Singapore Property Watch: 8/31/08

Friday, September 5, 2008

Retail body chief calls for lower rents as sales droop

Source : Business Times - 3 Sep 2008

Jannie Tay suggests talks with landlords to tackle issue

High rental levels are the biggest challenge faced by retailers in Singapore today and the problem is compounded by inflation, weakening global economies as well as lower than anticipated spending by overseas visitors.

Jannie Tay, president of the Singapore Retailers Association, stressed the need for a drop in retail rents, in light of weaker sales. For June, some sectors in the retail industry saw sales fall 10-20 per cent.

‘Landlords factor in what they claim will be rent increases year on year in the shop leases we sign but such increases are not representative of the real economic environment,’ Mrs Tay emphasised, adding that evidence is beginning to suggest that the retail economy is unable to sustain such hikes.

‘We must continue to meet the challenges of high operational costs, stiffer competition, a limited consumer base and more demanding and price conscious consumers.’

Mrs Tay cited organising a dialogue session with landlords as one plausible means of tackling the issue.

Senior Minister of State for Trade and Industry S Iswaran highlighted that local retailers for their part needed to adapt operations to capitalise on new opportunities such as the upcoming Formula One race, as well as to strive for the highest standards in service excellence.

He was speaking at the Singapore Retail Industry Conference 2008 yesterday, which was also co-organised by Spring Singapore and The Retail Academy of Singapore.

And, while retail sales for the first half of the year grew 8 per cent year on year, Mr Iswaran noted that the ‘global economic slowdown has begun to have an impact on Singapore’s retail scene’.

Charles Wong, founder of local shoe retailer Charles and Keith, said that while the slowdown would have some impact, the brand still had its overseas stores to fall back on.

Out of its 130 stores worldwide, only 26 are located in Singapore. However, local stores account for about 50 per cent of revenue.

A study conducted by Media Research Consultants also showed that Singaporeans were increasingly spending on shopping overseas.

Respondents highlighted customer service as one key area for improvement here, as well as a need for greater diversity of stores.

Asians want to bet more on property

Source : Business Times - 3 Sep 2008

Barclays Wealth survey says more individuals in Asian and emerging markets would like to up property allocation, reports GENEVIEVE CUA

Mass affluent and high net worth individuals in Singapore would like to invest more into property, a survey by Barclays Wealth has found. But those surveyed also indicate that in a time of increased economic volatility they would like to raise their allocations into cash, and take on more risk.

That may not be as contradictory as it sounds, says Didier von Daeniken, Barclays Wealth Asia-Pacific chief executive. ‘There might not necessarily be a long term change in people’s willingness to bear risk, although there is clearly a temporary reduction in risk-taking due to less optimistic investment prospects.’

Barclays has just published the latest in its series of ‘Wealth Insights’ publications, this time looking into behavioural finance aspects of clients’ attitudes. The survey has found that on property, more individuals in the Asian and emerging markets say they would like to invest more, compared to those in the UK, Germany and Spain.

The survey, done together with the Economic Intelligence, was conducted between March and April this year. Sentiment here on property, however, has dampened markedly this year, alongside a bleaker economic outlook. Roughly 2,300 investors were polled, with investable assets of between £500,000 and over £30 million.

On property, 57 per cent of those in China indicated they want to raise allocations, compared to 48 per cent of clients in India and 45 per cent of Singaporeans.

Greg Davies, Barclays Wealth head of behavioural finance, says a drop in property prices may not dampen desire by very much. ‘Our economic research people tend to feel that perhaps the lower availability and depth of (alternatives) is one reason for the property focus in Asia.’

On volatility, he says: ‘Data seems to suggest that Asian investors treat volatility more opportunistically, rather than cautiously.’ This may be partly because investors see the current downturn as a ‘dip’ in an upward trend for Asia and the emerging markets.

‘In these markets up to last October, the recent trend has been very strongly positive, and individuals are very strongly influenced by trends. In mature markets, data extends much further back and they see this as a cyclical dowturn rather than a dip in an uptrend.’

Another factor that may favour risk taking is that many in Asia are entrepreneurial, first or second generation wealth owners. ‘Even with the recent and fairly strong drop in Asian markets, many people are so much wealthier than they have been in recent memory…This inclines people towards a more opportunistic way of thinking.’

Age appears to play a part in the desire to allocate to cash. Younger respondents under 50 are more likely to move to cash in a market upheaval, than those over 50. Younger respondents were also more likely to trade more frequently. This is likely to reflect the fact that older investors have more experience of previous cycles and may be less nervous in the face of volatility.

In terms of monitoring their portfolios, 71 per cent of the individuals monitor their overall portfolio at least monthly, and 41 per cent monitor either weekly or daily. In the study, Mr Davies says that the frequency of monitoring a portfolio is linked to an investor’s level of composure. Those with lower levels of composure are likely to watch their investments more closely.

Those who monitor more tend to focus on relative benchmarks rather than absolute ones. Individuals’ perception of their own skills, and the extent to which they think their skills contribute to success instead of luck, also play a part. Wealthy investors who attribute success to their skills are more likely to monitor and take risks.

The study also looked into clients’ sources of advice. It found that those with assets greater than £30 million are more likely to seek advice from a business adviser. Those with between £500,000 and £1 million in assets, however, look to the media. This suggests that as individuals gain wealth, they are more likely to rely on professional advice.

In terms of gender differences, women tend to be more likely to turn to family and friends, and men seem more likely to turn to the media. This is partly borne out in the Singapore portion of the survey, which found that 47 per cent of women cite family and friends as information sources. Among men, 38 per cent cite their peer group.

In addition, more than 70 per cent of men in Singapore believe that increasing the value of their portfolios is the most important outcome in wealth creation and protection. The majority of women (65 per cent), on the other hand, see regular income as the most desirable outcome.

Globally men displayed higher levels of confidence than women on a broad range of issues, including domestic equities, tax, bonds and private equities. While the Barclays survey did not look into performance, academic studies have found that women’s portfolios tend to do better, as they are less likely to trade.

Mr Davies says Barclays is in the process of fine-tuning a risk profiler for Asian clients. ‘We believe that most assessments that banks use is not good, not behaviourally or statistically robust, and ask the wrong questions. We’d like to make a distinction between long-run and short-run financial objectives. We need to understand clients’ composure level, the degree to which they are comfortable with taking risk in the financial market context.’

Property buyers defy Hungry Ghost taboo at auction market

Source : Business Times - 3 Sep 2008

August sales of $22.75m beat June’s $11.35m, the next highest this year

Typically a taboo time for property purchases, this year’s Hungry Ghost Festival bucked the trend and worked up an appetite among buyers in the auction market.

The festival fell in August, which registered the highest sale value for auctions so far this year. According to Colliers International, 12 properties and sites out of 66 put up for auction were sold, fetching $22.75 million.

This surpassed the next-highest auction sale value of $11.35 million in June this year and the $9.56 million recorded during the Hungry Ghost Festival last year.

It ‘confirms that buyers will defy traditional taboos and will commit to a purchase so long as the price and location - among other factors - are right,’ said Colliers deputy managing director (agency and business services) and auctioneer Grace Ng.

Of the auction sale value of $22.75 million in August, 61 per cent or $13.81 million came from the sale of four residential in-fill sites at a Singapore Land Authority (SLA) auction.

If the subdued mood at the SLA auction was anything to go by however, the market has quietened from a year ago and figures indicate the same.

From January to August this year, properties sold at auctions totalled $70.79 million. Amid buoyant sentiment in the same period last year, total sale value was more than four times higher at $329.18 million.

The sluggish stock market, negative reports from the US and more conservative bank lending dragged property market activity down in the earlier part of the year, said Knight Frank executive director (auctions) Mary Sai.

Sales are taking longer to materialise in the auction market. ‘We have more willing sellers with realistic pricing, but buyers are bottom-fishing,’ Ms Sai said. In particular, residential property sales in the auction market have been slow, said DTZ senior director Shaun Poh.

‘Some potential buyers may be waiting for more re-possessed property to come along,’ he said. ‘This may happen beginning next year as new developments receive their Temporary Occupation Permits and speculators from the earlier market boom lose their ability to pay the bulk of the purchase price.’

According to Colliers, commercial and industrial properties sold at auctions during the Hungry Ghost Festival this year fetched $5.42 million, exceeding the $3.52 million from residential properties.

‘During market downturns, investors tend to shift their focus to non-residential properties,’ said Colliers’s Ms Ng. ‘Commercial and industrial properties generally offer better yields than residential properties, and the limited supply has made this asset class more resilient to unattractive market conditions.’

CapitaLand sells Capital Tower Beijing for US$352m

Source : Channel NewsAsia - 3 Sep 2008

Property developer CapitaLand is selling its Capital Tower Beijing office tower for US$352 million.

It declined to name the buyer, except to say it is a Fortune 500 company, which is looking to set up a corporate headquarters in Beijing.

CapitaLand intends to use the funds to reinvest in other opportunities in China.

It will also recognise a gain of about US$115 million.

The developer said it received unsolicited offers for the building from several prospective investors.

CapitaLand acquired Capital Tower Beijing while it was still under construction in 2005.

The property has become a well-known landmark in the Chinese capital and has attracted major international companies as tenants.

Singapore ranked top global city for meetings

Source : Business Times - 3 Sep 2008

But MICE industry faces short-term challenges: Iswaran

FOR the very first time, Singapore was ranked the world’s top international meeting city - in 2007 by the Union of International Associations (UIA).

Singapore climbed from third spot previously in the 2006 rankings to pip favourites such as Paris and Vienna, Senior Minister of State for Trade and Industry, S Iswaran, said yesterday night at the Singapore Business Events Awards, which was organised by the Singapore Tourism Board (STB).

Singapore was also ranked Asia’s top city for meetings for the 25th consecutive year and Asia’s top country for meetings.

The minister also cautioned that Singapore’s business travel and MICE industry would face some short-term challenges as a result of the uncertain global economy and financial markets.

‘Companies will be looking to trim discretionary expenditure, and such belt-tightening will see some scaling back in the corporate travel and meeting segments while attendance building at exhibitions and conferences will become more challenging in the coming months,’ he said.

However, he added that there were significant opportunities for bidding for future business events from 2010 onwards.

In 2007, business travel and MICE visitors accounted for more than $5 billion or 40 per cent of total tourism receipts.

The minister also urged the Singapore Association of Convention and Exhibition Organisers to help ‘bridge the gap between the industry and educational institutions’ to push for greater professionalism and competency in industry standards.

Other initiatives to support the growth of the industry include STB’s project to upgrade the facilities at the Singapore Expo.

World Vision International Triennial Council was among the winners at the Singapore Business Events Awards as meeting of the year while Singapore Maritime Week 2007 was selected as convention of the year.

Exhibition of the year went to CommunicAsia 2007 and professor Feng Pao Hsii of the National University of Singapore was Business Events Ambassador.

Kingsmen Exhibits was winner of the Service Partner Excellence Award for the second year running and Raffles City Convention Centre was tops for business event venue excellence. WIT - Web In Travel 2007 was voted the most innovative marketing initiative.

Singapore ranked top global city for meetings

Source : Business Times - 3 Sep 2008

But MICE industry faces short-term challenges: Iswaran

FOR the very first time, Singapore was ranked the world’s top international meeting city - in 2007 by the Union of International Associations (UIA).

Singapore was also ranked Asia’s top city for meetings for the 25th consecutive year and Asia’s top country for meetings.

The minister also cautioned that Singapore’s business travel and MICE industry would face some short-term challenges as a result of the uncertain global economy and financial markets.

However, he added that there were significant opportunities for bidding for future business events from 2010 onwards.

In 2007, business travel and MICE visitors accounted for more than $5 billion or 40 per cent of total tourism receipts.

Other initiatives to support the growth of the industry include STB’s project to upgrade the facilities at the Singapore Expo.

Exhibition of the year went to CommunicAsia 2007 and professor Feng Pao Hsii of the National University of Singapore was Business Events Ambassador.

Development of NTUC Club’s S$45m Palawan Resort at Sentosa delayed

Source : Channel NewsAsia - 2 Sep 2008

Touted as the Singapore labour movement’s first high-end resort for the working class, the S$45-million Palawan Beach Resort has been facing major delays.

The proposed 200-room resort, announced 3 years ago by then NTUC Secretary-General Lim Boon Heng, was to have been built on a 3-hectare plot of land, next to Palawan Beach at Sentosa, and to have opened its doors by March this year.

According to the Sentosa Master Plan, the site is zoned for Sports and Recreation use.

Channel NewsAsia understands that based on the concept for the site, the cost of leasing the land now has gone up considerably compared with initial estimates.

Other reasons cited for the delay include the skyrocketing costs of construction and material.

Construction costs in Singapore have gone up some 60 to 70 percent since 2005, and in the past 12 months alone, it has increased by almost 30 percent.

Based on the condominium plots at Sentosa Cove, the land value on Sentosa has risen between 3 and 3.7 times since 2005.

Nicholas Mak, director of Knight Frank, a real estate consultancy firm, said: “All the land on Sentosa are practically state land so the government will have to weigh the balance on whether to maximise the value of the state land by selling it at the highest possible price, or should they be selling some parcels of state land to certain organisations that may be developing a project that meets certain social needs, like for example the NTUC.”

He added that the S$45 million budgeted for Palawan Beach Resort may now not be enough for the plans that were laid out.

A report by the labour movement’s recreational arm said Palawan Beach Resort will boast state of the art facilities, including a luxurious spa and a mirage pool. Room rates were expected to average S$150, with discounts for union members.

However, to ensure the project is financially sustainable, the concept and business model are being reviewed. Areas being looked into include reducing the number of facilities at the resort, the room size or even the number of rooms.

Both NTUC Club and landlord Sentosa Development Corporation declined to be interviewed, although NTUC Club confirmed that talks between both parties are ongoing.

In a statement to Channel NewsAsia, it said the resort will serve its social mission of providing affordable social and recreational facilities, in a sustainable manner.

General-secretary of the Metal Industry Workers Union, Tan Chai Kun, said he is looking forward to the new resort and their members, especially those in the lower-income group, enjoying higher-end recreational facilities.

NTUC Club hopes to put the final touches on the project’s concept by the end of the year and obtain the approval from authorities.

NTUC Club is the biggest local resort operator, managing three budget family-themed resorts, with two resorts located at Pasir Ris and one located at Sentosa.

Serangoon Gardens’ residents against plan to build workers’ dorm

Source : Channel NewsAsia - 2 Sep 2008

Residents of Serangoon Gardens are upset over news that a workers’ dormitory may be built at Burghley Drive where Serangoon Garden Technical School used to be located.

Residents’ concerns include noise pollution, traffic congestion and the safety of residents – many of whom are retirees.

Over 500 people have signed a petition against the construction, with the intention of presenting it to their MPs at a community dialogue session on Wednesday.

The government announced in February that it would release 11 new dormitory sites to house over 65,000 foreign workers. These dorms are scheduled to be completed in stages by 2010.

But the Ministry of National Development (MND) said temporary facilities have to be built in the meantime, which is why it is reviewing all available vacant state properties to see if they can be converted into dorms.

The Serangoon Gardens site, which has been vacant since 2003, is one of the many properties that are being assessed. MND said it would take into account the other possible uses for the property and residents’ feedback.

Britain axes property sales tax to boost housing market

Source : Business Times - 2 Sep 2008

The British government moved on Tuesday to bolster the stricken housing market, announcing that homes worth up to 175,000 pounds (US$311,000) would be exempt from property sales tax for the next year.

The move will increase the threshold at which the tax, known in Britain as stamp duty, is paid from 125,000 pounds from Wednesday, which is expected to save buyers up to 1,750 pounds.

The announcement came as the Organisation for Economic Cooperation and Development (OECD) said Britain’s economy, which stalled in the second quarter, would be in recession in the second half of 2008.

Many Britons are struggling to borrow money from banks for mortgages because of the credit squeeze that followed the US sub-prime home loans crisis while Britain is experiencing a prolonged property slump alongside high inflation and interest rates.

Other steps to help first-time buyers and support homeowners at risk of repossession were unveiled on Tuesday and Prime Minister Gordon Brown said they would help Britain ‘come through what is a difficult situation and show that our economy is resilient.

‘Homeowners need to know that we will do everything we can to keep the housing market moving forward,’ he said.

But the opposition Conservative Party quickly condemned the announcement as an attempt to bolster Mr Brown’s plummeting support in the polls.

‘This is a short-term survival plan for the prime minister, not a long-term recovery plan for the economy,’ Conservative finance spokesman George Osborne said.

The tax move is expected to cost about 600 million pounds but Mr Brown’s Downing Street office said the Treasury would not identify where the money would come from until its economic forecasts, known as the pre-Budget report, are unveiled later this year.

‘They’ve had months to prepare and on the day it’s launched, they can’t even tell us how much it costs, or where the money’s coming from,’ Mr Osborne said.

He said a more substantial package was needed, particularly faced with the OECD’s estimation that Britain’s economy would contract by 0.3 per cent in the third quarter and 0.4 per cent in the fourth.

A recession is defined as two consecutive quarters of negative growth.

House prices in Britain fell 1.7 per cent in July on June levels, dropping for the fourth month running, and were down 8.8 per cent from a year earlier, home loan provider Halifax said.

The average British home cost 177,231 pounds in July, Halifax said. The Treasury estimates the tax break will cover half of all house sales in the next year.

Stamp duty is currently charged at a rate of 1 per cent on property worth between 125,000 and 250,000 pounds, 3 per cent between 250,000 and 500,000 pounds, and 4 per cent above half a million. It netted the government 13.4 billion pounds last year.

The government has been accused of talking the economy down after finance minister Alistair Darling said in an interview published on Saturday that conditions faced by Britain and the rest of the world ‘are arguably the worst they’ve been in 60 years’.

The pound struck a record low against the euro on Tuesday for the second day in a row after the bleak economic assessment. — AFP

Construction sector growth expected to slow over next 3 to 4 quarters

Source : Channel NewsAsia - 2 Sep 2008

The construction sector has been a pillar of Singapore’s economy over the past two years, supporting it with on-year growth of close to 20 per cent every quarter.

But the sector’s pace of growth has slowed from the 24 per cent rate seen in the fourth quarter of last year to below the 20 per cent mark for the first three months of 2008.

Analysts said they expect the sector to continue slowing over the next three to four quarters, once the full impact of the global economic slowdown is felt.

The sector has been doing well despite general softening in the economy. But analysts said that is because the sector lags behind the overall economy.

Vishnu Varathan, regional economist, Forecast, said: “We have seen the construction sector holding up very well, even though growth in the other sectors slowed perceptibly in the second quarter. But this is actually not based on underlying demand in construction not tapering off.”

He noted that property prices are starting to cool, putting pressure on revenues. Furthermore, construction costs have gone up by about 50 per cent or more in the past two years, keeping developers on the sidelines.

Chia Ngiang Hong, group general manager, City Developments, said: “For new projects that we are planning to launch in future, we will continue to monitor the construction industry closely and make sure that we award them at the right opportune time.”

But City Developments also thinks that a cooling is in order. Mr Chia said: “I’m quite hopeful that by the second half of next year, when some of the very major projects are completed, the pace of increase should moderate. And that is when we see construction costs coming to (a) more realistic level.”

The construction sector continues to slow this year, with on-year growth at 17.4 per cent in the second quarter, down from 22.4 per cent a year ago.

Auction property sales hit record high of S$22.7m in August

Source : Channel NewsAsia - 2 Sep 2008

Auction sales of properties in Singapore hit a record high in August at S$22.7 million, 37 per cent higher compared to a year ago.

The increase was mainly due to the sale of four residential infill land sites by the Singapore Land Authority (SLA), despite taboos associated with property purchase during the Hungry Ghost month.

The report by Collier’s International said this confirms that investors are ready to buy property as long as the price and location are right.

Last month, buyers focused on commercial and industrial properties as they are seen to offer better yields than residential units.

A total of S$5.4 million worth of commercial and industrial properties were sold under the hammer versus S$3.5 million of residential properties.

A total of 66 properties were put up for auction sale last month, and 12 of them were successfully sold.

On a monthly basis, auction sales in August posted the highest value so far this year. The next highest sales value was in June at S$11.35 million.

‘Not in our backyard’

Source : Today - 3 Sep 2008

Residents are used to the food-lovers who invade the area’s eateries on weekends. But of late, there’s been a buzz of consternation, and a petition, going around Serangoon Gardens - following rumours of intrusion of another kind.

The talk, which surfaced last week, is about how an empty school compound in the middle of the private estate could be turned into a temporary dormitory to house 1,500 foreign workers.

This has sparked concerns that residents want to raise at a dialogue session tonight with their Member of Parliament, Mrs Lim Hwee Hua. The session is part of a planned series, and scheduled to also attend is Foreign Minister George Yeo, who leads the team for Aljunied GRC.

Most that Today spoke to had the quiet and the security of the neighbourhood on their minds. Businessman Yeo Siang Yow, 59, whose front gate is just 15m away from the gate of the former Serangoon Gardens Technical School, predicted: “If it turns into a dormitory, the Singapore Land Authority (SLA) and police will receive complaint letters every day. The residents here will be watching the workers for any signs of unruly behaviour.”

Already, some 600 residents have signed a petition urging the SLA, which manages the plot of land, to drop the idea.

Mr Yeo’s next-door neighbour, an elderly woman who declined to be named, said she understood that foreign workers were “important to Singapore” and needed a place to stay - but not in the midst of their residential estate.

“Can you imagine, in the morning when you want to go to work, all the trucks will be lined up here along this road? “It would be inconvenient for the workers, too, because their movements and hours will be even more restricted if they move here,” she added, referring to a likely curfew.

Mrs Lim said that since the school building was vacated in 2003, residents had been asking what would become of it. “I think they had been expecting a condominium. Maybe this idea was completely different from what they had in mind.”

All vacant state buildings will be assessed

The MP told TODAY the idea to turn the premises into a workers’ hostel was still being assessed by the Ministry for National Development (MND).

“That will include assessment of traffic, security, safety and a whole list of issues to see whether the site can support a dormitory,” said Mrs Lim, who is also Senior Minister of State (Transport and Finance).

She has heard from residents and - while she points to the chronic national shortage of dormitories - she feels some of their concerns, such as traffic congestion, are “fair and valid” and “would be quite happy to pass on to MND”.

In response to queries, the MND said it was at the preliminary stage of assessing “all available vacant state buildings”, and has not decided on which ones are suited for use as short-term dormitories.

Such “transitional dormitories” will meet demand over the next one to two years; while the Government has recently released 11 new dormitory sites, to meet the influx of foreign workers across all sectors, these facilities will take time to build.

Added the MND: “Given that Singapore is becoming more built-up, it will be an increasing challenge to find suitable sites for foreign workers.

“Residents may find more foreign workers living in their midst, or dormitory sites located near to their premises for a short period of time. We seek their understanding and support.”

The issue has triggered a debate online, with netizens split in their views.

One wrote that a foreign workers’ hostel parked in a private estate could drive property values down, while another remarked: “No matter where they are housed, there will be unhappy people”.

This dilemma of housing foreign workers has come up repeatedly in recent times, with an airing in Parliament as recently as February. One of the most common gripes from residents: Some foreign workers cause social problems by loitering in their estates and get rowdy after drinking alcohol.

At Serangoon Gardens, Mr Lee Mun Yuan, coffeeshop owner said the influx of foreign workers would likely help boost his business. “But I don’t think the people here will be too happy,” he said. “Imagine, you have the rich and foreign workers living in the same place.”

Foreign workers? Not in my backyard

Source : Straits Times - 3 Sep 2008

Residents of Serangoon Gardens sign petition against converting an unused school in private estate into foreign workers’ quarters

Foreign workers? Not in our neighbourhood.

More than 600 residents of Serangoon Gardens, a private estate in the north-east, have signed a petition against converting an unused school there into a dormitory for foreign workers.

The Ministry of National Development (MND) confirmed that it is assessing whether Serangoon Gardens Technical School can be converted into quarters for foreign workers, although no decision has been made yet.

The school in Burghley Drive has been vacant for about four years and can possibly house 1,000 workers.

When residents of the estate, which has more than 2,000 homes, heard about the news earlier this week, a petition was started by the residents’ committee asking the authorities to reconsider.

The one-page petition said the move would ‘create security and social problems and spoil the ambience of the estate’.

‘I signed the petition immediately and got 80 of my friends to sign it too,’ said retired teacher S. Raja, 69.

MP for Aljunied GRC Lim Hwee Hua said it is ‘good that residents are speaking out with an interest’ on the issue and encouraged them to give their feedback, which she would convey to MND.

The residents will be meeting Mrs Lim and fellow MP George Yeo, who is also the Foreign Minister, today as part of a dialogue series and will raise the issue.

Especially concerned are the residents who live opposite the former school.

They said that security was their main worry. Many were afraid that their maids might befriend the foreign workers and invite them into their houses while they are out.

Already, with a few construction sites and a small number of workers in the area, there have been problems, they said.

Housewife S.K. Lim, 70, said her sister, who also lives in the neighbourhood, had forgotten to lock her car one evening. A foreign worker was caught trying to steal her CashCard and other items in the car.

Sales executive Josephine Ng, 46, said she has also seen her neighbour’s maid letting a man out of the house when her neighbours were on holiday.

‘My husband tried to confront the stranger but he ran away,’ she said.

Residents were also concerned about loitering, alcoholism and congestion problems along Burghley Drive.

Mrs Raja noted how residents in Little India complained about workers sitting in the void decks drinking and making noise.

‘I hope it will not happen in Serangoon Gardens,’ she said.

Another retired teacher, Mrs L. Raja, 69, was concerned about taking the bus on Sundays.

‘Sometimes, I take the bus to the food centre. With 1,000 workers living here, there would be so many of us using the buses,’ she said.

Other residents expected weekday congestion to increase. They pointed out how the narrow roads in the estate are currently packed with parents sending their children to the CHIJ Our Lady of Good Counsel in Burghley Drive.

‘During peak hours, the jam is bad already. Can you imagine if there are lorries picking up and dropping off workers?’ said Ms Ng.

MND told The Straits Times that while 11 new dormitory sites providing 65,000 additional bed spaces for foreign workers had been released, these will take time to build, so existing buildings will be converted into temporary quarters. The school is one such building being considered.

The ministry is at a preliminary stage of assessing all available properties, and will consider factors like the site, competing uses for the property and residents’ feedback.

It said that it sought residents’ understanding if they find more foreign workers living in their midst and added that employers and dormitory operators also had to educate the foreigners on the Singapore way of life.

Said Mrs L. Raja: ‘It is not that we are not grateful to foreign workers. It is just that we do not want any problems.’

Cut shop rents, pleads retail chief

Source : Straits Times - 3 Sep 2008

Retailers are struggling as rent has skyrocketed despite downturn, says SRA president

High rental levels at shops must come down to allow retailers to survive, Singapore Retail Association (SRA) president Jannie Tay warned yesterday.

In a heart-felt plea, Dr Tay said the biggest challenge for local retailers today is the struggle to pay rent, which has ’skyrocketed despite the slower economy’.

She was speaking to about 100 retail heads at the Singapore Retail Industry Conference, which was jointly organised by SRA and enterprise agency Spring Singapore.

Dr Tay, who is also the vice-chairman of watch retail chain The Hour Glass, said: ‘Traders are worried that many of us could have over-extended ourselves by signing up pricey leases (in the past two years that) we were told by the landlord was the market rate.’

But some of those rental levels appear to now be 30 to 50 per cent above the prevailing market rate, she added, and ‘evidence is beginning to suggest that the retail economy cannot sustain such hikes’.

Spring Singapore’s director of retail, furniture, textile and apparel, Mrs Kee Ai Nah, said the rises are ‘just a function of supply and demand’.

But Dr Tay believes the increase is the result of a chain of costs being passed upwards - starting with rising land prices.

‘Basically, the Government keeps on increasing tender prices for land,’ she told The Straits Times.

A second factor was the influx of big, brassy brand names from overseas. These companies are paying top dollar for the most premium of prime spaces, she said.

They can afford these rents as they have ‘deep pockets and brand names, better margins and profit’ - but this simply drives up the prevailing rate for others.

Dr Tay also said sales in stores are now down 20 to 30 per cent, so rental levels ‘have to come down 20 to 30 per cent’ too. She was blunt when asked how many retailers have expressed anxiety over the issue to the SRA, saying: ‘Everyone.’

Dr Tay also cited Department of Statistics’ figures for June, which showed that overall retail sales for the month, excluding motor vehicles, fell 6.4 per cent year on year.

But would an easing of rental levels necessarily save the day for all struggling retailers?

Not everyone in the industry agrees that expensive spaces alone would spell a shop’s downfall in these tough times.

A director of a local fashion company, who declined to be named, said: ‘Of course, today, anything that lowers the cost of retail operations would help. But if we see that other outlets are performing reasonably well, we can’t go to the landlord (and demand action).’

He added: ‘The acid test is the next six months. If things are really bad by the end of this year, a lot of retailers will be scrambling. It’s going to be dicey.’

Dr Lynda Wee, a retail expert who has a doctorate in retail marketing, even questioned whether rent was the real reason behind falling profits.

She said: ‘I think we’re losing not just because of cost reasons. We’re losing because of competitiveness.’

The Government is urging all parties to talk these concerns through.

Senior Minister of State for Trade and Industry S. Iswaran, guest of honour at the conference, advised retailers, developers and landlords to all have ‘ongoing dialogue’ to sustain business performance and competitiveness.

This includes working to extend stores’ operating hours during the Formula One Grand Prix later this month, as visitors will want to shop and dine after the night race. This way, retailers can thrive ‘even as (they) face challenges from a less sanguine global economic outlook’.

Self-regulation in estate agency industry

Source : Straits Times - 2 Sep 2008

I REFER to the letters (Aug 22), ‘Test ensures housing agents are more qualified’ by Mr David Ong and ‘Two-tier test system raises standards of estate agency industry’ by the Singapore Association of Estate Agents (SAEA).

The Common Examination for House Agents (CEHA) was introduced in 1996 to raise professional standards. In 2005, an accreditation scheme was launched by the Singapore Institute of Surveyors and Valuers and the Institute of Estate Agents (IEA), with support from the Ministry of Finance and Inland Revenue Authority of Singapore, with HDB providing the HDB Resalenet for accredited agents and agencies.

Under the scheme, a target was set for Jan 1 next year, for all estate agencies in the scheme to achieve full accreditation for all their members. However, before the realisation of this target, SAEA short-cut the process by introducing a scaled-down Common Examination for Salespersons (CES). Such an exam, dubbed ‘tikam-tikam’ by the person who introduced it, comprises 100 multiple-choice questions and requires 50 per cent to pass. It is a watered-down standard for estate agents to be accredited.

IEA has made representations to HDB, seeking clarification. While we await HDB’s response, many agents have been misled into believing CES is recognised by the Government and passing it will give agents the same standing as those who have passed CEHA - that is, be accredited to use the HDB Resalenet.

Can the professional standard of estate agents be raised when those entrusted with the duty compromise their own standards by taking short-cuts? Can those who take a ‘tikam-tikam’ course be on the same level as those who pass CEHA to get accredited?

To raise standards, we need to coordinate and synergise the efforts put in by experts in the relevant fields, including real estate sales, agency owners and managers, professional real estate trainers and various government departments.

It is an opportune time for the authorities to mandate a body to oversee a self-regulating process. The Central Registration Scheme introduced in 2006 has the support of more than 360 licensed agencies with the names of over 22,000 estate agents in the register. IEA has in place industry entrance criteria, comprehensive training, development courses and continuous assessment procedures to ensure all agents remain competent amid rapid societal changes and market dynamism.

IEA is ready to take the lead if the mandate is given by the authorities to move forward with industry self-regulation.

Jeff Foo
President, IEA, 6th Council

Planners of F&B outlets in residential estates can learn from Joo Chiat experience

Source : Straits Times - 2 Sep 2008

I REFER to the call by the Urban Redevelopment Authority (URA) last Saturday for views on F&B outlets located near residential estates (’Music and F&B close to home?’).

Visions of ‘violinists serenading diners nightly and rock bands playing to bar flies’ seem idealistic and romanticised at best, in Singapore’s context. If and when the URA does decide to tweak its planning guidelines, I hope it learns from the experiences and ongoing feedback from residents in Joo Chiat.

In a best-case scenario, the authorities may create a good buzz as in Holland Village and Siglap. If the areas are left unchecked and unenforced however, residents will have to deal with what Joo Chiat residents experience every evening in the past seven to eight years - an influx of prostitutes and their clients; ‘coffee shops’ that sell nothing but alcohol and peanuts; litter and cigarette butts outside the bars; vomit and urine in the back alleys and on the pavements; and residents fearful for the safety of their children and female family members. This is in addition to tables and chairs crowding the narrow five-foot ways illegally, fire-safety violations, noisy karaoke sessions and leftover food wiped off dining tables and into the street.

Joo Chiat residents have worked closely with grassroots leaders and the authorities to keep the sleaze and litter to certain parts of the neighbourhood over the years. Unfortunately, the damage to the reputation of Joo Chiat has yet to heal, and new businesses continue to find loopholes in the authorities’ moratorium on bars and massage parlours in the neighbourhood by setting up ‘beer gardens’ and ‘cafes’ which are nothing more than fronts for Vietnamese and Filipino prostitutes to ply their trade. Art galleries and lifestyle boutiques are taking over some of the bars and massage parlours. But will they last with the continuing proliferation of sleaze? Will families and residents from all over the island converge here to patronise more legitimate businesses when sex-trade workers solicit outside the bars?

Considering the rich Peranakan and Malay cultural heritage that makes up the tapestry of Joo Chiat, the neighbourhood could have been as successful and iconic as Jonker Street in Malacca or GeorgeTown in Penang. Unfortunately, mismanagement mean residents have to live with the arduous task of repairing the damage.

I hope that, in considering the relaxation of rules on F&B outlets in other residential estates, the URA can ensure sleaze does not permeate the areas it has earmarked, with the ‘buzz’ it is trying to create.

Lee Chin Chye

Citizens oppose new KL city plan

Source : Straits Times - 2 Sep 2008

A government plan to turn Kuala Lumpur into a world class city has run into controversy as critics claimed it would lead to fewer green lungs and more congestion.

Under the comprehensive Draft Kuala Lumpur City Plan 2020, the government wants to transform parts of old KL, like the century-old Malay enclave of Kampung Baru, into a tourist district with art galleries and boutique hotels.

Lake Gardens - one of the city’s oldest and few remaining green lungs - will be filled with tall buildings.

KL citizens, empowered by the higher number of opposition MPs in Parliament, have stood up against the plan.

More than 26 residents’ associations have formed a coalition against the plan and urged the government to withdraw all proposals. The deadline for objections and feedback ended last weekend.

Opposition MP Wee Choo Kiong said: ‘This is a plan for a concrete jungle as there is very little green space involved. It is supposed to be more people friendly but this plan is more ‘housing-developer friendly’ instead.’

In cities such as London and Singapore, local governments jealously guard green lungs, he told The Straits Times.

Many residents’ associations and non-governmental organisations plan to challenge in court the legality of the plan, which they say go against existing development codes.

The plan falls short of its target to boost the ratio of public parks and open space to population from the current 7sqm per person to 11, said critics like the Malaysian Nature Society.

KL has 1,543ha of public parks. Kuala Lumpur City Hall, in unveiling the plan in mid-May, said it does not compromise the environment.

Not everyone is opposed. Property consultant Ho Chin Soon said: ‘Those who are making noises are selfish. If you don’t allow them to increase density in KL, you have to go to the outskirts and cut down the forests to build more houses.’

He said high-rise buildings should be built to save land for more public spaces. Traffic problems could be resolved by having underground trains and an efficient public transportation system like Singapore and London, he added.

But critics say the plan to surge KL’s population by 600,000 people to 2.2 million in 12 years would only worsen traffic snarls, raise pollution levels and cause more flooding.

In the upmarket Federal Hill district, close to Lake Gardens, residents are disturbed to find that a stretch of it has been changed from institutional land to commercial land. This means land owned by the government and used for parks can be converted to shops and restaurants.

Mr Lim Lip Eng, lawmaker for an opposition party said on his blog: ‘Generally, I have one solution. Scrap it. Redraft the plan with the inclusion of a wider range of public opinion.’

Residents’ objections to the proposal

THE Draft Kuala Lumpur City Plan 2020 will guide the city’s development for the next 12 years. Here are the highlights and criticisms:

~ The plan envisages an increase in KL’s population from 1.6 million to 2.2 million by 2020 and expects population density to go up from 6,840 people per sq km to 9,577 per sq km.

Objection: Critics say the city is already facing a daily traffic gridlock because of high population density.

~ Tall buildings to be built in one of the city’s oldest green lungs, the Lake Gardens.

Objection: Residents want it to be preserved.

~ Some areas will be re-zoned as commercial centres, bringing them closer to entertainment outlets, theme parks and hotels.

Objection: Residents do not want institutional land to be redesignated for commerical purposes.

~ The 100-year-old Malay enclave of Kampung Baru is to be developed into a modern district, with tourist spots, art galleries and boutique hotels.

Objection: Residents have launched a petition to reject the plan and want the area to stay as it is.

Hindu groups say hundreds of temples, including several prominent ones, and two existing crematoriums are not included in the draft plan.

HAZLIN HASSAN

Now, deferred payments with a twist

Source : Business Times - 2 Sep 2008

Credit-worthy buyers offered loans with no interest and instalment payment until TOP

The deferred payment scheme may have been banned, but something strikingly similar is doing the rounds to help developers sell their properties.

The interest absorption scheme (IAS) and the zero instalment scheme allow the buyer to make a 20 per cent downpayment - and then pay nothing until the temporary occupation permit, which may still be up to three years down the road.

Maybank, OCBC Bank and United Overseas Bank (UOB) are currently offering the scheme. Standard Chartered Bank is launching it soon, according to Dennis Khoo, its general manager of lending. Interestingly, DBS Bank has decided to stop offering such schemes.

The deferred payment scheme was banned by the government last October to dampen excessive speculation. It was offered by buyers and you did not even have to qualify as a borrower to buy property worth millions of dollars - as long as you had funds for the downpayment.

Under the new schemes, the buyers have to sign up to a bank loan for the property. ‘The buyer has to be credit-worthy,’ said Nicholas Mak, Knight Frank’s director of research and consultancy. Once the creditworthiness is established, the buyer pays nothing more till TOP. During that period, it is the developer that pays interest to the bank, under the IAS.

Some small projects such as Chepstow Ville and Lynwood Grove are practically sold out after resorting to the IAS. However, the developer of another project who asked not to be named said the IAS has not helped his sales and he thinks it is the pricing that could be critical.

DBS Bank used to offer a zero instalment home loan scheme until TOP to buyers. The results were not always clear-cut. At the preview period of the 724-unit Livia, 160 units were sold in early July when DBS Bank offered a zero instalment home loan scheme. Subsequently, sales at the Livia slowed down and by end-July, it had sold 301 units, according to the latest data from the URA.

DBS said that the bank no longer offers the scheme. ‘We had targeted the HDB upgraders on a project-by-project basis,’ said Koh Kar Siong, DBS’ head of deposits and secured loans. Some observers say such schemes could come back to bite the banks if the value of the properties fall. Last month, Citi analyst Wendy Koh said she expects a 20-30 per cent price correction for high-end properties from their recent peak, and reckons the mid-tier is likely to decline 10-20 per cent.

Said Helen Neo, Maybank Singapore head of consumer banking: ‘Our credit assessment policy has always been to ensure that the buyer has the capacity to repay. It boils down to repayment capability.’

Kevin Lam, UOB head of loans, said the assessment of the customer is key. ‘If the profile of the customer is good for a regular loan, he is good enough for this.’ He also noted that the risks to the developer is lower with the IAS because the bank will disburse the loan to the developer according to the progressive payment schedule during construction. ‘Unlike the deferred payment scheme, the developer gets no money from the buyers during the construction period.’

Gregory Chan, OCBC Bank head of secured lending, noted: ‘Under the interest absorption scheme, the bank will not be exposed to additional risk as loan applicants are assessed based on their ability to repay both the principal and the subsequent instalments.’

Govt waives building premium on lease top-ups

Source : Business Times - 2 Sep 2008

Little impact seen as only a handful of applicants incur cost in past year

The government will waive the building premium when a lease extension is granted with immediate effect. But as tantalising as this may sound, the impact is likely to be minimal.

Fewer than 30 developments have sought lease extensions in the past year, says the Ministry of Law. And only a ‘handful’ have incurred the building premium.

The building premium is based on the value the Chief Valuer puts on a building sitting on the land with an expiring lease and is payable if a lease extension is sought.

It is separate from the land premium, which is based on the value the Chief Valuer puts on the land the building sits on.

There is no change to the land premium.

The building premium does not apply if a building is demolished. Only the land premium - as in most collective sale deals - applies.

In a statement released yesterday, the government said it decided on the building premium waiver because ‘this will encourage lessees to continue to invest in the upkeep and improvement of the property’.

DTZ senior research director Chua Chor Hoon said: ‘This is good news for lessees. It seems illogical that one has to pay a building premium for a building one built on the site. It’s like a double charge. This will reduce the cost of extending a lease.’

But the building premium is thought to be only a fraction of the land premium - more often referred to as the differential premium.

Knight Frank director (research and consultancy) Nicholas Mak said: ‘The building premium makes up a small part of the taxes compared with development charges or the differential premium.’

And according to him: ‘If the amount waived is too small, it may not encourage building owners to upkeep or improve their property.’

As such, Mr Mak believes the properties most likely to be affected are industrial units on short leases and leasehold conservation properties because they cannot be torn down.

The waiver was actually introduced in 1997, when it only applied to the extension of short-term industrial and institutional leases. It will now apply to the extension of leases on all types of property.

But the impact on other types of property is expected to be limited, says Cushman and Wakefield managing director Donald Han: ‘I don’t think there will be a lot of residential properties affected by this, except for those on short-term lease tenure like at Riffle Range, which has some 30-years left of its lease remaining.’

The extension of a lease is also not a given, he noted: ‘I think government may consider extending leases on short term basis, but this must be in line with socio-economic and overall planning considerations.’

Developers starting to preview projects

Source : Straits Times - 2 Sep 2008

With Hungry Ghost month over, condo projects being launched to test market

NOW that Hungry Ghost month is over, property developers are starting to line up project previews and launches to test the market.

Keppel Land released a new high-rise tower block at its Reflections at Keppel Bay on the weekend, putting up a third of the block’s 83 units for sale in Singapore and Hong Kong.

An artist’s impression of Reflections at Keppel Bay. Units in a new tower block there were released for sale over the weekend. — PHOTO: KEPPEL CORP

About 10 apartments have been sold since Saturday, at an average of just over $2,000 per sq ft (psf). Prices range from $1,500 to $2,300 psf, depending on the floor and the view.

A two-bedroom apartment on a low floor would cost about $1.5 million, according to property agents. Reflections has a total of 1,129 units in six high-rise tower blocks and 11 low-rise villa blocks.

Also on the weekend, Far East Organization invited interested buyers to its showflat for Miro in Lincoln Road, which sources say will be launched in about two weeks.

The freehold 85-unit development is priced at around $1,700 per sq ft (psf) on average, they said. Prices start at about $1.6 million for a one-bedroom studio loft of 990 sq ft.

Also available in the 32-storey tower are two-bedroom units of 1,302 sq ft and three-bedroom lofts at more than 1,600 sq ft.

A boutique project at nearby Moulmein Road starts previews this weekend with plans for a launch next Monday.

Mulberry Tree has 32 freehold units and a ‘retro-style’ facade, said an agent marketing the development. Indicative prices have been set at $1,300 to $1,500 psf. They start at less than $700,000 for the smallest apartment.

Agents said the two-bedroom flats, of about 710 sq ft each, would cost around $900,000. The project is forecast to be completed at the end of 2011.

Developer Hong Fok is expected to preview its Concourse Skyline in Beach Road later this month. Prices are likely to range from $1,600 to $2,000 psf, with two-bedroom units priced upwards of $1.8 million, The Straits Times understands.

The 360-unit development is slated to be completed in 2013.

Tat Aik Group has also started to preview its Nathan Residences, which will be developed on the former Nathan Court in Nathan Road.

Sales are expected to start this week, with prices in the region of $2,000 psf, said marketing agents. One-bedroom units will start at $1.2 million and two-bedroom apartments are likely to go for $1.6 million.

UK’s Brown to unveil housing market support plan

Source : Business Times - 2 Sep 2008

British Prime Minister Gordon Brown will unveil plans on Tuesday to boost the country’s slumping housing market as he launches a fight back after nearly a year trailing in the opinion polls.

With consumer confidence crumbling in the face of the credit crunch and rocketing energy bills, his ruling Labour Party is some 20 points behind the opposition Conservatives and on that showing would easily lose the next general election.

The government said the housing package would help vulnerable families struggling with mortgage payments avoid losing their homes and bring forward funding for new social housing from existing budgets.

The government and property developers also plan to offer five-year interest-free loans for some first-time buyers - both to help people move into affordable homes and support the house building industry.

A government source said those measures would cost about 1 billion pounds (US$1.8 billion). Full details will be announced by Mr Brown and Communities Secretary Hazel Blears on Tuesday morning.

Mr Brown’s planned relaunch comes after a summer which kicked off with speculation he could soon be ousted as Labour leader and ended with data showing the British economy failed to expand in the second quarter of 2008.

That was the first quarter the economy has not grown since a recession in the early 1990s, ending Mr Brown’s ability to boast of uninterrupted growth since Labour took office in 1997.

Data on Monday showed that the number of new home loans approved in July fell for the 12th consecutive month and the government may consider tinkering with an unpopular tax on home purchases, known as stamp duty.

The government may offer homebuyers the option of paying the tax at a later date or perhaps cut the rate of stamp duty for homes of a certain value, or for first-time buyers.

Mr Brown also plans later this week or next to look at ways to help households cope with the rising cost of fuel bills, perhaps by asking utility firms to pay money into a voluntary fund that could be used to make poor households more energy efficient.

The prime minister is hoping for an economic rebound to boost his popularity in time for the next election. But he must also resolve the dissent within his own party and questions over whether he is the right person to lead Labour.

While speculation of an imminent leadership challenge has waned, there will still be a lot of focus on the prime minister’s speech to his party’s annual conference later this month.

‘We’ve got our work cut out. The coming 12 months will be the most difficult 12 months the Labour Party has had in a generation,’ finance minister Alistair Darling said an interview published on Saturday.

‘We’ve got to rediscover the zeal which won three elections, and that is a huge problem for us at the moment. People are pissed off (angry) with us.’ — REUTERS

UK’s Brown to unveil housing market support plan

Source : Business Times - 2 Sep 2008

British Prime Minister Gordon Brown will unveil plans on Tuesday to boost the country’s slumping housing market as he launches a fight back after nearly a year trailing in the opinion polls.

A government source said those measures would cost about 1 billion pounds (US$1.8 billion). Full details will be announced by Mr Brown and Communities Secretary Hazel Blears on Tuesday morning.

That was the first quarter the economy has not grown since a recession in the early 1990s, ending Mr Brown’s ability to boast of uninterrupted growth since Labour took office in 1997.

The government may offer homebuyers the option of paying the tax at a later date or perhaps cut the rate of stamp duty for homes of a certain value, or for first-time buyers.

While speculation of an imminent leadership challenge has waned, there will still be a lot of focus on the prime minister’s speech to his party’s annual conference later this month.

‘We’ve got to rediscover the zeal which won three elections, and that is a huge problem for us at the moment. People are pissed off (angry) with us.’ — REUTERS

Aust rate cut a relief for homebuyers

Source : Business Times - 2 Sep 2008

A cut in Australia’s benchmark interest rate is a relief for homebuyers, Prime Minister Kevin Rudd said on Tuesday, but was only a beginning. ‘This interest rate decision is welcome, but it is not a day for celebration.

Interest rates took a long time to rise, they will take a long time, a long time to come back down, and the road will be a very uneven one,’ Mr Rudd told Australia’s Parliament on Tuesday.

The Reserve Bank of Australia cut its benchmark cash rate by 25 basis points to 7.0 per cent on Tuesday, the first fall in Australian interest rates since December 2001.

UK house prices see their steepest fall since 2001

Source : Business Times - 2 Sep 2008

End to property slump still some way off: research firm Hometrack

(LONDON) UK house prices fell by the most since at least 2001 in August as economic growth stagnated, and an end to the property slump is ’still some way off’, according to Hometrack Ltd.

Falling value: A couple browsing at the window of an estate agent in Didcot, Oxfordshire. The average cost of a residential property in England and Wales slipped 5.3 per cent from a year earlier to £167,000

The average cost of a residential property in England and Wales slipped 5.3 per cent from a year earlier to £167,000 (S$428,700), the London-based research company said in a statement yesterday. That’s the biggest annual drop since the index started seven years ago.

Prices fell 0.9 per cent from July.

‘A recovery in the housing slump, even back to zero monthly growth, is still some way off,’ said Richard Donnell, director of research at Hometrack.

‘It is confidence over the outlook for job prospects and the wider economy that is fundamental to any sustained turnaround in market conditions.’

Nationwide Building Society and HBOS plc reports show that the UK has entered its steepest property market slump since the early 1990s.

The Bank of England kept the benchmark rate unchanged in August as it weighed the fastest inflation in a decade against the threat of a recession.

The Royal Institution of Chartered Surveyors yesterday called for the government to take measures to revive the market for bonds backed by home loans in order to spur mortgage lending. The government should allow investors to swap the securities for Treasury bills with the Bank of England, RICS said in a statement.

Property values fell in each of the nine regions in Hometrack’s survey. In London, they dropped 1.1 per cent from July. The average time for a home to stay on the market rose to 11.3 weeks from 11 weeks, and the amount of the asking price achieved in sales fell to 90.7 per cent from 90.9 per cent.

‘When the market turns, it can take as long as 24 to 36 months for prices to reach realistic levels,’ Mr Donnell said. ‘We are now well into this process.’

House prices in Britain declined 10.5 per cent from a year earlier last month, the most since 1990, Nationwide said on Aug 20. HBOS said on Aug 7 that prices declined the most since 1983.

The flagging property market adds to signs that the UK may be entering its first economic contraction since 1992 after growth stagnated in the second quarter.

For manufacturers, orders fell to the lowest in three years, and companies expect a further deterioration, a separate report published yesterday by the EEF engineering lobby group showed.

Inflation accelerated to 4.4 per cent in July, more than twice the central bank’s target, making the Bank of England reluctant to cut interest rates to shore up the economy.

Societe General SA and Bank of America Corp predict that the central bank will start lowering interest rates by the end of this year.

The next interest rate decision is on Thursday. All 61 economists in a Bloomberg News survey expect no change this month. — Bloomberg

UK mortgage approvals fall to lowest since 1999

Source : Business Times - 2 Sep 2008

UK mortgage approvals fell for a 12th month to the lowest since at least 1999 in July as financial institutions curbed lending and the property slump deepened.

Banks granted 33,000 loans for house purchase, compared with 35,000 in June and the fewest since comparable data began nine years ago, the Bank of England (BOE) said in London yesterday. Economists predicted 35,000, according to the median of 27 estimates in a Bloomberg News survey.

Home-loan approvals are at less than a third of the level a year ago as Britain teeters on the brink of a recession. BOE policy makers will probably keep the key interest rate at 5 per cent this week as they battle the fastest inflation in more than a decade while Prime Minister Gordon Brown announces a package of measures to shore up the economy.

‘The data are still showing a very gloomy picture,’ said Matthew Sharratt, an economist at Bank of America Corp in London. ‘There’s no signs of a bottoming out in the housing market.’

The value of home loans rose to £3.23 billion (S$8.3 billion) in July from £3.14 billion in June. The figure is down from £9.35 billion in July 2007.

Hometrack Ltd said yesterday the average cost of a residential property in England and Wales slipped 5.3 per cent from a year earlier in August. A recovery in prices is ’still some way off’, said Richard Donnell, director of research.

The slump has led to a collapse in support for Mr Brown since he took over from Tony Blair 15 months ago and reduced the popularity of the ruling Labour Party to the lowest since it took office. Labour trailed behind the opposition Conservative Party, led by David Cameron, by 20 percentage points in recent opinion polls.

Mr Brown will hand UK local government authorities money to buy homes, a person familiar with the plan said last week, as part of a package to prevent the economy entering its first recession since 1991. Chancellor of the Exchequer Alistair Darling said in a Guardian newspaper interview on Aug 30 that the UK is facing ‘arguably the worst’ economic crisis for the last 60 years.

Financial institutions are still reluctant to lend to one another almost a year after housing market turmoil in the US led to a freeze in interbank lending. Bank losses from the collapse of the US sub-prime mortgage market now exceed US$500 billion.

UK gross domestic product stagnated in the second quarter, ending the nation’s longest stretch of economic expansion in more than a century.

Risks of a deeper slump in growth and in house prices prompted policy maker David Blanchflower to call for a lower in benchmark borrowing costs.

He said on Aug 28 that his prediction of a 30 per cent drop in house prices may now be ‘a fairly optimistic number’, and that ‘we need to see a substantial fall and probably quite quickly’, in rates.

A majority of the nine-member rate-setting panel probably won’t heed his call at their Sept 5 decision as inflation accelerates. Record commodity prices helped push the consumer price index to 4.4 per cent in July, more than double the 2 per cent target.

UK inflation expectations for the year ahead are also feeding risks of further price gains. Consumers’ forecasts rose to 4.4 per cent in August, Citigroup Inc said on Aug 29, citing a poll by YouGov plc.

All 61 economists in a Bloomberg News survey expect the bank to leave the key rate at 5 per cent for a fifth month. - Bloomberg

UK house prices dip

Source : Reuters - 1 Sep 2008

RITISH house prices fell for an 11th straight month in August to stand 5.3 per cent lower than a year earlier, a survey by property consultants Hometrack showed on Monday.

The monthly price drop of 0.9 per cent was slightly smaller than the previous two months, however. The figures are not adjusted to take seasonal factors into account.

Mr Richard Donnell, Hometrack’s director of research, said there were signs falling prices were starting to attract buyer interest but warned it could be some time before the market stabilised.

‘We may well start to see a moderation in the rate of monthly price falls. However, with ever growing uncertainty amongst households over the broader economic outlook the current re-pricing of housing still has some way to run,’ he said.

The survey showed properties were on average taking more than 11 weeks to sell, almost twice the time taken a year ago.

The number of viewings to achieve a sale fell for the first time in almost a year.

The proportion of the asking price being achieved fell to 90.7 per cent in August, the lowest level since the survey began, from 90.9 in July.

US real estate, banks still troubled: French minister

Source : Business Times - 1 Sep 2008

The US economy has not yet recovered from the financial crisis and its banking and real estate sectors still face difficulties, French Economy Minister Christine Lagarde said on Monday.

Ms Lagarde said France was downgrading its 2008 growth forecast partly because it had underestimated the impact of the US crisis, and that it would now follow developments there closely.

‘American banks, especially regional banks, will again see difficulty in the weeks and months ahead,’ she told France Culture radio.

‘One must be patient and attentive… to determine if the American economy, which has not finished regurgitating the effects of the financial crisis, and of which in my opinion the real estate market has not yet touched bottom, will really take off again,’ she added.

Figures from the US government surprised markets last Thursday when a revision of second quarter GDP figures showed year-on-year growth came in at 3.3 per cent on strong exports and consumer spending.

France drew up its 2008 budget based on an estimated annual 1.7 to 2.0 per cent gross domestic product (GDP) growth, but Prime Minister Francois Fillon said earlier on Monday that figure would be revised down to just over 1 per cent.

Government waives building charge on extension of state leases

Source : Channel NewsAsia - 1 Sep 2008

The government is doing away with the building premium it charges on all buildings when granting lease extensions.

The government currently charges both a land premium and a building premium when extending a state lease.

The charging of these premiums was based on the Common Law principle that both land and buildings would revert to the landlord at the end of the lease.

The waiver of the building premium is because the government wants to encourage lessees to continue to invest in the upkeep and improvement of the leased property.

In 1997, the government waived the building premium for short-term industrial and institutional leases to make costs more competitive to investors.

The waiver is now applicable to all types of uses including commercial, agricultural and conservation properties when lease extensions are granted.

Building premium is calculated based on the condition of a building. Thus, many lessees tend to let the properties deteriorate until the leases expire before filing for an extension in the hope of paying less.

Lessees of long-term industrial uses are seen as the ones likely to benefit the most from the waiver.

City Development’s City Square Mall to open by end-2009

Source : Channel NewsAsia - 1 Sep 2008

A sprawling 700,000 square foot mall will open in Little India by the end of next year. City Square Mall’s launch will coincide with that of other major retail shopping centres along Orchard Road like 313@Somerset.

However, its developers remain confident that the new malls will not pose a threat. Going by the numbers, it seems retailers agree. They have already committed to about 70 per cent of City Square’s tenancy.

At about half the size of VivoCity, the mall is located two streets away from the popular Mustafa Centre.

While some worry about how it will stand up against competition from the mainstream shopping belts, its developer City Developments is confident of its niche appeal.

Corrine Yap, deputy general manager, City Developments, said: “Our mall is at the fringe and we position ourselves like a suburban mall even though it’s at the city fringe. There will be a regular pool of customers coming to the mall because we are providing convenient shopping.”

City Developments has signed nine anchor tenants, taking up about half of the mall’s lettable area.

Set in the middle of a park, City Square also incorporates green features into its design. For example, it has an eco-friendly roof that harnesses solar power and rain water. It also comes with restrooms that save water and electricity.

City Developments is positive on the outlook for the retail industry going forward and is looking to open more malls.

Chia Ngiang Hong, group general manager, City Developments, said: “It’s quite site specific in the sense we need to look for right place for the mall. If opportunities arise, we will be looking actively.”

However, for now, its focus will be on its upcoming South Beach project.

Alpha to put US$1.2b in Asian properties

Source : Business Times - 2 Sep 2008

ALPHA Investment Partners, the fund management unit of Singapore’s No 3 developer Keppel Land, said its new fund will invest US$1.2 billion into Asian retail, residential and hospitality property by 2011 despite a global slowdown.

The group, which closed the Asia Macro Trends fund in July, now has five Asia-focused funds with S$3.9 billion in property assets under management.

‘Our strategy is not premised on the fact that Asia has decoupled. We have a eight to 10 year horizon and from what we can see, the region will do well in the medium to long-term,’ Alpha managing director Loh Chin Hua told Reuters in an interview yesterday.

‘It is very much a play on increasing affluence of Asian economies and domestic consumption, and the increase in flow of capital and trade within Asia,’ Mr Loh said.

The new fund has set an internal rate of return of 16-18 per cent and has so far invested US$41 million in a hotel near South Korea’s Incheon Airport, and US$30 million in a stake to build a Hong Kong hotel with an unlisted local developer.

‘It’s assets like these that we think will do well despite the poor economic conditions,’ Mr Loh said, adding that the Korea hotel already provides a yield higher than the projected 17.3 per cent.

Mr Loh, who led the Government of Singapore Investment Corp’s London- based Europe real estate division before he helped found Alpha in 2003, said he is more prudent about the office and logistics sectors as these have already seen strong growth.

The poor economic and credit conditions, ignited by the US sub-prime mortgage crisis, provide an opportunity to invest as there is less competition for good assets, said Mr Loh.

‘There could be some dislocations in the short term, but we see it as opportunities rather than a threat. I would rather be investing in market conditions like these where there is less capital chasing assets.’

Asia’s developers are also more willing to accept property funds as equity partners for their projects, Mr Loh said, as other sources of financing become more expensive after banks turned increasingly prudent about lending.

Alpha’s earlier funds include one focusing on Asia-listed securities such as real estate investment trusts, or Reits, and a Japan-focused fund.

Mr Loh declined to reveal how many more funds Alpha plans to launch or give a target for assets under management, but said he expects fund flows to Asia to grow strongly due to heightened interest from US and European pension funds.

‘We would expect their allocations to Asia real estate to increase. And within Asia, we are also seeing sovereign funds from countries like South Korea and Japan starting to look outside their domestic markets.’

Income from Keppel Land’s fund management business, which comprises Alpha and property trust K-Reit Asia , nearly tripled to S$9.4 million for the six months to June 2008, compared with S$3.4 million a year earlier.

Asia’s top developers, such as Cheung Kong , CapitaLand and Mitsui Fudosan, have also set up property fund management units in recent years, for the fee income and to tap new funding sources for growth. - Reuters

Some 70% of space let out at City Square Mall

Source : Business Times - 2 Sep 2008

It has also secured nine anchor tenants and will open in Q4 of next year

SINGAPORE’S first eco- friendly mall - City Developments’ City Square Mall - is close to 70 per cent let and has secured nine anchor tenants.

The mall will open in the fourth quarter of 2009.

The developer yesterday disclosed the anchor tenants which together will occupy about half of the total lettable space in the 700,000 square foot mall.

City Square Mall: It will have more than 250 shops and is touted as the first eco-friendly mall in S’pore

They are Metro, NTUC FairPrice, Best Denki, Kopitiam, MindChamps PreSchool, Amore Fitness & Boutique Spa, home furnishings company V.Hive, Popular bookstore, and halal food court operator Banquet.

Another 20 per cent of space has also been let out. CityDev said it will unveil these non-anchor tenants later.

Rents at the mall are close to market rates, said CityDev’s group general manager Chia Ngiang Hong. In general, suburban malls fetch about $8-$15 per square foot per month (psf pm) on average, although rents at some prime suburban malls can hit $40 psf pm.

Mr Chia said CityDev is optimistic that it will achieve its target of attracting at least 1.3 million visitors a month to the mall.

‘We believe that the buying sentiment of the heartland population will always be there (even in an economic slowdown),’ he said.

The mall is targeting both Singapore and middle-income tourist shoppers.

With over 250 shops, the $200 million City Square Mall will be one of the largest malls in Singapore. It is also touted as the Republic’s first eco-friendly mall and will boast ‘green’ features such as eco-restrooms that save water and electricity and an eco-roof that will harness solar power and rainwater.

It is projected to reduce its energy usage by about 39 per cent compared with designs using standard industry codes.

In line with this, anchor tenants will also be encouraged to look at green features.

Metro, the largest anchor tenant with some 56,000 sq ft of space, will run a ‘family-friendly store in the suburbs for suburban shoppers’, said Wong Sioe Hong, managing director of Metro (Private) Limited.

NTUC FairPrice - the second-largest tenant with some 26,000 sq ft of space - will open its pilot eco-friendly supermarket with a host of green features. These include dedicated checkout lanes for shoppers with reusable bags and motion-sensor lighting in the store office and storeroom.

While most mall operators are moving away from signing up anchor tenants, City Square Mall is sticking to the format, said Corinne Yap, CityDev’s deputy general manager for marketing and leasing.

‘We feel very strongly that the mall needs to be anchored with strong tenants,’ she said. This allows the developer to get better rentals from the rest of the tenants, she added.

Part of lease extension levy waived

Source : Straits Times - 2 Sep 2008

Building premium waiver will boost upkeep of ageing property

A LEVY that property owners had to pay the Government when they extended a lease on state land has been axed.

The so-called ‘building premium’ is being waived with immediate effect, said the Law Ministry yesterday.

The move gets rid of a potential hindrance to owners keen to upkeep, improve or redevelop an ageing property nearing the end of its lease.

It will help owners of industrial land, which tends to have shorter leases, and conservation properties but will have little effect on residential sites.

The Government has been charging both a land premium and a building premium when extending a lease.

‘The charging of these premiums was based on the common law principle that both land and buildings would revert to the landlord at the end of the lease,’ said a statement from the Law Ministry.

In the past, the Chief Valuer, who decides the premiums, had computed the building premium, if applicable, into the land premium. This made it unclear how much of the building premium makes up the land premium.

It is understood that only owners of a handful of sites, including industrial properties and conservation shophouses, have had to pay the building premium upon lease extension.

In general, the Government’s policy is still to allow leases to expire without extension because it needs to reallocate land to meet fast-changing socio-economic needs. It will consider lease extensions only on a case-by-case basis.

Industrial properties are likely to benefit more from the levy waiver. Residential en bloc sites are not affected. Under redevelopment, the estate sold en bloc is torn down so no building charge is payable even if the site’s 99-year lease is extended.

There is no building premium payable when leases are renewed on vacant land.

Yesterday’s move is not entirely new. In 1997, the Government waived the building premium for short-term or 30-year-old industrial and institutional leases on the recommendation of the Committee on Singapore’s Competitiveness, said the Law Ministry.

The latest waiver applies to all types of land, including longer industrial leases and residential properties.

It said the decision was made to encourage ‘lessees to continue to invest in the upkeep and improvement of the property’ when a lease extension is granted.

Previously, if an owner was granted a lease extension, he could opt not to redevelop the property if there was only a few years left on the lease.

He would be able to avoid paying a building premium if he let the lease run out and redeveloped the property only when the new lease started.

The waiver will give the owner no reason to hold back on redevelopment plans.

The waiver will please some owners of conservation shophouses, said Knight Frank’s director of research and consultancy, Mr Nicholas Mak.

Rising construction costs could make it worthwhile for some owners to upkeep their buildings instead of tearing them down for redevelopment, he said.

Overall, waiving the building premium is expected to affect only a small group of owners, market watchers say.

‘It’s about urban renewal but in Singapore, the strategy is to demolish and rebuild,’ said Mr Mak. Also, market watchers say most buildings are not built to last forever, particularly those on leasehold sites.

‘Properties generally become obsolete after 30 years,’ he said. ‘Factories, for instance, may become obsolete within a shorter period because of changing technology and changing manufacturers’ needs.’

The question of lease renewal will be a big issue nearer to 2070, when most of the leases on Singapore’s 99-year leasehold land will expire, Mr Mak added.

Waiver aimed at lessees of state land

Source : Straits Times - 2 Sep 2008

What is a building premium?

It is a charge payable by an owner when he extends the lease on state land.

The amount is determined by the chief valuer but not disclosed as it is computed into the land premium.

The premium is calculated based on the building’s condition. Lessees tended to let properties run down until the leases expire in the hope of paying less when they extend their lease.

Why waive it?

It is to encourage lessees to continue to invest in the upkeep and improvement of a property when a lease extension is granted so they will not let the site run down.

If a building premium is payable, lessees will not be motivated to upkeep, improve or redevelop a property.

It is not meant as an incentive but rather removes a factor that may have discouraged improvement work.

What’s the impact?

The waiver is expected to have minimal impact as few people will be affected, although lessees of long-term industrial land are among those likely to benefit.

In general, the Government will allow leases to expire without extension. It will consider lease extensions on a case-by-case basis. For instance, it may allow extensions for conservation properties to give as incentive for lessees to carry out major conservation works.

Upcoming malls to offer Japanese food concepts

Source : Straits Times - 2 Sep 2008

SUBURBAN and city fringe malls are usually dull on the food front but they are being forced to spice up their menus to lure a new generation who know their sashimi from their satay.

What were once treats found mainly in Orchard Road outlets are now being served from Tampines to Jurong as malls fight to give themselves an edge.

Scheduled to open late next year in Little India, City Square Mall will feature three foodcourts, one of which will have a Japanese theme. PHOTO: CDL

City Square Mall, which is slated to open late next year in the Little India area, will have three foodcourts, including one that is Japanese-themed.

Called ishi mura, the Japanese foodcourt by the firm behind the Suki Sushi and Sakura buffet restaurants will take up about 7,000sq ft of the mall.

Another mall to put its culinary cards on the table is the upcoming Tampines 1, which has signed a Japanese food hall as an anchor tenant.

The mall, which is expected to open in March, will be offering authentic Japanese cuisine in a gourmet street setting, said a statement from AsiaMalls Management, which will run the centre.

Its deputy general manager, Ms Stephanie Ho, said suburban malls have to offer more food choices to meet the higher expectations of shoppers.

‘Competition is fierce in Tampines. There are a lot of foodcourts and in the HDB areas, there are a lot of food places. So having just another foodcourt in Tampines 1 does not make sense,’ said Ms Ho.

Knight Frank deputy managing director Danny Yeo said suburban malls are hedging their bets, boasting trendier restaurants and more higher-priced options while retaining the usual fast food eateries and other low-priced outlets.

‘Generally, in Singapore, more and more food and beverage tenants are going into the shopping malls,’ said Mr Yeo.

‘Around 10 to 15 years ago, when you went into a shopping mall, you would have found 10 to 15 per cent of the space allocated for food outlets. Nowadays, that has increased to as much as 20 per cent of the space.’

Or more. City Square Mall, which is aimed at the mid-income shopper, will devote 25 per cent of its 450,000 sq ft of net lettable area to more than 50 food and beverage outlets.

City Developments yesterday announced that close to 70 per cent of the eco-themed mall, which is twice the size of Junction 8, has been taken up.

Nearly half of the space will be taken up by nine anchor tenants, including a 23,000 sq ft Kopitiam foodcourt and an 11,000 sq ft Banquet foodcourt.

‘We want to ensure that it’s a food haven,’ said City Square Mall’s senior manager, Ms May Then.

Much of the demand is coming from young people and families who are eating out more often as they work late and have no time to cook, said Mr Yeo. Naturally, more food outlets will spring up in malls to cater to them.

Ms Ho agreed: ‘People want to be able to hang out at a nice cafe near their place and not have to go to Orchard Road.’

She said Coffee Club and Toast Box have recently set up shop at Tiong Bahru Plaza and even Hougang Mall boasts a Cafe Cartel.

Japanese cuisine is clearly seen as a crowd-puller. Jurong Point, which opened last month, has an Osaka food street in the basement.

The food hall in Tampines 1 will have 10 counters of Japanese food, with some taken up by established restaurant names such as Botejyu, Yoshimi, Hokkyokusei, Aoba and Toku Toku Tei. These are traditional food establishments set up in Japan as early as the 1920s.

Their fare is mostly familiar to local Japanese food fans. Botejyu, for example, is famous for its Osaka okonomiyaki, or Japanese pancake, while Yoshimi from Hokkaido serves soup curry. Hokkyokusei, set up in 1923, serves Japanese omelette rice.

Japan Foods Holdings, which is behind the chain of 14 Ajisen Ramen stores here, is bringing these operators in and will be operating the food hall.

With people becoming more affluent, increasing numbers are willing to spend more on food, said market watchers.

Customers welcome new concepts and for retailers, they offer them the chance to generate more revenue if done well, said Mr Yeo.

‘Over the years, with asset enhancement in the major malls, you see more new retail concepts and they are mostly food and beverage ones,’ said Ms Then.

Singapore Property Watch

Friday, September 5, 2008

Retail body chief calls for lower rents as sales droop

Asians want to bet more on property

Property buyers defy Hungry Ghost taboo at auction market

CapitaLand sells Capital Tower Beijing for US$352m

Singapore ranked top global city for meetings

Singapore ranked top global city for meetings

Development of NTUC Club’s S$45m Palawan Resort at Sentosa delayed

Serangoon Gardens’ residents against plan to build workers’ dorm

Britain axes property sales tax to boost housing market

Construction sector growth expected to slow over next 3 to 4 quarters

Auction property sales hit record high of S$22.7m in August

‘Not in our backyard’

Foreign workers? Not in my backyard

Cut shop rents, pleads retail chief

Self-regulation in estate agency industry

Planners of F&B outlets in residential estates can learn from Joo Chiat experience

Citizens oppose new KL city plan

Now, deferred payments with a twist

Govt waives building premium on lease top-ups

Developers starting to preview projects

UK’s Brown to unveil housing market support plan

UK’s Brown to unveil housing market support plan

Aust rate cut a relief for homebuyers

UK house prices see their steepest fall since 2001

UK mortgage approvals fall to lowest since 1999

UK house prices dip

US real estate, banks still troubled: French minister

Government waives building charge on extension of state leases

City Development’s City Square Mall to open by end-2009

Alpha to put US$1.2b in Asian properties

Some 70% of space let out at City Square Mall

Part of lease extension levy waived

Waiver aimed at lessees of state land

Upcoming malls to offer Japanese food concepts

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