Dream home chase turns bad

Source : New Paper - 4 Oct 2008

Buyer loses unit & savings after mistake in loan application

HE wanted to upgrade from a four-room HDB flat in Hougang to a new condominium unit near the city.

Now Mr Thomas Ng, 49, may end up losing his life savings, all because of a mistake in his loan application.

He wanted to buy a $630,000 one-bedroom studio apartment in the Mackenzie 88 at Mackenzie Road, near Little India, under the Deferred Payment Scheme.

Under this scheme, buyers have to pay the stamp duty and 10 per cent down payment upfront and settle the remaining 90 per cent when their apartments are ready in 2010.

For Mr Ng, that would have been $78,000.

But when he signed the option to purchase, Mr Ng claimed, a property agent ticked the Normal Payment Scheme in his loan application.

This means that Mr Ng has to pay a 20 per cent down payment, and then make progressive payments as the condo is being completed in phases.

To add to his woes, the bank later would only offer him a 70 per cent loan instead of 80 per cent.

In all, he had to pay the developer a total of $202,000 by June this year.

Mr Ng, who earns about $5,000 a month as a self-employed salesman, could not afford this amount.

Wrong option

He could now lose the $140,000 he had paid up so far, after the developer told him in July this year that it was going to annul their agreement.

Mr Ng told The New Paper: ‘What can I do now? I’ve lost everything and my wife told me that she wants a divorce.’

The unit which he reserved has since been sold.

Mr Ng claimed his problem started because one of the property agents in charge of marketing the project had ticked on the wrong loan option, perhaps because of his rush in handling a long queue of buyers.

Without checking, Mr Ng signed the document and passed it to his lawyer.

He assumed that everything was correct and that his lawyer would notify him if there were any mistakes.

He only realised the error some time in April or May this year when his lawyer asked him for a 10 per cent progressive payment.

Mr Ng found it strange since he had already paid 20 per cent of the purchase price and stamp duty in June last year.

Asked why he paid a 20 per cent down payment when in the deferred payment scheme, he just had to pay 10 per cent, he said he paid up because he could afford it, and did not question the discrepancy at that time.

He said: ‘I know that I am partly to blame for not checking the documents, but I was not the one who ticked the wrong option. It’s so much money to be paying for someone else’s mistake,’ he said.

OCBC bank withdrew its 80 per cent loan offer to Mr Ng and approved a loan for 70 per cent of the purchase price.

Under banking confidential rules, Mr Gregory Chan, head of Consumer Secured Lending at OCBC Bank, could not comment specifically on this case.

But he said: ‘Typically, banks assess and approve each loan application on the basis of the customer’s credit-worthiness which takes into consideration factors such as income level, credit history and repayment ability, among others.’

To make the 10 per cent progressive payment, Mr Ng tried to secure a bridging loan close to the July deadline.

He sold his flat for $355,000, so OCBC approved a loan of $63,000 to him in August.

But it was too late, Mr Ng said, because his payment deadline was already over by then.

He said: ‘My house was sold, the bank had offered me a bridging loan, everything was ready. But I was told that the developer was confiscating my money because I missed the deadline, and the deal was over.’

Mr Kenneth Liu, 28, a relationship manager who specialises in mortgages, said Mr Ng should have got an Approval in Principle, valid for one to three months, to qualify for a loan of a certain sum even before he views a property or commit to buying it.

He said: ‘He should have made sure his loan would be approved before shopping around for his house, instead of going the other way round.’

Mr Ng has tried to meet the condo developer at least twice to see if it could work out an arrangement for him to buy another unit at Mackenzie 88 or in its other developments.

He claimed that when he went to the developer’s office the first time, the secretary told him the person in charge was out of town.

The second time, Mr Ng was told to deal with the developer’s lawyer instead.

Mr Ng said: ‘The property market now is bad, why not let me proceed with buying the unit? I am a sincere buyer, and I’ve tried everything to meet the developer, but it still wants to confiscate my money?’

When contacted, the condo developer declined to comment, but it is understood that it had sent Mr Ng several reminders to pay up.

As he failed to do so, he was deemed to have breached the agreement, which in turn led to the forfeiture.

Mr Ng plans to consult a lawyer on how he can recover his money.

He said: ‘I have nothing to lose. I might have to downgrade from my current four-room flat, but at least I will have a roof over my head.’

Phase 2 of Admiralty Park opens to public

Source : Channel NewsAsia - 4 Oct 2008

Woodlands residents can look forward to a closer experience with nature, with the opening of Phase Two of Admiralty Park - a 20-hectare nature area.

Home to more than 100 species of animals and plants, the nature area at the Admiralty Park is the biggest nature area within a park in Singapore.

Mr Khaw Boon Wan, Minister for Health and Member of Parliament for Sembawang GRC, officiated at the event on Saturday morning together with fellow MPs Mr K. Shanmugam, Dr Lim Wee Kiak and Ms Ellen Lee.

At 27 hectares, Admiralty Park is the largest park in the Northwest district to offer both recreational amenities and a mangrove swamp. It has a hilly terrain shaped like a river valley to reflect the history of the site, which used to have a river (Sungei Cina) running through it. Phase One, comprising seven hectares of recreational space, was officially opened in October last year.

Construction works for Phase Two started in September 2007 and took about nine months to complete.

With Phase Two completed, the park now has three boardwalks and a 2-kilometre trail the public can explore.

The park is unique because of the variety of mangrove plants, such as the Nipah Palm from which you can harvest what’s called “attap chee”, an ingredient found in local desserts.

Mr Khaw, who joined nearly 1,200 residents on the morning trail, said kids who have grown up in built-up housing estates can learn much from the park.

He said: “For us, growing up in a kampong, we can relate to all these but the next generation growing up in HDB (flats), they may not appreciate all these attap trees, seeds, lalang, birds, and mangrove swamps.”

The park will be a great asset for the residents living nearby, he added.

Just like the vegetation and natural elements have a symbiotic relationship with each other, the park itself has a relationship with its neighbours. In this case, it is the Republic Polytechnic.

The school is experimenting with using waste wood from the park to lower the amount of electricity air-conditioners consume.

The wood rot helps a drying agent to absorb humidity from the environment, which helps the cooling process.

Dr Wong Luh Cheng from the Republic Polytechnic’s School of Applied Science said: “We came across this de-gasification process in which we can extract energy from the plant without creating smoke and other pollutants and it’s clean burning. We will take this heat, and we dehumidify the air through a mechanism that we devised.”

The park will also be a live classroom for the polytechnic students.

More than 30 Republic Polytechnic students and staff have also been trained to give guided tours of the park.

Serangoon Gardens dorm to go ahead

Source : Straits Times - 4 Oct 2008

Separate access road and noise and security measures will address residents’ concerns

PLANS for a dormitory to house foreign workers in Serangoon Gardens will go ahead, despite unhappiness expressed earlier by some residents there.

But in a nod to their concerns, the Ministry of National Development (MND) announced yesterday that measures would be taken to minimise disruption in the area.

ST PHOTO: DESMOND WEE

For starters, no more than 600 foreigners - generally factory workers in the IT and electronics industries in Ang Mo Kio - will be housed at the dormitory, which will be up within a year.

An earlier feasibility study had shown that the premises of the former Serangoon Gardens Technical School could hold up to 1,000 workers.

An access road to the building will also be built, so buses transporting the workers to and from their ‘home’ will not wind through the middle-class estate, which already has traffic congestion problems.

Once the road, which leads only to the dormitory, is built, the buses will enter the compound via a slip lane on the Central Expressway and exit through a new road leading to Ang Mo Kio Avenue 1.

To keep the workers from disturbing the estate’s residents, the dormitory operator will have to implement noise-control, security and other measures.

The facility will also have adequate amenities, including provision shops, so workers will have little reason to leave it.

Finally, the site area will be reduced, setting it further back from homes along Burghley Drive and giving residents there an additional buffer from noise.

Announcing these measures yesterday, Minister for National Development Mah Bow Tan said they would ensure that the dormitory would not create a ‘huge impact’.

The measures are a result of discussions between the ministry, the Member of Parliament for the area, Mrs Lim Hwee Hua, and grassroots leaders, he said.

A majority of residents contacted yesterday said they had expected the plan to go ahead, but that the measures went some way to address their concerns.

Their reaction was a far cry from that of a month ago, when plans for the dormitory first made the news.

The residents raised an uproar, collecting more than 1,600 signatures from among the more than 4,000 households in the estate, firing letters to the press and protesting vociferously in a meeting with their Members of Parliament.

They said that allowing large numbers of foreign workers into the area could lead to a spike in crime, drunken and disorderly behaviour and traffic congestion, and that the value of their properties would be hit.

The issue also spiralled into a national debate of sorts, with residents and those who supported keeping foreign workers away from population centres on one side, and those who cried ‘discrimination!’ on the other.

Yesterday, Mr Mah reiterated that the need for temporary dormitory spaces was pressing and added that other sites - fewer than 10 - would be released within a month. No details were given on their locations but a feasibility study will be done for each before the MND goes to grassroots leaders for their feedback.

In the meantime, Mr Mah said, the Government was working hard at getting permanent dormitories in Chua Chu Kang and Lim Chu Kang ready.

There were 577,000 foreign workers here last year, up from 475,000 in 2006.

Speaking to reporters yesterday, Mrs Lim conceded that some Serangoon Gardens residents would be disappointed by the decision, but emphasised that the measures had been taken to address their concerns.

She said it was ‘no trivial matter’ to create a new access road and that it was a ’substantial revision’.

Ms Sujata Jayaram, 43, who chairs the estate’s Chartwell neighbourhood committee, said there were ‘mixed feelings’ but that residents were pleased with the infrastructure arrangement.

Another Burghley Drive resident, Madam S. Raja, 69, said she was glad that the road would not be clogged with traffic. Calling the decision ‘a compromise’, she said: ‘We will cross the bridge when we come to it. At the moment, it’s okay.’

Temporary dorm in Serangoon Gardens

Source : Business Times - 4 Oct 2008

THE Ministry of National Development (MND) has decided to convert a former school site in Serangoon Gardens into a temporary dormitory for foreign workers.

Following concerns raised by residents in a petition against the conversion in early September, various measures will be put in place. These include the construction of a new access road, a reduction in the site area, and sealing off of the existing entrance at Burghley Drive.

The dormitory’s capacity will be capped at 600 initially, and it should be ready within a year to serve manufacturing and services factories in the Ang Mo Kio area. If there is demand, the government may consider raising its capacity to a maximum of 1,000.

Speaking at a news conference yesterday, National Development Minister Mah Bow Tan emphasised the balance to be maintained. ‘We need foreign workers, we need to provide adequate housing. We also need to make sure disamenities created in residential areas, whether HDB or landed, are minimised.’

While permanent purpose-built dormitories are being developed, temporary ones like the Serangoon Gardens site, with a lease of up to five years, have been sought to meet the high demand.

Fewer than 10 other temporary sites are being considered and Mr Mah said assessments of these should be completed in a month’s time.

Dorm gets the go ahead

Source : Today - 4 Oct 2008

New road, other measures to address residents’ worries

SERANGOON Gardens’ grassroots group adviser Lim Hwee Hua probably summed it up, when she told Today: “I don’t expect any of my residents to tell me they are happy, but I think they will be less unhappy.”

Following a residents’ petition and a public furore last month, the go ahead has been given to convert the former Serangoon Gardens Technical School at Burghley Drive into a temporary foreign workers’ dormitory. With it come steps to address worries raised by the estates residents. A new access road, 400-metres long, will run from the dorm to Ang Mo Kio Ave 1, so as not to add to the traffic woes of the already-busy roads within Serangoon Gardens.

To increase the buffer space between homes and the dorm, so that noise nuisance is minimised, the existing entrance at Burghley Drive will be closed, and the basketball court and school hall near this entrance will not be developed as part of the facilities.

Also, said National Development Minister Mah Bow Tan in a press briefing on Friday, just 600 workers - instead of the rumoured 1,300 - will be living at the dorm when it opens next year. There is capacity for 1,000, if it becomes necessary.

The lease is for up to five years, after which, stressed Mr Mah, “the need for a foreign workers dormitory will not be there, because by that time we would have established some of the more permanent sites”. Residents can also take assurance that the land is marked out for residential use in the long-term masterplan.

Finally, the dorm operator will be required to implement security measures, such as a perimeter fencing, and house rules to maintain order. These suggestions were made through “close consultation” over the past two to three weeks with grassroots leaders and Mrs Lim, whose ward comes under the Aljunied GRC.

Some might wonder if the new steps could throw up fresh concerns - this time, from residents along Ang Mo Kio Ave 1 and the nearby Tai Hwan estate. Referring to a map of the proposed access road,Mr Mah noted that it would run along a canal separating it from the housing estates on the other side.

Did public spotlight play a part?

Since it first leaked out that authorities were considering a workers’ dorm in the estate, the outcries of Serangoon Gardens residents have made headlines. Did this public spotlight, as well as the involvement of Mrs Lim, a Senior Minister State, and Foreign Minister George Yeo - both MPs for Aljunied GRC - impact on the Ministry’s decision?

Mrs Lim responded that “with or without the publicity, the same issues would still have been brought up to the Minister during the consultation period”.

But, referring to how some had lambasted Serangoon Gardens residents for protesting, she told TODAY: “I think the publicity over the issue took the discussion (from the actual concerns) into a different line, where people took a very moralistic viewpoint. That’s actually what my residents were very unhappy about - being judged in very harsh terms.”

On the decision to go ahead with the dorm, she said some residents “will no doubt be disappointed” but they would “work very closely with the agencies so as to minimise any inconveniences”.

Residents were indeed unhappy, but acknowledged the measures taken.

Said Mr Yeo Siang Yow: “Six hundred is still a lot of workers, and five years is not a short period of time. People are still going to worry about noise, littering and problems with their maids. And those selling now are going to feel the pain, because not everyone wants to buy a property next to a foreign workers’ dorm.

“I’m still not happy about it, but I think we’ve said all we can, and I think the Government is responding to some of it, like building the road. That’s a good move, at least.”

Another resident, who only wanted to be known as Ms Tan, said: “Five years is quite a long time, especially when we thought it would be two or three years. I’m glad the solution addresses some of the infrastructure issues, but … I think the anxiety level will be high for a while.”

Mrs Lim said grassroots leaders could look to other neighbourhoods that have gone through experience of adjusting to living alongside foreign workers, like Jalan Kayu and Teban Gardens.

Mr Terry Fong, chairman of the Neighbourhood Committee in Jalan Kayu where two foreign workers dorms opened in 2006, said: “I think eventually, it will lead to a harmonious situation, but it will take time and compromise.”

Same old brand new landmarks

Source : Today - 4 Oct 2008

MANY Singaporeans may remember taking their wedding photos at the Look-out Tower at the Toa Payoh Town Park in the past.

Today, the memories will live on not only in picture albums but through the efforts of the Urban Redevelopment Authority (URA).

The statutory board is expanding its conservation programme for buildings and monuments to include heritage structures.

“What makes a place distinctive and elegant are not just the buildings. It could be an elegant tower, a historic bridge, or a beautiful pavilion … places where we spent quality time with our friends and family,” National Development Minister Mah Bow Tan said on Friday.

Six other pavilions and towers will also be kept. They include the Swan Lake gazebo and Band Stand at Botanic Gardens, the observatory tower at Seletar Reservoir Park and the floating pavilion at MacRitchie Reservoir.

Six historic bridges will also be conserved. They include the Elgin Bridge at Boat Quay, the first vehicular bridge to be built across the Singapore River, Cavenagh Bridge outside Fullerton Hotel and the Crawford, Ord and Read bridges. Anderson Bridge, now part of the history-making Singapore Formula One Grand Prix, is also on the list.

“Most of these bridges are over 100 years old and are engineering feats of their time. They act as important landmarks of our rivers,” said Mr Mah at the 2008 URA Architectural Heritage Award presentation ceremony.

Singapore Heritage Society president Dr Kevin Tan applauded the “long-overdue” move. Historical artefacts that lie outside a conservation area tend to be neglected, he told Today, and URA’s initiative will help to “preserve these important iconic structures for our future generations”.

The URA will also conserve four “Black and White” houses at Bukit Chermin, bringing the number of these conserved colonial houses to 29.

Seven restoration projects were recognised at this year’s heritage awards, which are given for work done by owners, architects, engineers and contractors to conserve buildings while catering to modern needs.

The awards went to Sri Temasek at the Istana, film and foodie haven The Screening Room at Ann Siang Hill and five residential projects, which include The Sea View Clubhouse, Tan Chin Tuan Mansion, a black and white bungalow at No 14 Cable Road and a restored double-storey shophouse at No 120 Cairnhill Road.

The fifth residential project is Citylights at No 82 Jellicoe Road. Once a row of 16 motor workshops, the reconfigured 10 units of double and triple-storey pre-war shophouses now anchor a high-rise residential development.

Mr Mah said: “The identity of a city evolves from its history, culture, and collective memories of its inhabitants … These heritage buildings give our city a distinctive character and lend soul to our urban environment.”

A total of 84 restoration projects have received the annual URA Architectural Heritage Awards since it started in 1995.

Twelve iconic structures

Source : Straits Times - 4 Oct 2008

The URA has extended its conservation efforts to cover towers, bridges and structures other than buildings for the first time.

LONG-TIME Toa Payoh resident Kenny Leck has seen many changes in the housing estate where he has been living for 28 years.

Neighbours have moved away and old blocks of flats have been demolished to make way for skyscraper blocks.

The lookout tower at Seletar Reservoir Park, built by the Public Works Department in the late 1960s, has a striking angular geometry chracteristic of the period. — PHOTO: URA/KEVIN LEONG

Yesterday, the 30-year-old bookseller was glad to hear that one landmark in his neighbourhood will be conserved: the 25m-tall Lookout Tower in Toa Payoh Town Park.

Built in 1972, it was at one time a very popular spot for photo taking. Mr Leck said that on public holidays, his family often went to the park to take photographs, posing with the tower looming in the background.

‘The tower holds fond memories for residents and it is a good move to keep it,’ he said.

He was responding to the announcement that the Urban Redevelopment Authority (URA) is extending its conservation programme beyond buildings, to include structures such as towers, pavilions and bridges.

The structures are: the Botanic Gardens’ bandstand and the Swan Lake Gazebo; MacRitchie Reservoir’s water intake tower and bridge and its pavilion and bridge; the water intake tower, bridge and weir at Lower Peirce Reservoir and the lookout towers in Toa Payoh Town Park and Seletar Reservoir Park.

The six historic bridges to be conserved are Anderson, Cavenagh, Elgin, Read, Ord and Crawford.

In announcing the extension of the URA conservation programme, National Development Minister Mah Bow Tan said that what makes a place distinctive and memorable are not just buildings.

‘It could be an elegant tower, a historic bridge or a beautiful pavilion. There are many places and landmarks that we can identify with and feel for in Singapore - places where we spent quality time with our family and friends.’

He cited the Lookout Tower in Toa Payoh Town Park, which he called a landmark that many people identify with the estate.

He was speaking at the annual URA Architectural Heritage Award ceremony held at The Sea View Clubhouse at Amber Road. The clubhouse, built in the early 1900s, is a former seaside bungalow that has been restored and is a heritage award winner this year.

More than 6,800 buildings have been conserved under the URA programme since the programme started almost 30 years ago.

The National Parks Board also has its own conservation programme, under which some of the more scenic and significant tree-lined roads in Singapore are protected.

These include Arcadia Road, Mount Pleasant Road and Mandai Road. Mature trees along these roads cannot be cut down.

In June, the Land Transport Authority announced that it is saving the oldest bus stop in Singapore - a bus stop along Old Choa Chu Kang Road that was built in the 1970s.

Yesterday, Mr Mah also announced that four black-and-white houses at Bukit Chermin in Telok Blangah will also be conserved. These were built in the early 1900s by the then Singapore Harbour Board for its senior staff members.

The four houses, together with 25 pre-war colonial buildings that are already conserved at the Southern Ridges, can be developed for future use as hotels, restaurants, art galleries and the like.

Dr Kevin Tan, president of the Singapore Heritage Society, is pleased that the URA is now looking at individual structures for conservation. ‘It is a welcome and long overdue move as these structures are important to our historical and cultural landscape,’ he said.

Property stocks on downward slope

Source : Business Times - 4 Oct 2008

Stock prices will continue to fall as home prices continue to decline for the rest of this year and in 2009, analysts say

PROPERTY stocks took a beating yesterday following news that private home prices fell for the first time in 41/2 years, officially marking the end of the boom. And the worst is not over yet - the share prices of Singapore- listed developers can be expected to continue to slide, analysts say.

The FTSE Real Estate Index shed 10.9 points, or 2.4 per cent, yesterday to close at a 52-week low of 451.7. The index has lost 48.5 per cent since the start of the year. In contrast, the Straits Times Index has lost 33.7 per cent so far in 2008.

Singapore’s three biggest developers by market capitalisation all saw their stock prices fall yesterday. CapitaLand dropped 10 cents to close at $2.94, City Developments shed 36 cents to end at $8.01 and Keppel Land declined 14 cents to $2.61.

But property stocks have not bottomed out, analysts reckon. ‘We are not there yet,’ said DMG & Partners analyst Brandon Lee. ‘A lot of the news has been factored in (into the share prices), but we still have some way to go.’

CIMB analyst Donald Chua agrees. ‘We are not really seeing the full impact yet and it’s a bit too early to call the bottom.’ But property stocks are looking cheaper and more attractive than two or three years ago, he said.

The latest quarterly flash estimate released by the Urban Redevelopment Authority showed the overall price index for private residential property fell 1.8 per cent in the third quarter, after a marginal 0.2 per cent rise in Q2.

The market had been expecting physical property prices to fall since the start of this year, though it took the index three quarters to get there. ‘The index decrease was expected and anticipated by the market, especially as many commentaries have evoked anecdotal evidence based on selected transactions in certain projects to comment that prices have already fallen by up to double- digit percentages,’ said DBS Vickers analyst Adrian Chua.

But that did not stop investors selling down developer stocks yesterday in response to the latest negative news.

Stock prices will continue to fall as home prices continue to decline for the rest of this year and in 2009, analysts say. ‘Overall, we are predicting further mid single-digit price declines for Q4 2008, before dropping 3-5 per cent on a year-to-date comparison,’ said DMG’s Mr Lee.

‘With macro-economic growth not expected to recover in the near term, we believe the price correction would continue through 2009, falling between 8-15 per cent, with the CCR (core central region) bearing the brunt of the decline.’

DBS Vickers’ Mr Chua also expects single-digit price drops for private homes for the whole of 2008 and believes the price downtrend should continue into 2009. High-end properties should bear the brunt of any price falls, while the mass-market segment should be relatively resilient, he said.

Investors are now holding off buying homes in anticipation of prices falling further, and the poor demand is affecting market sentiment on property counters.

Merrill Lynch analysts wrote in a report: ‘We expect the price index to turn more negative in the upcoming quarters given weakening market conditions.’

There is also the risk that tighter credit could lead to higher interest rates, which would increase the cost of holding on to properties and potentially lead to a larger number of ‘fire sales’ as more projects approach completion and property investors start to do their sums. Some buyers could be waiting to snap up distressed assets on the secondary market, contributing to lower sales for developers.

All these mean that developers are selling very few private homes. For example, only about 60 were sold in the primary market in the first two weeks of September, said DMG’s Mr Lee.

Home prices need to fall further before demand could go in the opposite direction, and property counters recover.

High loan exposure becomes dampener

Source : Business Times - 4 Oct 2008

Analysts say Singapore banks may have over-lent to property sector

THE tables have turned. In the heady days when the Singapore economy was roaring ahead, banks which grew their loans the fastest were lauded. Now that the economic outlook has worsened considerably, a high exposure to loans is a cause for concern.

Analysts have been sounding the alarm on deteriorating asset quality, or the possibility of loans defaulting, when times are bad.

In a recent report, ratings agency Standard & Poor’s noted that property-related exposure is relatively high for Hong Kong and Singapore banks. ‘While housing loans form the bulk of it, the share of commercial real estate and construction is high for a single sector exposure,’ the report said. ‘With economic growth expected to slow down in 2008 and 2009, the quality of this portfolio’s unseasoned portion is at risk.’

Morgan Stanley analyst Matthew Wilson wrote in a report that from 2004 to 2007, banks lent aggressively at very low credit spreads ‘on the assumption that asset values would continue to inflate and macro growth trends in Asia would sustain’.

He added: ‘Singapore banks, in particular, appear to have over-lent into an over-built property bubble. The credit cycle has now clearly turned and higher rates will exacerbate inevitable asset quality issues.’

A report from DMG & Partners pointed out that the banks which have been most aggressive in recent lending could potentially face more severe asset quality reduction.

‘Banks that have expanded their loan book more aggressively in the years preceding the economic weakness face a higher risk,’ analyst Leng Seng Choon wrote. He said that DBS is most aggressive in lending over the past three-and-a-half years.

‘Our analysis showed that DBS has been the most aggressive in loan expansion from December 2004 to June 2008,’ the report said.

‘Over this period, DBS recorded a loan compound annual growth rate of 16.3 per cent, which is significantly higher than OCBC’s 11.2 per cent and UOB’s 11.5 per cent.’

It added: ‘Given DBS recent aggressiveness in loan expansion, the risk of asset quality deterioration is higher than its peers.’

The biggest risk to earnings would come from an increase in non-performing loans and a subsequent rise in the level of provisioning, UBS analyst Jaj Singh said in his report. ‘We are projecting an increase in provisioning from the 17 basis points (as a percentage of loans) of the last few years to 30 basis points.’ He noted, however, that a return to the levels of the Asian financial crisis is unlikely as corporate balance sheets and the finances of individuals are healthy.

The banks’ core business of loans will also be impacted along with the downturn in the economy, some analysts believe.

Citi said in a report that ‘worsening job conditions could weaken mortgage affordability and add pressure to the fragile property market’.

But UBS’s Mr Singh said although the slowing economy will lower earnings growth for the banking sector, there are still some bright spots in the economy. ‘The reason for this support is primarily due to the construction/real estate sector,’ he said in the report.

‘Singapore is in the middle of a construction boom, with large infrastructure projects under development, such as the expansion of the Mass Rapid Transit and the construction of two integrated resorts.’

He added: ‘We believe these projects are relatively insulated from the slowdown in the economy as they are well-funded and have deadlines to meet.’

JTC completes S$20m state-of-the-art theatre in Fusionopolis

Source : Channel NewsAsia - 4 Oct 2008

Beijing has “The Bird’s Nest”. Singapore’s Esplanade is sometimes referred to as “The Durians”. Now, meet “The Egg” - Singapore’s new S$20m venue for arts performances.

The oval-shaped Genexis Theatre is sandwiched between two office buildings at Fusionopolis at one-north, an upcoming R&D hub in Singapore. It is the first theatre built by JTC, Singapore’s largest industrial landlord.

JTC’s Assistant CEO, Philip Su, said: “They (the tenants) wanted a space for them to launch their products, they wanted a space for them to hold specific conferences.

“And because of the proximity to all these scientists, engineers, media people, we wanted to position this theatre together with the common area here to be a science-based, arts-based location. So now, you can have a science festival here and an arts festival here.”

JTC had initially planned to build an auditorium, but decided to double their budget and go for an experimental theatre instead, since there is a demand for it.

Mr Su said: “Most of the performing arts centres, venues, they’re very much restricted to a fixed configuration. And those that are not fixed, whether it’s the Arts House or the Substation, you find that the numbers for the audience are not big enough.

“Here we want to marry both, the intimacy of a good performance with the closeness to the artists, and yet in the same breath be able to seat more people 50-70 cm away from the performances.”

Research for the theatre started in 2005. Surveys were done with several arts groups and venues in Singapore, including The Esplanade, which said that an experimental theatre like Genexis would add value to the local performing arts scene.

The theatre’s unique features include 560 adjustable seats which can be moved in any direction, or kept, depending on the event; 400,000 timber beads which line the curved walls as acoustic padding; and a cargo lift just behind the curtains so trucks can load up props minutes before a performance.

The Genexis also has a wired lighting grid, possibly the first built for a theatre in Singapore. Technicians can actually walk on it in any direction to reach and adjust the over 30 lights in the house.

Ahead of its launch on October 17 with Fusionopolis, Genexis has already been booked for a week-long science festival and a Christmas performance.

Private home buyers cautiously optimistic about Singapore’s property sector

Source : Channel NewsAsia - 4 Oct 2008

Early estimates show prices of private residential properties fell for the first time in four years in the third quarter.

Concerns are that times ahead may be rough.

Still, about one-third of MCL Land’s latest mid-range condominium project - The Peak@Balmeg - was snapped up over the last two days during its private launch.

Among the visitors at the launch were Panneer Selvi and her family who have been shopping for their ideal home.

Over the last four months, they have visited 12 condominium projects, comparing prices, features and home loan packages.

Panneer Selvi said: “We have not made up our mind to buy one, we are checking with the bankers, at the same time looking around for a suitable unit.”

Some visitors said they are not overly concerned with negative market sentiments.

And with prices of private apartments expected to fall over the next six months, they hope to cash in on a good deal.

Michael Tan, a potential home buyer, said: “I am not plunging into it. Sometimes buying a home, if it’s for a home, then there are other considerations other than just pricing alone.”

Ronald Wee, a property investor, said: “I do not foresee a slump like in 2003 or 2004, it’s just that if you have a good piece of property with a good location and nice view, I guess mid- to long-term is still very promising, especially the IR (integrated resort) is coming up next one to two years.”

Wee Hian Woon, a potential home buyer, said: “The market condition is so bad, the financial market is in the news all the time, the general sentiments I think are quite weak, so the feeling is that prices are likely to drop, then go up.”

The developer says it has yet to decide whether the project will be launched for public sales.

The 180-unit project, going for S$1,000 per-square-foot, will be completed in 2011.

Overall, many home hunters are still confident that Singapore will be able to weather the financial crisis and economic slowdown in the US, because the country has strong fundamentals in place.

The MRT guide to home prices

Source : Straits Times - 2 Oct 2008

Buyers increasingly keen on units near stations, which can command up to a 20% premium

HOME seeker Wan Kum Wai is hunting for a flat that is well-located - specifically, within walking distance of an MRT station.

For this convenience, the multimedia designer and his wife Jessie are willing to pay 10 to 20 per cent more than they would for a home a few bus stops away from a station.

‘We don’t drive, and the cost of living is running high,’ he said. ‘We don’t mind paying more because we think this will help us save on transportation costs and other expenses in the long run.’

In an era of sky-high petrol prices, multiplying Electronic Road Pricing gantries and increasing worries over environmental degradation, the all-important ‘location, location, location’ element of a home purchase has taken on a new slant.

While the classic prime districts of 9, 10, 11 are still sought after, home buyers are also increasingly keen on properties near MRT stations.

Apart from non-drivers, MRT-accessible homes also attract buyers with school-going children as well as investors who want to rent the units to expatriates, many of whom rely heavily on public transport, say property agents.

Ms Mylene Kwan, a PropNex agent who is helping Mr Wan find a home, said some of her clients have only one priority: to be near an MRT station.

‘Many of them don’t drive, so it’s very important to these buyers,’ she said.

But such proximity comes at a price.

Ms Kwan estimated that HDB flats with this privilege have their valuations alone jacked up by at least $20,000 or $30,000, and buyers often pay even more in cash on top of that.

The most popular HDB flats near MRT stations are those close to town, such as in the Tiong Bahru, Redhill and Queenstown areas, she said.

But even in the suburbs, a nearby station can give a big boost to prices.

In Woodlands, owners of flats near the MRT station are asking $40,000 to $50,000 above valuation just because of the location, said Ms Rohaizah Ramjan, another PropNex agent.

Whenever these flats come on the market, they get snapped up within two or three weeks, she added. For ‘normal ones’ further from the station, it can take a few months for a sale to be closed.

‘Flats near MRT stations are harder to come by, because owners are comfortable there and don’t want to sell,’ she said. ‘So if a buyer has the budget and they see a well-located flat for sale, they just grab.’

The same principle applies to private property. Condominiums near MRT stations can command a premium of up to 20 per cent over similar units a bit further away, said Mr Eric Cheng, executive director of HSR Property Group.

The price difference stems partly from the convenience of these homes, but is also due to their limited supply, he added.

‘If you look at the whole map of Singapore, I dare say only about half the MRT stations have condos right next door. Of course, they command a premium, a good 10 to 20 per cent above neighbouring properties 10 minutes’ walk away.’

At Tiong Bahru MRT station, for instance, new condos that are at the doorstep of the station - such as Twin Regency and Regency Heights in Kim Tian Road - fetch $1,240 per sq ft (psf) on average.

About five to 10 minutes away, prices average $1,072 psf, or about 15 per cent less, at the equally new The Regency at Tiong Bahru on Chay Yan Street.

‘Most of these units are rarely on the market,’ said Mr Cheng. ‘Even if the owners are not staying in them, they might not want to sell because they can get very high rental returns.’

Still, not all MRT stations are equal. Property values can differ widely between two consecutive stops, such as in the case of Novena and Toa Payoh, where condos around the former are almost double the price of those around the latter, according to an extensive analysis done by property firm Savills Singapore.

Even stations within a few kilometres of each other can see significantly different prices.

Savills’ data showed that condos around the Dhoby Ghaut station, for instance, fetched an average of around $1,600 psf in the first six months of the year. Less than 2km away, condos near the Little India station cost only two-thirds that on average, or $1,071 psf.

‘Apart from the proximity to an MRT station, buyers do look at other factors,’ said Mr Ku Swee Yong, Savills’ director of marketing and business development.

“Equally important is the quality, age and tenure of the project and its facilities, how much the unit can fetch in rentals and what amenities are nearby.”

Mr Ku cited Lavender and Farrer Park MRT stations, separated by just 1.5km in distance but about $200 psf in price

At Lavender, well-equipped condos such as Citylights boosted prices in the vicinity to an average of $1,104 psf in the first six months of the year. But Farrer Park is surrounded by several smaller condos with minimal facilities, so rents and prices tend to be lower, said Mr Ku.

Home prices fall after 4 years

Source : Straits Times - 2 Oct 2008

HDB resale flat prices still rising but at a slower pace.

PRIVATE home prices in Singapore fell between July and September - the first time in over four years and after almost a year of deadlock between buyers and sellers in which home sales all but dried up.

For the first time since 2006, the URA did not highlight the number of upcoming homes in the flash estimates, after concerns that the large headline supply figures would further dampen already gloomy sentiment. — ST PHOTO: STEVEN LIM

Official estimates released by the Urban Redevelopment Authority (URA) on Thursday showed that overall prices of private residential properties slided 1.8 per cent in the third quarter, led by homes in the central region, which fell by about 2 per cent.

Suburban home prices, however, held steady with a marginal 0.1 per cent rise.

HDB resale flat prices are also still going strong, but at a slower pace. They rose 4.2 per cent in the third quarter, on top of a 4.5 per cent increase in the second quarter.

So far this year, private home prices have risen 2 per cent, while HDB resale prices have increased 13 per cent.

For the first time since 2006, the URA did not highlight the number of upcoming homes in the flash estimates, after concerns that the large headline supply figures would further dampen already gloomy sentiment.

Instead, the agency said housing supply statistics will be released along with the full set of third-quarter property data at the end of October.

The URA said early estimates showed the price index for private residential properties dropped to 174.3 points from 177.5 in the previous three-month period.

This is the first decline in the index since the first quarter of 2004, amid concerns over the global financial turmoil that has caused home sales to slump.

Private home sales in Singapore plummeted 81 per cent in August from a year ago, to the lowest level since March as a combination of global financial turmoil and the traditionally ‘unlucky’ Hungry Ghost month spooked buyers.

Poor demand and a looming housing glut are threatening to plunge the property market into a prolonged downturn, which could deal a blow to Singapore’s top developers such as CapitaLand, CityDev and Keppel Land.

The advance estimates are compiled from transaction prices lodged during the first 10 weeks of the quarter as well as data from new apartments that have been booked.

The URA will release the official price index in four weeks.

URA expects Q3 private home prices to fall 1.8%

Source : Channel NewsAsia - 2 Oct 2008

Private home prices in Singapore fell by 1.8 per cent in the third quarter, according to flash estimates released on Thursday by the Urban Redevelopment Authority.

This is the first time the index of private residential properties has dipped in four years to 174.3 points in the third quarter, compared to second quarter’s price index of 177.5 points, which was a 0.2 per cent increase over the previous quarter.

The cost of high-end properties in prime districts continues to taper, with prices falling by 2 per cent quarter-on-quarter, but those in the mass market segment grew marginally by 0.1 per cent.

Some industry watchers say the figure is better than expected, given deflated investor sentiments amid concerns of a brewing global economic storm.

They expect a gradual sell-down of properties if prices trend down further and the economy takes a turn for the worse.

Director of Savillis, Ku Swee Yong, said: “There has been an increased urgency to sell. The good thing that is preventing that from happening on a very widespread scale is interest rates are still pretty low. We are worried about the potential job losses, but that has yet to happen in a big way.”

Analysts project prices of private residential properties will slide by 2 per cent over the next 6 months. But they add that this is unlikely to trigger substantial sales as buyers will bide their time until prices bottom out.

Director of Consultancy & Research at Knight Frank, Nicholas Mak, said: “Developers will try to resist cutting prices, they may give different sorts of soft discounts. For example, they may give furniture vouchers, they may give renovation vouchers or other methods in a way to try to encourage the growth.”

With the financial crisis unfolding in the US, market players say some investors are considering parking their funds in the property market instead of investing in financial instruments.

One analyst said that the number of enquires on properties has gone up since the collapse of investment bank Lehman Brothers.

In contrast, prices of resale public housing flats rose 4.2 per cent in the third quarter.

This is slightly lower than the 4.5 per cent increase registered in the second quarter, but property watchers say demand in this segment will continue to be robust.

Real estate agency Propnex says the Resale Price Index (RPI) of 137.4 is now the highest mark reached by the RPI since the last quarter of 1996, which saw an RPI of 136.9.

Property agents believe demand for resale flats will continue to be robust despite the Housing and Development Board’s plan to offer more new units in the coming months, and the overall price outlook for the year could see a growth of between 15 and 17 per cent.

Ubi plot gets $85 ppr bid

Source : Business Times - 1 Oct 2008

THE Urban Redevelopment Authority (URA) has received a top bid of $26.3 million from Sim Lian Land for an industrial site at Ubi Avenue 4.

This works out to about $85 per sq ft per plot ratio (psf ppr). It is 13.6 per cent higher than the only other bid of $75 psf ppr submitted by Orion-Four Development, and 20 per cent higher than a committed bid received by URA in August.

Li Hiaw Ho, executive director at CBRE Research, said Sim Lian’s bid is only marginally lower than the price paid for a 60-year leasehold site at Ubi Avenue 4/Ubi Road 2. Mr Li said that Sim Lian-linked 3 Link Development paid $89 psf ppr for that site in April 2008.

Sim Lian said that a seven or eight-storey flatted factory will be built on the site at Ubi Avenue 4/Ubi Road 2. ‘It is likely that Sim Lian will develop a similar project if awarded the subject site,’ Mr Li said. ‘Breakeven cost for a similar project at the subject site is expected to be about $300 psf.’

Money market rates fall on cash injection

Source : Straits Times - 1 Oct 2008

SINGAPORE’S money market rates fell yesterday after the central bank injected funds to ease credit strains caused by the global financial turmoil, traders said.

One-month interbank market rates fell to 1.85per cent yesterday from 2.06per cent on Monday, and retreated from a nine-month high at 2.275per cent hit last Friday.

Singapore’s overnight rates fell to 0.875per cent yesterday from 2.125per cent on Monday, traders said. They added that the falling money market rates indicated that the Monetary Authority of Singapore (MAS) had injected money.

‘No doubt the MAS will be there to stabilise the money market conditions, but they are dealing in a global environment that has turned irrational,’ said Mr Claudio Piron, a currency strategist at JPMorgan Chase in Singapore.

‘There are signs around the region that counter-party risk and risk aversion are starting to push rates high as banks limit their credit,’ he said.

The MAS may have sold United States dollars in recent weeks to support the weakening Singdollar, which required it to add liquidity into the local market to help offset the effect of such intervention, analysts said.

Singapore’s interbank rates had long been held down by steady inflows of foreign money, which put pressure on the Singdollar to rise and in turn forced the MAS to buy US dollars to curb its strength. It then released money into the local money market, keeping rates low as it failed to sterilise the intervention, analysts said.

But the picture has changed in recent weeks as the global credit turbulence has prodded foreigners to dump Singapore’s stocks, which have fallen by a quarter since early June.

‘Outflows and concerns over counterparty risks naturally put some upside pressure on the US dollar against the Singapore dollar,’ said Mr Yeo Han Sia, a currency strategist at Bank of America.

Reflecting the trend of capital outflows and weakening exports, Singapore’s foreign exchange reserves fell by US$4.86billion (S$7 billion) in August to US$170.1billion.

The Singdollar fell to 1.4345 against the greenback yesterday, down some 6per cent from its record high of 1.3453 hit on July15 amid a regionwide squeeze on the US dollar funding.

Most analysts expect the MAS, which steers monetary policy by managing its currency within an undisclosed trading band rather than adjusting interest rates, to slow the pace of currency gains when it reviews policy on Oct10.

The central bank shifted the centre of that band upwards in April to try to quell inflation, which has started easing.

Mr Mark Tan and Mr Michael Buchanan, analysts at Goldman Sachs, said in a note that they expect the Singdollar to fall to 1.45 and 1.47 against the US dollar over the next six and 12 months.

Interbank rates fall as MAS injects more funds into jittery market

Source : Straits Times - 1 Oct 2008

THE Monetary Authority of Singapore (MAS) joined other central banks and injected more funds into a jittery money market spooked by the failure of a US bailout package.

Singapore’s central bank said in a statement last night that it had increased liquidity in the local money market through its market operations.

‘As (Singapore dollar) funding activities picked up into the quarter-end, Sibor rates came under some upward pressure. MAS has responded by keeping a higher level of liquidity in the banking system,’ it said.

The MAS also said that it will ‘continue to anticipate the market’s funding needs, and will consider on a case-by-case basis any unique liquidity needs of individual banks’.

Singapore’s money market rates fell yesterday, with the one-month interbank offer rates (Sibor) dropping to 1.85 per cent from 2.06 per cent on Monday, retreating from last Friday’s nine-month high of 2.275 per cent.

Traders said that overnight rates also fell to 0.875 per cent yesterday from 2.125 per cent on Monday.

MAS said that it has been monitoring developments in global financial markets and the impact on Singapore’s markets and financial institutions.

It also assured investors that financial institutions here are ‘functioning normally’ and have ‘enhanced their risk management measures given the uncertain market conditions’.

In anticipation of tighter lending conditions, MAS said that it has expanded its standing facility to all banks - which subscribe to its electronic payment system (MEPS+) - to provide assurance that they can readily access central bank liquidity ‘when required’.

Singapore shares closed steady after recovering from sharp intraday losses.

Buy a home, get a cow

Source : Today - 1 Oct 2008

Property developers pull out all stops to boost sales

CHINA’S property market is facing a downturn. This has prompted some Chinese developers to resort to publicity stunts and even gimmicks to revive interest among prospective buyers.

Following a slowdown in June, the property market in China is expected to remain sluggish in the last quarter of this year. In its report, Singapore’s DBS Group Research noted that the volume of property sales in nine Chinese cities under its coverage fell by more than 60 per cent in August from the corresponding month a year earlier. The plunge in Beijing was 72 per cent, but this was partly due to the Olympics.

The DBS report noted that while potential homeowners are holding back from buying due to expectations that prices will fall, many developers are reluctant to lower prices, fearing this could further dampen sentiment.

To counter the slowdown, property developers have pulled every trick out of their bag. One developer in Nanjing has offered to give away a free cow - a living breathing cow - to those who buy a new home. The developer was said to have reached an agreement with a farm to supply the bovines.

The developer described the move as “timely”, given public concerns about the safety standards of dairy products in China. Acknowledging that it is impossible to keep a bovine in a high-rise apartment, the developer said: “The idea is for homeowners to adopt a cow, leave the care of the cow to farmhands and have fresh milk delivered to their doorsteps every morning.”

The developer also pledged that “further discounts will be offered if homeowners do not want a cow”.

Another developer in Nanjing used creativity in its ads to attract buyers. In its ad, the commercial real estate developer declared that “our ovaries are ready and all sperm are welcome”. Punning on the Chinese word for “sperm”, the ad was actually referring to its target market of “elites”, who are likely to fill up its office space in an area known for high-tech incubators and start-up firms.

And the ads have generated a huge response - from supporters and detractors. While some agreed that it was clever and eye-catching, others said it was “probably one of the most distasteful ads ever seen”. How that is going to be translated into sales remains to be seen.

Even renowned Chinese property developer Pan Shiyi has jumped on the publicity bandwagon. The chairman of Hong Kong-listed Soho China pledged to build ten “internationally advanced high-standard” toilets in impoverished rural schools in China’s vast western provinces. Each toilet is expected to cost 18,000 yuan ($3,760). In his blog, the property mogul wrote: “We build homes for the richest in China and build toilets for the poorest children in the country. Undertaking work with such great extremes means that we help society to progress and advance.”

But Mr Pan’s move was heavily criticised for its impracticality. Critics said maintaining the toilets would add to the financial burden of rural schools, many of which are already struggling to get by.

Some accused Mr Pan of seeking publicity for himself and his company, adding that “by selling one bungalow to a rich Chinese, the property tycoon would have recouped the cost of building the 10 toilets”. Others argued that the money could have been put to better use by giving more rural children the chance to attend school.

While the publicity stunts and gimmicks may have attracted much attention, other developers are calling for more practical measures to spur sales.

To give the flagging market a much-needed boost, the China Real Estate Association has petitioned the central government to relax its austerity measures. The association also called on the central government to allow local governments the discretion to boost the market, such as lowering taxes for real estate transactions.

But despite the current slowdown, many analysts are confident that China’s property market will revive next year, given the country’s rapid urbanisation and the likelihood that the government will loosen credit controls.

Businesses cash in on dorm demand

Source : Today - 2 Oct 2008

Averic sets out to challenge biggest player in the foreign worker segment

TRUST a few good businessmen to sniff out money-spinning opportunities.

On the one hand there is Singapore’s heavy reliance on foreign workers, and then there is the reluctance of part of the population to share their living environment, as seen with the recent furore in Serangoon Garden estate.

But for some this is not so much a problem as an opportunity, with a whole new multi-million-dollar industry created, which already has investors swooping in.

Many of the dormitories involved were previously operated by JTC Corporation. Within the past year, since JTC decided to divest its non-core assets, four dormitories have been snapped up for more than $210 million. These include the Westlite Dormitory, which was bought by Centurion Properties.

“We believe there will be a continuing demand for good quality, purpose-built foreign workers’ dormitory accommodation in the medium term,” Centurion chief executive Tony Bin told Today.

The other three dormitories were bought by Averic Strategic Investments, a Morgan Stanley-controlled venture which is also investing a further $100 million to develop what it calls an “up-market” dormitory, fronting Jurong River. The new property will bring the total bed count in the group’s Singapore dormitories to about 21,500.

In one fell swoop, Averic announced its ambitions by challenging Mini Environment Service’s (MES) position as the biggest private sector player in this segment.

MES, which has been around since 1976, does not specialise in foreign workers’ accommodation. It provides an array of services including recruitment, transportation and food provision.

“You don’t have an established developer in this dormitory sector, so we thought there is a window of opportunity,” said Mr Vernon Chua, managing director of Averic Capital Management, which is the asset manager for the venture and which holds a 3 per cent stake in Avery Strategic Investments.

It is not hard to see why these investors are bullish about the segment’s prospects: Last year, the foreign worker population here shot up by 102,000, twice the jump of 55,000 in 2006. As at the end of last year, there were 577,000 foreign workers here, excluding maids.

According to the authorities, an estimated 80,000 to 100,000 of them are housed in poor conditions, often in illegal accommodation.

Averic hopes to stake its claim as a market leader. This is where its “up-market” plans come in. Avery Lodge, which will be completed in March next year, will house up to 8,000 workers.

The 1.9-hectare site will be developed into five blocks of 486 self-contained apartments with their own living, dining and kitchen areas in addition to sleeping quarters. Each unit will have 16 to 18 beds.

All common areas will be tiled. Security features include access through vascular scanners and 24-hour guard patrols. The facility will also have a mini-mart and canteen.

Other proposed amenities include a gymnasium, a clinic and a barber shop. At $180 per worker monthly, Avery Lodge’s monthly rental would be between $10 to $30 more than the other dormitories under Averic’s management.

Under Averic’s business model,Mr Chua said its dormitories are targeted primarily at the marine, processing and manufacturing industries.

And he was confident of the demand for the new, costlier brand, dismissing suggestions that employers are out to house their foreign workers as cheaply as possible.

Pointing out that his company hasalready received numerous inquiries about Avery Lodge before it opens for bookings next week, Mr Chua said: “From our experience with managing the existing dormitories, many of our tenants, particularly the blue-chip ones, appreciate and value quality housing for their employees.”

But Chesterton International research director Colin Tan was sceptical, saying that the current sluggish economy and high business costs mean that many employers will be trying to cut housing costs for their workers.

The yields would be more attractive if developers targeted foreign workers in the more lucrative services industry, Mr Tan added.

Given a shortage of such facilities and buoyant economic conditions last year, foreign worker dormitory rents, on average, rose more than 30 per cent to about $130 to $180 per worker monthly. Net yields on such properties are understood to be in the double-digit range.

Mr Tan said: “If developers can find the right formula, so be it. It’s much better for the Government, which has been cracking its head over possible solutions.”

With the recent row at Serangoon Garden estate, Mr Chua said his company was open to the idea of building self-contained communities for the foreign workers.

But in land scarce Singapore, it would be a challenge to find an ideal site for such a project.

Said Mr Chua: “If you build it somewhere too close to residents, you affect Singaporeans. If you build it somewhere too close to industrial areas, there are health and safety issues. You can’t put them in cemeteries. So where do we go?”

New business park space looms over CBD

Source : Business Times - 2 Oct 2008

New supply over next 5 years projected at about 7.8m sq ft: CBRE

WITH the Singapore market still digesting the fact that there is about 10.2 million sq ft of office space in the pipeline, news that there is also substantial business park space coming is not likely to go down well.

According to CB Richard Ellis, projected new supply of business park space over the next five years is about 7.8 million sq ft. This includes developments like The Icon@International Business Park, Solaris, Mapletree Business City, and Centric Singapore.

CBRE also believes 67 per cent of this has already been pre-let.

By comparison, only about 25 per cent of future office supply is thought to be pre-let.

While certain conditions apply before anyone can move into a business park space, it has become increasingly clear that businesses themselves have no qualms about moving to the outskirts of the city. Already, Changi Business Park has attracted MNCs like Citigroup, Standard Chartered Bank and Credit Suisse.

CBRE executive director (office services) Moray Armstrong added that many new leases in business parks ‘are in motion’, boosted by the availability of quality business parks.

‘The business parks have evidently been the sweet spot for many occupiers over the past 12 months,’ he added.

And business parks, which Mr Moray describes as a ‘hybrid’ of traditional office space and high-tech industrial space, is set to evolve even more.

While Changi Business Park is characterised by individual developable land plots available for end users or developers to construct build-to-suit corporate buildings, Mr Armstrong reveals that the upcoming 1.7 million sq ft Mapletree Business City in the Alexandra vicinity will be a more office-like integrated precinct including retail space under single ownership. It is also just minutes from the CBD.

And the concept is proving to be popular as over 400,000 sq ft of pre-lease deals have already been done ahead of completion in H2 2010.

Demand for business park space is likely to grow at the expense of standard office space. Business park rents, at an average $3.15 psf per month in Q2 2008, are considerably lower than average prime rents of $16.10 psf per month.

But while Mr Armstrong believes that business parks will certainly compete to an extent and will slightly dilute overall office demand, he said: ‘Nonetheless, we do not expect this to impact the office sector significantly.’

He added: ‘There is far less speculative business park development as a rule. Most projects that are being built are pre-let or built-to-suit.’

According to CBRE’s analysis, Grade A office space vacancy remained tight in Q2 ‘08 at 0.6 per cent. However, vacancy rates for the CBD fringe rose significantly from 4.6 to 7 per cent.

For the same period, vacancy rates for decentralised areas dipped to 1.6 per cent from 3 per cent. CBRE noted there was ‘heightened interest’ in the Alexandra/Harbourfront micromarket.

Interestingly, new supply could also have a diluting effect on the business park space segment as well. JTC’s Q2 ‘08 quarterly facilities report reveals that its occupancy level for its business park space declined marginally by 0.4 percentage points quarter-on-quarter to 94.3 per cent. This was partly attributed to new supply from Fusionopolis which saw gross allocation of about 450,000 sq ft of space.

UBS Investment Research estimates that financial firms occupy 20 per cent of CBD offices and 30-50 per cent of the prime buildings within it.

UBS does not expect major job losses here from the fallout of the US financial crisis. Losses, if any, will only occur in 2009. Still, it said that if even between 1.5-6 per cent of the estimated 156,900 financial sector jobs are lost, it could equate to a drop in demand in office space of between 243,000 and 971,000 sq ft.

Private home prices ease after 4 years

Source : Business Times - 3 Oct 2008

Strength in HDB resale prices in Q3 anchors market overall while private residential prices dip 1.8%, flash estimates show

THIRD-quarter private property prices fell for the first time after 17 straight quarters of growth.

And with financial and economic headwinds working their way through, market watchers reckon this could be the start of further price falls ahead.

Urban Redevelopment Authority flash estimates for July to September released yesterday show the private residential property price index dipped 1.8 per cent from Q2.

But strength in the public housing resale market is supporting the property sector overall. The Housing and Development Board resale flat index advanced an estimated 4.2 per cent in Q3 from Q2, exceeding its previous peak in 1996.

The 1.8 per cent fall in private home prices was largely driven by declines in the Core Central and Rest of Central regions. Prices of non-landed private housing in these areas slid 2 per cent and 2.1 per cent respectively. Holding up, with support from HDB upgraders, were prices in the Outside Central Region (OCR), which edged up 0.1 per cent in Q3.

The fall in private property prices comes as no surprise to Knight Frank’s director of consultancy and research Nicholas Mak. ‘US financial problems and the global economic slowdown already weighed down investment sentiment and caused the local transaction volume of private homes to diminish since H2 2007,’ he said. ‘As (these) problems persisted, it was only a matter of time before overall private home prices started to fall as well.’

DTZ’s senior director of research Chua Chor Hoon also anticipated the slide. But she noted that ‘the index has not fallen significantly because many developers are still holding firm on prices for their projects’.

URA’s private residential property price index rose just 0.2 per cent in Q2 2008. Taking the Q3 estimate into account, prices have increased 2.1 per cent this year.

But there is unlikely to be any let-up in price pressure, according to market watchers. ‘Prices, which are now under tremendous pressure, are likely to decline again in Q4,’ said CB Richard Ellis’ executive director Li Hiaw Ho.

Reflecting this sentiment, Knight Frank’s Mr Mak said: ‘Whatever price gain was achieved in the first half of this year will be given up in H2, resulting in flat prices for the whole of 2008.’

With worldwide financial turmoil eating into Singapore’s GDP growth prospects and threatening job losses, Citi has projected respective price falls of 25 and 15 per cent in the high-end and mid-tier private residential housing over the next six to 18 months.

Even the OCR is unlikely to be immune. ‘While it has been performing better, prices in that area will also drop if the economic slowdown continues,’ said DTZ’s Ms Chua.

Explaining how the HDB resale market performed so strongly in Q3, ERA Asia Pacific’s assistant vice-president Eugene Lim said there was robust demand from upgraders, downgraders and permanent residents.

Including the Q3 estimates, the HDB resale price index has jumped 12.4 per cent this year. And the rise will now probably be ‘in the region of 15 per cent for the whole year’, said Propnex CEO Mohd Ismail.

ERA’s Mr Lim said the HDB resale market could see an overall price increase of 15-17 per cent in 2008. But he noted that Q3’s estimated 4.2 per cent increase in the resale price index was a shade lower than the 4.5 per cent in Q2. ‘(This) may be a sign that prices have begun to moderate,’ he said.

Home prices in 20 US cities fall at record pace in July

Source : Business Times - 2 Oct 2008

More contraction to come should banks stiffen lending rules in months ahead

House prices in 20 US cities declined in July at the fastest pace on record, signalling the worst housing recession in a generation had yet to trough even before last month’s credit crisis.

The S&P/Case-Shiller home-price index released on Tuesday dropped 16.3 per cent from a year earlier, more than forecast, after a 15.9 per cent decline in June. The gauge has fallen every month since January last year, and year-over-year records began in 2001.

The US housing slump is at the centre of the meltdown in financial markets as declining demand pushes down property values and causes foreclosures to mount. Banks will probably stiffen lending rules even more in the coming months to limit losses, indicating that residential real estate will keep contracting and consumer spending will continue to falter.

‘The fact that house prices quickened their slide before the worst point in credit markets hit this month does not bode well,’ said Derek Holt, an economist at Scotia Capital Inc in Toronto.

Home prices decreased 0.9 per cent in July from the prior month after declining 0.5 per cent in June, the report showed. The figures are not adjusted for seasonal effects so economists prefer to focus on year-over-year changes instead of month-to-month.

Prices dropped in 13 cities month-over-month, compared with 11 in June. Las Vegas saw values fall 2.8 per cent in July, the largest decline.

Economists forecast that the index would fall 16 per cent from a year earlier, according to the median of 23 estimates in a Bloomberg News survey. Projections ranged from declines of 14.5 per cent to 16.5 per cent.

Compared with a year earlier, all 20 areas showed a decrease in prices in July, led by a 30 per cent drop in Las Vegas and a 29 per cent decline in Phoenix.

‘While some cities did show some marginal improvement over last month’s data, there is still very little evidence of any particular region experiencing an absolute turnaround,’ David Blitzer, chairman of the index committee at S&P, said in a statement.

Robert Shiller, chief economist at MacroMarkets LLC and a professor at Yale University, and Karl Case, an economics professor at Wellesley College, created the home-price index based on research from the 1980s.

Sales of previously-owned homes fell 2.2 per cent in August from the prior month and were 32 per cent below their historic high reached in September 2005.

Declining home construction has subtracted from growth since the first quarter of 2006, pushing the economy to the brink of a downturn.

US homebuilders, buffeted by at least US$19 billion in losses since 2006, will ask lawmakers to pass a US$15,000 tax credit for all homebuyers, replacing a US$7,500 incentive enacted earlier this year that they contend failed to stimulate demand.

‘Our members are really hurting,’ Jerry Howard, the chief executive officer of the National Association of Home Builders, said in an interview on Monday. ‘The tax credit passed in July seems to have failed to have sparked interest.’

Developers may be first to feel the chill

Source : Straits Times - 3 Oct 2008

Interest costs are rising and they may be stuck with project backlogs

PROPERTY developers here are likely to be among the first to feel the chill winds sweeping into Singapore from the big freeze-up in global credit markets.

For years, being among the largest borrowers in town, they have lapped up cheap credit to finance major projects. But now, they are set to feel the squeeze from the markedly higher interest costs arising from the global credit crunch.

They may also face a large backlog of vacant units, if buyers who signed up to buy properties through deferred payment schemes fail to secure financing to complete purchases. These schemes were stopped last October.

The global credit crisis erupted about a year ago in the United States, but until now, it has not touched Singapore in a truly significant way.

Local banks did not scale back on loans to firms and individuals. The interbank market - comprising loans between banks - was flush with cash. In early August, the one-month Singapore Interbank Offered Rate (Sibor) charged for loans between banks was just 0.75 per cent.

But this cosy scenario altered dramatically after the collapse of US investment bank Lehman Brothers two weeks ago. US insurer American International Group almost went belly up soon after.

In the 10 days after that, as global credit markets froze up completely and banks refused to lend to each other, the one-month Sibor shot up, hitting 2.275 per cent last Friday before easing to 1.8125 per cent yesterday.

Singapore home buyers have started to notice that ‘distressed sales’ are now more common, as banks turn more cagey about extending loans to buyers, in case they are over-stretched financially.

Remisier Alan Goh said: ‘I recently saw a flat that the owner had to sell cheap. Otherwise, the bank would not give him a loan for his new flat, which had just received its temporary occupation permit (TOP).’

Going by gloomy reports put out by analysts, the situation may not improve, as an estimated 15,000 new flats are set to hit the market by the end of next year.

‘Our economist is now projecting the service sector will create just 20,000 jobs next year, against the 100,000-plus jobs a year created since 2006,’ said Citigroup analyst Wendy Koh.

She expects the residential market to swing from ‘a standoff between buyers and sellers to a buyer’s market’.

A softening job market and rougher economic conditions are hardly likely to encourage any bank to expand its mortgage portfolio.

For property developers, this will be a double whammy, hitting them just as the income stream from completed projects is due to help fund their start-ups.

Credit Suisse noted that in the second quarter, smaller developers were already saddled with gearing ratios of 242 per cent. In other words, for each dollar put up by their shareholders, they had borrowed another $2.42.

Some analysts are worried that with credit drying up, these heavily indebted developers could face difficulties in refinancing as interest rates rise.

Large developers have been more prudent, maintaining their gearing at 52 per cent in the second quarter, but that may be scant consolation given the size of their commitments.

Credit Suisse estimated that CapitaLand’s gearing could rise to 1.1 times if all $8 billion of its major commitments comes in at once.

Keppel Land is also likely to be financially stretched by its projects in the Marina Bay Financial Centre, and in Vietnam and China, Credit Suisse added.

Even Allgreen Properties could see its gearing shoot up to 1.5 times, given its $2billion worth of impending investments in China.

Weighted down by such large financial commitments, whenever new problems emerge in global credit markets, developers will face a fresh round of worries.

Take last Tuesday, after the US Congress rejected the original US$700 billion (S$1 trillion) plan to buy the troubled assets of US financial institutions.

The big loser on the local market that day was City Developments, which plunged $1.27, or 14.8 per cent, to $7.33 at the opening bell.

In contrast, traders were relatively sanguine about local banks, despite the bruising received by financial institutions elsewhere. DBS Group Holdings lost only 90 cents, or 5.3 per cent, falling to $16 at the opening bell that day.

Six historic bridges in Singapore gazetted for conservation

Source : Channel NewsAsia - 3 Oct 2008

For the first time, heritage structures such as bridges and towers will be included under a national programme to conserve Singapore’s architectural heritage, and Anderson Bridge is one of six bridges named for conservation in 2008.

The others are the Elgin Bridge at Boat Quay, the Cavenagh Bridge just outside Fullerton Hotel, the Ord, Read and Crawford Bridges.

At the 2008 URA Architectural Heritage Award Presentation Ceremony on Friday, seven awards were given out to recognise projects that have been well restored, yet serve a functional need.

One major challenge in conservation projects is the loss in redevelopment potential, and this is a challenge that the winners managed to overcome.

One of the winning projects is a century-old seaside bungalow, which is currently the clubhouse for the Sea View condominium.

National Development Minister Mah Bow Tan said, “Our city is not just a collection of buildings. Iconic new buildings alone do not give a city its unique character. The soul of a city requires more careful nurturing. By preserving the collective memories of our past, we make our physical environment more meaningful.”

Expect slowdown, not major contraction

Source : Business Times - 1 Oct 2008

Need of the hour is to invest in a global balanced portfolio complemented by a portfolio of high-yielding Singapore stocks

THE financial chaos engulfing Wall Street has left investors and market observers breathless and shaken by the capitulation of once venerable global financial institutions. Though banks in Singapore have avoided the worst of the credit crunch, with little exposure to the sub-prime crisis, the Singapore stock market has not been spared the carnage ripping through global equity markets since July 2007.

Since the start of the credit crisis in July last year, the Straits Times Index has lost 30 per cent. And on a year-to-date basis as at Sept 16, the index was down 28.7 per cent. The UOB Singapore Government bonds index has also experienced unusually high volatility this year. And with real yields negative thanks to persistently high inflation and low interest rates, Singaporean investors are clearly not having the best of times.

The collapse of Lehman Brothers and takeover of Merrill Lynch by Bank of America in September have left many market participants perplexed and shocked at the scale and speed of the de-leveraging that is unravelling in spite of the US government’s exceptional response to contain the credit crisis. In short, a comatose credit market, combined with massive asset de-leveraging, has caused global capital markets to experience a level of volatility not seen in a long while.

Unfortunately being conservative and staying in cash via fixed deposits may not be the best course of action. Over the 12 years from 1997 to 2007, with an average inflation rate of 0.9 per cent and the average 12-month fixed deposit rate at 1.9 per cent, local investors were getting positive returns of one per cent.

However, that scenario changed drastically towards the end of last year when inflation in Singapore shot up to 25-year high levels. From January 2007 to July 2008, inflation in Singapore (as measured by the Consumer Price Index) averaged 5.3 per cent, while 12-month fixed deposit rates averaged 1.3 per cent. Thus, real yields in Singapore were a hefty -4 per cent.

The message is, therefore, very clear: you need to make certain investments to try to generate returns higher than inflation. Otherwise, your cash in the bank will slowly erode away. Assuming a negative real yield of 3 per cent - inflation at 4.5 per cent and interest rates at 1.5 per cent - $100 today will be worth only $85.90 in five years.

So we need to invest - but what do Singaporeans usually invest in? Until recently, the property market was foremost on many people’s minds. However, a deeper analysis would reveal that investing in property is not attractive as it would seem. For instance, property prices as measured by the URA Residential Property Index yielded a total return of 24.2 per cent, or an annualised return of 1.9 per cent for the period from 1996 to 2007. This return excludes property taxes, stamp duty, commission for selling the property and legal fees that usually add to the expense of investing in physical real estate.

Currently, the local Sing-dollar bond market is not liquid enough for most retail investors, leaving the stock market as the only other realistic alternative for local investors. Despite the local equity market going through a slump from 1996 to 2002, except for a technology-driven rally in 1999, the market, as measured by the MSCI Singapore index, returned an average of 8.2 per annum.

To achieve achieve higher returns than inflation in Sing-dollar assets, we may need to invest in the local stock market. However, with the current spike in uncertainty and resultant volatility, the market has been sold down sharply, and investing in it is not for the faint of heart. Singapore has one of the most open economies in the world and is, therefore, vulnerable to any global economic slowdown. As such, any systemic threat to the world economy is likely to have an impact on Singapore and may affect the stock market. This recent sell-off in the stock market presents some interesting opportunities.

In a highly globalised economy, downturns sparked by asset sales and loan disposals reinforcing one another cannot be contained. As my UBS colleague and US economist George Magnus had pointed out, economic downturns sparked by de-leveraging are not self-correcting and are measured empirically in years and not quarters. Exceptional circumstances like the one we are going through require unorthodox solutions.

To this end, the proposed US$700 billion mortgage bailout package is a step in the right direction. A systemic downturn of the scale we are currently witnessing requires a systemic approach from policy, including intervention via recapitalisation and the establishment of structures to manage a more orderly disposal of assets.

The crux of the problem is now shifting to the fact that even interbank lending has come to an almost complete halt. Despite strong, concerted efforts by central banks globally to continue to pump liquidity into the system, most refinancing operations between banks are currently concentrated on the very short end of the curve, with most of the liquidity traded on weekly maturities.

This disruption in the interbank market is resulting in much tighter credit conditions from the banks, translating into a sharp increase in funding costs not only for banks but also for corporations and leverage-hungry hedge funds. For instance, the average of the Singapore Overnight Rate went from 0.49 per cent on Sept 1, 2008, to 1.7 per cent on Sept 25, (figures from Monetary Authority of Singapore).

As a result of this sharp rise in short-term rates, Singapore Reits have been sold down drastically over the past week on fears they will suffer from higher refinancing costs. But S-Reits do not typically finance on the short end. Current yields now average 9.5 per cent per annum, or +660 basis points spread to the 10-Year Singapore Government bond, based on FY09 estimates. In an environment where there is deep risk aversion, high inflation and low interest rates, the recent sell-off in S-Reits presents a unique opportunity for investors to get exposure to some good-quality, liquid and large-cap trusts such as Parkway Life, Macquarie Prime, CapitaMall Trust and CDL Hospitality Trust.

Other high-yielding, defensive stocks that are likely to post inflation-plus returns based on 2009 earnings include Singapore Press Holdings, which is currently yielding 8 per cent, Singapore Exchange at 6 per cent and SingTel, which is currently yielding 4.24 per cent.

We believe the macroeconomic environment in Singapore is unlikely to deteriorate to the extent of that in 1998 during the Asian Financial Crisis or in 2003 during Sars. We expect the global slowdown to affect Singapore, but it may lead to a slowdown and not a major contraction. At the beginning of the year, we were projecting GDP growth for Singapore at 6.8 per cent for 2008 and 7.9 per cent for 2009. Now our forecasts are 3.5 and 5.9 per cent respectively.

But will the current crisis turn out to be worse than the Asian Financial Crisis or Sars? Where do we stand in relation to these past crises? As noted by my colleague Tan Min Lan, UBS research strategist for Singapore, the STI now trades at 10.1X, all time low on trailing PE. Compared with the worst of the Asian crisis (at 11.2X) and the worst of Sars (at 10.9X), the market is now trading some 7-10 per cent below past crises.

If we use price-to-book value (PB), the trailing PB of key stocks is at 1.8x, close to the -1 Standard Deviation level, but approximately 70 per cent above the worst of the Asian crisis and 22 per cent above the worst of Sars. Note that corporate profitability (ROE) has structurally improved since then, thanks to sale of non-core assets, consolidation, and stronger capital management. ROE was 4.7 per cent in 1998, 7-8 per cent in 2002-03 and 12 per cent in 2008. For ROE to reach the 1998 or 2003 levels, earnings have to fall 60 and 35 per cent respectively from here. In volatile markets where there is a high level of uncertainty, a well-diversified portfolio may help investors lower their risks. Unfortunately, the Singapore capital markets do not provide much depth for local investors to diversify. Besides selective exposure to high-yield stocks in Singapore, investors may also consider diversifying into international capital markets.

For instance, a balanced portfolio with 50 per cent exposure to global equity markets as typified by the MSCI World Equity index and 50 per cent exposure to the global bonds market as typified by the Citigroup World Bonds Index would be down 11 per cent (in Sing-dollar terms) since the crisis started in July last year, much less than the 30 per cent slide the STI has suffered in the same period. Such balanced portfolios generally deliver between 6 and 8 per cent per annum (Sing-dollar terms) over a five-year investment period, with less than half the volatility of the STI.

Depressed investment markets such as we are currently going through often offer good opportunities for investors to build portfolios geared towards the medium to long-term periods. We suggest investing in a global balanced portfolio complemented by a portfolio of high-yielding Singapore stocks with strong balance sheets and a sustainable cashflow business, as mentioned earlier.

On a near-term basis, the markets might be in a range-bound trading environment due to ongoing uncertainty. But over a medium to longer-term basis, the rationale for such a portfolio will become clear.

By KELVIN TAY, deputy head of products & marketing, UBS Wealth Management

Dormitory decision upsets some Serangoon Gardens residents

Source : Channel NewsAsia - 3 Oct 2008

Despite the various mitigating measures being proposed, some residents in Serangoon Gardens did not take too well to news that a foreign workers’ dormitory is going to be set up in the area.

The dormitory will be at the former Serangoon Garden Technical School school site, just right across the road from the residents.

There is going to be additional fencing to keep workers in as well as planters to screen the site. But is this a satisfactory compromise for residents?

“I am fed up!” a woman screamed from her car.

“I am thinking of moving out,” said a resident.

“We are living with people; they move around. If you fence them up, and say ‘this is your area, this is my area’, I don’t think it is going to work,” said Angela Yeo, a resident at Burghley Drive.

Although the dormitory is for manufacturing and services foreign workers, residents said it does not mean security is less of a concern.

Chen Sung Sheng, a resident at Burghley Drive, said: “I think it is the same, isn’t it? It all boils down to the same…..foreign workers, regardless of what they are working as. Of course, we can’t say that all foreign workers are bad. But majority of us are not very happy about it.”

The other issue that irks residents - the way the decision was made.

“The whole consultation process, while it was useful, it kind of makes the residents feel ‘what was the point?” said Lim Chia Joo, a resident at Burghley Drive.

But some felt the proposed measures allay their concerns.

Rose Tan, a Serangoon Gardens resident, said: “If, after that study, they think that it is feasible to go ahead with the project, I am sure they would have taken steps to address the many concerns that were raised by the residents.”

Residents are asking the police to step up patrols in the area. They also want the police post, which operates from noon to 10pm, to extend its opening hours.