Tuesday, July 8, 2008

Worst Crisis I Have Seen: Wee Cho Yaw

Source : TODAY, Tuesday, July 8, 2008

VETERAN banker Wee Cho Yaw has seen many economic crises in his 48 years in the banking business. Yet UOB’s chairman, who is now in his late 70s, says: “I believe that this current financial crisis is the worst I have encountered.”

“It is a deadly combination of the United States sub-prime mortgage mess, severe credit crunch and unprecedented inflationary pressures,” said Mr Wee, delivering a sombre message to students graduating from National University of Singapore (NUS) and about to enter the job market.

Mr Wee warned more of more possible financial writedowns around the world from an industry that has already chalked up US$400 billion ($544 billion) in losses and writedowns so far.

“But this is still not the end of the story and this is what frightens me most: No one can tell me how much more will be written off because no one really knows the size of the collateralised debt obligations market before its collapse,” said Mr Wee, who was conferred the Honorary Doctor of Letters by NUS yesterday.

The International Monetary Fund estimates global writedowns and losses from the mortgage crisis will hit US$945 billion. Compared to some of their US and European counterparts, Singapore banks have emerged comparatively little scathed.

While Mr Wee believes securitisation started out as “innocuous” to help banks spread their risk, it has turned into a nightmare for credit markets since the first quarter of 2007.

He said the crux of the subprime problem lies in the transformation of the financial industry and corporate culture into one that encourages financial players to focus on short-term gains.

Recalling how the banking industry was “pretty straightforward” when he joined 48 years ago, Mr Wee said banks have now branched out into exotic derivatives and structured products which are not limited by capital ratio considerations.

While he urged regulators around the world to step up bank supervision with tougher rules on issues like transparency and risk management of exotic trades, Mr Wee noted: “There will always be creative people who will find ways to beat the rules.”

“This is driven by a compensation system that encourages people to take excessive risks because the short-term upside is greater than the long-term downside,” he said.

Chinese Conglomerate That Built These Landmarks... ...Snags $705m Contract For Sentosa Theme Park

Source : The Straits Times, July 8, 2008

Deal goes to arm of state-owned group that built China's steel industry

IN A sign of the growing role of China construction firms in Singapore, a top mainland firm has landed a plum $705 million job to build the highly-anticipated Universal Studios theme park on Sentosa.

Mainland building firms have shaken off perceptions of poor quality work, after rapidly picking up experience in the construction explosion that has accompanied China's spectacular economic boom.

HIGH-PROFILE JOB: China Jingye will be in charge of general building works and an amphitheatre for the Singapore version of the Universal Studios attraction. -- PHOTO: RESORTS WORLD AT SENTOSA

Resorts World at Sentosa (RWS) yesterday awarded the large contract to China Jingye Engineering, a unit of state- owned China Metallurgical Group Corp. The company founded and built China's huge steel industry.

The Chinese firm has worked on some of China's landmark projects such as the Beijing Olympic stadium and the new National Centre for the Performing Arts.

# Beijing's National Stadium

# Beijing's performing arts centre

The deal is China Jingye's biggest yet in Singapore and comes in the wake of high-profile investments made by China firms in Singapore's building industry recently.

In February, for example, Qingdao Construction Group clinched the contract to design and build an HDB site in Bishan with the highest bid of $135.9 million.

'Over the years, Chinese contractors have been increasingly able to successfully compete for higher-value contracts due to experience gleaned back home,' said Knight Frank director for research and consultancy Nicholas Mak. Also, there is no longer the perception of second-rate quality that beset Chinese firms when they first made forays abroad, he said.

One construction industry source, who declined to be named, told The Straits Times that China firms are becoming bigger players in the local industry - in tandem with the growing building sector in Singapore.

'These firms have access to cheaper labour and resources in China. We see them as healthy competition, which helps to ease some of the burden on the local contractors,' he said.

A check with the Building and Construction Authority showed that foreign firms make up 26.4 per cent of major construction players in Singapore. Of this, China firms make up 4.17 per cent, Japan 9.72 per cent and South Korea 2.78 per cent. China once trailed Korea and its share could rise soon, said Mr Mak.

China Jingye has clocked 12 years in Singapore, and has worked on HDB projects and other contracts. It recently won a $60 million deal to supply 23,000 tonnes of steel to the $6 billion Sentosa resort development.

An RWS spokesman said it held a tender exercise and 'chose the most suitable candidate based on suitability to deliver'. It declined to reveal details of the other bidders.

China Jingye managing director Tan Zhiyong said its ability to deliver projects on time and within budgets were key plus points. 'We have done overseas projects apart from China, such as Australia, and have a good track record,' he said.

China Jingye will be in charge of general building works such as structural buildings, facades, walkways and an amphitheatre at Universal Studios - which will feature 24 rides and attractions.

RWS said it is 'on track for a soft opening in early 2010'. It has awarded $2.7 billion worth of building contracts to date.

Sub-Prime Will Take 1-2 Years To Sort Out: Wee

Source : The Business Times, July 8, 2008

UOB head calls it the worst crisis he has seen in 48 years

FOR those caught up in the sub-prime crisis, the light at the end of the tunnel is going to take one to two years to emerge, according to United Overseas Bank (UOB) chairman Wee Cho Yaw.

Mr Wee: Received an Honorary Doctor of Letters degree from NUS yesterday for his accomplishments

Mr Wee spoke at the start of the National University of Singapore (NUS) Commencement 2008 yesterday, during which he received an Honorary Doctor of Letters degree from the university.

The honorary title was conferred in recognition of his accomplishments in the banking, education and community leadership areas.

Mr Wee had strong words about the current financial crisis and the myopic nature of the players in the financial industry.

'During these past 48 years, I have seen many economic crises, but I believe that this current financial crisis is the worst I have encountered.

'As I see it, the crux of the problem lies in the transformation of the financial industry and a corporate culture that encourages financial players to focus on short-term gain.

'I am very concerned about the current situation. I hope I am wrong, but my view is that this crisis will take one to two years to stabilise,' he said.

Mr Wee also pointed out the ambiguous extent of the fallout from exotic lending instruments.

'According to media reports, financial institutions have written down close to US$400 billion so far. But this is what frightens me most - no one can tell me how much more will be written off because no one really knows the size of the collaterised debt obligations (CDO) market before its collapse,' he said.

According to him, a tighter rein is needed to ensure recovery.

'The liquidity crunch can only be resolved by concerted efforts of the world's major central banks.

'Regulators around the world will also need to take steps to ensure close supervision of financial institutions and the exotic trades that have sprung up over the past decade,' he said.

Yesterday was the first of a series of commencement ceremonies being held for NUS's graduating class of 2008, which will continue until July 15.

It was presided over by the university's chancellor, President S R Nathan, and the commencement address was given by Professor Shih Choon Fong, the president of NUS.

Also present was Dr Ng Eng Hen, Minister for Education.

Showy To Buy HK Developer In $545m Deal

Source : The Business Times, July 8, 2008

(SINGAPORE) Showy International, which designs and manufactures sanitary, bathroom and kitchen products and accessories, is seeking to acquire Hong Kong-incorporated Fortune Court Holdings for $545.4 million.

And the move will see the Singapore listed company leap-frog into property development in Chongqing in China.

The proposed acquisition of Fortune Court will be satisfied by allotment and issue of shares in Showy International, resulting in the reverse takeover of Showy International.

Under the deal, Showy International will acquire the entire issued and paid-up capital of Fortune Court, which will comprise 381,428,846 ordinary shares of par value HK$0.00004 each, for an aggregate consideration of $545,395,762.

In a statement released late yesterday evening, Showy International said that it had entered into an agreement with vendors Newest Luck Holdings (NLH), Leap Forward Holdings (LFH), and Tan Hoo Lang and Tan Fuh Gih (Tan Brothers).

The allotment and issue of a total of 1,652,714,429 new ordinary shares in Showy International to NLH, LFH and Tan Brothers will be credited as fully-paid at the issue price of $0.33 each, representing not less than 60.87, 28.63 and 3.36 per cent of the issued and paid-up share capital of Showy International immediately following the proposed acquisition.

LFH and Tan Brothers currently hold in aggregate $95 million in principal amount of redeemable loan stock issued by Fortune Court.

In the process, Showy International has also entered into a business transfer agreement to dispose of its existing business, assets, transferred employees, interests in Showy Overseas and all liabilities to Showy Pte Ltd, a company wholly-owned by Showy International founders Lim Hong Ching and Yeo Sock Kon.

Showy International said that Fortune Court, through its subsidiary Chongqing Yingli Real Estate Development Co, has developed buildings in Chongqing such as Future International, Zou Rong Plaza and New York New York.

According to Showy International's statement, net profits attributable to the acquired assets for the 12 months ended Dec 31, 2007 was $120.1 million.

Showy's adjusted NTA is $178.3 million (after the proposed acquisition but before the proposed disposal) and $570.3 million (after the proposed acquisition, the proposed disposal and the revaluation of development properties and land for development.

Showy International shares, which are seldom traded, last traded at 40 cents per share.

Fed Study Says Home Price Drop 'Necessary'

Source : The Business Times, July 8, 2008

WASHINGTON - Large-scale government intervention in the US housing crisis would be counterproductive and prevent a 'necessary' correction in home prices, according to a Federal Reserve study released on Monday.

The economist noted that the phenomenon of home foreclosure is an 'unpleasant, but essential aspect of the mortgage market'

The study by economist William Emmons of the St Louis Fed concluded that 'government interventions directly in housing or mortgage markets are not necessarily the best policy responses'.

'By allowing markets to sort themselves out quickly, a foundation for sustainable homeownership and responsible mortgage lending can be re-established,' the regional branch of the central bank said.

The report said home prices in many parts of the country may fall from their peak levels in 2006 or 2007 by the largest amount in several decades, but that 'from an economic standpoint this decline of overvalued properties is necessary'.

'If house prices are allowed to remain artificially high, homebuilders will make the eventual correction even worse by supplying more unneeded houses and driving prices down even further,' the report said.

The economist noted that the phenomenon of home foreclosure is an 'unpleasant, but essential aspect of the mortgage market'.

'In order to ensure the mortgage market functions effectively, the lender must have the ability to seize the borrower's property as collateral,' the report said.

'Without the possibility of foreclosure, mortgage rates would be more on par with those of credit cards,' said Emmons.

'It is important to keep in mind that there will be those individuals who are truly harmed by the crisis,' said Mr Emmons.

'The financial distress to borrowers and communities caused by foreclosure should be addressed directly,' he said, with a stronger 'social safety net'. -- AFP

US Pending Home Sales Tumble In May

Source : The Business Times, July 8, 2008

WASHINGTON - Pending sales of previously owned US homes plummeted by 4.7 per cent in May, far more than expected and a sign of more trouble ahead for the beleaguered housing market, a real estate trade group report showed on Tuesday.

Economists polled ahead of the report had been expecting to see a 2.8 per cent decrease in the National Association of Realtors index after a 7.1 per cent surge in April, which previously had been reported as a 6.3 per cent gain.

'The overall decline in contract signings suggests we are not out of the woods by any means,' said Lawrence Yun, chief economist at the real estate trade group.

Compared to a year ago, pending sales, which are based on contracts signed in May and seen as a key barometer of future home sales activity, were down 14 per cent.

Analysts said things are not likely to improve until next year.

'You are going to see this trend for a while,' said Bob Moulton of American Mortgage Group. 'People are nervous about their jobs, they are nervous about getting approved and they are nervous about paying too much for a house.'

According to the real estate trade group, however, sales activity is widely varied regionally.

'Some markets have seen a doubling in home sales from a year ago, while others are seeing contract signings cut in half. Price conditions vary tremendously, even within a locality, depending upon a neighbourhood's exposure to subprime loans,' NAR's Yun said. -- REUTERS

F&N Buys Allco Reit Stake, Manager For US$132m

Source : The Business Times, July 8, 2008

Singapore conglomerate Fraser and Neave (F&N) said on Tuesday its property unit has bought 17.7 per cent of Allco Commercial Reit and all of the real estate investment trust's manager for $180 million (US$132 million).

Fraser's property unit Fraser Centrepoint said in a statement it would buy 125.6 million shares in Allco Reit for $0.83 per share, and drop earlier plans for the listing of a commercial property trust

Fraser Centrepoint plans to rename Allco, which is a unit of troubled Australian asset manager Allco Finance Group, to Fraser Commercial Trust following the acquisition.

At 0152 GMT, shares of Allco Reit climbed 7.8 per cent to a six-day high of $0.77 with almost two million shares changing hands, while its parent Allco jumped 11.6 per cent in Australia.

F&N shares were up 0.2 per cent.

'Fraser Centrepoint...will be able to assist Allco Reit in negotiating the refinancing of its existing loans, which will bring clear benefits to Allco Reit's unitholders,' Fraser Centrepoint chief executive Lim Ee Seng said in a statement.

Singapore's real estate investment trusts are expected to go through a round of mergers and acquisitions this year as weaker players find it increasingly tough to raise funds and refinance loans.

Fraser Centrepoint said it plans to grow Allco Reit by injecting a pipeline of its commercial property worth $700 million, which was initially identified for its own Reit.

The company has a listed Reit for its retail properties, Frasers Centrepoint Trust, and said it intends to list a third Reit comprising serviced residences in two to three years, depending on market conditions. -- REUTERS

China Jingye To Build Universal Studios S'pore

Source : The Business Times, July 8, 2008

It clinches $705m contract for infrastructural work

RESORTS World at Sentosa (RWS) yesterday said that it awarded a $705 million contract to a Chinese company for infrastructural work at Universal Studios Singapore.

The contractor, China Jingye Engineering Corporation (Singapore branch), is a subsidiary of the Chinese government-linked China Metallurgical Corporation (MCC) group.

China Jingye will handle the general building works of Universal Studios Singapore, including structural buildings, facades, walkways and an amphitheatre.

The installation of the theme park's 24 attractions, designed and prefabricated by renowned theme-park ride manufacturers worldwide, will also be co-ordinated by China Jingye.

RWS, a wholly owned subsidiary of the listed Genting International group, said in a press statement that the MCC group is one of China's top five construction-engineering companies.

The group has been involved in the structural design, consultation and project management of some of China's biggest landmark projects, including the China Central Television (CCTV) headquarters, the Beijing Olympic 'Bird's Nest' Stadium, and the new Beijing Opera House.

China Jingye has been in Singapore for 12 years. Last September, it won a $60 million contract to supply, fabricate and deliver 23,000 tonnes of structural steel to RWS' $6 billion integrated resort on Sentosa.

The 49 ha development, positioned as Asia's leading family destination, is slated for a soft opening in early 2010.

It has so far awarded $2.7 billion worth of building contracts.

Apart from theme park rides, RWS will feature the world's largest oceanarium and the region's first integrated destination spa.

Plans are in the pipeline for some 1,800 rooms, spread across its six hotels. Among them are Maxims Residences, Hotel Michael and Hard Rock Hotel.

Property Market In Las Vegas Hits Losing Streak

Source : The Business Times, July 8, 2008

Vacancy rates for apartments, offices up in Q2

(NEW YORK) As Las Vegas sees its hotel and casino businesses sputter and office, apartment and retail real estate markets flag, the rest of the country is hoping what happens in Vegas stays in Vegas.

Despite its crushing housing market, one of the worst in the nation, Las Vegas' economy has been held up on the shoulders of tourists ready to imbibe giant drinks, shop, see shows, and, of course, gamble.

But there are growing signs that the higher cost of gas, food and airline travel is trumping the gold and glitter.

'The tourist economy of Las Vegas can't just rely on its own or nearby surrounding areas,' said Sam Chandan, chief economist of real estate research firm Reis. 'People really have to come in from outside.'

So far in 2008, overall visitation to Las Vegas is down from last year.

Nevada casinos won just over US$1 billion from gamblers in April, the latest figures available, a 5.1 per cent decrease from the same month a year earlier, according to Nevada's Gaming Control Board.

The major casino operators all reported lower profits or outright losses for the first quarter, and there are few indications that conditions are improving.

Last week UBS cut its share price target on Las Vegas casino owners Las Vegas Sands Corp, Wynn Resorts Ltd and MGM Mirage.

In the second quarter, the office vacancy rate in Las Vegas rose to 17.3 per cent, up 3.2 percentage points, the greatest jump among the 79 office market Reis tracks.

The apartment vacancy rate in the quarter rose to 7 per cent, up 0.5 percentage point, according to Reis. The Las Vegas apartment market was the third worst performer among major US markets. In comparison, the average overall US apartment vacancy rate was stable at 5.9 per cent.

Vacancies at the city's strip malls crept up 0.3 percentage point to 5.6 per cent. Strip mall rents fell 0.2 per cent, making the market No 44 out of 79 in terms of rent growth.

'In spite of having a strong demographic trend in terms of population growth, it does rely on tourism dollars,' Mr Chandan said. -- Reuters

Hyundai Dev't Leads Fall In Construction Stocks

Source : The Business Times, July 8, 2008

(HONG KONG) Hyundai Development Co, the South Korean builder that gets more than half of its sales from residential homes, led declines in construction stocks in Seoul trading on concern tighter lending will crimp property sales.

Hyundai Development fell 3.5 per cent to close at 44,100 won, the lowest since October 2006.

Hyundai Engineering & Construction Co, South Korea's largest builder by market value, dropped 6.1 per cent to 60,100 won.

South Korea's property market may be saddled with more unsold new homes as the government said it will tighten lending to curb inflation, which rose the most in almost 10 years last month.

The number of unsold apartments in February reached the highest since July 1996.

'The housing market could get worse in the second half,' said Kim Suk Joon, an analyst at SK Securities Co in Seoul.

'It will be difficult for the government to come up with measures that will help bolster the industry since they're focused on curbing inflation.' He has a 'neutral' rating on the construction industry.

South Korea's government will focus on cooling inflation by stabilising the exchange rate and freezing price increases on some public services, the Ministry of Strategy and Finance said in its semi-annual policy report on July 2.

Bank of Korea forecast on July 1 inflation for 2008 will quicken to the highest in a decade on climbing fuel and food costs.

A total of 180 builders collapsed in the first half, 45 per cent more than a year earlier, after banks tightened lending and raw material prices surged, the Seoul Economic Daily reported July 4, citing industry groups including the Korea Specialty Constructors Association.

Daelim Industrial Co, the country's fifth-largest builder, fell 5.3 per cent to 90,000 won.

Samsung Engineering Co, South Korea's largest engineering company, slipped 8.2 per cent to 72,400 won. -- Bloomberg

US Retail Malls' Q2 Results Worst In 30 Years

Source : The Business Times, July 8, 2008

Strip malls seeing average vacancy rates spike sharply

(NEW YORK) US store closings and cutbacks turned the second quarter into the worst for strip mall owners in 30 years, as increasingly budget-conscious consumers flocked to low-cost warehouse-style grocery centres, according to a report by real estate research firm Reis.

Cautious shoppers: In addition to cutting back on clothing, jewellery and nonessentials, cost-conscious consumers are turning to lower-price grocers such as Wal-Mart at the expense of the upper end usually found at strip malls

Strip malls, which are usually anchored by grocery or drug stores, saw average vacancies spike 0.5 percentage points to 8.2 per cent, a level unseen since 1995, according to the report released yesterday.

Vacancies at regional malls rose 0.4 percentage points to 6.3 per cent, the highest level since the first quarter of 2002, according to the preliminary results.

'They definitely came up weaker than our expectations and we've been pretty bearish on our outlook for retail for some time,' Reis chief economist Sam Chandan said.

'In the market in general there have been a lot of store closings.'

A growing list of retailers shuttered stores ahead of lease expirations or chose not to renew leases, and as newly completed space hit the market without signed tenants.

Starbucks Corp recently said it would close 600 stores by March.

GAP Inc is looking to give up some of the 40 million square feet of retail space its leases.

That's in addition to the growing list of retailers, such as Linen 'n Things and Goody's Family Clothing, which filed for bankruptcy protection.

Consumers are constrained by increases in food and energy costs, as well as the cost of servicing debt run up during the housing boom.

In addition to cutting back on clothing, jewellery and non-essentials, they have turned to lower-price grocers such as Wal-Mart at the expense of the upper end usually found at strip malls, such as Whole Foods Market Inc, Reis said.

For the first time since 1980, more space became available to rent at strip malls than was rented out - about 3.2 million square feet more.

Part of the available space came in the form of 5.7 million square feet of new development that came on the market during the quarter.

The extra space translated into falling rents at strip malls, down 0.1 per cent to an average of US$17.60 per square foot.

'The downward pressure on rent is coming from landlords being very nervous about the idea of losing a tenant when they know that there's a paucity of replacements for that tenant in the current market environment,' Mr Chandan said.

Preliminary figures show that regional malls were barely able to raise rents, with just an anaemic 0.2 per cent rise excluding concessions, its weakest gain since the second quarter. -- Reuters

Japanese Condo Developer Tightens Belt

Source : The Business Times, July 8, 2008

Joint Corp to focus on reducing assets to ride out negative business climate

(TOKYO) Japanese condominium developer Joint Corp plans almost no new investments this year as it focuses on reducing its assets to ride out an increasingly negative business environment including an exodus of foreign investment, a company executive said on Monday.

Shares of Joint and other Japanese real estate developers have been hit hard in recent sessions amid concerns about the health of the sector due to the global credit crunch and weak consumer spending.

Japan's property sector has also been hurt by tighter bank lending and soaring prices for steel and other construction materials.

To survive this business environment and improve its cash situation, Joint is mulling selling off some of its vacant land, said director and executive officer Hisahi Oribe.

'We don't want to be seen as having passive business plans, but our business is currently up against a really strong headwind,' Mr Oribe told Reuters in an interview.

'For a while, all we can do is simple things just to improve our business,' he said. The Tokyo-based midsized developer plans to sell land, buildings and other inventories to reduce its fixed assets to 150 billion yen (S$1.90 billion) for the year ending in March 2009 from 230 billion yen as at March this year.

Joint may post special losses this year for writing down such assets, but the amount will likely be small as it already wrote down 11 billion yen worth last business year, said Mr Oribe.

'About 80 per cent of our condominium-development projects have already been inked or paid,' said Mr Oribe.

He added that the company would not have to spend much on new projects during the course of this business year.

The recent sell-off of Japanese real estate-related stocks comes as the global credit crisis muddies the outlook for Japan's once-soaring property market.

Adding fuel to investors' worries over the sector's financial health, a series of Japanese contractors and real estate developers including Suruga Corp have fallen into bankruptcy.

The Tokyo Stock Exchange's Reit index has dropped about a quarter this year.

Japanese Reits' market value tumbled to 4 trillion yen in March this year from 6.8 trillion yen in May last year when it hit its peak.

Mr Oribe said, however, that although there was a slew of bad news in the sector, the recent sell-off of Joint shares was 'abnormal and emotional'.

'It is abnormal that even big real estate players have a PBR (price to book value ratio) of below one,' he said. 'Our business environment really is tough, but I think investors have been a bit too emotional,' he added.

Joint shares, which have a PBR of 0.29, fell as low as 440 yen during morning trade yesterday, their lowest intraday level since August 2003, but bounced back to finish up 5.4 per cent at 509 yen. -- Reuters

Varying Pace Of Sales At Recently Released Projects

Source : The Business Times, July 8, 2008

Most private homes register slower sales at the weekend

DEVELOPERS selling private homes had a mixed bag of results at the weekend.

The 99-year-leasehold Livia in Pasir Ris, where previews started last Friday, has chalked up relatively strong sales of 160 units at an average of $650 per square foot (psf).

Strong sales: The 99-year-leasehold Livia in Pasir Ris, where previews started last Friday, has chalked up relatively strong sales of 160 units

But sales were slower for most other recently released projects.

At Kovan Residences, another 20-plus units were sold at the weekend, taking total sales to more than 80 since the 99-year-leasehold project next to Kovan MRT Station was previewed at a private party on June 28.

The average price is between $870 and $900 psf.

Riding on the buying interest in Kovan Residences, MCL Land accelerated the preview of its 50-unit D-Pavilion, a freehold condo on Upper Serangoon Road slightly further away from Kovan MRT. It sold 10 units on Saturday and Sunday at an average price of $900 psf.

In Bishan, Sim Lian found buyers for another 59 units last week at its Clover By The Park condo, taking total sales to 254 since it previewed the 616-unit project on June 25.

The average price for the 99-year-leasehold project is $750 psf. Sim Lian also sold four units at The Amery in Telok Kurau last week, taking the total to 31 of the 78 units in the freehold development. The average price is $860 psf.

NTUC Choice Homes and Ho Bee Investment sold another 10 units at the weekend at Dakota Residences. The sales tally is 161 for the 348-unit, 99-year condo that is currently selling at an average price of $980 psf.

Commenting on the varying pace of sales, a developer said it is not unusual for transactions to taper off after the first weekend or two weekends of a launch, after initial demand has expressed itself and choice units are taken up.

Another developer said: 'I think potential buyers are nibbling. If they see a project they like and it's priced attractively, they'll go in. But buyers are very price-sensitive.'

Giving his take, a property consultant suggested: 'I've got the feeling these developers may be slowly pushing up prices; so demand has been tapering off.

'Once a developer has sold at least 30-40 per cent of units in a project, it may be slightly more comfortable with cash flow.

'It may then be prepared to sell the rest of the project at a slower pace if it can achieve higher prices.'

A more worrying reason could simply be that demand has dropped.

'People ask themselves: 'With all the global economic uncertainty, do I really need to buy a new home now?' said a market watcher.

City Developments Ltd said yesterday that most of the buyers at Livia are Singaporeans, while foreign buyers come from China, Indonesia, India, Malaysia and the Philippines.

Most people bought for owner occupation. The 160 units sold so far achieved prices of between $570 psf and $740 psf.

Prices start from $597,000 for a two-bedroom unit, $793,000 for a three-bedder and $991,000 for a four-bedder.

Hayden Properties starts to preview The Hamilton Scotts this week.

Prices are expected to start below $3,000 psf, though the average price is expected to be around $3,500 psf.

The freehold project comprises 54 apartments and two penthouses.

CBD Offices Still Available At $6-9 PSF A Month

Source : The Business Times, July 8, 2008

Small pockets of space can be found in older buildings in the central district

THE average Grade A office monthly rental in Singapore touched $18.80 psf in Q2, while the vacancy rate for such premium space stands at a mere 0.6 per cent.

However, small pockets of space ranging from a few hundred square feet to 3,000 sq ft are still available in older buildings in the Central Business District. For example, at Cecil Street, Shenton Way and Tanjong Pagar, monthly rents range from $6 psf to $9 psf.

Older but cheaper: At Shenton House (foreground), asking rentals for units on the seventh and 25th floors are said to be in the $6.50 to $7.00 psf range

At International Plaza next to Tanjong Pagar MRT Station, a 400 sq ft unit without a window is going for a monthly rental of $6 psf, while a 1,500 sq ft unit on a higher floor has a $9 psf rental tag.

Over at Octagon along Cecil Street, two units (of 1,300 sq ft and 2,000 sq ft) are being offered at $7.80 psf.

At 146 Robinson Road, tenants are being sought for a few units of between 1,000 and 3,000 sq ft on various floors with an asking rental of $7.50 psf.

Bigger office spaces in the CBD are also becoming available.

At Shenton House, asking rentals for units on the seventh and 25th floors are said to be in the $6.50 to $7.00 psf range.

'While there are many office buildings asking for double-digit monthly rents, users can still find office units at single-digit rents on the fringe of Raffles Place, such as Robinson Road and Cecil Street.

'These buildings are mainly older and have smaller floor plates. In addition, they are mostly sandwiched between other buildings and offer very limited or no car park lots in the building,' says Knight Frank director, business space (office) Agnes Tay.

'We would expect smaller companies providing professional services and non-financial companies to find such options attractive in terms of rental levels and at the same time without compromising on the convenience of location. These tenants could be in fields like auditing, accounting, consultancy, legal services, design, shipping and IT,' she added.

Tenants willing to pay slightly higher rents but still shy of Grade A rates also have several options in the CBD.

At UIC Building on Shenton Way, owner United Industrial Corporation has put on hold its development plans for the property and is said to have for leasing a total 43,000 sq ft comprising units of various sizes from 700 sq ft to 9,000 sq ft.

The asking rental is said to be about $11 psf. UIC is said to be offering tenants leases of three years but without options for renewal.

In more prime buildings such as the Arcade near Raffles Place MRT Station and 8 Shenton Way (formerly Temasek Tower), asking rents are higher, around $10.50-14.50 psf and $12-14 psf respectively, BT understands.

Bigger office spaces in the CBD are also becoming available, partly due to the government's initiative to move its agencies out of the CBD to ease the acute shortage of prime offices.

Singapore Land Authority will be giving up seven floors or 92,569 sq ft at 8 Shenton Way when it moves to Revenue House in Novena in Q4 this year.

InfoComm Development Authority is also expected to give up some space at Suntec City by the year-end.

Swiss banking group UBS is also believed to be giving up about 47,000 sq ft of space it no longer needs on the 10th and 15th floors of Suntec City Tower.

The space may be available for lease as early as September, BT understands.

A UBS spokeswoman said: 'We are giving up some space at Suntec City because we've achieved more efficient space usage. But even after releasing this area, we'll still continue to occupy some 200,000 sq ft at Suntec City alone. In addition, since last year we've leased 230,000 sq ft at One Raffles Quay. So we would still have grown our Singapore footprint from 250,000 sq ft in 2006 to 450,000 sq ft.'

Industry observers are keeping their eye on other big office occupiers to see if they, too, would release excess space.

DTZ noted last week that the government's efforts to create more immediate office space - such as releasing transitional office sites and awarding disused state properties to the private sector for conversion to offices - has helped to ease the supply crunch and pressure on rentals.

This CBD office shortage will be eased from 2010 as new office projects are completed.

'Going forward, as companies and government agencies start to move out of the CBD and more new supply comes onstream, office occupancy is likely to ease and limit rental growth in the CBD for the rest of 2008,' DTZ said.

What's Next For Property?

Source : The Electric New Paper, July 08, 2008

Is the property market going up or down? Here are some ways of spotting the trends yourself

ARE property prices still on the way up, or are they heading to a slippery slope already?

If you are confused with so much talk on the property market these days, you are not alone.

One property consultant in a news report may say property prices will go up, but another consultant in the same report will probably say that the high prices cannot be sustained in the current climate.

So, who do you believe?

With the help from well-known market commentators - Chesterton International's research head Colin Tan and Knight Frank's research director Nicholas Mak - The New Paper compiled a checklist of 10 factors for bewildered sellers and buyers to consider before they sign on the dotted line.

Bear in mind that no one factor alone affects property prices because a cocktail of different elements are at play.

But if you do notice more of the following, you'll know that something is brewing.

# More homes in the market

Plain Economics 101 - more supply vs same demand, or higher demand vs even higher supply, will eventually lead to lower prices.

For example, if the Housing and Development Board decides to bump up construction of flats in a big way, be prepared for a ripple-down effect on the property market.

# Rentals start dropping

Rentals may dip due to a slowdown in demand or more supply in the market.

When rentals start dropping in a weak market, more landlords may have problems meeting their monthly instalments and up to a point, the gap will be so big that they will have to sell the property.

# Agents get aggressive

You leave your name at a condo showroom and agents keep calling you, even for other projects that you didn't view.

It means that agents are getting desperate and buyers are not biting.

# More units put up for sale

The Straits Times Classifieds on Saturdays come packed with numerous property advertisements, even more than during the 1996 property heydays.

And developers start to launch their projects in double-quick time to beat the rest.

# No one's home?

You drive along the expressway at night and you see flanked on both sides newly completed swanky condos, but few lights are switched on, suggesting that the projects are not fully tenanted.

# Asking prices have dropped. Again.

If you've been house-hunting, you'll see the signals.

A unit you've been looking at has dropped its selling price three times in the last six months, but no one is buying.

# Property not moving

A unit has been advertised for more than six months, but has seen no takers. This means that buying activity has slowed down.

# More units put up for rent

This means that the owners could be leveraging.

If the seller can't sell their units in a bad market, they'll try to offset their monthly mortgages by renting out their units instead. This means that buying activity has slowed down.

# Economic weakness and uncertainty

If there's economic uncertainty, investors, both locals and foreigners, will be spooked and unwilling to invest in the real estate market for fear of falling prices.

# Falling wages & rising unemployment

If companies are freezing recruitment and employment numbers and wages fall, affordability is also affected.

This leads to a drop in demand and similarly, prices.

She Pays Hundreds Of Dollars To Fake Landlord

Source : The Electric New Paper, July 08, 2008

# 'Landlord' evicted, so victim's lease terminated
# 'Landlord still owes her $1,600'

FIRST, there were bed bugs and cockroaches in her rented three-room HDB flat.

Next, the water and power supply were cut off.

When she complained to the 'landlord', she was shocked to discover the woman was not only a bankrupt, she did not even own the flat.

Miss Cui's 'landlord' was found to be an undischarged bankrupt. -- TNP Picture: KENNETH KOH

To top it off, she had to leave when the actual owner evicted her 'landlord' for failing to pay rent and subletting the room.

The tenant, who wanted to be known only as Miss Cui, is a 25-year-old Chinese national who is working here as a sales executive. She signed a one-year lease for the master bedroom of a flat in Clementi for a monthly rent of $600.

Now she says she is losing more than $1,500 which she had paid to the 'landlord'.

She had found the room through a property agent who had advertised in the press.

'When I went to view the room, I did ask them if the landlord was the flat owner and she claimed to be,' said Miss Cui.

She signed the tenancy agreement the next day as the agent said there were other interested tenants, and moved in on 20 Mar.

The 'landlord' and her husband stayed in the other room of the three-room flat.


Miss Cui was soon bothered by the bed bugs.

'The infestation was so bad, you could see the bugs crawling around the furniture and even on the wall,' she claimed. 'The flat appeared clean when I first viewed it. I did not expect it to be so dirty.'

She complained repeatedly to the 'landlord' who changed her mattress.

'But it was worse - the replacement mattress was old, dirty and it had many stains on it,' she said.

And there were cockroaches in the kitchen.

'It was very scary. When I opened the drawers, I saw cockroaches and cockroach eggs. I just slammed it shut,' she said.

The 'landlord' finally called the pest control people, but Miss Cui had to pay them.

On 4 Apr, Miss Cui said the 'landlord' asked for an advance payment of another 10 days worth of rent. Said Miss Cui: 'I found it strange. The 'landlord' told me she had no money.'

Nevertheless, Miss Cui handed over$240. On 5 Apr, a Saturday morning, the 'landlord' told Miss Cui that if she wanted to shower, she should do so quickly as the water supply was going to be stopped.

'She told me there were going to be repair works, but it wasn't true. The power supply was cut off too,' fumed Miss Cui.

It was only later that she discovered that the landlord had failed to pay the water and electricity bills.

Miss Cui finally learnt the truth when on 13 Apr, the real owner of the flat came with policemen to evict her 'landlord'. She said she left the flat to avoid trouble.

Later that night, she met the agent and the 'landlord'.

Recalled Miss Cui: 'The 'landlord' said she was not the flat owner, and that there was nothing she could do as she was a bankrupt.'

The agent returned her commission to Miss Cui.

But, she asked: 'Who is going to pay me the cost I incurred moving?'

The property agent when contacted, declined to comment.


Miss Cui, who found another room for rent in a private apartment, claimed the 'landlord' owed her $1620.50, including a penalty she could claim according to the contract she had signed.

'She has avoided my calls, and I doubt I will get my money back,' she said.

A check with the Insolvency & Public Trustee's Office revealed that the 'landlord' is an undischarged bankrupt.

The New Paper was unable to reach her on her handphone.

A spokesman for the Insolvency & Public Trustee's Office said that when obtaining a loan of $500 or more from another person, an undischarged bankrupt has to inform the credit provider of his or her bankruptcy status.

Failure to do so is an offence which carries a fine of up to $10,000, or a jail term of up to three years.

Mr Mohd Ismail, 44, vice-president of the Institute of Estate Agents, said tenants should take precautions when renting by asking to see proof of the property ownership, such as property tax statement or conservancy charges.

He said: 'The tenant should also state in the tenancy agreement that 'the tenant is hereby renting the premises at the agreed price with the following conditions'.'

In the event of a dispute between the tenant and landlord, a claim may be lodged at the Small Claims Tribunal.


Source : 《联合早报》July 07, 2008