M’sian property market can weather slump

Analysts expect a slowdown but no major correction as there is still room to grow

THE Malaysian property market, which is expected to enter the down cycle next year, will still be resilient enough to survive the onslaught of a softening global economy.

The government’s RM7 billion (S$2.9 billion) stimulus package, including the reduction of Employees’ Provident Fund contributions from 11 per cent to 8 per cent coupled with lower interest rate and inflation, would provide the bright spark to the market.

The market still has ample liquidity as banks continue to give out financing despite worries about an increasing credit crunch in the US.

Association of Valuers and Property Consultants in Private Practice Malaysia (PEPS) president, James Wong Kwong Onn, said that although the property market was expected to see a slowdown in the take-up rate, there would not be a major correction as there was still room to grow.

He said that Malaysia was in a better position compared to Singapore, Hong Kong and Thailand which were more exposed to the US sub-prime crisis. ‘Prices in these three countries have shot up tremendously by 50-100 per cent but in Malaysia, the increase was gradual,’ he said.

Mr Wong, however, said that the association did not expect the market to burst as there would be a moderate reduction in property prices. He added that the property market, especially for residential and commercial, has been ‘red hot’ for three years up to the third quarter of this year but the softening economy has put a pressure on it.

According to Real Estate and Housing Developers’ Association president, Ng Seing Liong, the property market would see a slowdown of between 5 and 15 per cent in 2009. He attributed the economic slowdown as a dampener to the enthusiasm of buyers.

Mr Ng said that sales generally would be ongoing but in small volumes as most purchasers adopted a wait-and-see attitude while most developers downsized their new property launches for next year. ‘Prices are likely to moderate by 5-10 per cent from the first quarter 2009,’ he said.

An analyst from Aseambankers Malaysia Bhd said that buyers were holding back their investments until the economic environment was stable. He, however, anticipated home buyers to return to the market in the second half of 2009.

‘The ‘hot’ property items, especially luxury condominiums in the prime locations, such as in the Kuala Lumpur city centre and Mont Kiara, would continue to be a focus as demand remains positive. Iskandar Malaysia is in the limelight. The most prominent developments are in Nusajaya and Danga Bay, which have attracted buyers from all over the world,’ he said.

An analyst from OSK Research, who also shared his view, said that given a huge supply expected to hit the market, especially in the high-end condominiums segment commencing late this year, 2009 would prove to be a year of reckoning for the Klang Valley’s luxury condos.

‘As the market having to digest the massive supply of high-end condos that will flood the market to at least 2010, this supports the belief that the next property boom cycle will potentially be led by high-end landed properties,’ he said. He added that the next phase of the property upcycle could only commence in early 2010 or 2011.

Source : Business Times - 27 Dec 2008

Don’t be in a hurry to reinstate DPS

Uncertainty in the market being caused now by the scheme should not be treated lightly. By Kalpana Rashiwala

THE deferred payment scheme (DPS) was scrapped over a year ago but it has left a lingering uncertainty in the market that may not clear for some time yet - a fact that should not be taken lightly in examining the merits of reviving the scheme, as some developers are urging the authorities to.

Developers say bringing back DPS will stimulate property demand and point out the scheme did help genuine home buyers tide over temporary cashflow issues.

However, DPS has also been blamed for creating excesses during the recent property bull run. It fuelled speculative buying, since buyers needed to pay only 10-20 per cent of a property’s purchase price to the developer, with the rest only upon the project’s completion.

Amidst the current property slump, DPS has also created a ‘time bomb’ that is ticking away as projects sold on the scheme near completion, which is when buyers have to pay the chunk of their purchase price to the developer. Buyers who have not secured a housing loan yet may find it difficult to get one, with the current tight lending regime being practised by financial institutions.

Without a housing loan, these buyers may not be able to meet their payment to the developer to complete their purchase. This will have consequences.

The government recently revealed that 10,450 private homes sold in uncompleted projects were under DPS as at Nov 30, 2008 and has even given a breakdown of this figure by location and expected year of completion. Of course, not all DPS buyers are speculators. Nevertheless, the debate continues to rage on how big an impact there will be on Singapore’s property market from buyers failing to complete their purchase when projects receive Temporary Occupation Permit (TOP).

Predicting the size of the blast from the DPS ‘time bomb’ is tricky.

For one thing, no one knows how many of these buyers who purchased on DPS have already secured a housing loan. For those who have, paying that big instalment to the developer at TOP may not be an issue. Those without a loan may start to panic.

Other factors affecting the magnitude of the problem created by DPS include: how buyers are affected by the ongoing recession, prospects for their jobs or businesses, the economic and property market outlook at the time, and whether banks relent on their current tight lending policy.

So the impact of DPS is unclear. And the fate of buyers and developers remains uncertain.

Much has been said about DPS buyers defaulting on their purchases by walking away and returning units to developers. The reality is not so simple. The right to repudiate the sale-and-purchase agreement lies with the developer, not the buyer. Even so, some foreign buyers may get away with absconding from the deal and limiting their damage to the 10 or 20 per cent deposit paid.

However, local buyers who fail to complete their purchase risk being sued by developers to either complete the transaction or to compensate the developer for the shortfall between the original contracted purchase price and what the developer manages to sell the unit for later.

On the other hand, if buyers try to offload their units in a weak market, this may accelerate the tailspin in property prices. Another point to note is that those who sell their units at a loss in the subsale or secondary market will still have to cough up the difference and pay the developer.

For instance, if a buyer had picked up a $1 million property on DPS, has paid the developer a 20 per cent or $200,000 deposit and manages to sell his property to another buyer for say, $700,000 in the downmarket, the first buyer has to pay the developer the $100,000 shortfall before it agrees to transfer the title to the second buyer.

Developers too will have to count the cost of this whole episode, including the damage to their image if they drag financially strapped buyers to court.

The global financial crash has already dealt a big blow to sentiment in the Singapore property market. This is being exacerbated by the uncertainty over the likely fallout from DPS.

Defusing the time bomb

What can be done to defuse this time bomb? If buyers say they can’t secure housing loans or sufficient loan quantums from banks to complete their purchase of properties bought on DPS, some of the stronger developers may be game to provide second mortgages for buyers - if the authorities allow that.

Alternatively, developers could record the outstanding payments from problem DPS buyers as debt owed to them. So these buyers become debtors to the developers, who may charge them interest on the unpaid amount until the sum is settled by buyers, as allowed under the sale-and-purchase agreement. Developers may, however, be deluged with buyers taking refuge in such arrangements. And these arrangements can only be made with the support of the developers’ banks. Already, many mid-sized and smaller developers are highly geared.

Whichever way you look at it, somebody will have to pay the price for the problems created by DPS - be it buyers having to sell their units at a loss or being sued by the developer, or developers ending up financing buyers to help them complete their purchase.

Sentiment is so weak now that reviving DPS alone probably won’t do the trick in jumpstarting private home sales.

Banks are tight-fisted now, but it is a matter of time before they have to relax on home mortgages. The business of financing will then be best left to them. In the months gone by, some banks had even devised novel schemes like zero instalment and interest absorption that mimicked DPS - and served the needs of genuine home buyers with temporary cashflow problems, just as well as DPS did.

The good thing about this approach is that banks will have to do checks on borrowers to ensure they are credit worthy - to minimise the risk of non-performing loans manifesting later from giving loans to poor-quality borrowers dabbling in properties beyond their means.

Developers, on the other hand, are not in the business of assessing the creditworthiness of potential buyers. Their business is to sell homes - to as many people as possible and at as high a price as possible. If developers are again allowed to offer DPS in its old form to home buyers, it may once more draw speculators with weak credit standing and create another round of excesses.

Some have suggested ways to temper DPS. For example, buyers could be required to pay an additional 10 per cent - say 18 months after they have paid the initial 20 per cent to the developer. The idea is that buyers would need to apply for and draw down a housing loan, bringing banks into the picture earlier. That may help to sift out financially weaker speculators.

DPS helps HDB upgraders to buy private property, as they don’t have to sell their existing HDB flats immediately to make progress payments on their new home. But the problems being caused by DPS should not be treated lightly amidst calls to reinstate the scheme.

The Singapore property market will eventually recover after the dust from the global financial crash settles and the Remaking Singapore Story takes centre stage once again. In future, high-net worth individuals from overseas and other investors looking for places to park their monies may develop a distate for places brimming with excesses. After all, buying a property is a long-term commitment, best made within one’s means.

Source : Business Times - 27 Dec 2008

The story of three slumps

The current downturn bears little resemblance to those of 1998 and 2001

HOW does the current property market slump compare with the earlier ones in 1998 and 2001?

Sitting here at my desk, looking out over the huge Marina Bay building site that will grow into Singapore’s first integrated resort, it doesn’t look much like a market in a downturn. But, we are currently experiencing some very special market conditions that started 18 months ago with the sub-prime issue in the US. It has had a knock-on effect across the global economy that few at the time anticipated.

To make some sense of it all, I find myself thinking about how very different from 1998 and 2001 this current situation is. In 1998, the turmoil came from some parts of Asia, as a result of weak fundamentals such as inadequate regulatory oversight, and overexposure to foreign exchange risks. There were also two further events - the dotcom failure in 2000 and Sars in 2003 - that derailed the recovery and shut down tourism, dampening consumers’ confidence in Asia until 2005. As a consequence of this sequence of events that started in 1997, a number of the Asian markets underwent a substantial structural revamp, harried on and supported by the developed economies.

Today, thanks to these economic storms, the Asian economy is in much better shape than in 1998.

However, the current downturn is more serious than we’ve seen before. Credit - a key tool in the business world - is at the centre of the crisis. As the credit markets froze earlier this year, consumption in the developed markets shifted to low gear and this is affecting the global economy. With debt availability low, businesses find it difficult to continue functioning as before. Even a growing company is stymied without investment.

So, coming back to Singapore, it showed itself to be strong in 1998 and has continued to use the experiences of the last 10 years to advance its economic and financial structure even further. It is now better positioned to manage this global slowdown. And, more importantly, to come out of it faster and stronger.

For example, Singapore has been very successful in attracting foreign direct investment (FDI), with an estimated $348 billion in 2007, compared to $165 billion in 1998 in (estimated real value terms). This is a direct endorsement of the business-friendly measures that Singapore has put in place. These have ranged from the removal of capital gains tax through to the signing of tax treaties with 50 countries that allow companies based here to reduce taxes in dividends, interest and royalties.

The property market here benefited from this investment influx. The value of property investment in Singapore has increased from $15 billion in 1997 to $43 billion by 2007 (estimated real value terms) - almost a 290 per cent increase.

Part of this property investment has come from Reits. The Monetary Authority of Singapore’s issuance of the guidelines for property trusts in 1999 opened the door for Singapore to become the Asian Reit hub it is today. There are now 20 Reits listed on the Singapore Exchange built from a variety of properties across Asia.

The formation of the Reit market has made this chunky and illiquid investment class accessible to a larger pool of retail investors and improved the transparency of this market - a key determinant in attracting foreign investments that has provided more liquidity.

One of the most striking changes from 1998 is that, despite its size, Singapore has increased its resident population from 3.6 million in 2005 to 4.6 million today.

With the enlarged population, the proportion of non-Singaporeans has also increased by 5 percentage points to 25 per cent. It is with no surprise that the volume and demand for new residential launches has similarly jumped.

In 2007, there were over 13,000 units launched and sold - 25 per cent more than the 10,000 units launched in the 1996 peak. Demand, spurred by a relaxation in government policy on foreign ownership of residential properties in Singapore, increased some 64 per cent over the same period.

There is much talk about the health of the property market in Singapore at the moment, but looking at the figures, our market today is in a more robust state than in 1998. Vacancy rates are much lower, with grade A office vacancy at 1.8 per cent today, against 14.4 per cent 10 years ago. This indicates a very tight market.

In the residential sector, we see the same strong story, with capital values in the prime market still 57 per cent higher than in 1998 and affordability improving. So those who see themselves in Singapore for the long term and missed the last market rise, now have an opportunity to enter the market.

As the global economy continues to struggle, Singapore is still likely to feel the pinch. However, the pro-business mindset and innovative attitude of its government are two crucial ingredients that will support the economy - and the property market - through the downswing.

We all know that there will be a turning point in the current cycle. Perhaps when buyers and sellers of physical assets finally agree on price expectations, or liquidity returns to the market as credit conditions revert to normal. Or perhaps a change in people’s sentiment could cause the turnaround. Whichever it is, Singapore has worked hard on managing its economic fundamentals and infrastructure, to be ready to capitalise swiftly on any positive economic moves. Certainly, the Marina Bay Sands coming to life outside my window will be ready to take advantage of the upswing.

Chris Fossick
Managing Director, Head of SE Asia
Jones Lang LaSalle

Source : Business Times - 27 Dec 2008

Retail rents expected to fall in 2009

Retailers likely to be cautious in expansion, rents may undergo corrections to reflect the gloomy outlook

RENTS for prime retail space in Orchard Road could fall by as much as 13 per cent in 2009, while rentals at suburban malls are expected to ease by about 3 per cent, property analysts here said.

Cuts in consumer spending will be the key threat to rental rates. But rents will also come under pressure from the 3.2 million square feet of new retail space expected to come onstream next year - close to half of which will be along Orchard Road.

A poll of property analysts here showed that they expect prime retail rents to fall by anywhere between 5 and 13 per cent next year. But malls in the suburbs, where people go to buy their neccessities, are expected to fare better. Predictions for suburban rental growth range from ‘holding steady’ to a decline of up to 7 per cent. The consensus view is a fall of about 3 per cent.

By contrast, so far in 2008, prime Orchard Road rents fell 0.8 per cent year-on-year, while prime suburban rents rose one per cent, data from CB Richard Ellis (CBRE) shows.

Consumers are expected to cut back on spending on concerns of job and wage security, which will hit the sales of retailers, analysts said. Tourist arrivals are also expected to fall, which will depress sales further.

‘A prolonged depression in consumer spending could affect retailers’ ability to service their rents and we think it is possible that more retailers would renegotiate for lower rental rates, and retail mall managers may have to give in to avoid a high turnover in tenants,’ noted OCBC Investment Research analysts Foo Sze Ming and Meenal Kumar in a report.

Echoed Knight Frank: ‘Retailers will be more cautious in expanding their businesses and retail rents are likely to undergo corrections to reflect the gloomy outlook.’

In addition, more space is due to come onstream - some 5.7 million sq ft in the next two years. Of this, 20-30 per cent will be located along the Orchard Road belt. Another 21 per cent will come from the Marina Bay Sands resort. Some of the major retail supply due to be completed next year include Ion Orchard, The Marina Bay Sands Shoppes, Orchard Central, 313@Somerset and City Square Mall.

But in spite of all the new space, analysts here remain confident that the healthy take-up of retail space seen so far is likely to keep vacancy rates under control and prevent sharp rental declines caused by oversupply.

Most of the major upcoming malls - such as Ion Orchard, Orchard Central, Mandarin Gallery, 313@Somerset and Marina Bay Shoppes - have reportedly achieved pre-commitment rates of between 50 per cent and 70 per cent, said Colliers’ director for research and advisory Tay Huey Ying. And there should be interest for the remaining retail space, she said. The Orchard Road malls will ‘probably be the only new retail malls the market is likely to see on this prime stretch for a while’ and the Marina Bay Shoppes ’should also be sought after as the locality would be a new icon for Singapore’, Ms Tay said. ‘The challenge, therefore, is really in structuring a rental package that is win-win for both landlord and retailer in an increasingly trying time,’ she added.

Other analysts agreed, saying that the onus will be on landlords in 2009.

‘Prime properties will still be able to attract tenants, but developers must be more flexible with rental expectations,’ said Anna Lee, DTZ’s associate director for retail. ‘As consumers hold their purses tighter, landlords would have to spend more on advertising and promotion to entice more consumer traffic to their malls and translate that into spending.’ And to mitigate lower sales faced by their tenants, some landlords may offer rental rebates and lower turnover rents, she added.

Analysts also said that capital values are expected to remain steady in the retail sector. ‘Of note is that the retail sector remains defensive even during the Asian Crisis period, with rental rates and capital values remaining fairly stable during this period. Hence, we believe that a fair cap rate for the retail sector would remain in the 5-6 per cent range,’ said DBS Group Research analysts Mun Yee Lock and Derek Tan.

Source : Business Times - 27 Dec 2008

Private properties looking attractive

What to look out for when hunting for that perfect condo or house

THE recession has resulted in a 25-per-cent fall in private- property prices from their market peak, and with prices expected to dip further next year, there may be opportunities to pick up some bargains.

However, buyers of properties - whether for investment or occupancy - should do their homework before committing to such big-ticket items.

Here are 10 tips to keep firmly in mind.

1 CONSIDER LANDED

The executive director of HSR Property Group, Mr Eric Cheng, feels that if buyers are willing to fork out $1.2 million to $1.3million for a condominium, they should consider buying landed property instead.

Due to land scarcity in Singapore, there is always more demand than supply for landed property, which is not the case with condos, said Mr Cheng.

2 INSTALMENT RESERVE

Mr Cheng said it is important to invest within your means. Have a reserve of at least one year’s worth of instalments in case of shocks, like a loss of income.

3 LEASING OR LIVING?

Mr Arvin Sylvester Lim, division director of Century 21 SHL Realty, said it is important to be sure if you plan to live in the property or rent it out.

If you are making it your home, the equation is simple: Find something that you like and can afford.

If you are looking to invest and rent out, do your research to see if there is good demand in an area, and if the rent will be enough to cover the instalment payment and still allow a profit.

4 DON’T WAIT TOO LONG

While one should hold back until one finds something ideal, Mr Lim does not encourage overspeculating on trends.

“Buying a house is not like buying a car. The moment you drive the car…the value drops, but with property the value can go up or down,” he said.

Even though prices are expected to fall further, “a home is a must”, Mr Lim said. He advises against pegging buying one to unpredictable market movements.

5 MAKE OFFERS FAST

Buyers who bought too many properties or can’t afford to keep up with payments, given the weak economy, will be selling off their investments now, said Mr Shannan Govindarajoo, marketing manager at ERA.

He suggests you start looking and making reasonable offers as he thinks more buyers will be entering the market, which could mean prices for these “must-sell” properties may rise.

6 CHECK MASTER PLAN

Look at the Urban Redevelopment Authority’s master plan and invest where the Government is pumping in money, said Mr Govindarajoo.

For instance, he thinks those interested in the Marina area should strike now, as prices are down by 40 per cent, compared to last year’s.

Mr Lim said investing in property in that area will reap great returns when the integrated resort is ready as “a lot of the management staff will be living there, so rentals will be high”.

7 SHOP FOR A LOAN

Banks are now becoming more cautious with making home loans and how much they are willing to lend, said Mr Govindarajoo.

He advised shopping around for a good home loan first, so that you do not commit yourself to a seller before knowing how much you have to work with.

8 PRICE VS VALUATION

Check the valuations of the property you are considering at different banks to make sure you’re getting a good deal, said Mr Govindarajoo.

9 OLDER CONDOS

Mr Parthiban Sadagopal, a Prop- Nex realtor, suggests buying a condo “between seven and 10 years old in the outskirts”, like Pasir Ris or Tampines.

Judging from the trend seen after the 2003 recession, such condos are good buys for living in and investment, as you could hope to buy one at $400,000 to $500,000 now and sell it for up to $800,000 when the economy picks up.

Renting it out could fetch $3,000 a month as well.

10 DISTRICT 15

Keep your sights on the East Coast area of District 15, said Mr Cheng, as prices there are unlikely to dip drastically.

Good schools, malls and eateries add value, making it a good option for those who feel prime locations are too expensive. Meyer Road, Ceylon Road, Telok Kurau and Crane Road are some of the best places to buy a house, according to him.

Mr Govindarajoo agrees, saying District 15 is “evergreen”.

Source : AsiaOne - 26 Dec 2008

Advance GDP estimates for Q4, whole of 2008 to be released Jan 2

Singapore’s Trade and Industry Ministry says it will release the advance economic growth estimates for the country’s fourth quarter and the whole of 2008 on January 2.

The announcements will be made at 8 am that day.

The Singapore government has brought forward its annual budget sitting, which usually takes place in February, to January 22 next year.

This is to address measures needed to tackle the current global economic downturn.

The government’s forecast for Singapore’s economic growth next year is between a contraction of 1.0 per cent and growth of 2.0 per cent.

Source : Channel NewsAsia - 26 Dec 2008

Crunch time looms for industrial property

Source : Business Times - 24 Dec 2008

Rents, capital values could see double-digit percentage falls, but correction may not be a bad thing

The industrial property sector, which had grown at a steady pace for most of 2008, is unlikely to escape from the economic downturn that has hit its residential and office counterparts.

As manufacturing activity dips and relocations from offices slow, some property consultants believe that industrial rents and capital values could register double-digit percentage falls starting from Q4 2008. Industries could also start sub-letting space that they no longer need.

‘With an expected slowdown in GDP growth and poor expectations of the performance of the manufacturing sector, demand for industrial space is likely to moderate,’ said DTZ’s senior director of research Chua Chor Hoon.

‘The fourth quarter could be the turning point,’ noted Knight Frank’s head of industrial business space Lim Kien Kim.

According to DTZ data, growth within the industrial sector in the first three quarters of the year pushed the average rent of first-storey private industrial space up 6.8 per cent to $2.35 per sq ft per month (psf pm) in Q3. That of upper-storey space rose 7.9 per cent to $2.05 psf pm.

But rents could slide in Q4 as the manufacturing sector cools, said Ms Chua. The Singapore Purchasing Managers’ Index fell for the third straight month in November, reflecting tougher times for manufacturers.

DTZ estimates that average rents of first-storey and upper-storey private industrial space could each drop by more than 2 per cent from the previous quarter to $2.30 and $2.00 psf pm, respectively, in Q4.

High-tech and business park spaces are likely to face the same sinking fate. Rents had jumped 15.4 per cent to $4.50 psf pm in the first three quarters, largely because more companies were moving over to avoid soaring office rentals.

The average occupancy rate in private sector business parks notched up 6.3 percentage points from Q4 last year to 93.2 per cent in Q3 2008, said DTZ.

‘Businesses, including those occupying prime office space, increasingly found business parks to be attractive alternatives for housing approved back- end operations,’ said Mr Lim.

But such spillover demand could slow as office rents fall amid a weakening economy. DTZ projects that the average rent of high-tech and business park space could drop to $4.30 psf pm in Q4, more than 4 per cent down from Q3.

As Colliers International’s research and advisory director Tay Huey Ying said: ‘Modern light-industrial and hi-specs industrial buildings would be worst hit as they will suffer from the double whammy of slowdown in demand from industrialists as well as from office users.’

She noted, however, that the industrial property sector had started to cool from the second half of 2008. Colliers’s data pointed to a slight fall in rents of hi-specs space in H2, while those of factories and warehouses stayed flat in the same period.

As the downturn hits businesses, industrial tenants could start moving to cheaper locations, said Ms Tay. She also expects more downsizing companies to sub-let part of their premises.

DTZ’s Ms Chua shared similar views. ‘We may see some shadow space in the industrial sector next year, like what we are beginning to see in the office sector, as more companies consolidate their operations.’

Industrial landlord JTC Corporation has been taking back more space as manufacturing and related companies merged their operations. According to its quarterly facilities report for Q3 2008, termination at its ready-built facilities surged 25.7 per cent quarter-on-quarter and 45 per cent year-on-year.

‘Industrial landlords could be more flexible in the coming months in order to maintain the occupancy levels of their industrial portfolio,’ said Knight Frank’s Mr Lim.

He estimates that for 2009, industrial rents could slide 7-12 per cent and prices by 10-15 per cent, with modern industrial space and business parks facing greater declines.

Ms Tay from Colliers believes that rents of conventional flatted factories and warehouses could drop by 12-15 per cent next year, while those of hi-specs industrial space could fall further by up to 20 per cent.

‘Capital values are expected to soften by the same quantum as industrialists choose to conserve cash for their business operations instead of investing in an industrial unit,’ she said.

Economic uncertainty has already spurred the Trade and Industry Ministry to suspend sales of state-owned industrial land on the Confirmed List for the first half of 2009.

While industrial rents and prices will fall, the sector is nowhere near a crash. ‘The speculative element in industrial sector is not major,’ said Mr Lim. As prices moderate to more realistic levels, ‘the correction will be good as it will again draw investments back into industrial activities for Singapore’.

El-Ad looks to offload South Beach, Futura stakes: sources

Source : Business Times - 24 Dec 2008

Market watchers say group’s problems in US property market may be at play

The high-profile South Beach development could see a new shareholder emerging if US-based El-Ad Properties, owned by Israeli billionaire Yitzhak Tshuva, manages to find a buyer for its stake, BT understands.

El-Ad Properties is said to be looking for buyers for its one-third stake in the South Beach project as well as its half-share in the Futura condo site at Leonie Hill Road. Going by its share of the purchase prices for the two sites, El-Ad’s total investment in the assets would be about $707 million.

In the US, El-Ad has a partnership with another Israeli company to develop a US$5 billion mega hotel and casino project in Las Vegas and has announced that it would delay the start of construction for the project to 2010 instead of this year, due to financing difficulties and high construction costs, according to US media reports.

An El-Ad executive declined to comment when contacted by BT.

A property industry player observed: ‘I think they are trying to sell their assets here because of their position in the US. A lot of their portfolio has exposure to the US economy and property market. ‘

For its two Singapore property investments, El-Ad is said to have initially hoped to exit at a profit but was later prepared to sell at cost in view of the global financial meltdown. Now, it could even discuss taking a haircut, industry watchers suggest.

On the surface, El-Ad’s entry costs for Futura and South Beach were not out of whack at the time.

The group clinched the 99-year leasehold South Beach site jointly with City Developments Ltd (CDL) and Dubai World unit Istithmar in September last year for $1.69 billion or $1,069 psf per plot ratio (psf ppr). The winning bid was believed to have been around $500 million lower than the highest offer for the tender, which was evaluated on concept and price.

The freehold Futura site - El-Ad’s equal partner in this acquistion is also CDL - was bought in Oct 2006 for $287.3 million, or $1,179 psf ppr. This is lower than prices fetched later for nearby sites such as The Grangeford, which was sold for $1,810 psf ppr in 2007.

Finding buyers is not expected to be easy.

‘The issue in today’s market is not intrinsic value or pricing, but weak property demand and managing cashflows,’ an industry observer said.

‘Tight funding would also be an issue with most potential investors,’ he added.

The South Beach project development has been pitched as a ‘revolutionary New Eco-Quarter in Singapore’. Cutting-edge green features in the Foster & Partners-designed scheme include slanting facades for the towers to catch winds and direct air flow to ground-level spaces.

CDL, Istithmar and El-Ad own equal stakes in the South Beach project, which will have hotel, office, residential and retail space and is expected to have a $2.5 billion total development cost. Last month, CDL said that the start of construction has been deferred until construction costs fall to more attractive levels.

Analysts say that typically, partners in a joint venture would have a right of first refusal (ROFR) to buy out fellow partners wishing to exit. ‘A common strategy for the exiting party would be to try and get the best offer from the market for its stake and then use this as the basis to offer the first right to existing JV partners,’ a property insider said.

For the benefit of potential investors wondering if it would be worth their while performing due diligence to buy El-Ad’s stake only to discover later that other shareholders in the consortium will exercise their ROFR, CDL is understood to have indicated that it welcomes new partners. Put simply, CDL will not exercise its ROFR. The group had cash and cash equivalents of $813 million as at Sept 30, 2008.

When contacted, a CDL spokesman said: ‘The joint venture is progressing well, with the major project like South Beach being slightly delayed to take advantage of the likelihood of lower construction costs in the near future.

‘There is nothing to prevent venture partners in the property sector from looking for opportunities on their own, but one must be careful not to draw the wrong conclusion.’

CDL and El-Ad did their first transaction in 2004 when CDL’s hotel arm Millennium & Copthorne Hotels sold its stake in The Plaza in New York to El-Ad in a deal that valued the landmark hotel at US$675 million.

Celebrated architect taps deep into ecology

Source : Business Times - 25 Dec 2008

Environmental protection, far from being a constraint, should be a source of inspiration, in the view of celebrated Italian architect Renzo Piano.

Rooftop garden: The San Francisco Academy of Sciences’ ‘living roof’, which gives off oxygen instead of absorbing heat, is a landscape of rolling green hills

‘Ecology can be a lovely source of inspiration and an enormous opportunity,’ the 71-year-old architect said in an interview at his workshop in Genoa, north-west Italy.

‘Environmental constraints should not be seen as an assault on freedom. You find that the planet is vulnerable. Does this have to be a crisis?’ Mr Piano asked.

‘Architects should be able to interpret the changes of their times and live with their times,’ said Mr Piano, who was awarded the Pritzker Prize, considered the ‘Nobel’ of architecture, in 1998.

His latest work, the Academy of Sciences in San Francisco, received top marks from the Green Building Council, which encourages environmentally friendly architecture.

‘The San Francisco museum is an interpretation of the green revolution on the march,’ said Mr Piano.

The building, inaugurated in September, is bursting with ecological innovations.

Old blue jeans insulate the structure, whose roof is dotted with skylights and rimmed with solar panels that provide up to 10 per cent of the site’s energy needs.

The museum’s ‘living roof’, which gives off oxygen instead of absorbing heat, is a landscape of rolling green hills.

‘Our duty is to translate the codes of this ecological language in a poetic way, to marry beauty with respect for the environment,’ said the slim architect, who sports a salt-and-pepper beard.

‘I believe in the poetic benefits of lightness and transparency,’ he added.

Mr Piano’s workshop in Genoa, built about 15 years ago on a cliff overlooking the sea, has a glass roof that lets in sunlight for heat and light.

‘It’s December and there’s no need for heating,’ enthused Mr Piano, whose most famous projects include the Pompidou Centre in Paris, Kansai International Airport in Osaka, Japan, and the Menil Collection in Houston, Texas.

Mr Piano divides his time between Genoa, Paris and New York, where he has just opened an office to coordinate his many projects in the United States.

Among these are an extension of the campus of New York’s Columbia University and a museum at Harvard University in Boston.

‘The architect should feel responsible towards the environment, all the more so since he will need to continue to look after his work all through his life,’ Mr Piano said.

‘I myself spend a good part of my life travelling to visit my creations scattered around the world,’ he said, referring to them as his ‘children’.

‘I give birth to buildings, after which they have to lead their own lives,’ he said, adding: ‘When I finish a work, I always wonder, is it going to be happy?’

It was fun till the money ran out

Source : Business Times - 25 Dec 2008

The abrupt end to what had promised to be an era of architectural renaissance may not be all bad, says NICOLAI OUROUSSOFF

WHO knew a year ago that we were nearing the end of one of the most delirious eras in modern architectural history? What’s more, who would have predicted that this turnaround, brought about by the biggest economic crisis in a half-century, would be met in some corners with a guilty sense of relief?

Before the financial cataclysm, the profession seemed to be in the midst of a major renaissance. Architects such as Rem Koolhaas, Zaha Hadid, Frank Gehry and Jacques Herzog and Pierre de Meuron, once deemed too radical for the mainstream, were celebrated as major cultural figures. And not just by high-minded cultural institutions; they were courted by developers who once scorned those talents as pretentious airheads.

Firms such as Forest City Ratner and the Related Cos, which once worked exclusively with corporations that were more adept at handling big budgets than at architectural innovation, seized on these innovators as part of a shrewd business strategy. The architect’s prestige would not only win over discerning consumers but also persuade planning boards to accede to large-scale urban projects such as, say, Gehry’s Atlantic Yards in Brooklyn, New York.

But somewhere along the way, that fantasy took a wrong turn. As commissions multiplied for luxury residential high-rises, high-end boutiques and corporate offices in cities such as London, Tokyo and Dubai, more socially conscious projects rarely materialised.

Public housing, a staple of 20th-century Modernism, was nowhere on the agenda. Nor were schools, hospitals or public infrastructure. Serious architecture was beginning to look like a service for the rich, like private jets and spa treatments.

Nowhere was that poisonous cocktail of vanity and self-delusion more visible than in Manhattan. Although some important cultural projects were commissioned, this era will probably be remembered as much for its vulgarity as its ambition.

Every major architect in the world, it seemed, was designing an exclusive residential building here. With its elaborate faux-graffiti barrier, Herzog & de Meuron’s 40 Bond Street was among the most indulgent, but it had plenty of rivals, including projects by Daniel Libeskind, UNStudio, Koolhaas and Norman Foster.

Together, these projects threatened to transform the city’s skyline into a tapestry of individual greed.

Wake up call

Now that the high-end bubble has popped - and it is unlikely to return anytime soon - Jean Nouvel’s 75-story residential tower adjoining the Museum of Modern Art has been delayed indefinitely. And developers now seem loath to undertake similar projects.

Even if the economy turns around, the public’s tolerance for outsize architectural statements that serve the rich and self-absorbed has already been pretty much exhausted.

This is not all good news. A lot of wonderful architecture is being thrown out with the bad. Although most of Nouvel’s MoMA tower would have been devoted to luxury apartments, for instance, it would have allowed the museum next door to expand its gallery space significantly. It would also have been one of the most spectacular additions to the Manhattan skyline since the Chrysler Building.

And it would be a shame if the recession derailed promising cultural projects such as Renzo Piano’s new Whitney Museum of American Art in the meatpacking district or Foster’s interior renovation of the Beaux-Arts New York Public Library on Fifth Avenue.

Architecture firms, meanwhile, are suffering like everyone else.

With so many projects postponed and so few new ones coming in, many are already laying off employees. Aspiring architects who are just emerging from graduate programmes are likely to move on to more secure professions, which could spell a smaller talent pool in the future.

Still, if the recession doesn’t kill the profession, it may have some long-term positive effects for US architecture. President-elect Barack Obama has promised to invest heavily in infrastructure, including schools, parks, bridges and public housing. A major redirection of our creative resources may thus be at hand.

If a lot of first-rate architectural talent promises to be at loose ends, why not enlist it in designing the projects that matter most? That’s my dream, anyway.

Architecture book spotlights 1,037 notable buildings

Source : Business Times - 25 Dec 2008

The large-format Phaidon Atlas of 21st Century World Architecture (Phaidon Press, 800 pages, US$195) spotlights 1,037 notable buildings completed worldwide by superstar architects and regional talents since January 2000. Innovative projects in Asia, Africa, Europe, North America, South America and Oceania are shown in 4,600 colour photos, 2,100 line drawings and concise textual summaries.

The structures include expensive single homes in exotic locales and high-rise offices and apartments in major cities. Airports, stadiums, hotels, railway stations, embassies, museums, galleries, libraries and schools are also depicted. Unusual profiles, ingenious engineering and high functionality are much in evidence.

More than 60 maps and statistical charts from the London School of Economics summarise global trends in architecture, and easy-to-read indexes on the projects and architects are helpful in navigating the wealth of material.

Hefty at 6.6 kg, the atlas comes with a plastic carrier to aid portability.

How were projects chosen? In the two-year compilation, 10,000 new millennium buildings worldwide were proposed by regional teams of curators, writers, teachers and architects, who could endorse their own work. Then, an unnamed ‘panel of expert advisers’ guided the London publisher’s final selections.

Almost half the projects - 476 buildings - are located in Europe, including 52 in the United Kingdom, 45 in Switzerland, 39 in Spain and 38 in Germany.

Two European firms - Foster & Partners of London and Herzog & de Meuron of Basel, Switzerland - have the most buildings in the atlas, 10 apiece. London alone has 22 projects, including Foster’s US$1.7 billion Wembley Stadium.

Regional bias in the book’s selections? Not according to Phaidon editorial director Emilia Terragni, who said that it accurately reflects where the most variety and innovation are occurring in global architecture. One in six projects in the atlas were executed by an architect foreign to the site, the book notes.

The United States has the most projects with 95. These include the groundbreaking Seattle Central Library, by the Rem Koolhaas-led Office of Metropolitan Architecture in Rotterdam and New York’s REX firm; 14 flat-roofed units of affordable housing in Aspen, Colorado, by Peter Gluck of New York; the industrial-influenced Guthrie Theater in Minneapolis by France’s Jean Nouvel; and The New York Times skyscraper in Manhattan by Italy’s Renzo Piano.

Japan has 91 buildings represented, from the low-slung Fuji kindergarten and the Mikimoto Ginza 2 Retail space in Tokyo to the glass-walled Ring House in Nagano Prefecture.

China’s 41 projects include the Bird’s Nest National Stadium and the Watercube National Swimming Center built for the 2008 Olympics. Australia’s 40 projects include the Southern Cross Station with its undulating roof in Melbourne and an array of modernistic villas perched on seaside cliffs.

The contrasts are striking. Diebedo Francis Kere, the first from his African village to study abroad, returned to Burkina Faso to design a US$46,437 brick primary school with an elevated roof that allows cooling air to flow across classroom ceilings.

At the high end is Santiago Calatrava’s 54-storey Turning Torso Tower in Malmo, Sweden, 147 apartments above 10 floors of offices in a graceful spiral landmark overlooking the harbour.

UK commercial property lending falls: study

Source : Business Times - 25 Dec 2008

The total value of new loans secured by UK commercial property buyers shrunk to £24.6 billion (S$52.68 billion) in the first half of 2008 - less than one third of the total loans issued in 2007, research last Wednesday showed.

De Montfort University’s Commercial Property Lending Review, broadly seen as a key study of UK commercial mortgage markets, showed a sharp contraction in the number of active lenders as the second year of the credit crunch unfolds.

The report, which covers a £226.7 billion total UK property (commercial and social housing) loan book, showed that just over a quarter of the 58 banks surveyed completed no loan originations in the first half of 2008, while 12 banks undertook 74 per cent of all lending in the period.

The report also showed that appetite to lend to commercial property buyers had weakened yet again by mid-2008 as the value of loans in breach of financial covenants hit 3.3 per cent of the total aggregated loan book, more than treble the proportion reported at the end of 2007.

Some 38 per cent of organisations said that they intended to increase loan originations compared with 55 per cent who expressed their intention to do so at the end of 2007.

The average loan book allocation for commercial property fell to 9.5 per cent at June 2008, a 1.5 percentage point fall on year-end 2007 figure.

This figure could fall even further as the recession amplifies a commercial property correction and a squeeze on inter- bank lending persists, the report suggested.

‘A weakening economy resulting in the failure of an increasing number of business tenants, further declines in capital values . . . will make it far more difficult for lending organisations to maintain or refinance existing loan portfolios,’ the report said.

‘It is expected that liquidity will remain scarce and may have even been further eroded by the events in the banking industry subsequent to mid-year 2008,’ the report added.

Forty-three per cent of organisations reported having put loans into administration in the first half of 2008, compared with 33 per cent of banks which were forced to do so during the whole of 2007.

During the first six months of 2008, interest rate margins for loans to all property types spiked by an average 27.7 basis points versus year-end 2007.

Maximum loan-to-value ratios also fell over the period, highlighting stronger bank demands for bigger sums of equity in leveraged property deals.

The average typical maximum loan-to-value ratio applied to loans secured by prime office property was 72 per cent as at the end of June 2008 compared with 75.6 per cent at year-end 2007.

Spain escapes US sub-prime mess but faces its own crisis

Source : Business Times - 25 Dec 2008

Defaults for real estate, construction firms make up half of corporate credit

Spain escaped exposure to US sub-prime assets but risks its own property debt crisis in 2009 as defaults soar among real estate and construction firms that hold half of all Spanish corporate credit.

Over 1,000 Spanish property and building firms will have filed for bankruptcy protection in 2008 and more than 1,300 could follow suit next year as they struggle to repay over 470 billion euros (S$950.14 billion) in debt, according to PricewaterhouseCoopers.

The collapse of Spain’s decade-long housing boom will send non-performing loans to 9 per cent by 2010, from 3.5 per cent at present, threatening the solvency of savings banks that hold over half of all property debt, according to Credit Suisse.

Prime Minister Jose Luis Rodriguez Zapatero is ready to launch Spain’s first bank bailouts to avoid capital problems and the Bank of Spain expects a wave of forced mergers among small regional savings banks or cajas.

‘It’s the main risk to the whole banking sector,’ said Antonio Ramirez, a banking analyst at London broker Keefe, Bruyette & Woods. ‘I think the peak on defaults is quite close - probably mid-2009 - not because things are getting better, but because things are getting bad so quickly.’

Starved of easy foreign financing, Spain’s housing sector has collapsed under its own weight of over production.

Up to 1.5 million unsold new homes stand empty in Spain, equivalent to five years of sales at current depressed rates.

Demand is unlikely to recover until house prices hit bottom, and Standard and Poor’s says that may not happen before 2010, with a 30 per cent fall from a 2007 peak.

Spain is more dependent on housing than any European Union economy, bar Ireland. That has made real estate the Achilles’ heal of a banking sector which stayed out of US sub-prime debt due to Bank of Spain regulations and strong domestic business.

‘The Spanish central bank didn’t allow our banks to take American crap because they had their own crap . . . they were extremely exposed to the Spanish housing market,’ said economist Luis Garicano of the London School of Economics. ‘This famous 315 billion euros in developer loans and 160 billion in builder loans, that’s not going to be paid.’

This year alone, Spanish banks have been dumped with 15 billion euros of bad loans from builders, paid firms five billion euros for assets to stave off bankruptcies, and another five billion in debt-for-equity deals, Spain’s El Mundo newspaper reports.

Bad loans at larger, publicly traded banks such as Santander and BBVA, should remain at manageable levels around 4 per cent, according to Credit Suisse.

Some regional savings banks, that have higher property exposure, could see rates of 12 or 13 per cent in two years and face capital shortages, the investment bank estimates.

The biggest real estate victims so far are Martinsa Fadesa, which suffered Spain’s biggest ever corporate default with debts of 5.4 billion euros, and Habitat, 20 per cent owned by Heathrow owner Ferrovial, with 2.3 billion euros of debt.

The failure of giants such as Martinsa is the most visible sign of stress felt by an industry in which 95 per cent of home building is by small, unlisted firms.

Building sites that long fringed Spanish towns and villages are disappearing as firms finish off projects started before the credit crisis, then shut down.

The government has offered subsidised housing contracts and eight billion euros in public works spending, but the aid may only aggravate existing oversupply and construction dependency.

‘Time is the only thing that’s going to solve this one with the size of the stock, whether that’s two, three or five years,’ said Roger Cooke at real estate consultants Cushman & Wakefield.

Aussie bank to buy A$4b of home loans

Source : Business Times - 25 Dec 2008

Commonwealth Bank of Australia, which last week scaled back a share sale after saying that bad debts were rising, will buy up to A$4 billion (S$3.93 billion) of loans from a General Electric Co unit to extend its lead in the nation’s mortgage market.

Sydney-based Commonwealth Bank will get loans that are 100 per cent insured, the lender said yesterday.

Aussie Home Loans, a mortgage provider 33 per cent owned by Commonwealth Bank, will buy the brand and distribution network of Wizard Mortgage Corp, the GE division.

Commonwealth Bank beat back a challenge from National Australia Bank Ltd, which last week said that it was in talks to buy loans and assets from Wizard. Aussie, which sold a third of itself to Commonwealth Bank in August, gets 160 Wizard branches across Australia, where home prices have bucked a global slump.

‘Commonwealth gets to broaden its customer base without putting too much strain on its balance sheet,’ said Paul Xiradis, who manages the equivalent of US$8 billion as chief executive officer of Ausbil Dexia Ltd in Sydney.

‘Aussie effectively have direct access back to Commonwealth, and this allows them to be competitive while offering products they don’t have to fund.’

Commonwealth Bank said that it would acquire A$2 billion of Wizard loans at the end of February, and is discussing the purchase of a further A$2 billion. The bank last week sold A$2 billion in shares and said that bad debts would rise.

Aussie executive chairman and founder John Symond is increasing his loan distribution network in a property market that has so far weathered the global credit crisis.

While the US property market suffers its worst slump since the Great Depression, home prices in Australia rose 2.8 per cent from a year ago in the third quarter.

Meanwhile, the tie-up with Commonwealth Bank, the nation’s biggest provider of home loans, has improved Mr Symond’s access to wholesale funding at a time when non-bank lenders, which don’t have a deposit base to fall back on, have struggled as the global credit crisis forces up funding costs.

‘The acquisition of Wizard accelerates Aussie’s growth initiatives, adding a significant retail channel and distribution capability to our existing operations,’ Mr Symond said in a statement posted on the closely held company’s website.

Aussie, with a loan book of A$24 billion at the time of Commonwealth Bank’s stake purchase, didn’t say how much it had paid for the Wizard assets.

Credit markets seized after Lehman Brothers Holdings Inc collapsed on Sept 15 and remain blocked amid US$1 trillion in losses and writedowns at the world’s biggest financial companies.

Fairfield, Connecticut-based General Electric is selling assets and exiting underperforming businesses to bolster profit growth. Its GE Money unit has withdrawn from vehicle financing in Australia and said that it may close its Wizard home loans unit in New Zealand.

GE, which bought Sydney-based Wizard in 2004, hired Citigroup Inc and JPMorgan Chase & Co in June to advise on the sale of Wizard.

Aussie will retain Wizard’s chairman, Mark Bouris, as an adviser, Mr Symond said in the statement.

To boost access to loans, the government in September said that it would spend A$4 billion buying residential mortgage-backed securities to revive a debt market frozen by the credit crunch.

Commonwealth Bank yesterday said that the loans purchase would have little impact on its Tier 1 capital ratio or 2009 funding plans. Last week, the bank raised A$2 billion in a share sale arranged by UBS AG and said that provisions for bad loans would increase.

Manhattan’s Q4 vacancy rate highest in two years

Source : Business Times - 25 Dec 2008

The Manhattan office vacancy rate hit a two-year high as financial services companies and law firms dumped space back onto the market, according to a report released on Tuesday by a real estate services firm.

The overall vacancy rate rose to 10.9 per cent in the fourth quarter, the highest level in two years and more than three percentage points greater than a year ago, according to the report released by FirstService Williams.

Space available directly from a landlord registered an 8.1 per cent vacancy rate in the fourth quarter, while sublease space weighed in at 2.8 per cent - the highest rate in more than three years.

Almost 2.4 million square feet of sublease space entered the market over the last three months, larger than the quarterly increase of 1.8 million square feet in directly available space.

‘With leasing activity languishing and tenant space choices growing exponentially, it is not surprising that the overall asking rent for Manhattan dropped by 4 per cent from the previous quarter,’ Mark Jaccom, FirstService Williams chief executive, said in a statement.

The increased availability of space helped drive down asking rent - rent before concessions - by 2.7 per cent to US$74.49 per square foot from a year earlier.

Law firms and financial services companies had been the greatest driver of space demand over the past few years, fuelling record-high rents.

But financial services firms, including Citigroup Inc, Credit Suisse Group AG, Credit Lyonnais, Alliance Bernstein, UBS AG, MetLife Inc, Bear Stearns, and National Financial Partners Corp, placed almost 1.2 million square feet of sublease space on the market in the fourth quarter.

Legal services firms such as Reed Elsevier; Cadwalader, Wickersham & Taft; and Thacher, Proffitt & Wood contributed 230,000 square feet of sublease space.

Other law firms, including Orrick, Herrington & Sutcliffe and Thelen Reid Brown vacated almost 450,000 square feet of direct space.

Manhattan’s Q4 vacancy rate highest in two years

The Manhattan office vacancy rate hit a two-year high as financial services companies and law firms dumped space back onto the market, according to a report released on Tuesday by a real estate services firm.

The overall vacancy rate rose to 10.9 per cent in the fourth quarter, the highest level in two years and more than three percentage points greater than a year ago, according to the report released by FirstService Williams.

Space available directly from a landlord registered an 8.1 per cent vacancy rate in the fourth quarter, while sublease space weighed in at 2.8 per cent - the highest rate in more than three years.

Almost 2.4 million square feet of sublease space entered the market over the last three months, larger than the quarterly increase of 1.8 million square feet in directly available space.

‘With leasing activity languishing and tenant space choices growing exponentially, it is not surprising that the overall asking rent for Manhattan dropped by 4 per cent from the previous quarter,’ Mark Jaccom, FirstService Williams chief executive, said in a statement.

The increased availability of space helped drive down asking rent - rent before concessions - by 2.7 per cent to US$74.49 per square foot from a year earlier.

Law firms and financial services companies had been the greatest driver of space demand over the past few years, fuelling record-high rents.

But financial services firms, including Citigroup Inc, Credit Suisse Group AG, Credit Lyonnais, Alliance Bernstein, UBS AG, MetLife Inc, Bear Stearns, and National Financial Partners Corp, placed almost 1.2 million square feet of sublease space on the market in the fourth quarter.

Legal services firms such as Reed Elsevier; Cadwalader, Wickersham & Taft; and Thacher, Proffitt & Wood contributed 230,000 square feet of sublease space.

Other law firms, including Orrick, Herrington & Sutcliffe and Thelen Reid Brown vacated almost 450,000 square feet of direct space.

Source : Business Times - 25 Dec 2008

Private-run market, food centre at Sengkang

Source : Today - 24 Dec 2008

A PILOT project could see more privately-built and run markets and food centres in the heartlands, with Sengkang residents being the first to benefit.

The latter can look forward to a new market and food centre come 2010. The Housing and Development Board (HDB) has launched a tender for a market and food centre development at Sengkang Square/Sengkang East Road.

:This will be a standalone, naturally-ventilated market and food centre to be built and run by a private operator.

The 6,000 square metre land parcel is located opposite the Sengkang MRT/LRT station and bus interchange. The project will offer residents an estimated 40 market stalls selling a variety of fresh market produce, as well as50 cooked food stalls.

The operator is also required to provide parking lots and a drop-off porch.

Sengkang was selected for the pilot project as “it is a new town and many residents there have requested for additional market and food centre”, said the HDB.

This development arose from the Forum on HDB Heartware, led by Senior Minister of State for National Development Grace Fu last year. The forum had recommended among other things such as promoting community bonding the resumption of building of wet markets and hawker centres. They can be privately run and operated at estates assessed to be commercially viable.

The tenure for the Sengkang land parcel is for an initial term of 5 years, with an option for second and third terms. The tender closes on Feb 17.

HDB invites tenders for Sengkang market

Source : Business Times - 24 Dec 2008

THE Housing and Development Board (HDB) began inviting tenders yesterday for a land parcel in Sengkang New Town for the building and managing of a market and food centre. The land parcel has a site area of 6,000 square metres and a maximum gross floor area of 4,000 sq m.

The tenure is for an initial five years with options for another two terms. The development will house an estimated 100 stalls offering fresh market produce and cooked food, as well as parking lots and a drop-off porch.

The tender arose from the Forum on HDB Heartware, which among other things, recommended the building of wet markets and hawker centres to promote community bonding and strengthen local identity. Sengkang was chosen for the pilot project as it is a new town and many requests have been made for another market and food centre.

Despite the dismal economic climate, Nicholas Mak, Knight Frank’s director of research and consultancy, expects the response to be positive. ‘The Sengkang area is a growing estate housing about 140,000 people at the moment and the location of the market is quite attractive as well, with it being surrounded by high-density flats and quite near the MRT,’ he said, adding that the project would most likely be taken on by a contractor that frequently works with the HDB.

The project is expected to be completed on or before Dec 31, 2010.

GIC RE acquires $1.9b in assets

Source : Straits Times - 24 Dec 2008

GIC Real Estate (RE), the real estate investment arm of the Government of Singapore Investment Corporation (GIC), announced yesterday that it had acquired all of ProLogis’ property fund interests in Japan and China operations for US$1.3 billion (S$1.9 billion).

‘The acquisition consolidates control over our existing portfolio in Japan and provides a platform to expand our logistics property business in China,’ GIC RE president Seek Ngee Huat.

The transaction is due to be completed in January.

GIC RE will be establishing an equal share joint venture with Mr Jeffrey Schwartz, the former chairman and chief executive of ProLogis, along with managers involved in the management of the properties in China and Japan to manage the portfolios.

US housing crisis worsens as economy weakens

The desperate straits of many US homeowners showed in new data released on Monday, suggesting efforts to help them are having limited success.

As the recession throws more people out of work, the rate of re-default on modified mortgages is rising and may worsen as the economy deteriorates, banking regulators said.

After much browbeating from Congress, banks and other mortgage lenders are beginning to do more, to modify home loans so that distressed borrowers can avoid foreclosure.

But the latest figures from regulators raise questions about how modifications are being done and how much they help, even as foreclosure rates hit record-setting levels.

‘You have to think that it will get worse before it gets better,’ John Dugan, the US Comptroller of the Currency, said in an interview with Reuters.

Critics say most loan modifications up until a few months ago were temporary and not aimed at providing for sustainable payment plans, so it comes as no surprise that homeowners are defaulting.

At the same time, a lenders’ group known as Hope Now warned on Monday that the number of US homeowners seeking help to avoid foreclosure would double next year to 2 million.

The housing crisis and the recession will keep Congress busy when it returns on Jan 6, 2009, from a holiday break, and preoccupy President-elect Barack Obama after he is sworn in on Jan 20.

Between Jan 6 and the inauguration, congressional Democrats are expected to introduce legislation urging more aggressive efforts to help those homeowners who are in over their heads.

A bill being drafted by Massachusetts Rep Barney Frank might include a sweeping mortgage relief plan from Federal Deposit Insurance Corp Chairman Sheila Bair, a House aide said on Monday.

The bill is sure to insist that more be done to help homeowners under a plan already under way - the Treasury Department’s US$700 billion Troubled Asset Relief Programme.

That plan, known as the TARP, has given hundreds of millions of dollars in aid to banks and, more recently, to major US automakers. But Mr Frank and other Democrats contend the TARP is doing little to help homeowners.

What is loan modification?

The Office of the Comptroller of the Currency and the Office of Thrift Supervision, both key US banking regulators, said that after six months, nearly 37 per cent of mortgage loans modified in the first quarter were 60 or more days delinquent.

After three months, 19 per cent were 60 or more days delinquent or already in the process of foreclosure, they said.

‘One very troubling point is that whether measured using 30-day or 60-day delinquencies, re-default rates increased each month and showed no signs of leveling off after six months or even eight months,’ Mr Dugan said in the joint OCC-OTS report.

Possible explanations for the high re-default rate include the faltering economy as well as loan terms were not being modified enough to help homeowners, Dugan said.

But critics said the data were misleading because they included repayment plans that did not significantly modify home loans.

For example, some repayment plans freeze the interest rate for just a year, according to the Centre for Responsible Lending, a nonprofit group that aims to help homeowners.

‘You really have to work it out to a sustainable loan, not just one that is designed to default because after a year it’s going to rise again,’ said spokeswoman Kathleen Day.

A spokesman for IndyMac Bancorp, which was taken over by the FDIC in July, said lenders were only tinkering with loan terms up until a few months ago and not making true modifications.

‘Modifications in the past were never about finding the borrower an affordable payment,’ Evan Wagner said. ‘So I think it shouldn’t be surprising that you are seeing a lot of these folks redefaulting.’

The data, some of which was released in preliminary form earlier this month, were based on information collected from some of the biggest US financial institutions, including Bank of America, Citigroup and JPMorgan Chase.

Source : Business Times - 23 Dec 2008

10% fall seen in UK home prices next year

UK house prices will decline 10 per cent next year as a shortage of mortgage finance limits new sales, according to Hometrack Ltd.

Values will drop a further 3 per cent in 2010 after dropping 9 per cent this year, the London- based property researcher said in a report yesterday.

Home lending will increase by just £15 billion (S$32 billion), down from £39 billion in 2008 and a peak of £107 billion last year.

Bank of England deputy governor John Gieve said in a BBC interview that the bank knew the rate of house-price growth was unsustainable and underestimated the severity of the problem.

After prices tripled in a decade, policymakers now are struggling to revive the market for home finance, with Prime Minister Gordon Brown pushing banks to revive lending.

‘Prices will remain under downward pressure for the foreseeable future,’ Richard Donnell, Hometrack’s director of research, said in the statement.

‘The onset of recession and rising unemployment is set to act as a major constraint on demand compounding the level of price falls in the near term,’ he added.

Sales volumes will fall 12 per cent next year after dropping 45 per cent in 2008, while repossessions will climb to 70,000 from 45,000, Hometrack said.

The global credit squeeze has pushed the UK into its first recession since the early 1990s.

Unemployment rose at the fastest pace since 1991 in November, with the number of people claiming jobless benefits climbing above one million.

Mr Gieve said using interest rates to tame asset prices may have limited growth in other areas of the economy.

He made the remarks in a BBC interview which was to be broadcast on its Panorama programme last night.

Mr Brown has partly suspended a tax on house purchases, and the government has created a £50 billion rescue package for UK lenders stung by credit losses.

Source : Business Times - 23 Dec 2008

Tapping market indices to signal office rental swings

In Singapore as well as Hong Kong, stock market indices lead official office rental indices between two and five quarters before correction or recovery sets in, property consultancy DTZ observes in a report issued yesterday.

Office vacancy rates in these two Asian cities also led office rent correction and recovery by a few quarters. Guided by this finding, DTZ has developed an in-house early warning system to predict the probability of office markets in both cities entering correction or recovery phase within the next three to six months.

This will use the stock index and vacancy rate as leading predictors. These indicators are based on the probability concept and expressed in percentage terms.

Figures exceeding 50 per cent indicate that the probability of entering the correction phase in the next three to six months is high, and vice-versa.

As at end-Q3 2008, the Singapore office probability indicator reached 65 per cent while that of Hong Kong hit 63 per cent. ‘The risk reflected for Singapore matched the official pronouncement by the Urban Redevelopment Authority,’ DTZ says.

The URA office market rental index for Q4 2008 will be released only in late January.

DTZ, in its report, does not give latest Q4 office rents for Singapore.

However, BT reported recently that, according to latest estimates by rival property consulting group CB Richard Ellis, average Grade A and prime office rental values in Singapore have slipped about 20 per cent in the fourth quarter of this year over the preceding quarter - after rising steadily for nearly four years.

The rents for these two categories of office space peaked in Q3 this year. DTZ evaluated the quarterly movements of the STI against URA’s office market rental index as far back as 1993.

For Hong Kong, it mapped the official office rental index against the Hang Seng Index as far back as Q1 1997.

‘The results . . . clearly show that such a delayed effect is not a one-off event. It had occurred in the past during the Asian financial crisis in 1998 and the tech bubble crisis in 2001,’ DTZ says.

The Straits Times Index peaked at 3,900 points on Oct 10, 2007, while the Hang Seng Index peaked at 32,000 on Oct 30 last year, DTZ notes.

Source : Business Times - 23 Dec 2008

Rents to hold steady despite en bloc influx

MORE units at developments sold enbloc are expected to be released onto the rental market, as developers look to ride out the market downcycle by renting them out, instead of leaving them empty.

But the additional supply of apartments from these developments should not weigh heavily on an already falling rental market, property consultants said.

Several developments that were sold en bloc last year and intended for demolition and redevelopment were put back onto the rental market this year, following the deterioration of market sentiment.

There has been a thin but regular stream of such developments since early this year. They are typically leased out at rents that are at least about 20 per cent below market level, said Knight Frank director of research and consultancy Nicholas Mak.

More will follow next year as some developers have yet to take possession of their collective sale properties. For instance, Airview Towers in the River Valley area will be leased out from February next year, for a one-year period.

Units there will be rented out at more than $2,000 to less than $4,000 a month.

An owner there said their rent-free period will end in February, but a few units are already being leased out to quite a number of foreigners on work permits.

Two other developments, Spottiswoode Park and Oakswood Heights, on Spottiswoode Park Road are also likely to be put on the rental market early next year, said a market watcher.

Mr Mak said these developments are unlikely to add much downward pressure on rents as there are not many of such developments, which come with just basic facilities and a short lease.

Secondly, they are mostly rented out to existing tenants or ex-owners of the development, he said. ‘Thirdly, not all the units in the developments are fit for rental. One reason why these developments went for en-bloc sale is because they are rundown,’ said Mr Mak.

Also, as the projects are meant for redevelopment eventually, developers are unlikely to spend a lot of money to spruce them up, consultants said.

‘Rents in general, like capital values, reflect the physical condition of the stock, the tenure, location et cetera,’ said Jones Lang LaSalle’s South-east Asia research head, Dr Chua Yang Liang.

As the reported rents must also account for the transient nature of the leases, the depressive effect of such rents on the general market is marginal, he said.

Rents of private residential properties here have fallen and are expected to fall further next year. Average prime rents are now at $4 to $4.40 psf, slightly down from $4.20 to $4.60 psf in the third quarter, according to CB Richard Ellis.

Other collective sale developments being leased out include Fairways in Telok Blangah, Grangeford at Leonie Hill, Lucky Tower in Grange Road and even Merlin Mansion in the East Coast Road area.

Fairways is offering a one-year lease at rents from $1,900 a month while rents at Grangeford start from about $3,500 for a two-bedroom unit. Both were bought around the middle of last year.

Developments that have already been in the rental market for months include Leedon Heights off Holland Road, Sophia Court in Adis Road and Lincoln Lodge off Newton Road.

Source : Straits Times - 23 Dec 2008

How to deal with pesky en blocs

WE REFER to the letters “Just leave me alone!” (Dec 16) by Lee Siew Hua and “A loophole, a headache” (Dec 19) by Yeo Han Tiong.

We would like to clarify that the legislation already allows the subsidiary proprietors of a strata-titled development to decide on the tenure of an en bloc sale committee. A sale committee may be dissolved by way of ordinary resolution at a general meeting of the management corporation.

Owners can therefore vote on the dissolution of the sale committee anytime, either at the annual general meeting or at an extraordinary general meeting of the management corporation. This approach provides flexibility to subsidiary proprietors to decide the term of the en bloc sale committee elected by them.

We thank the readers for their views.

Chong Wan Yieng
Head, Corporate Communications, Ministry of Law

Source : Today - 23 Dec 2008

Japanese developer Urban to be liquidated

Urban Corp, the real estate developer that became Japan’s biggest bankruptcy this year, will sell off two of its businesses and liquidate after failing to attract final bids from investors.

Urban will sell its residential business to its main creditor Hiroshima Bank Ltd and a bank affiliate, according to a release on the company’s website yesterday. Its securitisation business will be sold to Kyokuto Securities Co and Chuo Mitsui Trust Holdings Inc. After the sale, the Hiroshima- based company will be liquidated.

A slump in Japan’s property market has forced 25 publicly listed developers and construction companies to file for bankruptcy. Dia Kensetsu Co, a Japanese condominium developer, became the latest casualty, filing for bankruptcy on Dec 19 with 30 billion yen (S$483 million) in liabilities.

‘It highlights the dim prospect for the property market,’ said Junko Miyakawa, a senior analyst at Shinsei Securities Co. ‘People anticipate that property prices in the next few years will deteriorate further.’

Daiwa House Industry Co, Japan’s biggest home builder, Goldman Sachs Group Inc and Merrill Lynch & Co, which were interested in Urban’s assets, didn’t take part in the bidding on Dec 19 because most of the company’s well-located sites in Tokyo had been sold off and they didn’t want Urban’s remaining staff, said two people familiar with situation.

Urban filed for protection from creditors on Aug 13, citing 255.8 billion yen of debt, the largest bankruptcy among listed companies in Japan this year.

Tokyo District Court started a rehabilitation process on Aug 18 for assets that were valued in June at more than 477 billion yen.

Source : Business Times - 23 Dec 2008

Hypo Real Estate to slash workforce

It will also sell off some of its activities in restructuring plan

Troubled German property lender Hypo Real Estate said last Saturday that it will slash its workforce by almost half in three years, part of draconian moves to save it from near bankruptcy.

‘The number of employees will go from some 1,800 to about 1,000 over the next three years,’ the private bank said in a statement, adding that two-thirds of the axed jobs would be outside Germany.

‘Given the new situation in the capital markets . . . there is no other alternative to our extensive restructuring programme,’ said chief executive Axel Wieandt in the statement.

The Munich-based bank, Germany’s biggest victim of the global banking crisis, stressed that it would also sell off some of its activities, hoping to avoid as many redundancies as possible.

The bank said that its restructuring plan should allow it to save 600 million euros (S$1.2 billion) over the next three years, and another 500 million euros to 2013.

Hypo Real Estate and its Irish subsidiary Depfa were caught up in a liquidity crunch that worsened after the US investment bank Lehman Brothers declared bankruptcy in September.

Hypo Real Estate has already benefited from some 30 billion euros in a rescue plan worked out by the German government and the country’s central bank in October.

The bank’s stock, which lost 80 per cent of its value, was forced off the Frankfurt DAX index yesterday.

After a German association of small shareholders, DSW, filed a complaint against the bank, prosecutors in Munich opened an investigation into accusations that Hypo Real Estate directors provided insufficient information on the bank’s situation before it required an emergency bailout.

Two more Hypo Real Estate executives announced their resignations last Saturday: financial officer Markus Fell and director of real estate operations Frank Lamby.

Source : Business Times - 23 Dec 2008

Tapping market indices to signal office rental swings

Source : Business Times - 23 Dec 2008

In Singapore as well as Hong Kong, stock market indices lead official office rental indices between two and five quarters before correction or recovery sets in, property consultancy DTZ observes in a report issued yesterday.

Office vacancy rates in these two Asian cities also led office rent correction and recovery by a few quarters. Guided by this finding, DTZ has developed an in-house early warning system to predict the probability of office markets in both cities entering correction or recovery phase within the next three to six months.

This will use the stock index and vacancy rate as leading predictors. These indicators are based on the probability concept and expressed in percentage terms.

Figures exceeding 50 per cent indicate that the probability of entering the correction phase in the next three to six months is high, and vice-versa.

As at end-Q3 2008, the Singapore office probability indicator reached 65 per cent while that of Hong Kong hit 63 per cent. ‘The risk reflected for Singapore matched the official pronouncement by the Urban Redevelopment Authority,’ DTZ says.

The URA office market rental index for Q4 2008 will be released only in late January.

DTZ, in its report, does not give latest Q4 office rents for Singapore.

However, BT reported recently that, according to latest estimates by rival property consulting group CB Richard Ellis, average Grade A and prime office rental values in Singapore have slipped about 20 per cent in the fourth quarter of this year over the preceding quarter - after rising steadily for nearly four years.

The rents for these two categories of office space peaked in Q3 this year. DTZ evaluated the quarterly movements of the STI against URA’s office market rental index as far back as 1993.

For Hong Kong, it mapped the official office rental index against the Hang Seng Index as far back as Q1 1997.

‘The results . . . clearly show that such a delayed effect is not a one-off event. It had occurred in the past during the Asian financial crisis in 1998 and the tech bubble crisis in 2001,’ DTZ says.

The Straits Times Index peaked at 3,900 points on Oct 10, 2007, while the Hang Seng Index peaked at 32,000 on Oct 30 last year, DTZ notes.

10% fall seen in UK home prices next year

Source : Business Times - 23 Dec 2008

UK house prices will decline 10 per cent next year as a shortage of mortgage finance limits new sales, according to Hometrack Ltd.

Values will drop a further 3 per cent in 2010 after dropping 9 per cent this year, the London- based property researcher said in a report yesterday.

Home lending will increase by just £15 billion (S$32 billion), down from £39 billion in 2008 and a peak of £107 billion last year.

Bank of England deputy governor John Gieve said in a BBC interview that the bank knew the rate of house-price growth was unsustainable and underestimated the severity of the problem.

After prices tripled in a decade, policymakers now are struggling to revive the market for home finance, with Prime Minister Gordon Brown pushing banks to revive lending.

‘Prices will remain under downward pressure for the foreseeable future,’ Richard Donnell, Hometrack’s director of research, said in the statement.

‘The onset of recession and rising unemployment is set to act as a major constraint on demand compounding the level of price falls in the near term,’ he added.

Sales volumes will fall 12 per cent next year after dropping 45 per cent in 2008, while repossessions will climb to 70,000 from 45,000, Hometrack said.

The global credit squeeze has pushed the UK into its first recession since the early 1990s.

Unemployment rose at the fastest pace since 1991 in November, with the number of people claiming jobless benefits climbing above one million.

Mr Gieve said using interest rates to tame asset prices may have limited growth in other areas of the economy.

He made the remarks in a BBC interview which was to be broadcast on its Panorama programme last night.

Mr Brown has partly suspended a tax on house purchases, and the government has created a £50 billion rescue package for UK lenders stung by credit losses.

US housing crisis worsens as economy weakens

Source : Business Times - 23 Dec 2008

The desperate straits of many US homeowners showed in new data released on Monday, suggesting efforts to help them are having limited success.

As the recession throws more people out of work, the rate of re-default on modified mortgages is rising and may worsen as the economy deteriorates, banking regulators said.

After much browbeating from Congress, banks and other mortgage lenders are beginning to do more, to modify home loans so that distressed borrowers can avoid foreclosure.

But the latest figures from regulators raise questions about how modifications are being done and how much they help, even as foreclosure rates hit record-setting levels.

‘You have to think that it will get worse before it gets better,’ John Dugan, the US Comptroller of the Currency, said in an interview with Reuters.

Critics say most loan modifications up until a few months ago were temporary and not aimed at providing for sustainable payment plans, so it comes as no surprise that homeowners are defaulting.

At the same time, a lenders’ group known as Hope Now warned on Monday that the number of US homeowners seeking help to avoid foreclosure would double next year to 2 million.

The housing crisis and the recession will keep Congress busy when it returns on Jan 6, 2009, from a holiday break, and preoccupy President-elect Barack Obama after he is sworn in on Jan 20.

Between Jan 6 and the inauguration, congressional Democrats are expected to introduce legislation urging more aggressive efforts to help those homeowners who are in over their heads.

A bill being drafted by Massachusetts Rep Barney Frank might include a sweeping mortgage relief plan from Federal Deposit Insurance Corp Chairman Sheila Bair, a House aide said on Monday.

The bill is sure to insist that more be done to help homeowners under a plan already under way - the Treasury Department’s US$700 billion Troubled Asset Relief Programme.

That plan, known as the TARP, has given hundreds of millions of dollars in aid to banks and, more recently, to major US automakers. But Mr Frank and other Democrats contend the TARP is doing little to help homeowners.

What is loan modification?

The Office of the Comptroller of the Currency and the Office of Thrift Supervision, both key US banking regulators, said that after six months, nearly 37 per cent of mortgage loans modified in the first quarter were 60 or more days delinquent.

After three months, 19 per cent were 60 or more days delinquent or already in the process of foreclosure, they said.

‘One very troubling point is that whether measured using 30-day or 60-day delinquencies, re-default rates increased each month and showed no signs of leveling off after six months or even eight months,’ Mr Dugan said in the joint OCC-OTS report.

Possible explanations for the high re-default rate include the faltering economy as well as loan terms were not being modified enough to help homeowners, Dugan said.

But critics said the data were misleading because they included repayment plans that did not significantly modify home loans.

For example, some repayment plans freeze the interest rate for just a year, according to the Centre for Responsible Lending, a nonprofit group that aims to help homeowners.

‘You really have to work it out to a sustainable loan, not just one that is designed to default because after a year it’s going to rise again,’ said spokeswoman Kathleen Day.

A spokesman for IndyMac Bancorp, which was taken over by the FDIC in July, said lenders were only tinkering with loan terms up until a few months ago and not making true modifications.

‘Modifications in the past were never about finding the borrower an affordable payment,’ Evan Wagner said. ‘So I think it shouldn’t be surprising that you are seeing a lot of these folks redefaulting.’

The data, some of which was released in preliminary form earlier this month, were based on information collected from some of the biggest US financial institutions, including Bank of America, Citigroup and JPMorgan Chase.

US commercial property industry seeks bailout aid

Source : Business Times - 23 Dec 2008

A group of trade associations representing the US commercial real estate industry is lobbying to be included in the US Federal Reserve’s US$200 billion asset-backed bailout plan in order to head off a wave of foreclosures over the next few years.
Commercial banks and the commercial mortgage-backed securities market comprise about 75 per cent of the lending pool for commercial real estate loans

In a letter to US Treasury Secretary Henry Paulson, industry organisations have asked that the US$200 billion Term Asset-Backed Securities Loan Facility (Talf) provide guarantees or financing, or purchase highly rated asset-backed securities collateralised by new or recently originated mortgages.

The programme, aimed at unsticking frozen consumer credit markets such as auto loans, student loans and credit cards, was funded at US$200 billion from the Fed, with the first US$20 billion in losses to be covered by the Treasury.

Mr Paulson said when the Talf programme was announced it could expand to include commercial or nonagency residential mortgage-backed securities.

The Treasury acknowledged receipt of the letter and referred questions to the Federal Reserve.

Members of the group have met with US congressional leaders, according to the Real Estate Roundtable, which represents 16 national real estate trade associations.

The seizure of the global credit markets has all but shut down the commercial mortgage-backed securities (CMBS) market, a chief source of funding for the recently ended commercial real estate boom.

So far this year, about US$20 billion in CMBS were issued, down from US$230 billion in 2007, as buyers of even the highest-rated triple-A bonds shun the market.

‘Restart the market’

‘I think it comes down to less of the government actually buying these bonds and more of the government assisting to restart the market,’ said Mr Dan Fasulo, managing director at real estate research firm Real Capital Analytics.

‘The government can buy whatever they want, but without private investment none of us is going to get out of this mess.’

Commercial banks, which have curtailed their lending, and the CMBS market comprise about 75 per cent of the lending pool for commercial real estate loans, according to the real estate organisations.

‘Through the end of 2009, an estimated US$400 billion in commercial real estate loans will mature, and the pace of maturities will increase over the succeeding years,’ the group of a dozen associations wrote in their Nov 26 letter to Mr Paulson.

‘With new loan originations at a standstill, commercial borrowers face a daunting challenge of refinancing maturing debt and, as a result, borrowers and lenders alike may experience rising foreclosures, delinquencies and loan losses,’ the letter said.

Barclays Capital estimates that US$270 billion in mortgages will come due in 2009 with slightly less maturing in 2010.

However, maturing CMBS-related loans will grow from US$21.8 billion to US$38.7 billion.

Real Capital Analytics has identified US$106 billion in property that is either in distress or are potentially troubled assets.

Sales of US commercial real estate have dropped 74 per cent in 2008 to US$134 billion, according to the research firm.

CapitaLand appoints Peter Seah as deputy chairman

Source : Channel NewsAsia - 23 Dec 2008

Property developer CapitaLand has appointed Peter Seah as its new deputy chairman from January 2009. Mr Seah has been a non-executive director with CapitaLand since 2001. He is also appointed to chair the company board’s finance and budget committee.

Mr Seah takes over from the incumbent Hsuan Owyang, who has been with the company since its inception, following the merger of Pidemco Land and DBS Land. Prior to the merger, Mr Owyang was the chairman of DBS Land.

During his time at CapitaLand, Mr Owyang held a number of key appointments, including chairman of the finance and budget committee, member of the executive resource and compensation committee, and member of the nominating committee.

Mr Owyang has been credited with transforming CapitaLand from a Singapore-centric developer to a multinational real estate company, with businesses in 120 cities in over 20 countries.

Paying tribute to Mr Owyang, Liew Mun Leong, president and CEO of CapitaLand Group, said Mr Owyang’s insight and knowledge of China has been especially valuable in guiding the group’s expansion in the country.

The company also gained much from his vast experience in the financial sector, which benefited CapitaLand’s real estate investment trusts – CapitaMall Trust and CapitaRetail China Trust.

Mr Owyang said he has been planning his retirement for some time and plans to move to the United States to be with his family and to pursue other interests.

Looking ahead, he noted that the future for the company would be fraught with challenges, but he is confident that the management will be able to steer it through difficult times.