Eager For The Green Mark

Source : TODAY, Wednesday, January 16, 2008

ONLY 39 buildings made the mark last year. But just two weeks into 2008, nearly 120 building projects, both private and public, are lined up and eager for a Green Mark rating.

The idea of building sustainability is gaining acceptance among industry players and builders, even as need and legislation are providing the added impetus.























"So far, over 70 buildings have been Green-Mark-certified, and many more are in the pipeline for assessment. This is an encouraging sign," said Parliamentary Secretary for National Development Mohamad Maliki Osman yesterday, even as he announced even more good news: New construction demand is expected to reach between $23 billion and $27 billion this year.

The bulk of this is expected to come from private residential and commercial developments, while public sector housing, amenities and infrastructure projects will also add to demand. This buoyant period is also a time to look forward to the industry's environmental responsibilities, Dr Maliki said at the Construction and Property Prospects 2008 Seminar.

When the Building Control Act takes effect in a few months, all new buildings and existing ones undergoing major retrofitting will have to meet Green Mark standards. Green Mark Platinum buildings would have achieved 30-per-cent energy efficiency, and a basic Green Mark building at least 10-per-cent energy efficiency, said Building and Construction Authority (BCA) chief executive John Keung.

Meanwhile, to promote sustainable construction, the BCA will introduce new guidelines this month for the usage of high-strength concrete, while guidebooks on the use of steel and of recycled materials in building will also be launched soon.

A "wake-up call" came early last year, in the form of disruption to sand and granite supply that had "some developers exploring sustainable designs, using alternative or recycled construction materials," said Dr Keung.

And now — a year since Indonesia banned the export of concreting sand — Dr Maliki announced the BCA's assistance scheme to co-share the risk of bringing in sand from distant sources would be "discontinued".

"Concrete prices stabilised quickly after an initial spike and the construction boom last year was hardly affected … Based on feedback from the industry, the scheme is no longer necessary," he said.

But to ensure the long-term supply and quality of essential construction materials, the BCA is finalising details of a licensing scheme for importers.

Hedge Fund Gets Into Property Development

Source : The Straits Times, Jan 16, 2008

HEDGE funds do not usually get into property development, but a home-grown firm is venturing into the real estate game despite signs the roaring high-end market is slowing.

Ferrell Asset Management will develop Ferrell Residence, a project consisting of luxury flats and penthouses on a 31,371 sq ft site opposite Anglo-Chinese School (Barker Road), next to City Tower.

The freehold estate in Bukit Timah will have about 30 units worth at least $2,300 per sq ft.

Ms Jeanna Chan, executive director of Ferrell Asset Management, which manages more than US$700 million (S$1 billion) worth of assets, said the project would be launched around the middle of the year.

It signals a major shift for Ferrell. It has been a big investor in existing properties and counts real estate players such as Indonesia's Lippo Group as investors, but developing has not been in its game plan.

Ms Chan, however, sees it as a logical move.

'Development is a natural and strategic extension of our experience in managing properties,' she explained. 'I feel this is an opportunistic move in light of our outlook for local and regional properties.'

Ferrell's property portfolio includes The Trillium, 100 condominium units at RiverGate and 52 per cent of strata units in 79 Anson.

Ferrell is one of the few funds that have spent big money on single residential projects.

One play involved outlaying more than $182 million to buy units at RiverGate three years ago.

While non-property firms have ventured into real estate development - publisher Eastern Holdings is one - it is unusual for hedge funds.

Most funds typically invest in properties directly or via other property funds or team up with developers to take stakes in projects.

'When we have a property boom, it is not surprising that we have more players going into property development than the traditional developers,' said Daiwa Institute of Research analyst David Lum.

While industry watchers do not doubt Ferrell's ability to profit by buying and selling properties, they say developing is a different ball game altogether.

'You have to market the building. You need coordinators with real estate experience to manage the building. It's a case of specialising in what you do best,' Knight Frank director of research and consultancy Nicholas Mak said.

'Ferrell has always been deemed to be different compared to our peers in this market. Our principals are business-oriented in outlook other than being hedge fund managers,' Ms Chan said.

Ferrell's move may encourage other funds with the financial muscle to develop their own properties.

With assets so pricey, spotting an undervalued real estate deal becomes more difficult, so hedge funds would rather develop their own to sell.

'Now that interest rates have gone down, liquidity will be improved, and that will be an excellent time for the likes of private equity firms and funds to come back again,' said Jones Lang LaSalle Asia Pacific head of investments Lui Seng Fatt.

With interest rates being driven down further, sources of funding are becoming more attractive for hedge funds, he added.

Building Boom May Lift Deals To New High

Source : The Straits Times, Jan 16, 2008

Record $24.5b in contracts last year, with private sector leading the way

ROCKETING demand propelled the construction industry to record levels last year, eclipsing even the glory days of 1997, with even more to come this year.






















Contracts totalling $24.5 billion were awarded last year, up 46 per cent from the $16.8 billion in 2006 and just above the $24 billion in the boom year of 1997.

The figures cover private projects and public works, such as new MRT lines, but private sector demand was the key driver behind the record numbers.

Mega projects like the Marina Bay Sands integrated resort (IR), Marina Bay Financial Centre and Somerset Central lifted private commercial contracts to a record $5.1 billion, according to official figures announced at an industry seminar yesterday.

Demand shows no sign of slowing, with contracts for this year forecast at between $23 billion and $27 billion, depending on whether some large projects get held back.

The bulk of the demand this year and next will come from developments such as the IRs and the Downtown MRT line.

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Construction stocks also prospered. Chip Eng Seng closed at 55 cents yesterday, below its high last year but up from a low of 31 cents last March. Lian Beng Group has risen from a low of 22 cents in March to 63.5 cents yesterday.

But there are concerns amid the bright outlook, including rising costs.

Dr Mohamad Maliki Osman, Parliamentary Secretary for National Development, told the Construction and Property Prospects 2008 seminar that high demand will keep exerting pressure on resources.

This demand has already placed 'a tremendous strain' on resources and has led to a 'chaotic price escalation', said Mr Seah Choo Meng, executive chairman of Davis Langdon & Seah Singapore, one of the seminar speakers.

He warned that if prices are not reined in, they will hurt the industry and even the overall Singapore economy.

'There will be some negative impact this year, but we have built up a momentum which can be maintained for the next two years,' he said.

The Government has reduced some pressure by putting more than $2 billion worth of projects on the backburner until 2010 at least, with more to come.

'All ministries are currently combing through their list of projects to identify more projects for rescheduling,' said Dr Maliki.

He urged the industry to move towards sustainable construction, which is environmentally friendly and can enhance Singapore's resilience against supply fluctuations in basic construction materials.

He also said the Building and Construction Authority (BCA) will release information on demand to enable the industry to get a better feel of the market and plan more efficiently.

It has all been a stark turnaround for a sector that was in the doldrums just three years ago. Now that things are rosier, contractors are facing new challenges.

The industry continues to grapple with the uncertainty of material prices, said Singapore Contractors Association president Desmond Hill.

Ready-mixed concrete is around $130 a cu m, compared with about $190 during the Indonesian sand ban last year and $74.40 at the end of 2006. Prices could rise to $150 per cu m in the next few years.

Steel bars cost about $1,000 a tonne, up from $744 a year ago, said the BCA.

There is also a lack of middle management staff as many bailed out of the sector in the last downturn, Mr Hill said.

S'pore Again Ranked World's Second-Freest Economy

Source : The Straits Times, Jan 16, 2008

The Republic closes in on HK and comes out tops in business and labour freedom

SINGAPORE has closed the gap on long-time rival Hong Kong in a ranking of the world's freest economies - a key indicator of a business-friendly environment.
The Republic came second in the ranking, finishing behind Hong Kong for the 14th straight year.

Singapore scored 87.4 on the Index of Economic Freedom, which is published annually by The Wall Street Journal and American conservative think-tank The Heritage Foundation. This was a 0.2 percentage point gain over its score last year and narrows the gap with Hong Kong to 2.9 percentage points.

The gap last year had widened to 3.4 percentage points, due partly to Singapore's lower scores on the degree of freedom in its financial sector and taxation.

This year, the editors of the index lauded Singapore as the top scorer in terms of business and labour freedom.

Besides those two factors, the index takes into consideration eight other types of freedom, including trade and monetary, as well as the size of the government and freedom from corruption.

Scores between zero and 100 are given, and the ratings in each category are averaged to produce an overall score. A total of 157 economies were surveyed.

Publishers of the index say that economic freedom has long been related to good economic performance. Hong Kong scored the highest in four of the 10 categories to top the rankings.

And while it may be easy to dismiss the latest index as one of many disparate economic rankings that use a wide range of measure, experts say that it has special significance for Singapore.

Action Economics economist David Cohen said: 'It is a reflection of the attractiveness of a location to conduct business in. It indicates little government interference and a low tax rate, among other factors.'

CIMB-GK economist Song Seng Wun agreed, saying: 'With two small open economies like Singapore and Hong Kong, which are dependent on external investment for growth, it's no surprise that they are at the top.

'The two economies share much of the same mindset, which is to be open, transparent, flexible and accommodating in order to attract more business and investment. It is a reminder of some of the factors and foundation of Singapore's success and progress.'

With Australia coming in fourth, the Asia-Pacific has three of the world's five freest economies.

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Singapore finishes behind Hong Kong for the 14th straight year in a ranking of the world's freest economies.

Record Sales Of New Private Homes In 2007

Source : The Straits Times, Jan 16, 2008

Total of 14,826 sold, mostly in first nine months, before sales slid sharply at year-end

HOMEBUYERS picked up a record number of new private homes last year - before demand dipped sharply at year-end.















They bought 14,826 new homes in the year, up from 11,147 the year before, according to the latest figures from the Urban Redevelopment Authority (URA).

This all-time high figure was boosted by sales in the first nine months, when 90 per cent of last year's deals were done, said property consultancy CB Richard Ellis (CBRE).

Demand then went into a freefall in the last months of the year amid a slew of worries, including concerns over the United States sub-prime mortgage crisis.

New home sales, which had averaged 1,480 a month between January and September, fell to below 600 per month in October and November.

Last month, a mere 305 deals were done, the lowest number since the URA started tracking monthly new home sales in June. All the figures exclude executive condominiums.

December also saw a dip in the median price of new homes. Price gaps within each category of new homes also narrowed, said consultancy Jones Lang LaSalle (JLL). It noted that the gap between the highest and lowest prices for city-centre and mid-tier homes narrowed to its smallest in recent months.

But the year-end decline was 'expected', said JLL's head of Singapore research, Mr Chua Yang Liang. He said the 'looming uncertainty from the US sub-prime issue', coupled with the usual 'lull period' in December led to fewer launches of new projects and fewer home sales.

Developers tend to launch fewer projects at the end of the year because of the holidays. They launched only 1,673 units in the fourth quarter last year, about a third of that in each of the first three quarters.

But a bigger reason for the slowdown could be the fact that recent asking prices have soared so much, said Mr Ku Swee Yong, director of business development and marketing at Savills Singapore. 'A lot of recent new home transactions are at record-high prices,' he said.

Last year, developers sold almost 200 new homes at more than $4,000 per sq ft (psf), Savills said - a level never reached in previous years.

Even in December, three units at the Ritz-Carlton Residences in Cairnhill went for more than $5,000 psf.

Units at the Marina Collection also fetched record prices for Sentosa Cove last month at a median price of $2,734 psf, said CBRE.

'There is now a 15 to 20 per cent gap between what developers are asking for and what buyers seem willing to pay,' Mr Ku said.

This has led to a 'stand-off' and a more cautious mood among buyers which may persist well into this year, he added.

Already, the median prices of new uncompleted units have started to slide, said Knight Frank. They eased from $1,110 psf in November to $1,063 psf last month.

New home sales last month dropped off most in the mid-tier and suburban regions, consultants said.

Only 56 mid-tier units were sold in December, 80 per cent less than in November. For suburban projects, the number of units sold fell 35 per cent to 60.

In the prime city centre, new home sales jumped 36 per cent to 175, boosted by a bulk purchase of 97 units in Goodwood Residences at a median price of $3,200 psf.

New launch Zenith in Zion Road also helped city-centre sales, with 37 units sold at a median price of $1,665 psf.