Marina Bay Taking Shape

Source : The Straits Times, April 21, 2009

MORE than $22 billion of investments have been pumped into transforming Marina Bay and the vision of a prime waterfront location for living, working and playing is steadily taking shape.

The transformation of the Marina Bay area is progressing on schedule. --PHOTO: ZAOBAO

'In one or two years' time, this bay will be alive with people, with activities, festivities and it's a testimony to the foresight of the people who started developing this area many, many years ago,' said National Development Minister Mah Bow Tan after touring key sites on Tuesday.

The immediate vicinity of Marina Bay will be ready 'for people to enjoy in a couple of years' time', he added.

The development of the entire Marina Bay area - Singapore's most ambitious urban transformation project - is expected to be completed in 10 to 15 years.

Yet the groundwork for the expansion of the existing Central Business District started back in the late 1960s. The new downtown comprises 360ha, which was reclaimed in phases from 1969 to 1992.

Plans started in earnest about 10 years ago when the area was first developed. The first site was put up for sale in 2004.

The transformation of Marina Bay into Singapore's new downtown is part of a bigger plan to remake the city and turn it into an exciting, liveable global city.

Mr Mah reiterated that the plans are going ahead in spite of the economic crisis. 'As a Government, we must be able to look farther ahead and we must be willing to invest,' he said.

Read the full report in Wednesday's edition of The Straits Times.

Abu Dhabi's Aldar Launches Mid-Income Housing

Source : The Business Times, April 21, 2009

(ABU DHABI) Aldar Properties , the largest real estate developer in Abu Dhabi, is launching a 9.4 billion UAE dirhams (S$3.85 billion) mid-income housing project and the government signalled more could follow. The Al Falah project will be fully funded by the Abu Dhabi government and would be delivered in stages starting from 2011 to 2014, Aldar said on Sunday.

'This project signals the emphasis we will place this year and next in building more mid-income housing projects because there is a requirement for it from UAE nationals,' Aldar chairman Ahmed al-Sayegh told reporters. A section will be made available for expatriates, he added.

Abu Dhabi is facing a housing shortage that has driven up rents and stoked inflation as an oil price boom attracted expatriates faster than new homes could be built, but inflationary pressures have subsided since the global economic crisis spread and hit oil prices. -- Reuters

Dubai Home Prices Fell 42% In Past 6 Months

Source : The Business Times, April 21, 2009

(DUBAI) Dubai house prices have fallen as much as 42 per cent in the past six months and are likely to drop further as new homes are completed amid waning demand in the Persian Gulf business hub, Colliers CRE plc said.

Gloomy outlook: Prices are expected to decline even as estimates for the number of new homes coming onto the market are revised lower, to about 64,800 units between now and the end of 2011

Prices will decline even as estimates for the number of new homes coming onto the market are revised lower, to about 64,800 units between now and the end of 2011, the property adviser said yesterday in an e-mail report. It had previously estimated 140,000 new units by the end of 2010.

It's 'reasonable to assume that as new stock continually comes online that the downward trend in the market will continue throughout 2009 and is unlikely to stabilise before the second- quarter of 2010', Ian Albert, the firm's regional director, said in the report.

The worst financial crisis since the 1930s has weakened the real-estate market in Dubai as banks curtailed mortgage lending and speculators pulled out. Expatriates who were fired by companies trying to weather the global recession are being forced to leave the country because of visa restrictions, Colliers said.

The rest of the Gulf, richer than Dubai in oil and gas wealth, is suffering less as crude prices lost almost US$100 a barrel from their US$147.27 peak last July. Abu Dhabi, capital of the UAE and holder of most of the country's oil and gas reserves, remains undersupplied with houses.

It already lacks 70,000 homes and will require more than 120,000 new units by the end of 2012, the report said. Doha, the capital of gas-rich Qatar, is also short of homes as its population rose by almost 40 per cent last year to 1.6 million. Some 9,000 apartments will be ready by the end of 2010, according to Colliers. -- Bloomberg

Ground Zero Projects May Be Put On Hold

Source : The Business Times, April 21, 2009

(NEW YORK) Construction of several office towers at the World Trade Center site could be put off for decades because of the failing real estate market, the site's owners said on Thursday.

An analysis projected that one skyscraper might not be built and occupied until 35 years after the Sept 11, 2001, attack which destroyed the complex. Developer Larry Silverstein and the Port Authority of New York and New Jersey have been talking on and off for months about rewriting a three-year-old agreement that gives the developer rights to build three out of five towers planned for the site.

Mr Silverstein, unable to obtain financing for all the towers and with only about US$1 billion left in insurance money to pay for them, asked the Port Authority last fall to guarantee financing for two of his towers, officials familiar with the negotiations say.

The Port Authority agreed to back one tower already under construction, where the government agency has agreed to move once it's built.

Executive director Chris Ward on Thursday cited the exodus of major financial firms like Merrill Lynch and American International Group from downtown Manhattan as a reason not to flood the market with 10 million square feet of office space at the same time - about 2013.

Mr Ward also said that Mr Silverstein was free to build his three towers on his own.

'Mr Silverstein is asking the public sector to finance, in fact, his buildings,' Mr Ward said. Mr Silverstein 'is seeking the Port Authority's capacity to finance office space downtown'. Janno Lieber, who oversees the trade centre site for Mr Silverstein, said on Thursday that guaranteeing financing for Mr Silverstein's towers would help generate commercial rents the Port Authority could collect for the 90 years remaining on Mr Silverstein's lease.

'Most important, from a public standpoint, this allows the Port Authority to honour its commitment to rebuild lower Manhattan - a promise that the agency has made many times since 9/11,' he added.

The Port Authority is building a 1,776-foot skyscraper, commonly known as the Freedom Tower, that is set to open in 2013.

It has no beginning or completion date for a second tower that it is responsible for building. Mr Silverstein's other towers should be built whenever the market improves, Mr Ward said. The Freedom Tower and Silverstein's three planned towers - designed by architects like Lord Norman Foster and Richard Rogers - are all expected to be among the city's tallest towers.

But an analysis prepared for the Port Authority by the Cushman & Wakefield real estate brokerage projected that while two of Silverstein's towers could be built by 2013, a third wouldn't be built until 2030 and fully leased until 2036.

A second tower that hasn't been built yet wouldn't be fully leased until 2025, the analysis said.

Mayor Michael Bloomberg, who has committed city office space to the one tower the Port Authority agreed to back, said Thursday the 2036 date is 'just a number out of the blue'. 'My hope is that things will get done a lot quicker . . . The problem is that you sort of have to do everything or at least part of everything because if you don't, then nothing works.'

The lease requires Mr Silverstein to build his three towers by 2013 or forfeit rights to them. -- AP

City Of London Office Rents Plunge 38%

Source : The Business Times, April 21, 2009

It is now not among Europe's top three most expensive office locations

(LONDON) The City of London has been knocked out of Europe's top three most expensive office locations by Geneva and Paris, research by property consultants NB Real Estate and ONCOR International showed yesterday.

Flagging: City of London rents are now 157 euros cheaper per square metre than in the Triangle d'Or area of Paris, which is often compared with London's Mayfair district

Average office rents in the City business district - Britain's historic financial heartland - have fallen 38 per cent in the last 12 months to 593 euros (S$1159.30) per square metre, making it Europe's sixth-most expensive office district.

City of London rents are now 157 euros cheaper per square metre than in the Triangle d'Or area of Paris, the neo-classical neighbourhood between the Champs-Elysees and the River Seine, which is often compared with London's Mayfair district.

The West End of London remains the most expensive office district in Europe despite experiencing the largest fall in office rents in the past year, with 45 per cent wiped off its office rental values to 961 euros per square metre.

Office rents in Moscow and Geneva, Europe's second and fourth-most expensive business locations, are now 873.3 euros and 623.1 euros per square metre respectively. Dublin takes fifth spot, with average rents of 600 euros per square metre.

Geneva and Zurich saw the biggest growth in rents in the last 12 months, the report said.

Geneva has seen a 14.6 per cent increase in the rental cost of office space and Zurich a 5.5 per cent increase in rents.

'Swiss banks may have taken the axe to their London-based investment banking operations but as a whole their private banking sector has held up relatively well,' said James Crisp, director at NB Real Estate.

'Whilst the City of London and the West End now have a substantial overhang of spare office space, that does not seem to be the case in the major Swiss cities,' he added.

Less than half the 16 European office locations covered by the report posted growth in rents in the past year, the weakest overall performance since 2004.

With the exception of London, Moscow office rents suffered the largest fall in Europe in the last 12 months, dropping 15 per cent on average.

'Rents for prime offices in Moscow are still among the most expensive in Europe - how well Russia deals with its latest economic crisis will determine whether it stays in that position,' Mr Crisp said. 'Depreciation of the rouble suggests rents have further to fall,' he said. -- Reuters

New Showflats Pull In Crowds

Source : The Straits Times, April 21, 2009

Condo-style flats popular; private homes see encouraging sales

THOUSANDS of people flocked to check out some of the new housing developments on sale over the weekend, scenes more reminiscent of a boom, not a recession.

Despite the recession, many were checking out new housing projects over the weekend. The Arte attracted about 1,000 people and another 20 units were sold over the weekend for $30 million, said its developer. -- PHOTO: CITY DEVELOPMENTS

As one industry watcher told The Straits Times: 'The mass market is still moving. If you price it correctly and reasonably, people will still buy.'

The hottest ticket in town was clearly the Parc Lumiere project, which drew an astonishing 6,500 visitors over the weekend.

Buyers had begun queueing last Friday before its viewing period started on Saturday, with 829 people eventually in the line for flats in the estate, which is being developed under the Design, Build and Sell Scheme (DBSS).

There was no balloting for the project: Just turn up and book.

Developer Sim Lian Group said it has already sold 306 units out of a total of 360. All the four-room flats, priced between $378,000 and $425,000, have been sold.

Only the low-floor five-room flats are left. The five-roomers are priced from $462,000 to $575,000.

'After going through Premiere @ Tampines, we thought we would try another way of selling. When you do it by ballot, a lot of people just try for fun. A lot who were keen didn't get the chance to book,' said Sim Lian executive director Diana Kuik.

But some potential buyers felt the walk-in selection sale method, essentially a first-come, first-served sale, was inconvenient. One said the sale came at too short a notice for him to take leave to queue. A parent said her son had been waiting for the project but was travelling in Europe.

Sim Lian said it has had feedback from happy buyers, including a pair of siblings happy to get a unit next to each other.

The second DBSS project, The Peak @ Toa Payoh, also had a busy weekend with 1,711 applications lodged as of 6pm yesterday for the 1,203 units.

This project by developer Hoi Hup Sunway is being sold by ballot, with applications open until next Tuesday.

About 22,500 people had visited the showflat from last Wednesday until it closed yesterday, said Ms Kellie Liew, executive director of projects at HSR Property Group, the marketing agent for The Peak. More than half of the applicants are interested in the five-room flats, with about 30 per cent looking at the four-roomers, she said.

In the private home market, the freehold The Arte in Jalan Datoh attracted about 1,000 people over the weekend, said developer City Developments (CDL).

The average price at the 336-unit project - which boasts relatively large flats - is $880 psf, with most units going for under $2 million each.

CDL said it sold another 20 units over the weekend for $30 million, bringing total sales to 170.

'The sales volume indicates that buyers have greater confidence in the property market and in the future of their investment,' said CDL group general manager Chia Ngiang Hong.

'This reinforces CDL's view that the current market is now attracting savvy but cautious investors.'

A large number of buyers have private home addresses, he said, with many saying they want to invest in another property or to move into a 'new and upscale residence'. CDL said it has extended the interest absorption scheme to these buyers.

Two other large projects that were launched last month also saw encouraging sales.

A further 22 apartments were sold at the 457-unit Mi Casa condominium in Choa Chu Kang in the past week, bringing total sales to 202 units. Prices hovered around $635 psf.

More than half of the 646 units at Double Bay Residences in Simei have been sold. This was the best-selling project last month, with 264 units being bought.

About 60 per cent of the 68-unit Verdure in Holland Roadhas also been sold since its preview more than a week ago.

Some Developers May Turn Residential Projects Into Serviced Apartments

Source : Channel NewsAsia, 20 April 2009

Some private property developers are thinking of turning their residential projects into serviced apartments.

Ascott Hospitality said it has been approached by some developers recently, but declined to say which were considering such a move.

Experts, however, said such conversions are unlikely to gain popularity in Singapore anytime soon as there are many factors against it.

Private home sales may have been on the rebound over the past two months, but that has largely been restricted to the mass to mid-market segment where developers used various pricing strategies to attract buyers.

Many developers are grappling with a poor global economic outlook and tighter credit conditions.

Gerald Lee, chief executive officer, Ascott Hospitality, said: "Now at a time where it's more challenging for them to sell, they may want to do something about that.

"So one good solution is to convert them to serviced residences so it can be rented out for people relocating to the city. So there are more owners coming to... (ask) us to manage those properties for them."

Ascott Hospitality said it is still evaluating proposals as not all properties fit the bill. For example, location is extremely important as the target clientele tends to have specific needs. Proximity to areas like shopping centres, or business parks is almost essential.

Projects found in central locations like the business district with small units and good amenities could consider going the serviced apartment route.

The Urban Redevelopment Board also needs to approve the change in land use. And if some units in the development are already sold, the property's management committee must agree to the plan.

Some analysts said the numbers do not look good for such a conversion.

Karamjit Singh, managing director, Credo Real Estate, said: "It's really a question of the operating cost here in Singapore. They are quite high. At the same time property costs are very high to a point where the net revenue accrued from operations of a serviced apartment won't necessarily yield as much returns as an investor would be happy with.

"In the context of our capital values here, it is not very popular because yields for serviced apartments range from three to four per cent or so. So it is not very attractive unless they were designed right from scratch for serviced apartments and they were bought for that purpose, factored right from day one."

To date, Ascott Hospitality has already turned down one proposal in Singapore.

But it said that conditions in markets outside Singapore, such as China and the Middle East, look very attractive for this trend. - CNA/vm

Almost All Units Launched For Sale At The Arte At Thomson Sold

Source : Channel NewsAsia, 20 April 2009

Almost all of the 180 units for sale at The Arte at Thomson have been sold since the project's official launch earlier this month.

A total of 170 units has already changed hands, with 20 sold over the weekend for some S$30 million.

More than 1,000 visitors made their way to the 336-unit, freehold development's showroom last weekend.

Developer City Developments sees this as evidence that buyers have greater confidence in the property market now.

Private home sales in Singapore in the first three months of 2009 hit 2,660 units. That was about 62 per cent of total new home sales in 2008. - CNA/vm

20 Units Of The Arte Sold Over Weekend

Source : The Business Times, April 21, 2009

This takes total sales since the official launch to 170 units

CITY Developments Ltd (CDL) sold 20 units at The Arte at Thomson over the weekend. This takes total sales since the property's official launch to 170 units, with last weekend's sales fetching a total of $30 million.

'The sales volume indicates that buyers have greater confidence in the property market and in the future of their investment. This reinforces CDL's view that the current market is now attracting savvy but cautious investors,' said Chia Ngiang Hong, Group general manager of CDL.

Buyers' interest was also evidenced by the strong turnover of over 1,000 visitors at The Arte's showroom over the weekend.

Among other factors, these prospective buyers were drawn by the property's location and proximity to a MRT station, according to a CDL release.

The Arte is located within the Thomson area with convenient connections to the City and the expressways. It is also a short walk from Toa Payoh MRT station.

Priced at $880 psf on average, the freehold project comprises two 36-storey towers and will be completed in 2012. Most of the 336 units available are going for under $2 million.

Buyers can opt for CDL's interest absorption scheme (IAS), which allows them to defer the bulk of their purchase until The Arte's completion on the condition that they take up a housing loan at the point of sale.

A majority of buyers of The Arte have private home addresses and many say they want to invest in another property or to move into a new and upscale residence.

Singaporeans' renewed interest in private property saw the sales of 2,660 private homes in the first three months of 2009, which is about 62 per cent of total new home sales in 2008, according to the CDL release.

Recession Will Last At Least 24 Months, Says Economist

Source : The Business Times, April 21, 2009

(HONG KONG) Nouriel Roubini, the New York University professor who predicted the financial crisis, said that he was 'still bearish' and that an economic recovery is going to take 'longer than expected.'

Prof Roubini: 'The current rally is a bear-market rally... This is a dead-cat bounce, sucker's rally, whatever you want to call it.'

Corporate earnings will 'surprise on the downside,' Prof Roubini said in a speech in Hong Kong yesterday. 'Lots of banks, even the better ones, are going to be in trouble.'

Banks around the world have reported US$1.3 trillion in credit losses tied to the housing market collapse since 2007. The deficits, which spurred the first simultaneous recessions in the US, Europe and Japan since World War II, pushed the American government to pledge US$12.8 trillion to stabilise the banking system and revive economic growth.

The Standard & Poor's 500 Index, which tumbled 38 per cent in 2008, has rallied 29 per cent after sinking to a 12-year low on March 9. Prof Roubini said that day that the S&P 500 is likely to drop to 600 or lower this year as the global recession deepens.

George Soros, the billionaire hedge-fund manager who made money last year while most peers suffered losses, said on April 6 that US stocks weren't at the start of a bull market yet because the economy is still shrinking.

'The current rally is a bear-market rally,' Prof Roubini told reporters after his speech. 'I don't expect a 50 per cent adjustment that I expected two years ago, but this is a dead-cat bounce, sucker's rally, whatever you want to call it.'

Prof Roubini's view contradicts that of investor Marc Faber, who said on April 13 that the S&P 500 may rise to 1,000 in the next three months as government spending boosts bank profits.

Markets are 'way ahead' of real economic data and this recession will last at least 24 months, Prof Roubini said. He predicted China's economy will grow 5.5 per cent in 2009, which is slower than the 8 per cent expansion the Chinese government is targeting.

Prof Roubini has stayed away from 'risky assets' including equities, and 95 per cent of his savings have gone into cash.

'Reserving capital, compared with losing 50 per cent of it, is good,' he said. -- Bloomberg

DPS Buyer With 20 Units At The Fernhill Drags Feet On Payment

Source : The Business Times, April 21, 2009

Episode watched by developers that had sold multiple units to foreigners under DPS

A China investor that bought 20 units at MCL Land's The Fernhill condo has failed to pay roughly $30 million that became due when the project received Temporary Occupation Permit recently.

MCL sent the notice seeking payment to buyer Concordia Overseas Pte Ltd 14 days ago. By the due date yesterday, the payment had still not been made, BT understands.

This development on the deferred payment scheme (DPS) - which was scrapped in October 2007 - is being closely watched.

Under the Sale and Purchase Agreement (SPA), MCL will now wait for another 14 days and if the payment is still not made by then, the developer can serve a 21-day notice on Concordia to repudiate the SPA. After that, if there's no payment, MCL would be entitled to treat the 20 per cent paid so far by Concordia as forfeited and resell the units.

Concordia, controlled by Hong Kong resident Chan Ki, who has developed commercial buildings in Shanghai, had bought all 25 apartments in The Fernhill in January 2007 at $1,410 per square foot.

It flipped five of these units to foreigners at an average price of nearly $2,200 psf later the same year. JTResi brokered both sets of deals for the five-storey freehold project at the corner of Orange Grove and Fernhill roads.

Concordia bought the units from MCL on DPS, and paid an initial 20 per cent of purchase price in 2007. The 20 units it still holds were purchased for nearly $47 million and it was asked to pay another 65 per cent - around $30 million - after the project received TOP last month.

In case there is a hitch in receiving the payment, analysts say, MCL Land is pretty well covered, as it can walk away with the 20 per cent downpayment from Concordia. Its 'breakeven cost' so to speak on the 20 units would be $1,128 psf ($1,410 psf sale price to Concordia less the 20 per cent collected so far).

Based on recent transactions at Gallop Gables on Farrer Road and The Verdure on Holland Road, MCL should easily be able to sell the units individually for more than that sum. An average resale price of $1,250 or so could mean another round of profits.

BT understands that MCL did not extend DPS to the buyers of the five units who picked up their apartments from Concordia in the subsale market. They have been making normal progress payments to MCL.

While MCL is on a firm footing, other developers who sold their projects on DPS at peak prices in 2007 and early 2008, may have reason to worry in case buyers do not pay up once the projects are completed in the coming months.

This is because the values of many such units could be down more than the 20 per cent initial payment and the developer would be out of pocket if it were to treat the SPA as being repudiated. Such developers may have to sue buyers for specific performance - complete the SPA at the contracted price.

But some developers may agree to a payment extension or restructuring for local buyers in hardship.

Developers may find it tough to take legal action against foreign buyers domiciled offshore who walk away from purchases. 'The practical thing to do may be to treat the SPA as repudiated, take possession of the units and try to resell them or lease them out. Once you go down the route of suing defaulting buyers for specific performance, it will be some time before you can take possession of the units,' a developer said.

In case The Fernhill units end up being resold by MCL, the price could have implications for neighbouring projects. The price benchmark may hit DPS buyers in these projects who have yet to secure a loan. Even those that have secured loans may be affected as the bank may now assume a lower value for the properties and ask borrowers to top up more equity.

Some analysts said that the latest development at Fernhill may be a sign of things to come as more projects are completed. The situation of multiple unit buyers, especially if they are foreigners, will be keenly watched.