowdown, but the mid and lower-tier will still go up, partly because of all the people who sold their homes en bloc last year,' Mr Gwee said.

Thousands of Singaporeans collectively sold their apartment blocks to developers in a ferocious land-grab over the past two years in en bloc sales, and some developers believe these sellers have yet to purchase replacement homes.

UOL now has about 80 per cent of its investments in Singapore and the remainder overseas, and is also looking abroad for growth but prefers to do so defensively, Mr Gwee said.

Its top pick now is China, particularly its second-tier cities. The firm is also looking to acquire distressed US assets such as offices or hotels at a good price, but will wait for uncertainties caused by the US sub-prime mortgage crisis to clear up before doing so.

'Right now it's still too early. The sub-prime issue is still not resolved and there's still a lot of currency risk when you buy overseas, so we'll let all these clear up first,' Mr Gwee said. -- Reuters

CapitaLand Invests RM595m In Sungei Wang

Source : The Business Times, June 26, 2008

Acquisition enables creation of pure-play Malaysian retail Reit by year end

CAPITALAND has acquired its third Malaysian retail asset, buying nearly 62 per cent of the total retail area of Sungei Wang Plaza, located in the Kuala Lumpur city centre, for RM595 million (S$250 million).

The acquisition from a private entity called Sungei Wang Plaza Sdn Bhd includes the car parks and was done through an asset securitisation structure, which would see Sungei Wang held by a special purpose vehicle called Vast Winners, according to a CapitaLand statement yesterday.

In the heart of KL: Sungei Wang Plaza's eclectic mix of shops continues to attract locals and tourists despite the emergence of newer flashier malls

Property consultants said that the deal was a positive sign for the local market, and while they expected CapitaLand to add value to Sungei Wang Plaza, the company was also gaining from a solid cash-flow acquisition.

'They're buying into a good stream of cash flow,' Zerin Properties chief executive Previndran Singhe told BT, adding that there is still upside in the complex, particularly with CapitaLand's expertise in mall management.

In the media statement, CapitaLand Retail chief executive Pua Seck Guan said much the same, noting that through CapitaLand's proactive management and by leveraging on its retail real estate management expertise, 'there are tenancy remixing opportunities to create significant value at Sungei Wang'.

CapitaLand had already acquired Gurney Plaza in Penang and Mines Shopping Fair in Selangor. With the Sungei Wang Plaza acquisition, it has now accumulated assets totalling about RM2 billion. This puts it on track to establish a proposed pure play Malaysian retail Reit by year end, Mr Pua said.

Of the three, Sungei Wang Plaza, which roughly translates to river of money, is the cream of the crop. Located in the city's Golden Triangle at the Bukit Bintang shopping district, its annual visitors surpass 24 million, while its occupancy is close to 100 per cent. It is also easily accessible as it is located next to a monorail station, and according to some, enjoys one of the highest rentals on a per square foot basis in the city.

Despite the emergence of newer, flashier malls, the long-established plaza continues to attract locals and tourists who like its eclectic mix of shops.

In Malaysia, CapitaLand has a listed commercial Reit - QuillCapita - via a joint venture with local partner Quill Group. However, that Reit is more of a pure-play commercial Reit because it prefers not to take on retail malls which require shopping centre management skills.

On the asset securitisation structure, CapitaLand said that Vast Winners has issued three tranches of senior medium-term notes - Classes A, B, and C - as well as a tranche of subordinated Class D medium- term notes.

Its wholly owned subsidiary Gain 888 Investments has fully subscribed for the Class D notes in the principal amount of RM338 million, while the senior medium-term notes were fully taken up by a Malaysian financial institution, which has asked not to be identified.

Q2 Investment Sales Of Properties Slide, But Money Waiting In The Wings

Source : The Business Times, June 26, 2008

Price mismatch expected to keep volume of deals low

Total investment sales of Singapore real estate, a gauge of developers' and investors' medium- to long-term confidence in the property sector, have dipped to $3.7 billion so far this quarter (up to June 20), or 58 per cent lower than the Q1 2008 figure of $8.9 billion, according to figures compiled by CB Richard Ellis.

The Q2 showing is the lowest quarterly number in three years, and brings the total so far in the first-half to around $12.6 billion.

CBRE executive director (investment properties) Jeremy Lake predicts the full-year figure could come close to around $20 billion - or less than half the record $54.4 billion of investment sales deals clocked last year

Putting things in perspective, Mr Lake reasons that 'last year was arguably a one-off year, so even if we hit $20 billion this year, it would be a very active year and the third highest performance in a decade'.

'We'll continue to see the sale of office, retail and industrial income-producing assets and possibly hotels during second-half 2008 but the volume will be lower (than the first half) because of a price mismatch between sellers and buyers.

'There's still plenty of institutional money ready to invest but pricing sought by institutional investors, including property funds, is lower than that being asked by most sellers. This means the volume of deals is low,' Mr Lake says.

The property consultancy defines investment sales as deals with a value of at least $5 million, comprising government and private sales, buildings and land, strata and en bloc. It also includes change of ownership of real estate via share sales.

Public-sector land sales accounted for 34 per cent or $4.3 billion of total investment sales so far this year.

The office sector contributed about $5.2 billion or 41 per cent of year-to-date investment sales. Major transactions include The Atrium @ Orchard bought by CapitaMall Trust for $839.8 million or $2,249 psf of net lettable area and 71 Robinson Road's purchase by Germany's Commerz Grundbesitz Investmentgesellschaft for $743.75 million ($3,125 psf). 'Investment activity in the office sector will continue to be healthy, albeit at a slower pace. The more active investors in the short- to-medium term would be the core and core-plus investors which underwrite acquisitions with lower debt levels, given the current climate of tighter bank lending and moderate increases in office rentals going ahead,' Mr Lake reckons.

The $5.2 billion of office investment sales struck so far in H1 2008 is roughly 36 per cent of the $14 billion-plus achieved for the whole of last year.

In contrast, the residential sector has seen a much bigger slowdown. The $4.2 billion of deals in H1 2008 (up to June 20) is just 13 per cent of the $33.3 billion achieved for full-year 2007.

Residential investment sales done this year include around $2.1 billion of sites sold either through the Government Land Sales (GLS) programme or at Sentosa Cove; around $141 million of collective sales sites (compared with some $14 billion for the full-year 2007); $817 million of landed home sales (including Good Class Bungalows); and around $1.1 billion of apartment/ condo sales (units costing at least $5 million each).

Market watchers note that developers' appetite for residential sites has weakened considerably in the first-half of this year against the backdrop of weak home sales.

Looking ahead, CBRE's Mr Lake says: 'The delay of new residential launches by developers, coupled with rising construction costs and tighter credit terms, would continue to curtail developers' interest for residential sites. Hence, activity in the collective sales market is likely to remain lacklustre in H2 2008.'

Agreeing, Credo Real Estate managing director Karamjit Singh says: 'There is a lack of availability of prime residential sites in the en bloc sales market at prices reflective of today's sentiment. Most of the reserve prices set by owners for en bloc sites available for sale today were agreed last year, when the market was still buoyant.'

'Residential sites are more likely to be sold in H2 from the GLS slate, by virtue of the fact that the GLS Programme is the only source of supply of sites at prices that reflect today's market. Of course, if prime private-sector sites at current market-adjusted prices are available, there should be takers for those too.'

The industrial property market chalked up $943 million of investment sales deals between Jan 1 and June 20 this year. Ascendas Reit, Mapletree Logistics Trust and Cambridge Industrial Trust were among the major buyers.

Colliers International managing director (Singapore and North Asia) Dennis Yeo estimates that up to yesterday, the tally so far this year would have crossed the $1 billion mark and that a further $1 billion or more of industrial property investment sales deals are likely to be announced in H2 2008. 'Some of the big overseas funds that have been buying office properties in Singapore in the past few years are now also looking at industrial, logistics and business park assets.

'With tighter bank financing these days, smaller office blocks and industrial or business park buildings costing $20-200 million each are in greater demand among funds. Industrial property is also more in favour now because it offers higher yields than offices and is a better match for these funds' lower risk appetite in the current climate,' Mr Yeo added.

Property Transactions With Contract Dates Between June 9th - 14th, 2008

Gillman En Bloc Sale To Proceed

Source : The Business Times, June 26, 2008

Judge says minority owners did not provide adequate reasons to stop sale

THE High Court has dismissed an appeal by minority owners of Gillman Heights Condominium to stop its en bloc sale.

This means that the $548 million sale of the development to CapitaLand, Hotel Properties and two private funds is set to go through.

High rise tussle: Gillman Heights is set to be sold to CapitaLand, Hotel Properties and two private funds

Justice Choo Han Teck, in his judgment yesterday, said that he was 'satisfied' that the appeal by the minority owners 'must fail', as they did not provide adequate reasons as to why he should stop the sale.

The Strata Titles Board (STB) had approved the collective sale of the 607-unit, 99-year leasehold estate late last year. But a group of minority owners, represented by Senior Counsel Michael Hwang, had appealed that decision.

They argued that the STB had erred in approving the sale. They said that collective sale rules do not apply to Gillman Heights, which is an former HUDC estate. They also argued that insufficient notices were put up informing owners of the proposed sale and that the collective sale agreement - signed by the consenting owners - was not validly extended before the deal was brokered with the CapitaLand consortium.

Justice Choo ruled yesterday that the law does not mean to treat privatised HUDC estates differently from other private strata developments with a management corporation. He said that a privatised HUDC estate can participate in the benefits of an en bloc sale if the requisite conditions are met. He also agreed with the STB's ruling that sufficient notices had been posted and that the collective sale agreement had been validly extended.

The minorities had also argued that the sale was done in bad faith. They said that the National University of Singapore (NUS), which owns a sizeable chunk of Gillman Heights and had agreed to the en bloc sale, has a 15 per cent stake in Ankerite, the entity that purchased Gillman Heights.

Justice Choo noted yesterday that NUS's relationship with the buyer - which came to light after the STB approval - was not presented before the STB at the relevant time. 'A court deliberates only on the basis of the evidence before it,' he said. He said that it was strictly up to the STB to judge if there was an act of bad faith by reason of the relationship between NUS and Ankerite - but that he was not persuaded that the board should hear the issue again.

Justice Choo also agreed with the STB that there was no bad faith regarding the sale price of Gillman Heights, as it was $20 million above the reserve price.

The minorities had also argued that one of the STB board members, Michael Ng of Savills (Singapore), was a real estate valuation professional who had worked on projects involving the consenting owners' lawyers.

But Justice Choo said: 'I am of the view that it is too tenuous an objection. Professionals cannot avoid working on the same projects. It does not follow that they necessarily agree or have reasons to be biased or prejudiced against other professionals.'

Gillman Heights owners will get between $870,000 and $950,000 per unit in the en-bloc sale. But many of those objecting to the sale say that it is more important for them to be able to keep their homes.

Industrial Site At Ubi Ave 4 Now Available

Source : The Business Times, June 26, 2008

THE Urban Redevelopment Authority has released an industrial site at Ubi Avenue 4 through the reserve list of the Government Land Sales Programme. The move follows the award of a nearby industrial site at Ubi Avenue 4/Ubi Road 2 in April for $88.74 per sq ft per plot ratio (psf ppr) or $23.9 million. Both sites have 60-year leases.

Chesterton International director (industrial) Albert Yeo believes the new site could see bids of about $100 psf ppr if or when it is triggered and put up for tender. And Mr Yeo reckons interest could be high. Already, the Vertex project in the same area has been selling well. Upper-floor units in the 552-unit eight-storey flatted and ramp-up factory development are going for $320-$360 psf, and ground-floor units for $460-$600 psf.

Explaining the demand, Mr Yeo said: 'Many businesses are now buying space instead of renting - to avoid rental hikes.' Also, businesses that were previously located in CBD-fringe office space have migrated to industrial estates, he said. 'We see a lot of SMEs moving in.'

The build-quality of new flatted factories has improved vastly, he added. 'They are attracting businesses in electronics, media and distribution.' Colliers International director (industrial) Tan Boon Leong also believes the general outlook for the industrial sector is good.

Colliers has been appointed by 3M Singapore to sell a freehold industrial site at 9 Tagore Lane by expression of interest. Mr Tan expects interest from developers and investors because the 156,188 sq ft site presents a 'rare' opportunity. It is now occupied by a three-storey warehouse and office building with a total gross floor area of 126,033 sq ft, but can be redeveloped into a four-storey light industrial building with a gross floor area of up to 310,000 sq ft.

The capital appreciation for similar freehold developments is 5-10 per cent so far this year, according to Mr Tan. While there is no indicative price for 9 Tagore Lane, strata-titled freehold units in the area have recently changed hands at $280-$300 psf, he said.

Separately, URA said yesterday it has awarded the tender for the residential site at Woodleigh Close to Frasers Centrepoint, which submitted the highest bid of $270 psf ppr or $87.68 million.

YTL's Sentosa Villas To Start From $12m Each

Source : The Business Times, June 26, 2008

Sandy Island villas are being designed by Italian architect Claudio Silvestrin

MALAYSIA'S YTL Corp will launch later this year 18 luxury waterfront villas at Sandy Island on Sentosa Cove and prices are expected to start from $12 million for a villa or at least $2,000 per square foot (psf) of land area, BT understands.

YTL's spokeswoman declined to comment on the planned pricing, but confirmed that the plan is to launch the project later this year.

Luxurious: Artist's impression of one of the villas, which will be built on 99-year leasehold land plots

The development will nestle within a tropical rainforest and boast upscale finishes and fixtures. It is being designed by renowned Italian architect Claudio Silvestrin, famous for designing Giorgio Armani boutiques worldwide as well as the Museum of Contemporary Art in Turin.

YTL has also appointed celebrated Australian landscape architect Jamie Durie for Sandy Island.

Each two-storey waterfront villa will have a basement and a terrace floor, and feature a double-volume living room facing a private berth. 'Each home will have a private car lift, a passenger lift, kitchen and wardrobes personally selected by Mr Silvestrin,' YTL's spokeswoman said.

The villas will be built on 99-year leasehold land plots ranging from about 6,000 sq ft to 10,000 sq ft each and will have four or five bedrooms with en-suite bathrooms, a pool and timber patio set within a waterfront garden designed by Mr Durie. Sandy Island will feature more than 30 trees transplanted from the Resorts World integrated resort site.

Sandy Island is located in Sentosa Cove's Southern Precinct. YTL also has another villa development in the waterfront housing district's Northern Precinct on the Lakefront Collection site abutting Serapong Lake. This project is expected to comprise more than 10 villas which will boast views of Serapong Golf Course. The project is still in the design development stage and could be released next year.

On the mainland, YTL is looking at different proposals by world-renowned architects to develop an 'iconic lifestyle quality development' on the Westwood Apartments site at Orchard Boulevard.

YTL inked a deal in November last year to buy the 62,179-sq-ft freehold property for $435 million, which worked out to $2,525 psf of potential gross floor area inclusive of an estimated $4.6 million development charge at the time. Westwood Apartments' collective sale was approved by the Strata Titles Board earlier this week. The deal was brokered by Savills Singapore. Law group Rodyk & Davidson acted for the majority owners.


Source : 《联合早报》 June 26, 2008

即将在一两个月后完工的市区公寓滨海舫(The Sail),预计将是我国房市供应、售价和租金走势的温度计。



摩根大通(JP Mor- gan)分析师在最新发表的报告中指出,1111个单位的滨海舫取得临时入伙准证(TOP),将能让市场更明确意识到在艰难的环境中,私宅售价和租金是否还能坐稳四方,以及未来走向。




卓登国际(Ches- terton)研究部主管陈瑞谨同意,滨海舫“交货”后,将能让市场探温豪华私宅未来的价格走势以及市场是否有供应过剩的问题。


至于租金,他指出,滨海舫位于中央商业区心脏地带,是主要商业区的唯一住宅项目,业主预期的月租要比海天大楼(The Icon)来得高至少10%,可达6000元至7000元。

根据SISV记录,像海天大楼(The Icon)和瓅之尚都(Citylights)的市区公寓,目前的每月租金达4500元至6300元。不过,陈瑞谨提出,由于滨海舫规模非常大,如果大量新单位在同个时候转交到业主手中,可能将压低租金和售价。







US New Home Sales Fall 2.5% In May

Source : Channel NewsAsia, 26 June 2008

WASHINGTON : Sales of new homes across the United States fell 2.5 percent in May from the prior month to a seasonally adjusted pace of 512,000 homes, according to a government survey on Wednesday.

Most economists had expected sales to fall more steeply to around 510,000 new properties amid one of the deepest and longest-running US housing slumps in decades.

The latest decline came after sales rose an unexpected 4.8 percent in April to a revised 525,000 new homes, the Commerce Department reported.

Sales of new homes have declined since early 2006 when a multi-year housing boom abruptly ended.

The bleak snapshot on the housing market was released as Federal Reserve policymakers held a second day of interest rate deliberations in Washington.

Many analysts expect the Fed, led by chairman Ben Bernanke, to announce later Wednesday that it will keep its key base rate pegged at 2.0 percent, despite rising inflationary pressures stoked by soaring crude oil prices.

Economists say the Fed cannot afford to cut rates for the time being, which could offer relief to the stressed housing market, because of the mounting inflation risks.

New home sales have tumbled a dramatic 40.3 percent in the year to May, the monthly government report showed.

Sales fell in May as new home demand dropped in the northeast and the western parts of the United States. Sales in the south showed little change, but sales in the Midwest picked up.

The median sales price of new houses sold in May declined 5.1 percent compared with April to 231,000 dollars.

Some home builders are offering enticing incentives, such as financial assistance and free flat screen televisions, to prospective buyers in a bid to sell newly-built properties.

The housing downturn has been exacerbated by a sweeping credit crunch which has roiled the banking sector, making it harder for Americans to obtain mortgages and bank loans. - AFP/de