Source : Business Times - 15 Nov 2008
PROPERTY was the theme of the week as developers such as City Developments and Ho Bee Investment took a hit from lower sales this quarter.
This brings the total number of Singapore Exchange-listed companies reporting Q3 results to 298. Of these, 296 which have comparative results for the previous corresponding period have posted earnings of $6.51 billion, down 11.3 per cent.
For the nine months ended September, 293 firms with comparative results posted earnings of $22.9 billion, up 3.4 per cent from a year ago.
Bellwether City Developments posted an 11 per cent fall in net profit to $150.8 million due to a smaller revenue recognition from its residential projects in Singapore. The group also said that it would defer its South Beach development project ’till construction cost reverts to more reasonable levels’.
DMG research analyst Brandon Lee said yesterday that this is also likely a move to preserve capital given the tight credit conditions.
Mr Lee, who held a ‘neutral’ rating for the stock, sees a delay in the sale and launch schedules for the company’s domestic residential projects and assumes price declines of up to 8 per cent for the remaining 2008 and as much as 20 per cent fall for 2009.
Ho Bee Investment reported a 52 per cent slump in Q3 net profit to $18.7 million. Revenue slid 59.4 per cent to $52.5 million from a year ago, due to the deferment of revenue recognition from units sold under the deferred payment scheme.
The developer is ‘holding out for the good times’, said DBS Vickers analyst Adrian Chua in a research note yesterday, noting that the firm sees a lower risk of default on the five projects slated for completion in the first half of next year.
‘Although FY09 earnings will be strong, longer-term visibility is lacking given that its remaining projects at Sentosa were acquired at relatively high land costs, coupled with the tepid sentiment for high-end property,’ wrote Mr Chua, who kept a ‘hold’ rating on the stock.
Malaysian casino operator Genting International posted a net loss of $116.83 million for the quarter, compared with a net loss of $393.38 million in the same period last year, on bad debts and forex losses.
‘Not a winning bet yet,’ wrote CIMB-GK analyst Soh May Yee, who said that the traditionally stronger summer period did little to offset the dragging effects of UK’s weak economic conditions and last year’s smoking ban on its operations.
But she added that the company’s cash coffers are not expected to ‘dwindle materially’ from $774 million as at end-September, as it has fully contributed its equity position for the Sentosa casino project and has up to $4.2 billion loans set aside for the project.
Ms Soh downgraded the stock to ’underperform’ from ‘neutral’.
ComfortDelgro Corporation said on Thursday that third-quarter net profit fell 18.1 per cent to $48.3 million from the same period last year due to the earlier spike in fuel costs.
Kim Eng analyst Gregory Yap said in a research note yesterday that 5 per cent quarter-on-quarter drop in fuel energy costs to $78.7 million was not as steep as the drop in crude oil suggests ‘as hedging was done when oil first started to fall’.
Mr Yap added that domestic profits, which almost tripled by a quarterly comparison, and its Shenyang operations were bright spots.
Noting that Comfort is still ‘a defensive place to park funds during volatile times’, he kept a ‘buy’ rating.
Merrill Lynch said in a Nov 13 report that while profits from Asia are expected to fall about 20 per cent next year, there has been a negative co-relation between earning growth and regional stock market returns.
‘Asian markets don’t follow earnings’, it said.
The report pointed out that while Asian earnings growth has been negative in 10 of the past 33 years, seven of those 10 years saw stock market gains. In both 1983 and 1993, earnings fell more than 20 per cent, but saw higher markets.
‘Putting it all together, we see limited downside, but at the same time little reason to expect a sustained bull market,’ it said.
‘Rather, the environment is more likely to be direction-less.’
Saturday, November 15, 2008
Writedown math may sully developers
Source : Business Times - 15 Nov 2008
Bottom lines have already started to shrink in current reporting season
SMALLER home developers have already started cutting prices and this will raise the pressure on other listed property groups to make writedowns. This will whittle bottom lines, which have already started to shrink during the latest quarterly reporting season.
Back in 2001, developers such as CapitaLand and Keppel Land made massive writedowns on their Singapore residential landbanks. Some were made for sites that had breakeven costs below the achievable selling prices. In short, the provision quantums were based on the the difference between breakeven cost and selling price.
So too, this round, as we see achievable selling prices slipping below breakeven costs at certain sites, the writedowns could follow - although developers may drag their feet through Q4. But next year, they may have little choice as more widespread evidence of falling home prices emerges.
A seasoned valuer told BT that he would peg valuations for selling prices of top-end homes as at end-2008 at about 10-15 per cent below end-2007 levels. However for high-end residential land itself, the decline would be higher, at 15 to 20 per cent.
Past property slumps have lasted at least six to eight quarters - so we are in for a rough ride ahead. High-end sites may need to be written down a lot more than mass market sites. The run-up in home prices in 2006-2007 was much more concentrated on the high-end segment, unlike the bull run in 1995/96 when every segment - mass market, mid and high-end - galloped.
Developers who snapped up land at the market peak in 2007 and early 2008 will face much greater pressure for writedowns than those who bought in the early stages of the bull cycle, say, in 2005.
Developers who sold homes on deferred payment schemes may also worry if they have gone on to recognise profits on such units - beyond the initial 20 per cent payment collected from buyers - based on the extent of the project’s completion. What happens if these buyers default and return their units? We could potentially see developers having to un-book some of the sales and and profits on such units - until they find new buyers.
Office revaluations
Evidence of office rents slipping has also begun to emerge. Potential investors also demand higher yields on office acquisitions today than 12 months ago. These two factors point to lower office valuations.
Some believe that valuations of office buildings should not decline much next year even if office rents fall because as leases come up for renewal, the new rental rates will still be much higher than the low rates which were locked in previously.
A seasoned valuer disagrees, pointing out that valuers estimate the capital value of an office block based on current market rents being fetched in the building, and then dividing it by a capitalisation rate (which would be the yield that potential investors demand). Even using a discounted cashflow model for valuation, capital values for office blocks are set to decline because future rents are coming off and an adjustment for higher capitalisation rates has to be made given the riskier economic environment.
His estimate is that end-2008 Grade A office capital valuations would be around 10 per cent lower than the end-2007 level. Bigger drops can be expected in 2009 as the economy deteriorates.
Downward revaluations of investment properties like office blocks would hit developers’ bottom lines under Financial Reporting Standard 40 for most property groups. The major exception would be City Developments which, upon adoption of FRS 40, has continued to state its investment properties at cost less accumulated depreciation and impairment losses.
Most property groups’s bottom lines are likely to deteriorate going ahead, whether they choose to start making residential provisions and downward revaluations of office investment properties in their Q4 2008 report card or delay it till 2009.
However, a seasoned property analyst is not bothered by such writedowns and losses. Property counters are already trading at huge discounts of over 50 per cent to revalued net asset value. The market seems to be pricing in extreme declines of around 50 per cent in property values. The bad news from provisions and writedowns has already been factored in. Developers’ indebtedness and cash positions may be the things to watch out for.
Call to make refinancing of debt easier for S-Reits
Source : Business Times - 15 Nov 2008
ARA CEO John Lim suggests regulatory reviews to relax bank lending to S-Reits for the next few years to tide them over liquidity issues
ARA Asset Management Group CEO John Lim would like to see refinancing of debt being made easier for Singapore real estate investment trusts (Reits). ‘The whole S-Reit market is oversold. The biggest fear, besides the issue of valuation of assets, is the refinancing of debt,’ he told BT in a recent interview. ‘In 2009 alone, you have $4.6 billion of debt for refinancing. In the next four years, it may be close to $20 billion including rollover debt. The issue is very real.’
Mr Lim made a few suggestions involving a regulatory review to relax bank lending to S-Reits for the next few years to tide them over liquidity issues.
One suggestion would be for the Monetary Authority of Singapore to consider lifting the cap limiting banks’ exposure to property development and investment activity - excluding owner-occupied residential mortgages - to 35 per cent of total non-bank loan and credit exposures, under Section 35 of The Banking Act.
‘But if that is not possible, why don’t they consider exempting Reits from Section 35 for Singapore banks?’ Mr Lim asked. Arguing the case for this, he said risks are relatively low for S-Reits, which are generally conservatively geared at between 30 and 40 per cent, while those geared above 35 per cent have to be rated, so the risk is reflected in the rating. ‘As a quid pro quo (for exempting S-Reits from the Section 35 limits), Reits may have to accept a lower gearing limit,’ he suggested. ‘So we would not be putting any additional risk on to the banking sector.’
Under current rules, a Reit’s aggregate leverage limit is 35 per cent of its deposited property if the Reit is not rated, with a higher 60 per cent limit if a credit rating for the Reit is obtained and made public.
Last month, Monetary Authority of Singapore deputy chairman Lim Hng Kiang told Parliament that most banks are significantly below the Section 35 limit and the aggregate banking system’s exposure here is just 15 per cent.
A banking source said that although most banks may be well below the Section 35 limit, they may be prudent and set their own internal limits that may be below that stipulated by MAS.
ARA’s Mr Lim has another suggestion on his wish-list to alleviate refinancing issues for S-Reits: Perhaps MAS could set up a temporary relief fund line of, say, $10 billion - managed by the banks - to provide refinancing to S-Reits in the next few years.
He stresses that he is not making his various suggestions for the benefit of the Reits managed by ARA, such as Fortune and Suntec Reits, but out of concern about the fate that may befall smaller Reits without strong sponsors if they fail to secure refinancing deals. ‘We don’t want to see even a single Reit fail,’ he said. ‘Because when even a small Reit fails, in today’s market, confidence in the whole S-Reit sector will collapse. It would be the same phenomenon as Lehman Brothers.’
If Reits cannot refinance their debt, they may be forced to sell assets on the cheap in a weak property market to repay their loans or do a rights issue at a huge discount that could potentially cause earnings dilution. ‘Either way, that is going to destroy value,’ said Mr Lim
Privatisation is another possibility Mr Lim envisages, given that S-Reits are trading at huge discounts to net asset value (NAV) - on a sector average basis, at over 50 per cent. Market watchers suggest that a way out for weaker Reits with refinancing issues could be to issue new shares to new cornerstone investors who may come on board with an eye on taking the Reit private later.
Giving his take, Mr Lim said: ‘If you’re trading at 80 per cent discount to NAV, or 50 or 60 per cent discount and you have a good bunch of assets, privatisation is definitely a viable (exit) option for shareholders, although it may not be fair value for long-term investors.’
Once a Reit is privatised, it would become a privately held property fund, and this would reduce the number of S-Reits trading on the Singapore Exchange. ‘So privatisation won’t be good for the Reit industry because you have fewer Reits,’ Mr Lim said. Market watchers say another big worry for S-Reits is that they are staring at write-downs on the value of their properties.
Lowering the value of properties would raise their gearing ratios - borrowings to value of property - and create challenges for Reit managers. They may have to resort to selling assets to repay borrowings or recapitalising by issuing new units and using the equity raised to trim debt. But this would have to be at discounts to market price to lure investors, and the additional units could dilute earnings.
Mr Lim acknowledges his suggestions on reviewing regulatory limits on property sector lending by banks won’t be a panacea for problems facing the S-Reit industry ‘but at least you give more avenues available for the industry so the chances of the worst scenario happening are less’.
ARA Asset Management, the only property fund management outfit listed on the Singapore Exchange (SGX), was set up by Mr Lim and Cheung Kong Holdings in 2002 and floated in November last year. Today it has $12 billion of assets under management. Mr Lim owns about 36 per cent of ARA. He lamented that ARA, a publicly listed property fund manager that manages six funds, is trading at six times price-earnings ratio, while recent deals involving unlisted managers of single Reits have been at a much higher 15 to 20 times. ARA manages four Reits - Suntec and Fortune listed on SGX, Prosperity Reit in Hong Kong and AmFirst listed on Bursa Malaysia - and two private property funds. The two private funds are ARA Asia Dragon Fund, which counts Calpers as anchor investor, and ARA Asian Asset Income Fund, a smaller fixed-income fund that invests in Reits, listed infrastructure and utilities trusts in Asia.
Mr Lim, 52, has more than 27 years’ experience in the real estate business, of which 13 have been in the property fund management industry. The avid 12-handicap golfer is an engineer by training. His first job was with the former DBS Land, where he worked for nine years. He later joined Singapore Labour Foundation Management Services, where he was general manager. He was also executive director at GRA (Singapore), today known as Pramerica Real Estate Investors (Asia). Mr Lim also sits on the Finance Ministry’s Valuation Review Board.
Friday, November 14, 2008
Singapore government will not bail out Las Vegas Sands
Source : Business Times - 12 Nov 2008
The Singapore government said Wednesday it will not bail out the troubled US gaming firm Las Vegas Sands should it fail to fund the Marina Bay integrated resort.
Senior Minister of State for Trade and Industry S Iswaran, speaking on the sidelines of an industry conference, said there has been no request from Sands for a bailout so far.
Sands has been working to avoid defaulting on bank covenants and announced on Tuesday that it was raising some US$2 billion in capital.
There have been concerns about whether Sands has the financial ability to finish the resort at Marina Bay, after it ran into financial difficulties.
Las Vegas Sands won the bid two years ago to build the Marina Bay integrated resort, one of Singapore’s tourist magnets. The S$5.4 billion project, to be ready next year, is a commercial one from the start. That’s why Singapore authorities will not bail it out should it fail.
There has been speculation, though, that government-linked companies may be interested. But Mr Iswaran made it clear that it is something for the companies themselves to decide.
“Government-linked companies are commercial enterprises. They have to make their own decisions on whether an investment makes sense for them or not. It’s not for the government to tell them what to do,” he said.
For now, construction work continues at the integrated resort. Sands says it has the money to see the project through, after raising over US$2 billion in capital.
“This fund-raising that Sands has done is an example of what they need to do in this environment in order to strengthen their balance sheet and be able to fund the relevant project. They have to do some prioritisation and that is what I think they are doing and that is the right thing,” said Mr Iswaran.
On the jobs front, Mr Iswaran said Marina Bay Sands has already started recruitment and there is no reason to think that a substantive portion of those jobs will be lost. However, some of them could be deferred due to delays in some elements of the project.
Mr Iswaran revealed that Sands has asked the Singapore Tourism Board to adjust the time-line for the construction of the resort. The request is being reviewed.
The government and Sands have a development agreement which sets out clear rights for both parties, including penalties for delays. But Mr Iswaran said the government will monitor the situation closely before deciding on exercising those rights.
The Singapore government said Wednesday it will not bail out the troubled US gaming firm Las Vegas Sands should it fail to fund the Marina Bay integrated resort.
Senior Minister of State for Trade and Industry S Iswaran, speaking on the sidelines of an industry conference, said there has been no request from Sands for a bailout so far.
Sands has been working to avoid defaulting on bank covenants and announced on Tuesday that it was raising some US$2 billion in capital.
There have been concerns about whether Sands has the financial ability to finish the resort at Marina Bay, after it ran into financial difficulties.
Las Vegas Sands won the bid two years ago to build the Marina Bay integrated resort, one of Singapore’s tourist magnets. The S$5.4 billion project, to be ready next year, is a commercial one from the start. That’s why Singapore authorities will not bail it out should it fail.
There has been speculation, though, that government-linked companies may be interested. But Mr Iswaran made it clear that it is something for the companies themselves to decide.
“Government-linked companies are commercial enterprises. They have to make their own decisions on whether an investment makes sense for them or not. It’s not for the government to tell them what to do,” he said.
For now, construction work continues at the integrated resort. Sands says it has the money to see the project through, after raising over US$2 billion in capital.
“This fund-raising that Sands has done is an example of what they need to do in this environment in order to strengthen their balance sheet and be able to fund the relevant project. They have to do some prioritisation and that is what I think they are doing and that is the right thing,” said Mr Iswaran.
On the jobs front, Mr Iswaran said Marina Bay Sands has already started recruitment and there is no reason to think that a substantive portion of those jobs will be lost. However, some of them could be deferred due to delays in some elements of the project.
Mr Iswaran revealed that Sands has asked the Singapore Tourism Board to adjust the time-line for the construction of the resort. The request is being reviewed.
The government and Sands have a development agreement which sets out clear rights for both parties, including penalties for delays. But Mr Iswaran said the government will monitor the situation closely before deciding on exercising those rights.
Redas offers more insights after bleak reports
Source : Business Times - 12 Nov 2008
It calls meeting to advise analysts that URA data may not give full picture
The recent string of negative reports on the property market has prompted the Real Estate Developers’ Association of Singapore (Redas) to engage analysts and offer them alternative sources of market data.
This came as analysts have drawn very bearish conclusions in recent weeks, based on official supply numbers from the Urban Redevelopment Authority (URA).
These included a string of research notes from firms such as Morgan Stanley, Deutsche Bank and Goldman Sachs which have projected significant falls in mass-market, mid-tier and high-end private home prices.
Redas’ position is that URA’s numbers are general in nature. On certain specific issues, they feel it is better to check with property consultants who can provide more detailed data.
Sources say the industry body met property analysts from local and foreign research firms last Friday. The meeting was chaired by Redas president Simon Cheong, who is also chief executive of upscale residential developer SC Global Developments.
Analysts from several foreign banks - including Goldman Sachs, JPMorgan, Morgan Stanley, Merrill Lynch, Nomura and UBS - attended the meeting, together with those from key local research firms such as DBS Vickers and CIMB-GK.
Also present were members of Redas’ management committee including representatives from CapitaLand, City Developments, Keppel Land and Far East Organization.
Sources say consultants from all the major property firms in Singapore - CB Richard Ellis, Colliers, DTZ, Jones Lang LaSalle, Knight Frank and Savills - as well as a legal advisor close to Redas also lent their weight.
Redas held the meeting to give equity analysts a more in-depth understanding of property issues in the light of the difficult economic environment, BT understands.
The perception is that while there are seasoned analysts who know the market well, there are others who are either new to the area of property research and lack historical perspective, or too young to fully understand the workings of the market.
The major property consultancies were there to offer help to analysts, and the legal advisor was present to explain technical issues including those involving the rights of buyers and sellers in property transactions.
Sources say one analyst present at the meeting suggested that the large developers could release their own data regularly to further improve clarity.
This is the first time Redas had organised such a briefing but based on the response, more such dialogues may be organised in the future. Views were freely exchanged, sources who were present told BT. Analysts also said they would take Redas’ points into consideration.
It calls meeting to advise analysts that URA data may not give full picture
The recent string of negative reports on the property market has prompted the Real Estate Developers’ Association of Singapore (Redas) to engage analysts and offer them alternative sources of market data.
This came as analysts have drawn very bearish conclusions in recent weeks, based on official supply numbers from the Urban Redevelopment Authority (URA).
These included a string of research notes from firms such as Morgan Stanley, Deutsche Bank and Goldman Sachs which have projected significant falls in mass-market, mid-tier and high-end private home prices.
Redas’ position is that URA’s numbers are general in nature. On certain specific issues, they feel it is better to check with property consultants who can provide more detailed data.
Sources say the industry body met property analysts from local and foreign research firms last Friday. The meeting was chaired by Redas president Simon Cheong, who is also chief executive of upscale residential developer SC Global Developments.
Analysts from several foreign banks - including Goldman Sachs, JPMorgan, Morgan Stanley, Merrill Lynch, Nomura and UBS - attended the meeting, together with those from key local research firms such as DBS Vickers and CIMB-GK.
Also present were members of Redas’ management committee including representatives from CapitaLand, City Developments, Keppel Land and Far East Organization.
Sources say consultants from all the major property firms in Singapore - CB Richard Ellis, Colliers, DTZ, Jones Lang LaSalle, Knight Frank and Savills - as well as a legal advisor close to Redas also lent their weight.
Redas held the meeting to give equity analysts a more in-depth understanding of property issues in the light of the difficult economic environment, BT understands.
The perception is that while there are seasoned analysts who know the market well, there are others who are either new to the area of property research and lack historical perspective, or too young to fully understand the workings of the market.
The major property consultancies were there to offer help to analysts, and the legal advisor was present to explain technical issues including those involving the rights of buyers and sellers in property transactions.
Sources say one analyst present at the meeting suggested that the large developers could release their own data regularly to further improve clarity.
This is the first time Redas had organised such a briefing but based on the response, more such dialogues may be organised in the future. Views were freely exchanged, sources who were present told BT. Analysts also said they would take Redas’ points into consideration.
One-third of US properties sold at a loss
Source : Business Times - 13 Nov 2008
Home values slide 9.7% in third quarter, the seventh consecutive decline
One-third of US homeowners who sold their property in the 12 months through September lost money as foreclosures depressed prices and more Americans became unemployed in a weakening economy, Zillow.com reported.
Home values fell 9.7 per cent in the third quarter, the seventh consecutive decline, to a median US$202,966, Seattle-based Zillow, a seller of real estate data, said in a report yesterday. One in seven homeowners had negative equity, or owed more on their mortgages than their houses were worth.
‘It’s clear we are at a unique point in history,’ Stan Humphries, Zillow’s vice-president of data and analytics, said in a statement.
‘We’ve had seven consecutive quarters of decline, and we expect that to continue until at least the middle of next year. Most markets are still seeing five-year annualised returns, but we will see more markets slip into flat or negative long-term change as the economy continues to suffer.’
Stricter mortgage standards and record foreclosures are deepening the housing recession amid climbing unemployment.
US payrolls fell for a 10th straight month in October and have dropped by 1.2 million so far this year, the Labor Department said last week. The jobless rate is at a five-year high of 6.3 per cent.
The 30.2 per cent of homeowners who sold at a loss at the end of the third quarter compared with 23.7 per cent at the end of the second quarter, Zillow said.
Almost one in five transactions were foreclosure sales. California had 14 of the 17 markets where more than half of homes sold were sold at a loss, according to Zillow.
Paulson backs away from buying bad assets
Source : Business Times - 13 Nov 2008
He now favours a second round of capital injection
US Treasury Secretary Henry Paulson yesterday said he was backing away from buying troubled mortgage assets using a US$700 billion bailout fund, instead favouring a second round of capital injections into financial institutions that would match private funds.
‘Illiquidity in this sector is raising the cost and reducing the availability of car loans, student loans and credit cards,’ Mr Paulson said. ‘This is creating a heavy burden on the American people and reducing the number of jobs in our economy.’
Mr Paulson, in an update on the Treasury’s financial rescue efforts, said his staff has continued to examine the benefits of purchasing illiquid mortgage assets under the so-called Troubled Asset Relief Program.
‘Our assessment at this time is that this is not the most effective way to use TARP funds, but we will continue to examine whether targeted forms of asset purchase can play a useful role, relative to other potential uses of TARP resources,’ Mr Paulson told a news conference.
When Treasury was selling the US$700 billion bailout plan to Congress, it initially promoted it as a vehicle that would purchase illiquid mortgage assets from banks and other institutions to cushion potential losses.
But it became quickly apparent that setting up such purchases would take time, and Treasury opted for the faster method of injecting capital directly into banks by buying preferred stock. The Treasury has allocated US$250 billion of the fund to such purchases so far.
Mr Paulson said the Treasury is evaluating a second programme that would provide government investments that would match private investments in capital raisings.
‘In developing a potential matching programme, we will also consider capital needs of non-bank financial institutions not eligible for the current capital programme,’ Mr Paulson said.
He announced a new goal for the programme to support financial markets, which supply consumer credit in such areas as credit card debt, auto loans and student loans.
Mr Paulson said that 40 per cent of US consumer credit is provided through selling securities that are backed by pools of auto loans and other such debt. He said these markets need support.
‘This market, which is vital for lending and growth, has for all practical purposes ground to a halt,’ Mr Paulson said.
‘We are looking at ways to possibly use the TARP to encourage private investors to come back to this troubled market, by providing them access to federal financing while protecting the taxpayers’ investment,’ he said.
The government on Tuesday sought to address complaints that not enough was being done to help Americans deal with record levels of mortgage defaults.
The Federal Housing Finance Agency, which seized control of Fannie Mae and Freddie Mac in September, announced a plan designed to speed up the process for renegotiating hundreds of thousands of delinquent loans held by the two mortgage giants.
Officials hope the new approach, which goes into effect on Dec 15., will become a model for loan servicing companies, which collect mortgage payments and distribute them to investors. These companies have been roundly criticised for being slow to respond to a surge in defaults.
The plan could have tremendous importance because Fannie Mae and Freddie Mac own or guarantee nearly 31 million US mortgages, or nearly six of every 10 outstanding. Government officials, however, did not have an estimate of how many people would qualify for the new programme. — Reuters, AP
No govt plan to fund Marina IR: Iswaran
Source : Business Times - 13 Nov 2008
GLCs, as commercial enterprises, will make their own investment decisions
THE government does not plan to fund the Marina Bay Sands project if casino operator Las Vegas Sands runs into financial problems, a trade minister said yesterday.
‘There’s been no request for a government bailout from Marina Bay Sands and neither does the government intend to do one,’ Senior Minister of State for Trade and Industry S Iswaran said on the sidelines of an event yesterday.
‘This has always been a commercial project and the solutions to the challenges posed by the current economic environment and the financial market situation really lie in the commercial sector as well,’ he said.
Las Vegas Sands said on Tuesday that it would halt expansion in Macau to focus on completing the Marina Bay project - dubbed as the company’s No 1 priority by chairman and chief executive Sheldon Adelson.
The casino operator, listed on the New York Stock Exchange, also said that it was working to raise about US$2 billion in capital and would channel some of the funds to the project here.
But Las Vegas Sands admitted that there would be delays, noting that the casino would be opened in two phases which will extend into early 2010. The project was slated to open fully in 2009.
Las Vegas Sands has proposed to the Singapore Tourism Board (STB) to modify the project timeline, said Mr Iswaran, adding that STB has not decided if the casino operator would be penalised for the changes under the development agreement.
‘So far, STB has not agreed to any of these variations,’ he said. ‘Their proposal was to complete the whole project by 2009. If there’s a variation to that, we need to look at that and see whether there are legitimate reasons for it.’
Mr Iswaran declined to reveal what specific requests had been made by the casino operator, citing confidentiality issues.
Disclosures would be made ‘at the appropriate time’, he said.
He added that while the government is still studying the proposal, STB has ‘very clear rights’ under the development agreement outlining the original project timeline.
‘We have those rights and they’ve been very well demarcated,’ he said. ‘They’re there to be exercised, if there are any eventualities.’
STB declined to reveal the terms of the development agreement when contacted.
The delay is unlikely to change the creation of the 10,000 jobs from the casino, said Mr Iswaran.
Market talk has been that government-linked companies (GLCs) could be poised to take a stake and inject funding if needed.
In response, Mr Iswaran said that GLCs are ‘commercial enterprises’.
‘They have to make their own decisions on whether an investment makes sense for them or not,’ he said. ‘It’s not for the government to tell them what to do.’
Economy to shrink 2% next year: Morgan Stanley
Source : Straits Times - 12 Nov 2008
Big drop from its earlier tip of 0.2% growth; global forecast also cut
SINGAPORE’S economy may shrink 2 per cent next year as it suffers from a worse-than-expected global recession, Morgan Stanley predicted yesterday.
This estimate is a drastic cut from the investment bank’s previous tip of a 0.2 per cent expansion, and marks the most bearish view so far for growth next year.
Full-year growth has not dipped below zero since the dot.com bust in 2001, when the economy shrank 2.4 per cent.
Morgan Stanley also slashed its projection for global growth - from 2.5 per cent to 1.7 per cent - and lowered growth forecasts for several countries.
‘The vicious loop of rising credit defaults, shrinking risk capital pool, slowing growth and rising unemployment is unveiling the possibility of deeper-than-expected recession,’ it said.
On the bright side, the consensus at the three-day Morgan Stanley Asia Pacific Summit, which opened at the Mandarin Oriental yesterday, was that this slowdown is not going to turn into the second Great Depression.
‘This time around, policymakers reacted at a much earlier stage,’ said Morgan Stanley’s co-head of global economics, Mr Joachim Fels, a member of a panel examining the global outlook.
‘We’ve already seen very aggressive responses from policymakers…no bank is allowed to fail, unlike in the 1930s.’
Mr Fels said he expects the slowdown in the United States and Europe to bottom out somewhere in the middle of next year, thanks to the coordinated monetary policy action and a massive fiscal package expected when Mr Barack Obama assumes office as US president.
‘Mr Obama’s fiscal stimulus will probably kick in in the first half of next year.’
The effects of policy actions so far have been blocked somewhat by the paralysed financial system, but now that governments are offering more liquidity to the banking system, they should soon filter through to the real economy, he added.
But the recovery expected in 2010 is likely to be a ’sub-par’ and ‘tepid’ one - payback for the large fiscal injections now.
‘Consumers will offset increased public debt by saving more,’ said Mr Fels. ‘There will be much slower economic growth than we have been used to.’
The crisis will also take its toll on Asia as the cost of capital spikes and export demand plunges with the world’s major developed economies in a recession.
Likely to be worst hit are South Korea, Australia, Indonesia and India, said Mr Chetan Ahya, a managing director and India and Asean economist at Morgan Stanley. These four economies are running current account deficits and have seen loans grow strongly relative to their economies, making the credit crunch more painful for them, he explained.
In a separate event at the summit, Harvard University professor Niall Ferguson also said this crisis is ‘not the Great Depression, just a big recession’.
‘I don’t think we will see unemployment in the US reach 25 per cent and output collapse 30 per cent,’ he said. ‘We have learnt that we cannot let generalised banking failures happen.’
Prof Ferguson also argued that the US would not lose its place as the world’s economic superpower despite this crisis being ‘made in America’, a reference to sub-prime mortgages that went bad.
The US has the fiscal power to ‘throw US$2 trillion (S$3 trillion) at the problem’ while Europe is suffering more. Also, the US has a symbiotic relationship with China - one the spender, the other the lender - that will weather the crisis.
Marina Bay IR is Sands’ top priority
Source : Straits Times - 12 Nov 2008
Tourism board says Singapore has several options should project go wrong
EMBATTLED casino operator Las Vegas Sands (LVS) said yesterday it was going ahead with plans for the Marina Bay integrated resort, but will suspend projects in Macau and the United States.
It said the multibillion-dollar resort and casino project will open partially at the end of next year.
Calling it ‘probably the most important project’ in the LVS portfolio, Sands president and chief operating officer William Weidner said the Marina Bay project offered ‘terrific returns on investment’.
He was speaking during an earnings conference call from the US yesterday.
Despite the LVS pledge, the Singapore Tourism Board (STB) said last night that should things go wrong, there were a number of options available under the terms of its agreement with Marina Bay Sands.
Responding to queries, a board spokesman said that if the project faced financial difficulties to such an extent that it was wound up or a receiver was appointed over its assets, the STB could step in and ‘resume possession of the land, the IR and any other structure on the land, and deal with them as STB sees fit’.
On its part, LVS was upbeat about its prospects and Marina Bay yesterday.
It said it had secured US$2.14 billion (S$3.22 billion) in capital-funding commitments, a move analysts said was reassuring to investors who had earlier feared LVS was doomed to go under.
Sands’ billionaire chief executive Sheldon Adelson also reiterated his commitment to the Singapore project yesterday.
He said: ‘As part of my visit to Singapore last week, I assured the Government we were very committed to the success of Marina Bay Sands and would have the funding necessary to complete this development.
‘That is exactly where we stand today.’
But LVS admitted yesterday that it will not be able to open the entire integrated resort at the end of next year after all.
First to open will be two out of three hotel towers, a portion of the shopping mall, most of the convention space and the casino, said LVS executive vice-president Bradley Stone. Other facilities, including an iconic sky park, will open in early 2010.
He said the project was among the company’s crown jewels given the low tax rates, high number of days visitors are projected to stay, and the benefit of operating with only one competitor - the Resorts World Sentosa complex.
Marina Bay Sands, with 1,000 gaming tables, is expected to turn an annual operating profit of US$1.26 billion by 2012.
LVS posted a worse-than-expected net loss of US$32.2 million, or 9 cents a share, for the third quarter. In the same period last year, it posted a loss of US$48.5 million, or 14 cents a share.
Mr Adelson said the news that it has secured capital-funding commitments should put to rest talk that the company is in danger of going belly-up.
But LVS is not out of the woods yet.
Its decision to suspend construction of its Macau development at the Cotai Strip was taken to conserve cash and avoid violating terms of some American loans that could set off a series of defaults.
Similarly, suspending work on its luxury St Regis condominium in Las Vegas and focusing solely on casino components at its Bethlehem, Pennsylvania, project will save an estimated US$1.8 billion.
Mr Weidner said the current capital market conditions will not have an impact on the Singapore development since the S$5.44 billion credit facility had been secured earlier in the year.
To date, he said, the company has invested US$1.81 billion in construction costs, including land price, in the Marina Bay project, of which an approximate US$616 million was in equity.
The current estimated cost of completing the project is about US$2.7 billion.
Separately yesterday, Macau chief executive Edmund Ho said his government would take over any casino that goes bankrupt there, Bloomberg reported.
Seeking to allay fears as Macau’s crucial gaming sector stutters, he said: ‘Our policy is that we will not allow any casinos to just shut down and cease operations.’
Tourism board says Singapore has several options should project go wrong
EMBATTLED casino operator Las Vegas Sands (LVS) said yesterday it was going ahead with plans for the Marina Bay integrated resort, but will suspend projects in Macau and the United States.
It said the multibillion-dollar resort and casino project will open partially at the end of next year.
Calling it ‘probably the most important project’ in the LVS portfolio, Sands president and chief operating officer William Weidner said the Marina Bay project offered ‘terrific returns on investment’.
He was speaking during an earnings conference call from the US yesterday.
Despite the LVS pledge, the Singapore Tourism Board (STB) said last night that should things go wrong, there were a number of options available under the terms of its agreement with Marina Bay Sands.
Responding to queries, a board spokesman said that if the project faced financial difficulties to such an extent that it was wound up or a receiver was appointed over its assets, the STB could step in and ‘resume possession of the land, the IR and any other structure on the land, and deal with them as STB sees fit’.
On its part, LVS was upbeat about its prospects and Marina Bay yesterday.
It said it had secured US$2.14 billion (S$3.22 billion) in capital-funding commitments, a move analysts said was reassuring to investors who had earlier feared LVS was doomed to go under.
Sands’ billionaire chief executive Sheldon Adelson also reiterated his commitment to the Singapore project yesterday.
He said: ‘As part of my visit to Singapore last week, I assured the Government we were very committed to the success of Marina Bay Sands and would have the funding necessary to complete this development.
‘That is exactly where we stand today.’
But LVS admitted yesterday that it will not be able to open the entire integrated resort at the end of next year after all.
First to open will be two out of three hotel towers, a portion of the shopping mall, most of the convention space and the casino, said LVS executive vice-president Bradley Stone. Other facilities, including an iconic sky park, will open in early 2010.
He said the project was among the company’s crown jewels given the low tax rates, high number of days visitors are projected to stay, and the benefit of operating with only one competitor - the Resorts World Sentosa complex.
Marina Bay Sands, with 1,000 gaming tables, is expected to turn an annual operating profit of US$1.26 billion by 2012.
LVS posted a worse-than-expected net loss of US$32.2 million, or 9 cents a share, for the third quarter. In the same period last year, it posted a loss of US$48.5 million, or 14 cents a share.
Mr Adelson said the news that it has secured capital-funding commitments should put to rest talk that the company is in danger of going belly-up.
But LVS is not out of the woods yet.
Its decision to suspend construction of its Macau development at the Cotai Strip was taken to conserve cash and avoid violating terms of some American loans that could set off a series of defaults.
Similarly, suspending work on its luxury St Regis condominium in Las Vegas and focusing solely on casino components at its Bethlehem, Pennsylvania, project will save an estimated US$1.8 billion.
Mr Weidner said the current capital market conditions will not have an impact on the Singapore development since the S$5.44 billion credit facility had been secured earlier in the year.
To date, he said, the company has invested US$1.81 billion in construction costs, including land price, in the Marina Bay project, of which an approximate US$616 million was in equity.
The current estimated cost of completing the project is about US$2.7 billion.
Separately yesterday, Macau chief executive Edmund Ho said his government would take over any casino that goes bankrupt there, Bloomberg reported.
Seeking to allay fears as Macau’s crucial gaming sector stutters, he said: ‘Our policy is that we will not allow any casinos to just shut down and cease operations.’
Sands skimps on Macau, bets on S’pore
Source : Business Times - 12 Nov 2008
Casino operator will scale back Cotai Strip development to focus on integrated resort here
WITH its resources curtailed by the downturn, Las Vegas Sands (LVS) has been forced to weigh and choose - and it has decided to bet big on the construction at the Marina Bay Sands (MBS) and put its Macau expansion on the backburner for now.
As such, LVS expects to invest an additional US$500 million in equity in MBS through the targeted opening of the property in late 2009. This, after saying it could increase the number of gaming tables to a maximum of 1,000, up from 600 previously.
Making the announcement yesterday, LVS president and COO William Weidner said: ‘Given current conditions in the capital markets and the global economy and their impact on the company’s ongoing operations, the company has chosen to temporarily or indefinitely suspend portions of its development projects and will focus its development efforts on those projects with the highest rates of expected return on invested capital given the liquidity and capital resources available to the company today.’
Mr Weidner said it will ‘focus its development activities and available capital principally on the timely completion of both Marina Bay Sands, in Singapore, and Sands Bethlehem, in Bethlehem, Pennsylvania’.
Consequently, LVS has decided to ’significantly slow the pace of our development activities on the Cotai Strip’.
In a separate statement, LVS chairman and CEO Sheldon Adelson added: ‘Completing and opening Marina Bay Sands is the No 1 priority for our company.’
The company went on to give an operating profit guidance for 2012, including an annual operating profit of US$1.26 billion out of Singapore. Quizzed by a sceptical analyst, Mr Adelson said the numbers were ‘extraordinarily conservative’.
Speculation about delays had intensified last week after LVS made a regulatory filing that it was unlikely to meet the maximum leverage ratio covenant, triggering defaults on loans needed to complete projects.
‘Any rumour or speculation about our ability to complete this project has now been put to rest,’ said Mr Adelson, adding: ‘As part of my visit to Singapore last week, I assured the government we were very committed to the success of Marina Bay Sands and would have the funding necessary to complete this development. That is exactly where we stand today.’
LVS also announced that it is in the process of raising approximately US$2 billion in capital.
Mr Adelson added that this ensures adequate liquidity at the parent-company level, which will be used for the Singapore development.
As at Sept 30, total debt outstanding for LVS was US$10.35 billion. But LVS said that its S$5.44 billion credit facility to support the development of Marina Bay Sands in Singapore is in place.
To date, it has invested about US$1.81 billion in construction costs in the project, including land, and has contributed approximately US$616 million in equity. Its current estimated cost to complete the construction of the project is approximately US$2.7 billion, and it expects to fund 75-80 per cent of future construction costs through proceeds from its Singapore credit facility, of which approximately US$2 billion is available.
Jonathan Galaviz, a partner at Globalysis, a leisure sector strategy consultancy also saw positives in the Singapore market, while Macau’s hands were tied by visa restrictions on mainland Chinese visitors.
‘As financial pressure is exerted on Macau’s casino gaming operators, the operators of Singapore’s integrated resorts (IRs) should do well due to the fact that Singapore’s tax on gross gaming revenue is over 50 per cent less than that of Macau’s,’ he said.
LVS will suspend development on Sites 5 and 6 of the Cotai Strip, and JPMorgan Securities (Hong Kong) analyst Billy Ng said he is not surprised. ‘They had no choice. The market had expected this, or something even worse, to happen,’ he added.
Sites 5 and 6 include the Shangri-La/Traders hotel tower and the Sheraton hotel. These, Mr Ng, are already ‘half built’.
Yesterday, Macau’s Chief Executive Edmund Ho said his government was aware of LVS’s funding difficulties but had no plans to throw in financial assistance.
‘Because of its overleveraged borrowing in the US and around the world, it’s normal and expected that it has to suspend some of its projects,’ Mr Ho was reported as saying.
Asked about reports that a Chinese bank would extend a significant loan to LVS, he said the Macau government was not in a position to intervene.
According to a Citigroup report, while Macau gaming revenues are estimated to be 8.9 billion Macau patacas (S$1.69 billion) for October - a 26 per cent increase over September - it still represents a 3 per cent decline compared to a year ago. Citigroup analyst Anil Daswani does not forecast a relaxation in visa restrictions until the second half of next year.
In Singapore, CIMB analyst Kenneth Ng said: ‘Toning down development in Macau will be positive for Singapore.’ CIMB had earlier said it expected the Singapore government to take a stake in MBS if LVS should fail. Mr Ng said: ‘We have to wait and see.’
The prospects for MBS and LVS do look brighter now though.
LVS, which announced its third-quarter result yesterday, reported a net loss of US$32.2 million compared to a net loss of US$48.5 million a year ago.
Net revenue for the quarter increased 67.2 per cent to US$1.11 billion, compared to US$661 million a year ago. This was largely boosted by the net revenue contribution of US$522.4 million from Venetian Macao.
Mr Weidner added: ‘At an appropriate time in the future, to the extent capital becomes available on acceptable terms, we plan to resume the development of Sites 5 and 6 on the Cotai Strip.’
Daughter must return $2m to late dad’s estate
Source : Straits Times - 12 Nov 2008
Three of his wives win case to claim unpaid purchase price for house
IN ONE camp were the three octogenarian wives of a late policeman.
In the other, the 47-year-old daughter of his fourth wife.
What they were fighting over in High Court: a $2.05 million semi-detached house, which Mr Seah Wee Tuan left behind when he died in 2005.
The daughter, Madam Seah Min Wai, had bought the Sommerville Road house from her father in 1995 but paid only $10,000 for it.
The three wives, aged 81 to 83, contended that she should return $2.04 million to the old man’s estate - and won.
Last week, Justice Andrew Ang ordered Madam Seah to fork out the unpaid purchase price. If she cannot pay up, the house will have to be sold, and the sales proceeds will be distributed among the four wives.
But with the market downturn, the house is now valued at about $1.8 million. If sales proceeds from the house do not cover the outstanding amount, Madam Seah may have to make up the shortfall.
Her father, who retired in 1969, married the four women through customary rites and had 14 children.
The house being fought over was occupied by him, his fourth wife and their children. His first three wives lived elsewhere.
When Mr Seah died at age 80, he left $55,000 to eight of his children, daughters-in-law, sons-in-law, nephews, nieces and grandchildren. The rest of his estate was to be split among his wives, with the first three getting 20 per cent each, and the fourth, 40 per cent.
The three wives - Madam Cheah Lee Kheng, Madam Wong Kang Choy and Madam Wong Siew Tian - sued Madam Seah to claim the $2.04 million she never paid her father.
Their lawyer, Senior Counsel Molly Lim, argued that the old man had intended for the house to be sold to provide for his wives after his death.
Madam Seah, a former lawyer who represented herself, argued that her father had intended to give her the property.
Ruling in favour of the plaintiffs, Justice Ang said Mr Seah’s intention was to allow her more time to make full payment on the house, not to give it to her.
He also had words about Madam Seah’s conduct during the trial: She was a no-show in court on at least six occasions during the hearing, and her absence was often unsupported by medical certificates.
Justice Ang also noted that she varied her story, at first insisting she had paid for the house in full, then later saying her father had given it to her.
She also made arguments that had no bearing on the main issue.
Source : Straits Times - 12 Nov 2008Three of his wives win case to claim unpaid purchase price for house
IN ONE camp were the three octogenarian wives of a late policeman.
In the other, the 47-year-old daughter of his fourth wife.
What they were fighting over in High Court: a $2.05 million semi-detached house, which Mr Seah Wee Tuan left behind when he died in 2005.
The daughter, Madam Seah Min Wai, had bought the Sommerville Road house from her father in 1995 but paid only $10,000 for it.
The three wives, aged 81 to 83, contended that she should return $2.04 million to the old man’s estate - and won.
Last week, Justice Andrew Ang ordered Madam Seah to fork out the unpaid purchase price. If she cannot pay up, the house will have to be sold, and the sales proceeds will be distributed among the four wives.
But with the market downturn, the house is now valued at about $1.8 million. If sales proceeds from the house do not cover the outstanding amount, Madam Seah may have to make up the shortfall.
Her father, who retired in 1969, married the four women through customary rites and had 14 children.
The house being fought over was occupied by him, his fourth wife and their children. His first three wives lived elsewhere.
When Mr Seah died at age 80, he left $55,000 to eight of his children, daughters-in-law, sons-in-law, nephews, nieces and grandchildren. The rest of his estate was to be split among his wives, with the first three getting 20 per cent each, and the fourth, 40 per cent.
The three wives - Madam Cheah Lee Kheng, Madam Wong Kang Choy and Madam Wong Siew Tian - sued Madam Seah to claim the $2.04 million she never paid her father.
Their lawyer, Senior Counsel Molly Lim, argued that the old man had intended for the house to be sold to provide for his wives after his death.
Madam Seah, a former lawyer who represented herself, argued that her father had intended to give her the property.
Ruling in favour of the plaintiffs, Justice Ang said Mr Seah’s intention was to allow her more time to make full payment on the house, not to give it to her.
He also had words about Madam Seah’s conduct during the trial: She was a no-show in court on at least six occasions during the hearing, and her absence was often unsupported by medical certificates.
Justice Ang also noted that she varied her story, at first insisting she had paid for the house in full, then later saying her father had given it to her.
She also made arguments that had no bearing on the main issue.
Three of his wives win case to claim unpaid purchase price for house
IN ONE camp were the three octogenarian wives of a late policeman.
In the other, the 47-year-old daughter of his fourth wife.
What they were fighting over in High Court: a $2.05 million semi-detached house, which Mr Seah Wee Tuan left behind when he died in 2005.
The daughter, Madam Seah Min Wai, had bought the Sommerville Road house from her father in 1995 but paid only $10,000 for it.
The three wives, aged 81 to 83, contended that she should return $2.04 million to the old man’s estate - and won.
Last week, Justice Andrew Ang ordered Madam Seah to fork out the unpaid purchase price. If she cannot pay up, the house will have to be sold, and the sales proceeds will be distributed among the four wives.
But with the market downturn, the house is now valued at about $1.8 million. If sales proceeds from the house do not cover the outstanding amount, Madam Seah may have to make up the shortfall.
Her father, who retired in 1969, married the four women through customary rites and had 14 children.
The house being fought over was occupied by him, his fourth wife and their children. His first three wives lived elsewhere.
When Mr Seah died at age 80, he left $55,000 to eight of his children, daughters-in-law, sons-in-law, nephews, nieces and grandchildren. The rest of his estate was to be split among his wives, with the first three getting 20 per cent each, and the fourth, 40 per cent.
The three wives - Madam Cheah Lee Kheng, Madam Wong Kang Choy and Madam Wong Siew Tian - sued Madam Seah to claim the $2.04 million she never paid her father.
Their lawyer, Senior Counsel Molly Lim, argued that the old man had intended for the house to be sold to provide for his wives after his death.
Madam Seah, a former lawyer who represented herself, argued that her father had intended to give her the property.
Ruling in favour of the plaintiffs, Justice Ang said Mr Seah’s intention was to allow her more time to make full payment on the house, not to give it to her.
He also had words about Madam Seah’s conduct during the trial: She was a no-show in court on at least six occasions during the hearing, and her absence was often unsupported by medical certificates.
Justice Ang also noted that she varied her story, at first insisting she had paid for the house in full, then later saying her father had given it to her.
She also made arguments that had no bearing on the main issue.
Source : Straits Times - 12 Nov 2008Three of his wives win case to claim unpaid purchase price for house
IN ONE camp were the three octogenarian wives of a late policeman.
In the other, the 47-year-old daughter of his fourth wife.
What they were fighting over in High Court: a $2.05 million semi-detached house, which Mr Seah Wee Tuan left behind when he died in 2005.
The daughter, Madam Seah Min Wai, had bought the Sommerville Road house from her father in 1995 but paid only $10,000 for it.
The three wives, aged 81 to 83, contended that she should return $2.04 million to the old man’s estate - and won.
Last week, Justice Andrew Ang ordered Madam Seah to fork out the unpaid purchase price. If she cannot pay up, the house will have to be sold, and the sales proceeds will be distributed among the four wives.
But with the market downturn, the house is now valued at about $1.8 million. If sales proceeds from the house do not cover the outstanding amount, Madam Seah may have to make up the shortfall.
Her father, who retired in 1969, married the four women through customary rites and had 14 children.
The house being fought over was occupied by him, his fourth wife and their children. His first three wives lived elsewhere.
When Mr Seah died at age 80, he left $55,000 to eight of his children, daughters-in-law, sons-in-law, nephews, nieces and grandchildren. The rest of his estate was to be split among his wives, with the first three getting 20 per cent each, and the fourth, 40 per cent.
The three wives - Madam Cheah Lee Kheng, Madam Wong Kang Choy and Madam Wong Siew Tian - sued Madam Seah to claim the $2.04 million she never paid her father.
Their lawyer, Senior Counsel Molly Lim, argued that the old man had intended for the house to be sold to provide for his wives after his death.
Madam Seah, a former lawyer who represented herself, argued that her father had intended to give her the property.
Ruling in favour of the plaintiffs, Justice Ang said Mr Seah’s intention was to allow her more time to make full payment on the house, not to give it to her.
He also had words about Madam Seah’s conduct during the trial: She was a no-show in court on at least six occasions during the hearing, and her absence was often unsupported by medical certificates.
Justice Ang also noted that she varied her story, at first insisting she had paid for the house in full, then later saying her father had given it to her.
She also made arguments that had no bearing on the main issue.
Punggol EC site fails to draw any bid
Source : Business Times - 12 Nov 2008
NO bid was received for an executive condominium housing site - despite its being attractively located in Punggol - by the time the tender closed yesterday.
The 99-year leasehold site at the junction of Punggol Field and Punggol Road was launched for sale by the Housing & Development Board (HDB) on Sept 17.
Property analysts had said then that they expect lukewarm response from developers despite its location near Punggol MRT Station and the future Punggol Town Centre.
Nicholas Mak, director of research and consultancy at Knight Frank, predicted fewer than five bids.
When the tender closed at noon yesterday, there wasn’t a single taker.
‘The lack of interest in the site reflects the cautious sentiment in the market,’ said Eugene Lim, assistant vice-president of property firm ERA.
There is also now a problem in deciding how to price executive condominium (EC) flats, he said.
EC flats are thought to be a cut above HDB’s Design, Build and Sell Scheme (DBSS) apartments. With the DBSS scheme, developers have flexibility in designing and pricing the flats - but the homes are still public HDB flats in nature.
EC flats, on the other hand, are just a step away from private apartments as they come with condo-like facilities and land rights.
With DBSS flats now mostly going for $500,000-$750,000 each and mass market private homes selling for just a bit more than that, it is hard to find a pricing range for EC flats where they will be attractive to homebuyers, Mr Lim said. ‘EC flats target the same market as the DBSS flats - first-time homeowners and HDB upgraders.’
The 242,159 sq ft site is the fourth EC site the government put on the market this year.
Unlike the private residential property market, the HDB market is still going strong.
HDB’s resale price index rose 4.2 per cent in the third quarter. This means that in the first nine months of 2008, HDB resale prices climbed 12.4 per cent. The number of transactions also rose in Q3 to 8,110, from 7,760 in Q2.
No takers for Punggol EC site
Source : Straits Times - 12 Nov 2008
IN THE latest sign of a weakening property market, a tender for an executive condominium (EC) site in Punggol closed yesterday with no bids received.
Property consultants attributed the dearth of interest in the entry-level condo site to still-high construction costs and a lacklustre property market which is expected to trend lower.
This is the fourth EC site the Government has put on the market this year and the only one it kept for confirmed sale for the rest of this year.
Due to the poorer outlook for Singapore’s economy and property market, the Government recently transferred all remaining confirmed sites for sale - apart from the Punggol EC site - onto a ‘reserve list’ where sites are put up for sale only if there is interest.
The 242,159 sq ft Punggol site can accommodate a development of about 16 storeys housing about 600 units.
It is a 99-year leasehold site at the junction of Punggol Field and Punggol Road and near the Punggol MRT station.
While property consultants consider the location to be fairly attractive, they also say the market is not.
They said that high construction costs are probably a key factor deterring developers from bidding.
‘Right now, construction costs have not come down yet so developers will still have to build at high construction costs. As a result, they do not have a lot of price flexibility,’ said Knight Frank’s director of research and consultancy, Mr Nicholas Mak.
‘They will end up with a case where some resale 99-year leasehold condo units cost the same or less than EC units,’ he said.
‘With construction costs still high, the numbers are just not attractive. If you’re going into a market that is trending down, there’s no point taking this risk,’ Savills Singapore’s director of marketing and business development Ku Swee Yong said of developers.
Besides, not all developers can get attractive financing terms in today’s market. The weaker ones have trouble raising any funds at all, he said.
Mr Ku also thinks the demand for an EC in Punggol may not be strong. ‘The market is not big in Punggol as many had bought in 2000 when prices were quite high so they haven’t made a profit yet.’
Applicants for EC homes are subject to a household income ceiling of $10,000.
Upgrading may not be a top priority for residents in Punggol as it is a fairly new town, he added.
According to the Housing Board, the fate of the site will be known by next month, when the National Development Ministry puts out its land sales list for the first half of next year.
IN THE latest sign of a weakening property market, a tender for an executive condominium (EC) site in Punggol closed yesterday with no bids received.
Property consultants attributed the dearth of interest in the entry-level condo site to still-high construction costs and a lacklustre property market which is expected to trend lower.
This is the fourth EC site the Government has put on the market this year and the only one it kept for confirmed sale for the rest of this year.
Due to the poorer outlook for Singapore’s economy and property market, the Government recently transferred all remaining confirmed sites for sale - apart from the Punggol EC site - onto a ‘reserve list’ where sites are put up for sale only if there is interest.
The 242,159 sq ft Punggol site can accommodate a development of about 16 storeys housing about 600 units.
It is a 99-year leasehold site at the junction of Punggol Field and Punggol Road and near the Punggol MRT station.
While property consultants consider the location to be fairly attractive, they also say the market is not.
They said that high construction costs are probably a key factor deterring developers from bidding.
‘Right now, construction costs have not come down yet so developers will still have to build at high construction costs. As a result, they do not have a lot of price flexibility,’ said Knight Frank’s director of research and consultancy, Mr Nicholas Mak.
‘They will end up with a case where some resale 99-year leasehold condo units cost the same or less than EC units,’ he said.
‘With construction costs still high, the numbers are just not attractive. If you’re going into a market that is trending down, there’s no point taking this risk,’ Savills Singapore’s director of marketing and business development Ku Swee Yong said of developers.
Besides, not all developers can get attractive financing terms in today’s market. The weaker ones have trouble raising any funds at all, he said.
Mr Ku also thinks the demand for an EC in Punggol may not be strong. ‘The market is not big in Punggol as many had bought in 2000 when prices were quite high so they haven’t made a profit yet.’
Applicants for EC homes are subject to a household income ceiling of $10,000.
Upgrading may not be a top priority for residents in Punggol as it is a fairly new town, he added.
According to the Housing Board, the fate of the site will be known by next month, when the National Development Ministry puts out its land sales list for the first half of next year.
A Boon Lay for everyone?
Source : Today - 12 Nov 2008
Young and old, local and foreign, the vision includes all
SOME 100,000 plants will be introduced. The neighbourhood park will be transformed into a theme park for both young and old. Boon Lay Shopping Centre will be revamped.
The vision is to transform Boon Lay into a tranquil suburban residential enclave with a distinctive identity, and it’s not just to cater to the district’s aging population.
By rejuvenating the estate with upgraded facilities, this will also hopefully attract younger families to live in Boon Lay, said Madam Ho Geok Choo, Member of Parliament for West Coast GRC, at a briefing on plans for the estate.
The WellnessCentre@BoonLay, which provides healthcare services to the elderly, will partner Alexandra Hospital to provide step-down care at affordable rates for elderly residents discharged after a hospital stay.
Also to be launched is an e-Learning Lab, set up by the Boon Lay Youth Executive Committee to provide computer facilities and Internet access to underprivileged students. Certified instructors will conduct computer courses.
Would the large number of foreign workers in Boon Lay, however, affect the estate’s image and younger families’ decisions to move into the estate?
Said Mdm Ho: “Boon Lay residents have learnt to accept the foreign workers, although the challenge remains how to assure the younger ones who want to set up homes in Boon Lay that the issue is not something to be worried about.”
Indeed, Boon Lay could become an example for a more tolerant nation, she said. “Perhaps Boon Lay can be the first constituency that will demonstrate that, despite the big proportion of foreign workers in the estate, we still have the young flocking to live here because we have got our fundamentals right.”
Citing examples of how foreign workers are included in community events in Boon Lay, Mdm Ho said the grassroots leaders have invited these workers to the community visit by Dr Vivian Balakrishnan, Minister for Community Development, Youth and Sports on Nov 23.
On the economic crisis, she said more residents have been coming to her for financial help.
“I use to see about 60 people or so, but in recent weeks, the number has grown to around 80 … They mainly come because they are laid off or they can’t afford to pay for their utilities. Some cannot even find enough money to pay for their transportation to school and their workplaces.”
Mdm Ho hopes to raise $1 million for community development in Boon Lay by end-January.
The fund-raising activities include a charity dinner at which a new cookbook with residents’ recipes will be auctioned off.
CDL defers South Beach construction, bets on costs easing
Source : Business Times - 14 Nov 2008
Q3 net profit slips 11% but group expects to ride the storm
CITY Developments Ltd (CDL), which yesterday posted an 11 per cent year-on-year drop in third quarter net earnings to $150.8 million, has deferred construction of its South Beach project until construction costs, which have already started to ease, fall to more attractive levels.
CDL is developing the project jointly with a Dubai World unit and Elad Group.
‘The consortium believes that construction cost will come down over time and therefore, it will delay the development of South Beach till construction cost reverts to more reasonable levels,’ CDL said in its results statement.
In December last year, CDL had said the retail, office, hotel and residential project would cost some $2.5 billion in all (including the land cost of some $1.69 billion) and estimated the project would be completed by 2012.
Under the terms of an agreement signed with the government, from whom the consortium bought the site, the South Beach consortium has up to 2016 to complete the development.
CDL also revealed yesterday that in the group’s stable of pre-sold projects under development that qualified for the deferred payment scheme (DPS), only about one-third of the units sold were under DPS and ‘thus its exposure to potential defaults is well under control’. The group does not extend DPS to sub-sales.
In the recently completed http://www.thesailmarinabay.com/ Tower 2, all of the buyers who had opted for DPS have paid up for possession of their units. ‘Furthermore, the majority of the group’s launched properties are expected to receive Temporary Occupation Permit in 2010 and 2011,’ CDL said.
The group also announced it is delaying launching new residential projects due to the subdued property market and global economic uncertainty. Nevertheless, it has proceeded with the construction for The Arte at Thomson and The Quayside Collection at Sentosa Cove, ‘both of which were secured at relatively low land and construction costs’.
‘The oversupply for the office and residential segments which was originally projected by the market is not as serious as anticipated. With the current tight credit crunch and economic slowdown, the majority of developers will naturally defer the development of their projects and delay launches,’ CDL said.
CDL revealed it had secured an anchor tenant for 9 Tampines Grande, a BCA Green Mark Platinum commercial property slated for completion by 2009. BT understands the tenant is Hitachi Asia, which has leased about 85,000 sq ft or the entire South Tower in the project under a deal brokered by Jones Lang LaSalle. Hitachi is expected to move out of Hitachi Tower at Collyer Quay.
On its outlook, CDL said: ‘With good management practices in place and prudence in expenditure, all core segments of business - property development, hotel operations and investment properties - should remain profitable over the next 12 months.’
For the first nine months of this year, CDL’s group net profit dipped 1.8 per cent to $480.95 million, due partly to the absence of writeback of tax overprovisions booked in the same year-ago period.
As for Q3, the group’s bottomline was dented by a $56 million or 38.2 per cent drop in profit before tax from property development. This was due to lower revenue recognition from the group’s Singapore residential developments.
Profit contribution from investment properties quadrupled to $74.3 million in Q3 2008 from $17.8 million in Q3 2007, due to the gain recognised from the sale of Commerce Point, higher rental income, recovery of some property taxes from tenants and increased profit contribution from CDL Hospitality Trusts.
Profit from hotel operations slipped 11.3 per cent to $70.5 million in Q3 on the back of a weakening sterling and US dollar against the Singapore dollar. CDL’s London listed hotel subsidiary Millennium & Copthorne Hotels has hotels in the UK, US and Asia-Pacific.
Third quarter earnings per share slipped to 16.6 cents from 18.6 cents in the same year-ago period. Net asset value per share stood at $5.93 as at Sept 30, 2008, up from $5.72 as at Dec 31 last year. Unlike most other Singapore-listed property groups which revalue their investment properties and state them at fair value, CDL states its investment properties at cost less accumulated depreciation and impairment losses.
Group revenue fell 13.6 per cent to $688.2 million in Q3 2008. For the first nine months of this year, revenue dipped 4.8 per cent to $2.2 billion.
On the stock market yesterday, CDL closed 12 cents lower at $6.09.
The group said that its gearing remains relatively low at 46 per cent, based on cost and not including revaluation surpluses, with interest cover of 11.7 times.
Q3 net profit slips 11% but group expects to ride the storm
CITY Developments Ltd (CDL), which yesterday posted an 11 per cent year-on-year drop in third quarter net earnings to $150.8 million, has deferred construction of its South Beach project until construction costs, which have already started to ease, fall to more attractive levels.
CDL is developing the project jointly with a Dubai World unit and Elad Group.
‘The consortium believes that construction cost will come down over time and therefore, it will delay the development of South Beach till construction cost reverts to more reasonable levels,’ CDL said in its results statement.
In December last year, CDL had said the retail, office, hotel and residential project would cost some $2.5 billion in all (including the land cost of some $1.69 billion) and estimated the project would be completed by 2012.
Under the terms of an agreement signed with the government, from whom the consortium bought the site, the South Beach consortium has up to 2016 to complete the development.
CDL also revealed yesterday that in the group’s stable of pre-sold projects under development that qualified for the deferred payment scheme (DPS), only about one-third of the units sold were under DPS and ‘thus its exposure to potential defaults is well under control’. The group does not extend DPS to sub-sales.
In the recently completed http://www.thesailmarinabay.com/ Tower 2, all of the buyers who had opted for DPS have paid up for possession of their units. ‘Furthermore, the majority of the group’s launched properties are expected to receive Temporary Occupation Permit in 2010 and 2011,’ CDL said.
The group also announced it is delaying launching new residential projects due to the subdued property market and global economic uncertainty. Nevertheless, it has proceeded with the construction for The Arte at Thomson and The Quayside Collection at Sentosa Cove, ‘both of which were secured at relatively low land and construction costs’.
‘The oversupply for the office and residential segments which was originally projected by the market is not as serious as anticipated. With the current tight credit crunch and economic slowdown, the majority of developers will naturally defer the development of their projects and delay launches,’ CDL said.
CDL revealed it had secured an anchor tenant for 9 Tampines Grande, a BCA Green Mark Platinum commercial property slated for completion by 2009. BT understands the tenant is Hitachi Asia, which has leased about 85,000 sq ft or the entire South Tower in the project under a deal brokered by Jones Lang LaSalle. Hitachi is expected to move out of Hitachi Tower at Collyer Quay.
On its outlook, CDL said: ‘With good management practices in place and prudence in expenditure, all core segments of business - property development, hotel operations and investment properties - should remain profitable over the next 12 months.’
For the first nine months of this year, CDL’s group net profit dipped 1.8 per cent to $480.95 million, due partly to the absence of writeback of tax overprovisions booked in the same year-ago period.
As for Q3, the group’s bottomline was dented by a $56 million or 38.2 per cent drop in profit before tax from property development. This was due to lower revenue recognition from the group’s Singapore residential developments.
Profit contribution from investment properties quadrupled to $74.3 million in Q3 2008 from $17.8 million in Q3 2007, due to the gain recognised from the sale of Commerce Point, higher rental income, recovery of some property taxes from tenants and increased profit contribution from CDL Hospitality Trusts.
Profit from hotel operations slipped 11.3 per cent to $70.5 million in Q3 on the back of a weakening sterling and US dollar against the Singapore dollar. CDL’s London listed hotel subsidiary Millennium & Copthorne Hotels has hotels in the UK, US and Asia-Pacific.
Third quarter earnings per share slipped to 16.6 cents from 18.6 cents in the same year-ago period. Net asset value per share stood at $5.93 as at Sept 30, 2008, up from $5.72 as at Dec 31 last year. Unlike most other Singapore-listed property groups which revalue their investment properties and state them at fair value, CDL states its investment properties at cost less accumulated depreciation and impairment losses.
Group revenue fell 13.6 per cent to $688.2 million in Q3 2008. For the first nine months of this year, revenue dipped 4.8 per cent to $2.2 billion.
On the stock market yesterday, CDL closed 12 cents lower at $6.09.
The group said that its gearing remains relatively low at 46 per cent, based on cost and not including revaluation surpluses, with interest cover of 11.7 times.
Higher-end HDB market may be cooling
Source : Straits Times - 14 Nov 2008
No rush for condo-style Bishan flats as market sentiment turns sober
THE higher end of the public housing market is showing its first signs of cooling, with the Housing Board’s latest condo-style flats receiving a lacklustre response.
With only one day left to the closing of applications, Natura Loft at Bishan has drawn about 600 applications for 480 flats, its developer told The Straits Times yesterday.
This is in stark contrast to the overwhelming demand for the previous three projects sold under the HDB’s design, build and sell scheme (DBSS).
The first project, Premiere @ Tampines, was a big hit, with 6,000 applications for 616 homes; City View @ Boon Keng had 3,500 buyers vying for 714 flats; while the third project, Park Central at Ang Mo Kio, drew 2,300 bids for 578 units.
Industry watchers say Natura Loft is a victim of the latest turn in market sentiment, which has seen companies retrenching staff and economies worldwide entering recession.
‘Announcements such as DBS Bank laying off 900 jobs have caught everyone off-guard, and local sentiment has turned very bad,’ said Mr Colin Tan, head of research and consultancy at Chesterton Suntec International.
Other analysts such as ERA Asia-Pacific’s assistant vice-president Eugene Lim said Natura Loft’s pricing was ‘on the high side’.
‘The pricey units are launched at a time when the market is jittery, making a double whammy for the project,’ he said.
Four-room 95-sq m units at Natura Loft are priced from $465,000 to $586,000 while the five-room 120-sq m flats cost $600,000 to $739,000.
That works out to about $450 to $570 per sq ft (psf).
PropNex chief executive Mohamed Ismail said the relatively poor response reflects buyers’ reluctance to take big loans for homes in a period of uncertainty. Also, he pointed out that developers such as EL Development have started becoming more ‘price-sensitive’ and are selling condo units with full facilities - such as Rosewood Suites in Woodlands - at attractive prices of $590 to $600 psf.
‘Alternatives to a pricey DBSS flat are more available now,’ he said.
Mr Zuo Hai Bin, managing director of Natura Loft’s developer, QingJian Realty, said it was inevitable that sales of the project would be affected by economic conditions.
‘But we are still confident that there are genuine buyers,’ he told The Straits Times, adding that the showflat had attracted thousands of visitors.
Separately, the HDB launched 750 new premium flats for sale in Punggol yesterday. This brings the total number of new flats launched this year to 5,800.
The new project, Punggol Arcadia, offers 120 three-roomers, 465 four-room flats and 165 five-room units.
It is located at the junction of Punggol Place and Punggol Field - right next to the future Punggol town centre. Prices start from $181,000 for a three-roomer and go up to $416,000 for a five-roomer.
Analysts say the prices are a tad high as they are comparable to prices of resale flats in the area.
Four-room resale flats were sold for about $300,000 to $330,000 recently and five-roomers for $360,000 to $420,000, said ERA’s Mr Lim.
New flats under HDB’s build-to-order scheme are usually cheaper and take three years to build when demand reaches a certain level.
The slightly higher prices could be a reflection of the prime location next to Punggol MRT station, Mr Lim added.
Meanwhile, analysts say it remains to be seen if red-hot demand for new HDB flats will be sustained for this latest sale.
The HDB’s new projects this year have consistently attracted high demand.
At the end of the first day of the application period, Punggol Arcadia had received 262 applications. The closing date for the project is Nov 26.
No rush for condo-style Bishan flats as market sentiment turns sober
THE higher end of the public housing market is showing its first signs of cooling, with the Housing Board’s latest condo-style flats receiving a lacklustre response.
With only one day left to the closing of applications, Natura Loft at Bishan has drawn about 600 applications for 480 flats, its developer told The Straits Times yesterday.
This is in stark contrast to the overwhelming demand for the previous three projects sold under the HDB’s design, build and sell scheme (DBSS).
The first project, Premiere @ Tampines, was a big hit, with 6,000 applications for 616 homes; City View @ Boon Keng had 3,500 buyers vying for 714 flats; while the third project, Park Central at Ang Mo Kio, drew 2,300 bids for 578 units.
Industry watchers say Natura Loft is a victim of the latest turn in market sentiment, which has seen companies retrenching staff and economies worldwide entering recession.
‘Announcements such as DBS Bank laying off 900 jobs have caught everyone off-guard, and local sentiment has turned very bad,’ said Mr Colin Tan, head of research and consultancy at Chesterton Suntec International.
Other analysts such as ERA Asia-Pacific’s assistant vice-president Eugene Lim said Natura Loft’s pricing was ‘on the high side’.
‘The pricey units are launched at a time when the market is jittery, making a double whammy for the project,’ he said.
Four-room 95-sq m units at Natura Loft are priced from $465,000 to $586,000 while the five-room 120-sq m flats cost $600,000 to $739,000.
That works out to about $450 to $570 per sq ft (psf).
PropNex chief executive Mohamed Ismail said the relatively poor response reflects buyers’ reluctance to take big loans for homes in a period of uncertainty. Also, he pointed out that developers such as EL Development have started becoming more ‘price-sensitive’ and are selling condo units with full facilities - such as Rosewood Suites in Woodlands - at attractive prices of $590 to $600 psf.
‘Alternatives to a pricey DBSS flat are more available now,’ he said.
Mr Zuo Hai Bin, managing director of Natura Loft’s developer, QingJian Realty, said it was inevitable that sales of the project would be affected by economic conditions.
‘But we are still confident that there are genuine buyers,’ he told The Straits Times, adding that the showflat had attracted thousands of visitors.
Separately, the HDB launched 750 new premium flats for sale in Punggol yesterday. This brings the total number of new flats launched this year to 5,800.
The new project, Punggol Arcadia, offers 120 three-roomers, 465 four-room flats and 165 five-room units.
It is located at the junction of Punggol Place and Punggol Field - right next to the future Punggol town centre. Prices start from $181,000 for a three-roomer and go up to $416,000 for a five-roomer.
Analysts say the prices are a tad high as they are comparable to prices of resale flats in the area.
Four-room resale flats were sold for about $300,000 to $330,000 recently and five-roomers for $360,000 to $420,000, said ERA’s Mr Lim.
New flats under HDB’s build-to-order scheme are usually cheaper and take three years to build when demand reaches a certain level.
The slightly higher prices could be a reflection of the prime location next to Punggol MRT station, Mr Lim added.
Meanwhile, analysts say it remains to be seen if red-hot demand for new HDB flats will be sustained for this latest sale.
The HDB’s new projects this year have consistently attracted high demand.
At the end of the first day of the application period, Punggol Arcadia had received 262 applications. The closing date for the project is Nov 26.
River Valley condo Luma relaunches with prices halved
Source : Business Times - 14 Nov 2008
Units going for $1,450 psf, down from $2,800 psf at launch last year
THE big property sale has begun - although, in this case, it could reflect the situation of the developer rather than the state of the market.
Prices have been slashed by half at Luma, a 75-unit freehold luxury condominium at River Valley Grove.
Relaunching this weekend, units at Luma are being offered at $1,450 per square foot, down almost 50 per cent from $2,800 psf when it was first launched last year.
About 10 units had been sold, mainly in Dubai and Hong Kong.
SISV-Realink data shows two units on the 25th floor changed hands at $2,837 psf and $2,586 psf in April this year.
These prices were already much lower than those for two units on the 20th and 26th floors, which went for $3,349 psf and $3,291 psf in August last year.
At the time, some speculated that prices could soon reach $4,000 psf.
Luma (which will be completed in 2011) has three units on each floor, ranging from 743 sq feet to 1,173 sq feet. The developer behind the project is the mid-sized Novelty Group, which is also in the department store business. Luma sits on an en-bloc site at St Thomas Walk which Novelty bought in 2006 for $76.5 million, or about $810 psf of potential gross floor area.
The relaunch of Luma is believed to be the first among luxury condominiums as other developers are holding back, given the weak market.
Nicholas Mak, director of research and consultancy at Knight Frank, said more of the smaller developers could be relaunching at lower prices.
‘The bigger ones are discreetly offering soft discounts, such as lifestyle vouchers,’ he said.
‘I think the chief aim is to move units, to increase sales. They’ve probably done their sums - they expect to do a level of sales to achieve breakeven point, which will lower their borrowings and feel more comfortable,’ Mr Mak added.
Banks are probably repricing loans, and some developers that have revolving facilities or variable- rate loans may feel the pinch.
‘More smaller developers will be doing this if the economic situation worsens,’ said Mr Mak.
The Novelty Group also bought White House Park Apartments in Stevens Road for $22 million from Asia General Holdings. It also has developments in Pasir Panjang, Geylang, Yio Chu Kang and Pasir Ris.
Condo launch goes ahead despite gloom
Source : Straits Times - 14 Nov 2008
Developer to roll out Woodlands project on back of solid soft launch
A DEVELOPER is rolling out a rare condominium launch in Woodlands this weekend - optimistic that lower-than-planned prices will draw buyers, despite the gloomy market conditions.
EL Development is launching the 99-year leasehold, 200-unit Rosewood Suites at $580 per sq ft (psf) on average.
The developer held a sneak preview to test the market a fortnight ago and then a soft launch last weekend, when it sold half of the 60 units launched.
Launches have been few and far between in recent months as most developers continue to hold off, given the volatile markets and poor sentiment.
‘We tested the market…and we were pleasantly surprised that the response was good, so we are going ahead with the launch,’ said Mr Lim Yew Soon, managing director of EL Development, a unit of local builder Evan Lim & Co.
‘If we had waited till next year, there would be a lot of competition. It’s better to have a first-mover advantage.’
Rosewood Suites is a five-storey development with one- to four-bedroom apartments. It is in Rosewood Drive, next to the 99-year, 478-unit Casablanca condominium and opposite Innova Junior College. The popular suburban mall, Causeway Point, and Woodlands MRT station are both within walking distance.
Prices start from $435,000 for a two-bedroom unit and go up to $1.1 million for a four-bedroom ground-floor unit. This works out to $500psf to $660psf.
‘Our earlier price expectations were higher. We benchmarked current prices against the prices of older condos in the area,’ said Mr Lim. Those who bought at the soft launch received a 2 per cent discount from these price levels, he said.
‘It is a fair value in today’s market,’ said Knight Frank director of research and consultancy Nicholas Mak. ‘There has not been a major development launch in the area for a long time so there will be some latent HDB upgrader demand.’
Mr Lim said the buyers were mostly dwellers of nearby flats and condominiums. There are two other condominiums in Rosewood Drive - Casablanca and Rosewood.
At Casablanca, two caveats lodged in September and October showed that two 1,184sqft units were sold at $541psf and $549psf, or $640,000 and $650,000.
Caveats lodged in the same months at the 437-unit Rosewood showed that two 1,173sqft units were sold for $537psf to $550psf, or at $630,000 and $645,000.
Rosewood Suites’ penthouses, priced from $700,000 to $1.4 million, will be released only when ‘times are better’.
EL Development bought the Rosewood Suites site from the Singapore Land Authority in November last year when prices were strong. It topped a tender that drew eight bidders with a price of $56 million or $232psf per plot ratio.
Mr Lim had then said that they had planned to launch the project in the third quarter of this year, and sell it for about $600 psf to $650 psf.
Condo launch goes ahead despite gloom
Source : Straits Times - 14 Nov 2008
Developer to roll out Woodlands project on back of solid soft launch
A DEVELOPER is rolling out a rare condominium launch in Woodlands this weekend - optimistic that lower-than-planned prices will draw buyers, despite the gloomy market conditions.
EL Development is launching the 99-year leasehold, 200-unit Rosewood Suites at $580 per sq ft (psf) on average.
The developer held a sneak preview to test the market a fortnight ago and then a soft launch last weekend, when it sold half of the 60 units launched.
Launches have been few and far between in recent months as most developers continue to hold off, given the volatile markets and poor sentiment.
‘We tested the market…and we were pleasantly surprised that the response was good, so we are going ahead with the launch,’ said Mr Lim Yew Soon, managing director of EL Development, a unit of local builder Evan Lim & Co.
‘If we had waited till next year, there would be a lot of competition. It’s better to have a first-mover advantage.’
Rosewood Suites is a five-storey development with one- to four-bedroom apartments. It is in Rosewood Drive, next to the 99-year, 478-unit Casablanca condominium and opposite Innova Junior College. The popular suburban mall, Causeway Point, and Woodlands MRT station are both within walking distance.
Prices start from $435,000 for a two-bedroom unit and go up to $1.1 million for a four-bedroom ground-floor unit. This works out to $500psf to $660psf.
‘Our earlier price expectations were higher. We benchmarked current prices against the prices of older condos in the area,’ said Mr Lim. Those who bought at the soft launch received a 2 per cent discount from these price levels, he said.
‘It is a fair value in today’s market,’ said Knight Frank director of research and consultancy Nicholas Mak. ‘There has not been a major development launch in the area for a long time so there will be some latent HDB upgrader demand.’
Mr Lim said the buyers were mostly dwellers of nearby flats and condominiums. There are two other condominiums in Rosewood Drive - Casablanca and Rosewood.
At Casablanca, two caveats lodged in September and October showed that two 1,184sqft units were sold at $541psf and $549psf, or $640,000 and $650,000.
Caveats lodged in the same months at the 437-unit Rosewood showed that two 1,173sqft units were sold for $537psf to $550psf, or at $630,000 and $645,000.
Rosewood Suites’ penthouses, priced from $700,000 to $1.4 million, will be released only when ‘times are better’.
EL Development bought the Rosewood Suites site from the Singapore Land Authority in November last year when prices were strong. It topped a tender that drew eight bidders with a price of $56 million or $232psf per plot ratio.
Mr Lim had then said that they had planned to launch the project in the third quarter of this year, and sell it for about $600 psf to $650 psf.
Developer to roll out Woodlands project on back of solid soft launch
A DEVELOPER is rolling out a rare condominium launch in Woodlands this weekend - optimistic that lower-than-planned prices will draw buyers, despite the gloomy market conditions.
EL Development is launching the 99-year leasehold, 200-unit Rosewood Suites at $580 per sq ft (psf) on average.
The developer held a sneak preview to test the market a fortnight ago and then a soft launch last weekend, when it sold half of the 60 units launched.
Launches have been few and far between in recent months as most developers continue to hold off, given the volatile markets and poor sentiment.
‘We tested the market…and we were pleasantly surprised that the response was good, so we are going ahead with the launch,’ said Mr Lim Yew Soon, managing director of EL Development, a unit of local builder Evan Lim & Co.
‘If we had waited till next year, there would be a lot of competition. It’s better to have a first-mover advantage.’
Rosewood Suites is a five-storey development with one- to four-bedroom apartments. It is in Rosewood Drive, next to the 99-year, 478-unit Casablanca condominium and opposite Innova Junior College. The popular suburban mall, Causeway Point, and Woodlands MRT station are both within walking distance.
Prices start from $435,000 for a two-bedroom unit and go up to $1.1 million for a four-bedroom ground-floor unit. This works out to $500psf to $660psf.
‘Our earlier price expectations were higher. We benchmarked current prices against the prices of older condos in the area,’ said Mr Lim. Those who bought at the soft launch received a 2 per cent discount from these price levels, he said.
‘It is a fair value in today’s market,’ said Knight Frank director of research and consultancy Nicholas Mak. ‘There has not been a major development launch in the area for a long time so there will be some latent HDB upgrader demand.’
Mr Lim said the buyers were mostly dwellers of nearby flats and condominiums. There are two other condominiums in Rosewood Drive - Casablanca and Rosewood.
At Casablanca, two caveats lodged in September and October showed that two 1,184sqft units were sold at $541psf and $549psf, or $640,000 and $650,000.
Caveats lodged in the same months at the 437-unit Rosewood showed that two 1,173sqft units were sold for $537psf to $550psf, or at $630,000 and $645,000.
Rosewood Suites’ penthouses, priced from $700,000 to $1.4 million, will be released only when ‘times are better’.
EL Development bought the Rosewood Suites site from the Singapore Land Authority in November last year when prices were strong. It topped a tender that drew eight bidders with a price of $56 million or $232psf per plot ratio.
Mr Lim had then said that they had planned to launch the project in the third quarter of this year, and sell it for about $600 psf to $650 psf.
Companies keen to add office space in Asia: survey
Source : Business Times - 14 Nov 2008
Many multinational firms are keen to take up more commercial space in Asia next year despite the ongoing financial crisis and slowing economic growth, a survey by Jones Lang Lasalle (JLL) showed on Friday.
JLL, one of the world’s largest real estate service firms, said a recent survey of 28 multinational firms that have large presence in Asia showed a majority still expect to take up more space in the first half of 2009.
But over half of the respondents said the expansion will be smaller than originally envisaged.
‘Asia remained the overwhelming first choice for new business activity,’ JLL said.
‘Pointing to the now familiar rationales of lower costs and more pronounced market growth potential, four-fifths of the companies said that they are favouring their Asian units at the expense of their operations based in other regions,’ it added.
Many multinational firms are keen to take up more commercial space in Asia next year despite the ongoing financial crisis and slowing economic growth, a survey by Jones Lang Lasalle (JLL) showed on Friday.
JLL, one of the world’s largest real estate service firms, said a recent survey of 28 multinational firms that have large presence in Asia showed a majority still expect to take up more space in the first half of 2009.
But over half of the respondents said the expansion will be smaller than originally envisaged.
‘Asia remained the overwhelming first choice for new business activity,’ JLL said.
‘Pointing to the now familiar rationales of lower costs and more pronounced market growth potential, four-fifths of the companies said that they are favouring their Asian units at the expense of their operations based in other regions,’ it added.
HDB launches 750-unit Punggol Arcadia under BTO system
Source : Channel NewsAsia - 13 Nov 2008
The Housing and Development Board (HDB) has launched Punggol Arcadia, a 750-unit project under its Build-To-Order (BTO) system. The project is at the junction of Punggol Place and Punggol Field.
Buyers can choose from 3-room, 4-room and 5-room units. The price of these flats range from S$181,000 for a 3-room unit to S$416,000 for a 5-room unit.
4-room units cost between S$268,000 and S$327,000. This is higher than the S$223,000 for a 4-room unit to S$382,000 for a 5-room unit for the 964-unit Punggol Breeze BTO project launched in June this year.
HDB said Punggol Arcadia, located next to the planned Punggol town centre, offers a better location. Some of its 4-room units are also slightly bigger than those of Punggol Breeze.
The project is also close to amenities such as the Punggol MRT station, bus interchange and schools.
Those who wish to apply for a unit should make their submissions by November 26 via the Internet at HDB’s InfoWEB. Computer terminals with access to the site can be found at all HDB offices.
For more information, visit HDB’s InfoWEB at www.hdb.gov.sg.
S’pore may be among the first to recover from global economic slowdown
Source : Channel NewsAsia - 13 Nov 2008
Economies such as Singapore and Hong Kong have benefited from the global economic boom in the last five years. But their open and exposed economies mean they are also vulnerable to recessionary pressures as the world economy slows down.
However, Morgan Stanley said it is not all doom and gloom for Singapore. Experts said the country would be among the first to bounce back once a global recovery takes place.
Stephen Roach, chairman, Morgan Stanley Asia, said: “If the global economy surprises on the upside, Singapore will be one of the first economies in the region to benefit from that. But I think it is hard to be too optimistic right now on global economy prospects over the next few years.”
Morgan Stanley, too, is feeling the pinch of the global slowdown. It announced on Thursday that it would be retrenching 10 per cent of its staff in the institutional securities unit and 9 per cent in asset management.
The global financial services firm said less of these cuts are likely to come from Asia. In fact, Morgan Stanley remains bullish on the prospects of Asian growth once the crisis is over and this bodes well for markets like Singapore.
Roach said: “The main challenges are to consider the options that (the) Singaporean government must consider to counter very powerful external headwinds around the world.
“The good news is that Singapore is more integrated with the rest of Asia than it is with Europe, South America and North America. The Asian region itself is likely to fair better than the rest of the world in this global downturn.”
Morgan Stanley downgraded its growth forecast for Asian countries earlier this week, but it expects a sharp recovery in Asia in the next few years on the back of solid economic fundamentals in the region.
New home sales on hold: CDL
Source : Today - 14 Nov 2008
AMID the weakening property market, City Developments said it will delay selling homes at new projects for now.
About 130 units remained unsold among the homes it had already released for sale. At the same time, CDL and its partners in the South Beach development, located downtown, have agreed to delay construction on expectations that building costs will retreat, said the company.
Singapore’s second-largest developer by assets revealed this yesterday, as it posted a drop in earnings for the three months ended Sept 30. Its net profit fell 11 per cent to $150.8 million due to weak demand at its property and hotel businesses. Revenue declined14 per cent to $688.2 million.
Despite an “uncertain” global economic outlook, CDL expects to show a profit in its property development, hotel operations and investment properties business over the next 12 months.
Building of Jurong General Hospital brought forward as construction prices fall
Source : Channel NewsAsia - 11 Nov 2008
Health Minister Khaw Boon Wan said construction plans for the new Jurong General Hospital have been brought forward to take advantage of softening construction costs.
In July, the government has said it is deferring another S$1.7 billion of public sector construction projects to ease pressure on the then red-hot construction sector.
More hospital bed spaces are coming on-stream and drugs could get cheaper, thanks to the economic crisis.
Private healthcare operator ParkwayHealth is building a 350-room hospital which will be ready by 2011.
The hospital will specialise in four main clinical areas - musculoskeletal, heart and vascular, oncology and general surgery.
ParkwayHealth has seen a 5-7 per cent drop in medical tourists in recent months due to the financial crisis. It expects the fall to taper off at 10 per cent.
But it is confident that in the long run, patients from the Middle East, Russia, Ukraine, Kazakhstan and the Asian region will continue to seek treatment in Singapore.
The national aim is to treat one million foreign patients a year by 2012.
ParkwayHealth said the drop in medical tourists from Indonesia in recent months has been most pronounced. But more patients are coming from Vietnam and Bangladesh.
“This is about the best time to build a hospital whereby we have more time, and our hands are not so tied with operational problems, so we can pay more attention to the construction,” said Dr Lim Cheok Peng, managing director of Parkway Holdings Ltd.
Construction costs in Singapore have been falling due to a slowing economy, and this is good news for ParkwayHealth’s new hospital at Novena which is estimated to cost between S$300 million and S$500 million.
The health minister also said he will bring forward the construction of the public hospital in Jurong to take advantage of falling construction costs.
Jurong General Hospital was originally slated for completion in 2015, but it’s likely to be earlier now.
Minister Khaw added that another key reason is that hospitals are operating near capacity.
“We have been enjoying a very steady growth - almost 20 per cent per annum compound rate of foreign patients. But last year, compared to 2006, it was quite flat. I don’t think it is because demand has shrunk or we are losing competitiveness, but capacity is constrained. When I visit friends who go to private hospitals, I look at the ward…. (it’s) just like public hospitals,” said Khaw.
To address the shortage of hospital beds, Singapore HealthPartners, a partnership formed by local doctors, is also building a “mediplex”, which consists of a hospital, hotel and specialist medical centre, in Little India.
But it’s not just a shortage of beds, there’s also a shortage of doctors.
Over 600 doctors graduated in Singapore in the last three years, while over 1,000 foreign medical graduates were recruited over the same time.
And there is still a need of more doctors to service new citizens and foreign patients. Recruitment is not expected to slow down with the recession, and no pay cuts are expected for public sector nurses and doctors.
Mr Khaw said it is important to pay them the market rate, otherwise the industry may lose 300 specialists by the time the new hospital opens.
Another advantage that the slowing economy is the possibility of cheaper drugs for patients, as the steep increase in drug prices in the last two years were partly due to high oil prices.
Health Minister Khaw Boon Wan said construction plans for the new Jurong General Hospital have been brought forward to take advantage of softening construction costs.
In July, the government has said it is deferring another S$1.7 billion of public sector construction projects to ease pressure on the then red-hot construction sector.
More hospital bed spaces are coming on-stream and drugs could get cheaper, thanks to the economic crisis.
Private healthcare operator ParkwayHealth is building a 350-room hospital which will be ready by 2011.
The hospital will specialise in four main clinical areas - musculoskeletal, heart and vascular, oncology and general surgery.
ParkwayHealth has seen a 5-7 per cent drop in medical tourists in recent months due to the financial crisis. It expects the fall to taper off at 10 per cent.
But it is confident that in the long run, patients from the Middle East, Russia, Ukraine, Kazakhstan and the Asian region will continue to seek treatment in Singapore.
The national aim is to treat one million foreign patients a year by 2012.
ParkwayHealth said the drop in medical tourists from Indonesia in recent months has been most pronounced. But more patients are coming from Vietnam and Bangladesh.
“This is about the best time to build a hospital whereby we have more time, and our hands are not so tied with operational problems, so we can pay more attention to the construction,” said Dr Lim Cheok Peng, managing director of Parkway Holdings Ltd.
Construction costs in Singapore have been falling due to a slowing economy, and this is good news for ParkwayHealth’s new hospital at Novena which is estimated to cost between S$300 million and S$500 million.
The health minister also said he will bring forward the construction of the public hospital in Jurong to take advantage of falling construction costs.
Jurong General Hospital was originally slated for completion in 2015, but it’s likely to be earlier now.
Minister Khaw added that another key reason is that hospitals are operating near capacity.
“We have been enjoying a very steady growth - almost 20 per cent per annum compound rate of foreign patients. But last year, compared to 2006, it was quite flat. I don’t think it is because demand has shrunk or we are losing competitiveness, but capacity is constrained. When I visit friends who go to private hospitals, I look at the ward…. (it’s) just like public hospitals,” said Khaw.
To address the shortage of hospital beds, Singapore HealthPartners, a partnership formed by local doctors, is also building a “mediplex”, which consists of a hospital, hotel and specialist medical centre, in Little India.
But it’s not just a shortage of beds, there’s also a shortage of doctors.
Over 600 doctors graduated in Singapore in the last three years, while over 1,000 foreign medical graduates were recruited over the same time.
And there is still a need of more doctors to service new citizens and foreign patients. Recruitment is not expected to slow down with the recession, and no pay cuts are expected for public sector nurses and doctors.
Mr Khaw said it is important to pay them the market rate, otherwise the industry may lose 300 specialists by the time the new hospital opens.
Another advantage that the slowing economy is the possibility of cheaper drugs for patients, as the steep increase in drug prices in the last two years were partly due to high oil prices.
New BTO in Punggol priced higher
Source : Today - 14 Nov 2008
The Housing and Development Board (HDB) has launched Punggol Arcadia, a 750-unit project under its Build-To-Order (BTO) system, at the junction of Punggol Place and Punggol Field.
Prices for the 120 three-room units range from $181,000 to $211,000 each.
The 465 four-room units will cost anywhere from $268,000 to $327,000 each; while the 165 five-room units come with a $356,000 to $416,000 price tag.
By comparison, a four-room flat at the Punggol Breeze BTO project launched in June could be bought for $223,000.
The HDB said Punggol Arcadia, located next to the planned town centre, offers a better location. Some of its four-room units are also slightly bigger.
But could the higher prices at Arcadia deter buyers?
PropNex chief executive Mohamed Ismail pointed out that the median price of the five-room flats were just a few thousand dollars below that of Punggol resale flats.
BTO flats, he argued, “should be priced about 20 per cent cheaper than resale flats in the same area.
Otherwise, buyers may as well go for a resale flat where they do not have to wait to move in and can enjoy grants of up to $70,000.”
Nonetheless, he thought the prices could be indicative of higher construction costs. He also said the three-room flats at Arcadia could see demand as there are no resale flats in that size available.
Applications for Punggol Arcadia should be submitted by Nov 26.
The Housing and Development Board (HDB) has launched Punggol Arcadia, a 750-unit project under its Build-To-Order (BTO) system, at the junction of Punggol Place and Punggol Field.
Prices for the 120 three-room units range from $181,000 to $211,000 each.
The 465 four-room units will cost anywhere from $268,000 to $327,000 each; while the 165 five-room units come with a $356,000 to $416,000 price tag.
By comparison, a four-room flat at the Punggol Breeze BTO project launched in June could be bought for $223,000.
The HDB said Punggol Arcadia, located next to the planned town centre, offers a better location. Some of its four-room units are also slightly bigger.
But could the higher prices at Arcadia deter buyers?
PropNex chief executive Mohamed Ismail pointed out that the median price of the five-room flats were just a few thousand dollars below that of Punggol resale flats.
BTO flats, he argued, “should be priced about 20 per cent cheaper than resale flats in the same area.
Otherwise, buyers may as well go for a resale flat where they do not have to wait to move in and can enjoy grants of up to $70,000.”
Nonetheless, he thought the prices could be indicative of higher construction costs. He also said the three-room flats at Arcadia could see demand as there are no resale flats in that size available.
Applications for Punggol Arcadia should be submitted by Nov 26.
New HDB BTO prices defy gloom
Source : Business Times - 14 Nov 2008
Private home prices may be looking shaky, but the Housing and Development Board (HDB) has launched the 750-unit Punggol Arcadia with five-room flats going for as much as $356,000 to $416,000.
This represents an increase of between 7 and 8 per cent compared to the neighbouring Punggol Sapphire, which HDB launched six months ago.
Both Punggol Arcadia and Punggol Sapphire are being sold under HDB’s Built-to-Order scheme (BTO) and both are about equal distance to the Punggol MRT/LRT station.
In February this year, HDB also launched Punggol Spring, which is twice the distance away from the MRT/LRT station. Launch prices of Punggol Spring were about 20 per cent lower in comparison to Punggol Arcadia.
The prices of new HDB flats do take into account resale HDB prices. But it is not known exactly how this is factored into new flat prices.
In Q3 2008, HDB’s resale price index rose 4.2 per cent, and 12.4 per cent in the first nine months of 2008.
While the location of Punggol Arcadia is ‘attractive’, ERA (Asia Pacific) associate director Eugene Lim notes that the pricing is also close to HDB resale prices nearby.
‘In terms of prices, the current resale prices for four-room flats at Punggol Field blocks 201 and 202, which is diagonally across Punggol Arcadia and a slightly longer walk to the proposed town centre and MRT station, are $300,000 to $330,000. Five-room resale flats in the same locality are selling for $360,000 to $420,000,’ revealed Mr Lim.
Four-room flats at Punggol Arcadia are priced at between $269,000 and $327,000.
Still, Mr Lim expects take-up to be good.
Not as optimistic is PropNex CEO Mohamed Ismail who believes that BTO flats are generally supposed to be the cheapest subsidised HDB flats.
‘In fact, such flats should be priced about 20 per cent cheaper than resale flats in the same area. Otherwise, buyers may as well go for a resale flat where they do not have to wait to move in and can enjoy grants of up to $70,000,’ adds Mr Ismail.
Mr Ismail concedes that the prices for Punggol Arcadia may reflect rising construction costs. Nevertheless, he feels that demand for Punggol Arcadia will be affected.
According the HDB data, only 262 applications were received for the 750-units available on the first day of applications yesterday.
Describing HDB pricing as ‘reactive’, Cushman & Wakefield managing director Donald Han asked: ‘How do you price flats now?’ Mr Han said that if one considered the rising HDB resale price index and the average cash-over-valuation of resale flats, ‘HDB’s adjusted prices could even be considered at the lower end’. According to HDB data, he median cash-over-valuation amount of all resale transactions in Q3 2008 was $19,000.
Mr Han also did not rule out that demand for HDB flats could be sustained by downgraders from the private residential market.
Still, given that HDB resale prices will eventually feel the impact of the global financial crisis, Mr Han believes HDB prices for new flats will be adjusted down accordingly.
Private home prices may be looking shaky, but the Housing and Development Board (HDB) has launched the 750-unit Punggol Arcadia with five-room flats going for as much as $356,000 to $416,000.
This represents an increase of between 7 and 8 per cent compared to the neighbouring Punggol Sapphire, which HDB launched six months ago.
Both Punggol Arcadia and Punggol Sapphire are being sold under HDB’s Built-to-Order scheme (BTO) and both are about equal distance to the Punggol MRT/LRT station.
In February this year, HDB also launched Punggol Spring, which is twice the distance away from the MRT/LRT station. Launch prices of Punggol Spring were about 20 per cent lower in comparison to Punggol Arcadia.
The prices of new HDB flats do take into account resale HDB prices. But it is not known exactly how this is factored into new flat prices.
In Q3 2008, HDB’s resale price index rose 4.2 per cent, and 12.4 per cent in the first nine months of 2008.
While the location of Punggol Arcadia is ‘attractive’, ERA (Asia Pacific) associate director Eugene Lim notes that the pricing is also close to HDB resale prices nearby.
‘In terms of prices, the current resale prices for four-room flats at Punggol Field blocks 201 and 202, which is diagonally across Punggol Arcadia and a slightly longer walk to the proposed town centre and MRT station, are $300,000 to $330,000. Five-room resale flats in the same locality are selling for $360,000 to $420,000,’ revealed Mr Lim.
Four-room flats at Punggol Arcadia are priced at between $269,000 and $327,000.
Still, Mr Lim expects take-up to be good.
Not as optimistic is PropNex CEO Mohamed Ismail who believes that BTO flats are generally supposed to be the cheapest subsidised HDB flats.
‘In fact, such flats should be priced about 20 per cent cheaper than resale flats in the same area. Otherwise, buyers may as well go for a resale flat where they do not have to wait to move in and can enjoy grants of up to $70,000,’ adds Mr Ismail.
Mr Ismail concedes that the prices for Punggol Arcadia may reflect rising construction costs. Nevertheless, he feels that demand for Punggol Arcadia will be affected.
According the HDB data, only 262 applications were received for the 750-units available on the first day of applications yesterday.
Describing HDB pricing as ‘reactive’, Cushman & Wakefield managing director Donald Han asked: ‘How do you price flats now?’ Mr Han said that if one considered the rising HDB resale price index and the average cash-over-valuation of resale flats, ‘HDB’s adjusted prices could even be considered at the lower end’. According to HDB data, he median cash-over-valuation amount of all resale transactions in Q3 2008 was $19,000.
Mr Han also did not rule out that demand for HDB flats could be sustained by downgraders from the private residential market.
Still, given that HDB resale prices will eventually feel the impact of the global financial crisis, Mr Han believes HDB prices for new flats will be adjusted down accordingly.
Las Vegas Sands secures US$2b capital funding, remains committed to S’pore project
Source : Channel NewsAsia - 11 Nov 2008
Las Vegas Sands said Tuesday it has secured over US$2 billion in capital funding commitments to avoid violating loan agreements.
President and Chief Operating Officer William Weidner said in a conference call that Sands expects to close the transaction by the end of the week.
He continued to say that however, there will be some changes to Sands’ overseas resort developments.
It will stop construction work at two sites in Macau’s Cotai Strip pending project financing arrangements.
Mr Weidner said Sands hopes to have an agreement with a major Chinese bank within the next three to six months.
Sands will also suspend the building of its St Regis Residence luxury-condominium project in Las Vegas indefinitely.
The operator said it expects to save US$1.8 billion by delaying and curbing plans for those projects.
But Sands said it remains committed to its Marina Bay Sands project in Singapore, and expects to open the resort by late 2009 according to plan.
Sands said it expects a significant return on capital from the Marina Bay Sands resort project.
It assured that the current capital market conditions will not significantly impact the integrated resort development in Singapore.
Sands also released its third quarter financial results overnight.
It narrowed its net loss to US$32.2 million, compared with US$48.5 million a year ago.
Sands said this is due to increases in operating income and an income tax gain.
Revenue increased by two-thirds to US$1.1 billion.
Marina Bay Sands may open in phases
Source : Business Times - 14 Nov 2008
SINGAPORE said on Wednesday it may let Las Vegas Sands open its casino in the city-state in phases from the end of 2009 instead of all at once due to the difficult economic conditions.
US casino operator Las Vegas Sands this week raised about US$1 billion to shore up its finances and said it would halt or delay projects in Macau and the United States to conserve cash. The firm said, however, that it would continue work on the planned Marina Bay Sands casino resort in downtown Singapore, which is expected to cost nearly US$5 billion.
Marina Bay Sands ‘had earlier committed to completing the integrated resort in a single phase by end-2009; however, it recently submitted a proposal for a progressive opening from end-2009 onwards’, the Singapore Tourism Board (STB) said. ‘STB is considering the proposal.’ The board also said Las Vegas Sands will invest about US$500 million in additional equity to ensure the Singapore project is completed.
The Marina Bay Sands will comprise a casino, hotels, convention and retail space as well as various entertainment facilities.
SINGAPORE said on Wednesday it may let Las Vegas Sands open its casino in the city-state in phases from the end of 2009 instead of all at once due to the difficult economic conditions.
US casino operator Las Vegas Sands this week raised about US$1 billion to shore up its finances and said it would halt or delay projects in Macau and the United States to conserve cash. The firm said, however, that it would continue work on the planned Marina Bay Sands casino resort in downtown Singapore, which is expected to cost nearly US$5 billion.
Marina Bay Sands ‘had earlier committed to completing the integrated resort in a single phase by end-2009; however, it recently submitted a proposal for a progressive opening from end-2009 onwards’, the Singapore Tourism Board (STB) said. ‘STB is considering the proposal.’ The board also said Las Vegas Sands will invest about US$500 million in additional equity to ensure the Singapore project is completed.
The Marina Bay Sands will comprise a casino, hotels, convention and retail space as well as various entertainment facilities.
Sands puts Marina Bay project first
Source : Today - 12 Nov 2008
LAS Vegas Sands is to halt work on developments in Macau, where it earns two-thirds of its revenue, to focus on the US$4-billion ($6-billion) integrated resort project at Marina Bay, executives said.
The casinos and resorts company run by billionaire Sheldon Adelson said it is managing to raise a further US$2.14 billion in capital following a third-quarter loss.
The United States-based company expects to finish the “oversubscribed” sale of debt or equity this week, including contributions from the Adelson family. This would remove the risk of the parent company breaking its loan covenants, the executives said. Mr Adelson said “a major Chinese bank” may lend the company as much as US$700 million to resume work in Macau.
Las Vegas Sands needs the cash to avoid violating the terms of some US loans and setting off a series of defaults that could force it into bankruptcy.
The company has extended the deadline for finishing parts of Marina Bay Sands into 2010, although the casino, two hotel towers, parts of the mall as well as meeting and convention areas are to open as scheduled by the end of next year, it says.
Design changes will allow the Singapore casino to house as many as 1,000 gambling tables, up from the 600 or so earlier planned, Las Vegas Sands said. It says it expects the Marina Bay project to deliver earnings before interest, taxes, depreciation, amortisation and rent of US$1.26 billion in 2012.
Meanwhile in Las Vegas, where Sands owns the Venetian and Palazzo casino resorts, gambling revenue on the famous Strip has declined for eight straight months. In response, as well as cutting back in Macau, Sands is also to stop work on its Las Vegas condominiums and parts of a casino project in Bethlehem, Pennsylvania.
The company will issue a prospectus relating to the new fundraising “within days,” executives said, while avoiding saying whether the new money was in the form of debt or equity.
Shares in Las Vegas Sands fell 6.3 per cent to US$7.50 after the close of New York Stock Exchange composite trading on Monday.
The company has lost 92 per cent of market value this year on investor concerns that falling casino revenue and the global financial meltdown will leave it without enough cash to pay for expansion projects or cover its loans. It was usurped as the world’s largest casino company by market value in the past month. Wynn Resorts is now the biggest, followed by MGM Mirage.
Mr Adelson’s company posted a third-quarter loss of US$32.2 million.
The company made a filing with regulators on Nov. 6 to allow it to quickly sell stocks or bonds if it finds investors. Mr Adelson, who owns about two-thirds of Las Vegas Sands, injected US$475 million on Sept. 30, and hired Goldman Sachs to help raise more capital.
Las Vegas Sands earlier pledged to invest at least US$12 billion building casinos in Macau, where casino gambling revenue has more than doubled since 2004 to 83 billion patacas (s$15.7 billion) last year.
Casino gambling revenue in Macau fell 26 billion patacas in the third quarter, 10 per cent lower than the previous three-month period, amid the economic slowdown caused by the credit crisis and measures by the Chinese government to restrict its citizens’ travel to the city.
The city had had 2.31 million visitors in September, 10 per cent less than the previous month and the lowest number since July 2007.
Still, compared with the third quarter last year, Macau’s casino revenue grew 28 per cent.
CDL to shelve South Beach
Source : Straits Times - 14 Nov 2008
Economic turmoil and high construction costs cited as reasons
PROPERTY giant City Developments (CDL) and its two joint-venture partners have shelved the $2.5 billion high-profile South Beach project earmarked for a hotly contested site in Beach Road.
The consortium cited ‘the economic turmoil and the high construction cost environment that Singapore is currently experiencing’ as reasons for the move. It will delay the project until building costs fall to ‘reasonable levels’.
The project was launched with much fanfare when CDL and its partners Istithmar - it is part of the Dubai World Group - and El-Ad Group clinched the 3.5-ha site with a $1.69 billion bid.
CDL said then that South Beach would elevate Singapore’s unique branding as a global city. Designed by renowned British architects Foster & Partners, the project features two towers of up to 45 storeys, plus the restored conserved military buildings of the old Beach Road Camp. It will have premium office space, two hotels, shops and city residences.
In August, CDL executive chairman Kwek Leng Beng said the company already had people knocking on its doors, keen to buy one block or one hotel.
CDL said earlier that it expected to complete the 99-year leasehold project by 2012, though it had until 2016 to finish it.
The news came on a bleak day for CDL, which reported an 11 per cent fall in third-quarter net profit to $150.8 million and a 13.6 per cent decline in revenue to $688.2 million.
Prices and demand have fallen, although in the three months to Sept 30 it sold ‘more than 330 units’ of The Livia in Pasir Ris, which has 724 units.
Demand and rental expectations in the office market were also hit by the financial crisis, the group said.
While its 53 per cent subsidiary Millennium & Copthorne Hotels delivered credible results, its contribution to CDL’s revenue and pre-tax profit fell due to the sterling’s weakening against the Singdollar.
The property development business remains the biggest earnings contributor but its third-quarter profit before tax fell from $147 million to $91.1 million.
Hotel operations accounted for $70.47 million of third quarter profit before tax, down from $79.5 million. Rental properties contributed $74.3 million, up from $17.8 million.
CDL is holding back the launch of new residential projects due to the economic uncertainty, but it is proceeding with construction of The Arte at Thomson and The Quayside Collection at Sentosa Cove.
Both sites were secured at relatively low land and construction costs, it said.
CDL said its exposure to potential defaults was under control as it did not sell too many units under the deferred payment scheme and did not extend this scheme to sub-sales.
It said its investment properties would still benefit even if renewed rentals were moderated as they would still be far higher than the previous low rates. The firm added that its hotel business had never operated at a loss since it went public in 1996.
Earnings per share dipped 10.8 per cent in the third quarter to 16.6 cents. Net asset value per share reached $5.93, up from $5.72 at the end of last year.
Its gearing is at 46 per cent, with interest cover at 11.7 times.
CDL said it expected all core business segments to remain profitable over the next 12 months.
The shares closed 12 cents down at $6.09 yesterday.
Economic turmoil and high construction costs cited as reasons
PROPERTY giant City Developments (CDL) and its two joint-venture partners have shelved the $2.5 billion high-profile South Beach project earmarked for a hotly contested site in Beach Road.
The consortium cited ‘the economic turmoil and the high construction cost environment that Singapore is currently experiencing’ as reasons for the move. It will delay the project until building costs fall to ‘reasonable levels’.
The project was launched with much fanfare when CDL and its partners Istithmar - it is part of the Dubai World Group - and El-Ad Group clinched the 3.5-ha site with a $1.69 billion bid.
CDL said then that South Beach would elevate Singapore’s unique branding as a global city. Designed by renowned British architects Foster & Partners, the project features two towers of up to 45 storeys, plus the restored conserved military buildings of the old Beach Road Camp. It will have premium office space, two hotels, shops and city residences.
In August, CDL executive chairman Kwek Leng Beng said the company already had people knocking on its doors, keen to buy one block or one hotel.
CDL said earlier that it expected to complete the 99-year leasehold project by 2012, though it had until 2016 to finish it.
The news came on a bleak day for CDL, which reported an 11 per cent fall in third-quarter net profit to $150.8 million and a 13.6 per cent decline in revenue to $688.2 million.
Prices and demand have fallen, although in the three months to Sept 30 it sold ‘more than 330 units’ of The Livia in Pasir Ris, which has 724 units.
Demand and rental expectations in the office market were also hit by the financial crisis, the group said.
While its 53 per cent subsidiary Millennium & Copthorne Hotels delivered credible results, its contribution to CDL’s revenue and pre-tax profit fell due to the sterling’s weakening against the Singdollar.
The property development business remains the biggest earnings contributor but its third-quarter profit before tax fell from $147 million to $91.1 million.
Hotel operations accounted for $70.47 million of third quarter profit before tax, down from $79.5 million. Rental properties contributed $74.3 million, up from $17.8 million.
CDL is holding back the launch of new residential projects due to the economic uncertainty, but it is proceeding with construction of The Arte at Thomson and The Quayside Collection at Sentosa Cove.
Both sites were secured at relatively low land and construction costs, it said.
CDL said its exposure to potential defaults was under control as it did not sell too many units under the deferred payment scheme and did not extend this scheme to sub-sales.
It said its investment properties would still benefit even if renewed rentals were moderated as they would still be far higher than the previous low rates. The firm added that its hotel business had never operated at a loss since it went public in 1996.
Earnings per share dipped 10.8 per cent in the third quarter to 16.6 cents. Net asset value per share reached $5.93, up from $5.72 at the end of last year.
Its gearing is at 46 per cent, with interest cover at 11.7 times.
CDL said it expected all core business segments to remain profitable over the next 12 months.
The shares closed 12 cents down at $6.09 yesterday.
No takers for executive condo site in Punggol
Source : Today - 12 Nov 2008
IT was the only executive condominium site up for confirmed sale this year. But when the tender closed yesterday at noon, there were no bids received.
The 99-year lease site in Punggol - with a land area of 22,497 sqm that can accommodate a 16-storey development - was the fourth EC site put on the market this year by the Government.
The other three were on the reserve list, to be launched for tender only if a minimum bid was received.
Given the poor market sentiment and construction crunch, PropNex chief executive Mohamed Ismail said it was “understandable” why the site did not attract any bids.
Moreover, developers are trotting out their new projects at “very attractive” prices.
“Whoever bids still has to pay a high construction cost to complete the development. Therefore their break-even cost will be high. If there are developers willing to sell private properties at almost $800 per square foot, the EC cannot sell.”
But, he also thought the response might have been different had the location been more central.
“Punggol already has a good supply of Built-To-Order flats, I don’t think a private developer would want to compete in these conditions.”
The HDB last year tried making ECs more attractive to home-buyers by relaxing the rules for applications. First-time buyers are eligible if they have household incomes of up to $10,000.
The last time an EC site was sold was in June 2004 at Woodlands Drive 16.
IT was the only executive condominium site up for confirmed sale this year. But when the tender closed yesterday at noon, there were no bids received.
The 99-year lease site in Punggol - with a land area of 22,497 sqm that can accommodate a 16-storey development - was the fourth EC site put on the market this year by the Government.
The other three were on the reserve list, to be launched for tender only if a minimum bid was received.
Given the poor market sentiment and construction crunch, PropNex chief executive Mohamed Ismail said it was “understandable” why the site did not attract any bids.
Moreover, developers are trotting out their new projects at “very attractive” prices.
“Whoever bids still has to pay a high construction cost to complete the development. Therefore their break-even cost will be high. If there are developers willing to sell private properties at almost $800 per square foot, the EC cannot sell.”
But, he also thought the response might have been different had the location been more central.
“Punggol already has a good supply of Built-To-Order flats, I don’t think a private developer would want to compete in these conditions.”
The HDB last year tried making ECs more attractive to home-buyers by relaxing the rules for applications. First-time buyers are eligible if they have household incomes of up to $10,000.
The last time an EC site was sold was in June 2004 at Woodlands Drive 16.
Interest rates fall to five-year low
Source : Business Times - 12 Nov 2008
3-month Sibor plunges to 0.89%; borrowers may gain, savers may be hit
Interest rates have plunged to near five-year lows as loan demand falls off a cliff even as governments inject liquidity to get credit flowing again.
Yesterday, the key three-month Sibor or Singapore interbank bank offered rate fell to 0.89 per cent, not far from the all-time low of 0.69 per cent on Nov 21, 2003. The benchmark rate, to which many home loans are pegged, is now 60 per cent lower from less than two months ago when it hit 2.23 per cent on Sept 26.
While this may be good for borrowers, savers may find themselves earning no interest - similar to the situation in Hong Kong where banks pay nothing for savings accounts.
HSBC Hong Kong pays zero interest for amounts less than HK$5,000 (S$969) while amounts higher than that earn 0.01 per cent. DBS Bank Hong Kong too pays a miserly 0.01 per cent for savings accounts regardless of amounts. Even its high-end Treasures customers get only 0.15 per cent, regardless of their balance.
The rapid fall in interest rates has caught many by surprise. ‘We are in unprecedented times,’ said Alvin Liew, Standard Chartered Bank Singapore economist.
Mr Liew said that Singapore’s interest rates are influenced by US interest rates and domestic demand.
‘In recent years, domestic interest rates moved more or less in line with the US$ Libor or interbank rate, but at a discount, as Singapore has in recent years had a forex appreciation stance,’ he said.
‘With Singapore now having moved to a neutral policy, one of the key implications would be that currency appreciation is taken out of the equation, and we are likely to see SGD Sibor tracking US$ Libor much closer.’
The US Federal Reserve recently cut the Fed Fund Target Rate (FFTR) by another 50 basis points to one per cent (on Oct 29) and many expect another 50 bps snip before end-2008 to bring FFTR to a record low of 0.5 per cent and held at this level for the whole of 2009.
But the three-month Sibor is still lower than the FFTR and one of the factors could be that Singapore is regarded as a safe haven in a more volatile region, said Mr Liew.
Selena Ling, OCBC Bank economist, said that, over the years, the three-month Sibor has traded at a wide discount to the US rate, though a very rough guide would be one per cent discount to the FFTR.
‘But if the Fed cuts to 50 basis points, we can’t go to negative, right?’ Ms Ling said. She noted, however, that overnight Sibor rates recently have gone very near to zero.
‘It’s highly unlikely we’ll go to zero, but never say never,’ she said, referring to the three-month Sibor.
‘The current circumstances are quite abnormal because all the central banks are injecting liquidity, and you can’t second guess them,’ she added.
Some feel interest rates will continue to face downside pressure as demand for loans will contract next year given that Singapore is already in a recession.
So what can borrowers and savers expect?
Dennis Khoo, general manager of lending at Standard Chartered Bank was non-committal.
‘If customers feel that rates will go lower, then the three-month Sibor is a good way to capitalise, given that it automatically adjusts as the rates go lower. Should customers feel that rates will eventually move higher, then Standard Chartered Bank offers them an attractive mortgage pricing package with a two-year lock-in period of 2.49 per cent.’
He added: ‘As interest rates drop, the savings rates will move in tandem.’
3-month Sibor plunges to 0.89%; borrowers may gain, savers may be hit
Interest rates have plunged to near five-year lows as loan demand falls off a cliff even as governments inject liquidity to get credit flowing again.
Yesterday, the key three-month Sibor or Singapore interbank bank offered rate fell to 0.89 per cent, not far from the all-time low of 0.69 per cent on Nov 21, 2003. The benchmark rate, to which many home loans are pegged, is now 60 per cent lower from less than two months ago when it hit 2.23 per cent on Sept 26.
While this may be good for borrowers, savers may find themselves earning no interest - similar to the situation in Hong Kong where banks pay nothing for savings accounts.
HSBC Hong Kong pays zero interest for amounts less than HK$5,000 (S$969) while amounts higher than that earn 0.01 per cent. DBS Bank Hong Kong too pays a miserly 0.01 per cent for savings accounts regardless of amounts. Even its high-end Treasures customers get only 0.15 per cent, regardless of their balance.
The rapid fall in interest rates has caught many by surprise. ‘We are in unprecedented times,’ said Alvin Liew, Standard Chartered Bank Singapore economist.
Mr Liew said that Singapore’s interest rates are influenced by US interest rates and domestic demand.
‘In recent years, domestic interest rates moved more or less in line with the US$ Libor or interbank rate, but at a discount, as Singapore has in recent years had a forex appreciation stance,’ he said.
‘With Singapore now having moved to a neutral policy, one of the key implications would be that currency appreciation is taken out of the equation, and we are likely to see SGD Sibor tracking US$ Libor much closer.’
The US Federal Reserve recently cut the Fed Fund Target Rate (FFTR) by another 50 basis points to one per cent (on Oct 29) and many expect another 50 bps snip before end-2008 to bring FFTR to a record low of 0.5 per cent and held at this level for the whole of 2009.
But the three-month Sibor is still lower than the FFTR and one of the factors could be that Singapore is regarded as a safe haven in a more volatile region, said Mr Liew.
Selena Ling, OCBC Bank economist, said that, over the years, the three-month Sibor has traded at a wide discount to the US rate, though a very rough guide would be one per cent discount to the FFTR.
‘But if the Fed cuts to 50 basis points, we can’t go to negative, right?’ Ms Ling said. She noted, however, that overnight Sibor rates recently have gone very near to zero.
‘It’s highly unlikely we’ll go to zero, but never say never,’ she said, referring to the three-month Sibor.
‘The current circumstances are quite abnormal because all the central banks are injecting liquidity, and you can’t second guess them,’ she added.
Some feel interest rates will continue to face downside pressure as demand for loans will contract next year given that Singapore is already in a recession.
So what can borrowers and savers expect?
Dennis Khoo, general manager of lending at Standard Chartered Bank was non-committal.
‘If customers feel that rates will go lower, then the three-month Sibor is a good way to capitalise, given that it automatically adjusts as the rates go lower. Should customers feel that rates will eventually move higher, then Standard Chartered Bank offers them an attractive mortgage pricing package with a two-year lock-in period of 2.49 per cent.’
He added: ‘As interest rates drop, the savings rates will move in tandem.’
Subscribe to:
Posts (Atom)