Friday, July 18, 2008

$1.99b Loan For Farrer Rd Condo

Source : The Business Times, July 18, 2008

It's S'pore's biggest syndicated loan for a residential project, says CapitaLand

THE en-bloc purchase of Farrer Court site - which has made many of the sellers millionaires - has achieved many superlatives, the latest being the $1.996 billion loan raised by the CapitaLand-led consortium that is re-developing the land into a high-rise condominium.

Making waves: Ms Patricia Chia, CEO, CapitaLand Residential S'pore, Mr Liew (centre) and Mr Ong. The Farrer Rd condo will have 1,500 homes in 36-storey blocks

The loan involving 10 local and international banks to fund the acquisition of the Farrer Court site and its redevelopment is the largest syndicated residential project loan ever arranged in Singapore, said CapitaLand's president and CEO Liew Mun Leong yesterday. He was speaking at the loan-signing ceremony at the Four Seasons Hotel.

This loan comprises a $1.362 billion term loan and a $500 million revolving credit facility with a tenor of five years, and $133.93 million bank guarantee facilities with a six-year tenor. A joint statement by the consortium partners said the loan will be used to partially refinance the acquisition costs and to part-finance the construction and development.

The consortium, Morganite Pte Ltd - whose partners are CapitaLand Residential (with a 35 per cent stake), Ong Beng Seng-controlled Hotel Properties Ltd (22.5 per cent), Morgan Stanley Real Estate Special Situations Fund III LP (22.5 per cent) and US-based Wachovia Development Corporation (20 per cent) - bought the site in June last year for $1.3388 billion, making it the largest collective sale transaction in Singapore. The transaction was completed in March this year.

The privatised HUDC estate of area 77,898 sq m (838,488 sq ft) will be re-developed into 36-storey condominium consisting of 1,500 homes.

This is the only private residential site in the Farrer Road and Holland Road area to be accorded a high plot ratio of 2.8 and a maximum height of 36 storeys.

'The project will cost us about $3 billion, including land price,' said Mr Liew. This $3 billion tag makes it the largest value residential project in Singapore.

'It's during such difficult times that developers, businesses and partners can pool together and seek partnership strengths with healthy financial standing to exploit opportunities,' Mr Liew added. Despite the weakness seen in new home purchases this year, Mr Liew believes that the demand here remains strong.

He is hence confident of attracting the right buyers for this project given its design by renowned architect Zaha Hadid and its good District 10 location, as well as support from the 'blue chip' partners.

'The demand is still holding (up) and there are still people buying,' Mr Liew said. 'If you look at people buying Nassim Park for over $3,000...and that's exceeding pre-Asian crisis (levels).'

Speaking on the sidelines, Hotel Properties executive director Christopher Lim concurred that current market weakness points to the issue of timing rather than a fall in demand.

'The demand is there but people are just waiting,' Mr Lim said. 'If they believe that price is not going to drop, they will come back to the market again.'

The 99-year leasehold project is slated to be launched in the first half of 2009 and its pricing will be determined at that time. Its breakeven pricing is in the region of $1,350 to $1,450 per square foot.

Mr Liew added that the group is ready to hold back the launch to achieve a desirable pricing as profitability remains the key focus for all its projects. 'We are a company that can hold on,' he said. 'Our balance sheet is not under pressure.'

The mandated lead arrangers and bookrunners of the loan are DBS Bank, UOB Asia, Standard Chartered Bank, OCBC and Royal Bank of Scotland plc.

The US Economy In Perspective

Source : The Business Times, July 18, 2008

THE past week has been pretty rough for those in charge of the US economy. For the second time this year, US Treasury and Federal Reserve officials had to work overtime last weekend to prevent another financial meltdown.

Between them, the two troubled entities in question - Fannie Mae and Freddie Mac - control just under half of US mortgages, worth a monumental US$5.2 trillion, or more than a third of US GDP. A serious situation, no doubt, but it's also important to take a step back and look at things in perspective.

In nervous trading last Friday, Fannie and Freddie saw their share prices halve in the course of a few hours. Elsewhere in the financial sector, trading this week has seen troubled banking giant Citigroup's share price tumble to 10-year lows, and insurance giant AIG's fell to levels not seen since 1995.

But despite all the bad news from the US financial sector, and a growing fear that we could well see more US bank failures, Wall Street's key indices still ended Wednesday trading as much as 3 per cent stronger, thanks to good news elsewhere - such as a great Q2 number from chip giant Intel.

True, Wall Street's key stock indices have fallen 14 to 15 per cent year to date. On the other hand, we've witnessed losses of more than 20 per cent each in Germany, the Antipodes, Malaysia, Thailand and Hong Kong. The decline in Singapore's STI and Japan's Nikkei was somewhere in between.

And yes, on top of having to finance expensive military operations abroad, and a hefty US$100 billion fiscal stimulus package more recently, the US government now faces the prospect of having to inject taxpayer funds into both Fannie and Freddie. UK-based research firm IDEAglobal estimated yesterday that based on the US Savings and Loans crisis in the early '90s, the final bill for US financial sector bailouts could possibly hit something like US$400 billion, or roughly 3 per cent of US GDP.

But here's a bit more perspective. The US budget deficit currently stands at a manageable 2.4 per cent of GDP. Japan - which doesn't have to finance any expensive wars abroad - has a larger deficit of 2.7 per cent of GDP.

What about US public debt? Yes, we are talking about a huge number of about US$14.5 trillion. But try to think about it this way: Would you be worried if your friendly next-door neighbour had bank borrowings equivalent to one year's income? Well, that US public debt number is only slightly larger than the US economy's annual GDP.

It remains true that, all things considered, the US economy is likely to get much worse before its get better, especially if the US dollar continues to slide from its near-record lows, and oil prices continue to rise. But even the doomsday scenario should be viewed in perspective - and the fact is that for all its troubles, the US economy still has strong foundations.

Ascendas Reit Q1 Income Up 16%

Source : The Business Times, July 18, 2008

Ascendas Real Estate Investment Trust (A-Reit) on Friday posted a 16 per cent rise in quarterly distributable income, boosted by higher rentals at its business park properties.

A-Reit, Singapore's second-biggest property trust by market value, earned distributable net income of $51.8 million (US$38.3 million) or 3.89 Singapore cents per unit, for its fiscal first quarter ending June 30.

This compares with $44.7 million in distributable income in the same period a year ago.

A-Reit competes against commercial and industrial property-based trusts Mapletree Logistics, CapitaCommercial, and Cambridge Industrial among Singapore-listed Reits.

A-Reit is managed by Ascendas Funds Management Ltd, a wholly-owned unit of Singapore government-owned industrial park developer Ascendas. -- REUTERS

HDB Condo-Like Flats In Ang Mo Kio Open For Sale Next Week

Source : The Straits Times, July 18, 2008

ANOTHER condo-like public housing is coming up, this time in the heart of bustling Ang Mo Kio.

Developer United Engineers, through its subsidiary Greatearth Developments, is launching its 578-unit project for sale next Wednesday.

Park Central is the third project under the Housing Board's Design, Build and Sell Scheme (DBSS). -- PHOTO: UNITED ENGINEERS

Located at Ang Mo Kio Street 52, Park Central@AMK offers four 30-storey towers with four and five room flats.

Every unit will come with condo-style trappings such as built-in wardrobes, kitchen cabinets, air-conditioning system.

The average selling price will range from $490 per square foot to $500 psf, or between around $400,000 to just below $700,000.

Park Central is the third project under the Housing Board's Design, Build and Sell Scheme (DBSS), which allows private developers to design, build and price the HDB flats for sale.

IMF Says Global Economy In 'Tough Spot'

Source : The Straits Times, July 18, 2008

WASHINGTON - The IMF on Thursday lifted growth forecasts modestly for the world including the United States but said the global economy is in a 'tough spot' due to rising inflation amid a slowdown.

Global output is expected to climb 4.1 per cent in 2008, up from its April projection of 3.7 per cent, the International Monetary Fund said in an update of its April World Economic Outlook.

But the report also dramatically boosted the inflation outlook.

For 2009, the forecast calls for 3.9 per cent global growth, up a notch from its earlier call of 3.8 per cent.

IMF chief economist Simon Johnson said there is still 'a chance of a global recession', which many economists define by global growth below 3.0 per cent.

Mr Johnson said the overall growth picture is 'roughly' the same as in April but that 'the situation has become more complicated since April because of the inflation problem.'

The IMF made modest upward revisions for the United States, the eurozone, Japan and China, but suggested that the small gains in output still reflect a slowing from 2007 levels and may be overshadowed by inflation pressures.

'The global economy is in a tough spot, caught between sharply slowing demand in many advanced economies and rising inflation everywhere, notably in emerging and developing economies,' the report said.

'Global growth is expected to decelerate significantly in the second half of 2008, before recovering gradually in 2009. At the same time, rising energy and commodity prices have boosted inflationary pressure, particularly in emerging and developing economies.'

Based on the latest trend, the IMF said the 'top priority for policymakers is to head off rising inflationary pressure, while keeping sight of risks to growth.'

The IMF raised its 2008 inflation forecast sharply to 3.4 per cent for advanced economies, from its April figure of 2.6 per cent. For emerging economies, prices are expected to soar 9.1 per cent, up from an earlier estimate of 7.4 per cent.

'Inflation is mounting in both advanced and emerging economies, despite the global slowdown,' the report said.

The report also said financial market conditions 'remain difficult' despite 'reduced concerns about a financial meltdown.'

It noted that 'markets remain fragile amid concerns about losses in the context of slowing economies' and the 'extension of new credit will be constrained by the need to repair balance sheets' of major banks hit by the US real-estate crisis.

On the growth front, the IMF said the outlook for the United States, the world?s biggest economy, is not as dire as previously projected.

The latest forecast calls for a 1.3 per cent expansion in 2008, in the second upward revision in the past month for the United States. In April, the IMF predicted growth of just 0.5 per cent but boosted that in June to 1.1 per cent.

The IMF maintained its call from last month's update of 0.8 per cent US growth for 2009.

The new projection is based on incoming data for the first half of the year, the IMF said, while indicating a recession remains possible for the US economy.

Mr Johnson said the US economy 'hasn?t stalled', and added that 'we don't think there will necessarily be two quarters of negative growth,' which is the definition of recession used by many economists.

But Mr Johnson declined to offer a prediction on a US recession, saying that forecast would be made by a US economic research organisation.

'The US economy is slowing down, but there should be a modest but significant recovery in 2009,' he said.

For the 15-nation eurozone, the new IMF 2008 projection calls for growth of 1.7 per cent, 0.3 percentage points more than it saw in April. The 2009 outlook was held at 1.2 per cent growth.

In Japan, the IMF added 0.1 percentage points to its 2008 outlook to show 1.5 per cent growth.

China's 2008 growth estimate was lifted to 9.7 per cent from 9.3 per cent and the 2009 estimate was boosted to 9.8 per cent from 9.5 per cent.

For Britain, the IMF also slightly raised its estimate to 1.8 per cent for 2008 from 1.6 per cent.

The IMF revised up its forecast for France to show growth of 1.6 per cent (from 1.4 per cent) and Germany to 2.0 per cent (from 1.4 per cent). -- AFP

Appeal Against Horizon Towers Sale Dismissed

Source : The Straits Times, July 18, 2008

High Court ruling clears the way for $500m collective sale that was inked 1-1/2 years ago

THE drawn-out battle over the $500 million collective sale of Horizon Towers has moved one step closer to a conclusion after the High Court threw out an appeal by objecting owners.

Yesterday's ruling means the sale of the Leonie Hill estate, first inked in January last year, can proceed - unless the objectors pursue one final possible avenue of appeal to the Court of Appeal. Some are considering this option.

The case marks a win for Mr K. Shanmugam in his final appearance as a litigator on April 30 before becoming Law Minister. He appeared before High Court Justice Choo Han Teck on behalf of the buyers, Hotel Properties (HPL) and its two partners.

HPL executive director Christopher Lim said: 'We hope to move forward with it after 1-1/2 years of signing the agreement.'

They had inked a deal to buy the 99-year leasehold estate for less than $850 per sq ft of gross floor area, before prices shot up dramatically in last year's bull market.

Some sellers were unhappy with what they regarded as a low price, particularly after a neighbouring development sold for more than double that price. Others, including the objectors, never wanted to sell from day one.

The objectors had argued, for example, that the sales committee had acted in bad faith in the way it handled an alternative offer of $510 million from another firm as well as the way it distributed the sale proceeds.

Justice Choo, in his judgment, dismissed the appeal saying there was no error of law to justify overturning a decision of the Strata Titles Board (STB) to allow the sale to go ahead. The STB had found that the sales committee had made a 'judgment call' to proceed with the offer.

The objectors did not prove the committee had acted in bad faith, he said. This was an issue of fact, not law, so it was within the purview of the STB, he said.

'From the submissions and supporting documents, it appears that there may have been intrigue in the course of the en bloc sale from the day the SC (sales committee) was created to the proceedings before the STB,' said Justice Choo.

'It is questionable, however, whether the STB was the forum to resolve all questions arising from secret manoeuvres of the different factions among the subsidiary proprietors.'

The STB is not a court but a statutory tribunal, he added.

The Horizon Towers case was the first collective sale where the majority owners were slapped with a lawsuit for alleged breach of contract.

In late June, Justice Choo also dismissed an appeal by objecting owners of another large collective sale site - Gillman Heights. CapitaLand is the lead buyer of the $548 million site in Alexandra Road.

Another Door Closes On Horizon Minorities

Source : The Business Times, July 18, 2008

High Court dismisses appeal, says there's no proof that sale was in bad faith

Minority owners seeking to stop the en bloc sale of Horizon Towers have been defeated yet again. Singapore's High Court yesterday dismissed their appeal, on the grounds that they failed to prove the sale was done in bad faith and prejudiced their rights.

This decision, coming on the heels of the High Court's dismissal of an appeal against the sale of Gillman Heights Condominium, marks the second major defeat for minorities here.

The minority owners of Horizon Towers whom BT spoke to said they were still considering their options at this time. But they will soon be meeting to decide if they will take the matter to the Court of Appeal, or start a civil suit to claim for any financial loss - which will be their final recourse.

If they decide not to appeal further, the $500 million sale of the Leonie Hill development to a consortium led by Hotel Properties Ltd (HPL) will go through. It will also mean that the closely watched saga - which has been playing out in the public eye for more than a year - will finally come to a close.

HPL group executive director Chris Lim told BT: 'We are pleased with the High Court judgment and hope to move forward with the deal as it's been one-and-a-half years since the sale agreement was inked.'

Justice Choo Han Teck, who presided over the minorities' appeal, said in his judgment yesterday that the minorities had failed to show that the Strata Titles Board (STB) erred in law in its decision to approve the en bloc sale in December.

The High Court only has powers to consider questions of law on appeal.

The minorities had argued that the sale had been conducted in bad faith. They claimed a better sale price might have been achieved if the sales committee had pursued a second offer from a party called Vineyard, which had reportedly offered $510 million. The minorities claimed the sales committee did not pursue the offer - and even concealed it - because the development's sales agent, First Tree, was getting a higher sales commission from the HPL consortium.

But Justice Choo said the minorities failed to prove bad faith, as their argument was essentially concerned with whether the eventual sale price was fair - which is 'a question of fact' for the STB to decide, and not a question of law for the court to deliberate on.

Justice Choo said, if the minorities feel the sales committee had deliberately or negligently not pursued the Vineyard offer, they can pursue a civil claim for the purported financial loss.

He also ruled that the minorities had failed to prove there was a lack of good faith in the way the sales proceeds were to be distributed amongst the various owners. The minorities argued the apportionment method used was unfair because it resulted in penthouse owners getting about 16 per cent less on a per- square-metre basis, compared to non-penthouse owners.

Justice Choo said there can't be a lack of good faith in the selection of the apportionment method just because it was the only one considered or it led to some owners getting more than others. He noted that the STB had considered the evidence of several experts and it seemed no one method would satisfy everyone.

He added that, even if the STB had deemed the chosen method inappropriate, it would be an error of fact and not an error of law.

He also dismissed the minorities' arguments that the en bloc sale was unconstitutional, and that the sale agreement had lapsed by the time the STB approved the sale.

Justice Choo also noted the 'intrigue' that has surrounded the en bloc sale of Horizon Towers. There have been numerous accusations on the conduct of the various parties involved - ranging from whether the sales committee should have worked harder to get a better sale price, to whether the minorities were only against the sale because the price was too low.

'The STB was not bound to examine the rights and preferences of each individual subsidiary proprietor and it was not the forum to inquire into the conduct of individual members of the SC (sales committee), or even the SC as a whole,' Justice Choo said. 'If the STB were to embark on the kind of inquiry and make the findings the appellants say it ought to have done, the STB would never get its job done within the time limited.'

Dissenters Of Horizon Towers En-Bloc Sale Lose Appeal

Source : The Straits Times, July 17, 2008

THE drawn-out collective sale of Horizon Towers finally came to a close on Thursday when the High Court threw out the appeal of the objecting owners, allowing it to proceed.

This means that Hotel Properties (HPL) and its two partners can now complete the $500 million collective sale of the Leonie Hill estate, if the objecting owners do not appeal against the High Court's decision.

It has been one-and-a-half years since the deal was inked.

High Court judge Choo Han Teck on Thursday said he was of the view that there was no error of law that would have corrupted the decision of the Strata Titles Board (STB), which had allowed the sale to proceed.

Office Space Slump? 2 State-Owned Sites Pull In Strong Bids

Source : The Straits Times, July 18, 2008

THE former Ministry of Home Affairs complex at Phoenix Park is set to be transformed into an 'iconic integrated office complex' with restaurants and other facilities.

The plans were unveiled by LHN Facilities Management, which was awarded the right to lease the Tanglin Road site by the Singapore Land Authority (SLA) yesterday.

LHN's managing director, Mr Kelvin Lim, added that perks like a shuttle service to the nearby Redhill MRT station would help to attract government agencies and private companies which need space outside the Central Business District. The property comprises 24 low-rise blocks.

LHN, which specialises in converting old properties for new uses, offered $368,888 a month - more than double the $165,000 guide rent. A total of 11 bids were received for the site.

Another state-owned site awarded for lease by the SLA, the former Monk's Hill Secondary School at Winstedt Road, is also set for a makeover.

The top bid came in from marine engineering firm Allbest Equipments at $211,328 a month - 40 per cent more than the guide rent of $147,300.

Allbest is retaining only 5 to 10 per cent of the built-up space for its own office needs and will rent out the rest.

The company will spend about $4 million doing up the building and expects to lease space to medium-sized businesses at $8 to $10 per sq ft, said Mr Chan Cheong Hoy, general manager of Allbest.

The strong interest in the two state-owned sites shows that despite the torpor in the property market, demand for office space in the prime area appears to be going strong.

The two buildings pulled in offers that were well above their guide rents, SLA said.

Both companies plan to sub-lease most of the space in these buildings, believing that office demand will remain healthy.

These two properties are the first that SLA has leased out this year. The agency will put up another two sites, also for office use, in the coming months.

One is a former police post at 11 Kelantan Road, which has a gross floor area of 1,905 sq ft. The other is the former Pacific Can Building at Cecil Street, a vacant two-storey property with a total floor area of 19,482 sq ft.

Tanglin Road Site Goes At 124% Above Guide Rent

Source : The Business Times, July 18, 2008

THE former Ministry of Home Affairs complex at Phoenix Park, off Tanglin Road, has been awarded to LHN Group for $368,888 a month - a huge 124 per cent more than the guide rent of $165,000 a month.

The site, with a gross floor area of 143,195.4 sq ft, is managed by the Singapore Land Authority (SLA). The tender attracted 11 bids - 10 of them at or above the guide rent.

Phoenix Park: LHN, which won the site, plans to configure it into separate tenant clusters

Bidders included United Engineers Developments (UE) which put in the second-highest offer of $315,033 per month.

Teo Cher Hian, director of land lease (private) with SLA's land operations group, said LHN offered the 'best value for the state' based on allowable uses, business concept, track record and corporate financial health.

LHN plans to configure the site into separate tenant clusters, he said. The adjacent former Education Ministry headquarters now houses the Youth Olympic Games headquarters. And with more office set-ups pending, Phoenix Park 'completes the area as an office hub', said Mr Teo.

LHN is the master tenant for other state properties, including the former Gan Eng Seng School and CID Training Centre.

LHN managing director Kelvin Lim said the investment cost at Phoenix Park is expected to be about $4 million. He estimates that rents could be around $6 psf per month when it opens at the year-end.

Rising office rents are forcing more businesses to consider alternative office space like Phoenix Park. UE, for instance, had intended to use most of the space to house its own engineering operations, and to lease the rest to other tenants. 'The existing structures and layout would also allow rather quick occupation with minimal works,' a UE spokesman said.

Marine engineering firm Allbest Equipments, which was awarded the former Monk's Hill Secondary School site by SLA, also expects to relocate its corporate offices there.

Allbest put in the highest bid of $211,328 per month for the site, which has a GFA of 83,889.5 sq ft.

Seven bids were received, with Allbest's 43 per cent higher than the guide rent of $147,300.

Allbest general manager Chan Cheong Hoy said it will lease the remaining space at $7.50-$10 psf a month and expects to complete the first phase of renovations within four months.

Cushman and Wakefield managing director Donald Han said that as well as getting such properties ready to let as quickly as possible, developers have to keep construction costs under tight control to ensure their projects are feasible.

Mr Han says that in the Newton area transitional office space is going for $7.50-$8 psf a month, while the former Gan Eng Seng School could achieve $4.50-$5 psf a month.

SLA Awards Office Properties, Offers Two More Sites For Lease

Source : Channel NewsAsia, 17 July 2008

The Singapore Land Authority (SLA) has awarded the first two sites for transitional office space this year.

One of the most keenly-watched sites was the former Home Affairs Ministry complex at Phoenix Park.

The parcel was awarded to LHN Facilities Management, which will pay S$368,888 in rent per month.

11 bids were received for the Phoenix Park site, 10 of which were above the guide rent of S$165,000 per month.

The second site is the former Monk's Hill Secondary School at No. 10, Winsteadt Road in the Newton area.

It was awarded to Allbest Equipments for a rental of S$211,328 per month.

The plot received seven bids in total, all above the guide rent of S$147,300 per month.

The SLA is preparing to lease out two more sites for office use.

The first is a former police post at No. 1, Kelantan Road. It has a gross floor area of 177 square metres and is suitable for small start-ups.

The second site is the former Pacific Can Building at Cecil Street, which has a gross floor area of 1,810 square metres.

Leases for the two properties will end in June 2011.

Ku Swee Yong, director of Savills, said: "The site at Kelantan Road, it is very small, probably good for just one single user. So, we would be expecting probably quite many bids, maybe 20 bids. (For the site at) Kelantan, we would be expecting $4 to $5 per square foot per month. At Cecil Street, we would be looking at $6 to $8 per square foot per month bid price." - CNA/ir

Prime Residential Rents Could Fall 4.5% By Year End

Source : The Straits Times, July 18, 2008

RESIDENTIAL rents in Singapore's prime districts could drop by 4.5 per cent by year end, amid fears of a longer-than-expected downturn in the United States.

Property consultant Jones Lang LaSalle (JLL) said the high rentals seen in the Republic's prime districts last year are now facing downward pressure.

Prime properties are typically located in districts nine to 11 with units ranging in size from 500 to 2,000 sq ft.

JLL South-east Asia and Singapore managing director Chris Fossick said in a press conference yesterday: 'Expatriates with lower housing budgets are moving out to the non-prime market, causing typical prime rentals to ease marginally in the first half of this year.'

According to JLL, luxury prime property rentals softened by 1 per cent in the year-to-date while typical prime rents weakened by 2 per cent.

Said JLL: 'With the US economy facing the potential of a longer downturn than expected due to the sub-prime woes, credit crunch and rising inflation, market sentiments continue to weaken in Singapore.

'The level of residential collective sales has dropped to only two transactions worth $55.3 million in the first half of the year compared with51 transactions worth some $9.33 billion over the same period last year.'

JLL forecasts that average resale prices in the central district are expected to ease about 1 per cent year-on-year by next year while mass-market resale prices will most likely maintain current levels.

Meanwhile, prices in the luxury prime market are expected to contract the most, falling some 11 to 13 per cent year-on-year next year.

However, Mr Fossick believes that once the US housing crisis passes, a recovery in this region will be swift given the sentiment-driven nature of the industry.

'The uncertainty in the US is unlikely to clear up in the next six months, but if things begin to look up after that, we could see a rapid turnaround here as soon as early next year.'

Rents, Prices In Central, Prime Areas May Drop

Source : The Business Times, July 18, 2008

JLL predicts up to 4.5% dip in typical prime district rents

RENTS and resale prices of housing in the central and prime districts could be hit this year and next depending on the crunch in the US market, says Jones Lang LaSalle (JLL).

In the worst case scenario, the real estate consultancy firm projects a 3.5 to 4.5 per cent drop in rents in the typical prime districts by year-end. 'Compared to recent rental rises, this remains a relatively small decline,' said JLL's managing director in South-east Asia and Singapore, Chris Fossick. The central districts could experience a bigger 5 to 7 per cent drop in rents in 2009.

The anticipated completion of some 15,000 units between 2008 and 2009 is likely to cause rents to ease, as new islandwide supply is likely to surpass the average 10-year take up of 6,600-6,800 units, JLL said in a statement yesterday. Most completed supply could appear in the central districts.

Average resale prices in the central districts could ease about one per cent by 2009, while prices in the luxury prime districts could dive 11-13 per cent.

Mr Fossick referred to the forecasts as 'more of a worst-case scenario' should the US market not pick up soon. He said that sentiment will improve once US housing shows signs of recovery. Singapore's fundamentals are attractive to investors and demand will return when uncertainty clears, he added.

Investors might then realise that 'there is less supply now than we thought there was' - and prices may rise again.

Taking a medium to longer-term view, Mr Fossick said: 'We are seeing a dramatic fall in potential future supply in Singapore due to a stall in collective sales.'

JLL said that there were only two transactions worth $55.3 million in the first half of this year, compared with 51 deals worth $9.33 billion in the same period last year.

Mr Fossick said that there is also less supply from the confirmed list of the Government Land Sales Programme for the second half of the year.

Prime districts are already seeing slightly weaker rents as expatriates with lower housing budgets move to non-prime areas. JLL data showed that in the first half of the year, luxury prime rents fell one per cent and typical prime rents dropped 2 per cent.

Properties in the central districts in turn became more popular for leasing. Average rents there rose 11 per cent and surpassed those of typical prime properties for the first time in H1 this year.

JLL data also showed average resale prices softening in some areas. Luxury prime property prices eased 4.9 per cent to $2,595 per square foot (psf) in the first half of the year, while central district prices eased 0.5 per cent to $1,020 psf.

The shift of rental demand from the prime to central districts has sustained investor interest in central district property, according to JLL.

The mass market stood out with 3 per cent growth in resale prices to around $690 psf in H1, and JLL projected that prices could stay at this level in 2009.

JL LaSalle Says Singapore's Prime Property Market To Ease Further

Source : Channel NewsAsia, 17 July 2008

Rents in Singapore's prime residential sector are expected to ease further. Consultancy firm Jones Lang LaSalle has projected a 4.5 per cent contraction for the whole year. The sector has already weakened by two per cent year to date.

In its mid-year review on the Singapore property market, Jones Lang LaSalle also noted an easing in the resale prices of luxury projects in the prime districts.

However, it said that mass market homes saw healthy growth of some three per cent.

High rentals are forcing expatriates on lower housing budgets to move out of the prime market in Singapore and this is behind softening rents this year. This is expected to persist into 2009, when more housing units will likely enter the market.

An anticipated 15,000 units are expected to be completed by the end of 2009, compared to an average take up of 6,800 units per annum.

According to Jones Lang LaSalle, what may help prop up rentals is demand. It noted that companies in Singapore are still expanding, going by the take-up in office space.

Christopher Fossick, Managing Director, Singapore & Southeast Asia, Jones Lang LaSelle, said: "There is still an influx of people coming here to work and there is a strong expatriate demand in all business sectors."

Meanwhile, in the resale market, the average prices of units in the prime districts eased by some 4.9 per cent in the first half of this year.

However, this may change. Collective sales have been a key source of land for new projects in the prime areas and with these drying up, home prices may be pushed upwards.

Mr Fossick continued: "There's been almost no residential collective sales this year. Volume has gone down 97 per cent by our records in the first half versus the first half in 2007. In 12 to 24 months’ time, we're going to see that impacting the market. There's also far less supply from luxury collective sales sources."

Over in the mass market, prices have been holding up, climbing by some three per cent in the first half of 2008 due to demand from dislodged collective sale owners and those upgrading from government flats. - CNA/vm

$3b Farrer Condo Boasts Sensuous, Curvy Towers

Source : The Straits Times, July 18, 2008

Renowned architect Zaha Hadid behind their design; project to be launched in 2009

PROPERTY giant CapitaLand has unveiled the 'branded' upmarket designs for a $3 billion residential project in Farrer Road that it aims to launch next year.

UNIQUE DESIGN: The as-yet-unnamed condo's 36-storey towers will feature a series of sensuous lines not commonly seen in residential developments in Singapore. The penthouse units (left) in the project offer good views. The project will be launched in the first half of next year. -- PHOTOS: CAPITALAND

The as-yet-unnamed condominium boasts a series of sensuous lines that are not commonly seen in residential projects in Singapore, while the curving towers give an ultra-modern feel without the harsh edges present on many blocks.

It is all very much in the recognised style of architect Zaha Hadid, the first female recipient of the coveted Pritzker Architecture Prize.

This is her first condo project in Singapore but she has designed two bungalows for niche developer Elevation Developments.

Past Pritzker Architecture Prize winners include Mr Frank Gehry, Sir Norman Foster and Mr Rem Koolhaas.

The seven 36-storey blocks on the sprawling 838,488 sq ft site will hold about 1,500 homes. There will also be six pairs of unique semi-detached houses.

CapitaLand is developing the 99-year leasehold plot with three partners. Hotel Properties and a Morgan Stanley Real Estate fund will each hold 22.5 per cent, while Wachovia Development will take 20 per cent.

These parties, which borrowed a whopping $1.996 billion for the ambitious project, yesterday held a signing ceremony for the loan with their bankers at the Four Seasons Hotel.

It is the largest syndicated residential property development loan ever arranged in Singapore and comes amid a slow housing scene and tight credit markets.

CapitaLand said the deal comprises a $1.362 billion term loan, $500 million of revolving credit and $133.9 million in bank guarantees.

The collective sale deal for the former Farrer Court condo site was inked in June last year at $1.338 billion, or up to $783 per sq ft (psf) of potential gross floor area.

Ms Patricia Chia, chief executive of CapitaLand Residential Singapore, said the project's break- even cost is around $1,350 psf to $1,450 psf.

The condo will be launched in the first half of next year.

Developers generally see no need to hurry given the slow property sector, falling share markets and continuing bad news from the United States.

CapitaLand chief executive Liew Mun Leong said at the signing ceremony that the past few months have been challenging, but the business world must go on, notwithstanding the current economic turbulence in the US.

He said bankers, developers, businesses and potential partners could come together to exploit opportunities that increase during bad times.

Mr Liew added later: 'Sentiment has been affected in the US, but I think the fundamentals in Asia - in terms of economic growth, the demand, urbanisation - are still very strong.'

CapitaLand To Build 1,500 High-End Homes On Site Off Farrer Road

Source : Channel NewsAsia, 17 July 2008

CapitaLand intends to build an estimated 1,500 mid- to high-end homes in prime District 10 on a site that currently houses the Farrer Court estate.

The developer and its partners bought the site off Farrer Road in a collective sale last June for some S$1.34 billion.

Revealing plans for the project on Thursday, CapitaLand said the new development will have seven blocks of 36-storeys each, with mainly two, three and four bedroom units. The development will also include 12 garden villas.

The unnamed project is expected to be launched in the first half of 2009.

CapitaLand said it is targeting high net worth individuals, both in and outside of Singapore.

Liew Mun Leong, President & CEO of CapitaLand Group, said: "They can choose Hong Kong, they can choose Shanghai, but I think that Singapore is the most attractive. It has good connectivity, good infrastructure and is a very safe investment."

CapitaLand expects the breakeven cost to range between S$1,350 and S$1,450 per square foot.

Industry watchers said that depending on the market conditions at the time of the launch, the new units could fetch between S$1,500 and S$1,800 per square foot on average.

The entire project will cost S$3 billion in total. CapitaLand and its partners have signed an agreement for a loan of S$2 billion to fund development costs.

Mr Liew continued: "The sentiments have been affected in US, but I think here in Asia in terms of economic growth, the demand and urbanisation is still very strong for us. So I think the effect is something I am not overly concerned about."

Farrer Court currently has 618 private apartment units. The 99-year leasehold site spans 838,488 square feet and has a maximum gross plot ratio of 2.8.

It is within walking distance of the future Farrer MRT station. - CNA/vm

仲量联行:如果次贷风暴持续 豪华房产转售价可能跌一成

Source :《联合早报》July 18, 2008








仲量联行新加坡与东南亚董事经理傅司克(Chris Fossick)也指出,政府售地和集体出售地段的交易开始放缓,发展商扣着项目不推出,未来的新私宅供应可能会因此开始减少。