Is Booming China Risking US-Style Housing Crisis?

Source : The Electric Paper, November 29, 2007

Yes, say some experts, pointing to country's riskier credit system

CHINA'S booming economy is making many people rich - and happy.

But experts warn of a possible downside: A property crisis like the one the US is facing now.

















Mortgage woes in the US have led to the forced sale of countless homes.

A government economist even warns that China's problems could be worse because its housing loans are riskier.

According to him, many mortgage holders in China borrow by giving false information about their assets and income.

Mr Yi Xianrong, an economist with the China Academy of Social Sciences - a government think tank - said in an interview with the state-run magazine Oriental Outlook: 'I estimate that the large majority of mortgage holders would not meet the standards for even subprime loans.'

He also said that China lacks a comprehensive credit data system, which makes assessing the level of risk difficult.

A price correction is unlikely to happen soon, though, as many consumers there are less concerned about potential economic problems than they are about speculating on property.

PRICES HIGH AND RISING

New flats north of Shanghai's famous Bund waterfront are selling for a record 128,000 yuan ($25,000) per sq m, or more than $2,300 per sq ft.

Typical buyers? Upwardly mobile singles like Ms Li Ruoning, 22, a public relations company employee who borrowed 300,000 yuan from her parents in central China for the downpayment on a 645 sq ft flat in Shanghai.

What's more, Ms Li says she would buy another flat 'as an investment', if she had the money.

The possibility of defaults in Asia may also not be as bad as in the US because in some markets, including China, lenders tend to demand downpayments of at least 30 percent or more.

Singapore and Hong Kong supply low-cost housing and low-interest loans to the poor, which cut the risk of foreclosures, while South Korea has already cracked down on risky mortgages.

None of this may be of help to red-hot China, though.

Warned Mr Zhang Yu, a real estate analyst from Guotai Jun'an Securities in China: 'The government does need to do something fundamental to improve the situation.

He added: 'Tightening mortgage operations iscrucial for avoiding a financial crisis.' -AP

Favourite Son Wins Dispute

Source : TODAY, Thursday, November 29, 2007

Defendant not obligated to distribute late father's assets

THE eight month-long legal battle over the assets of late shipping tycoon Ng Teow Yhee has ended with Justice Woo Bih Li ruling in favour of the defendant and third son Sebastian Ng, 50.

Justice Woo dismissed the claims by the tycoon's 83-year-old widow, Madam Low Ah Cheow, his youngest son, Mr Ng Puay Guan, 41, and second daughter, Madam Ng Bee Eng, 51, which alleged that the patriarch had willed the asset into Mr Sebastian Ng's care, on the understanding that the wealth was to be redistributed to the rest of the family.

The father, a Chinese immigrant who died of cancer in 2001 at the age of 80, found the shipping and stevedoring company Ng Teow Yhee & Sons in the 1960s.

Before he died, he made Mr Sebastian Ng — his favourite son — the sole beneficiary and trustee of his estate.

The patriarch, however, did not share the same bond with the rest of the family, court documents revealed.

Almost five years after his death, the issue remained a sore point with the family and in February last year, they sued Mr Sebastian Ng to reclaim assets they believed were rightfully theirs.

Madam Low had made a claim on the family bungalow at Wiltshire Road, as well as 186,740 shares in the company registered in her late husband's name.

Mr Ng Puay Guan claimed $200,000 for himself as well as $100,000 each for his sons, Ng Zhi Kai and Ng Zhi Hao.

His sister, Madam Ng Bee Eng, on the other hand, had asked for $90,000 as well as 33,320 shares in the company.

Two other daughters chose to drop out of the court tussle, claiming they had no money to pursue the case.

During the trial, Mr Sebastian Ng maintained that he was never instructed by his father to distribute the assets.

While Justice Woo was of the opinion that the patriarch left his entire estate to Mr Sebastian Ng "in the expectation that he would do right by the other family members", he concluded that "Sebastian will have to be dictated by his conscience but there is no legal obligation on him".

Justice Woo dismissed the claims because the "evidence is fraught with inconsistencies and is unreliable".

Though he was pleased with his victory, Mr Sebastian Ng said he was saddened that a private family dispute is now in the public domain.

"I am glad that my family and I can finally move on with our lives, and hopefully, I can now start to mend the relationship with my mother and siblings," he added. Defendant not obligated to distribute late father's assets and siblings," he added.

Flats To Be Had, Just Don't Be Picky

Source : TODAY, Thursday, November 29, 2007

TO CATER to the burgeoning demand for new flats, the Housing and Development Board (HDB) has announced it will offer another 6,000 flats under the Build-To-Order (BTO) system — bringing the total number of new flats to be released over the next seven months to more than 10,000.

This comes in addition to some 1,162 BTO units that National Development Minister Mah Bow Tan launched yesterday.

The projects, Segar Meadows in Bukit Panjang and Compassvale Beacon in Sengkang, comprise two-, three-, and four-room flats. Applications are open until Dec 18.

Mr Mah reiterated the Government's commitment to home ownership and ensuring a steady supply of new flats for first-time buyers such as young couples — but urged these buyers not to be too picky.

Citing recently-raised concerns from some first-time buyers who said they had gone through several rounds of balloting in vain, Mr Mah said he had investigated at least one such case of a buyer who emailed him.

He found that the potential buyer had been offered a flat, but had given it up as he did not want one below the sixth floor.

Mr Mah said buyers should "be realistic".

"It is really not possible for HDB to be able to provide a flat in the exact location, in the exact flat type, on the exact floor, in the right size (that you want), and so on," he said.

"We will build more flats, we will give you more chances to own a flat. If you do get a flat, it's best that you think carefully. Even if it's not ideal, if you need a new flat … take it up and then, over time, you may want to upgrade your flat," he said.

HDB statistics from BTO launches in August and September show that 92 per cent of first-time buyers are shortlisted for new flats. In total, the HDB has launched 4,800 BTO units this year, double the number for last year.

Also, from next month until June, the board will release sites that will contribute another 1,860 Design, Build and Sell Scheme (DBSS) flats and 1,300 Executive Condominiums (EC) to the pool.

The DBSS flats are alternatives to HDB-built flats as the private sector will be involved in developing the public housing.

Last week, the HDB announced it would require EC developers to reserve at least 90 per cent of units for first-time buyers in the first month of sale. Also, second-time buyers who buy a new EC will no longer have to pay the resale levy.

Apart from the new units coming on tap, there will be additional balloting exercises for surplus new flats.

Mr Mah said the HDB will not over-supply the market with new flats as it would not ensure a healthy resale market in the long run.

"A person who is a buyer today is also going to be a seller tomorrow," he said. "If we don't have a healthy resale market, then I think down the road ... we're going to have problems."

The increase in supply, however, has not quelled the anxiety of first-time buyer Alice Lim, who has been looking for a flat with her fiance since June.

She has taken part in balloting exercises twice but did not even get to view the flats as she was too far behind in the queue.

"We can't wait for BTO flats because we want to get married and start a family soon," the 31-year-old procurement officer said. "We are not fussy, but even in places like Sengkang and Punggol, there are no new flats readily available and resale flats are just too expensive."

And new flat prices are expected to rise if resale flat prices continue their upward trend. This is because HDB flat prices are pegged to resale flat valuation prices, even if they are not dependent on construction costs.

Mr Mah assured home-buyers: "We will always make sure that the new prices will be affordable." This will be achieved by ensuring the mortgage repayment paid out per month is not more than some 30 per cent of the household income.

$30,000 Auction Bid For Hotel Room During F1 Race

Source : The Straits Times, Nov 28, 2007

Sum paid was for charity but is indicative of F1 race interest building up

THAT room with a view of the Formula One race cost a bomb - $30,000 - but it was for charity.

A professional paid $30,000 for a three-night stay at the Pan Pacific Hotel to catch the F1 race from Sept 26 to 28 next year.

The winning bid was made at an auction during a charity dinner at the Pan Pacific on Sunday.

Some 500 guests, including Senior Minister Goh Chok Tong and Mrs Goh, were at the dinner which raised $700,000 for the Assisi Hospice.

While the sum the bidder paid for the hotel's standard room was for a charity auction, it is indicative of the interest that has been building up over the F1 race.

Room rates have been the subject of much speculation since the announcement by the Government that trackside hotels will be slapped with a 30 per cent levy between Sept 24 and 28.

Trackside hotels include The Fullerton, Marina Mandarin, Conrad Centennial and Pan Pacific.

When contacted, several of these hotels said their F1 rates have not been finalised.

Among them, so far Pan Pacific has said its guests could fork out well over $1,000 a night for a regular room during the race period, with no guarantee of rooms overlooking the racetrack.

This is more than double Pan Pacific's highest average room price of $455 this year.

The hotel also said its suites, which offer a view of the track, will cost over $2,200 a night. For both rooms and suites during that period, guests must stay a minimum of five nights.

Industry observer Noel Hawkes, who was general manager of the now defunct Hotel Phoenix, said in other cities which host F1 races, room rates could rise to as much as triple the normal rate.

'I don't think its unreasonable. It's not that exorbitant by any means,' he told The Straits Times.

Several non-trackside hotels, which will pay a 20 per cent levy, have set their rates and secured bookings too.

From checks with about 20 hotels islandwide, guests may have to fork out between $300 and $1,200 per night.

The Grand Hyatt Singapore is nearly sold out, though it still has limited suites available at $3,000 per night. Regular rates for its suites are about 50 per cent less.

'We have not encountered resistance to our rates,' said Grand Hyatt Singapore manager John Beveridge.

'This buzz in the market has created an environment for strong demand for all categories of rooms. There is no question F1 fans want to be here,' he said.

YTL Buying Singapore Apartments En Bloc

Source : TheStar Malaysia News

PETALING JAYA: YTL Corp Bhd has entered into the largest residential collective sale transaction in Singapore since the new en bloc legislations came into force on Oct 4.

According to a statement, YTL Corp was awarded the tender for the en bloc purchase of Westwood Apartments, located on Singapore's famed Orchard Boulevard, for S$435mil cash.

The acquisition is in line with our wider strategy, focusing on upscale real estate in well-established markets. Group managing director Tan Sri Francis Yeoh Sock Ping said the property acquisition was YTL Corp's third in the city-state in two years.

The company is currently involved in the high-end Lakefront and Sandy Island residential development projects in Sentosa Cove, which will comprise exclusive, bespoke homes.

“The acquisition is in line with our wider strategy, focusing on upscale real estate in well-established markets, which enables us to employ our branding to enhance the value of these properties,” Yeoh said in the statement.

Westwood Apartments is a condominium development on the Orchard Road shopping and entertainment belt and within easy access of several stations on Singapore's Mass Rapid Transit system.

The more than 30-year-old, 50-unit condominium block is located on about 62,179 sq ft of prime freehold land.

Its address is synonymous with some of Singapore’s top luxury residences, including the St Regis Residences, The BLVD and Four Seasons Park.

YTL Corp said apart from geographical diversification and increase in its property development land-bank portfolio in Singapore, the acquisition would enable the group to enhance its earnings potential from the high sale and rental rates expected from the renewed interest in the city-state's property sector.

In the same statement, property consultancy Savills (S) Plc managing director Michael Ng said the recent sales of well-designed properties to high net-worth individuals reflected the positive sentiments in the Singapore property market.

“For example, the Ritz-Carlton Residences was recently sold for as high as S$5,000 per sq ft, a reflection that Singapore is primed for growth in the indulgent property sector,” he added.

According to an analyst at Affin Securities, the Singapore property market had good earnings potential which would bode well for YTL Corp's latest acquisition.