Singapore Property Watch: 6/29/08

Wednesday, July 2, 2008

Higher rents lift Europe’s property market

Source : Business Times - 5 Jun 2008

The clouds over European commercial property may be about to lift because falling prices have raised rental yields, while inflation pressures elsewhere are making the sector’s index-linked rents a tempting hedge.

The vast majority of shops, warehouses and offices across the continent are let on rents that rise in line with inflation.

Fund managers and analysts say a surge in rents could help revive interest from income-hunting insurers and pension funds, who covet higher-yielding properties because they can more easily match investment returns against their liabilities.

‘If we are in for a short sharp bout of inflation, rental indexation is one of the few ways investment managers can benefit,’ said Robert Gilchrist, chief executive of fund manager Rockspring LLP.

‘As long as you avoid over-rented situations (where occupiers struggle to pay rents), you can get some significant, secure rises in income on a year-on-year basis,’ he said.

During the real estate boom years in recent years, institutions were forced to shell out large sums for European property providing meagre annual rental income yields, but now the market is in the grip of a downturn, and yields are on the rise.

Research published last week by property services firm CB Richard Ellis showed double-digit increases in office rents across many European cities including London, Paris, Rome, Athens, Prague, Moscow and Stockholm in the year to March 31, despite concerns that a slew of banking sector layoffs would dent rental growth.

‘Office occupancy costs are continuing to defy sluggish economic conditions and the credit crunch as they rise faster than global inflation,’ said Raymond Torto, global chief economist at CB Richard Ellis.

Of course, inflation-linked rents are no cast-iron inflation hedge, because rents could grow faster than occupiers can afford.

‘Economic inflation and rental inflation are not the same,’ said Lehman Brothers analyst Mike Prew.

‘Indexation increases the risk of over-renting … and trouble in credit markets has reduced the ability of tenants to service higher rents, which is likely to lead to a rise in delinquencies.’

Nevertheless, some institutions now see real estate as a cheaper inflation hedge than commodities.

According to data from Investment Property Databank, average UK commercial property values have slumped around 17 per cent in the last year while oil, gold and copper have all hit record prices in the last six months.

By exiting traditional commodity investments at peak pricing and buying into high-income producing real estate at close to the bottom of the cycle, buyers can offset higher funding and property transaction costs, while rising rents make interest payments easier to service.

‘There’s a clear logic behind it,’ said Robert Matthews, head of international property at Scottish Widows Investment Partnership.

‘If you look at commodity prices today you can see why some investors want to take a profit and deploy the capital in cheaper inflation hedges like real estate, which they regard to be more fairly priced now than 12 months ago,’ Mr Matthews said.

Analysts at JPMorgan suggest inflation could also provide a tonic for listed European property companies which own assets let on index-linked rents, andwhose shares are trading at substantial discounts to net asset value.

In a note ranking European property stocks on inflation-friendliness of rent contracts and average GDP growth forecast of domestic economies, JPMorgan said Babis Vovos, Corio , Hammerson, ProLogis European Properties and Europe’s largest property company, Unibail, offered good inflation protection to investors.

The negative correlation of real estate prices to inflation could also help several European markets rediscover the fair value for real estate faster.

This could help several markets avert the type of stalemate price correction seen in Britain and Spain where buyers are still stalling on purchases because they fear assets will be priced more cheaply in the future.

JPMorgan said a rise in inflation would put upward pressure on the current UK property real yield spread of 4.4 per cent and the current continental property 4.1 per cent real yield spread, pushing them closer to their ‘worst case’, and encouraging risk-averse buyers to re-enter the market. - Reuters

Monday, June 30, 2008

One North: A place to dine, drink and rock

Source : Business Times - 17 Jun 2008

The 5,000-seat entertainment centre to come up at one-north will be a world-class venue for big performances, writes CLARISSA TAN

FIVE thousand people yelling their heads off. Fists pumping the air. There will be a lot to shout about when Singapore gets another large entertainment centre in 2011, and concert and theatre fans troop in for the latest and brightest in performance acts, acoustics and lighting.

Plenty of fun: One Rochester, a wine and bistro chill-out outlet (above), and Min Jiang @ one-north, that serves Chinese cuisine. One-north is fast shaping up as one of Singapore’s most vibrant venues for fine dining, cocktail-sipping and art galleries

For starters, the 5,000-seat centre won’t be smack dab in the middle of the town, as one might expect. It will be at one-north, the area around Buona Vista that has been earmarked for massive development. Bringing the whole concert-going experience out of the city is part of the idea, say the developers.

‘Our extensive research indicates an overwhelming need for a sizeable performance venue, away from the city and well-equipped with state-of-the-art facilities,’ said Matthew Kang, director of Rock Productions, which will build, lease and operate a civic and cultural zone at one-north. ‘The proposed high-tech theatre is expected to fulfil the needs of and attract these performing art and cultural groups.’

The place will be a ‘world-class venue for staging large-scale performances, shows and events’, he added. Rock Productions hopes it will become the new centre for artistic and cultural events, as well as meetings, conventions and exhibitions in Singapore.

The centre, to be operated by Rock Productions, is part of a larger Civic Cultural and Retail Complex located at Vista Xchange within one-north. The Complex is designed to stand out with space-agey architecture by Andrew Bromberg of AEDAS Hong Kong. It will have eight levels dedicated to the civic and cultural zone, run by Rock, and four floors to retail and entertainment, managed by CapitaLand Retail.

The Complex will be served by Buona Vista MRT station, as well as the future Circle Line.

CapitaLand’s retail zone will have two floors above ground and two basement levels. Its open, spiral-stairway design will help show off its multitude of restaurants, food halls, cafes and fashion outlets.

‘The zone is expected to benefit from the natural visitor catchments from the one-north communities, surrounding housing estates, as well as tertiary institutions close by,’ said Pua Seck Guan, chief executive officer of CapitaLand Retail. It will also cater to ‘the affluent crowd’ from the nearby Bukit Timah, Holland Village and Rochester Park areas, he added.

‘The open concept, set in a lush green environment, will create a new destination for art and cultural patrons, professional, academic and residential communities in one-north and people from various parts of Singapore,’ he said.

Rustic and bohemian: Another corner of one-north that’s attracting visitors is Village Square in Wessex Estate. Among its attractions is Ristorante Pietrasanta (left), which offers hearty Tuscan dishes such as veal tripe

While the Cultural and Retail Complex will be completed in three years’ time, there’s already plenty of fun to be had at one-north. The area is fast shaping up as one of the most vibrant venues in Singapore for fine dining, cocktail-sipping and art-gallery hopping.

Wide variety

Rochester Park, for instance, has been pulling in the crowds for some years now, thanks in part to its tranquil colonial setting. The cluster of old black-and-white houses converted into food-and-beverage outlets offers a wide variety of dining experiences - from Graze, which offers contemporary dining, to Da Paolo Bistro Bar, with its Italian cuisine, to Min Jiang @ one-north, which serves Chinese fare.

‘We have grown in terms of global awareness,’ said Cheryl Lee, co-owner and director of One Rochester, a wine and bistro outlet that was the first to open in the area in December 2005. ‘We have been listed among the top 30 bars in the world in lists compiled by Forbes magazine.’

One Rochester has cleverly adapted its business to its old British residence, offering its premises as a kind of ‘house’, with different rooms and lounge areas called the Living Room, the Playroom, the Library, and so on. It also leases out its space for a variety of events, including birthday parties, weddings, wine tastings and corporate launches.

Another place aiming to offer a smorgasbord of experiences is Rochester Terrace, which describes itself as a ‘gastronomic village’. It consists of four outlets at one stretch on the elevated side of Rochester Park, each offering a different dining and entertainment concept.

The first outlet, Twelve + One, will house a gourmet bakery, cafe and cooking studio. The second, Cassis, specialises in modern French cuisine; the third, Pinchos, is a wine bar that emphasises food sharing, thus featuring tapas and finger food; and the fourth, Minx, is a Russian caviar and vodka bar.

To date, Cassis and Pinchos are open, Twelve + One will open in the middle of July, and Minx will open in time for the Singapore Grand Prix season.

Mahesh Ramnani, chief executive officer of Rochester Terrace, said the Park is a ‘great location’.

‘The layout and milieu is unique, allowing us to create a graceful and relaxed setting,’ he said. ‘It brings back classic entertainment consisting of camaraderie, indulging in the company of friends.’

Another corner of one-north that’s attracting visitors is Village Square, which is situated in Wessex Estate, another colonial enclave. Unlike the more high-end Rochester Park, the Village Square is more rustic and its various art studios and galleries such as Fringe Benefits, d’Art Studio and Geeleinan give it a bohemian feel.

There is also the legendary Colbar, which started life some 40 years ago as a British officers’ mess and still attracts nostalgic diners with its ramshackle, retro setting.

Across the road from the Colbar is a swish new cocktail bar called Klee, which opened just earlier this year. Klee’s cocktail servers are called ‘mixologists’ who pride themselves on using only premium spirits - Belvedere, Johnny Walker Black Label, Sagatiba - and fresh ingredients (bottled fruit juices are a no-no).

Occupying a happy spot between dining and art is the cosy Ristorante Pietrasanta, which offers hearty Tuscan dishes such as veal tripe and T-bond steak, and also sells the art works on its walls.

‘We have a curator who takes care of it, changing the works of art every two or three months,’ said Loris Massimini, who opened the restaurant with his wife Jennifer Tan.

Mr Massimini said business has been brisk since Pietrasanta swung open its doors in March. ‘We are always fully booked during the weekends,’ he said.

New private home sales up 55%

Source : Straits Times - 17 Jun 2008

Highest monthly figure so far this year follows softening of prices, surge in total units launched

SINGAPORE’S private residential property market has started showing some signs of life after several months in the doldrums, thanks in part to an easing of prices.

Last month, developers sold 441 new homes, excluding executive condominiums, a sharp 55 per cent jump on the figure for April - albeit a low base - of 284 home sales.

That made May the best month so far this year, according to the monthly sales figures released by the Urban Redevelopment Authority yesterday.

The improved sales came on the back of 474 new homes launched by developers - a 75 per cent surge over April - though many of the units sold were from earlier launches.

Still, consultants caution against reading too much into the latest figures. They say the market is generally still taking a breather, as many buyers prefer to stay on the sidelines.

Sales have improved from a very low base but they remained 32 per cent below the 12-month average, said Knight Frank’s director of research and consultancy, Mr Nicholas Mak.

The figures ‘do not necessarily imply that the private residential market has overcome the protracted lull sparked off by global economic woes’, he said.

‘The market is still at a plateau. Going forward, we will still see range- bound prices and volume of between 300 and 600 units a month. Sentiment is still very cautious,’ he said.

Jones Lang LaSalle’s head of research for South-east Asia, Dr Chua Yang Liang, said median prices have eased.

The chief executive of PropNex, Mr Mohamed Ismail, said that most May sales were done at a median price of below $1,000 per sq ft (psf), a stark contrast to the end of last year when the median price of almost two-thirds of all sales was over $1,000 psf.

‘Upon closer scrutiny, we can see that less than 50 per cent of the units launched were actually sold.’

Also, slightly over half the sales were from earlier launches, he said.

Still, there are a few bright spots. While some are struggling to sell, developer Macly Group sold 72 out of 102 units of Vutton in the Novena area at $1,057 psf to $1,416 psf.

In the luxury market, the 100-unit Nassim Park Residences is the star performer, logging in sales of over 50 units since its soft launch at end-May.

As these are large apartments, prices range from about $10 million to a whopping $19.5 million, sources said.

The prime Nassim Road project - being developed by UOL Group, Kheng Leong and Orix Corp - has already hit a high of $3,800 psf - far better than its low of $2,318 psf.

One buyer is Mr Wee Ee Cheong, son of UOL chairman Wee Cho Yaw, who bought a penthouse for $18.33 million.

Just over 30 per cent of the buyers are foreigners. The project has already been launched in Jakarta and Hong Kong, said UOL.

Another luxury development Scotts Square in the Orchard area registered sales of four units at a median price of $3,818 psf last month.

The relatively strong sales in central Singapore were the result of ‘latent demand spurred on by softening prices’, said Dr Chua.

‘Going forward, we reckon that developers are likely to keep prices competitive to keep the market demand stable,’ he said. As long as prices remain affordable, price-sensitive buyers will return, he added.

Savills Singapore’s director of business development and marketing, Mr Ku Swee Yong, said the level of transactions and price levels seen last month are sustainable.

‘Old money’ props rise in luxury home sales

Source : Business Times - 17 Jun 2008

Prices hold firm surprisingly; investment climate may have stabilised, analysts say

Developer sales of new homes jumped to 441 units in May from 284 units in April, with some property consultants already calling it a ’sharp rebound’.

While May sales were still relatively low compared to 2007 levels, several launches in prime and city-fringe locations did well.

Strong take-up: At UOL’s 100-unit Nassim Park Residences, 39 of 70 units launched were sold in May at a median price of $2,929 per square foot, URA data show

According to Urban Redevelopment Authority (URA) data, at UOL’s 100-unit Nassim Park Residences, 39 of 70 units launched were sold at a median price of $2,929 per square foot (psf). Sources also told BT that most of these units were sold to Singapore’s ‘old money’.

Savills Singapore director (marketing and business development) Ku Swee Yong said: ‘Based on what we have seen in the past few months, high net worth individuals (HNWIs) have not been affected by the slowdown in the global economy.’

While these buyers may be more ‘picky’ now, ‘they don’t want to wait for prices to fall just to save 5 per cent’, he said. And with banks generally offering low interest rate returns, these HNWIs are looking to ‘park’ their money in real estate instead.

A check with UOL revealed that since last week, Nassim Park Residences has been marketed overseas and more than 50 units have now been sold. UOL Group’s general manager of marketing, Dolly Lian said that as things stand, more than 30 per cent of the buyers are foreigners and the average selling price is $3,300 psf. This is higher than $3,000-$3,200 psf average selling price that some market watchers expected.

It is understood that most of the foreign buyers are from Indonesia.

Another popular development in May was Macly Group’s 102-unit Vutton, with 72 units sold at a median price of $1,225 psf. A market watcher said this is in the same price range as UOL’s Pavilion 11, also off Moulmein Road, which was sold in 2007.

Also selling well in May was Ascend Land’s 106-unit The Verve, off Balestier Road. During the month, 42 units were transacted at a median price of $985 psf. According to URA data, 84 units have been sold so far. In April, eight units were sold at a median price of $1,055, while in March the median price was $1,187 psf.

Collier’s International’s director for research and advisory Tay Huey Ying said that while the rebound in sales activity could be ‘just a monthly fluctuation, it may also be a sign that most genuine buyers have come to accept that the current price levels have reached a fair level’.

Ms Tay noted that the number of new launches increased 74 per cent in May from April. ‘This encouraging response could be just what is needed to trigger more of such launches in the coming months,’ she said.

She added, however, that developers will remain cautious with regard to pricing, ‘as buyers in today’s market tend to be price-sensitive’.

CB Richard Ellis executive director (residential) Joseph Tan said: ‘Based on the transactions in May, contrary to market expectations, there was no downward adjustment of prices.’

Luxury prices in particular ’seemed to hold firm’ as projects like Boulevard Vue, Scotts Square and Nassim Park Residences maintained $3,000-psf levels, he said. And in the eastern and western parts of Singapore, prices held at $800-$900 psf at projects including Breeze by the East, Blu Coral, The Ambrosia, The Lakeshore and Crystal Heights.

Still, not everyone was as sanguine about the state of the property market.

Knight Frank director (research and consultancy) Nicholas Mak said that while total new sales in the Core Central Region (CCR), Rest of Central Region (RCR) and Outside Central Region (OCR) rose 60.9 per cent month on month, the OCR saw a 14.6 per cent drop in sales volume month on month.

According to Mr Mak: ‘Essentially, the slight rise in sales volume can be attributed to some stability in investment sentiment. However, it should be noted that this escalation is still 32 per cent below the 12-month average figure.’

Looking at take-up rates (new sales versus new launches) in the three regions, Jones Lang LaSalle local director and head of research (South-east Asia) Chua Yang Liang said these were 87 per cent for CCR, 84 per cent for RCR and 146 per cent for OCR.

He said the strong take-up rates in CCR and RCR were a result of ‘latent demand spurred on by softening prices’, while the take-up rate in OCR was ‘the result of low supply of new launches over what appears to be a minimum demand threshold - an average of 113 units over the past six months - in the region’.

Inflation’s silver lining for local banks

Source : Business Times - 18 Jun 2008

LOCAL banks have lately not had much good news. Inflationary pressures at home threaten to undo the benefits of a still growing economy as consumers cut back on spending. In the region, political risks have risen considerably as people battle hunger caused by higher food and fuel prices.

Price pressures remain the biggest worry for Asia, where high inflation is threatening to spoil the gains achieved against poverty over the last two decades, the Asian Development Bank (ADB) said on Sunday.

Asian currencies are weakening and asset markets are being strained by worries that rising inflation could soon hurt growth, investment and corporate earnings, and destabilise governments.

Deutsche Bank Private Wealth Management said in a recent report that aggressive monetary tightening is required in Indonesia, the Philippines, India and Vietnam; and, to a more limited extent, in Thailand and Malaysia.

‘This could hurt equity prices in these peripheral markets,’ Chua Hak Bin, the Asian investment strategist at the private bank, said in the report.

He did highlight the differences of Taiwan, Singapore, China and Hong Kong as markets that have been less hit by oil prices and where monetary tightening would be more limited in future.

The three local banks - DBS Bank, United Overseas Bank (UOB) and OCBC Bank - have varying degrees of exposure to these peripheral markets. UOB and OCBC last year invested in Vietnam banks, but relative to their assets, the amount is tiny and insignificant. Their exposure to Indonesia is bigger but it is their much larger stakes in Malaysia that will provide anxious moments.

Ng Wee Siang, a BNP Paribas analyst, said Malaysia accounted for an average 23.3 per cent of OCBC’s 2004-07 pre-tax profit compared with 10.4 per cent at UOB. The variance lies in Great Eastern’s significant presence in Malaysia. Great Eastern, OCBC’s unit, is the leading insurance firm in Malaysia.

Political risk in Malaysia has risen after the government raised petrol prices 41 per cent this month. Individuals and small and medium enterprises are going to be hit as inflation bites hard.

At DBS, the earnings contribution from its South-east Asia neighbours is less than 7 per cent.

Still, as the local banks’ offshore ventures give headaches to their management, the home situation is not all gloom.

Inflation pressure in Singapore, no less worrying at 6.6 per cent - a 26-year high - is one of the factors causing long bond yields to spike.

‘Bond yields have risen across the world, not just in Asia. This is positive for banks to the extent they borrow short and lend long,’ said Credit Suisse.

Also, corporate lending is linked to capital market yields, so the banks will enjoy wider spreads on those as well, said Credit Suisse.

The three-month interbank rate here has risen recently to 1.38 per cent, but the 10-year bond had spiked to as high as 3.94 per cent last week before easing to 3.60 per cent yesterday.

Morgan Stanley, too, said that Asian yield curves have steepened recently, most notably in Indonesia, Thailand, Hong Kong and Singapore. ‘We believe banks (particularly in Hong Kong, Singapore and Indonesia) should benefit, as their deposits/funding are priced off short rates, while banks with liquid balance sheet can deploy their excess funds into higher-yielding securities, resulting in net interest margin (NIM) expansion,’ it said.

Credit Suisse estimates that the Singapore banks’ interbank and securities assets make up 28 per cent of their total assets. It did caution, though, that the value of existing portfolio holdings will drop as a result of higher bond yields.

Even more enthusiastic is Deutsche Bank’s Michael Chang.

‘Singapore banks are in a sweet spot of the cycle. NIM in Singapore seems to be rising. Loan growth is proving incredibly resilient. We may have seen the worst of non-interest income weakness on a quarter-on-quarter basis in Q1 ‘08. Our analysis in this report indicates that it is too early to be concerned about asset quality,’ said Mr Chang.

‘Singapore banks are a great defensive investment in these times of uncertainty and we reiterate our overweight rating on the sector.’

So amidst a tough business climate, there’s yet a silver lining for local banks.

Rising construction costs put squeeze on builders

Source : Business Times - 18 Jun 2008

Some manage to factor into contracts the higher risks of price fluctuations

Construction costs have risen across the board by at least about 13 per cent in Singapore in the six months to end-March. And for the residential/ condominium segment, costs have risen even faster, by as much as 16 per cent, according to a report by construction cost consultancy Rider Levett Bucknall (RLB).

The rise comes in the light of a 23 per cent increase in the Building and Construction Authority’s tender price index in Q4 2007 on a year-on-year basis, making Singapore among the most expensive in the world.

At the top end in Q1 2008, the construction cost for a luxury condominium, a five-star hotel and a 55-storey office now comes to as much as $4,000-$5,500, $5,650-$7,680 and $4,960-$5,660 psm per gross floor area (GFA) respectively, according to RLB.

Says RLB managing partner Winston Hauw: ‘High demand and competition for limited resources, the lack of tendering capacity among contractors, sub-contractors and suppliers, and volatile commodity prices have contributed significantly to building price escalation.’

RLB also found that the prices of crude oil, copper and aluminium have increased by 22-26 per cent between January and April.

According to RLB’s 2007 data, Singapore ranks after Macau and Hong Kong on its tender price relativity matrix. Against this index with Hong Kong at 100, Singapore is 97 while Macau is 102. London is 144, New York is 140 and Sydney is 105.

RLB also has its own tender price index. At end Q4 2007, the index rose 26.3 per cent year on year and it expects this to rise a further 15-18 per cent in 2008. Property prices have eased but RLB believes this will have a limited impact on local construction demand in the short term due to the large existing project commitments on hand from both the public and private sectors.

These ‘commitments’, together with rising costs, are adding strain to the industry.

United Engineers Ltd (UEL), which has operations across Asia, agrees with the growing market sentiment that Singapore could actually be the most expensive in the world in building costs. But a UEL spokesman added: ‘But it is likely to be a temporary phenomenon.’

To mitigate against rising costs, some construction companies have priced in the risk of price fluctuations at higher levels. A spokesman for a construction company said that in general, this could amount to 10-20 per cent of the construction package. Saying that this has increased by at least 10 per cent over the last three years, he added, ‘In fact, three years ago you might still have had to mark down to increase competitiveness.’

Straits Construction Co director Wong Chee Herng, however, says that these risk factors are still very ‘material specific’. And although such contractual clauses are becoming more common, Mr Wong said these are not always adopted.

Singapore Institute of Surveyors and Valuers president Lim Lan Yuan believes the pricing-in of risks may have increased by as much as 10-15 per cent since 2007 simply because ‘prices are so uncertain’.

The filter-down effect of rising costs is that more projects could be delayed. While private sector developers have stayed largely silent about the impact, it was recently reported that the completion of the Singapore Sports Hub could be pushed back to 2012. While it was only reported that the delays were due to the ‘contract’s financial and legal details’, it is probably safe to assume that construction costs were a factor too.

A spokesman for City Developments Ltd told BT: ‘There is a significant increase in demand for construction work over the past two years. However, we are fortunate to have a team of regular contractors who continue to build our projects over this difficult period.’

A spokesman for Kajima in Singapore says that delays are also not simply due to construction costs per se but also due to the ‘inability to pay’ for certain materials or services. Citing the cost of steel re-bars as an example, which have doubled in price since 2007, he says: ‘It’s an additional cost we have had to bear. Basically, if (a construction company) can’t shoulder this, it will have to default.’

Reiterating the plight of construction companies, Singapore Contractors Association (Scal) executive director Simon Lee says: ‘It is not true that Singapore construction companies are pricing in high-risk factors for all contracts. They only price in high-risk factors in the demanding and unreasonable contracts.’

He added: ‘Some contracts are very unforgiving and expect construction companies to take on all unforeseen risks and absorb all cost increases.’

But Mr Lee believes that construction costs are still competitive here because ‘labour cost is still kept at a reasonable level’.

He also says that while costs and shortages of materials can affect the progress of projects here, ‘on a case-by-case basis, the construction company and the developer will discuss the best way to resolve these issues. The parties always prefer not to nullify contracts if such issues can be amicably settled’.

URA plot facing Bedok Reservoir up for sale

Source : Business Times - 18 Jun 2008

Fairly good response seen with modest bids ranging from $200-$300 ppr

A 99-YEAR leasehold condo plot at Tampines Ave 1/10 fronting Bedok Reservoir, launched yesterday by the Urban Redevelopment Authority, is likely to draw modest bids ranging from $200 to $300 per sq ft of potential gross floor area, given tepid developer sales, property consultants say.

Cushman & Wakefield managing director Donald Han reckoned that ‘given Singaporeans’ affinity for living near water, the site should see fairly good response from developers’. ‘I would expect this site to fetch a fair number of bids, maybe about five,’ he added.

On the other side of Bedok Reservoir, in a more choice spot, Frasers Centrepoint and Far East Organization are understood to have sold about 140 units at their Waterfront Waves condo. The average price is about $800 psf for reservoir-facing units and around $750 psf for pool-facing units.

‘The Waterfront Waves project has better views all round whereas the URA site is kind of tucked in a corner,’ Mr Han said.

Assuming a new condo on the latest plot can sell for about $750 psf on average, the land bids will come in at about $280-$300 psf. ‘For developers to bid higher than this range, they must be confident of selling the project at above $750 psf or have a sense of controlling costs in a market where construction costs are spiralling upwards,’ he added.

CB Richard Ellis director (research) Leonard Tay projected an even lower land price of around $200-$230 psf per plot ratio. He reckoned a new 99-year leasehold project on the site may fetch an average price of around $700 psf, citing resale prices for nearby completed condos, and factoring in higher construction costs.

‘Current prices of units in The Tropica, Aquarius By The Park and The Clearwater are within $550 psf and $670 psf, while those at Baywater, a recently completed condominium, are around $600-$680 psf,’ Mr Tay added.

Cushman’s Mr Han reckoned the latest plot, which has a land area of 341,650 sq ft and a 2.1 plot ratio - the ratio of maximum potential gross floor area to land area - can accommodate a new condo with about 650 units averaging 1,100 sq ft.

URA’s latest plot is next to The Tropica, developed by a Hong Leong Holdings unit and completed around 2000.

The tender for the plot closes on Aug 12. It is the penultimate plot to be launched under the first-half 2008 confirmed list of Ministry of National Development’s Government Land Sales programme.

The 11th and final plot on the current confirmed list is a ‘white’ site at Ophir/Rochor roads. Slated for release by the end of this month, the 2.7 hectare plot will be sold with minimum office and hotel components stipulated. MND’s H1 2008 GLS programme also includes 26 reserve list plots. Twenty-four of these have been available for application by developers - but not one has been triggered for sale.

The two remaining reserve plots - residential sites in Sengkang West Avenue and Sembawang Road - will be made available for application by month-end. All eyes in the property market are now on the GLS programme for H2 2008, which will be announced by the end of this month.

MP Reit raises rent by 19.75% at Ngee Ann City

Source : Business Times - 17 Jun 2008

MACQUARIE Prime Real Estate Investment Trust (MP Reit) said yesterday that it has raised rent by 19.75 per cent for about 226,000 square feet of retail space in Ngee Ann City.

The Orchard Road space, of which Toshin Development is master lessee, is occupied by luxury retailers such as Louis Vuitton and Chanel, as well as brand name retailers.

MP Reit - formerly known as Macquarie MEAG Prime Reit (MMP Reit) - said that this is expected to push annualised DPU (distribution per unit) up by 7.2 per cent, based on an annualised DPU of 7.08 cents for the first quarter of 2008.

The rental increase for a period of three years starting on June 8 came after a review with Toshin, which is wholly owned by departmental store operator Takashimaya.

‘The announcement is above our estimates of 15 per cent and is largely positive for the Reit given its positive impact on earnings,’ DBS Vickers said in a research note.

The broking house raised its DPU estimates to 7.54 cents for the financial year 2008, translating to a DPU yield of about 6.7 per cent based on yesterday’s closing price of $1.13.

DBS Vickers also upped its DPU estimates for financial year 2009 to 7.81 cents.

The lease under Toshin contributed to a quarter of the Reit’s portfolio gross rent, as at end-March this year.

But the broking house lowered its target price to $1.61 from $1.63 to account for ‘a higher risk-free rate of 3.9 per cent against (its) previous estimate of 3 per cent’.

MP Reit holds a 27.23 per cent strata title interest in Ngee Ann City, comprising 256,000 sq ft in retail net lettable area and 141,000 sq ft in office net lettable space.

The 30,000 square feet of retail area that is not covered by the Toshin master lease is directly rented out and managed by the Reit.

MP Reit’s portfolio consists of 10 properties that are worth more than $2 billion.

Singapore property market approaching peak: report

Source : Business Times - 24 Jun 2008

SINGAPORE is still a safe haven for property investments but a market peak is approaching, Pacific Star says in a recent report.

The Singapore-based property group is most bullish on the retail sector here, recommending that investors add to investments in that segment. The residential and office sectors, on the other hand, are rated ‘neutral’.

In the same vein, OCBC Investment Research reiterated its ‘neutral’ view on the residential sector here in a June 12 report.

According to Pacific Star, the retail market here is tightening. Vacancy rates have fallen to levels not seen since 1993 and rents continue to climb slowly, with an increase of one per cent in Q1 this year, after a 0.6 per cent rise in Q4 2007.

Retail spending is expected to increase in line with growing tourism and rising incomes.

‘Marketing agents report that Orchard Central and Ion Orchard, two prime (upcoming) shopping centres in Orchard Road, are attracting strong rental enquiries from retailers that currently do not operate in Singapore,’ Pacific Star’s report said. ‘Rents at Ion are expected to significantly surpass current prime retail rents.’

For the office sector, the current demand-supply imbalance is expected to support rents till 2009, said Pacific Star. ‘Office demand is still firm with leasing agents lamenting the lack of available space rather than a lack of enquiries, although the number of enquiries would have fallen somewhat.’

But an above-normal supply of office space will put pressure on rents from 2010, even if growing demand from the services sector prevents any excessive correction, it said.

In the residential segment, Pacific Star expects the current stupor to continue, as there are few catalysts for the rest of 2008. It believes prices and transaction volumes will continue to soften for the rest of the year.

However, the initial catalysts for recovery are expected in 2009, when Singapore’s economic growth is expected to exceed that of 2008, according to Pacific Star.

The recovery will be fuelled by immigration and higher incomes that will make it more affordable for Singaporeans to buy mid and high-end private homes, it said.

In a report on the residential market here, OCBC sounded a warning, saying past trends point towards another price correction over the next few quarters.

On the other hand, interest in mass market properties should come back, said OCBC.

‘Given that only five projects with total of 1,139 units are expected to be launched in the outside central region between Q2 2008 and Q3 2008, this should ease concerns of oversupply and drive the take-up rate higher over the next few quarters,’ analyst Foo Sze Ming noted.

Economists in MAS survey expect S’pore GDP to grow 5.5% in 2008

Source : Channel NewsAsia - 16 Jun 2008

Private-sector economists are a little less optimistic about Singapore’s economic growth this year than they were three months ago.

According to the latest quarterly survey of 21 professional forecasters by the Monetary Authority of Singapore, they expect full year growth to come in lower at 5.5 per cent.

The new forecast is a slight downgrade from the 5.6 per cent estimate in the last survey in March. However, it is still at the high end of the government’s target of four to six per cent growth.

Song Seng Wun, Regional Economist, CIMB-GK Research, said: “For the full year, we believe that there are certain sectors and industries which may still provide the lift for overall growth. For instance, the construction sector - though faced with rising costs - it’s still probably going to do reasonably well, with double digit growth.

“And within the services sector itself, we have seen some moderation (in) activities, but we are still seeing enough activities going on to give some sort of decent growth.”

For the second quarter alone, the forecast is for growth to come in at 4.7 per cent, better than the 4.4 per cent forecast given in the previous survey.

But inflation is still pushing higher to as much as 7.5 per cent, primarily on the back of rising oil and food prices. Still, it is expected to ease in the third quarter.

David Cohen, Director, Asian Economic Forecasting, said: “We’ll get a little bit of relief in the third quarter, when the year-on-year comparison will be a little more generous because it will have already included the sales tax increase last July, so the year-on-year comparison won’t be inflated anymore.”

For the whole year, inflation is seen hitting six per cent. That’s higher than the forecast of five per cent in the previous survey three months ago.

Some economists said they see enough momentum for the Singapore economy to keep growing, especially since the US slowdown has so far not been as deep as earlier feared. - CNA/vm

Private home sales jump in May

Source : Channel NewsAsia - 16 Jun 2008

There has been a sharp pick-up in the number of private home sales in May - more than 441 homes changed hands, about 56 per cent higher than the previous month.

Despite the spike, analysts said it is premature to talk about any strong rebound in the property sector.

Colliers International’s director of research and advisory, Tay Huey Ying, said: “I wouldn’t say that this set of May numbers give a positive indication that the market is moving. But I think looking at last six months’ developer launches and sales volume, the market has reached a stable state, with launch volumes at 400-450 range, and sales volumes at 300-350 range.

“The fact that market can reach this consistently, despite prices remaining stubbornly firm, this means that the current price levels are well supported by homebuyers.”

Analysts added that even though May numbers come as a pleasant surprise, this bump upwards is also typical of the yearly property cycle.

Propnex Realty CEO Mohamed Ismail said: “The number has picked up a fair quantity compared to April. Generally speaking, the second quarter usually does better than the first quarter. Things start to pick up, and in the month of April, May, June, July, one can expect (the) numbers to grow.”

Ms Tay pointed out: “Monthly fluctuations in developer sale and launch volume (are) to be expected. But this set of May numbers… is indeed a very pleasant surprise.”

About 61 per cent of homes sold in May were under S$1,000 per square foot, suggesting that purchasers are genuine homebuyers, rather than speculators.

Analysts said a large decline in prices is unlikely going forward, although a marginal dip of one to two per cent may be possible.

“This is, to an extent, a buyer’s market. On the other hand, developers are not bringing the price down drastically. Many (are) holding prices because (the) fundamentals of economy and demand of such properties (are) still there. So I don’t expect prices to slide down,” said Mr Ismail.

Knight Frank and CB Richard Ellis also noted that prices have stayed firm, contrary to market expectations.

Although some analysts called this a buyer’s market, they also noted that sellers are taking a more measured approach.

Colliers said developers are likely to stay off launching luxury and super luxury projects until there is a clearer sign of market recovery. - CNA/ac

The bigger you are, the better you weather the storm

Source : Business Times - 24 Jun 2008

WHAT a difference a year makes.

Last year, euphoria ruled asset markets. After a moribund three years which saw Singapore property values dive by some 45 per cent, the market sprang to life in 2007, fuelled by the robust stock market and supported by a slew of new infrastructure initiatives - most notably the integrated resort (IR) development plans. Property prices surged some 28 per cent last year.

But all that is history now.

Latest data shows that prices for some property transactions in the sub-sale market have declined almost 40 per cent from last September’s levels. And although new home prices are still holding up amid only 2,100 new units launched to date, a potential glut of new supply next year could put pressure on new home prices.

Not surprisingly, property stocks have been hit.

And the turbulence facing the industry has sparked the inevitable rumours about who might be impacted most.

One company which is being closely watched is high-end property developer SC Global Developments.

With its properties priced at $4,000 per square foot per plot ratio (psf ppr) and above, speculation is rife that the company is caught between a rock and a hard place. Not surprisingly, SC Global’s stock price has dived into a seemingly inexorable decline, losing some two-thirds of its value since last October to close at $1.26 yesterday.

Weighing down sentiment on the stock is market talk that the company is struggling under a huge overhang of unsold apartment units and grappling with a huge debt burden.

Indeed, SC Global started the year with almost 1.1 million sq ft of unsold property - primarily at The Marq on Paterson, Hilltops, The Ardmore and The Beachfront Collection @ Sentosa. More critically, the company had debts of some $1.2 billion, almost double the $700 million it had a year earlier.

And its debt/equity ratio was almost three times.

Not exactly comforting numbers.

But looks can be deceiving. And SC Global is not just any developer.

The company, which has over $60 million in cash in its coffers, is a niche player catering to a high-end, globally mobile, jet-setting class which is relatively price-insensitive and discriminating.

Over the past half-year, the company has managed to sell some 200,000 sq ft of its land bank - mainly at The Marq @ Paterson and Hilltops - for over $700 million.

If SC Global exercises its option to prepay its debts from sale proceeds, the company would be left with a net debt of some $500 million against a remaining land bank of 900,000 sq ft. The resulting debt-land bank ratio of some $555 psf ppr is not exactly an insurmountable problem for a company like SC Global.

Seen from another angle, this could be a breakeven price of sorts for the company should it want to be completely debt-free (not that SC Global will ever sell any of its luxury units at such bargain basement prices, though).

In fact, the company has completely recouped its costs at The Marq with the sale of 40 per cent of the units there. So proceeds from every additional unit sold in the future will go straight to its bottom line.

But all this does not change the depressing macro picture for the property sector here, where there is still significant downside risk to valuations.

Still, as Merrill Lynch noted recently, SC Global has only two property assets that are at risk of impairment in the current downcycle: the Sentosa Beachfront Collection and The Ardmore. But the investment house noted that the average book value of these assets would have to dive by two-thirds, from $2,141 psf ppr to $824 psf ppr, ‘to be of any real threat to SC Global’s survival’ - an outcome which is highly unlikely.

Recent evidence suggests that despite the current slowdown, the luxury segment seems to have held up pretty well, with some 50 new apartments in the over $10 million price range being snapped up this year. This number could double by year-end.

Meanwhile, Fitch Ratings believes that residential receivable transactions have not been impacted by the softening of the local residential market. Fitch - which applies market value decline (MVD) assumptions of between 48 per cent and 58 per cent to the transactions depending on the property location - dismisses the possibility that the current stress scenario will develop into anything similar to that which existed during the Asian financial crisis.

The bottom line? Not all property players are equal. Some, like SC Global, have a premium land bank, cater to a niche market, and have the ability to sit on their land bank for a while. These players will ride out the current turbulence better than others.

Europe commercial property dips

Source : Straits Times - 24 Jun 2008

But price drop unlikely to be as much as in the UK, says CBRE

Commercial property prices on the European mainland are adjusting downwards in the wake of a global credit crunch but are unlikely to fall by as much as in the UK, a senior executive of CB Richard Ellis said yesterday.

‘We are seeing elements of repricing but the repricing is not as severe as in the UK because it does not need to be as severe to get back to equilibrium,’ said Mike Strong, president of CB Richard Ellis in Europe, the Middle East and Africa (EMEA), at the Reuters Global Real Estate Summit.

CB Richard Ellis, a constituent of the S&P 500 Index, is the world’s biggest property services firm and generated about a fifth of its revenues last year in the EMEA region.

Mr Strong said that British commercial property values - down an average 18 per cent since last summer, according to Investment Property Databank - had started from a higher starting point after a vintage bull run.

‘On the up, none of the (other) European markets went over the tipping point. One or two of them got close but none of them went over . . . the point of unaffordability. Say the UK has shifted 100 basis points, then mainland Europe would have shifted by between 30 and 50 basis points . . . so the wind back is less,’ Mr Strong said, referring to property yields which have risen by around a percentage point in the last year.

He said that if yields - which measure rental income in relation to capital values and move inversely to price - were currently about 5.4-5.7 per cent for prime office property in central London, the equivalent in central Paris was in the ‘mid-to-high 4 per cents’, Mr Strong said.

But he said that direct comparisons with the UK were misleading because property investors had access to cheap debt.

‘You cannot directly compare European mainland yields with London because the arbitrage between the cost of money and property yields is different,’ he said.

Five-year sterling interest rate swaps - a benchmark for property borrowing costs - are currently trading at around 6.1 per cent, compared with 5.1 per cent in the case of euro interest rate swaps, according to Reuters data.

When asked where he would put his money, Mr Strong nonetheless singled out the central London office market.

‘I think, selectively, there is value in London,’ Mr Strong said.

‘I agree with the Kuwaitis,’ he said, referring to the £400 million (S$1.07 billion) purchase last month of the Willis Building in London’s financial district by the property investment arm of the state of Kuwait. — Reuters

China may start reit next year: Industry group

Source : Business Times - 24 Jun 2008

Move could lead to the listing of US$60b worth of buildings in 5 yearsChina could kick-start a property trust market next year to give its pension funds and insurers an alternative to volatile stocks and meagre returns from government bonds, according to an industry group.

The move could lead to the listing of as much as US$60 billion worth of buildings in the form of real estate investment trusts (Reits) over the next five years.

And although it is unclear whether overseas investors would be allowed to invest in the securities, foreign property funds in China are keen to see new potential buyers for the office blocks and shopping centres they are accumulating.

Stock market watchdog China Securities Regulatory Commission (CSRC) sent a delegation to Australia in May to study property trusts, and is working with other authorities, including the central bank, to draw up legislation.

The trusts will probably be externally managed, in line with the Singapore and Hong Kong model, said Peter Mitchell, head of the Asian Public Real Estate Association, which is advising the CSRC on the matter.

‘A pilot Reit could possibly get underway next year,’ Mr Mitchell said. ‘They see pension funds and insurance companies as the main investors, as well as the man on the street,’ he said.

Property trusts, which pay most of their rent as dividends, have been long- established in the United States and Australia, but have caught on across Asia over the last five years as commercial property markets rode a cyclical upswing.

Asian Reit market capitalisation has grown to around US$80 billion, but unit prices have dropped this year - by as much as 24 per cent in Japan - as investors demand higher rental yields to compensate for rising bond yields and inflation.

However, China is pushing ahead with Reits because insurers and pension funds are desperate for the stable returns that they offer to match long-term liabilities. Reits tend to yield more than bonds, and offer capital gain if property values rise, but are typically less volatile than stocks.

Beijing is talking about allowing insurance firms to invest in property; but at the moment, they are only allowed to invest in stocks, bonds and deposits.

Flush with US$300 billion for investment, insurers could spend as much as US$30-40 billion on Chinese commercial property if they followed global industry norms of 10-15 per cent portfolio allocations to property.

If China’s Reit market grows along the lines of Japan’s, it could be worth some US$60 billion in five years time.

But the experience of RREEF China Commercial Trust, one of three Reits with Chinese assets listed in Hong Kong and Singapore, demonstrates the possible risks ahead for the market.

Last year, the trust found that tenants in its newly acquired Beijing office block - its only asset - paid less rent than expected and blamed the former landlord’s team for falsifying lease agreements and tampering with tenant replies during due diligence.

The trust saw its share price plunge by as much as 44 per cent below its initial public offering in the aftermath. It cut the valuation of its building, the twin 25- storey Beijing Gateway Plaza, and sought compensation from the former landlord.

Although Chinese authorities are keen to set up a stable and transparent Reit market, they may not introduce the same tax breaks and trustee structure common in most markets, said Andrew Weir, head of China property at consultants KPMG.

‘It might look like a Reit and smell like one but when you delve down, it might not have all the characteristics,’ Mr Weir said.

State-owned enterprises (SOEs), keen to trim their balance sheets, would be prime candidates to set up property trusts.

And developers, squeezed by a clampdown on bank loans by a government bent on cooling the housing market, would welcome them as another source of capital. — Reuters

Takashimaya hit by 20% rent hike for Ngee Ann City space

Source : Straits Times - 17 Jun 2008

TAKASHIMAYA Co is paying nearly a fifth more in rent to renew its tenancy at Ngee Ann City for the next three years.

The new rent, effective from June 8, for 226,000 sq ft of retail space in the heart of Orchard Road, is 19.75 per cent higher than what the Japanese retailer paid previously.

The revision is expected to account for a 7.2 per cent rise in annualised distribution per unit for owners of Macquarie Prime Real Estate Investment Trust (MP Reit).

As at end-March, this master lease with Takashimaya - negotiated through its subsidiary Toshin Development - made up about a quarter of MP Reit’s portfolio gross rent.

The Reit has a 27.2 per cent stake in Ngee Ann City, which is made up of 256,000 sq ft of net lettable retail space and 141,000 sq ft of net lettable office area.

Apart from Takashimaya Shopping Centre, the area under the master lease is also occupied by luxury retailers like Louis Vuitton, Chanel, Piaget and Burberry. Other brand-name retailers include Guess, Zara and Max Mara.

Mr Franklin Heng, chief executive of Macquarie Pacific Star, which manages the Reit, said the rental hike reflected Ngee Ann City’s premium location and quality.

‘Our master lease with Toshin is a valuable contributor to MP Reit’s performance, as it provides long-term income stability as well as the potential for rental upside every three years.’

Takashimaya Singapore, a unit of Takashimaya Co, has enjoyed strong sales.

Its most recent filing with the Accounting and Corporate Regulatory Authority showed a 23 per cent rise in after-tax profit to $28.7 million in 2006. Its results for last year are not yet publicly available.

MP Reit shares yesterday ended three cents lower at $1.13.

Frasers Centrepoint Trust puts in top bid of S$88m for Woodleigh site

Source : Channel NewsAsia - 24 Jun 2008

Frasers Centrepoint Trust has put in the top bid of nearly S$88 million for a residential site at Woodleigh Close. The price works out to S$270 per square foot per plot ratio.

The next highest bid came from Hoi Hup Realty at about S$83 million. The lowest bid of S$74 million was put in by Sim Lian Land.

The Urban Redevelopment Authority received six bids in total when the tender closed on Tuesday.

The site at Woodleigh Close was launched for public tender on April 29.

The 99-year leasehold parcel spans nearly 10,800 square metres, with a maximum gross floor area of some 30,200 square metres.

Property consultants CB Richard Ellis said based on the top bid of S$270 per square foot plot ratio, the estimated breakeven cost of the new project is around S$650 to S$700 per square foot.

It expects the units to be sold between S$800 and S$850 per square foot. - CNA/ac

Sports Hub may now be ready only by 2012

Source : Straits Times - 17 Jun 2008

SPORTS fans who have been excitedly awaiting the construction and completion of a new $1.87 billion playground will just have to wait a little longer.

The completion date for the Singapore Sports Hub, which will have a world-class stadium and aquatic facilities, has again been pushed back - and looks likely to be ready only by 2012.

It is not just sports fans who are crestfallen.

The two-year delay has also disappointed some national sports associations, who were hoping to bid to host world-class competitions at the new venue.

Singapore Rugby Union president Low Teo Ping said: ‘I hope there will be no further delays, or it’ll upset our plans to try to bring back the successful Rugby 7s tournament.’

When the Sports Hub project was first announced in April 2005, construction was scheduled to begin last year and to end by 2010. The date was pushed to mid-2011 the following year.

Last June, the Government added a late requirement after the three bidders had submitted their designs. It wanted a public water sports centre added.

So, it was back to the drawing board for the parties and a delay of several more months as amendments were made.

Subsequently, the Singapore Sports Hub Consortium (SSHC) won the bid in January and a final contract was expected to be inked with the Singapore Sports Council (SSC) in late March, and the National Stadium torn down soon after.

But delays, as the contract’s financial and legal details were worked out between the SSC and the consortium, gave the 35-year-old stadium a reprieve and the chance to host one final tournament - the Lions’ recent World Cup qualifiers.

Nearly all the paperwork has been settled now and the mega-project looks set to move forward.

Said a source involved in the discussions: ‘There’s finally light at the end of the tunnel, compared to a few months ago when we still looked to be deep in darkness.’

Sports Hub project director Poh Yu Khing said that the matter should be viewed in perspective.

‘As this is the world’s largest sports infrastructure public-private partnership project, it is imperative that more time is spent to ensure every aspect is carefully reviewed and taken care of.’

It is in the SSHC’s interests to conclude negotiations and ink the contract quickly.

This would mark the start of the public-private partnership (PPP) project’s 25-year lifeline, under which the SSHC would begin receiving an annual sum from the Government to build, run and maintain the Sports Hub.

Located on a 35ha site, the hub’s centrepiece is a new 55,000-seater complete with retractable roof, on the site occupied by the National Stadium.

It will also include a 6,000-capacity indoor Aquatic Centre, and a 3,000-capacity multi-purpose indoor arena.

Barring any major hiccups, the hub should still be ready by 2013 when Singapore hosts the 27th South-east Asia Games.

The hosting of the inaugural Youth Olympics in 2010 will not be affected. Various venues islandwide will stage the 26 sports for the Olympics for the young, with the opening and closing ceremonies at the Marina Bay floating platform.

Foreign developers remain upbeat about Singapore’s property sector

Source : Channel NewsAsia - 24 Jun 2008

Foreign developers are upbeat about Singapore’s property market, and despite signs of a slowdown, they see opportunities for growth.

Although the government may be releasing fewer sites for sale under the Confirmed List, one of the largest property developers in Hong Kong is viewing the latest government land sales list with great interest.

Cheung Kong Holdings is interested in the white site at Jurong East Street 13, placed for sale on the government’s land sales programme for the second half of the year.

Justin Chiu, executive director of Cheung Kong, said: “It’s a good location because the environment is good. Jurong could make itself to be one of the major business centres of Singapore.

“I’ve already asked my team in Singapore to study the location and to come up with some recommendations. Definitely we’re looking to expanding into Jurong area.”

He added that the general cooling in the local property market is a necessary price correction given the increases over the past three years.

Mr Chiu said: “If you look at (the) property market as whole in (the) past two, three years, I’d say prices went up too fast. So we expect some correction anyway in two years’ time.

“So I’d say this slight correction is actually a consolidation of (the) market, which will build a much stronger, solid base for future growth.”

Lippo Group also said it will continue to invest in Singapore, on top of its current focus on emerging markets.

“We like emerging markets. (We) put-two thirds of our money in emerging markets, one-third in developed markets like Singapore and Hong Kong,” Lippo Group’s President Stephen Riady revealed during a panel discussion at the 7th Annual Real Estate Investment World Asia 2008 conference.

At the conference, regional property bigwigs discussed the state of Asian realty, but not all were for Asian properties.

Yu Lai Boon, group chief investment officer of Dubai World, said: “Our point of view is that when you have corrections, that’s where a new golden era arises. Instead of emerging markets in Asia, my point of view is the US.”

Despite the current housing slump in the US, he said investors in the Middle East are looking seriously into the American and European market now, for the next golden era. - CNA/ac