Three S’pore residential plots up for sale in quiet market

Source : Straits Times - 30 Apr 2008

BUYING interest in private homes may be relatively low now, but the Singapore Government is offering developers three new residential sites to consider buying.

Two are 99-year leasehold suburban sites, and the other is an executive condominium site.

The first - in Woodleigh Close - is seen as an attractive site by property consultants, as it is a short walk from the Potong Pasir MRT station and the yet-to-be-opened Woodleigh MRT station.

Developers can build 260 to 290 apartments on the 1.08ha site, which has a maximum gross floor area of 30,167 sq m.

Property consultants expect the site to attract bids of $300 to $370 per sq ft (psf) of gross floor area. The apartments may then sell for between $800 psf and $880 psf, they said.

CBRE Research executive director Li Hiaw Ho said the site is close to the city and amenities in the Potong Pasir HDB estate and Upper Serangoon Road.

‘It is likely to be a popular location, as two freehold projects in the vicinity - Blossoms @ Woodleigh and Parc Mondrian - launched last year were fully sold,’ said Mr Li.

Recent caveats lodged for the 240-unit Blossoms @ Woodleigh have hovered between $770 psf and $922 psf.

The 100-unit Parc Mondrian sold for between $650 psf and $720 psf last April.

The tender for the Woodleigh Close site will close on June 24. The site is on the confirmed list, where sites are put up for sale on specific dates.

But the second site in Upper Thomson Road, close to Bishan Park and Lower Peirce Reservoir Park, is on the reserve list.

This means that it will be put up for sale only if a developer commits to a minimum bid acceptable to the authorities.

The site is not near any MRT station, but it is in an established private estate.

A developer could build 380 to 420 apartments on the 2.08ha Upper Thomson Road site, which can have a gross floor area of 43,758 sq m.

To attract buyers, developers may want to consider developing a condo with eco-friendly features, which is in line with the surrounding serene environment, said Mr Nicholas Mak, Knight Frank’s director of research and consultancy.

If triggered, this site could attract bids of $200 psf to $240 psf of gross floor area, and the apartments could sell for $650 psf to $700 psf, he said.

The third site, in Sengkang, is a 17,000 sq m executive condo site on the reserve list.

This 99-year leasehold site is the third executive condo site the HDB has made available for sale in the first half of this year.

The other two are in Jurong West and Yishun Avenue 11.

---

GOOD LOCATION

‘It is likely to be a popular location as two freehold projects in the vicinity…launched last year were fully sold.’ - MR LI HIAW HO, CBRE Research executive director, who adds that the Woodleigh Close site is close to the city

EXTRA FEATURES

To woo buyers, developers may want to consider a condo with eco-friendly features on the Upper Thomson Road site, said Mr Nicholas Mak, Knight Frank’s director of research and consultancy.

CCT defers office plans for carpark

Source : Straits Times - 30 Apr 2008

CAPITACOMMERCIAL Trust (CCT) is deferring its planned redevelopment of Market Street carpark into a $1 billion to $1.5 billion premium office building due to volatile market conditions.

The plan was announced early this year amid concerns that the carpark crunch in Raffles Place is worsening. Now, a decision will be made not earlier than mid-2009, said the trust’s manager yesterday.

‘Taking into consideration the significant size of this project, rising construction costs and the present volatility in financial markets, the manager is carefully evaluating the financial viability of the funding structure for the redevelopment,’ said its chief executive, Ms Lynette Leong.

In early January, CCT was granted provisional planning permission for the redevelopment - conditional upon the trust paying a development premium for changing the use of the 58,964 sq ft site from a carpark to an office tower.

This is to be assessed by the chief valuer. A second condition is that there will be no extension of the site’s existing leasehold land tenure.

Ms Leong said the deferment would give CCT time to plan and develop a sustainable architectural plan for the building.

She said a decision to redevelop will take into account the amount of development premium payable.

Market Street Car Park set to stay - at least for now

Source : Business Times - 30 Apr 2008

(SINGAPORE) CapitaCommercial Trust (CCT) has decided to defer its decision on the redevelopment of Market Street Car Park (MSCP) into an office building that could cost up to $1.5 billion.

Asked if the huge supply of new office space after 2010 was a determining factor, Lynette Leong, CEO of CCT manager CapitaCommercial Trust Management Ltd (CCTML), said: ‘No, the main reasons are the significant size of the redevelopment, rising construction costs, present volatility in financial markets and the unknown development premium amount, which have caused us to defer the decision on the planned redevelopment, such that it will not be made any earlier than mid-2009.’

Ms Leong also added that CCTML is ‘carefully evaluating the financial viability of and the funding structure for the redevelopment’.

‘We are not concerned about the new office supply after 2010 given that statistics show that office demand for good-quality office space is still strong and that the lease pre-commitments for the new supply have also reached a high level. For example, about 52 per cent of the office space at Marina Bay Financial Centre has been pre-committed three years ahead of its completion,’ added Ms Leong.

Apart from obtaining the necessary approvals, including the approval of CCT’s unitholders, if required, Ms Leong said that the decision to redevelop the site will always be subject to the financial viability of the project, which includes the amount of development premium payable based on the payment of 100 per cent of the enhancement in land value (instead of the standard 70 per cent).

She said: ‘We do not have any indication of the amount of development premium payable right now. However, it is expected to be a major component of the total redevelopment cost of MSCP.’

When the project was first announced in January, CCT said that the total project cost, depending on the development premium, could range from $1 billion to $1.5 billion.

On rising construction costs, Ms Leong said that this has increased by 10-15 per cent since the beginning of the year and that CCTML had also sought quotations from the construction companies.

Ms Leong said it would continue to take the necessary steps to obtain the planning permission (PP) from the Urban Redevelopment Authority, and assist its retail tenants in relocation. It would also ‘continue operating the car park to serve our season and hourly car park users’, she added.

While the potential loss of 704 car parking lots at MSCP was a prickly issue with many of its current uses, CCTML said that the provision of car parking lots was not an issue in getting PP.

Cushman & Wakefield managing director Donald Han said the deferment was ‘excellent news’, not least because occupancy costs, which factor the cost of car parking, would have increased.

He also reckons that the deferment could be linked to MSCP historically being designed to serve the CBD until new lots are provided. However, new restrictions limiting the number of lots in new buildings will have an impact on the number of available lots.

Knight Frank director (research and consultancy) Nicholas Mak believes deferring the project could be a strategic move to see if construction costs and rates for development charges could fall in the future.

But he believes the project will not be deferred for too long. ‘Reit’s have to constantly look for a growth story or it won’t seem interesting to investors.’

US home values plunge sharper than apparent: mortgage market pioneer

Source : Business Times - 30 Apr 2008

THE man credited with developing the financing of the modern US mortgage industry says home values have fallen more than their listed prices suggest but they could hold steady with the help of a bill in Congress.

‘I think the actual price declines are bigger than the indexes are showing, since so little is being sold,’ Lewis Ranieri, CEO of Ranieri & Co, said in an interview on the sidelines of the Milken Institute Global Conference.

Credited as the ‘father’ of the market for bundling mortgages and selling them on Wall Street as debt investments, Mr Ranieri backs a bill by US Representative Barney Frank, a Democrat from Massachusetts, that would make lenders accept losses on teetering home loans in exchange for government guarantees.

‘What he is trying to do is part of what really needs to be done,’ he added.

Mr Frank’s bill would allow the Federal Housing Authority to insure US$300 billion of home loans. Lenders would erase some of the original loan amount and could even loosen loan terms in order to win the government backstop.

‘At this point in the crisis, those of us who are practitioners would take what we can get. I wouldn’t turn down less! Because we need a re-performing programme, which is what in effect the Frank bill is.’ Mr Ranieri said the key to success for lenders was keeping people in their homes and his main concern was to make sure that the relief targeted lower- and middle-income families buying homes to live in rather than helped investors.

The inventory of homes for sale swelled by 40,000 to 4.06 million homes in March, or a 9.9 months’ supply at the current sales pace from 9.6 months in February, according to the National Association of Realtors.

Meanwhile, the median national home price declined 7.7 per cent from a year ago to US$200,700.

Mr Ranieri, who helped create the mortgage ’securitisation’ market while at Salomon Brothers, also favours new regulation of those involved in selling loans.

From mortgage brokers selling loans to home buyers to Wall Street banks who sold the securitised bundles of mortgages to investors, no one in the mortgage industry had a legal duty to work in the best financial interests of the person taking out the loan, he said.

That is in contrast to Wall Street rules on selling appropriate products to investors. ‘The whole system could sell (a) person the biggest investment he ever had, his house, in an inappropriate structure, and it was fine. It makes no sense. It is on its surface patently nuts,’ he said.

Inflation: Each country needs its own solution

Source : Business Times - 30 Apr 2008

OVER the last 150 years, in real terms, after allowing for inflation, commodity prices tend to fall. But the question is whether China and India are fundamentally changing this? The sheer scale of the demand for commodities as both countries open up will exert tremendous upward pressure on prices.

What remains to be seen is whether supply can respond. In terms of food prices, there is no shortage of land or labour, often the problem is low farm productivity and the absence of investment. That is, there needs to be a supply-side response, but that will take some time to be seen and, even then, it is not clear how effective it will be.

All in all, it adds to the perception that whilst commodity prices may ease during the coming cyclical slowdown, they will establish new, higher equilibrium levels, which whilst good for commodity exporters, will not be good for importers.

Former Fed chairman Alan Greenspan has come under criticism for not tightening monetary policy to curb asset price inflation earlier, but his response is understandable, he and the Fed can’t be blamed for the behaviour of private individuals, and for the fact that the asset price inflation seen in the United States was repeated in, as he said, about 20 other countries.

It has to be said that at the time there were many suggestions that the rapid pace of credit and lending growth and the rise in asset prices meant that monetary policy was too lax. Although Europe, it was said, opted for stability at the expense of growth, whilst the US favoured growth at the expense of stability, even within Europe there have been problems, with asset price inflation evident in a number of countries, such as Spain or Ireland.

In the late 1980s, a similar debate took place in Japan at a time when its economy was bubbling. Headline inflation was low, but asset prices were soaring. Then Bank of Japan (BOJ) governor Yasushi Mieno decided to tighten monetary policy, raising rates from 2 per cent to 6 per cent. The economy slumped! And the BOJ was partly blamed.

Thus it is vital to look at monetary growth and wider credit and liquidity. Measuring liquidity is hard; sometimes economists look at measures such as Marshallian k that look at monetary base in relation to an economy’s nominal GDP. Others prefer to look at overall monetary and credit growth. But, also, as has been seen in recent years, an increasing number of central banks have adopted inflation targets, although these may not give the full story.

What then should policy-makers do? It is important that they identify where the real problem lies. In the US, as we have said before, inflation is not the problem, a deep, long recession is. Firms will have to absorb higher costs in their margins, as weakening consumption means firms will not be able to pass on higher prices. In this environment the Fed will, rightly, ease, and as corporate profits are squeezed, bond yields will respond by heading lower.

In contrast, a number of countries that are tied to the dollar may see inflation problems escalate. Here, in particular, I am thinking of Hong Kong and the Gulf countries. Being tied to the dollar means lower interest rates, at a time when their buoyant domestic economies really need monetary tightening.

The result will be rising inflation, particularly asset prices, but also as wages have risen sharply across the Gulf, broader inflation measures may continue to rise. Of course, economies like China and India, where there has been strong domestic demand, have been tightening for some time with higher rates, rising reserve ratios and, in the case of China, loan quotas. China’s current account surplus gives it more room for policy manoeuvre. In the early 1990s, China suffered both inflation and a balance of payments problem.

Now, its external position is sound, and policymakers are more focused on inflation and trying to achieve a more sustainable pace of growth. In contrast, India’s deficit leaves its currency more vulnerable to near-term shifts in risk sentiment despite its many long-term positive factors.

As for Asian countries, policy-makers may opt for a combination of domestic monetary tightening or currency appreciation. For now, it seems many central banks are taking a proactive approach, with the attraction of currency appreciation to reduce imported costs potentially gathering ground.

Overall, there is still intense global competition. Furthermore the scope for large numbers of workers to join the global labour force, with low wages and potentially rising productivity, adds to the prospect of further competition for some time.

However, there is a need to look at each country’s situation on its own merits, taking into account credit and monetary growth, wage and inflation expectations, the amount of spare capacity and above all, the likely response of policy-makers.

Inflation may be a problem but the reality is far more complex and as Japan showed, an inflation fear, if badly handled, can soon turn into a deflationary reality.

By GERARD LYONS, chief economist and group head of global research Standard Chartered Bank, UK

Businesses you can embark on from home

Source: Straits Times - 30 Apr 2008

I HEARD that the Home Office Scheme is now extended to five years. What businesses can I run from home?

Examples of businesses that are permitted under the Home Office Scheme include:

Accountancy Services

Architectural Services

Consultancy Services (Business)

Consultancy Services (Engineering)

Consultancy Services (Information Technology/Management)

Consultancy Services (Education)

Design/Advertising Services

Transportation Services

Estate Agency

Insurance/Financial Planning Services

Technology based and knowledge intensive business

Trading Office

The owners, tenants, authorised occupiers and subtenants of HDB flats, who are 21 years old and above, are eligible to apply under the scheme.

The business should be registered with the Accounting and Corporate Regulatory Authority unless it is exempted from registration under the Business Registration Act. The business should also comply with the regulations of other government authorities and relevant licences/approvals must be obtained before the commencement of business.

To search for the licences/approvals that may be required for the business, please use the Online Business Licensing Service at the EnterpriseOne portal http://www.business.gov.sg

Build your brand in a competitive setting

I am starting up and planning to develop my brand. Are there assistance programmes on branding? In what ways can they help me?

The BrandPact programme launched by Spring Singapore and IE Singapore provides brand training, assessment and resources to meet companies’ brand development needs.

You can attend workshops to learn about branding and how to build a strong brand. A list of the workshops and seminars can be found on Spring Singapore’s and IE Singapore’s websites.

You can also do an online self-assessment at www.bizenquiry.gov.sg/toolkit/ie_new/start_assessment.asp to find out about the strengths, weaknesses, opportunities and threats that your brand faces.

If you need consultancy advice on your company’s specific branding needs, you can visit the Enterprise Development Centres. They are located at:

Association of Small and Medium Enterprises

Singapore Chinese Chamber of Commerce and Industry

Singapore Indian Chamber of Commerce and Industry

Singapore Malay Chamber of Commerce and Industry

Singapore Manufacturers’ Federation.

For enquiries, please visit www.business.gov.sg or email enterpriseone@spring.gov.sg

MCL Land Q1 profit jumps to US$5m

Source : Business Times - 30 Apr 2008

THANKS to a turnaround in its joint ventures, MCL Land yesterday reported a first-quarter net profit of US$5 million, up from just US$1 million in the year-ago period. Earnings per share rose to 1.36 US cents from 0.27 US cents.

Revenue for the three months to March 31 was US$365,000 - compared with US$393,000 for the year-ago period.

However, the property firm was helped by contributions from joint ventures which stood at US$4.94 million, against a loss of US$355,000 a year earlier.

The firm said its Q1 revenue arose primarily from rental income from its investment properties.

Also, the underlying profit for the period was US$5 million, compared with US$0.2 million in the first three months of 2007. ‘This improvement was due mainly to the completion in March of The Grange, the group’s joint-venture project in Singapore, and the sales of the remaining 12 shops at the Kuala Lumpur Suburban Centre in Malaysia.’

MCL added that construction work on its development projects is progressing well. ‘The Grange obtained its Temporary Occupation Permit in March 2008, and The Esta and Mera Springs are expected to complete in the second half of the year.’

The group secured a 99-year leasehold land parcel in Yishun Avenue 1 in March. Its purchase of another site - Casa Nassau at Upper East Coast Road - is expected to be completed in July.

Looking ahead, MCL said financial market uncertainties and the global economic slowdown could affect the residential property sector here in the short term.

‘However, favourable economic fundamentals should mean that the longer term prospects remain positive. The expected completion of Mera Springs and The Esta in Singapore should benefit MCL Land’s overall performance in 2008.’

Its shares rose 5 cents to close at $1.98 yesterday.

CapitaLand unlikely to match last year’s results

Source : Business Times - 30 Apr 2008

Chairman cites lack of revaluation gains this year

CAPITALAND said yesterday its 2008 earnings were unlikely to match last year’s $2.8 billion due to a lack of revaluation gains.

The firm should, however, perform better at the operating level, chairman Richard Hu said in response to shareholders’ queries at the firm’s annual general meeting (AGM).

About $1.1 billion of CapitaLand’s profit last year was from gains in the value of properties and investments it still holds.

The other $1.7 billion came from selling apartments, trading properties, rent and managing real estate funds.

The developer will report its first-quarter earnings today.

According to an average estimate of three analysts polled by Reuters, CapitaLand’s net profit likely fell 59 per cent to $247 million compared with the first three months of 2007, when earnings received a boost from divestments.

The smaller bottomline will also reflect slowing apartment sales in Singapore due to a global economic slowdown and government measures to cool the city-state’s property market.

For the whole of 2008, the firm is expected to post a net profit of $1.04 billion, according to a Reuters Knowledge poll of 19 analysts.

‘CapitaLand will probably continue to book some revaluation gains this year, but most of the increments would already have been booked in 2007,’ Kim Eng property analyst Wilson Liew said.

CapitaLand’s chief executive Liew Mun Leong told shareholders at the AGM that the firm will be able to weather the current economic uncertainties as it is well diversified geographically and can still raise funds amid tight credit markets.

The company made inroads into Vietnam, India and the Middle East last year and it successfully raised $4 billion in the first three months of 2008, he said.

‘Because we are well capitalised, we are ready to capitalise on opportunities that arise,’ he said.

Singapore property firms have so far reported disappointing earnings for the quarter ended March 2008, partly due to slower sales in the local market.

The city-state’s number three developer Keppel Land posted a 3.5 per cent fall in net profit, while GuocoLand and Allgreen reported earnings declines of 93 per cent and 65 per cent respectively. — Reuters

Millionaires also feeling economic squeeze: survey

Source : Business Times - 30 Apr 2008

They are optimistic that things will improve next year

EVEN millionaires are feeling the economic squeeze, with many saying that they don’t even ‘feel’ wealthy. But as a group, they are optimistic that things will improve in the next year.

The Fidelity Millionaire Outlook, a survey of 1,000 people with at least US$1 million in assets to invest, found that you don’t have to be a laid-off worker to have a negative view of the US economy.

Using a scale ranging from minus 100 as the worst to 100 as the best, the survey found that high net-worth individuals have a minus 50, or ‘very weak’ view of the economy right now. But when asked where things will be next January, the grade rises to a positive 18.

That could mean that millionaires see ‘today’s problem as tomorrow’s opportunity’, said Jack Callahan, president of Fidelity Institutional Wealth Services, the unit that sponsored the survey, which was conducted by an independent research firm.

People with more than US$10 million to invest other than their home and retirement savings - what Fidelity called ‘deca-millionaires’ - have a more pessimistic view than those with less than US$2.5 million.

Tellingly, about 19 per cent of the people surveyed do not consider themselves wealthy, even though they have on average US$3 million to invest and earn at least US$270,000 a year.

Mr Callahan suggested that reflects that people in this category are struggling to maintain a lifestyle which their income cannot support. ‘It says these folks are spending beyond their means,’ he said.

Overall, 31 per cent of those surveyed intend to put more money in the next year into fixed-income vehicles - typically bonds or preferred stocks that carry lower risk and guaranteed returns. Some 27 per cent plan to buy more individual stocks, with about half that, 14 per cent, planning to increase real estate investments.

‘As they look at the future and look at the markets, they see fixed-income as the best,’ Mr Callahan said. While fixed-income investments are usually considered safer, he noted that many have lost value in the last year because of the sub-prime housing crisis and credit crunch. Three-quarters of those surveyed said that the sub-prime fallout hurt their investments, with 42 per cent saying that the effect has been at least moderate.

The 2008 survey, conducted in January by Burke Inc, did not identify Fidelity as the sponsor. It has a margin of error of plus or minus 3 percentage points. – AP

Plans for $200m hotel in S’pore Sports Hub shelved for now

Source : Business Times - 30 Apr 2008

Analysts believe business decision is behind the move

PLANS for a $200 million hotel in the new Singapore Sports Hub appear to have been canned, even though preferred bidder Singapore Sports Hub (SSH) consortium said options to build the hotel at a later stage remain open.

Genting International, which was in discussions with the consortium about the proposed hotel, said in an announcement yesterday that it has ‘discontinued discussions with the consortium for the proposed construction of the hotel as it has been informed that the Singapore Sports Council (SSC) has decided not to have a hotel in the Singapore Sports Hub at this point in time’.

A Genting spokesman declined to comment beyond saying that ‘the ball now lies in their court’ regarding the proposal.

This is the first time news has broken that the hotel option would not be included in the deal. SSC did not respond by press time.

SSH consortium head Ludwig Reichhold said the proposed hotel was only an option and was ‘not confirmed’ at the time of bidding. ‘We are busy finalising the main contract with them now and as things were already running ahead with the main contract, negotiating more with the hotel factored in would have delayed the work,’ he added.

Analysts believe a simple business decision is behind the move. While there have been reports of strong demand for rooms, there are also a lot of hotels in better locations coming up in the years ahead. The floor area available could be much better used as retail space.

Hotels are a bit more complicated to run than retail and office space, Knight Frank director (research and consultancy) Nicholas Mak pointed out. Sharply fluctuating rates and branding and operational costs all add to the business risks. In the end, they need to make a ‘balanced decision’, he said.

The Sports Hub, whose construction was originally scheduled to begin last year, is already running late.

According to reports, the reason for the delay is that the paperwork for the nearly $2 billion public-private partnership project has not been completed. The latest sudden revelation suggests that more work is in store.

Earlier reports estimate the completion date will stretch from the end-2010 original date to at least 2012.

URA releases two more GLS sites

Source : Business Times - 30 Apr 2008

THE Urban Redevelopment Authority (URA) has released two more residential sites through the Government Land Sales (GLS) programme. And while interest is expected to be good, profit margins for developers will be slimmer.

A 1.08 ha site at Woodleigh Close, with a maximum permissible gross floor area of 30,167 sq m (324,714.5 sq ft), is up for sale via the GLS confirmed list. Cushman and Wakefield managing director Donald Han reckons the potential profit margin for a developer could be about 12 per cent.

This is based on a land price of $350-$380 per sq ft per plot ratio (psf ppr), factoring in construction costs and an estimated selling price based on current project launches. In the vicinity, Mr Han says Parc Mondrian and Blossoms at Woodleigh are going for $700-$850 psf. Noting that profit margins were 30-40 per cent until the effects of the US sub-prime crisis and global credit crunch took hold late last year, Mr Han said: ‘In bad times, profit margins can fall into single digit figures.’

The point, however, is that profit can still be made. ‘It’s a matter of who can control costs better,’ he said. ‘Construction companies can control costs better, so for them, even a baseline profit margin of 8 per cent is feasible.’

Reflecting market volatility, Knight Frank director (research and development) Nicholas Mak believes the land price for the Woodleigh site could be $300-$370 psf. ‘If the market turns bearish within the next two months, the bids will be at the lower end,’ he said. He expects four to eight bidders will take part in the tender, including major developers.

URA has also released detailed sale conditions for a 2.08 ha reserve list site in Upper Thomson Road, close to Bishan Park and Lower Peirce Reservoir Park, for residential development. The site has a maximum permissible gross floor area of 43,758 sq m (471,006.7 sq ft).

Mr Han said new projects in the area are going for about $850 psf. Factoring in construction costs and a developers’ profit of 10-12 per cent, he expects bids to be $380-$400 psf ppr.

Separately, the Housing and Development Board has made available a reserve list site at Sengkang East Avenue and Buangkok Drive for an executive condominium. The 17,000.8 sq m site has a permissible gross floor area of 51,002.4 sq m.

More flatted-factory leases terminated in Q1

Source : Business Times - 30 Apr 2008

23% of firms cited poor business as a factor for termination: JTC

TERMINATION of leases of JTC flatted-factory space, which is supported by manufacturing and services, hit 37,000 sq m in the first quarter of 2008 - 22 per cent higher year on year and 14 per cent higher quarter on quarter.

According to JTC’s quarterly facilities report for Q1, gross allocation of flatted-factory space, at 63,100 sq m, was 9 per cent down quarter on quarter but 122 per cent up year on year.

Net allocation was positive for a fourth straight quarter, though growth, at 28 per cent, was lower than in the preceding quarter.

JTC’s report also shows that 23 per cent of companies cited ‘poor business’ as a factor for termination, up from 7 per cent in Q4 2007. Only 35 per cent cited ‘consolidating operations’, compared with 54 per cent a quarter earlier.

Termination of ready-built facilities, which include flatted factories, increased 13 per cent year on year to 51,100 sq m.

But net allocation of ready-built facilities was six times higher year on year at 38,400 sq m, though this was almost 50 per cent down from the preceding quarter.

Overall occupancy increased 1.3 percentage points, raising the overall occupancy rate for ready-built facilities to a record 93.9 per cent.

Net allocation of technopreneur increased a modest 100 sq m in Q1. Demand was 12,900 sq m, while supply was unchanged at 15,100 sq m.

Gross allocation of business park space was 5,800 sq m, or 19 per cent lower year on year. Termination was 2,500 sq m, or 2 per cent lower year on year. As a result, net allocation was 3,300 sq m.

Gross allocation of standard factory space rose to 10,500 sq m while termination was flat at 2,300 sq m, resulting in net allocation of 8,200 sq m.

For stack-up factory space, demand and supply remained largely unchanged in Q1. Net allocation was 800 sq m. Gross allocation was 9,700 sq m while termination was 8,900 sq m.

Net allocation of prepared industrial land was 8 per cent lower quarter on quarter but 20 per cent higher year on year.

A larger proportion of gross allocation of prepared industrial land in Q1 was for manufacturing and supporting sectors.

The service and chemical sectors contributed 59 per cent and 22 per cent respectively to total gross allocation.

Income, not interest, led to property boom

Source : Business Times - 30 Apr 2008

THE recent climb enjoyed by equity and property prices was driven more by strong economic growth than by low interest rates, according to a study by the Monetary Authority of Singapore (MAS).

Empirical research by MAS shows that economic activity exerts a larger influence on asset prices in Singapore than borrowing costs.

‘Asset price inflation reflects an underlying increase in income growth augmented in part by favourable sentiment towards domestic assets,’ says the study, featured in the MAS macroeconomic review report released yesterday.

The MAS report also says: ‘This linkage has been misunderstood by some analysts, who expressed concern that the increase in domestic liquidity, in and of itself, has fuelled the run-up in asset prices.’

Private housing prices increased by 31.2 per cent for 2007 as a whole, and some market analysts had felt that the central bank should raise interest rates to rein in property inflation.

This was because while overseas investors were driving property prices up, the inflow of foreign funds continued to add to domestic liquidity and kept borrowing costs low.

But as the MAS report mentions, ‘the factors behind the increase in liquidity are much more complex in view of Singapore’s monetary policy framework’.

Domestic interest rates have dropped since September last year as US interest rates fell and the Singapore dollar grew stronger.

The benchmark three- month domestic interbank rate fell by 144 basis points from August 2007 to 1.31 per cent at the end of March 2008.

As interbank rates fell, banks also started offering cheaper and more innovative mortgage packages.

Income, not interest, led to property boom

Source : Business Times - 30 Apr 2008

THE recent climb enjoyed by equity and property prices was driven more by strong economic growth than by low interest rates, according to a study by the Monetary Authority of Singapore (MAS).

Empirical research by MAS shows that economic activity exerts a larger influence on asset prices in Singapore than borrowing costs.

‘Asset price inflation reflects an underlying increase in income growth augmented in part by favourable sentiment towards domestic assets,’ says the study, featured in the MAS macroeconomic review report released yesterday.

The MAS report also says: ‘This linkage has been misunderstood by some analysts, who expressed concern that the increase in domestic liquidity, in and of itself, has fuelled the run-up in asset prices.’

Private housing prices increased by 31.2 per cent for 2007 as a whole, and some market analysts had felt that the central bank should raise interest rates to rein in property inflation.

This was because while overseas investors were driving property prices up, the inflow of foreign funds continued to add to domestic liquidity and kept borrowing costs low.

But as the MAS report mentions, ‘the factors behind the increase in liquidity are much more complex in view of Singapore’s monetary policy framework’.

Domestic interest rates have dropped since September last year as US interest rates fell and the Singapore dollar grew stronger.

The benchmark three- month domestic interbank rate fell by 144 basis points from August 2007 to 1.31 per cent at the end of March 2008.

As interbank rates fell, banks also started offering cheaper and more innovative mortgage packages.

The White House Residences

Majestically poised in the coveted environment of Tanglin, Singapore’s prime residential district, are the White House Residences, a prospective living development of grandeur and privilege. The owner says of this prestigious area, “Singapore is not a mere jewel in Asia but a whole jewelry box with its rapidly changing and ever-progressing business, entertainment, cultural, and lifestyle opportunities.” Surrounded by a mélange of romantic colonial bungalows, stately villas, and classic architecture, these homes sit amid verdant landscape surroundings and share the exclusive neighborhood of ambassadors, senior politicians, and captains of industry. Centrally located, yet secluded, the residences enjoy proximity to Singapore’s Botanic Gardens and the bustle of Orchard Road

Only 12 distinctive homes comprise this enviable community. They share a sheltered enclave clad in an elegant mix of contemporary white stones and expansive glass enhanced by a fully equipped gym and a reflective infinity-edge pool set against a sweeping tropical backdrop. Embracing a milieu somewhere between Modernism and Romanticism, each residence has an architectural weave of comfort, style, and class with finishes that are simple and understated.

Casa, one of the three distinguished developments, boasts homes of 5,000 to 5,600 square feet spanning three stories with five voluminous bedrooms. Roof terraces, a lap pool, and landscaped gardens highlight these four dwellings. Penthouse is the second hamlet of residences that are enviably spacious and feature a roof top whirlpool with timber decks and landscaped planters. Suite is the third set of resplendent homes and graces owners with four bedrooms and a secluded private garden.

Each division of the White House Residences features homes of exemplary designer finesse, outstanding architecture, and the finest finishes. The most renowned names in the creation of masterful domains have been employed, including Anotnio Lupi and Gaggenau. The custom kitchens, baths, and wardrobe structures have each been meticulously borne of a specialist’s discerning eye. A Home Intelligence System provides state-of-the-art technology to ensure each resident supreme comfort and security. A tasteful vision and white-glove standards have been imbued into each of these Singapore jewels. Breathtaking scenery, world-class structures, upscale shopping, and refined dining are just some of the alluring attractions of the urban centerpiece that frames these gracious homes.

Dubai World investments slowed

Source : Business Times - 30 Apr 2008

Dubai World, the investment firm of the Dubai government, said yesterday it is holding on to US real estate assets amid a sub-prime housing crisis that has slowed its investment decisions this year.

Dubai World, with a portfolio of over US$200 billion, is still seeking investments in transport and logistics, financial services and for opportunistic deals in a battered real estate market after a credit crisis that has rattled global markets.

‘I’m more cautious because I don’t think there’s total transparency on how bad the situation is. At the moment we don’t know, and it means a lot for our investment planning,’ its chief investment officer Yu Lai Boon told Reuters in an interview.

He said the concern is that the contagion, which has caused Western banks to write down billions of dollars and caused liquidity to dry up, could spread to Japan and China.

‘If the world’s top three economies are hit, then we have the makings of a worst case scenario. So we have to know,’ he said.

Dubai World, which invests via subsidiaries Nakheel and Istithmar, has a portfolio that ranges from British port operator P&O to New York retailer Barneys, and includes over US$20 billion in real estate outside Dubai.

Mr Yu said Dubai World had sold two buildings in New York near the market’s peak in the first quarter of last year, and reinvested the gains in US markets that have seen corrections, but will retain its remaining US property assets.

‘I don’t think we want to sell right now. I’m happy to keep a holding pattern,’ he said, adding that those properties are giving good rental returns in the meantime.

Mr Yu said he intends to tap the credit markets more to fund future investments in order to maximise the rate of returns.

He declined to reveal the exact value of assets that Dubai World has on its books but said it is well over US$200 billion.

‘We plan to do as any prudent corporation does and that is to add some credit, to work the balance sheet that we have. Otherwise the balance sheet is too lazy,’ said Mr Yu. - Reuters

S’pore economy faces dark storm clouds: PM

Source : Business Times - 30 Apr 2008

The United States is probably in a recession and the Singapore economy will be more severely affected if the turmoil in global financial markets worsens, Singapore’s prime minister said on Wednesday.

The Southeast Asian country was ready to respond if the situation in the United States worsens, said Lee Hsien Loong in a statement to mark May Day.

‘Dark storm clouds have gathered… A US recession has probably already started,’ Mr Lee said.

‘We must watch closely how the situation in the US unfolds, and be ready to respond if things take a turn for the worse. We have the resources and the ability to do so.’

Mr Lee acknowledged that the rising cost of living in the Republic was a major issue but said Singapore could not be completely insulated from rising global inflation.

‘We need not worry about a food shortage, because we have adequate supplies, and can buy what we need from many sources,’ he said.

Mr Lee said that the central bank’s policy to allow the Singapore dollar to rise had moderated the impact of imported inflation.

Singapore’s central bank earlier this month tightened monetary policy by allowing a rise in the Singapore dollar, its main policy tool .

Inflation in the city-state accelerated to a 26-year high of 6.7 per cent in March. The central bank expects inflation to hit the upper-end of a 4.5-5.5 per cent range this year, although some economists said inflation for the year could average 6 percent.

Mr Lee reiterated the government’s official forecast that the economy would grow at 4-6 per cent this year.

Booming construction, tourism and marine engineering will help lessen the impact of a US recession on Singapore, he said.

Mr Lee also said the labour market would remain tight, and that more jobs will be created as the country builds two multi-billion dollar casinos, the first of which is set to open late next year.

Singapore’s unemployment rate rose to a seasonally adjusted 2 per cent in the first quarter amid mounting uncertainties in the global economy, advance government estimates showed on Wednesday, and analysts warned the jobless rate may climb higher in the months ahead. — REUTERS

CapitaLand profit slumps as expected, outlook cautious

Source : Straits Times - 30 Apr 2008

CAPITALAND, South-east Asia’s top property developer, met expectations with a 59 per cent slide in quarterly profit due to lower sales in Singapore and the absence of one-off gains, and said buyers would remain wary amid the credit crisis.

CapitaLand earned net profit of $247.5 million (US$182 million) in the three months to the end of March, compared with $608.1 million from a year ago

The developer earned net profit of $247.5 million in the three months to the end of March, compared with $608.1 million from a year ago, in line with the average forecast of $247 million by three analysts polled by Reuters.

CapitaLand said on Wednesday the 2007 first-quarter results included a $426.8 million fair value gain from one of its office buildings in Singapore.

‘Market sentiment in the property market is expected to remain cautious until a sustained recovery in the financial markets and economic conditions can be foreseen,’ CapitaLand said in a statement.

‘Nevertheless, the group is confident that it will be profitable in 2008,’ said the group, which is partly owned by state investment firm Temasek Holdings.

The developer’s Chairman Richard Hu said on Tuesday that its 2008 earnings were unlikely to match last year’s $2.8 billion due to a lack of revaluation gains.

Private home prices in Singapore, CapitaLand’s biggest market, recorded a second straight quarter of slower growth in the first quarter of 2008 as property sales slumped to the lowest in five years, government figures showed on Friday.

About $1.1 billion of CapitaLand’s profit last year was from gains in the value of properties and investments it still holds. The other $1.7 billion came from selling apartments, trading properties, rent and managing real estate funds.

Singapore property firms have so far reported disappointing earnings for the quarter ended March 2008, partly due to slower sales in the local market.

The city-state’s number three developer Keppel Land posted a 3.5 per cent fall in net profit, while GuocoLand and Allgreen suffered earnings declines of 93 per cent and 65 per cent respectively.

CapitaLand shares rose 1.3 per cent in the first quarter, outperforming rivals City Developments whose shares lost 22 per cent while KepLand is down 24 per cent. The broader Straits Times Index fell 13 per cent in the same period. — REUTERS

S&P report says Asian economies will stay on track

Source : Business Times - 30 Apr 2008

The economic engines of India and China will help keep Asia-Pacific economies on track amid a global slowdown, but a protracted US slump and rising inflation pose possible hazards, a report said on Wednesday.

The most significant threat to the region’s macroeconomic stability is inflation, in particular the recent surge in food and oil prices, according to the report by Standard & Poor’s Ratings Services.

‘There are some visible threats to the region in the form of food and energy prices, which may adversely affect performance over the next couple of years,’ said S&P Asia-Pacific chief economist, Subir Gokarn, according to a statement. The most important challenge facing regional policy makers was managing inflation while sustaining economic performance, Mr Gokarn said.

The region’s economies are expected to grow more slowly this year and in 2009, although they will maintain a relatively fast pace on the back of strong regional drivers, the S&P report said.

China and India, two of the three largest economies and the fastest growing, will together continue to grow at about 8 percent or more over the next two years, it said.

‘This momentum will help sustain a positive growth environment for Asia-Pacific as a whole,’ S&P said. ‘The ability of the region’s economies to insulate themselves against a U.S. recession is enhanced by their ability to exploit the opportunities in the region through greater economic integration.’ Japan’s return to positive growth is another factor in the region’s resilience, although the economy is predicted to slow compared to the expansion rates of more than 2 per cent in the past two years, the report said.

‘Japan’s growth, in turn, reinforces the growth impulses in other countries in the region,’ S&P said. The report forecasts Japan’s real gross domestic product to be above 1 percent this year and as much as 2.2 per cent next year.

The report said that Asian economies were also more resilient because they have become less dependent on exports to the US as recent efforts to expand regional integration start to bear fruit.

‘Asian countries have been extremely active in entering into trade and broader commercial agreements, both within and outside the region,’ the report said. ‘Fast-growing neighbours, particularly those whose growth is driven from within, offer enormous opportunities for all these countries - and they are all trying their best to exploit those opportunities.’ S&P said, however, that sustained Asian growth depended on the US recession being moderate and brief.

‘A prolonged slump in the US economy and the effect it will have on demand for imports, particularly of consumer goods from the region, will impact on wage incomes and investment activity in the region,’ it said. — AP

Keppel Land enters joint venture with Sunsea Yacht Club

Source : Channel NewsAsia - 30 Apr 2008

Keppel Land has entered into a joint venture with Sunsea Yacht Club to develop its first integrated residential cum marina lifestyle development in Zhongshan, Guangdong.

Keppel Land will have an 80 per cent stake in the venture to develop the waterfront homes in the affluent Pearl River Delta region of Zhongshan.

Targeted at the upper-middle to upper income segments, the proposed residential project covers a total area of 82 hectares.

When completed, it is expected to yield about 300 high-end luxurious villas with private berths, and 2,500 condominium units and serviced apartments.

Residents can look forward to a luxurious waterfront lifestyle enhanced by a marina clubhouse with related amenities, including fine dining restaurants, berths for about 550 boats, a boating school and comprehensive recreational facilities. - CNA/vm

JTC releases North Buona Vista Drive site for sale

Source : Channel NewsAsia - 30 Apr 2008

JTC Corporation releases its North Buona Vista Drive (LX 1-1) site for sale under the government’s reserve list .

The 99-year lease site is located at the junction of North Buona Vista Road and Commonwealth Avenue West.

Under the Reserve List system of the Government Land Sale programme, the site would only be put up for tender after the minimum bid price received from a developer is found acceptable by the government. Interested developers will then have up to 8 weeks to submit their tender bids. - CNA /ls

Keppel Land in Pearl River Delta project

Source : Business Times - 1 May 2008

KEPPEL Land said yesterday that it is developing a waterfront residential pro-ject in China’s Pearl River Delta region.

Keppel Land is taking an 80 per cent stake in Sunseacan Investment, a Hong Kong company that will undertake the development. The remaining 20 per cent will be held by Sunsea Yacht Club, another Hong Kong company and the former owner of Sunseacan Investment.

Keppel Land had earlier announced that it was buying an 80 per cent stake in Sunseacan for HK$50 million (S$8.74 million) in cash. It will hold the stake through a subsidiary.

The luxury complex will be 35 km from Zhongshan city in Guangdong province and will cover 82 hectares. When completed, it is expected to yield about 300 villas with private berths on the Xijiang river and 2,500 condominium units and serviced apartments, with a total gross floor area of 408,000 sq m.

There will also be restaurants, berths for 550 boats and other recreational facilities.

Keppel Land’s group chief executive officer Kevin Wong said: ‘Waterfront living has become a worldwide trend. Keppel Land is confident this integrated development will present a new and refreshing lifestyle to home-buyers in China.’

Keppel Land said the deal is not expected to have a material impact on its consolidated earnings per share or net tangible assets per share for the current financial year.

A-iTrust distributable hits $45.8m

Source : Business Times - 1 May 2008

ASCENDAS India Trust (A-iTrust) yesterday reported net property income of $60.5 million for the 12 months ended March 31, 2008 - up 51 per cent from $40.2 million the year before.

The improvement was driven by a 50 per cent jump in property income to $102.7 million year on year.

Distributable income for FY2007-08 was $45.8 million. This translated to distributable income per unit (DPU) of 6.09 cents, or 9 per cent higher than the forecast of 5.6 cents.

Based on a closing price of $1.04 a unit on March 31, the annualised yield was 5.86 per cent.

For Q4, DPU was 1.64 cents. With Q3’s DPU of 1.5 cents, a total of 3.14 cents will be paid on May 28.

A-iTrust was the first Indian property trust listed on the Singapore Exchange - in August last year. Its portfolio comprised four Indian IT parks at end- March.

A-iTrust said its asset portfolio has grown and the performance of its properties has improved. The occupancy rate for the portfolio is 96 per cent, and the renewal rate of expired leases is 92 per cent.

The trust is maintaining a distribution forecast of 6.85 Singapore cents made for FY2008-09 in its listing prospectus.

Jonathan Yap, CEO of the trustee-manager, said: ‘We remain focused on actively managing the portfolio’s income stability and enhancing returns through organic growth.’

The trust will continue to develop the land it owns and acquire new assets in a yield-accretive manner, Mr Yap said. ‘We aim to do so through an optimised capital structure.’

Gearing for the trust was 4 per cent at the end of Q4, leaving it with about $300 million of borrowing capacity for developments or purchases before gearing reaches 35 per cent.

JPMorgan rated A-iTrust ‘overweight’ in early April, with a target price of $1.54. The trust’s units closed two cents lower at $1.18 yesterday.

CDL Hospitality Q1 available distribution surges

Source : Business Times - 1 May 2008

CDL Hospitality Trusts (CDLHT) has announced income available for distribution of $23.6 million for Q1 2008, a 91.5 per cent increase over the corresponding quarter last year.

CDLHT, a stapled group comprising CDL Hospitality Real Estate Investment Trust (H-Reit) and CDL Hospitality Business Trust (HBT), said income available for distribution per stapled security for the quarter rose 63.4 per cent year-on-year to 2.86 cents or 11.50 cents on an annualised basis.

Citing the 6.6 per cent year-on-year increase in visitor arrivals to Singapore in the first quarter of 2008, Vincent Yeo, CEO of M&C Reit Management Ltd, the manager of H-Reit, said: ‘As Singapore’s largest hotel owner by number of rooms, we are well positioned to take advantage of the very robust demand for transient accommodation in Singapore.’

Gross revenue for the quarter of $27.9 million was 55.1 per cent higher while net property income was $26.1 million, up 55.8 per cent.

Average occupancy rate for H-Reit’s Singapore hotels - Orchard Hotel, Grand Copthorne Waterfront Hotel, M Hotel, Copthorne King’s Hotel and Novotel Clarke Quay - actually fell marginally by 0.2 percentage points to 84.4 per cent.

However, Mr Yeo said this was more a function of the Reit manager, ‘managing for RevPar (room revenue per available room) growth’.

Mr Yeo also revealed that its market mix had changed with more business being contracted through corporate clients.

Indeed, RevPar increased by 37.7 per cent from $151 in Q1′07 to $208 in Q1′08.

Average daily rate (ADR) of $247 was 38 per cent higher compared to the same period a year ago.

The Singapore Tourism Board’s figures for gazetted hotels here in March show that the average room rate was estimated at $238, while the average occupancy rate was estimated at 87 per cent.

Mr Yeo said that it was also on track to make its forecast annual acquisitions of $200-$300 million.

In the quarter, Mr Yeo said that six of the 24 extended stay suites at the Grand Copthorne Waterfront Hotel were completed and the hotel has received positive responses from potential guests during the pre-marketing phase. All the suites will be launched officially by the end of this month.

Mr Yeo also added that ’service apartments are within its ambit’, and he would not discount the possibility of acquiring a service apartment in the future.

At the end of yesterday’s trading, CDLHT’s unit price rose 6 cents to close at $1.92 per unit.

CapitaLand profit hit by absence of fair-value gain

Source : Business Times - 1 May 2008

Q1 net earnings fall 59%; assets under management rise to $19.1b

PROPERTY giant CapitaLand yesterday posted a 59.3 per cent year-on-year drop in first-quarter net profit to $247.5 million, from $608.1 million in Q1 2007 when the bottom line had been boosted by a $426.8 million fair value gain from the sale of 8 Shenton Way (formerly Temasek Tower).

The group said, however, that its assets under management (AUM) rose to $19.1 billion as at end-Q1 2008 from $14.6 billion a year ago. It now manages four listed real estate investment trusts and 13 private equity funds across Singapore, China, Japan, Malaysia and the Gulf Cooperation Council region.

CapitaLand also said in its Q1 results statement that it plans to originate new property funds in Asia, in particular China, following the increased institutional and private investors’ interest for real estate investments.

The group is on track to grow AUM to $25 billion in three to five years. Its fund management arm, CapitaLand Financial, reported a 52.4 per cent year-on-year jump in Q1 earnings before interest and tax (Ebit) to $18.5 million.

Group revenue for the first quarter ended March 31, 2008, dipped 0.9 per cent to $631.3 million. Higher revenue from office and retail properties was offset by lower sales of development projects in Singapore. Singapore’s share of CapitaLand’s group revenue and Ebit slipped in Q1 this year against the year-ago period. The Republic made up 29.7 per cent of revenue in Q1 2008, down from 41.4 per cent in Q1 2007. Singapore’s share of Ebit fell from 83.5 per cent in Q1 2007 to 55 per cent in Q1 2008.

At CapitaLand’s annual general meeting on Tuesday, shareholders were told that 2008 full-year earnings are unlikely to match last year’s $2.8 billion due to a lack of revaluation gains. However, the group should perform better at the operating level, chairman Richard Hu told shareholders.

In its results statement yesterday, CapitaLand said it expects sentiment in the Singapore residential sector to remain cautious until more stability emerges in global financial markets and economic conditions. ‘However, earnings for our residential business in Singapore will be underpinned by brisk sales achieved in the last two years,’ it added.

The group was silent on possible launches in Singapore this year, although it highlighted likely launches elsewhere, in China, Vietnam, Thailand and Kazakhstan.

Ebit from residential rose 11.7 per cent year-on-year to $151.5 million in Q1 2008, with the improvement contributed mainly by China, arising from marked-to-market gains on an investment.

Ebit from commercial strategic business unit fell 74.6 per cent to $138.6 million due mainly to the fair value gain for Temasek Tower in the same year-ago period. The retail SBU posted a 145.8 per cent jump in Q1 Ebit to $58.1 million largely on the back of unrealised forex gains arising from revaluation of US dollar-denominated loans as the Sing dollar strengthened against the US currency and the divestment gain of Xizhimen mall to CapitaRetail China Trust, but partly offset by higher operating expenses.

The Ascott Group’s Ebit rose 35.3 per cent to $39.5 million, due largely to the portfolio gain from the divestment of the property at 6 Sarkies Road in Singapore and better revenue per available unit performance from Europe and Singapore operations.

CapitaLand also said that the group’s net debt to equity ratio rose to 0.59 as at end-Q1 2008 from 0.5 as at end-Q1 2007. The group’s gross debt stood at $12.4 billion as at end-Q1 2008 compared with $8 billion a year earlier.

Earnings per share fell from 21.8 cents in Q1 2007 to 8.8 cents in Q1 2008. Net asset value per share stood at $3.62 as at March 31, 2008, up slightly from $3.54 as at Dec 31, 2007.

On the stock market yesterday, CapitaLand closed 18 cents lower at $6.79.

JTC offers 1.9ha one-north site for sale

Source : Business Times - 1 May 2008

A COMMERCIAL site slated for mostly office use near the existing Buona Vista MRT Station has been made available for application under the reserve list.

The 1.9-hectare site can yield close to 1.3 million square feet of gross floor area, of which 21,528 sq ft are for ground-floor retail use.

The 99-year site is in the biomedical hub of one-north and is being offered for sale under the Government Land Sale Programme for first-half 2008 by JTC Corporation.

The plot could be worth about $500 million assuming it fetches $400 per square foot of potential gross floor area.

JTC Corp said the plot will be developed into a high-rise commercial building that will provide office space for the business support companies of the research institutes at one-north. The plot is next to a new MRT station that will open under the Circle Line in 2010.

Cushman & Wakefield managing director Donald Han said the development, which will have about one million sq ft net lettable area, will benefit from spillover office demand from the surrounding biomedical facilities, as well as commercial office tenants and government departments relocating out of the Central Business District.

‘This is a sizeable investment, so bidders will be the big boys potentially looking at developing a project on a built-to-suit basis for anchor tenants. The end-product will be very suitable for sale to a Reit. It’s pretty untested ground, but the plot could fetch about $350-$420 psf per plot ratio (psf ppr). The breakeven cost will be about $1,000 to $1,100 psf of net lettable area,’ Mr Han added.

Colliers International managing director Dennis Yeo estimates the site to be worth a slightly higher $400-$500 psf ppr, reflecting a breakeven cost of around $1,200 psf of net lettable area. ‘Assuming an average rent of about $7 psf, the net yield will be about 5 to 6 per cent,’ he added.

Measures to cool the market are working, says CBRE

Growth in China property prices more sustainable

Source : Business Times - 1 May 2008

FOLLOWING a slew of measures to cool the property market in China, property prices are now more sustainable.

Saying that the measures - which include capital gains tax - have ‘generally worked well’, CB Richard Ellis (CBRE) president and CEO (Greater China) Chris Brooke added: ‘There will always be some fine tuning in specific markets but generally the measures have created a more sustainable market.’

Mr Brooke also believes that prices have mostly been corrected. ‘I don’t think we will see prices going down although I don’t think the rates of growth will be like that seen in 2006 and 2007,’ he added.

‘I believe the government’s objective is to achieve sustainable growth and if you see what the government has been saying in public, I think they will be comfortable with an annual growth rate of 5 to 10 per cent because it is in line with inflation, GDP growth and it will create wealth for the individual. So prices will continue to rise with GDP growth and inflation.’

Mr Brooke also believes that with continued market volatility, especially in the equities market, investors are more likely to divert cash into real estate. ‘There are not many investment products available in China,’ he added.

The Chinese residential market is a large one.

According to the CBRE’s Market View report of the property market in China for the first quarter, quoted prices in the luxury residential market in the North China city of Beijing did drop 3.4 per cent quarteron-quarter after the dramatic growth in 2007, while prices sustained steady increases in Tianjin, Dalian and Qingdao.

CBRE also noted that in East China, which includes Shanghai, there has not been a downward correction in luxury home prices, although the growth rate has slowed. Luxury apartment prices increased by 2.2 per cent in Shanghai.

In South China, luxury residential prices did slip in Guangzhou, Shenzhen and Xiamen this quarter as further macroeconomic controls went into effect. In Guangzhou, luxury apartment prices fell 2.8 per cent.

In Chengdu, sales prices of luxury apartments remained stable.

In the first quarter of 2008, the office sector in major cities in North China, including Beijing, Tianjin, Dalian witnessed an upward trend in the prime office market, with the average rental increasing slightly.

In East China, which includes Shanghai and Nanjing, all the major urban markets (except Ningbo) achieved positive rental growth, while the growth rates of Hangzhou and Nanjing accelerated.

In South China, high-quality office space in Shenzhen continued to be taken up by MNC tenants.

Developers vie for top ‘green’ honours

Source : Business Times - 1 May 2008

Keppel Land wins its first platinum for Ocean Financial Centre, slated for completion in 2011

THE battle for the Green Mark platinum award is heating up.

Last year, City Developments fired the first salvo, claiming two of the seven platinums, the highest rating given out by the Building and Construction Authority for environmental friendliness.

First salvo: The platinum bagged by Keppel Land for its massive Ocean Financial Centre office block is the first given for an office tower. The 43-storey building will be constructed on the site of the present Ocean Building and Ocean Towers

But this year, rival developer Keppel Land has bagged its first platinum for Ocean Financial Centre, a massive 43-storey office block to be built on the site of the present Ocean Building and Ocean Towers. This is also the first given for an office tower, said Tan Swee Yiow, chief executive officer of Singapore Commercial at Keppel Land.

City Developments had won two platinums last year and three more this year - two condominium projects, Cliveden and Solitaire, and the Tampines Grande office building.

But because of its more complex energy needs, getting the Ocean Financial Centre certified platinum was more difficult than for a similar residential tower or commercial building, Mr Tan said in an interview.

‘If you want to talk about energy savings, probably the easiest way is to build a lot of concrete walls up. But the challenge is how to make an iconic architectural statement and at the same time achieve energy savings,’ he said.

The green features that helped Keppel Land clinch the platinum award could add ‘5 to 10 per cent’ to development cost, said Mr Tan, declining to be more specific because tenders have yet to be called. While the features will not come cheap, Mr Tan said that ‘at this moment we can’t say that we can charge a premium for its greener features’.

‘To us it’s a necessity. This is a historical site, so it’s very visible and the extra cost is justifiable. Our client mix will also appreciate the features,’ he added.

The Ocean Financial Centre is slated for completion in 2011 and will offer 850,000 sq ft of prime office space. It will be a redevelopment of Ocean Building and Ocean Towers, now on the same site.

Ocean Building has already been torn down; some of the debris will be recycled for use in the new building. Ocean Towers will be demolished later to make way for a five-storey car park and grand plaza integrated into the entire Ocean Financial Centre complex.

Mr Tan said that among its extensive energy-saving features was a 400-sq-m roof-mounted solar panel array. Along with efficient lighting panels and air conditioning, this would save nine megawatt hours a year, enough to power a 50,000-sq-m office space.

The complex will also have a roof-top garden and rainwater-harvesting features which could save 42 million litres of water a year, Mr Tan said, enough to fill 21 Olympic-sized swimming pools.

As well, a small chute running down the middle of the tower can be used for waste paper disposal, he said, adding this was an ‘in-house’ innovation probably not replicated elsewhere as yet, adding there would be sprinklers and safeguards so that a carelessly discarded cigarette butt would not cause an inferno.

The company is aiming to achieve at least Green Mark gold or gold plus ratings for all future projects, he said.

Transitional office site gets top bid of $226 psf ppr

Source : Business Times - 1 May 2008

Offer is 7% below last week’s top bid for nearby plot

THE Urban Redevelopment Authority (URA) has closed the tender for a transitional office site at Scotts Road/ Anthony Road - receiving a top bid of $32.99 million.

This works out to be $226 per square foot per plot ratio (psf ppr) for the 97,284.1 sq ft site which has maximum permissible gross floor area of 145,926.2 sq ft.

Four bids were received with the highest bid coming from Sun Venture Investments, a subsidiary of interior design and build firm DB&B Developments Pte Ltd. Its bid was 3 per cent higher than the next highest bid of $32 million from Scotts Development Pte Ltd.

DB&B chief executive Billy Siew Kim Leng said that if it is awarded the site, it intends to lease the building fully. Already, Mr Siew said that it is talking to two potential tenants who may lease the entire building.

While Mr Siew did not say who these might be, a check with the DB&B website reveals that its current clients include ABN Amro Bank and Korea Development Bank.

If awarded, this will be the first development project for DB&B. Still, Mr Siew said this is the normal progression in terms of ‘vertical integration’ for its business.

He also said he was bullish on the office sector and is setting its sights on a monthly rental of $9.50 psf.

Cushman and Wakefield managing director Donald Han agreed that the site could eventually attract big companies. ‘I think corporations would be favourable to an address like this.’

He also said that as long as the locations were good, there would still be developers interested in such sites. ‘The entry level is low so it would be good for new developers,’ he added.

The potential over-supply of new office space after 2010 is not likely to affect demand for this site either. Savills Singapore director (marketing and business development) Ku Swee Yong said: ‘The future supply is likely to be more spaced out than originally expected due to construction delays.’

Even so, Mr Ku estimates that rentals for transitional office space in the Scotts Road area is more likely to be around $7 psf a month.

While the DB&B’s bid is about 7 per cent lower than the top bid for the neighbouring transitional office site last week, Knight Frank director (research and consultancy) Nicholas Mak believes it is very likely that the government will award this site to DB&B, ‘taking into consideration that this average price of $226 psf ppr is slightly higher than the price paid for the first transition office site at Scotts Road last August’.

He added: ‘In an effort to ease the office space crunch, up to now, the government has awarded four transition office sites, which could yield about 650,000 sq ft of office space.’

Cut workplace fatality rate to 1.8 by 2018: PM

Source : Business Times - 29 Apr 2008

Prime Minister Lee Hsien Loong has set a more ambitious target to reduce workplace accidents - 1.8 per 100,000 workers, down from the current 2.5.

Although the fatality rate has fallen from 4.9 per 100,000 workers in 2004 - a loss of 83 lives - to 2.9 in 2007, PM Lee on Tuesday said Singapore companies can do even better to improve workplace safety.

‘Our original aim had been to halve the workplace fatality rate to 2.5 by 2015. This looks well within reach,’ he said at the launch of the National Workplace Safety and Health Campaign 2008 and the Workplace Safety and Health Council (WSHC).

‘I think we should set a more ambitious goal, to reduce the rate to 1.8 within a decade.’

‘We should aim not only for as good a safety record as the developed countries, but to have one of the best workplace safety records in the world.’

Mr Lee also launched a new council for the workplace - the Workplace Safety and Health Council, chaired by Mr Lee Tzu Yang.

An integral part of the new legislative framework to drive and implement safe practices at work, it will have greater teeth to set safety standards, clamp down on errant employers and have a suitable code of practice for industries to follow.

Mr Lee said its biggest challenge would be in outreach, engagement and changing mindsets to bring about a quantum improvement in safety and health outcomes.

He urged every individual to take ownership of safety issues and see this as his own responsibility. — BT ONLINE

PM Lee sets ambitious goal to reduce workplace fatality rate

Source : Channel NewsAsia - 29 Apr 2008

Prime Minister Lee Hsien Loong has set a more ambitious, 10-year target of reducing deaths at the workplace to 1.8 per 100,000 workers.

Singapore’s aim right now is to halve the fatality rate to 2.5 by 2015 and Mr Lee said this target is “well within reach”.

Mr Lee was speaking at the launch of the Workplace Safety and Health Campaign 2008 on Tuesday.

The stakeholders from industry and the tripartite partners endorsed the aim to keep the number of accidents down and to design safety into the work process.

A new council has been set up to develop codes of practice for the different sectors.

Lee Tzu Yang, Chairman, Workplace Safety and Health Council, said: “What we are trying to do is to see how we can make sure that we address the key areas of vulnerability. So we looked at the statistics in Singapore from the experience in workplace safety and health, and the sectors which need to have better practices than currently.

“So for example, the areas we are looking at (includes) metal pressing - the safe use of machinery - and we are looking at supervision in construction where the statistics indicate more needs to be done.”

PM Lee explained that if accidents were analysed, many creative and innovative ways could be found to tighten safety standards and practices, and to correct what workers and companies are still not doing properly.

He stressed that every safety improvement that Singapore’s workforce makes is an important one because it will reduce the risk of tragedy and prevent the further loss of lives.

PM Lee said: “From time to time, accidents would still occur, and we would have to deal with them. But we had developed an effective framework, with clear principles for safety management.

“This would keep accident rates to a minimum, not just by responding to accidents when they occur, but by designing safety into the work processes and pro-actively detecting and fixing unsafe practices before accidents happen.

“We must convince employers that a safe and healthy workplace makes good business sense. Workplace injuries and fatalities can result in not only financial expense, but also loss of reputation.

“On the other hand, a safe workplace environment and a good safety record will give workers confidence that the firm has their well-being at heart, and motivate them to perform that much better.

“Hence, every employer and business owner should see good safety and health practices as an investment for the future, not an additional cost burden.”

The Prime Minister noted that in 2004, accidents at the workplace resulted in the loss of 83 lives or 4.9 fatalities per 100,000 workers. And in 2007, the fatality rate dropped to 2.9.

At the heart of this year’s campaign is a 40-foot container, a mobile exhibit which will visit various workplaces. The aim is for the container to reach out to some 200,000 workers during the year, with a whole host of educational materials on workplace safety and health.

The ultimate goal is for Singapore to have one of the best workplace safety records in the world. - CNA/vm

MMP REIT posts S$17m distributable income for Q1

Source : Channel NewsAsia - 29 Apr 2008

Mainboard-listed Macquarie MEAG Prime REIT (MMP REIT) has booked a distributable income of S$17 million for the first quarter, up nearly 22 per cent compared to the same period a year ago.

MMP REIT said that its earnings were driven by attractive acquisitions, tenancy remix as well as asset enhancement initiatives.

The REIT saw strong rental rates in Singapore. Its retail space was at full occupancy, while offices were 98 per cent occupied.

MMP REIT is proposing to pay out 1.76 cents for the first quarter, up 20 per cent on year. - CNA/vm

MAS expects S’pore inflation to cool to 4% in second half

Source : Channel NewsAsia - 29 Apr 2008

The Monetary Authority of Singapore (MAS) has said it expects inflation, now at a 26-year high of 6.7 percent, to cool to an average 4 percent in the second half of this year.

Singapore’s central bank also said on Tuesday that economic growth will slow in 2008, but the expansion will likely remain at a healthy level even under a tighter monetary policy.

“Full-year gross domestic growth of between 4%-6% is still achievable, barring a sharp downturn in the US economy,” the MAS said in its semi-annual macroeconomic review, available on its Website www.mas.gov.sg. “The slower rate of expansion will bring the economy closer to its potential output path.”

Earlier in April, the MAS unexpectedly tightened its monetary policy by allowing the Singapore currency to rise at a faster pace to keep a lid on import costs.

The central bank manages the local dollar within an undisclosed currency band, which it shifted higher at its meeting on April 10.

“The re-centering of the policy band… will help to alleviate inflation pressures and provide support to the economy as it eases to a more sustainable growth rate,” the MAS said.

First-quarter GDP growth came in unexpectedly strong, running at an annualised seasonally adjusted rate of 16.9%, and economists said the data had calmed fears that the weakness of the US economy would drag on Singapore, giving the MAS room to tighten policy.

Singapore’s economy grew by 7.7% in 2007, when consumer prices rose 2.1%.

A recent jump in food costs has been a key driver of inflation across Asia, and a further acceleration in commodity prices could not be ruled out, the MAS said.

“Even if (food and oil) prices were to level off, upward pressure on wages and rentals, reflecting domestic capacity constraints, is likely to remain,” it said.

The MAS predicted inflation will peak at around 7% in the middle of the year before averaging in the upper half of a 4.5%-5.5% range for all of 2008.

Different sectors of Singapore’s economy will feel varying impacts from a global downturn, the MAS said.

“In contrast to last year’s broad-based growth story, the outlook for the Singapore economy in 2008 will vary significantly from industry to industry, depending on their exposure to the U.S.,” the authority said.

The construction sector will be relatively protected, with a steady pipeline of contracts, including S$24.5 billion in work awarded in 2007.

“This suggests a possible surge in construction activity over the next two to three quarters, as work on projects progresses into the phase where the bulk of payment streams occurs,” the central bank said. “Future demand should also remain firm, with contracts for major projects such as the integrated resorts yet to be fully awarded.”

Las Vegas Sands is expected to open the Marina Bay Sands resort in 2009, and a unit of Genting International will open Resorts World at Sentosa in 2010.

The MAS said the economy should also be supported by most of the services sector and selected manufacturers such as pharmaceuticals firms and offshore oil rig makers.

However, the electronics industry will be highly exposed to an external economic slowdown, likely preventing the sector from posting a meaningful expansion.

The financial sector is also expected to weaken if markets remain in a slump, leading to lower revenues from wealth management and brokerage services.

The MAS expects the job market to remain tight, with the unemployment rate holding beneath 2 percent. - CNA/ir

CCT decides to defer redevelopment of Market Street carpark

Source : Channel NewsAsia - 29 Apr 2008

CapitaCommercial Trust (CCT) has decided to defer the planned redevelopment of the Market Street car park.

In January 2008, CCT was granted an outline planning permission by urban planners to redevelop the property into a Grade A office building.

Since then, it has been working with its appointed architect and consultants to finalise and submit design plans to the Urban Redevelopment Authority.

In a statement on Tuesday, CCT said it does not expect a plan for the redevelopment to be made before mid-2009. This came after taking into consideration the significant size of the project, rising construction costs and the present volatility in financial markets.

Industry watchers said the decision is unlikely to dampen the market. The delay may, in fact, be welcomed due to the tight car parking space situation in the Central Business District.

Property analysts added that the deferment is a prudent move, given the bulk of office supply coming on stream between 2010 and 2012.

They said there is no hurry for CCT to redevelop the property in a climate of rising construction costs, which could also pose some challenges in getting construction firms to work on the project.

CCT said it will continue to take necessary steps to obtain the provisional permission from the authorities, as well as assist retail tenants in relocation and continue to operate the car park. - CNA/vm

JTC achieves record occupancy level for ready-built facilities in Q1

Source : Channel NewsAsia - 29 Apr 2008

JTC has achieved a record occupancy level for its ready-built facilities in the first quarter of 2008.

Net allocation was 38,400 square metres, six-fold higher than the same period last year.

In its quarterly report, JTC said this helped to boost the occupancy level for ready-built facilities by 1.3 percentage points to 93.9 percent.

Termination level, however, has gone up as well - to 51,100 square metres in the first quarter of this year, compared to 45,300 square metres in the first quarter of 2007.

However, the net allocation for prepared industrial land remained strong - at 114.9 hectares - due partly to the general expansion across the manufacturing sector for 2007.

Looking ahead, more ready-built spaces are expected to come on stream with Phase 2 construction of Fusionopolis, which is set to be completed by the third quarter of 2010. - CNA/ms

URA releases 2 residential sites for sale

Source : Business Times - 29 Apr 2008

The Urban Redevelopment Authority (URA) has made available two 99-year leasehold residential sites for sale.

One is a site in Woodleigh Close, a short walk from the Potong Pasir MRT station, or the yet-to-be opened Woodleigh MRT station.

The 1.08 ha site has a maximum gross floor area of 30,167 sq m for 260 to 290 apartments.

The tender for this land parcel will close on June 24.

The other in Upper Thomson Road is close to Bishan Park and Lower Peirce Reservoir Park.

On the reserve list, the site will be put up for sale, only if a developer were to indicate his interest by committing to a minimum bid.

The 2.08 ha Upper Thomson Road site can have a gross floor area of 43,758 sq m.

URA releases two residential sites for sale

Source : Channel NewsAsia - 29 Apr 2008

The Urban Redevelopment Authority (URA) has launched a residential site at Woodleigh Close for sale by public tender.

At 1.08 hectare, market watchers said about 260-290 apartment units can be built on the plot of land, which is located near to the Potong Pasir MRT station.

A new 99-year leasehold project in the location is expected to fetch prices of around S$800 psf. This will translate to a possible land price of around S$300-350 psf per plot ratio for the site.

The tender will close at noon on June 24 and selection will be based on the tendered land price only.

Separately, the URA also released the detailed sales conditions for the residential parcel at Upper Thomson Road, which is estimated to offer 380 to 420 new homes.

The site is on URA’s reserve list and developers who are interested in buying it can apply for the plot to be put up for tender.

Under the reserve list system, the site will only be put up for sale if a developer’s minimum bid price is acceptable to the government.

Analysts expect this site at Upper Thomson Road to fetch S$200 to S$240 psf per plot ratio, which will translate into a possible selling price of S$650 to S$700 psf. - CNA /ls