CapitaLand To Invest Over S$1b In 15 Malls In India

Source : Channel NewsAsia, 22 January 2008

CapitaLand is investing over S$1 billion in 15 malls across India through two joint ventures with Indian companies.

The venture will be fully funded by the CapitaRetail India Development Fund, which is 45 per cent owned by CapitaLand.

CapitaLand said it plans to duplicate its China strategy in India, which is to focus first on the gateway cities, including Mumbai, New Delhi and Bangalore, and then venture out.

CapitaLand CEO Liew Mun Leong said, "We have already formed a fund in Singapore which will invest (in malls) in India... and this fund will be used to invest in the funds in Asia."

The 15 malls will have an asset value of more than S$2.12 billion and a total lease area of over 11 million square feet, about 220 times that of Tampines Mall.

Being the largest retail property landlord and manager in Singapore, CapitaLand said the two joint ventures will give it immediate presence and scale within India, with 15 retail or predominantly retail projects across 14 cities.

One of its partners, the Prestige Group, will give it greater access to South India while the other, Advance India Projects, will help it expand in the northern part of the country.

CapitaLand plans to exit the investments through a real estate investment trust.

The property developer, which has been successful in spinning off its assets into REITs, also said it may list in India, Singapore or London.

One of its sponsored REITs, CapitaMall Trust, reported a distributable income of S$39 million for its fourth quarter on Tuesday, and is proposing to pay out 2.34 cents a unit.

Senior analyst David Lum at Daiwa Institute of Research said, "I think a 14 per cent year-on-year growth is very impressive for a mature REIT… I think the results showed there is underlying growth."

"There's still a lot of room for asset enhancement, a lot of room for acquisitions and probably in a very shaky market, CapitaMall might be able to acquire some properties at a decent price. So I think the drivers for last year will remain for this year, and I think it's not too demanding to look for double digit growth in CMT's results again," he added.

CapitaMall Trust said it might exceed its asset target of S$8 billion by 2010. - CNA/ac

Steady Climb, Not Sprint

Source : The Electric Newpaper, January 21, 2008

Prices Still Likely To Rise But…

Buy now or wait? House hunters unsure which way prices will go

WITH a possible recession looming in the US, and the injection of more HDB flats and private properties into the market this year, will property prices take a breather or even head south?

Those scouting for a house now will want that to happen.

Take communications manager Mah L C for example. For this 31-year-old, hunting for a flat has been a trying exercise for the last three months.

Ms Mah is getting married in March to a financial adviser.

The couple’s combined income has busted the $8,000 ceiling for subsidised housing, which means their options are limited to the HDB resale market or private housing.

But in today’s market, if you’re not cash-rich, you can forget about the HDB resale market given the high cash-over-valuation (COV) premiums sellers are asking for.

That’s the cash difference between the property’s valuation and the asking price.

Ms Mah, who is currently living in a four-room HDB flat with her parents in the central area, wants to buy an HDB flat near her parents for convenience.

She said: ‘Ideally, we’ll like to buy a new flat but we can’t because we bust the ceiling. But in the resale market, the premiums (COV) that sellers are asking for are just crazy. In the central area, be prepared to pay at least $50,000 above valuation.

Ms Mah said they’ve viewed other resale HDB flats in the central area, all with high COVs.

So the couple is now thinking of renting a flat first.

Some may say they are choosy but they have since given up their home search and are thinking of renting instead.

She said: ‘Rents may be high but it’s better than forking out such a huge cash outlay. We may perhaps rent for a year or two and wait for prices to stabilise or drop.’

This wait-and-see strategy is a gamble on property prices dipping in the next two years.

Barring any unforeseen external events, a price drop in the property market is quite unlikely, said industry watchers.

The general consensus is that property prices are likely to still head upwards, but at a more gradual pace.

ERA assistant vice-president Eugene Lim explained that the property market is driven by internal and external events.

Internal factors such as the demand and supply of homes, and excessive speculation will affect prices.

Mr Lim added that the Government is trying to contain the situation by supplying more flats and providing enough housing for everyone.

National Development Minister Mah Bow Tan announced last November that 7,000 new flats will be launched for sale in the next few months.

Said Mr Lim: ‘In order for the prices to drop, the supply must outstrip demand. But demand is expected to go up because the population is increasing. Economically, we’re stable and this will generate more confidence and more jobs.

‘Yes, more new flats will be released but it’s not meeting immediate needs and one must wait for at least three years for these flats to be built.’

WHY IT WON’T BE LIKE 2001

He doesn’t foresee a supply glut in the property market, even though more new private properties will also be completed in the next few years.

Mr Lim, however, thinks sellers would be more realistic about their pricing in the next few months.

And even if the US slips into a recession, it may not necessarily affect us in a big way like it did in 2001, which was centred on the IT industry, according to a report in The Business Times earlier this month.

A recession this time will not be IT-industry-specific and the Singapore economy is now more diversified and resilient, with domestic demand growing strongly, helped by large projects such as the integrated resorts (IR).

Continued strong growth in China and India will also help provide a cushion, according to that report.

Certainly, the upcoming IRs and Formula One will translate into more visitors and also more demand for housing here, said Chesterton International’s research director Colin Tan.

He said: ‘If you’re buying a place to live in, buy something you can afford so that there’s no fear of defaulting on your mortgage.

‘Property is a cycle. The question is when you want to exit the market? If you exit during the bull run, you’ll be fine.’

For those unwilling to fork out a premium for a place today, they can always rent a place but make their money grow by investing.

Said Mr Tan: ‘Hedge yourself by buying blue-chip property stocks. If the market is good, your stock value will increase.

‘If the market is bad, you’ll be able to take advantage of weak prices (by buying a property).’

Raise Or Not To Raise?

Source : TODAY, Tuesday, January 22, 2008

MPs debate whether to up $8,000 ceiling for DBSS buyers

THEY are public housing flats designed, built and marketed by private developers, costing as much as $700,000 - which begs the question: Should not the $8,000 income ceiling for prospective buyers be raised?


















Taking up the issue of Design, Build and Sell Scheme (DBSS) flats in Parliament yesterday, Nominated Member of Parliament (NMP) Eunice Olsen said: “When the income ceiling of $8,000 was set by the Housing and Development Board (HDB), there was no DBSS and no DBSS prices. Shouldn’t the income ceiling be commensurate with the increase in prices?

“In the event of a downturn, these buyers may not be able to afford their mortgages. As only private housing is not afforded any insulation by the Government from market fluctuations … does this change how we view public housing?”

MP (Marine Parade GRC), Dr Ong Seh Hong, similarly asked about the rationale for “the shift from providing affordable housing” to the $700,000 DBSS flats in Boon Keng, even as the income ceiling remains fixed.

And with prices of new and resale HDB flats rising, fellow Marine Parade MP, Dr Muhammad Faishal Ibrahim, asked about the Government’s plans to ensure home ownership stays affordable for lower income families.

In response to all three, National Development Minister Mah Bow Tan pointed to the need for “a wide range of housing options” to meet varying needs and aspirations “if we want public housing to remain relevant and attractive”.

So, even as the HDB is providing higher-end options such as DBSS, it has also, in recent years, introduced two- and three-room flats targeted at lower-income households.

“The HDB is not shifting its mission; neither is it abandoning its role of directly providing the standard HDB flats,” said Mr Mah.

Indeed, DBSS flats constitute a small part of the total public flat supply, catering for niche HDB buyers “with higher aspirations and who can afford a higher price”.

And as DBSS is for this select group, there are no plans to raise the $8,000 income ceiling. If this were done, richer home-hunters might join the queue, resulting in DBSS flats being “priced higher instead of becoming more affordable”, he argued.

Meanwhile, the Government remains committed to providing affordable public housing for families with more modest means.

Last year, the income ceiling for the Additional CPF Housing Grant was raised from $3,000 to $4,000 and the grant quantum for the various income tiers increased by $10,000.

Since it was introduced in March 2006, the additional grant has benefited more than 4,600 households.

Still, Mr Mah acknowledged, rising resale flat prices are a concern and the HDB is monitoring the situation.

Those who find it too expensive or cannot afford the Cash-Over-Valuation “should seriously consider postponing their purchase or applying for a new HDB flat instead”, he advised, adding: “For many Singaporeans, buying a property is the single most significant investment they make in their lives. It is wise to be careful and patient.”

Upgrading Costs Too Much For Some, Says MP

Source : TODAY, Tuesday, January 22, 2008

The makeover of their homes is welcomed, but would the weight on the wallets of the low-income be too much?

Member of Parliament (MP) Cynthia Phua of Aljunied GRC raised this concern yesterday as Parliament debated proposals to usher in new upgrading programmes for public housing. The objective - repair works on ceiling leaks, for example, to spruce up ageing homes - was not in question.

Even Opposition MP Chiam See Tong added his support for the Home Improvement Scheme announced by Prime Minister Lee Hsien Loong at last year’s National Day Rally - while asking for his residents to get their due turn to be selected.

But, as three MPs spoke on the issue, the biggest worry was that homeowners’ share of the bill, between 5 and 12.5 per cent, would be too much for some.

“I therefore appeal to the (National Development) Ministry to create some air pockets for the lower-income residents before they suffer from hypoxia because of rising inflation,” said Mdm Phua.

She asked the Housing and Development Board (HDB) to absorb the quantum for smaller units and a lower co-payment for four-room flats or bigger.

In reply, Minister of State Grace Fu said there would be repayment schemes to make the renovation process affordable. But she added that the scheme was not a substitute for routine maintenance and practical repairs for which HDB lessees have to be responsible.

In reply to a request by Mr Liang Eng Hwa (Holland-Bukit Timah GRC) for the Government’s upgrading schemes to be extended to private estates, Ms Fu said such Government surpluses would be kept for public housing.

As for Mr Chiam’s request, he was told that Potong Pasir’s turn would come - eventually. - Zul Othman

Asian Markets Crash While US Totters - Recession Fears Hit Home In Plunges Reminiscent Of Post-9/11 Debacle

Source : The Business Times, January 22, 2008

It was blood on the floor across Asian bourses yesterday as investors dumped stocks amid intensifying fears of a US economic meltdown.

This, despite President George W Bush last week announcing a massive US$145 billion stimulative tax relief plan and Federal Reserve boss Ben Bernanke stating that more interest rate cuts were in the works.

But all this fell on deaf ears of panic-stricken investors.

The result: a series of institutional programme selling and waves of margin calls which resulted in the most intense one-day rout across Asian bourses in recent memory.

Singapore’s recently revamped Straits Times Index (STI) plunged a massive 6.03 per cent to end at its lowest levels since March 2007 at 2,917.15 points as bellwether stocks and blue chips took a beating. It was its steepest single-day fall since the September 2001 New York bombings, when it had fallen 7.47 per cent.

In Hong Kong, the Hang Seng also posted its worst one-day fall since the same tragedy, as it plunged 5.49 per cent to 23,818.86 - its lowest close since last September. And in Tokyo, the Nikkei 225 sank 3.86 per cent to 13,325.94, while Mumbai’s BSE Sensex 30 plunged 7.41 per cent to 17,605.35 points.

The same depressing scenario was played out in Seoul, Kuala Lumpur, Jakarta, Sydney and elsewhere.

And as Asian investors licked their wounds after a massive beating, European bourses started the day in similar vein in negative territory.

Analysts attributed the selldown to intensifying fears of a US economic recession, brought about by knock-on factors from the widening sub-prime crisis.

That had prompted President Bush to unveil his US$145 billion tax plan over the weekend - which many had hoped would help calm nerves and stabilise markets.

‘Letting Americans keep more of their money should increase consumer spending,’ he declared.

But many in the market now say the plan was too little, too late.

‘We are just seeing the beginnings of what could be a downward spiral which could take months to flatten out,’ said a European fund manager who spoke anonymously on account of the bank’s internal compliance requirements. ‘The real crunch-time could come some time during the middle of this year, when the US adjustable rate mortgages come up for review. That could hit the wider US housing market, especially if banks start tightening up.’

Others noted that this was a long overdue correction, with the markets having largely recovered in November and December, after being hit last July and August.

And even while the US economy comes into focus, new fears are emerging about a massive economic slowdown in the euro- zone, no thanks to a sharp appreciation in the euro which is already hurting exports.

Meanwhile in China, there are fears that Chinese banks which have until now remained largely silent about their sub-prime exposure could now start unveiling losses. Some market insiders reckon large players like Bank of China have substantial exposure, which could come to light in the coming weeks.

Meanwhile, the flight to cash has already started across Asian markets and looks likely to continue for the foreseeable future.