URA Gives Go-Ahead For Three Hotels

Source : The Business Times, July 26, 2008

A number of residential projects also get the nod

A STRING of residential, commercial and industrial projects received provisional permission from the Urban Redevelopment Authority (URA) in the second quarter of this year.

URA also gave the nod in Q2 for the development of 110,790 sq metres of business park space.

Far East Organization unit China Classic received provisional permission to build a 384-room hotel at Cross Street, while Hotel Plaza got the nod for a 345-room hotel at Upper Pickering Street.

Resorts World at Sentosa got the go-ahead to build a hotel with 1,352 rooms as well as 45,090 sq m of retail space in the central zone of its integrated resort.

Residential projects that received URA's provisional permission in April-June this year include Frasers Centrepoint's 717-unit condo at Lakeside Drive in the Boon Lay area, Chip Eng Seng's 372-unit condo at Elias Road in Pasir Ris; and UOL/Peak Century's 643-unit condo at Simei Street 4. All these projects have 99-year leasehold tenure.

EC Prime Pte Ltd - controlled by Melvin Poh, Tan Koo Chuan and Saw Pik Kee - received approval to develop 228 apartments at Alexandra Road.

URA also gave the nod in Q2 for the development of 110,790 sq m of business park space in three new projects - to Soilbuild Group Holdings to develop a facility named Solaris at Ayer Rajah Avenue/Fusion Walk (42,780 sq m); to Lawrence Leow's Crescendas Bionix Pte Ltd to develop 41,200 sq m at Biopolis Phase 3; and to Ascendas for a project at Changi Business Park Crescent (26,810 sq m). Business park space can meet the office needs of some firms, for example, backroom operations, URA noted.

Provisional permission for multiple-user factories were also granted for projects at Commonwealth Drive and Jalan Tepong. Trio Link Development clinched approval for a 21,570 sq m industrial development at Playfair Road.

UOB Kay Hian Trading obtained URA's go-ahead for its transitional office development at Anthony/ Scotts roads (13,020 sq m).

URA also gave provisional permission to Ritzland Investment for 12,050 sq m of offices at Mountbatten Road.

Worries Over US Housing Slump Impact Drag Down Asian Stocks

Source : The Business Times, July 26, 2008

Banks and property stocks drive STI lower, but for the week, index is still up 2.6%

STOCKS here and elsewhere in Asia tumbled yesterday after steep losses in the United States overnight amid renewed worries over the impact of the US housing slump on banks and the wider financial sector.

The Straits Times Index (STI) ended 55 points or 1.8 per cent lower at 2,922.91, after falling as much as 2.2 per cent earlier in the day.

For the week, the index is still up 2.6 per cent, after big gains on Monday and Wednesday.

Banks and property stocks drove the STI lower yesterday, a day after the Monetary Authority of Singapore raised its forecast range for inflation this year to 6-7 per cent, from 5-6 per cent previously.

Higher inflation can trigger a repricing of stocks, especially if investors believe that the policy response - a stronger local currency or higher interest rates - may result in slower economic growth.

Data released in the US on Thursday showing that sales of existing homes in June fell to their lowest level in a decade prompted a sharp fall in major US stock indices.

Worries over the impact of the US housing slump on the broader financial sector extended into Asia-Pacific markets yesterday.

In Australia, the main stock benchmark fell 3.4 per cent after National Australia Bank shocked investors by announcing that it would set aside a further A$830 million (S$1.08 billion) to cover potential losses from its exposure to US mortgages.

The news dragged down banking and other financial sector stocks throughout the region.

Here, DBS Group, the largest of the three banks listed here by loans book, was the main stock driving the STI lower, falling 1.9 per cent to $19.38. United Overseas Bank, the second-biggest lender, declined 1.5 per cent to $19.08, while OCBC Bank ended 1.3 per cent lower at $8.35.

The two biggest local developers, CapitaLand and City Developments, also weighed on the index. CapitaLand fell 3.1 per cent to $5.91, while CityDev finished 3.4 per cent down at $11.50.

Of the STI's 30 component stocks, 27 fell, one rose and two were unchanged. Jardine Cycle & Carriage, a conglomerate with major car distribution businesses and other holdings in South-east Asia, was the only gainer, rising 0.4 per cent to $17.10.

Yanlord Land, a Chinese property developer, was the worst performer among the index members in percentage terms, followed by shipping group Neptune Orient Lines (NOL). Yanlord fell 6.1 per cent to $2, while NOL slid 4.8 per cent to $3.15.

In the broad market, losers outnumbered gainers by 242-108, with 487 counters unchanged, excluding warrants and bonds.

Trading volume was lower than on Thursday, with 835 million units worth $1.06 billion changing hands, including warrants and bonds but excluding shares traded in foreign currencies.

The FTSE ST All-Share Index, which tracks 270 of the most liquid stocks listed here, fell 1.6 per cent. But the UOB Catalist index of stocks on the second board ended 1.2 per cent higher, as penny stocks such as Junma Tyre Cord Co, Sapphire Corp and Medi-Flex rose 40-50 per cent on thin trading volumes.

Elsewhere in the region, major share indices fell, except in Malaysia, where the Kuala Lumpur Composite Index ended flat. In Japan, the Nikkei-225 index slid 2 per cent, while Hong Kong's Hang Seng Index finished 1.5 per cent lower.

Parkway Reit Q2 Income Beats Forecast

Source : The Business Times, July 26, 2008

PARKWAY Life Real Estate Investment Trust (P-Reit) yesterday announced a distributable income of $10.0 million for the second quarter ended June 30, 2008, beating its forecast of $9.4 million by 6.4 per cent.

Distribution per unit (DPU) for the three months was 1.66 cents, also 6.4 per cent higher than the forecast DPU of 1.56 cents.

Net property income for Q2 was $11.7 million, 8.1 per cent higher than the trust's forecast of $10.8 million.

There is no comparable period for 2007 as P-Reit was only listed on the Singapore Exchange in August last year.

The trust benefited from higher gross rental revenue in Q208 as a result of better-than-expected revenue from its Singapore hospital assets, as well as additional income from three new Japanese assets.

Q2 gross rental revenue was $12.5 million. The bulk of it came from the trust's Singapore hospitals, where total gross rental revenue was $12.0 million, a 4.3 per cent increase from the forecast figure of $11.5 million.

For the first six months of 2008, the trust's distributable income was $19.8 million while the DPU was 3.29 cents - both 5.1 per cent higher than the forecast.

Justine Wingrove, chief executive of P-Reit's management team, said that the private healthcare sector continues to remain robust even in the current volatile market conditions.

'As a result, P-Reit will not only enjoy strong growth from its current portfolio, but will also benefit from attractive asset acquisition opportunities,' she noted. Target markets for acquisitions include Australia, China, India, Japan, Malaysia, Singapore, Taiwan and Thailand, Ms Wingrove added.

The Reit's total portfolio size now stands at $902.2 million, following acquisition of its latest assets earlier this year. In May 2008, P-Reit bought a pharmaceutical products distributing and manufacturing facility as well as two nursing homes in Japan for $70 million in all.

P-Reit lost three cents to close at $1.12 yesterday. The stock has shed 0.9 per cent since the start of the year.

HDB Resale Market Buoyant But Upgrader Effect Still Muted

Source : The Business Times, July 26, 2008

Resale price index very close to record high of Q41996; Q2 transactions up 22%

THE Housing and Development Board (HDB) has announced that its Resale Price Index rose by 4.5 per cent in Q2 2008 over the previous quarter and 8.4 per cent since Q4 2007.

The number of resale transactions also increased by 22 per cent quarter on quarter to hit 7,760 transactions.


















On a half-yearly basis, a total of 14,120 transactions have been recorded so far, almost half of the 29,450 transactions for the whole of 2007.

The HDB Resale Price Index is now hovering very close to the all-time peak in Q4 1996, boosted by high resale prices in estates like Queenstown and Bukit Merah where the median price for five-room flats is now around $600,000.

But while a buoyant resale market can translate into a stronger HDB upgrader base, it may still be too early for developers to count on upgraders to prop up the private residential market.

DTZ executive director and regional head for consulting and research, Ong Choon Fah, said that HDB upgraders are 'still price-sensitive'.

According to DTZ's analysis, HDB upgraders accounted for 28 per cent of all private homes bought in Q1 2008, up from 22 per cent in the preceding quarter.

However, in 1998, when private property prices bottomed out, HDB upgrader transactions peaked at 62 per cent of all private property transactions.

And when the property market tanked again in 2002, HDB upgraders went in to buy up to 59 per cent of all private property transacted.

While the numbers suggest that HDB upgraders still find private property too expensive, Mrs Ong also pointed that HDB does now offer a 'spectrum' of property types to cater to more specific needs and price brackets.

Mrs Ong was referring to HDB's new Design, Build and Sell Scheme flats which have been selling well.

Sources also say that the 578-unit Park Central at AMK has received around 1,000 applications since its launch on June 23.

HDB has also launched a total of 4,524 new flats under the Build-To-Order (BTO) system for H1 2008.

ERA Asia Pacific assistant vice-president Eugene Lim points out that HDB upgraders tend to be those who sell their five-room or executive flats, and according to his analysis, this number has not increased significantly.

Five-room flats made up 26 per cent of all HDB resale transactions in Q2 2008, up from 25 per cent in the previous quarter while executive flats made up 9 per cent, up from 7 per cent quarter on quarter.

Four-room flats made up 37 per cent of all resale transactions, and Mr Lim also notes that the median price for this segment saw the highest increase by $15,000 to $300,000.

Mr Lim believes that the upgrader effect on the private property market could be curtailed by affordability too.

'Most upgraders will be looking for properties in the $650-$750 psf bracket,' he said.

Interestingly, the influx of new permanent residents (PRs) here has added to the demand for resale flats.

Mr Lim estimates that 20 per cent of buyers in the resale segment are PRs, up from 10-12 per cent a year ago.

However, whether PRs are partially responsible for the buoyant resale market is not known. HDB has not revealed the number of flats bought by PRs.

Perhaps a more interesting development is that the HDB Resale Price Index has begun to diverge from the private property price index, which grew by just 0.2 per cent in Q2 2008.

Still, most property consultants believe the chances of the two indices decoupling, to represent a disconnected private and public property markets, are remote.

Knight Frank director (research and consultancy) Nicholas Mak also highlights that between Q2 2002 and Q1 2004, prices of private homes fell, while HDB resale prices increased.

During this period, both indices did, however, remain relatively flat.

Mr Mak does believes that any divergence in price trends, if any, will only last for a few quarters before a correlation is re-established.

He added: 'Both private and public sectors do relate to the same macro-economic factors.'

DTZ's Mrs Ong also said that both sectors are linked by the 'substitutional effect'.

'If prices are too high in the private housing market, buyers will shift to the public housing market,' she added.

She also noted that significant shifts in price movements only tend to follow changes in housing policy and related spheres like Central Provident Fund.

Savills Singapore director (marketing and business development) Ku Swee Yong believes that HDB upgraders will eventually return to 'lend strong support' to the private property market, citing the interest, if not the take-up, in new mass-market launches like Livia and Clover by the Park as examples.

Private Homes To Take A Slower Road To Completion

Source : The Business Times, July 26, 2008

Many units pushed back as costs rise and sentiment falters

The latest news is good or bad - depending on your point of view. Official data now shows that the number of private homes that could be completed by end-2011 may be less than previously thought - which means residential rental and capital values could hold better than expected.
















Urban Redevelopment Authority's (URA) latest Q2 figures, based on quarterly surveys of developers, showed that 46,480 private homes are expected to be completed between Q3 2008 and end-2011. This figure is 18 per cent - or 10,021 units - lower than the figure of 56,501 units slated for completion between Q2 2008 and 2011 listed in URA's Q1 data.

Of these, 2,587 units were completed in the second quarter and have hence been removed from the supply pipeline, URA explained. Other completions have been put on hold as some developments have been postponed - as seen in the case of some en bloc sale sites. Rising construction costs and cautious market sentiment have delayed the construction of other projects.

Notwithstanding this, URA highlighted that the total supply of new private homes in the pipeline stood at 67,569 units as at end-Q2 2008 - about the same as 67,736 units at end-Q1. However, more of these units may now see completion after 2011.



















Some industry players welcomed the latest figures, which will hopefully clear up some of the question marks about home completions.

Knight Frank managing director Tan Tiong Cheng said: 'Rents should hold better and capital values should also hold slightly better. Basically the window widens for those who've bought homes earlier on deferred payment schemes to clear their purchases if their units are in projects whose completions are being delayed. In short, there should be less panic selling.'

Typically, deferred payment schemes - scrapped since last October - expire when a project is completed, which is when buyers have to pay the bulk of their purchase price to developers. As a result, 'specuvestors' tend to offload their units in projects before they are completed.

However, Mr Tan also pointed to a potential downside for developers whose projects are in the immediate vicinities of condos sold earlier. 'As a developer, I face competition for sellers from those specuvestors who've bought in nearby projects for a longer period now if the project completions are delayed.'

URA's price index for non-landed private homes in Core Central Region (CCR) dipped 0.1 per cent in Q2 over the preceding quarter - for the first time since Q1 2004, the earliest period for which such data is available.

The Q2 decline in CCR - which includes the prime districts 9, 10 and 11, the financial district and Sentosa Cove - came on the back of a 0.5 per cent drop in the price index for uncompleted homes in the region; the index for completed homes rose 0.3 per cent.

Non-landed home price index (overall, covering both completed and uncompleted units) rose 0.7 per cent in Q2 for Rest of Central Region and by 0.9 per cent in Outside Central Region.

URA's headline islandwide price index for private homes (landed and non-landed) inched up 0.2 per cent quarter on quarter in Q2 - weaker than the 0.4 per cent flash estimate rise announced earlier this month. The index has risen 3.9 per cent in the first half from the end-2007 level - after escalating 31.2 per cent for the whole of 2007.

Looking ahead, CB Richard Ellis executive director Li Hiaw Ho said: 'Correction of residential prices, to the tune of 5 to 10 per cent in H2 2008, will be inevitable but is likely to vary according to location, product type and target market', citing the continued toll of the sub-prime mortgage meltdown on the global economy and high inflation.

Developers sold a total 1,525 private homes in Q2, double the Q1 volume. But overall in H1 2008, they have sold only 2,287 units, which is around just one quarter of the 9,912 units developers sold in the same period last year.

The total number of subsale transactions - often seen as a proxy for speculative activity - rose 10.6 per cent quarter on quarter to 440. Leading the pack was the Outside Central Region (OCR), where subsale volume jumped 39 per cent to 154 units. Subsales in Q2 made up 8.1 per cent of private home deals in the region, which includes mass-market locations, up from 6.7 per cent in Q1.

URA said that examples of projects that saw significant subsales in OCR in Q2 include The Centris in Jurong (15 units) and The Raintree near Bukit Timah Nature Reserve (16 units). Analysts say that The Calrose in Yio Chu Kang and Varsity Park Condo also saw at least 10 subsales each in Q2.

Some of these projects have either received Temporary Occupation Permit or will be getting it soon; investors tend to sell off units shortly before or after a project gets TOP as buyers are willing to pay a slightly higher price then, because units can be immediately rented, analysts noted.