Skyline to be all lit up

Source : Today - 19 Sep 2008

STB, URA and building owners making plans for special lighting

WITH the world’s first Formula 1 night race to be beamed to350 million fans globally, Singapore authorities are pulling out the stops to ensure the downtown skyline forms a blazing backdrop.

The reason why that will be a challenge: The race circuit’s 1,500 light projectors, which are four times brighter than average stadium floodlights, so as to simulate daylight, could easily wash out the normal Singapore nightscape.

That is why the Singapore Tourism Board (STB) and Urban Redevelopment Authority are working closely with trackside building owners to install special lighting during the race weekend of Sept 26 to 28.

Some, like Marina Mandarin Hotel, even have their own fancy lighting arrangements to add spice to the razzle dazzle.

The hotel will be projecting nine slides of race-related artistic works by German architectural projection specialists Casa Magica onto the building’s facade on the three race nights, a spokesperson said.

Meanwhile, five key landmarks along the race circuit ˜ Anderson Bridge, City Hall, The Esplanade, Old Supreme Court and the Victoria Theatre Clock Tower ˜ that will be featured prominently by the race cameras will be specially lit up, STB’s assistant chief executive (Brand and Communications) Ken Low told Today.

Other downtown buildings in the Marina Centre area and Central Business District, such as Raffles City, Maybank Tower and UOB Plaza, have also been encouraged to keep their building lights on during the race weekend.

“Because it is a race held at night, Singapore’s cityscape around the Marina Centre area needs to be made visible in order to showcase itself to the world,” said Mr Low. “Lighting of the skyline is an integral part of the event, and will help create a vibrant and dynamic night race atmosphere, and experience for spectators and television broadcast globally.”

The Singapore Flyer will also have 15 different lighting patterns for the races, said a spokesperson.

For instance, the giant observation wheel will be illuminated in red and white to represent our national colours before each race. Additional floodlights will also be mounted on the Flyer to make it more prominent.

The crowns of the 50- and 28-storey towers of One Raffles Quay will also be lit up ˜ similar to what was done during National Day ˜ to mark the occasion.

Said its asset management general manager, Mr Wilson Kwong: “With F1 in the city, the eyes of the world will be on Singapore. As building owners, we want to help make sure the view is a spectacular one. We’re doing our part to make sure there is a great backdrop for the race.”

A new night glow

Source : Straits Times - 19 Sep 2008

23 buildings in Marina Bay, CBD submit lighting proposals to the Govt

A NEW city skyline will arise over the next couple of years when 23 buildings turn on the lights at night.

Maybank, The Sail condo and the Marina Bay Sands integrated resort are among the buildings that have sent lighting proposals to the Government. The plans include how they will illuminate their roofs or accentuate their facades.

The existing skyline of the CBD will be illuminated with new lights. — GRAPHIC: URA PHOTO: URA

This light-up is part of Singapore’s plan to create a night buzz for a distinctive city, said Mrs Cheong Hoon Kean, chief executive officer of the Urban Redevelopment Authority (URA).

Speaking to The Straits Times ahead of the Formula One night race next week, she said: ‘We can look forward to a signature night skyline in the next couple of years, when the buildings in Marina Bay and Central Business District (CBD) are completed and external lighting is installed.’ Beautiful lighting will create ‘a captivating night scene that enhances our city’s appeal’, she added.

An artist’s rendering of the reborn skyline was completed yesterday, piecing together the 23 lighting proposals.

The buildings appear subtly illuminated, not flooded with light.

Good lighting, Mrs Cheong said, is not about being the brightest or flashiest. Asian cities tend to be over-lit, she added, but this is not Singapore’s ethos.

The underlying principle is to stay ‘elegant and tasteful, and sensitive to a building’s architecture’, she said. ‘Look at Paris, the romantic City of Lights.’

According to URA officials, elegant lighting should bring out the architectural design elements of a building. So, the emphasis includes illumination of the roof or crown of the building, and lighting walkways on the first storey to create spaces ideal for outdoor activities.

Lights can also be programmable. Day-to-day lighting can be ‘a little bit more calm’, Mrs Cheong said. The look can be ‘celebratory’ for festive seasons.

Building owners are hiring lighting experts like Mr Bo Steiber to give their properties a glow at night. The founder of Bo Steiber Lighting Design is lighting up the new tower of OUB Centre at 1, Raffles Place.

His earlier work includes illuminating Shanghai’s Xintiandi lifestyle and nightlife district, and the Esplanade’s Theatres on the Bay.

The Swede, a Singapore permanent resident, said his energy-efficient lighting of OUB Centre will ‘accentuate the tower’s angular, linear, diamond features’. He lauded the URA’s ‘good initiative’ to beautify the skyline.

The URA’s Lighting Masterplan was introduced in 2006. To encourage more buildings in Marina Bay and the CBD to light up, incentives were rolled out. New developments and buildings being revamped can get as much as 2 per cent additional gross floor area if they light up.

Cash incentives from a $10 million fund to offset the capital costs of new lighting are also granted, particularly for existing structures.

The URA also had a night lighting plan in 1995 for the civic district, the cultural and historical heart of the city. Some 90 per cent of the buildings, bridges and public spaces there were lit.

New CPF rule for home sellers aged 55 and above

Source : Straits Times - 19 Sep 2008

It will address shortfalls in their Minimum Sum to build up retirement funds

A LITTLE-KNOWN rule change will kick in next year regarding how much money property owners must return to their Central Provident Fund (CPF) accounts when they sell their homes.

The new rule, which will address shortfalls in an individual’s Minimum Sum, is aimed at helping CPF members build up their retirement funds.

Currently, home owners aged 55 and above do not have to refund their CPF accounts when they sell their properties, unless they have pledged their homes to meet their Minimum Sum requirement. In that case, they will pay back to the CPF the amount they have pledged their home for - with interest.

But from Jan 1, all home sellers over 55 who use CPF funds to pay for their properties will have to pay back this money - plus interest - up to their Minimum Sum requirement.

If they have withdrawn less CPF money than the shortfall in their Minimum Sum, they will need to refund only what they have withdrawn, including interest, currently at 2.5 per cent a year. They do not need to make up for the rest of the shortfall in cash.

Home sellers who do not receive enough from the property sale to refund the Minimum Sum deficiency will not be required to top up the shortfall, as long as the property is sold at market value.

To see how the rule change works, consider the case of Mr Tan, a 58-year-old home owner whose Minimum Sum requirement is $90,000.

He has only $30,000 in his retirement account, so his shortfall is $60,000. To help make up for this difference, he has pledged his property for $45,000.

If Mr Tan sells his property this year, he will pay back to the CPF what he has pledged the property for, plus interest, which works out to, say, $51,000.

But if he sells his property next year under the new rule, he will have to pay back the amount he has withdrawn, capped at his Minimum Sum deficiency - that is, $60,000.

This rule change, which was first announced during the Budget debate last year, will not affect those under the age of 55, or who turned 55 before July 1, 1995.

While home sellers under 55 have to refund any CPF money used to buy their properties, this rule has not been enforced uniformly for those above 55, said Manpower Minister Ng Eng Hen last year.

‘Specifically, we have only recovered the property pledge from them and not the shortfalls for the cash portion of the Minimum Sum,’ said Dr Ng when he introduced the rule change in March last year.

The Minimum Sum that applies to any individual CPF member depends on the year he or she turns 55. Those turning 55 between July 1 this year and June 30 next year will have a Minimum Sum of $106,000, for instance.

Generally, the impact of this rule change is likely to be small, said Mr Christopher Tan, chief executive of independent private wealth firm Providend.

‘To begin with, most people would have pledged their house as part of the Minimum Sum because they want to take out more money at 55,’ he said.

‘When they sell their house, they would have to put back that money anyway. With the new rule, you refund your CPF account only up to the Minimum Sum, which is, in all likelihood, less than what you withdrew from the CPF to pay for it.’

Limited Impact

With the new rule, you only refund your CPF account up to the Minimum Sum, which is, in all likelihood, less than what you withdrew from the CPF to pay for it.’ - Mr Christopher Tan, chief executive of independent private wealth firm Providend, saying the impact of the rule is likely to be small

Sibor posts stunning jump before relief pours in

Source : Business Times - 19 Sep 2008

Central banks pump billions to ease borrowing costs; markets on a yo-yo

LIKE A journey in the hills, stocks in Asia fell, rose and dipped again on a day when the world’s biggest central banks injected billions into banking systems in a desperate bid to unblock interbank markets and bring down borrowing costs.

The move came after US-dollar interbank lending rates in Singapore saw their biggest jump on record, following similar severe dislocations in interbank markets in the United States and Europe earlier this week.

In a statement published at 3pm Singapore time, six of the world’s biggest central banks - the US Federal Reserve, Bank of Canada, Bank of England, European Central Bank, Swiss National Bank and the Bank of Japan - said they would provide up to US$180 billion in additional funds to meet demand for US-dollar short-term loans worldwide.

The concerted attempt to ease borrowing costs came after interbank lending in some markets ground to a halt and interbank rates jumped to unprecedented levels as banks jealously hoarded cash and charged each other exorbitant rates to borrow funds.

Here, the one-month Singapore interbank offered rate or Sibor for US-dollar loans soared 48 per cent or 1.4 percentage points to 4.31 per cent yesterday morning before the intervention - its single biggest one-day jump on record and a stark indication of how the severe stress in financial markets worldwide is affecting even the interbank market here. On Monday, the rate was just 2.53 per cent.

Last night, the Monetary Authority of Singapore said the joint action by central banks yesterday afternoon appeared to have eased pressures in US-dollar markets, adding that it ’stands ready to inject additional liquidity’ if needed.

The Sibor is fixed at 11am daily by the Association of Banks in Singapore based on quotes by selected banks on what they expect to pay for interbank loans that day. Domestic interbank rates for loans in Sing dollars also rose, but far less sharply.

The dramatic developments meant that retail investors - those that still had the stomach to trade shares - were taken on a dizzying ride, as Hong Kong’s Hang Seng index plunged 7.7 per cent before staging a spectacular recovery to close flat after central banks in the US, Canada, Europe and Japan pumped a staggering US$180 billion into money markets to ease interbank lending rates.

The last time central banks took drastic action on such a large scale was in early March - when credit markets seized up, eventually causing investment bank Bear Stearns to topple.

Here, the Straits Times Index also staged an astonishing recovery, finishing virtually unchanged after plunging as much as 4.6 per cent earlier in the day.

In Japan, where trading ended before the official announcement of the central bank action, the Nikkei-225 index closed 2.2 per cent lower after falling as much as 3.8 per cent earlier.

Meanwhile, indices tracking the spreads on corporate credit-default swaps - a measure of the risk of the underlying companies defaulting on their debt - surged in Asia yesterday as investors sought protection from bank defaults on fears that more financial institutions would crumble.

In Russia, stock markets were shut most of the day - the third day of interruptions by trading suspensions to prevent a financial crash. The government said stock trading will resume today after it announced a slew of measures to restore investors’ confidence in financial markets.

‘There is no more important task for Russian authorities than supporting the financial system,’ President Dmitry Medvedev told Russian ministers, according to AFP.

The US financial sector is facing a ‘long workout’ of past excesses - chiefly an over-reliance on debt - but not a complete meltdown, said Gerard Lyons, chief economist at Standard Chartered Bank, in a report yesterday.

‘This deleveraging process still has some way to go, and requires a rebalancing of the economy. Private sector debt is still too high, and American consumers need to spend less, save more.

‘Caution, not pessimism, is required in 2009.’

Sales of investment property stagnating

Source : Straits Times - 19 Sep 2008

SALES of investment property are in the doldrums with the global financial mayhem and credit crisis slowing buying interest so far this quarter.

Nearly all sectors have been ‘relatively quiet’ apart from the hospitality industry, which has ‘remained healthy’, said a CB Richard Ellis (CBRE) report yesterday.

CBRE said a total of $3.17 billion worth of investment transactions have been recorded so far this quarter - the period actually runs until Sept 30 - down from $4.86 billion in the April-June quarter.

The figure is also a fraction of the $16.51 billion recorded in the third quarter last year, and likely to mark the fourth consecutive quarter that investment transactions have dropped.

Total investment sales for 2008 so far have totalled $17.12 billion.

CBRE’s director of investment properties, Mr Jeremy Lake, said this year will likely round up at about $18 billion, a third of 2007’s bumper $54.02 billion.

‘If you look at the freak year of 2007, yes, it is a huge drop. But if you look back to 2004, it’s still the third highest result of the last five years,’ said Mr Lake.

The second highest total for investment sales occurred in 2006 when transactions hit $28.38 billion.

CBRE’s report said the latest results are because tighter credit measures have brought about a temporary halt to major investment decisions as investors take stock of the local property market.

Mr Lake also said the spectacular failure of two large US banks this week will ‘compound the slowdown that is evident in the statistics’ and ‘exacerbate the uncertain outlook’.

CBRE defines investment sales as real estate sales with a value of at least $5 million. It includes private and government sales, buildings and land, strata and en bloc, as well as the change of ownership of real estate via share sales.

The report said the industrial sector has accounted for 61 per cent of sales so far in this quarter. Retail investment sales contributed the least, just $215.04 million, or 7 per cent, of sales.

CBRE blamed rising construction costs, higher interest rates and tighter lending measures for the inactivity.

It added that investors are expected to ’stay on the sidelines’ in view of the cautious market conditions.

Slide in property investment deals continues in Q3

Source : Business Times - 19 Sep 2008

Global financial instability, stock market volatility hit sentiment: CBRE

PROPERTY investment sales continue to soften in Q3 2008 and global financial instability could keep investors out of the market, said a CB Richard Ellis (CBRE) report.

According to latest figures from CBRE Research, property investment transactions in Q3 (up to Sept 18) reached $3.17 billion. This is a 35 per cent drop from $4.86 billion in Q2 and a 65 per cent slide from $9.09 billion in Q1 this year. On a quarterly basis, property investment sales last peaked in Q3 2007 at $16.51 billion.

‘The lingering worldwide impact of the US-spawned credit crisis has compounded financial instability in most global economies, compelling many regional investors to adopt a cautionary attitude,’ said CBRE’s report.

Many are holding back on major investment decisions as credit conditions tighten, and stock market volatility has also hit investor sentiments, it said.

Driving property investment sales in Q3 was the industrial sector, which accounted for 61 per cent or $1.92 billion of transaction value. However, most of the sector’s contribution came from a single $1.71 billion deal, in which JTC Corporation divested its industrial property portfolio to Mapletree Industrial Trust.

The residential sector was the next largest contributor, registering 26 per cent or $807.79 million of property investment sales in Q3. There was only one successful collective-sale deal in the period, where an unnamed developer bought Ruby Apartments for $11 million.

‘Developers’ ability to acquire sites was dampened by rising construction costs, rising interest rates and tighter lending measures,’ said the report. Investment activity in the retail and office sectors was also quiet in Q3, with transaction values of $215.04 million and $142.84 million respectively.

While the hospitality sector accounted for just $100 million of property investment sales, CBRE noted that the limited supply of hotel rooms today would attract greater investor interest in the medium term.

Property investment sales chalked up in the year to date stood at $17.12 billion, with 65 per cent coming from the residential and office sectors. While this is some distance from the $54.02 billion achieved for the whole of 2007, it has already exceeded the $14.66 billion in 2005.

‘Looking ahead, investors are expected to stay on the sidelines in view of the cautious market conditions that are likely to prevail until the end of the year,’ said the CBRE report. Nevertheless, it noted that demand for quality assets as a hedge against inflation may provide some support for investment activity the rest of the year.

How Asia will be hit

Source : Weekend Today - 20 Sep 2008

And how it can seize the opportunity and surge forward

WE NOW have a perfect storm with the perfect ingredients - easy liquidity, poor alignment of incentives, inadequate assessment and management of risks, greed, and lack of due diligence.

The surge of the energy price - a bubble of its own - was the catalyst. To fight inflation, the United States government hiked interest rates. The housing bubble burst and mortgage default surged. With property foreclosures and defaults in mortgage payments, mortgage-backed securities were now viewed as high risk with low value. When large investors holding them attempted to unload their holdings, the action spiralled into even lower valuations.

But, the bad news did not stop there. At the beginning of the sub-prime crisis, the US government did not take decisive actions; instead, it still played the interest rate game. Fundamentally, the US borrowed too much. One could counter that by producing a lot of income growth. Unfortunately, with globalisation, the US economy now only made up about a third of the world economy. Thus, the US monetary authorities could not readily generate a surge in the US economy.

The recent spate of write-downs of losses arising from bad investments was the right thing to do, but, they came a little too late in the game. Without a clean revelation, investors were suspicious, especially after seeing some losses. The result is a systemic large-scale markdown of the real value of many financial instruments, largely stemming from fear.

The US government’s attempt to alleviate fear in the financial markets by bailing out some, but not all, had the unintended consequence of heightening investor suspicions. Trapped investment banks now found refinancing capital even more expensive. One after another, the banks had to either create a bailout (call it accepting a fire sale) or file for bankruptcy.

What this means for Singapore

The financial turmoil has real consequences on the economy. If we get up in the morning and find that our financial assets have dropped by $200,000, what would we do? We would scale down our expenditures, perhaps not dining out and having a simple home-cooked meal instead. The financial meltdown drags down our consumption levels. The high cost of capital also discourages corporate investment. We have a severe economic downturn in real terms.

Asians are affected in two ways. First, the slowdown in US consumption and investment affects our exports, and thus our earnings. Second, the losses in the US suffered by Asian banks and other financial institutions damage their books and their ability to lend. Tighter credit curtails investment. (We hasten to add that not all Asian banks are affected equally. For example, Singapore banks have insignificant exposure to Lehman’s instruments while Japan and Taiwan banks have billions. Credit is available in Singapore in a prudent manner.)

Lessons to be learn

This is not a simple storm and it will take time for it to pass. It is not clear what the best course of action should be. Yet, a few things are clear.

First, financial institutions should make clear what they have suffered and recognise the losses. The Japanese financial firms’ coming-out action in this regard is the right move, although it does not spare them from negative market reactions to the exposure. But not doing so will only heighten investors’ fear and worsen the current credit crunch.

Second, real fiscal economic stimulations to counter financial market over-reaction are not really nonsensical.

Third, with the weakened US aggregate demand, the pan-Asian market will be more important. Asian economies should seize this chance to strengthen the interreliance on each other’s consumer and credit markets; it is time to further foster the pan-Asian market concept.

Fourth, we should learn from this crisis. It teaches us to recognise the need to evaluate how and where financial innovations and policy initiatives will challenge our regulation and market systems. In the sub-prime case, the noble initiative to encourage home ownership and fancy financial engineering created a breakdown in the otherwise sound public regulations and monitoring system of the US.

Finally, for me, I hold on dearly to the maxim: Do not invest in what you do not know.

S’pore River glows as light-up brightens night-scape

Source : Straits Times - 20 Sep 2008

THE Singapore River was awash with light last night, bringing to life the first of the Government’s plans to transform the country’s night-time look.

Pyrotechnics, music and a carnival accompanied the unveiling of hundreds of lights along the waterway’s banks.

With the flick of a switch by Trade and Industry Minister Lim Hng Kiang, the Read and Cavenagh bridges came alive in a wash of colours.

A school of ‘jellyfish’ - underwater lights - started to glow in front of the Asian Civilisations Museum, giving the river a subtle gleam. And the pedestrian underpasses linking Clarke Quay and Boat Quay started to shimmer.

Yesterday’s big light-up marked the end of the first phase of a Singapore River makeover announced in March.

The project, which the Singapore Tourism Board (STB) would only say cost less than Orchard Road’s $40 million renovation, covered Empress Place, Clarke Quay and Boat Quay. By March next year, the works will be extended to Robertson Quay and Kim Seng Bridge.

Mr Lim said: ‘The lighting enhancements not only highlight the unique architectural features of the river by night but also improve the river experience for diners and partygoers.’

Last night’s light-up was the start of a larger drive by the Urban Redevelopment Authority (URA) to beautify the city’s night-scape. Other areas where lighting will be enhanced include Marina Bay and Bugis.

URA chief executive officer Cheong Koon Hean, who was behind the project, said: ‘Good lighting can help create a captivating night scene that enhances our city’s appeal. It enlivens our experience and appreciation of our city.’

The URA, however, also said it is important to consider the environment while brightening the night sky. In the Singapore River’s case, energy-efficient LED lighting was used, said the STB.

Yesterday’s spectacular event marked the start of the inaugural Singapore River Festival, which will include shows, parties and concerts in the lead-up to the Formula One Grand Prix next weekend.

Property risks back in spotlight

Source : Business Times - 20 Sep 2008

Developers with overseas exposure stay upbeat amid downturn

THE property business has come full circle for listed developers here. A few years ago, with land prices on the upswing and intensifying competition in Singapore, many property companies ventured overseas into untapped markets in search of better returns. Their overseas units flourished. And for the past few years, these units have been fattening the bottom lines of many property firms here.

While the going was good, there was a tendency, when it came to evaluating such companies, to overlook the commonly-acknowledged risks inherent in developing markets - such as changing regulatory environments and the tendency of foreign investors to flee when the going gets even a bit rough. But now, with the property markets in China (and to a lesser extent Vietnam) taking a beating - in part due to government actions - those risks are being thrown into the spotlight once again.

Last week, China Vanke, China’s largest listed property developer, reported a 35 per cent drop in its August real estate sales. The developer also reportedly cut prices in Nanjing, Guangzhou, Shanghai and Beijing by as much as 20 per cent. Soon after, news emerged of other developers following suit with substantial price cuts.

There are no signs of the Chinese government stepping out to halt the slump in the property market. In an announcement by the People’s Bank of China in late August, the central bank continued to call on commercial banks to tighten their lending to property developers and restated its curbs on bank loans directly for land purchases by developers.

‘We think recent price cuts could further depress pricing of residential properties and lead to prolonged weakness in an already ailing China property market as other developers may undercut prices for their properties and buyers are likely to avoid the market on concerns of further price cuts,’ said OCBC Investment Research analyst Foo Sze Ming.

In Vietnam, prices could also head south. Like in China, the government in Vietnam is fighting inflation with various regulatory measures to cool the economy. A liquidity crunch also means that smaller and non-reputable developers could be forced out of the market.

Many Singapore-listed property companies have targeted China, Vietnam, and also India, another emerging market, for expansion over the past few years. Now, with the property market in Singapore taking a pause, developers with large stakes in these emerging markets, such as CapitaLand, Keppel Land and GuocoLand, have to assure investors that they have not over-stretched themselves.

Partly in response to the negative news flow about China’s property market over the past few weeks, property stocks with exposure in that country have been punished by the market over the past week. Adding to the problem was the current global stock market turmoil.

But looking ahead, analysts are throwing their weight behind those developers who have stayed put in Singapore. Kim Eng Research, for example, said yesterday that its picks for the sector are Singapore-centric property developers City Developments and Wing Tai as beta plays for a recovery in the Singapore property market in the future.

On their part, developers with assets in emerging markets have been pointing to the strong fundamentals in these countries. Growing middle classes, increasing disposable incomes and housing affordabilities as well as rapid urbanisation are all key drivers for real estate demand, they say. Some also point out that their overseas exposure is not as large as their presence in the relatively more stable Singapore.

‘CapitaLand’s exposure in China is a balanced one with exposure to the residential, commercial, retail, serviced residence and financial services sectors across multiple regions,’ said Lim Ming Yan, chief executive of CapitaLand China. As at June 30, 2008, CapitaLand’s assets in China came to some $7.4 billion and accounted for 27 per cent of CapitaLand’s total assets.

CapitaLand’s presence in Vietnam, on the other hand, is much smaller, the developer said. ‘CapitaLand is relatively early in expansion in Vietnam and our current exposure is just under one per cent of the group’s total balance sheet,’ said Chen Lian Pang, chief executive for South-east Asia for CapitaLand Commercial.

Similarly, both Keppel Land and GuocoLand have stressed that their portfolios are balanced.

Some developers, sitting on a pile of cash, are also taking this opportunity to hunt for distressed assets they could pick up at bargain prices. ‘I am still looking to buy in those markets (China and Vietnam) but only if the price is right,’ a developer told BT. If smaller developers are forced to sell because of refinancing or other issues, bigger companies could buy assets and wait for the market to turn around, he said.

CapitaLand shared the view. With its strong balance sheet, the developer is in a very good position to take advantage of the current market to continue to expand selectively in China and Vietnam, it said.

Orchard Central over 50% leased

Source : Business Times - 18 Sep 2008

Mall says more tenants in pipeline; confident despite economic turmoil

FAR East Organization’s Orchard Central mall is more than 50 per cent leased some six months ahead of completion, the developer told BT yesterday.

A different world: Orchard Central’s high-traffic basement two will have a Mediterranean concept with food and goods coming from countries such as Italy, Spain, France, Turkey, Morocco and Greece

Rents at the mall, which has a net lettable area of 250,000 square feet, range from $20 per sq ft per month (psf pm) to more than $70 psf pm, said Far East deputy director for retail management Susan Leng. ‘We are still negotiating with a lot of potential tenants who are not in Singapore,’ she said.

Because of this, some leases are taking longer to tie down. But more tenants are in the pipeline, she said. The mall is expected to be completed in Q1 next year.

In July, Ion Orchard - a joint project by Singapore’s CapitaLand and Hong Kong’s Sun Hung Kai Properties, above Orchard MRT station - also said that it is 50 per cent leased. Tenants are paying base rent of up to $80 psf pm.

Both projects have been dogged by rumours of poor demand for space amid the current financial market turmoil.

The upcoming 313@Somerset - the third of only three new malls to come up on Orchard Road in more than a decade - has yet give any details on leasing or tenant mix. In May, Australian group Lend Lease Retail, which is developing the mall, said that it had started marketing to potential tenants six months earlier.

Ms Leng said that Orchard Central faces no problem. ‘I am fairly confident. Business has to carry on, even though economic cycles come and go.’

Unlike Ion Orchard, Orchard Central is looking for mid-range tenants because it is aimed at young working professionals. The fact that no luxury tenants have been named so far is not a concern, Ms Leng said.

She also unveiled the concept for Orchard Central’s high-traffic basement two. The level - which is expected to see high footfall because of its links to Somerset MRT station and shopping centres Centrepoint, Specialist Centre and 313@Somerset - will have a Mediterranean concept and will be called The Med.

With lettable area of 14,370 sq ft, The Med will house retail, lifestyle and F&B units such as restaurants, cafes, ice-cream parlours, wine and cheese specialty shops, bakeries, pizza shops, chocolatiers, delicatessens and florists. Food and goods featured will come from countries such as Italy, Spain, France, Turkey, Morocco and Greece. The level is designed by local firm DP Architects.

Some 100,000 foreign workers staying in illegal quarters

Source : Channel NewsAsia - 18 Sep 2008

It is estimated that some 100,000 foreign workers are living in illegal accommodations across Singapore, due to a severe shortage of dormitory space.

One particular shophouse, for example, houses about 35 foreign workers. The narrow shophouse is cramped, and there are no windows or ventilation. In one of the rooms, six bunk beds are packed into a tight space measuring 1.5 metres by 6 metres.

Despite the squeeze, one worker said he would rather stay at this shophouse illegally, than in a dormitory.

“Ali” said: “(When) I stayed in the hostel (with workers from) India, Thailand, Bangladesh, some (of them would) drink, vomit on the floor. Some (would) want to fight. (All of us staying here are from) Bangladesh. (It is) comfortable, (there is) no fighting….(and) no drinking.”

But illegal dorms like this pose fire safety and public health risks.

Jolovan Wham, executive director, Humanitarian Organisation for Migration Economics, said: “To comply with existing fire safety regulations, you need to have staircases and fire exits, and there cannot be too many people living in one place, otherwise it will pose as a fire hazard.

“Some of these living quarters are unhygienic and dirty, and not much is done to ensure that these places are suitable for workers to live in. So I think it is also in the national interest, in Singaporeans’ interest that foreign workers are housed in appropriate conditions that are clean and hygienic because it affects everyone’s living environment.”

Singapore’s National Development Ministry said that while private residential properties such as apartments or landed houses can be rented out to foreign workers, they should not be converted into workers’ dormitories.

Housing a large number of workers in private residential properties could affect the surrounding residents.

The National Development Ministry said that upon receiving a complaint, the Urban Redevelopment Authority will carry out an investigation and conduct a site inspection to ascertain the use of the premises.

If the unauthorised use persists, the owners or tenants may be charged in court for non-compliance of the Enforcement Notice.

If convicted, the offender may be fined up to S$200,000 or imprisoned for a term of up to 12 months or both.

If the offence continues after conviction, a fine of up to S$10,000 per day may be imposed.

However, the shortage of dormitories has forced many employers to house their foreign workers in illegal quarters.

Jalan Kayu residents find ways to coexist with foreign workers

Source : Channel NewsAsia - 18 Sep 2008

When two dormitories housing 6000 foreign workers sprung up in the private estate of Jalan Kayu in 2005, it led to a flood of complaints from residents.

Manager of Tee Up Dormitory, Kelvin Low, said, “Initially, they hope not to see any foreign workers around the estate. This is unrealistic expectation.”

3 years down the road, not only have foreign workers become a common sight here, they are even mingling with residents.

Some foreign workers even join the police and volunteers to patrol the neighbourhood to discourage rowdy behaviour by fellow workers.

A volunteer of the Jalan Kayu Rangers, Saravana Kumar, said, “Some worker throw the bottle outside the road, I say don’t throw the bottle (on the road), must throw (into) the dustbin.”

Dorm operators have started education programmes, while agencies like the National Environment Agency (NEA) have been brought in to tackle the issues of cleanliness and security.

Chairperson of Jalan Kayu Neighbourhood Committee, Terry Fong, said, “For NEA, they have people to clean up during the weekends because you cannot completely stop and tell the workers to not litter here. For the police, they have regular patrols.”

With facilities like beer gardens, exercise fields, food outlets and mini-marts within the dormitories, foreign workers also have less of a need to encroach residents’ space.

In December 2007, 100 foreign workers from these dorms and 100 residents also jointly participated in a walk-a-jog. There are plans for more such interaction sessions to foster understanding between the two groups.

After all, these foreign workers are not too different from Singapore’s early settlers.

Minister for National Development Mah Bow Tan said, “It reminds me of the story of our own forefathers who came from China, India and lived in dormitories, sometimes (in) substandard conditions, (with) 30, 40 in a room. The story I hear today is similar to stories I hear from our own parents.”

And like Singapore’s ancestors, these workers play a critical role in Singapore’s development.

S’pore ranks top in global list of destination for meetings and business

Source : Channel NewsAsia - 18 Sep 2008

For the first time, Singapore has clinched top spot as the best place for meetings and businesses, beating global players such as Paris and Vienna.

The Union of International Associations (UIA) Global Rankings also gave Singapore top billing as the number one Asian country for meetings, a position Singapore has held for the past 24 years.

The Singapore Tourism Board said the country accounted for 22.5 per cent of the meetings held in Asia in 2007.

Over the past ten years, Singapore has also seen a whopping 256 per cent growth in international meetings staged here.

Last year, Singapore hosted 465 international meetings that met UIA’s qualifying criteria, representing a significant 56 per cent growth over 2006.

Most notable among the meetings were the 3rd Hague International Model of United Nations, the 27th International Epilepsy Congress, the 2nd World Glaucoma Congress & Exhibition, the 18th Wonca World Conference 2007 and International Bar Association Conference 2007 which cumulatively drew close to 12,700 delegates to converge in Singapore.

Grade A office rents to be hit amid uncertainty in financial sector

Source : Channel NewsAsia - 18 Sep 2008

The collapse of Lehman Brothers is set to hit Asian office rental rates.

Banks are traditionally the largest users of Grade A office space in the region, and they are likely to cut back on expansion plans and even consolidate current operations in the year ahead.

In the region’s major office markets, Tokyo’s prime rentals are leading the decline.

Others are expected to follow suit over the next 12 to 18 months.

In Tokyo, the cost of each tsubo - or 3.3 square metres - of office space fell for the first time in 35 months in July.

And office rents in similar financial hubs like Hong Kong, Shanghai, and Singapore are likely to go down this road, as the banking industry continues to stumble in this uncertain period.

Colin Tan, Head of Research and Consultancy, Chesterton, said: “There may be more mergers and some banks may actually fold up. And I think this (would have an impact) in the sense that banks are usually the largest user of office space.”

Rental cycles across the region have already been peaking in key cities.

And analysts said a larger-than-expected fall in demand will exacerbate declines.

Grade A office rents in Singapore have fallen from a peak of about S$18 per square foot per month to about S$14. And analysts said it is likely to fall further to S$10 in 2010, which is when the first phase of the Marina Bay Financial Centre is expected to be completed.

Meanwhile, Merrill Lynch analysts expect rents to fall to S$8 by 2011.

Donald Hang, managing director, Cushman & Wakefield, said: “We will probably see developers and landlords trying to activate tenancies on a quicker basis rather than a delayed basis. Last year, a vacant space (would have seen) a rental increase of 5 to 6 per cent, which is why rents went up almost double. But this year, rentals have peaked; it pays to get the premises let out rather than keep it vacant.”

This means companies can expect a tenant’s market ahead.

And with the major support for office space demand weakened, analysts said local firms will be the ones keeping the market afloat.

Mr Han said: “If we look at the last six months, if you asked me the same question, I will be looking into the continued growth in the financial, services sector. But with the recent bankruptcy news we have seen from the US, I think the growth from the financial sector will probably be muted for the time being. And the continued growth…will be more focused on local companies.

“For instance, in Japan and China, we see more Japanese and Chinese corporates looking to consolidate their offices under one building.”

US office REITs in the centre of the storm took a dive on Monday before recovering slightly over the past few days.

Fun stay at SIM hostel

Source : Today - 19 Sep 2008

Tennis, futsal, yoga, dance and space for visiting parents too

IT MAY not be publicly funded, but the Singapore Institute of Management (SIM) is shaping up to offer some students a varsity experience not unlike that of the three local universities. Hostel living will now become part of the SIM education, after the tertiary institution officially opened its new campus yesterday.

Formerly an army camp, the campus at Ulu Pandan will have an array of facilities such as tennis and futsal courts, an outdoor yoga pad and a dance studio to go with its 247 rooms and 428 beds. The residences will be open to both local and international students ˜ and even visiting parents, who can use four short-stay studio apartments while their children settle in.

“We note that many of the parents of our foreign students come with them when they first arrive in Singapore. Since we provide hostel facilities for some of the foreign students, it will be logical for us to cater to parents who would want to stay with them for a few days,” said SIM chief executive Lee Kwok Cheong. These studio apartments would also be used to accommodate visiting faculty members.

But the biggest beneficiaries of its new campus, which is the size of six football fields, are its students.

SIM dance club president and final-year student Tan Mei Sha said: “I enjoy the green environment here. The facilities on this site have also helped CCA (co-curricular activity) groups to cut cost.

A lot of CCAs in SIM are self-funded and we previously had to rent our own dance studios for practice but now booking (the campus dance studio) is free and it’s really accessible to all students.”

Mr Lee said SIM’s third campus ˜ its main academic building is at Clementi Road and its management house is at Namly Avenue ˜ now gives the tertiary institution the opportunity to develop its students academically, personally and socially. “The new SIM is not just to provide hostel facilities to foreign students. It also creates a new campus to live, to learn and to have fun in.”

For international students, the timing could not have been better.

Mr Antony Simon, 21, a third-year student from Medan, North Sumatra, said: “Rising rentals have been a concern especially for international students.”

He described the $700 monthly hostel fees for his twin-sharing room as “quite reasonable”, although it would be $50 more than what he used to pay for a single room in a condo apartment. “There are enough facilities to support my study needs as CCA meetings and group studies are all centred in the campus.”

But what students like most about having a residential campus, they told Today, is that it takes interaction among themselves to a whole new level.

Mr Akshay Kingar, 20, a second-year student from Bangalore, India said: “I plan to start a business in the future and here, I get to mingle with and learn new things and concepts from international students from different countries. The world is getting more globalised and I feel here is a good place to start.”

Yesterday also marked the launch of SIM’s scholarship programme for its Global Education students.

Up to 35 scholarships would be offered each year to students with outstanding academic results or achievements in the areas of sports and the arts. The scholarships would have a total value of $500,000 annually.

Finance Minister Tharman Shanmugaratnam, who graced the opening, said: “The students are very lucky to have a campus that makes this a full university in a sense of providing an all round education for its students. I hope SIM continues to contribute to the Singapore brand of education, team up with reputable players internationally as it has been doing and keeps the high quality standard it has come to be known for.”

Strong demand cuts HDB’s stock of unsold units

Source : Business Times - 18 Sep 2008

Bookings for new flats jump 49% to 12,580 in financial year ended March

THE strong property market in the Housing and Development Board’s (HDB) last financial year whittled down its stock of unsold flats. The board now holds about 1,500 completed units, compared with 3,500 last year.

Reflecting the boom, bookings for new flats rose 49 per cent year on year to 12,580 in the financial year ended March 31.

‘There has been an increase in demand for new flats,’ HDB chief executive Tay Kim Poh said at a press briefing on the board’s annual report. ‘We have been ramping up the building programme.’

The growing need for public housing prompted HDB to offer 8,400 new Build-To-Order (BTO) flats this year - 40 per cent higher than the 6,000 last year and more than three times the 2,400 in 2006.

Of this year’s planned supply, about 5,000 new flats have already been launched, leaving more than 3,000 for the remaining months of 2008.

More flats from the BTO pipeline will be situated at Punggol and Sengkang. About 2,500 units are in Punggol, as part of HDB’s plan to build up a critical mass to support a thriving town centre. The other new flats will be spread across various towns including Yishun, Woodlands and Bukit Panjang.

HDB has not decided on the supply of new BTO flats for 2009.

‘We’ll monitor demand,’ said Mr Tay. ‘When necessary, we’ll make adjustments to our building programme to make sure our supply matches demand.’

ERA Asia-Pacific’s assistant vice-president Eugene Lim said: ‘So far, take-up for new BTO flats has been pretty good.’

Demand comes largely from first-time buyers, he said. But it can take up to three years for such flats to be ready, so some buyers turn instead to existing units in the resale market.

PropNex chief executive Mohamed Ismail expects demand for resale housing to remain strong, and reckons the Resale Price Index may grow another 5 per cent in H2 2008. The HDB market should suffer little or no effect from the US financial crisis, he said.

According to HDB’s Mr Tay, resale flat demand has been driven by various market segments, including permanent residents and first-time and second-time home buyers. No details have been released on the profiles of resale flat buyers.

Beyond new and resale flats, demand for rental flats has also grown, prompting HDB to build another 2,000 units this year.

It plans to increase its stock of rental flats from 42,000 now to about 50,000 in the next few years and is reviewing eligibility rules to ensure these units go to people in genuine need.

HDB completed 6,247 flats last financial year, more than three times the number the year before. HDB also had 18,073 flats under construction, 27 per cent more than in the previous year.

Against a backdrop of rising construction costs, Mr Tay reaffirmed HDB’s commitment to keep flats affordable. ‘We are monitoring the situation closely,’ he said.

According to HDB, a new four-room flat can cost about $300,000 to develop today, taking into account land, building and other costs. This is higher than the subsidised price of a four-room flat sold by HDB at $200,000 to $260,000.

HDB’s greatest challenge is to continue to ensure that people in the mass consumer segment have affordable roofs over their heads, said PropNex’s Mr Ismail. ‘This may mean having to review certain policies, such as the income ceiling for HDB flat applicants, and perhaps even abolishing the resale levy.’

Foreign workers dorm in Serangoon Gardens not definite

Source : Channel NewsAsia - 17 Sep 2008

Minister for National Development Mah Bow Tan has stressed that no decision has been made regarding the building of foreign worker dormitories in Serangoon Gardens.

Addressing the issue at a media conference on Wednesday, Mr Mah emphasised that the proposal was still in the initial stages.

He said the different ministries would first conduct a technical feasibility study at the location.

Should the site be found appropriate, a dialogue will be held between the government and grassroots leaders.

In the case of Serangoon Gardens, Mr Mah said it was unfortunate that an email was leaked, resulting in miscommunication.

“There was a miscommunication, an email went out that should not, it was not supposed to be that we had already decided, that was a miscommunication. There was no decision yet at that time to even shortlist it as a temporary dorm site, because we had not even finished the technical evaluation. So this gave rise to a lot of suspicion that we had already made up our mind,” he said.

He added that concerns raised by the residents will be factored into any decision made by his ministry.

Should a decision be made to go ahead with the temporary dormitories at Serangoon Gardens, Mr Mah said it will be present for three to five years.

Serangoon Gardens is one of a few vacant state properties currently being studied.

Mr Mah said the total number of sites numbered less than 10, and all were either near or within residential areas.

When asked for the location of these sites being studied, Mr Mah declined to comment.

Mr Mah said these temporary dormitories were necessary to house the large number of foreign workers in Singapore in the interim period, before permanent housing was built.

Permanent dormitories are expected to be ready by 2010 or 2011.

Putting things in perspective, Mr Mah said Singapore would be worse off without foreign workers.

The challenge is in balancing the needs of these workers and those of Singaporeans.

There are 577,000 foreign workers in Singapore excluding maids. And the National Development Ministry expects more to enter Singapore in the next few years.

“We plan for a certain level of increase but we never expected the demand to go up so high. (If) we don’t have the facilities in place, therefore we don’t allow the foreign workers in, that would affect many of our major projects,” said Mr Mah.

The minister is also against the idea of segregation, saying that more can be done to help facilitate the co-existence of Singaporeans and foreign workers.

No decision made yet, says Mah

Source : Straits Times - 18 Sep 2008

But integration of foreign workers is a larger issue that must be tackled

NO DECISION has been made about setting up a foreign worker dormitory in Serangoon Gardens, but it is hoped it will come in a couple of weeks.

National Development Minister Mah Bow Tan, disclosing this to reporters yesterday, also took the opportunity to raise a larger issue - that of balancing the economic growth that foreign workers bring with the ‘disamenities’ to local residents.

He said it was impossible to segregate the foreign worker population - now at 577,000, excluding domestic maids - so Singaporeans must ‘be prepared to see them and share with them our common spaces’.

The issue of housing foreign workers in residential areas was thrown into sharp relief two weeks ago when residents in Serangoon Gardens heard that the former Serangoon Gardens Technical School in their neighbourhood was to be converted into a dormitory for 1,000 foreign workers.

A petition against the move was started and, at a dialogue session with their MPs, many residents were vocal about the prospects of traffic congestion and the lack of security if foreign workers were to move into their estate.

Mr Mah said he had noted their concerns and saw why they were upset.

‘They felt it was already a done deal, that we had made up our minds,’ he said.

He went on to say that no decision had been made yet, and that information on the proposal was leaked to Serangoon Gardens residents prematurely, before a feasibility study on whether the site could be shortlisted for further use was completed.

It had not even been decided who would be housed there - construction workers or workers in manufacturing - or how many workers would be housed, he said.

If the site were to be shortlisted, his ministry would then consult the MPs and grassroots leaders for the area, he added.

Unfortunately, before the study was completed, ’someone somewhere made a mistake and it went out, and there was a miscommunication’.

Ms Sujata Jayaram, 43, who chairs the Chartwell neighbourhood committee, said: ‘I’m glad to hear it is not a done deal, and I hope Mr Mah will listen to the residents. We’ll just have to keep our fingers crossed.’

The minister added that fewer than 10 sites - vacant tracts of state land and properties like the former Serangoon Gardens Technical School - were being considered as temporary dorms, good for the next three to five years.

Mr Mah said it concerned him to see the debate on foreign workers framed as ‘one group against another’ - those in landed property versus those in public housing, or foreigners versus locals.

‘We should move away from the zero sum - I win, you lose - kind of situation and move the debate into something a lot more meaningful, a lot more constructive,’ he said.

The larger issue was segregation and integration, he added.

It was not ideal to segregate foreign workers in their own communities, and ‘even if we wanted to do it in Singapore, the land is so scarce’, he said.

He urged Singaporeans to consider the role of foreign workers and the larger social issue of how to ‘accept and live with a larger foreign worker population’.

Everyone - the foreign workers, locals, employers and government agencies - could play a role.

The Government, on its part, has formed an inter-ministry committee to look into housing, infrastructure and amenities for foreign workers.

Mr Mah also said it was wrong to ‘demonise’ foreign workers.

‘I’m not saying all foreign workers are angels, but neither am I saying all of them are criminals,’ he said.

‘The truth is, there will be some black sheep, but by and large, most of them are here to earn a living, not to create problems.’

He added that Singaporeans must understand these workers keep a lid on costs and help the economy to grow.

‘Without them, we will be worse off. That’s a fact,’ he said.

Temporary housing sites still needed

Source : Straits Times - 18 Sep 2008

Mah: Despite 4 options to house them, there’s space shortage in short term

THE foreign worker population here went up by 102,000 last year, double the jump of 55,000 a year ago.

And with major contruction works lined up, a let-up is unlikely.

The influx is ruffling a growing number of feathers too: Complaints relating to illegal housing of foreign workers numbered 300 last year, but the number has already shot past 300 so far this year.

National Development Minister Mah Bow Tan said yesterday that restricting the number of foreign workers is not an option for the next couple of years if the economy is to grow.

The question is how they can be housed properly and, until more permanent housing becomes available in 2011, temporary facilities have to be created from now vacant state buildings.

As at the end of last year, there were 577,000 foreign workers here, excluding maids. Of these, 180,000, or one-third, were doing construction work.

An estimated 80,000 to 100,000 are housed in illegal accommodations or living in conditions that are ‘not ideal’, Mr Mah noted.

Given that minimum standards of public health should be provided where they live, he listed four ways to house them.

~ Residential housing: in rented public housing or in private residential developments.
~ On-site living: on the grounds of or close to large construction projects.
~ Purpose-built dormitories: sited further away from residential areas or within or near industrial estates.
~ Factory-converted dormitories: Factory owners can convert 40 per cent of their industrial premises into dormitories.

Guidelines have also been relaxed to allow such facilities to operate as commercial dorms.

But he noted that pursuing these options still leaves a housing shortage for foreign workers in the short term. This makes it necessary to identify sites for temporary accommodation lasting two to five years. Ten sites are being explored for such use.

But even if all these sites are converted into housing for workers, it will still not totally meet the demand, said Mr Mah.

He stressed that while efforts would be made to house workers in ways that would minimise noise and inconvenience to nearby residents, it would not be socially desirable or possible to totally segregate them.

With Singapore’s limited land area, creating huge foreign workers’ communities like those in the Middle East would not be possible, he added.

Does the lack of housing for foreign workers reflect poor planning?

Mr Mah said projects such as the two integrated resorts needed construction workers, and large investments calling for huge factories also required process workers.

‘Yes, we do some planning but the build-up of the spaces requires quite a lot of lead time so we could not anticipate that…To call it poor planning, to call it one of the problems of success because we were so successful, we did not anticipate this kind of issue.’

One option, he said, was to look into building self-contained complexes or campuses that house up to 20,000 workers.

More foreign worker dorms in pipeline

Source : Business Times - 18 Sep 2008

WITH more foreign workers expected in Singapore, the government is looking for more places to house them. It has released 11 sites for purpose-built dormitories since February last year and is studying others for temporary quarters.

National Development Minister Mah Bow Tan yesterday underscored the importance of foreign workers to economic growth, be it in construction, manufacturing or service industries.

Construction demand, for instance, came to $16-17 billion in 2006 and is expected to reach $27-30 billion this year, he said.

‘We’ve deferred some programmes . . . (but) we still need the housing programmes, we still want to build our schools and hospitals, and our MRT projects must go ahead,’ Mr Mah said.

For the economy to keep growing, restricting the number of foreign workers is not an option right now, he said. Nor is it possible to segregate foreign workers from residents because of space constraints.

‘We will have to strike this balance between economic needs and social issues that come with a large number of foreign workers,’ Mr Mah said.

The government, employers and the community will have to find ways to facilitate co-existence.

The 11 sites for purpose-built dormitories have 30-year leases and may be ready by 2010 or 2011 to provide up to 65,000 new beds.

While these sites are being developed, temporary dormitories will be needed to ease a short-term accommodation crunch. These dormitories can be built on vacant state land or converted from vacant state property and may carry leases of three to five years.

Fewer than 10 temporary sites are under consideration, one of which is Serangoon Gardens Technical School. The government is assessing the sites and will consult Members of Parliament and grassroots leaders if they appear suitable. So far, no decision has been made on any site.

There were about 757,000 foreign workers in Singapore in December last year. Excluding 180,000 foreign domestic maids who stay with their employers, the remaining 577,000 non-domestic foreign workers have to be accommodated.

And more non-domestic foreign workers could arrive in the next few years. The 577,000 last December was 21 per cent more than the 475,000 in December 2006 and 37 per cent more than the 420,000 in December 2005.

Singapore now has 25 purpose-built dormitories providing 95,000 bed spaces.

Australia seen luring global property funds

Source : Business Times - 18 Sep 2008

Middle East, German investors seeking out deals in commercial property market

With US$12 billion of commercial buildings up for grabs and its currency weakening, Australia is becoming a prime target for global funds keen to snap up bargains offloaded by troubled property trusts.

The Australian commercial property market, long dominated by local players, has held its value because of low vacancy rates. But highly leveraged real estate investment trusts are in trouble because the global credit crunch has raised borrowing costs.

Cashed-up Middle East investors and German funds with low-risk, low-return expectations are sniffing out deals, says Robert White, president of New York-based research firm Real Capital Analytics.

‘A lot of investors want to invest in Asia Pacific for allocation reasons but they’re scared of China, and there are limited opportunities in other markets,’ he said. ‘So Australia has emerged as a very attractive market for Germans, for Middle East investors.’

Australian developer Ashington said earlier this month that it was seeking foreign investors to stump up a A$200 million (S$228 million) fund to buy buildings during what it believes will be a short window in 2009 for bargain hunting.

And Abu Dhabi Investment Authority, the world’s largest sovereign wealth fund, wants to expand its property portfolio in Australia, according to UAE newspaper reports. About A$15 billion worth of assets are up for sale in Australia, according to consultants DTZ. And Australian property firms, which have traditionally relied on superannuation pension funds, are also looking to partner foreign funds to broaden their capital base.

The global credit crunch has hit Australian property firms hard, especially Reits, which are now looking to raise funds to cut their borrowing levels after debt spreads more than doubled in the last six months to about 110 basis points.

The refinancing problems of shopping mall operator Centro Properties Group and Allco Finance Group Ltd have hogged the headlines, but the whole stockmarket sector has been dragged down about 40 per cent since October.

Macquarie Office Trust said during the full year to June that it made asset sales totalling A$340 million while GPT Group plans to sell holiday resorts.

A fall in the currency and expected further cuts in interest rates are enticing many investors, said Jane Murray, Asia-Pacific head of research for Jones Lang LaSalle The Australian dollar has fallen about 18 per cent against the US dollar since a peak in July on expectations that global economic turmoil will drag down commodity prices and prompt interest rate cuts.

‘It may not be a long-term phenomenon because obviously the Australian market will recover,’ Ms Murray said. ‘But over the next year or even two years, we will see many more purchases done by international players.’

In 2007, overseas investors spent about A$15 billion on Australian commercial property - half of total transactions - with a slew of highly leveraged deals before the credit crunch hit.

So far this year the going has been slow, according to DTZ, with foreign investors spending A$1.5 billion, or about 21 per cent of the total recorded up to the end of August. Market fundamentals still look solid as a mining boom has brought office vacancy rates down to an average 4.2 per cent across the country. Office yields are also high at 7 per cent in the first half of 2008, compared with 6.7 per cent in the United States, 5.2 per cent in Singapore and 4.7 per cent in Japan.

But some funds see better value elsewhere. Henry Chin, a strategist at Deutsche Bank’s property investment arm RREEF, said a clampdown on bank lending was hampering growth in Australian property.

He prefers China and South Korea, where office vacancy rates are below 2 per cent and new supply is tight.

But although global funds are drawn to high growth markets such as China and India, many conclude that Australia offers the best returns compared to risk, according to Alistair Meadows, a director at DTZ.

‘After six to 12 months of looking hard into these markets, they fall back to a default position and look at Australia as offering good transparency,’ Mr Meadows said.

Australia, where nearly 70 per cent of investment-grade buildings are securitised, ranks second in the world for property market transparency, behind Canada, according to a Jones Lang LaSalle index. Japan comes in at 26 on the list, with China’s main cities at 49 and India at 50. — Reuters

SIM offers rental apts for students’ parents

Source : Business Times - 18 Sep 2008

Aim is for foreigners to be closer to their children, so as to help them settle in

WHILE university hostels are typically occupied by students, one tertiary institution here has dedicated units that its students’ parents can rent - to experience a dose of campus life with their children.

Over at the Singapore Institute of Management’s (SIM) new campus in Ulu Pandan, there are four studio apartments that parents of foreign students can stay in, so that they can be close to their children and help them adjust during their first few days in Singapore.

The $150-a-night apartments, which have themes such as Balinese and modern contemporary, are fully furnished with a pantry and balcony area. They are also just a stone’s throw away from the six hostel blocks where the students stay.

To date, seven sets of parents have stayed at the apartments since the 4.5-hectare SIM Global Education campus - built on the former army camp for the School of Military Medicine - was opened in July. It is SIM’s third campus, after its headquarters in Clementi and another site at Namly Avenue.

According to SIM chief executive Lee Kwok Cheong, there are also plans to allow visiting faculty or mature students enrolling in short executive education programmes to use the studio apartments as well.

‘For this old block, we could not turn it into too many student hostels, but we felt it was ideal to turn it into something that parents could use. The feedback has been good so far and it’s an alternative to staying in a hotel, which can be more expensive and further away,’ Mr Lee told BT in an interview during a tour of the campus.

The air-conditioned student hostels are also a first for SIM, and can house some 428 students. They pay anything from $500 to $900 a month, depending on whether they live alone or with roommates.

Already, 20 per cent of the rooms have been taken up and SIM expects full occupancy by year’s end.

One early bird who has moved in, 21-year-old management student Anthony Simon from Indonesia, said: ‘I used to rent a place in Lakeside, which took me nearly 45 minutes to get to school. Now, I can get to class in just 10 minutes by bus, and I’m paying less in rent as well.’

The campus, which will be officially launched by Finance Minister Tharman Shanmugaratnam this morning, is primarily a residential and recreational one. Facilities include a gymnasium, dance studio, tennis courts, a jogging track and a mini-mart.

All lectures and tutorials will still be conducted at the SIM headquarters, located just four bus stops away.

Mr Lee said that SIM management started scouring for suitable sites last year and eventually decided on the Ulu Pandan one earlier this year. It outsourced the development and operational work to property management firm EM Services, which leases the site from the government.

Mr Lee added that more campus development plans would be unveiled in the next few years as SIM moves ahead to double its existing cohort of 10,000 full-time students by 2013. Currently, about a quarter of this cohort is from overseas.

SIM will continue to actively recruit students from countries in Asia such as China, India and Indonesia, where there is ‘much interest in Singapore education’, said Mr Lee.

He did admit that there was no plan to open an overseas campus for the time being, with all energies focused on building the brand locally and attracting as many foreign students to the Republic as possible.

‘We know that if we go overseas and, for whatever reason, it does not work out, it has a big impact on reputation. That’s why I’m a bit cautious about talking about going overseas.

‘We have to be sure that it will be successful and that if we do so, we can provide the same quality and also enhance our brand.’

Lehman’s fall marks office rent peak here

Source : Today - 18 Sep 2008

Consultants expect demand for prime office space to ease as growth slows

The collapse of Lehman Brothers Holdings Inc may contribute to an easing of demand for prime office space in Singapore, where commercial rents are already peaking amid slowing economic growth, property consultants said.

The market turmoil that also this week forced the sale of Merrill Lynch & Co to Bank of America Corp and a bailout of American International Group Inc will probably further slow expansion by international companies in Singapore, said analysts at DTZ Debenham Tie Leung and Cushman & Wakefield.

‘Rents have peaked and with the collapse of Lehman and the further shakeout in financial markets, this is going to accelerate,’ said Ong Choon Fah, Singapore-based regional head of research at DTZ Debenham, a property consulting firm. ‘Financial companies are the ones occupying the very prime space and a lot of them are in survival mode.’

Home prices and office rents in Singapore have cooled after rising to records last year, and Colliers International said this month that office-vacancy rates in the US will rise to the highest in three years as financial-services companies slash jobs after reporting writedowns of US$515.8 billion.

Gains in Singapore office rents will be limited as global economic growth slows, the property researchers said. Singapore’s economy is forecast to grow between 4 per cent and 5 per cent this year, slowing from 7.7 per cent in 2007, as demand for Asian-made goods wanes and writedowns mount at banks and securities firms.

Lehman, which this week filed the biggest Chapter 11 bankruptcy in history, occupies office space in Suntec Real Estate Investment Trust’s Suntec development. The firm has about 270 employees in Singapore.

Suntec Reit, a property trust partly owned by Hong Kong billionaire Li Ka-shing, has dropped 26 per cent in Singapore trading this year. CapitaCommercial Trust, an office landlord run by South-east Asia’s largest developer, has slumped 36 per cent during the period.

So-called Grade A office rents will probably drop to about S$14 a square foot a month in 2009 from S$16 this year, Merrill Lynch analysts led by Kar Weng Loo estimated in an Aug 26 report.

Rents may fall further to S$10 in 2010, when the first phase of the 2.6 million-square-foot Marina Bay Financial Centre is scheduled to be completed, and to S$8 by 2011, the brokerage said. For the second half of 2008, rents for prime office space will be little changed after climbing about 7 per cent in the previous six months, said Donald Han, Singapore-based managing director of Cushman & Wakefield. Still, supply of prime office space is likely to remain tight until 2010 and any office space vacated by Lehman will probably be filled quickly, Mr Han said.

‘The market is still in a very healthy state and occupancy in Suntec, where Lehman has its offices, is in excess of 96 per cent,’ Mr Han said.

‘The only issue is that negative sentiment will creep in, with the fact that such a big investment bank that has a long history of operating in Singapore is collapsing will shock the market.’

Source : Business Times - 18 Sep 2008

Posted in General, Office / Retail Space, Rental | Tagged: Lehman Brothers, Office Rental, Office Space, Singapore Office | No Comments »

Office space rents to fall with Lehman collapse

Posted by luxuryasiahome on September 18, 2008

THE collapse of Lehman Brothers Holdings may contribute to an easing of demand for prime office space in Singapore, where commercial rents are already peaking amid slowing economic growth, property consultants said.

The market turmoil that this week also forced the sale of Merrill Lynch to Bank of America and a bailout of American International Group will probably further slow expansion by international companies in Singapore, said analysts at DTZ Debenham Tie Leung and Cushman & Wakefield.

Said Ong Choon Fah, Singapore-based regional head of research at property consulting firm DTZ Debenham: “Rents have peaked and with the collapse of Lehman and the further shakeout in financial markets, this is going to accelerate.

“Financial companies are the ones occupying the very prime space and a lot of them are in survival mode.”

Gains in Singapore office rents will be limited as global economic growth slows, the property researchers said.

Singapore’s economy is forecast to grow between 4 per cent and 5 per cent this year, slowing from 7.7 per cent in 2007, as demand for Asian-made goods wanes and writedowns mount at banks and securities firms.

Lehman, which this week filed the biggest Chapter 11 bankruptcy in history, occupies office space in Suntec Real Estate Investment Trust’s Suntec development.

The firm has about 270 employees in Singapore.

So-called Grade A office rents will probably drop to about $14 per square foot a month in 2009 from $16 this year, Merrill Lynch analysts led by Kar Weng Loo estimated in an Aug 26 report.

Rents may fall further to $10 in 2010, when the first phase of the 2.6 million-square-foot Marina Bay Financial Centre is scheduled to be completed, and to $8 by 2011, the brokerage said.

For the second half of 2008, rents for prime office space will be little changed after climbing about 7 per cent in the previous six months, said Mr Donald Han, the Singapore-based managing director of Cushman & Wakefield.

Still, supply of prime office space is likely to remain tight until 2010 and any office space vacated by Lehman will probably filled quickly, Mr Han said.

“The market is still in a very healthy state and occupancy in Suntec, where Lehman has its ­offices, is in excess of 96 per cent.”

HDB to build more new flats, rental units to meet rising demand

Source : Channel NewsAsia - 17 Sep 2008

Singapore’s Housing & Development Board (HDB) said it is offering 8,400 new flats this year, which is 40 per cent higher than the 6,000 units offered in 2007.

Of these, 5,000 flats have already been launched, with a good part of them sited in Punggol, which is earmarked as a waterfront town.

Plans are also in the pipeline to address the issue of rising construction costs and high demand for public rental flats.

The supply boost is a boon but market players said the new flats may not be ready in time for those who need housing in the coming year.

Real estate agency PropNex expects the strong demand for resale flats to persist.

It is also projecting resale prices to climb 5 per cent in the next 6 months.

The agency noted that the prices of new HDB flats have crept up as well, even though they are still below market rate.

PropNex’s CEO Mohd Ismail said: “It used to be much lower but because of construction cost(s), the gap has very much narrowed. Today, a brand new (HDB unit) versus a resale (unit), we are talking about less than 20 per cent.”

Observers said construction costs have nearly doubled in the past two years. And it’s showing on HDB’s books.

The HDB recorded a deficit of S$1,081 million in the 2007/08 Financial Year excluding the government grant. That is S$341 million more than the previous year.

The net surplus after government grant of S$1.248 billion was S$167 million.

HDB said it was due to the stepping up of its building and upgrading programmes.

And there are measures to keep costs down.

“We have a crop of building contractors who have been providing very good services to us at reasonable prices. We are also able to do bulk contract, (which is) buying in bulk, that helps us lower building material cost(s),” said Tay Kim Poh, HDB’s CEO.

More HDB owners also sublet their flats last year since subletting rules were relaxed. As of August 2008, 21,000 flats were rented out, compared to 13,200 in March last year.

Property agents said one of the challenges for HDB is in providing enough housing for needy families. To that end, the HDB will be building 2,000 new rental flats in various parts of Singapore next year.

Guidelines will also be reviewed by year-end to make sure the rental flats go to people who need them most.

HDB said it will continue with ongoing efforts to rejuvenate public housing estates. It is also studying wider application of environmentally-friendly technologies for HDB flats.

HDB - the new old folks’ home?

Source : Today - 18 Sep 2008

Young adults are placing their parents on the waiting list because they don’t want to live with them

TWO current issues should raise some concern among Singaporeans.

First, the tripling in the number of applications for HDB rental flats, as highlighted by Prime Minister Lee Hsien Loong at the National Day Rally, and second, news that more families are facing difficulty paying their electricity bills. Are these signs of rising poverty? Or, rather, issues that if not adequately tackled will expose the community to other social ills?

In light of inflation rates, it is easy to jump to the conclusion that we are a poorer society. But the HDB stories are more varied than we think and not simply of applicants being unable to buy a flat, hence being left with no choice but to rent. There are cases of opportunists cashing in on soaring property prices and biding their time for the next kill. Some HDB flat owners have furnished palaces inside their abodes. It is a legitimate matter of choice.

What is disturbing, though, are cases of young adults placing their parents on the waiting list because they no longer want to live with them in the same house or apartment.

Apparently, this number is rising and signals a fundamental change in our social structure and values.

The issue is not whether it is right or wrong that children should no longer want to put up with their parents when they have their own families. Living apart does not necessarily mean the severance of familial ties and is nothing new in the West, where the practice has evolved from a culture of independence.

But our Asian makeup is quite different, and the real question is whether the HDB rental flat has become a less severe and more consolatory alternative to the old folks’ home.

The old folks’ home is a contentious issue in the Asian context. Due to different cultural values, it will take another generation or more before this becomes an acceptable facet of Asian living. Stories of abandonment, loneliness and the lack of adequate facilities ˜ not only for medical care but also meaningful, engaging social activities ˜ have made sending a parent to such homes far from being a favourable choice. But who is to say rental HDB flats for old parents will not bring the same dismal prospects?

Mr Lee told of young adults willing to pay to keep their parents out of their bigger homes, to dwell in HDB rental flats instead. Yet, at the same time, we read of Singaporeans who renege on their electricity bills, 35 per cent of whom are surprisingly from four-room and five-room HDB households. Is this another sign of rising poverty, or is it a case of Singaporeans living beyond their means?

It is difficult to picture a poor Singapore when the restaurants, crowded shopping malls and entertainment centres are packed with patrons. While the propensity to spend is good for the economy, indiscriminate spendthrift habits can spell social problems. We hear grumbles about rising food and fuel prices, yet there is a long waiting list for the latest model of a car or some dispensable electronic gadget.

There is nothing wrong with indulging in luxuries if one can afford it. Perhaps the seemingly better-to-do households that are not paying their electricity bills should be more circumspect about prioritising their needs.

Or has there been a fundamental change in the way we live? Are people embracing the philosophy of living for today and leaving tomorrow to take care of itself if it comes? Has a seemingly ceaseless cornucopia of plenty created a false sense of security, and has the consistency of Government handouts led to expectations that help is always at hand?

The HDB rental stories and the households not paying their electricity bills may be only two signals of a shift in our social values and how we are beginning to live differently. We have identified the issues, which may or may not become problems. Equally important are the steps to be taken to cope with these shifts, to pre-empt problems that go beyond the pecuniary.

LIANG DINGZI, The writer is a management consultant and freelance contributor.

21,000 HDB flats sublet

Source : Today - 18 Sep 2008

CALL it a combination of financial need or greed, and exploding demand: As of last month, 21,000 flats had been rented out by Singaporeans, a near 60-per-cent spike from the 13,200 units just 17 months ago.

Coming as it does three years after subletting rules were relaxed, Housing and Development Board chief executive Tay Kim Poh attributes this recent surge to changing market dynamics. “Rentals for private housing have increased, and those previously renting private property are renting HDB flats,” he said.

The result: This demand is enticing more flat owners to sublet their homes.

Then, property agents said there are the growing numbers of foreigners and permanent residents looking to rent an affordable roof over their heads, as well as to a lesser extent, en bloc beneficiaries who have sold their condos and are waiting for the market to cool before buying a home.

One man who cashed in on the strong rental market trend was chef Chu Seng Poh, 43, who is leasing out his 3-room Jurong East flat for $1,500 ˜ even though it has meant moving back in with his parents after 15 years and sacrificing his privacy.

“Every month, $300 goes towards my flat mortgage from my CPF. I don’t have to dip into my pocket and I collect $1,500 in rent. This is sort of a semi-retirement plan for me,” said the bachelor.

In March 2005, rules were relaxed to allow homeowners who had not yet paid off their HDB loans to sublet their flats, so long as they had occupied it for at least 10 years. For those with no outstanding loan, the minimum period was halved to five years.

These days, in spite of the surge in supply, sublet HDB flats can fetch $2,600 for a 5-room unit. But with more new housing supply in the HDB’s pipeline, and the latest global financial turmoil, would rentals remain this buoyant?

A major crisis aside, property agents expect market rentals to rise 5 per cent next year. PropNex chief executive Mohamed Ismail said “outside factors” have little effect as demand for public housing will always outstrip supply, especially with the continued influx of foreigners.

But for others like housewife Hanifa Kadir, 57, subletting is more a matter of need than profit. A host of debts and medical problems lead her to rent out her paid-up, 3-room flat in Toa Payoh.

“I’m a diabetic, I have heart problems and gout, I have not been working my entire life and my (late) husband did not leave me with much,” said Madam Hanifa, who moved in with her son and daughter-in-law.

And there are others like taxi driver Mohamed Shamsuddin, 57, who bought his four-room flat in Aljunied during the property market peak in 1997, when he was an administrative manager.

He lost his job in 2001 and exhausted his CPF savings last year. Unable to afford the monthly payment of $950 on his current $2,000-a-month earnings, he sublet his flat. “I hope the good rental market continues as I still have 14 years on my loan to pay off,” he said. “The downside is I’m staying with my in-laws whom I don’t really get along with, and this has been a strain on my marriage.”

HDB’s tender costs up 22%, but flat prices not linked

Source : Today - 18 Sep 2008

With the Housing and Development Board’s (HDB) development costs up over the last year, young couples looking to buy a new flat may ask: Would I have to pay more?

For Financial Year 2007-8, tender prices for its construction works grew about 22 per cent. In June, National Development Minister Mah Bow Tan had estimated they could jump another 20 per cent this year.

Releasing the HDB annual report on Monday, chief executive officer Tay Kim Poh gave homebuyers his assurance the HDB had a “good framework to manage” the costs. “We have a core of building contractors who have been providing good service at reasonable prices … we also help them through various ways, for example, bulk contracts of materials. So, they are able to quote better prices for building contracts.”

Mr Tay also stressed that the pricing of flats is not pegged to development costs. Instead, the board looks at “the market price of comparable flats in the area, the profile of the flat buyers, their income level ˜ and from there, we determine the level of market subsidy that we need to give”.

The board said over FY07/08, HDB building developments were “adversely affected” by the hike in costs fuelled by “strong construction demand both globally and in Singapore”. The industry also encountered volatile oil and steel prices.It put in place “additional cost management measures”, such as reviewing its specifications and requirements”, and has procured materials such as cement and sand through bulk contracts.

“This will help to minimise price uncertainty and reduce the pricing of risk by (contractors) during tenders, which might lead to more competitive tender offers,” said the HDB. “Generally each supply bulk contract will last between 1 and 3 years.”

Even so, PropNex chief executive Mohd Ismail noted that the gap between prices of new flats and market prices “has narrowed” because of construction costs. “A brand new unit versus a resale unit, we are talking about less than 20 per cent,” he told CNA.

On the supply of new flats to meet demand, Mr Tay said 8,400 new flats were being added this year, with 5,000 of these already launched. As for the resale market, he dismissed the view prices are being driven up by permanent residents. “The increased demand for resale flats comes from all segments: First-timers who can’t wait, upgraders and permanent residents.”

With resale prices of HDB flats up 4.4 per cent in the second quarter, property agents were quoted in a July 2 Today report as saying the resale market would still be fuelled by strong immigrant demand.

Mr Tay said with the HDB increasing supply of new flats, “this will relieve pressure on the resale market”.

Lessons from HK’s rental housing system

Source : Straits Times - 18 Sep 2008

Hong Kong’s public rental housing system has thrown some ideas out for the Housing Board to mull over.

Senior Minister of State (National Development and Education) Grace Fu, who is leading a Singapore delegation to the territory, said about a third of Hong Kong’s population lives in 670,000 rental flats.

These comprise a wide range of homes catering to different family sizes and circumstances.

The Hong Kong Housing Authority (HKHA), which administers rental housing, provides flats at subsidised rates for as long as 10 years.

It also has ‘interim’ and ‘transit’ housing for families waiting to move into rental flats or those rendered homeless temporarily.

Ms Fu said Hong Kong’s ‘product offering is wider, and it provides good ideas for us’.

Over the past two days, the Singapore delegation has been meeting officials from the HKHA and the Hong Kong Housing Society (HKHS) and visiting public and elderly housing projects. The delegation is on a three-day working visit that will end today.

Ms Fu told reporters yesterday that Hong Kong has a different priority system for its rental flats. It has three queues - for the elderly, families with elderly members, and singles - with varying average waiting time. The family’s income levels and assets are used in the eligibility criteria, and rents are determined according to incomes and not pegged to market rates.

These are ideas ‘worth considering as well’, Ms Fu said.

The HDB is currently reviewing the eligibility criteria for rental flats, which have seen a surge in demand in the past year.

The waiting time for a new flat has now stretched to nine to 18 months from just two to six months two years ago.

Aljunied GRC MP Cynthia Phua, a member of the delegation, has suggested that perhaps it is time to review the percentage of rental flats in Singapore, which is now on the ‘low side’.

One quirky initiative that MPs have suggested is a points-system for tenants that the HKHA uses, where tenants get penalised for anti-social behaviour like littering. If they accumulate a certain number of points, they lose their right to stay in their flats.

Ms Fu stressed that while Singapore can take a leaf from Hong Kong’s rental policy book, the government’s role in each place is very different. Singapore’s focus is on home ownership, while Hong Kong’s is on providing comprehensive, low-cost rental housing, she said.

Another area that the HDB is also studying is housing for the elderly.

The HKHS, a non-governmental housing organisation, is piloting a new, mixed-use development that will integrate private homes with elderly housing, said its chairman, Mr Yueng Ka Sing.

Under this experiment, the first 10 floors of a 34-storey block will be reserved for senior citizens, while younger families can live on the upper floors.

The HKHS also recently rolled out two ‘retirement resorts’ for the middle- to upper-income elderly, where those over 60 years old can pay an upfront sum as a lifetime lease to live in a condominium-like home, with health and medical care provided.