Friday, May 22, 2009

Gillman Heights Sold

Source : The Straits Times, May 22, 2009

THE protracted and controversial sale of Gillman Heights finally came to an end on Friday, when owners and buyers legally completed the $548 million deal.

The estate's owners were anxious that buyers got the cold feet, but Ankerite's lawyers Rajah and Tann said the buyers had every intention to complete the sale. -- PHOTO: CAPITALAND

Lawyers Lee and Lee, acting for the Alexandra Road estate's sales committee, told The Straits Times on Friday evening that the deal had finally gone through.

This comes after the fate of the estate seemed to hang in the balance when purchasers, Ankerite, led by property developer Capitaland, did not complete the sale by its due date last week on May 15.

The estate's owners were anxious that buyers got the cold feet, but Ankerite's lawyers Rajah and Tann said the buyers had every intention to complete the sale.

Ankerite's lawyers had raised some housekeeping matters regarding the estate's management funds, and wanted to get proof that these matters were resolved before going ahead with the deal.

This puts an end to a saga that lasted more than two years since the sale was first inked in February 2007.

5 Buildings Get Grants To Install Solar Panels

Source : The Business Times, May 22 2009

EDB has also given grants to four public sector projects.

FIVE commercial buildings for office, retail and manufacturing use have received grants from a $20 million scheme to install solar panels, the Economic Development Board said yesterday.

It did not reveal the amount disbursed from the fund, saying that it is a small percentage. It noted that firms can receive grants of up to 40 per cent of the cost for solar panels.

Grants to 14 private and public solar projects so far total $8 million. or 21.6 per cent, of $37 million of funds, EDB said. The $37 million combines the $20 million solar capability scheme and $17 million set aside for clean energy research and test-bedding (Cert).

The five private sector projects that have received grants are: City Developments Ltd's Tampines Grande, Lend Lease Retail's 313@Somerset, Robert Bosch's regional headquarters building, Lonza Biologics' manufacturing facility and Applied Materials' manufacturing facility.

By year-end, Applied Materials is set to put up the largest solar installation in Singapore at its operations centre at Changi. The 5.7 sq metre panel to be installed - about the size of a Western king-size bed - can generate 430 megawatt hours (MWh) per annum. This is enough to power 95 four-room HDB flats.

CDL's office building Tampines Grande will incorporate a solar power system to provide air-conditioning to the atrium, the company said. It expects to save 2.7 million kilowatt hours (kWh) of electricity per year.

Besides the five commercial projects, EDB has given grants to four public sector projects under Cert - Ngee Ann Polytechnic, Changi Airport budget terminal, the National Environment Agency's Meteorological Station and Khoo Teck Puat Hospital.

With the earlier five public sector projects, Singapore's total installed base of solar power systems stands at 5MWh, up from 200kWh in mid-2008.

Financial Crisis Not Over Yet, Says Greenspan

Source : The Business Times, May 22, 2009

Banks need more money, mortgage crisis still serious

(NEW YORK) Former Fed chairman Alan Greenspan signalled that the financial crisis has yet to end even as borrowing costs tumble, warning that US banks must raise 'large' amounts of money.

'There is still a very large unfunded capital requirement in the commercial banking system in the United States and that's got to be funded,' Mr Greenspan said in an interview yesterday in Washington. He also said that 'until the price of homes flattens out, we still have a very serious potential mortgage crisis'.

Mr Greenspan's comments suggest that he sees a bigger capital shortfall in the banking system than reflected in regulators' stress tests on the 19 biggest US lenders. Treasury Secretary Timothy Geithner told lawmakers on Wednesday that banks have issued more than US$56 billion in new stock or debt since the tests found 10 firms needed to raise about US$75 billion.

A lack of capital at banks may inhibit lending to consumers and businesses, tempering any economic recovery. The former Fed chief said that the continued slump in home prices is putting at risk millions of borrowers.

Home prices will only start to stabilise once the 'liquidation' rate of single-family homes has peaked, he said. 'I don't think we're there yet.'

More broadly, 'things have unquestionably improved' across the economy and financial markets, he said.

The London interbank offered rate, or Libor, for three-month US dollar loans fell three basis points on Wednesday to 0.75 per cent, the British Bankers' Association said, the 35th straight drop. The Libor-OIS spread, a gauge of banks' reluctance to lend, narrowed to 55 basis points, the least since February 2008. It was as high as 364 basis points in October.

That's an 'extraordinary improvement', said Mr Greenspan, who last year said that the credit crisis would be at an end once the Libor-OIS spread narrowed past 25 basis points. 'Virtually all of the various credit spreads, not only in the US but globally, have come down.'

Alan Blinder, a former Fed vice-chairman, also said that 'if there are no more reversals, history will judge that by May 2009, we will have passed the worst of the crisis.'

'My current guess would be in terms of GDP the second quarter will be a bottom and by the third quarter we're eking out a positive,' he said.

Mr Greenspan agreed, estimating that US gross domestic product will decline at an annual rate of one per cent in the second quarter.

Members of the Fed's Open Market Committee who met in Washington April 28-29 saw 'some signs pointing towards economic stabilisation', and some officials detected prospects for 'a trough' in the housing market's downturn, according to minutes of the meeting released on Wednesday in Washington.

Fed governors and district-bank presidents project that the economy will shrink 1.3-2 per cent this year and grow 2-3 per cent in 2010, according to median estimates released on Wednesday. -- Bloomberg

Prime Office Rents Check Their Slide

Source : The Business Times, May 21, 2009

Pace of decline slows down but new supply looms over the next few years

The pace of decline in prime office rents slowed in the first six weeks of the second quarter and the improvement has been most visible in the key Raffles Place sub-market, going by latest data from Cushman & Wakefield.

The property consultancy's monthly average rental value for prime Raffles Place slid 6.6 per cent in the six weeks since the end of Q1 2009 to $9.44 per square foot as at May 15, a much smaller decline than the 28.8 per cent quarter-on-quarter drop registered in Q1 this year. This brings the total year- to-date decline to 33.5 per cent from $14.20 psf a month at end-2008.

The average Grade A Raffles Place rental eased 8.7 per cent in mid-Q2 2009, again a more moderate drop than the first quarter's 27.7 per cent Q-on-Q slump.

The moderation in rental decline was also seen in the other micromarkets in Cushman's prime office basket - namely, Shenton, City Hall and Orchard. Cushman's overall prime office vacancy rate crept up 0.4 percentage point to 5.5 per cent as at May 15, milder than the 2.1-percentage point Q-on-Q hike to 5.1 per cent in Q1 2009.

'The deceleration of rent declines is not surprising in light of the recent global stock market rally and signs of the oft-mentioned green shoots starting to emerge in major economies around the world,' Cushman said in its report. This has caused a mood shift among landlords - from one of nervousness to a 'more considered and cautious stance'. 'The continued caution is understandable in light of competition from the oncoming stream of new office supply,' Cushman added.

CB Richard Ellis executive director (office services) Moray Armstrong acknowledged that the pace of rent declines has 'shown signs of easing in the past couple of months' and expects this trend to continue. 'There's some semblance of confidence seeping back into the system,' he said.

'Relocation and leasing activity has been very limited for the past six to nine months. We're looking out for a restoration of normal level of leasing activity, combined with the restoration of positive occupier demand. Those will be the signs that we're emerging out of the office downcycle. We're not there yet,' Mr Armstrong added.

The office market may be weighed down by looming new supply - with 9.9 million sq ft net lettable area of offices slated for completion from 2009 to 2013. This year alone, the new supply is projected at about 2.56 million sq ft, 83 per cent above last year's 1.4 million sq ft.

Demand-wise, the Singapore office market has already seen two consecutive quarters of negative take-up: 366,000 sq ft in Q4 2008 and nearly 323,000 sq ft in Q1 2009, based on official figures.

Cushman's director of research Ang Choon Beng predicts around 40 per cent full-year contraction in prime office rents, with a bigger slide expected for Raffles Place.

'While our forecast model predicts that prime office rents would continue to be weak through 2009, we believe the market has, in some instances, already priced in 70 per cent of the anticipated full-year decline. With the significant portion of the rent declines behind us, we think tenants can start to be more confident of entering into leases.'

Cushman's figures show that in the Shenton micromarket (which includes Shenton Way, Robinson Rd and Anson Rd), the average monthly rental value slipped 6.5 per cent in the first six weeks of Q2 2009, slower than the 18.7 per cent Q-on-Q contraction in Q1. The City Hall location - which includes the Marina Centre area - saw an average 9.4 per cent rent reduction in the first six weeks of Q2 from the end-Q1 level, against a 27.2 per cent Q-on-Q drop in Q1. Similarly, for the Orchard area, the 9 per cent mid-Q2 drop was smaller than the 15.5 per cent slump in Q1.

Cushman's director of commercial and industrial agency Kelvin Chiang says that along with an uptick in tenant inquiries and demand in the first six weeks of this quarter, there wasn't much sublease (shadow) space being added to the market. Neither does he foresee any significant supply of additional 'shadow space' - which refers to excess space that companies try to sublet - in the months ahead.

DTZ executive director (occupier services) Angela Tan says that while there has been no let-up in the amount of shadow space in the market, there is healthy interest in such space as it offers 'good value proposition for short-term use since the space usually comes fully fitted out and reduces the initial set-up cost for the new occupier'.

Property Transactions With Contract Dates Between April 29th - April 30th, 2009

Viet Property Market Seen Bottoming Out

Source : The Business Times, May 21, 2009

Prices at some developments may even rise 5-10% by end 2009: CBRE

THE residential property market in Vietnam is likely to have bottomed and prices at some developments may even rise 5-10 per cent by the end of this year, according to real estate consultant CB Richard Ellis (CBRE).

Mr Townsend: He says that S'pore developers have not trimmed prices

'There won't be anything like the demand we saw in 2007 and 2008, but at least it has stopped going down,' CBRE Vietnam's managing director Marc Townsend told BT.

From its peak in 2007, Vietnam's property market began cooling last year as inflation soared, interest rates shot up, and construction costs increased. The global financial crisis weakened the sector further as international investors stayed on the sidelines.

The average asking price for luxury apartments in Ho Chi Minh City, for instance, fell from more than US$5,500 psm (US$511 psf) to just over US$4,500 psm over 2008, CBRE noted.

But some economic factors have since improved. According to Bloomberg yesterday, inflation in Vietnam fell to 9.23 per cent in April, from a high of 28.3 per cent in August last year. Mr Townsend said lending rates and construction costs have also eased.

While the economic slowdown has led to lay-offs in Vietnam, most white-collar workers still have their jobs, he noted. In many cases too, expatriates have been the first to go, benefiting locals who got to fill their positions.

More importantly, some Vietnamese developers have trimmed asking prices to revive buying interest.

CBRE noted that one developer recently launched projects at prices more than 30 per cent lower than those last year. The company could have sold over 530 apartments in just four days, it said.

Singapore developers have not trimmed prices so far, Mr Townsend said. 'They have waited . . . and their patience has been rewarded with a strengthening of the market.'

Keppel Land's recent release of more units at the Estella is an example, he said. The developer told BT it offered a limited number of units early this month and there was 'an encouraging increase in the number of sales and enquiries'.

While Keppel Land kept the average selling price constant at US$2,000 - US$2,200 psm, it introduced - its first time in Vietnam - an optional staggered payment scheme for buyers.

Based on current sentiment, some residential properties may be able to achieve slight price increases this year, Mr Townsend said. Most developers are careful and will release a small number of units to test the market and create interest before raising prices, he said.

VinaCapital Expects Strong Recovery In Property Sector

Source : The Business Times, May 21, 2009

VinaCapital, Vietnam's largest asset manager, expects a strong recovery in the country's property sector and said that it has been buying stocks of firms such as Vinamilk that produce goods for domestic consumers. 'The area that we like a lot at the moment is real estate,' chief executive Don Lam told Reuters in an interview in Singapore.

Pathway to growth: Demand for homes has picked up as lower prices attracted local buyers

Demand for homes had picked up since the Vietnamese New Year at the end of January as lower prices attracted local buyers, he said. 'Prices have gone off from their peak by 30 to 35 per cent. On top of that, you have financing costs down by half and there's a 30 to 40 per cent drop in construction costs.'

While Vietnamese exports have been hit by the global recession, the domestic economy remained relatively strong with GDP expected to expand by 4 to 5 per cent this year and retail sales by over 20 per cent, Mr Lam said.

VinaCapital, which manages around US$1.7 billion in assets, recently purchased shares of materials firm Hoa Phat and diary giant Vinamilk, Mr Lam added.

Mr Lam described Vina-milk, which also produces coffee products, as the 'Nestle of Vietnam', and said Hoa Phat had the strongest brand name among Vietnamese construction materials firms.

The firm is also eyeing listed power firms as many are trading below replacement cost. Listed power firms include Khanh Hoa Power and Pha Lai Thermal Power.

VinaCapital has three closed-end funds listed on the London Stock Exchange's AIM market - VinaCapital Vietnam Opportunity Fund, VinaLand Fund and Vietnam Infrastructure Ltd.

Its funds invest in a wide range of listed and unlisted assets, and their property holdings include the landmark Sofitel and Hilton Opera hotels in Hanoi.

Mr Lam said Vietnam's financial profile was stronger than most people thought as its large trade deficit, estimated at US$19.2 billion this year, was offset by strong foreign direct investments.

The country also enjoyed inflows from remittances by overseas Vietnamese which were mostly made through unofficial channels and hence were not captured by official data, added Mr Lam, who was born in Vietnam but brought up in Canada. Mr Lam said foreign investors have largely given Vietnam's stock market a miss - despite a more than 70 per cent rise since February - but would probably return once global risk appetite recovers, giving the local bourse a further lift. -- Reuters

Iskandar M'sia Eyeing S'pore Outfits

Source : The Business Times, May 21, 2009

Its developers plan to make pitch at Cityscape Asia exhibition here

SINGAPOREAN companies have yet to make big property investments in Malaysia's Iskandar region, but the developers in charge of planning the area are hoping that this will change soon.

Horizon Hills: Foreigners make up 55 per cent of buyers in this project and some 90 per cent of the foreign buyers come from Singapore

Malaysian developers UEM Land and Iskandar Investment Berhad are both participating in this year's Cityscape Asia exhibition and conference in Singapore, and are aiming to attract more property investments into Iskandar Malaysia, which is located in southern Malaysia.

UEM Land, the master developer of Nusajaya, a key development project within the Iskandar Malaysia, has seen many buyers from Singapore pick up units in its residential projects in the Iskandar region.

Wan Abdullah Wan Ibrahim, managing director of UEM Land, says that for the company's East Ledang and Horizon Hills projects within Iskandar, foreigners make up 65 per cent and 55 per cent of buyers respectively. And some 90 per cent of all foreign buyers come from Singapore.

The company plans to start selling homes in Puteri Harbour - an upmarket waterfront and marina area within Iskandar - this year, and is hopeful that take-up will be strong.

However, when it comes to Singaporean developers' willingness to invest in Iskandar, the response has not been as keen.

For the land that UEM is in charge of, some RM600 million (S$247 million) of foreign investment has been secured, says Mr Wan Abdullah. However, none of it was from Singaporean companies. Companies from the Middle East have been most keen in investing in Iskandar.

By contrast, interest in Iskandar's Southern Logistics & Industrial Clusters (SiLC) - an advanced technology community - has been stronger. Singapore-based investors make up 40 per cent of investors at SiLC, and include companies such as Jurong Technologies Industrial Corp and Yongnam Holdings.

UEM is now hoping to partner Singaporean developers to build homes and develop retail and hospitality properties within Iskandar.

Iskandar Investment Berhad, which is in charge of other parts of Iskandar, also hopes to attract more investors from Singapore.

'For Singapore investors, we believe that Iskandar Malaysia plays a complementary role,' said Arlida Ariff, chief executive. 'It will enable and provide them with the facilities to build and expand their organisations further.'

The response from Singaporean investors has been favourable, she said, and added that discussions are ongoing.

Iskandar Malaysia has nearly met its overall foreign direct investment target of US$13 billion for the phase ending in 2010. To date, Iskandar Malaysia has altogether drawn more than US$11 billion, or 92 per cent of its targeted investment amount.

Australian Property Returns Sink To16-Year Low

Source : The Business Times, May 21, 2009

(SYDNEY) Total returns for Australian property hit a 16-year low in the latest quarter as capital values continued to drop, property research firm IPD said yesterday.

Total returns, which include income and capital growth, for all property types tumbled to a negative 1.5 per cent for the 12 months to March, the worst performance since December 1993.

Annualised capital growth dropped to a minus 7.6 per cent, the fifth consecutive quarterly fall, compared with a positive 11.6 per cent return a year ago.

'When comparing Australia with other countries, we certainly entered the downturn later but we are catching up faster,' said Goran Ujdur, director of IPD Australia.

'There is a sense that there are further value declines ahead, especially in the next major evaluation round, which is obviously at the end of financial year.'

Capital growth for Australian office buildings also shrank, posting a negative 8.1 per cent in the March quarter, compared with a positive 16.3 per cent a year ago.

Retail assets saw a smaller drop in total returns with a negative 0.8 per cent, but their capital growth logged a negative 6.9 per cent.

Mr Ujdur said that values of smaller neighbourhood shopping centres had overstretched and came down at a faster pace compared with major regional retail assets. -- Reuters

US Office Prices Fall 21% In March From '08: Moody's

Source : The Business Times, May 21, 2009

(NEW YORK) US commercial property prices fell 21 per cent in March from a year earlier and may fall further in the recession, Moody's Investors Service said.

Prices are now down almost 23 per cent from the October 2007 peak and transactions have dropped as much as 80 per cent, according to Moody's/REAL Commercial Property Price Indices issued on Tuesday. Price fell 1.7 per cent in March from February.

'Moody's expects continued weakness and possibly further declines in volume in the coming months,' the ratings company said in a statement.

Commercial real estate sales have fallen the US as banks have curtailed lending in the credit crisis. The economy has lost 5.7 million jobs since January 2008, reducing demand for office space and driving down property values.

Office prices dropped 30 per cent from their peak, including a decline of almost 20 per cent in the first quarter, Moody's said. Retail property values fell 13 per cent, while apartment and industrial prices remained about flat.

Commercial property prices in the top 10 metropolitan areas in the US outperformed the rest of the nation. Office prices in those markets, which include New York, Los Angeles, Atlanta, San Francisco, Dallas and Washington, fell 6.8 per cent this quarter from last quarter.

'Office prices in the top 10 cities peaked at the same time as the nation, the second quarter of 2007, but thus far have fallen less than half as much,' the report said.

Retail properties in the top 10 markets declined 14 per cent, 'slightly' underperforming the nation, Moody's said. Apartment prices in those markets were down 3.1 per cent in the quarter.

The Moody's/REAL indexes are based on repeat sales of properties. -- Bloomberg

Najib To Pitch For Iskandar

Source : The Straits Times, May 21, 2009

JOHOR BARU: Malaysian Prime Minister Najib Razak will make a pitch for the Iskandar project as a promising venture for Singaporeans to invest in when he meets Prime Minister Lee Hsien Loong on Friday.

Malaysian Prime Minister Najib Razak (left) will make a pitch for the Iskandar project as a promising venture for Singaporeans. --PHOTO: ST

Having said that he will place cooperation in Iskandar high on his agenda, Datuk Seri Najib visited the economic corridor in Johor on Thursday, just before he travelled overland into Singapore for his introductory visit.

In the morning, he did an aerial survey of the 2,200 sq km project by helicopter. Then, he launched an environmentally-friendly 'district cooling plant', which uses a centralised air-conditioning network system to cool all the buildings in Kota Iskandar - the new administrative centre of the Johor government.

Speaking to reporters after that, he pointed out that Iskandar not only creates economic opportunities, but also reaps social benefits by maintaining a 'sustainable and balanced' environment for the next generation.

He added that his message in Singapore would be that Iskandar 'is a very promising and exciting development for Singapore to consider'.

And that assessment applies 'whether at the strategic level, for their participation at the equity and development level, or for individual Singaporeans to consider, like purchasing houses and properties,' he said.

Launched in November 2006 by former Malaysian premier Abdullah Badawi, Iskandar is Malaysia's main southern development corridor.

Mr Najib said the Malaysian government would continue to support the development of Iskandar, which has attracted RM42.6 billion in investments so far.

He also does not expect foreign direct investment to Iskandar to suffer, despite the global economic downturn.

S'pore Buyers Get Free Rides To View UEM Properties

Source : The Straits Times, May 21 2009

A key development in Nusajaya, Puteri Harbour spans 278.4 hectares with a view of the Strait of Johor.

SINGAPORE residents already make up a substantial chunk of property buyers in the Nusajaya urban development zone of south-west Johor, but now they are being ferried in for free to further boost their numbers.


Master developer UEM Land (UEML) is chartering buses to ferry interested individuals to its property sites in the area.

Said UEML managing director Wan Abdullah Wan Ibrahim: 'We actually charter buses to a collection point in Singapore and ferry these people to our buyers will know what they are buying and the kind of infrastructure that we provide.'

In the past two months, UEML has held four events - two 'Super Sundays' for their hillside property Nusa Idaman and the other two for East Ledang, a residential enclave which will boast 31 themed garden spaces.

For the first Super Sunday event in March, UEML ran advertisements in Singapore on the free buses running between Jurong Point and Nusa Idaman.

Said UEML general manager for strategic marketing Zamry Ibrahim: 'We gave out cash vouchers as well for shopping. (The) response was overwhelming...about 220 Singaporeans came for the event and we collected 15 sales worth RM4.2 million (S$1.7 million).'

The second Super Sunday was held in April. This time, the company brought 175 Singaporeans in four buses and collected 20 sales worth RM6 million. A Super Sunday finale is planned for May 24.

Mr Ibrahim added that, 'going by the success of these events', UEML plans to organise more free tours covering more Nusajaya developments.

The Singapore market is of major importance to Johor developers. According to UEML, during East Ledang's phase one launch in February last year, which saw 139 units launched, it enjoyed a take-up rate of 75 per cent, with 65 per cent of the buyers being foreigners. Of these, 90 per cent were from Singapore.

Preparations are now under way for the launch of phase two.

Other developments in Nusajaya include Puteri Harbour, a waterfront and marina development that spans 278.4ha and offers a view of the Johor Strait. Additionally, Iskandar Investment is looking to build East Asia's first Legoland Park there in partnership with Merlin Entertainments.

The park's slated public opening in 2013 could be brought forward. Ms Arlida Ariff, chief executive of Iskandar Investment, yesterday told The Straits Times that, with the stimulus package, the government had told them to 'open earlier, so now it's April 2012'.

MND Will Ensure Property Sector Remains Stable

Source : The Business Times, May 21 2009

It will also help build capabilities of construction firms.

THE government will continue to monitor the property and construction markets and adopt more measures to keep them stable if needed, said National Development Minister Mah Bow Tan yesterday.

Marina Bay Station Square: Government has invested $5.7 billion in infrastructure in Marina Bay, and will continue to inject more than $1 billion

The Ministry of National Development (MND) will also introduce measures to build up the capabilities and productivity of construction firms, and make the industry more attractive to Singaporeans, he added.

'As we help Singaporeans tide over the current economic uncertainty, we will press on with our long-term plans to make Singapore an attractive and highly liveable city,' he highlighted in his ministry's addendum to the President's address in Parliament.

MND is overseeing several projects to transform Singapore into an exciting metropolis. For instance, the government has invested close to $5.7 billion in infrastructure in Marina Bay, and will continue to inject more than $1 billion in more works over the next 10 to 15 years.

Beyond Marina Bay, it will also invest in infrastructure in the new growth areas at Jurong Lake District, Kallang Riverside and Paya Lebar.

To ensure that Singapore's growth is sustainable, MND will push harder for the adoption of energy efficient technologies in buildings, and embark on a large-scale solar test-bed within HDB estates.

Recognising that public housing remains a key pillar of the country's social security system, Mr Mah said that the government will help HDB households affected by the downturn to manage immediate mortgage repayments and to work out longer-term solutions, such as switching to smaller flats.

MND will also increase the supply of rental, 2-room and 3-room flats. It will also step up the construction of studio apartments for the elderly looking to monetise their flats.

MND will kick off the Concept Plan 2011 exercise this year to draw up long-term plans for Singapore's growing economy and population.