HDB steps up lift upgrading

Source : Straits Times - 7 Mar 2009

THE pace of lift upgrading in HDB blocks will be increased by as much as 12 per cent this year - a move that will give struggling local builders a timely leg up.

The Senior Minister of State for National Development, Ms Grace Fu, said yesterday that the HDB is ‘going to hasten the pace of the Lift Upgrading Programme (LUP) because we think this is a very good time’.

‘The construction prices are moderating, and I think it’s good for us to take advantage. At the same time, we also see this as a way of injecting new work into the market,’ added Ms Fu, who was speaking on a visit to Block 906, Tampines Avenue 4, a pilot project for one of the lift upgrading schemes for HDB blocks.

Ms Fu said in Parliament recently that some government infrastructure projects, each with a value of up to $50 million and including lift upgrades, would be brought forward to help the building industry.

The HDB chose 60 precincts for lift upgrading last year - 10 more than was initially planned.

For this year, Ms Fu said yesterday: ‘We will look at bringing forward more, but a lot depends on the prices that we get as well.’

The HDB has spent $2.4 billion over the past five years on various upgrading programmes with a further $4.6 billion earmarked to be spent over the next five years.

The entire lift upgrading programme, which is slated for completion by 2014, will cost $5.5 billion.

Carrying out lift upgrades is part of a broader exercise to help struggling small- and medium-sized contractors get through the worsening recession by offering them a range of projects, each valued at $50 million or less.

About $1.3 billion worth of such work, from upgrading lifts and parks to schools, will be tendered out this year.

It will bring the total value of small- and medium-sized public sector projects to $4.8 billion for the year. This is 67 per cent more than the average annual value of such projects awarded in the past five years, said Ms Fu.

Ms Fu’s visit to Tampines Avenue 4 highlighted some of the innovative solutions needed in lift upgrades.

There are about 180 such uniquely designed half-landing blocks islandwide. In the past, lift upgrading still left residents needing to climb half a flight of steps from the lift to reach their homes.

Now they will get direct lift access thanks to new entrances built in the living rooms. These are connected by a common lift landing directly to the new lift shafts.

Work at the 21 pilot blocks began in November 2007 and was completed in January this year.

Resident Chew Geok Poh, who is in her 30s, said the lift upgrading was a ‘great help’ for her mother, who was finding it difficult to climb four flights of stairs to get to their home at the four-storey block.

The HDB has been working on the 21 blocks in its pilot project and will continue to offer such lift access to the remaining eligible blocks.

New flat prices to be adjusted

Source : Straits Times - 7 Mar 2009

LAUNCH prices of new HDB flats could be cheaper if market prices start to fall.

Senior Minister of State for National Development Grace Fu said yesterday that the Housing Board is monitoring the market closely and will adjust new-flat prices accordingly.

‘For every project that’s launched, we will take the cue from the market, so for every batch that’s coming up, if the current market has adjusted, we will adjust our selling price accordingly,’ she said.

The Straits Times yesterday reported that resale flat prices have softened for specific types, such as five-roomers in areas like Punggol, to match the price of similar newly-launched flats.

Ms Fu assured home buyers yesterday that HDB will ‘always price [the new flats] with the market price in mind’.

Rent arrears surge as sales plunge

Source : Straits Times - 7 Mar 2009

Rental default cases hit unprecedented level as recession takes its toll

MANY small retailers face an unenviable cash crunch as the recession crimps sales - and this is fast taking a heavy toll.

At the prime mall Far East Plaza, rental default cases are already piling up.

At least five shops at Far East Plaza - out of about 600 - have been repossessed so far this year. The mainly small retailers and start-ups at the mall may be in a weaker financial position to ride out the crisis. — ST PHOTO: LIM SIN THAI

Mr Charles Yue, a shop specialist who focuses on the Scotts Road mall, has already helped landlords repossess five shops since the start of the year, well up from ‘one or two’ for all of last year.

He is now handling an unprecedented number of cases of rental default at any one time - about 20.

This is where the tenant owes up to three months rent. The defaulting tenant must either pay up - or move out.

Far East Plaza is a strata-titled mall, which means it has multiple individual owners rather than one mall owner.

In regular economic times, about 50 cases of rental default crop up at the mall a year, as it attracts many first- timers trying their luck at opening a shop.

But Mr Yue, of Ginza Real Estate, said he has not seen rental default at the current levels.

‘It has become more pronounced as the crisis deepened. After Chinese New Year, retailers experienced a drastic drop in sales,’ he said. ‘This round, more people have cash flow problems. Their sales have dropped and their income is less than their expenses.’

Strata-titled malls are likely to suffer more than single-

owner malls because of a lack of a central lease management to handle vacancies as well as to promote the mall, said Knight Frank deputy managing director Danny Yeo.

Also, they tend to draw small- and medium-sized enterprises and start-ups, which may be in a weaker financial position to ride out the crisis, he said.

A strata title gives an investor ownership of a small piece of a bigger property. Other strata-titled retail properties include Lucky Plaza, Orchard Shopping Centre and Sim Lim Square.

Mr Yue has not handled so many cases of rental default in such a short period. ‘Now, we need to troubleshoot and do rental collection on behalf of the landlords,’ he said.

He said his firm has a regular clientele of more than 100 landlords at Far East Plaza, which has about 600 shops.

Individual landlords are reacting differently: Some are giving rent cuts of 3 per cent because of the government tax rebate, others are giving more. Then, there are those who have yet to do anything.

Some tenants are doing fine. But landlords will have to act if the tenants start defaulting on their rent.

Ms Dee Dee Yue, 46, a supervisor at Bus Stop Apparels in Far East Plaza, said it has no problem paying the rent but sales have dropped by about 40 per cent to 50 per cent from last year.

At another shop in the mall, a salesgirl, who wanted to be known only as Ah Mei, said business was very bad. ‘If we hadn’t signed the contract to stay on, we would have closed shop long ago.’

The situation at Far East Plaza could get worse, said Mr Yue.

Going to court may not be the best solution due to the time and cost involved, he said. ‘If tenants continue to default, it is sensible for the landlord to take back the shop and find another tenant.’

The current climate may attract start-ups keen to enter the market, said Mr Yue.

A 33-year-old landlord, who owns six shop units at Far East Plaza, said the defaults started last December. One of his tenants, a fashion retail start-up, moved out after Chinese New Year, after only several months of operations.

‘If we drag on for a few months, our losses will be higher,’ he said. ‘Compared with other places, Orchard Road rents are high for start-ups. Some of them didn’t expect the downturn to be so serious.’

He plans to cut rents for new leases by about 5 per cent for a start.

Rents at Far East Plaza can range from $20 to $40 per sq ft for fashion stores. For a tiny shop, this would amount to at least several thousand dollars a month.

Things will generally get tougher for retailers in the Orchard Road area after the new malls open, said Mr Yeo.

‘There seems to be more vacancies now as some tenants are not renewing their leases. But it is not alarming.’

It is still early days.

‘If the economy remains the same for the next six to nine months and consumer expenditures continue to dip, you can expect to see more vacancies,’ said Mr Yeo.

Fairly brisk sales for new condos

Source : Straits Times - 7 Mar 2009

THE show-flat crowd - that rarest of species these days - has been lured back into the market by two new developments that held soft launches this week.

Hundreds of people turned up at the Double Bay Residences showroom in Simei when its doors opened for a private preview yesterday.

Crowds at the Double Bay Residences showroom in Simei yesterday. UOL Group has so far released 250 of the condo’s 646 units for sale. Developers are seeing a renewed interest in their entry-level and mid-priced projects from HDB upgraders and private home owners. — ST PHOTO: AZIZ HUSSIN

Developer UOL Group said more than 80 units have been sold so far, at an average price of $600 per sq ft (psf) to $650 psf. The development’s six retail units have all been sold as well.

Chief operating officer Liam Wee Sin noted that the response was strong ahead of the 99-year leasehold condominium’s official launch next weekend.

UOL has so far released 250 of the 646 units in Double Bay for sale. One-bedroom units in the Simei Street 4 project start from $420,000, while four-bedders cost at least $930,000.

The crowds were also out for The Mercury in Shanghai Road, which was said to be more than 60 per cent sold since it started previews on Thursday.

The 67-unit freehold project is priced from about $1,040 psf. One-bedroom units at the River Valley estate start from $740,000, while two-bedders are going for about $1.1 million.

The fairly brisk sales for these projects come on the heels of a few successful launches recently, which appear to have boosted sentiment in the badly battered property market.

Last month, Frasers Centrepoint said it sold over 300 units in three days at its Caspian condominium in Jurong. To date, over 500 of the 712 units have been sold.

Caspian’s success was mirrored at The Alexis in Alexandra Road, which sold out within a few days of its preview.

Property consultants say the main draw for these projects is their attractive prices, which, at well under $1 million, are affordable for HDB upgraders. Even mid-tier projects such as The Alexis and The Mercury feature smaller units to offset their higher per square foot prices.

‘These days, it looks like the total quantum of price is more important than the price per square foot,’ said Knight Frank director of research and consultancy Nicholas Mak. ‘In some areas, prices have come down 20 per cent to 30 per cent from the peak, and there are probably people who see these buys as good bargains.’

Still, most of the sales activity are confined to the entry-level and mid-priced market. High-end projects are still facing a very challenging time, consultants say.

And while transactions are being steadily chalked up, there remain clear signs that not everything is fine and dandy in this economic recession.

At The Mercury, for instance, agents marketing the project said they had expected it to be fully sold within one day.

In Toh Tuck Road, off Upper Bukit Timah, boutique developer Hiap Hoe was said to have sold only a handful of units in The Beverly condominium, although news reports said more than 300 people turned up for its launch last weekend.

Hiap Hoe released 31 of the 118 units at an average price of $750 psf. The apartments are a bit bigger than average, starting from 1,120 sq ft for the smallest two-bedroom units, which translates into somewhat higher prices per unit.

The developer is also not offering the interest absorption scheme for The Beverly, which was on offer for the Caspian and The Alexis and is available for Double Bay and The Mercury.

Under the scheme, buyers who take out a loan immediately on purchase pay only a down payment and defer remaining instalments until the project is finished.

Mr Liam of UOL, however, said more of Double Bay’s buyers opted for the normal payment schemes rather than taking up interest absorption.

The buyers so far have been a mixed bag - HDB upgraders, private home owners and owner-occupiers, and investors.

On the whole, the smaller units have proven more popular, he said, underscoring the importance of affordability. But he said an ‘encouraging’ sign was that buyers were also going for units on higher floors, which are more expensive.

‘We are seeing a flight to quality,’ he told The Straits Times. ‘If the price is within their budget, they will gun for the better units and the higher floors.’

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HUNT FOR BARGAINS

‘In some areas, prices have come down 20 per cent to 30 per cent from the peak, and there are probably people who see these buys as good bargains.’ - Mr Nicholas Mak, Knight Frank’s director of research and consultancy

Fairly brisk sales for new condos

Source : Straits Times - 7 Mar 2009

THE show-flat crowd - that rarest of species these days - has been lured back into the market by two new developments that held soft launches this week.

Hundreds of people turned up at the Double Bay Residences showroom in Simei when its doors opened for a private preview yesterday.

Crowds at the Double Bay Residences showroom in Simei yesterday. UOL Group has so far released 250 of the condo’s 646 units for sale. Developers are seeing a renewed interest in their entry-level and mid-priced projects from HDB upgraders and private home owners. — ST PHOTO: AZIZ HUSSIN

Developer UOL Group said more than 80 units have been sold so far, at an average price of $600 per sq ft (psf) to $650 psf. The development’s six retail units have all been sold as well.

Chief operating officer Liam Wee Sin noted that the response was strong ahead of the 99-year leasehold condominium’s official launch next weekend.

UOL has so far released 250 of the 646 units in Double Bay for sale. One-bedroom units in the Simei Street 4 project start from $420,000, while four-bedders cost at least $930,000.

The crowds were also out for The Mercury in Shanghai Road, which was said to be more than 60 per cent sold since it started previews on Thursday.

The 67-unit freehold project is priced from about $1,040 psf. One-bedroom units at the River Valley estate start from $740,000, while two-bedders are going for about $1.1 million.

The fairly brisk sales for these projects come on the heels of a few successful launches recently, which appear to have boosted sentiment in the badly battered property market.

Last month, Frasers Centrepoint said it sold over 300 units in three days at its Caspian condominium in Jurong. To date, over 500 of the 712 units have been sold.

Caspian’s success was mirrored at The Alexis in Alexandra Road, which sold out within a few days of its preview.

Property consultants say the main draw for these projects is their attractive prices, which, at well under $1 million, are affordable for HDB upgraders. Even mid-tier projects such as The Alexis and The Mercury feature smaller units to offset their higher per square foot prices.

‘These days, it looks like the total quantum of price is more important than the price per square foot,’ said Knight Frank director of research and consultancy Nicholas Mak. ‘In some areas, prices have come down 20 per cent to 30 per cent from the peak, and there are probably people who see these buys as good bargains.’

Still, most of the sales activity are confined to the entry-level and mid-priced market. High-end projects are still facing a very challenging time, consultants say.

And while transactions are being steadily chalked up, there remain clear signs that not everything is fine and dandy in this economic recession.

At The Mercury, for instance, agents marketing the project said they had expected it to be fully sold within one day.

In Toh Tuck Road, off Upper Bukit Timah, boutique developer Hiap Hoe was said to have sold only a handful of units in The Beverly condominium, although news reports said more than 300 people turned up for its launch last weekend.

Hiap Hoe released 31 of the 118 units at an average price of $750 psf. The apartments are a bit bigger than average, starting from 1,120 sq ft for the smallest two-bedroom units, which translates into somewhat higher prices per unit.

The developer is also not offering the interest absorption scheme for The Beverly, which was on offer for the Caspian and The Alexis and is available for Double Bay and The Mercury.

Under the scheme, buyers who take out a loan immediately on purchase pay only a down payment and defer remaining instalments until the project is finished.

Mr Liam of UOL, however, said more of Double Bay’s buyers opted for the normal payment schemes rather than taking up interest absorption.

The buyers so far have been a mixed bag - HDB upgraders, private home owners and owner-occupiers, and investors.

On the whole, the smaller units have proven more popular, he said, underscoring the importance of affordability. But he said an ‘encouraging’ sign was that buyers were also going for units on higher floors, which are more expensive.

‘We are seeing a flight to quality,’ he told The Straits Times. ‘If the price is within their budget, they will gun for the better units and the higher floors.’

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HUNT FOR BARGAINS

‘In some areas, prices have come down 20 per cent to 30 per cent from the peak, and there are probably people who see these buys as good bargains.’ - Mr Nicholas Mak, Knight Frank’s director of research and consultancy

Double Bay Residences: 80 units of Simei condo sold

Source : Business Times - 7 Mar 2009

UOL Group and Kheng Leong yesterday sold more than 80 units of their new Simei condominium Double Bay Residences on the first day of its preview, the companies said.

Units at the 646-unit, 99-year leasehold project went for $600-650 per square foot (psf), UOL group chief operating officer Liam Wee Sin told BT.

UOL and Kheng Leong paid some $296 psf per plot ratio for the site in Jan 2008.

Mr Liam is upbeat about future take-up for the project as well. ‘The response to the preview has been terrific and if the same momentum is sustained, we expect to sell at least 200 units by this weekend,’ he said.

UOL released 250 units during yesterday’s soft launch. The project will be officially launched on March 14.

Yesterday’s transaction prices were slightly lower than the indicative prices that agents were giving out last week - which were in the range of $650-680 psf.

Mr Liam said that the $600-$650 selling price will be maintained: ‘We are happy with the pricing and we have no intention of raising prices.’

One-bedroom apartments were priced at $420,000 to $480,000; two-bedders went for $570,000 to $620,000; three-bedders for $740,000 to $850,000; and four-bedroom units sold for $930,000 to $1.02 million.

Like with other recent launches, UOL is offering an interest absorption scheme to buyers, but this costs about 2 per cent more.

The project is expected to receive its temporary occupation permit in 2013.

Peter Ow, executive director for residential marketing at Knight Frank (which is marketing the project), said that most of the buyers were HDB upgraders. Units on higher floors were also proving to be more popular, he said.

Mr Liam pointed out that the last condo project in Simei was launched a decade ago.

‘So we believe there’s pent-up interest for condo living in the area,’ he said, noting that there is latent demand from owners of HDB five-room and executive flats in Bedok, Pasir Ris, Punggol, Sengkang and Tampines.

UOL and Kheng Leong also said that apartments will be fitted with ‘elegant finishings comparable to district 10 condos’, which they expect will be a selling point.

Two-thirds of Double Bay Residences are taken up by four swimming pools and landscape features such as a five-storey high waterfall, an elevated jacuzzi and a sports deck.

UOL Group and Kheng Leong also sold six shop units within the project at $1,150 psf to a single buyer.

S’pore tumbles 30 places on global home price index

Source : Business Times - 7 Mar 2009

HOME prices in Singapore have been among the hardest-hit worldwide, with the city state ranking 34th out of 42 countries in Knight Frank’s Global Home Price Index. The index, based on the latest government and central bank data, tracks price movements quarterly. It shows that in Q4 2008, private housing prices here fell more than 6 per cent year on year, after rising more than 30 per cent a year earlier - the fourth-fastest rise worldwide.

Singapore’s dramatic drop in the rankings is only second to that of Iceland, which plunged 31 places after a 14 per cent dive in prices to 38th position in rankings.

Prices rose fastest in Dubai (up 59 per cent), followed by Russia (19.7 per cent) and the Czech Republic (19.6 per cent).

Countries where prices fell the steepest were Latvia (down 33.5 per cent) and the UK (14.7 per cent).

Although Dubai was the strongest performer in 2008, Knight Frank said much of the gain could be ‘wiped out’ this year. ‘No market will escape unscathed from the global financial crisis, although the scale of the impact will vary according to the structure not just of the housing markets themselves but also the underlying economies,’ it said.

More than 80 per cent of locations in the firm’s global index recorded price falls in the final three months of 2008, compared with 27 per cent in Q4 2007. Prices increased more than 10 per cent in seven countries in 2008, but values have now started to fall in six of these.

Knight Frank’s head of international residential research Nicholas Barnes said: ‘Predicting how much further markets will fall during 2009 is virtually impossible.’ He said it does not follow that a country that entered the downturn ahead of another country will recover faster.

In Singapore, Knight Frank said the prime Core Central Region suffered the biggest quarter-on-quarter price fall in Q4 2008 at 6.5 per cent. In the mid-tier Rest of Central Region, the drop was 6.2 per cent. And in the mass-market segment, it was 5.9 per cent.

A separate report by CBRE Research shows luxury home prices in Singapore - currently the highest in Asia - fell 13 per cent quarter on quarter in Q4 2008 to US$1,388 per sq ft. In Hong Kong, they fell a steeper 31.4 per cent to US$1,314.5 psf, while in Ho Chi Minh City the drop was 9.8 per cent to US$427 psf. In Thailand, Indonesia and the Philippines, luxury home prices remained unchanged.

CBRE said that in Singapore’s luxury condo segment - units costing $2,500 psf or more - only about 140 units were sold in 2008, way down from 900 in 2007.

Foreigners are typically the main buyers of luxury and investment-grade properties here, but CBRE said the number of foreign buyers in 2008 plunged 80 per cent from 2007. By end-2008, luxury prices here had fallen by 30-35 per cent year on year.

Luxury rents were hit by the weak market sentiment and an overhang of new supply. In Singapore, the average figure eased 3.4 per cent to US$3.96 psf per month. In Hong Kong, it fell a steeper 23 per cent to US$4.38 psf per month.

MacPherson Gardens Estate to have extensive barrier-free features

Source : Channel NewsAsia - 7 Mar 2009

To cope with an ageing population, Singapore is looking into make it easier for the elderly to move around.

And come 2010, barrier-free features will become a reality at the MacPherson Gardens Estate under the estate upgrading programme.

Some of these features include brightly-coloured markings on the floor to highlight changes in levels and direction of roads, gentle slopes and ramps, as well as flattened road kerbs and covered drains.

And making it easier for the wheelchair bound to get into the outdoors are rain shelters with provision for wheelchairs.

About a third of the residents are at least 55 years old at MacPherson Gardens Estate.

Maybank makes fixed-rate mortgages cheaper

Source : Straits Times - 6 Mar 2009

MAYBANK aims to counter the rising popularity of floating-rate home loans by making its fixed-rate loans cheaper.

It has cut rates on its three-year fixed-rate package, it said yesterday.

Home owners will now pay 1.6 per cent for the first year, 2.2 per cent for the second, 2.9 per cent for the third and 3.75 per cent thereafter.

The final rate is the bank’s board rate and subject to change, but Maybank said it has not been adjusted since it was implemented in February 2007.

Previously, the package charged 3.58 per cent in each of the first three years and 3.75 per cent thereafter.

Although the promotion is being advertised as a refinancing package, Maybank said the special rates are also open to new home buyers, and apply to both HDB flats and private properties.

But there are some conditions: The loans cannot be for more than 70 per cent of the property’s purchase price, and the rates apply only to completed homes that are owner-occupied.

Maybank’s move comes as more people turn to floating-rate loans pegged to transparent indicators such as the Singapore Interbank Offered Rate (Sibor) and the Swap Offer Rate (SOR).

These rates have plunged recently, making floating-rate loans more attractive. Sibor touched 0.68 per cent last month. With a mark-up of 1.25 percentage points - as in one package offered by HSBC Bank - a Sibor-pegged mortgage rate would come up to 1.93 per cent.

An HSBC spokesman said yesterday that most of its home loan clients opt for Sibor-pegged packages as ‘they like the transparency these loans offer’.

Maybank does not offer Sibor-pegged loans, though it has floating-rate loans.

Its consumer banking head Helen Neo said Sibor is already close to 10-year lows and there is no guarantee it will continue the downward trend. She noted that rates can fluctuate by as much as 3per cent over three-year periods.

She said: ‘We are confident people will welcome the peace of mind that fixed-rate packages can offer, particularly in times of such volatility.’

Punggol resale flats close the price gap

Source : Straits Times - 6 Mar 2009

PRICES of resale HDB flats in Punggol have fallen in recent weeks to the point where they are now around the same level as new ones launched barely two months ago.

Normally new flats are markedly cheaper than resale ones as the Housing Board ‘deeply discounts’ their price to prevailing market values as a form of subsidy to first-time home buyers.

But the worsening recession, fragile job market and weak property sector have closed this ‘discount gap’ to virtually nothing in some cases, making resale homes as attractive as new ones.

This is a reversal of the trend during the pre-crisis property boom which saw first-timers flock to HDB for new flats when they found themselves priced out of the resale market.

Experts also point to weaker demand for premium, five-room flat types, which has led to a drop in prices.

The HDB’s website this week showed that the range of resale prices for such five-roomers in Punggol had dipped, from $375,000 to $462,000 in December to about $350,000 to $440,000 last month.

Out of 36 five-room transactions in February, a majority of 29 were priced below $400,000.

This puts them in a similar price range as new five-roomers launched at Punggol Regalia in December at $342,000 to $428,000, and Punggol Arcadia in November at $356,000 to $416,000.

Even prices at the lower end for Punggol’s premium four-roomers have fallen from around $338,000 in December to $306,000 last month.

First-timers eligible for housing grants that may reach as much as $70,000 could now be paying much less for a resale flat than a new one.

This could prompt some cost-conscious buyers in the queue for new flats in Punggol to drop out and buy resale ones, said ERA Asia-Pacific’s associate director, Mr Eugene Lim.

Analysts say the dip in prices has come as home buyers are less likely to pay a premium, or cash-over-valuation, for a flat amid a deepening recession where every quarter sees fresh layoffs.

When HDB launched the Punggol flats late last year, the prices were also based on earlier, higher-priced transactions so it was ‘inevitable’ for new and resale flat prices to have some overlap.

A similar scenario was seen in the 1998 Asian financial crisis when new flat prices were ‘outdated’ quickly due to a downturn in the property market, said PropNex chief executive Mohamed Ismail.

One such area was Jurong, where some first-time buyers eventually discovered they paid more for a new flat than for some resale flats, he said.

It is difficult to compare that situation to Punggol now as the latest projects launched have a premium price due to their attractive location near Punggol MRT station and proximity to the town centre.

Punggol also has long-term potential due to plans to transform it into Singapore’s first waterfront public housing estate, added Mr Ismail.

Chesterton Suntec International’s head of research and consultancy, Mr Colin Tan, pointed out that, unlike private developers, the HDB does not have the luxury of flexibility to adjust prices according to the market immediately.

‘Once they’ve launched, the price is fixed. So there’ll always be a lag effect,’ he said.

One outcome might be that if the projects do not sell out, the HDB will take back surplus flats and relaunch them at a more attractive price later, he said.

Engineer Tang Zhi Wei,who is in the queue to buy a flat at Punggol Regalia, said the prices of resale flats are starting to look very attractive.

‘I’d be tempted to drop out and get a resale flat if time was important and I couldn’t wait,’ said Mr Tang, 26.

But while it seems he is no longer getting a ‘deep discount’ for a new flat, he will still buy one as it is ‘new and the location is good’.

The HDB has stated previously that it follows the market and adjusts prices accordingly.

In the aftermath of the Asian financial crisis when the property market suffered a severe downturn, new flats in Sengkang, for example, cost up to 30 per cent lower in 2005 than when they were first offered for sale in 1997 to 1998.

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Engineer Tang Zhi Wei, who is in the queue to buy a flat at Punggol Regalia, said the prices of resale flats are starting to look very attractive. ‘I’d be tempted to drop out and get a resale flat if time was important and I couldn’t wait.’

Maybank home loan deal may spark refinancing war

Source : Business Times - 6 Mar 2009

Maybank has fired the first salvo in what is likely to become the 2009 home loan refinancing war, as new property transactions slow down and banks try to poach one another’s customers to boost their mortgage books.

The bank yesterday announced a three-year fixed rate home loan refinancing package, throwing in free legal and valuation fees.

The interest rate for the first year starts at 1.6 per cent, rising to 2.2 per cent and 2.9 per cent for the second and third year respectively.

The catch is that the loan, which is also open to new home buyers, is available for up to only 70 per cent of valuation price. This is lower than current packages which offer financing for up to 80-90 per cent of valuation.

In addition, the package is only for lower risk owner-occupied and completed properties. There is also no minimum loan amount required for application.

With a fixed rate of 1.6 per cent per annum for the first year, Maybank’s refinancing package places itself as the lowest fixed-rate deal in town.

United Overseas Bank’s three-year fixed-rate package charges 3.25 per cent per year.

For borrowers looking at interbank plus packages, banks have jacked up their spreads as they turn risk averse. Sibor, the wholesale interbank rate, is hovering at just 0.68 per cent, taking it near the all-time low of 0.56 per cent in June 2003.

At DBS, a home buyer taking a Sibor package would have to pay the Sibor rate plus 1.75 percentage points.

A DBS spokeswoman said that the bank remains the only bank to date to offer full transparency for all home loans.

‘To offer customers peace of mind, the packages are pegged to publicly known rates like the interbank rates (offered under DBS Home Advice) and CPF Ordinary Account rate (offered under POSB Home Ideal),’ she said.

Maybank’s three-year fixed rate package works out to an average of 2.23 per cent per annum over three years, which is lower than the HDB concessionary rate of 2.6 per cent.

It said that refinancing customers also stand to enjoy fully subsidised legal and valuation fees if the loan amount is $400,000 and above for private properties, or $250,000 and above for HDB flats.

‘Prudent financing considerations should extend beyond short-term Sibor fluctuations,’ said Helen Neo, head of consumer banking at Maybank. ‘There is no guarantee that Sibor will keep trending downwards. We are confident that people will welcome the peace of mind that fixed rate packages can offer particularly in such times of volatility.’

Retail crunch: no need to panic … yet?

Source : Today - 6 Mar 2009

ARE retailers on the verge of crisis or not? As their representative body cries out for help, shoppers who rub shoulders in crowded malls on weekends may be wondering.

And at least one major landlord insists, there is no reason to panic, and no justification for an across-the-board cut in rentals.

Last week, the Singapore Retailers Association sounded the alarm bells Sales have dropped 20 to 30 per cent and some 20,000 jobs could be lost, if rents weren’t slashed.

The odd pocket of distressed tenants appears to bear this out - at Far East Plaza, as many as 20 shops have been in arrears since the start of the year, and a bunch have petitioned landlord Far East Organization for a cut in rent.

But the bigger picture could be more complex, and in an interview with Today, CapitaLand Retail chief executive officer Lim Beng Chee called for “a measured way of handling the crisis rather than sending panic (signals)”.

Citing statistics from the Monetary Authority of Singapore, Mr Lim pointed out that Singaporean households, who are traditionally conservative spenders, retain considerable buying power. “I’m not saying things will be rosy. Yes, there will be difficult times, but we must also ask what are the fundamentals.”

CapitaLand, the largest retail landlord here, owns 14 shopping malls under its real estate investment trust (Reit).

Ahead of its first-quarter results next month, the listed company could not reveal its tenants‚ average takings this year, which it tracks on a monthly basis.

But a spokesperson said levels were similar to those of previous months, in which most tenants did well in spite of lower discretionary spending, because when people get cautious about spending, they tend to buy “things you are familiar with” and “look at value”, Mr Lim said.

For whom the cash registers ring

Indeed, in past recessions, the earnings of supermarkets and fast food restaurants have actually increased as consumers “downgrade their spending”, business don Catherine Yeung pointed out. “It‚s not that they have no money at all. They can still make discretionary consumption, but they give it a more deliberate consideration,” said the National University of Singapore associate professor.

In the last three months of last year, spending at CapitaLand’s malls on jewellery and telecommunication equipment fell by 16.3 per cent and 23.6 per cent respectively, compared to the corresponding period in the previous year.

Yet, sales takings of the supermarkets and leisure and entertainment outlets grew by 15.9 per cent and 13 per cent respectively.

With 80 per cent of CapitaLand’s shopping malls catering to necessity shopping, Mr Lim stressed the need to ensure its investors enjoy “steady returns during difficult times”. “Reducing rentals when tenants are doing very well is not the right thing to do.”

Disagreeing, SRA executive director Lau Chuen Wei said the landlords were not looking “at the full picture”.

Alluding to the plethora of sales and promotions in which retailers are “slashing their prices like never before”, Ms Lau said: “That may drive customers to their stores and increase their takings, but it does not translate to better margins because sometimes they are even selling below costs.”

Small-timers FLOUNDER at Far East Plaza

While Mr Lim noted that “experienced and seasoned” tenants have the know-how to cope with the latest downturn, the same could not be said for some tenants at Far East Plaza, known for its smorgasbord of start-ups selling fashion apparels and accessories.

Far East Organization owns the first level of the strata-titled mall; other shops are leased out by individual investors. Tenants said takings have dropped by more than half.

Twenty stores have defaulted on rents, compared to five for the whole of last year, said Mr Charles Yue, a retail shop specialist for Ginza Real Estate who acts as the middleman for the various landlords and tenants.

When Today visited Far East Plaza yesterday at lunchtime, shutters were down at several shops. Some that were open had put up posters to advertise for new lessees.

One tenant, who wanted to be known only as Ms Lim, said she was in rental arrears of about $12,000 for her two apparel shops.

“If this goes on, we can only last another 1.5 months. But if I close my shops, I would have to pay a penalty for terminating my contract earlier,” said the 27-year-old.

One landlord, a retiree, said he had already reduced his rentals by 5 per cent. But he was not willing to trim further, simply because there is “still demand”. His previous tenant left just last month, but he has already found a new one.

Meanwhile, 35 tenants have petitioned Far East Organization. The petition, a copy of which was obtained by Today, did not state how much they hope rentals could be cut by. But Mr Goh Dung Kiang, who has incurred losses on his two shops after the Chinese New Year, hopes for “at least 30 per cent”.

When contacted, an FEO spokesperson said it would pass on the property tax rebate and work with the tenants on the issue of rentals, “as (the tenants) are key to the viability of our malls”.

So is this an isolated spike in the number of small-time retailers going belly-up?

Having heard enough pleas from SRA’s members, Ms Lau said: “These are retailers which have been in existence for more than 10 years, well-established brands with multiple stores … and they are all struggling.”

Maybank rolls out lowest rate

Source : Today - 6 Mar 2009

IN A bid to increase its slice of the housing pie, Maybank has rolled out a three-year fixed-rate loan package with first-year interest at 1.6 per cent - the lowest of its kind in Singapore.

With second- and third-year interest at 2.2 and 2.9 per cent respectively, that works out to an average of 2.23 per cent per annum over three years.

This is even lower than the HDB‚s concessionary rate of 2.6 per cent a year.

The new package is available for both new and refinanced loans of any amount up to 70 per cent of valuation prices of completed owner-occupier properties.

Maybank will also subsidise the full legal and valuation fees if the loan amount is $400,000 or above for private properties or $250,000 for HDB flats.

As global interest rate continues to fall and with Singapore Interbank Offer Rate (Sibor) hovering at just 0.68 per cent in these volatile times, Maybank‚s sales pitch for its new three-year fixed rate loan rests on the lines of stability and assurance.

“Owning a home is a long-term commitment, and prudent financing considerations should extend beyond short-term Sibor fluctuations,” said Maybank‚s consumer banking head, Ms Helen Neo.

“The current Sibor is already close to the 10-year historical low in July 2003, and fluctuations within three-year periods can vary as widely as 3 per cent. There is no guarantee that Sibor will keep trending downwards,” she said.

Mr Dennis Ng, founder of mortgage consultancy portal www.housingloansg.com, points out that mortgages from different banks come with different conditions. Property valuations may also vary.

Mr Ng cited DBS‚ three-year fixed rate mortgage at 3.5 per cent a year as an example, noting that its equivalent loan amount is 70 to 80 per cent of valuation. That is higher than Maybank‚s.

“For couples buying a new home or upgrading, cash may be tight and a 5- to 10-per-cent difference may mean that they may not be able to buy the place,” he added.

Likewise, UOB offers a three-year fixed rate housing loan at 3.25 per cent interest rate a year for loan amounts that is up to 80 per cent of valuation.

S’pore cuts F1 levy on hotels due to economic slump

Source : Business Times - 6 Mar 2009

Singapore on Friday slashed a levy collected from hotels to help fund the island’s Formula One Grand Prix.

‘This is a special measure for hotels this year, taking into consideration the current economic downturn,’ the Singapore Tourism Board said.

The levy was imposed for five days during last year’s inaugural race - the world’s first F1 night event - but this will be reduced to four days from Sept 24-27 in this year’s edition.

The rates will remain unchanged at 30 per cent of total revenues from rooms and room packages for 13 trackside hotels, and 20 per cent for all other tourist hotels in the city-state, which is now entering its worst economic recession.

Last year’s race on a street circuit in downtown Singapore generated tourism receipts of S$168 million (US$109 million) and drew more than 40,000 visitors, the tourism body said.

Breathing room for homeowners

Source : Today - 6 Mar 2009

Avoid foreclosure by granting moratoriums on loan repayment

AS THE economic crisis deepens, banks should expect more people to default on their housing loan repayments. Under the circumstances, is it in the interest of the banks to implement the commonly-practised course of action of repossessing the property and foreclosing the loan?

Granting the struggling debtor a moratorium and waiting for a better day is perhaps a better option than addressing the many issues involving foreclosure. In any case, granting a moratorium is a common practice in banking, wherein banks extend such facilities to corporate borrowers in times of need. In the case of project financing, a moratorium is often considered at the point of granting the loan, in order to accommodate the cashflow issues projects sometimes face during the start-up phase.

An individual borrower who is about to default or may have already defaulted on the housing loan is, in theory, no different from the situation faced by a corporate borrower facing difficulty financing the loan. But the impact on the individual borrower is much more than on the corporate body. The borrower‚s family is put through a period of stress due to circumstances beyond their control.

Getting banks to approve a moratorium - at least for a period of two years, by which time we should expect an improvement in our economic condition - will not only ease the financial burden on many families but also help alleviate the psychological pressures.

This will be a big relief to a number of responsible borrowers, who may be unable to repay their housing loans because they have lost their jobs.

Such a moratorium and reduction in interest would mean delayed repayments and a reduction in earnings for the bank over the next two years, but certainly not a loss; it is simply a case of deferring their income under special circumstances. This certainly pales in comparison to the magnitude of the losses posted by some banks on account of reckless lending.

This will be a win-win solution for all concerned, and will help consumers to participate in keeping the economy moving, in however small a way.

G Shekar

Affordability key: HDB

Source : Today - 6 Mar 2009

WE REFER to the letters, “The social and financial impact of no-frills flats, estates” and “DBSS contractors will only sell at a profit” (Feb 11).

HDB is mindful to ensure the affordability of public housing even as they are equipped with the essential amenities and basic finishes. We agree that children‚s playgrounds and neighbourhood parks are necessary to serve the needs of HDB residents, especially young families. Similarly, most HDB flats are provided with basic finishes like bathroom tiles and sanitaryware so flat buyers benefit from the economies of scale HDB enjoys.

HDB offers a variety of flats to meet the diverse housing needs of flat buyers, from basic 2-room flats to larger flats with better finishes. On average, first-time flat buyers in 2008 needed only about 21 per cent of their monthly household income for their housing loan. This is well below the 30-per-cent benchmark for affordable housing. Most buyers can service their monthly instalments entirely from their CPF contributions, and need not fork out any cash. HDB has recently enhanced the Additional CPF Housing Grant (AHG) to provide even more help for first-time homebuyers.

New flat prices will not necessarily be lower if they are based on cost. Based on recent HDB projects, a new four-room flat costs about $330,000 to develop, taking into account land, building and other costs. This is significantly higher than the average subsidised selling price of a four-room flat of about $220,000.

Design, Build and Sell Scheme (DBSS) flats do not contribute to overall price increases as they only make up less than 10 per cent of public housing supply. They cater to the needs of a niche group with higher income and housing aspirations. If developers overprice DBSS flats for their target group, they face the risk of low demand.

It is not true that flatbuyers have been forced to buy bigger flats because HDB stopped building 2- and 3-room flats. On the contrary, HDB stopped building 2- and 3-room flats in the ‚80s due to poor demand. In response to public demand, HDB has resumed the building of 2- and 3-room flats in recent years.

We thank the two writers for their comments.

Ignatius Lourdesamy
Deputy Director (Marketing & Projects), HDB

Marina Bay Sands to be 15% bigger

Source : Business Times - 5 Mar 2009

Marina Bay Sands, which is targeted to open around the end of the year, will be 15 per cent bigger in terms of gross floor area (GFA).

The four level casino area will, however, only occupy about 3 per cent of the total GFA.

The GFA for the integrated resort was initially expected to be 570,000 sq m (6.14 million sq ft). A 15 per cent increase could take it up to 655,500 sq m (7.06 million sq ft).

MBS general manager and vice-president George Tanasijevich said that since the design of MBS was first revealed, the design of the integrated resort (IR) had undergone ‘refinement and redesign’ to become both ‘bigger and better’.

This increase in size also partially accounts for the current budget for the IR which stands at US$5.4 billion, up from previous estimates of US$3.6 billion and US$4.5 billion.

About 2 per cent of additional GFA can be attributed to the $50 million that will be spent on art at MBS. This is through an Urban Redevelopment Authority art incentive scheme which allows property developers of new projects to gain additional GFA, over and above the maximum allowed, if they integrate art permanently in the design of new commercial or residential buildings in the Central Area.

Mr Tanasijevich was speaking at a media briefing yesterday at the construction site of MBS where it was revealed that the IR will now also be 5-storeys higher.

Structural works are almost 75 per cent completed with the structure for the casino building already ‘topped up’ and the topping up for the three 55-storey hotel towers expected by July.

The hotel towers, which are currently at about the 28-storey level are simultaneously being fitted out.

All this with the aim of opening in time.

While Mr Tanasijevich said they hope to open by the end of 2009, ‘or close to it’, it is not clear yet which parts of the IR will open first.

He said what will likely open first will be the ‘primary contributors of revenue’. He added that MBS was currently in discussions with the authorities on the phasing of the ‘progressive opening’ of the IR.

Separately, Las Vegas Sands (LVS) chairman and CEO Sheldon Adelson, who was speaking in the US, said that estimates made by analysts for earnings by MBS were ’somewhat low’.

According to a Reuters report, analysts had estimated that MBS could generate Ebitda of between US$500 million and US$900 million.

But citing Singapore’s favourable tax regime, Mr Adelson said: ‘We will save 25 per cent on average on taxes.’

Mr Adelson’s comments come after LVS reported a loss of US$136.5 million in the fourth quarter of 2008, down from a profit of $39.9 million a year ago.

At the time of the filing on Feb 25, LVS also said that it had raised its annual cost savings target to US$250 million.

In addition to this, Mr Adelson said yesterday that it would try and ’squeeze out another US$200 million to US$250 million’. ‘If we do that, we are home free,’ he added.

According to its Q4′08 filings, LVS has unrestricted cash balances as of December 31 of US$3.04 billion while restricted cash balances were US$194.8 million.

Of the restricted cash balances, it said US$124.1 million is restricted for Macau-related construction and US$61.9 million is restricted for construction of MBS.

Total debt outstanding, including the current portion, was US$10.47 billion. Principal payments required to be repaid in 2009 and 2010 total US$114.6 million and US$197.6 million, respectively.

Resort at three-quarter mark

Source : Today - 5 Mar 2009

First batch of hotel rooms will be ready by August

COME year-end, Marina Bay Sands will usher visitors in to at least half of the property’s gross floor area.

That was the assurance given for Singapore’s first integrated resort, although Marina Bay Sands executives yesterday stopped short of revealing an opening date.

The project is already three-quarters completed, they said, during a press tour for some 40 journalists.

“Everyone at Marina Bay Sands is working aggressively towards our target opening date. This is our total focus and we are confident of delivering on all fronts,” said Marina Bay Sands president Nigel Roberts in a statement.

The crowning glory of Marina Bay Sands is the roof garden atop the three hotel towers - which have now hit the halfway mark of between 26 and 28 floors.

From end-August, 4,000 tonnes of steel beams will be hauled 200m skywards to build the 340m-long, 38m-wide sky park. When completed, the park will have three linked 50m swimming pools to provide a 146m-long infinity edge overlooking the city.

Building the park‚s 66m cantilever - the longest in the world - will be an engineering feat, said senior vice-president of construction (Asia) Matthew Pryor. He said it takes 18 hours to lift each steel beam.

The hotel towers, which feature a vertical west wall and an arched east wall each, will now enter a comparatively simpler construction phase. Progress will be more “rapid”, Mr Pryor said.

Between now and July, the hotel towers will rise by at least five storeys each month to reach its eventual 55 floors.

VIEW FROM HALF WAY UP

From the 21st floor of Marina Bay Sands‚ hotel tower 1, company officials gave a show-and-tell update of the progress of each structure on its grounds - including the four-storey casino building, the 120,000 sq m Expo and Convention Centre, the ArtScience Museum, and two theatres.

Four of the five storeys at the convention centre are complete, and work is underway on the top floor, which will house a grand ballroom. Much of the casino structure is also done.

Journalists also got a peek of the views some of the 2,600 hotel rooms will have - the CBD skyline and the Marina Barrage.

Interior fitting-out of some hotel rooms have begun, said Mr Pryor. The first batch will be ready by August.

About 90 per cent of the construction costs have been locked in, said Marina Bay Sands general manager George Tanasijevich. The eventual cost of the entire project will be US$5.4 billion ($8.4 billion).

Parent company Las Vegas Sands lost94 per cent of its market value last year amid a plunge in gaming revenues in Las Vegas and Macau. The company suspended all development works in Macau and its St Regis condominium on the Las Vegas strip to focus on its resort in Singapore and Bethlehem.

OTHER NUGGETS
————-
- Construction of Marina Bay Sands goes on round-the-clock, with 7,500 workers on-site at any time.

- The length of the sky park is approximately the height of the Eiffel Tower, and the cantilever alone can fit an A380 aircraft.

- The three swimming pools, which contain about 1.6 million litres of water altogether, are the world‚s largest outdoor pools.

- Marina Bay Sands is spending over $50 million on artwork to be displayed on its property.

- 40 per cent of the Marina Bay Sands project is underground.

When a mortgage becomes a millstone

Source : Today - 5 Mar 2009

Three years ago, Mr Gurdev Singh was working in a security firm for a monthly pay of $1,200. The divorcee with a son, had just started dating. He and his girlfriend were thinking of starting a family, so he bought a flat.

“Six months later, we broke off. I tried ways to keep the 5-room flat. I tried my very best until I couldn’t make it,” he recalled.

Mr Singh negotiated with the Housing Development Board (HDB) for extra time to pay the loans and even tried renting out rooms in his flat to pay the mortgage. Still, he could not meet the payments.

His plight is not uncommon.

About 6,500 HDB home owners have been in arrears for two years or more.

How the HDB goes about helping such households is to first assess whether it is a short- or long-term problem, said Dr Maliki Osman, Parliamentary Secretary of the Ministry of National Development.

“For example, someone who has just lost his job, retrenched, we look at the potential of this person to quickly recover, get another job with regular income, regular CPF contributions. If the potential is high and the household is able to recover very quickly, then the solution is really for them to be assisted in the short-term period that they need help,” said Dr Maliki.

Several help measures are in place including the deferred payment scheme and the reduced repayment scheme.

HDB allows flat owners in difficulty to defer payment of loan instalments for an initial period of 6 months. The deferment may be extended for another 6 months if necessary.

Under the reduced repayment scheme, home owners with financial problems are allowed to make smaller payments of between 50 per cent and 75 per cent of their normal instalment.

They can also look at the option of subletting.

But other avenues may have to be explored when it comes to long-term financial difficulties like a homeowner without the ability to service the mortgage.

Mdm Tan Suay Yan, 52, earns $950 a month as a gardener, while her husband takes home about $1,000. They have four school-going children. In 1999, the family moved from a two-room flat to a five-room unit, which led to a monthly mortgage payment of about $1,000. She soon ran into arrears of about $200,000.

Mdm Tan admits that it was a mistake to buy the flat in the first place.

“We obviously couldn’t afford it. I don‚t know why he still wanted such a big flat. I think a bit of it was because of image and status,” she said.

Three years ago, the HDB finally told them they had no choice but to sell the flat.

“For families who have difficulties and remain unemployed for a longer period of time, the advice is not to hold on to the flat because the arrears will accumulate,” said Dr Maliki.

Mr Singh was told by HDB to downsize, but he met with further problems. “At that point in time, I couldn’t downgrade because it’s already my second loan with HDB. So there’s no third time.”

The banks also rejected his requests for a loan due to previous banking problems.

“I went down to the MP for help as well and in the end, they granted me a third time instalment with HDB, a third time HDB loan,” said Mr Singh, who can now comfortably use his CPF savings to pay the $462 monthly mortgage for a three-room flat.

In such cases, said Dr Maliki, the authorities would look at the history of the loans taken.

But he warned that it was not a given that HDB would assist all downgraders. “There are those who are downgrading because they want to monetise their assets. They live comfortably in a 5-room flat, they sell their flat, they get substantial proceeds and they want to buy a 3-room flat. Such cases are really not the financially hardship type.”

SCCCI shares former JTC tenants’ fears

Source : Straits Times - 5 Mar 2009

THE Singapore Chinese Chamber of Commerce and Industry (SCCCI) shares the fears of former JTC tenants that the corporation’s huge property sell-off has sent rents up.

The SCCCI has backed the tenants’ view that the sell-off is diverting the JTC from its essential purpose of providing affordable industrial land.

Some former JTC tenants have been affected after the corporation sold some of its assets to Mapletree Investments last July. These tenants had petitioned Mapletree last December to cut rents, but have yet to see any success.

The SCCCI said yesterday: ‘These former JTC tenants are justifiably frustrated because if JTC had not sold their properties to Mapletree last year, they could now be benefiting from the much-needed 15 per cent rental rebate the JTC has kindly offered to its tenants. Their predicament reflects one major concern of many SMEs (small and medium-sized enterprises) under the current extremely difficult economic environment.’

According to SCCCI’s survey in 2006, some respondents did not want large real estate firms gaining monopoly rights on industrial property. They felt such firms would not be able to perform ‘JTC’s unique role in rendering suitable aid to tenants during recessions and economic downturns’.

SCCCI lauded the timely rental rebates given by JTC, the Housing and Development Board, the National Environment Agency and the Singapore Land Authority.

It also appealed to Mapletree to extend some assistance to those affected by JTC’s divestment plan.

ANANYA ROY

Rethink JTC hive-off plan

Source : Straits Times - 5 Mar 200

THE unenviable predicament of tenants of factories sold by JTC Corporation to Mapletree Investments, which was reported on Monday (’Mapletree rejects appeal for rent cuts’), is a reminder to the Government to rethink its plan to hive off JTC factories to the private sector.

Once such factories are taken over by the private sector, full market forces must come to bear. As it is a listed real estate investment trust that survives or perishes by rental yield, Mapletree’s sole concern is yield maximisation.

Even if the factories were sold to an unlisted private entity, rent maximisation will still be the ultimate objective, although it may not need to be as high-handed in the absence of stock market pressure. Private-sector landlords are just doing what they are supposed to do.

But if factories, as productive entities, have wider added values in the economy (what economists call ‘externalities’), then the Government must rethink its plan to leave them at the mercy of yield-maximising private landlords. It is not without economic basis that even in the supposedly ruthless United States free market, state governments regularly offer free industrial land in exchange for agreed investment commitments.

Cheng Shoong Tat

Ensure landlords pass on tax rebate

Source : Straits Times - 5 Mar 2009

I READ with interest Monday’s report, ‘Mapletree rejects appeal for rent cuts’, and would like to mention my own problems with my landlord, Wheelock Properties.

During this year’s Budget speech, Finance Minister Tharman Shanmugaratnam announced that, as part of the Government’s efforts to lighten the tax burden of businesses in the coming year, it would give a 40 per cent property tax rebate for industrial and commercial properties.

A day after that, I wrote to Wheelock to ask if it would heed the Government’s call and pass on the savings from the rebate to tenants of Wheelock Place. I highlighted that a number of landlords have announced that they would do so, with CapitaLand the first to respond with a commitment to pass on all savings from the tax rebate.

I also highlighted to Wheelock Mr Tharman’s comments, in which he said: ‘The Government strongly urges landlords to pass on the benefits of this rebate to their tenants.’

To my disappointment, the first response I received from Wheelock a week later was non-committal, saying ‘any rebate passed on to the tenants is at the sole discretion of the landlord’.

In a second response to my follow-up e-mail messages a week later, Wheelock said it would give an update by the end of February.

Last week, in a third response to my e-mail messages, it said: ‘There is no confirmation yet on the property tax rebate, we will revert only in April.’

The only conclusion I can draw from its responses is that Wheelock has no intention of passing on the benefits of the rebate to its tenants.

While I cannot force it to do so, my question is whether the Finance Ministry can ’strongly urge’ landlords to do the right thing. If not, how can tenants like us, who had to pay more than double in rent when leases were renewed in late 2007, benefit from this rebate?

As MP Amy Khor noted in Parliament on the Jobs Credit scheme: ‘Since it is a cash injection from government coffers, arguably, the Government has the moral authority to compel recipients of Jobs Credit to save jobs for Singaporeans - as much as reasonably possible. Otherwise, the scheme should be tweaked to ensure some accountability by companies.’

Similarly, as pointed out by the Finance Minister, the 40 per cent property tax rebate will cost the Government about $800 million. If landlords keep these savings, how will it benefit small and medium-sized enterprises?

Alan Lee

IR on target for year-end opening, says Sands

Source : Straits Times - 5 Mar 2009

THE Marina Bay Sands integrated resort (IR) will open by year-end, as scheduled, its top suits said yesterday.

It may not look like it to the casual passer-by, but despite the expanse of cranes and other construction equipment at the site, 75 per cent of the building’s structural work is already done.

Giving this assurance yesterday on a site tour for the media, top executives of the IR, several of whom flew in from Las Vegas, said that though construction has just hit the halfway point, much of the hard work has already been done.

Mr Matthew Pryor, the Venetian Macau’s senior vice-president of Asia construction, who also oversees the Singapore works, pointed out that 28 out of 55 floors of the three iconic hotel structures have been completed.

The tough part of the work on this section was securing the sloping section of the hotel towers, but now that this has been done, ’stacking floors atop each other’ will be fairly straightforward, he said.

Five to six floors of the hotels will be built monthly until July, when the blocks will be topped off.

Elsewhere, the four-storey casino building is only awaiting its roof, while there is only the fifth and final floor left to build for the meetings and convention block.

Mr Nigel Roberts, the IR’s president, said: ‘Everyone is working aggressively towards our target opening date. This is our total focus, and we are confident of delivering on all fronts.’

Mr George Tanasijevich, the general manager of Marina Bay Sands, said the apparent lack of visible construction progress on the project had led many to question if it was on schedule.

There were also worries that the impact of the global financial crisis on the books of the parent company, Las Vegas Sands, would sink the project.

But new funds were raised last year, and assurances have been given by top management that the Marina Bay Sands - which the group has described as its crowning jewel in Asia - would be completed as scheduled, even if it is at the expense of its other projects.

Mr Tanasijevich said another reason much construction was not visible was that over 40 per cent of work was done underground. There was a delay, he admitted, because an obstruction - an old sea wall - had been discovered, but this had been taken care of.

Despite their assurances that construction will be completed on time, however, what will be ready for business when the end of the year rolls around remains to be seen.

Marina Bay Sands is still in the midst of negotiating the opening schedule with the Singapore Government.

Yesterday, Mr Tanasijevich would only say that details would be announced in ‘due course’.

But he added that it will try to open sections of all areas of the IR - the retail mall, the meetings and conventions space, the casino and the hotel, so visitors can sample a little of everything.

As for the IR’s prospects in a time of falling tourist numbers - arrivals for this year are expected to drop by between 6 per cent and 11 per cent, to between 9 and 9.5 million people - Mr Roberts said he is confident it will pack in the crowds.

‘Despite the economic conditions, people will still want to come and look at this.’

ERA pays flipping profit to couple; agent and his boss quit

Source : Straits Times - 5 Mar 2009

A COUPLE who successfully sued estate agency ERA Realty Network for flipping their apartment has got back the money that the agents made on it, with interest.

ERA yesterday said that it would not be appealing against the decision last month ordering it to pay $257,000 to Mr Yuen Chow Hin and his wife, Madam Wong Wai Fan.

The couple had sold their two-bedroom downtown apartment for $688,000 through ERA agent Jeremy Ang in 2007, thinking it was the best price he could get them.

They did not know that the buyer of the unit, Madam Natassha Sadiq, was his boss’s wife, who immediately resold the apartment for $945,000. Her husband, Mr Mike Parikh, was a senior group division director at ERA.

In a statement responding to queries from The Straits Times, ERA president Jack Chua said yesterday that Mr Parikh and Mr Ang have resigned.

The two men have also agreed to make full restitution for the claims against ERA, he said.

Mr Chua said: ‘After reviewing the judgment and the results of its internal findings, ERA concurs with the judgment that both Mike Parikh and Jeremy Ang did not act in good faith in the transaction.’

Mr Parikh is believed to still be in the property business. A Straits Times check found a website, with a photograph of him on it, advertising itself as a ‘real estate portal’. It featured several properties he had claimed to have sold, and was updated just yesterday.

He did not return calls to him, however. Mr Ang could not be contacted.

ERA has since implemented new initiatives to improve customer accountability, transparency and governance, Mr Chua added.

Last month, it announced that it now requires agents to sign an undertaking assuring clients that all possible conflicts of interest would be disclosed.

In his judgment, Justice Choo Han Teck had stern words for the unethical behaviour of the two agents. Though Madam Sadiq had made the transactions, her husband was behind them. It was clear, he said, that such practices were not unknown in the industry as the ERA top brass had condoned it.

So that none could claim ignorance, he reminded the industry that an agent had a responsibility to act in the interests of his client, ‘not his own, or his friends’, or relatives’ or his boss”.

Yesterday, Madam Wong said she was very happy with the outcome, as she recalled the journey which had consumed their lives for 11/2 years.

‘It was a risk we took, as with any litigation, the outcome is never guaranteed,’ said the 48-year-old housewife.

‘We believe we were wronged and we were able to get a judgment in our favour.’

The trouble started around October 2007 when she and her 50-year-old husband, a vice-president in an IT company, realised something was amiss when they learnt that their flat had been resold for a much higher price.

As the matter unravelled, she and her husband could not stop turning it over and over in their conversations.

‘My children are sick of hearing about the subject,’ the mother of two teenage boys said with a laugh.

The day after the judgment came out, her husband was on a plane flying home, and found himself looking at their photo on the front page of The Straits Times. It was ’surreal’, he said.

They are recognised at their regular haunts. Some of her friends call her ‘the 257 person’ and their story is repeated at dinner parties. But testifying in court was ‘unnerving’ and ‘not one of life’s greatest feelings’, she said soberly.

In the days following the judgment, they received a few phone calls as well as an anonymous package in the mail containing documents from someone who appears to have been in a similar situation.

Madam Wong is aware of the interest in their case. But she declined to comment on the broader issue, except to say that she would be ‘less trusting’ and ‘ask for more information’ the next time she sells a property.

Retailers, landlords lock horns

Source : Business Times - 5 Mar 2009

HIT by weak sales and high rents, Singapore’s retailers are bleeding - and they want landlords to help them out by cutting rents. But landlords are saying that rent cuts of 20-30 per cent all round - which is what the Singapore Retailers Association (SRA) publicly called for last week - are neither needed nor feasible. Instead, building owners are looking at ways to help tenants with sales. ‘Rent is always a function of sales. Therefore, the most scientific way to look at sustainable rent for each trade is to look at each retailer’s occupancy cost,’ said Lim Beng Chee, chief executive of CapitaLand’s retail arm. CapitaLand, which owns and/or runs 16 malls, is Singapore’s biggest retail landlord.

Typically, landlords calculate occupancy cost as rent divided by gross revenue. For CapitaLand’s retail trust CapitaMall Trust (CMT), the average portfolio occupancy cost was about 16 per cent in 2008. Most tenants’ occupancy costs fall within the 15-18 per cent range, according to CapitaLand.

Frasers Centrepoint, which has seven shopping malls, says it has been meeting tenants to work out solutions based on what their specific or critical needs. ‘Outright rent rebates are not a sustainable option given the tight profit atmosphere that every business is currently operating in,’ said a spokesman.

At the Causeway Point and Anchorpoint malls operated by listed Frasers Centrepoint Trust (FCT), the respective average occupancy cost was 12.7 per cent and 15.7 per cent in 2008. But the average occupancy cost at a mall cannot be applied across the board to all tenants. For instance, a supermarket with a much smaller profit margin will not be healthy within the average range, while other trades - such as accessories, fashion and cosmetics - can afford higher occupancy costs because they have better margins. Most developers, therefore, fix rents on a case-by-case basis.

SRA says retailers’ income has contracted 20-30 per cent in the past few months, but landlords say not all retailers have been hit equally - so they are not willing to drop rents for all tenants. ‘The financial crisis is not hitting all malls equally. Most of our malls are still showing healthy numbers, both in sales, traffic and occupancy costs,’ said Frasers Centrepoint.

Landlords say they monitor tenants’ sales closely and can easily tell when a tenant is in serious trouble. CapitaLand, for example, evaluates tenants’ sales and occupancy costs on a monthly basis - store by store and trade by trade - using a system that captures data at each tenant’s point-of-sales. The data is then uploaded into a central database, often daily. Mr Lim, therefore, is confident that the company will be able to spot tenants that are in real trouble and help them accordingly.

But retailers say landlords can never really understand what is happening on the ground. A spokesman for RSH said: ‘Should landlords be defining what is viable for their tenants? Every tenant has a level of profitability they have to achieve to sustain their business, and that level varies from retailer to retailer. Each label or retail concept works with a margin and cost base, and that varies even for brands within the same category. Would landlords have the knowledge or information on these margins and costs, which is information-privy only to retailers themselves?’

Retailers are also frustrated that landlords still seem to be ‘waiting’ and ‘assessing’ the situation - instead of acting to stop the slide. They say that instead of taking the bold and necessary step of cutting rents, landlords are trying to help tenants manage their occupancy costs in other ways - which, according to them, are not working on the ground.

Frasers Centrepoint, for one, said it has stepped up advertising and promotions (A&P) for its malls. ‘We have increased our expenditure about 10 per cent to focus on more tactical promotions we feel will help increase tenant sales,’ the company said.

Likewise, Mr Lim said CapitaLand has in place a slew of measures it can activate to help its tenants. These include relocation to a higher floor within a mall where rent is cheaper, downsizing store space and to trying to boost gross revenue through promotions such as push sales in atriums.

The last strategy - giving discounts and holding promotions to increase revenue - is already common as retailers try to prop up revenue artificially to pay their rents and improve cash flow. But in the long run, this strategy is not sustainable, tenants say.

‘The formula (rent/gross turnover) is such that retailers have to generate sales even when the market is bad, and many resort to more discounts and more promotions. So even if the turnovers increase, margins fall,’ said Douglas Benjamin, chief executive of retail group FJ Benjamin. ‘Just looking at occupancy costs is not accurate when it comes to measuring the health of a tenant. You have to look at the margins as well.’

And there is no doubt that margins are being hit. FJ Benjamin says that for the industry as a whole, margins are down 20-30 per cent. SRA also said last week that retail margins are now almost negligible - if not negative. Increased A&P expenditure will not help much at a time when the entire market is depressed, one retailer told BT.

And landlords, retailers complain, are not just refusing to cut rents - they are, in fact, looking to increase rents about 20 per cent when the time comes for leases to be renewed. When talks on lease renewal for his Mothercare store at VivoCity began, the mall began by asking for 22 per cent more, Pang Kim Hin, chairman of the baby goods retailer, told BT. His story is just one of many such complaints from tenants in recent weeks.

Landlords maintain that they are only asking for the kind of rent increases that tenants can afford to pay. In 2008, Frasers Centrepoint renewed 27 leases at rents that were on average 17.5 per cent higher than preceding rates. And CMT said 363 new and renewed leases were signed in 2008, at rents 9.3 per cent higher than than preceding rates. Typically, preceding rental rates were committed about three years ago. Many landlords, which are listed companies, also point out that retail rents are their only sources of income. CMT, for example, reported gross revenue of $511 million in 2008. If the retailer were to cut rents 30 per cent across the board, revenue could fall by an estimated $153 million. This means that the trust’s distributable income, which was $238 million in 2008, could fall to just $85 million - something that is sure to upset the trust’s international institutional investors.

The same applies for other Singapore-listed retail trusts such as FCT and Suntec Reit. Cutting rents and, consequently, distributions by significant amounts is akin to sending a signal to international investors that Singapore’s economy is in dire straits, a reit manager said.

Frasers Centrepoint explained: ‘As with any business in this economic climate, we are also subject to a similar predicament. The costs of doing business has affected landlords as well, with borrowing costs having increased substantially.’

In light of all this, some landlords say not all businesses can or should be saved during a downturn. ‘In cases where the tenants have over-expanded or if their business model or product is not sustainable, the most logical and win-win solution for us is to facilitate an amicable way to pre-terminate the leases to prevent further losses to the tenants,’ said CapitaLand’s Mr Lim, adding that the developer takes this approach during good times and bad.

Source : Business Times - 5 Mar 2009

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

Paragon facade gets $45m facelift

Posted by luxuryasiahome on March 5, 2009

SHOPPING mall Paragon is sporting a new look after a $45 million project to revamp its facade.

It now boasts an eye-catching three-dimensional look that makes use of multiple pop-out glass panels combined with multi-faceted aluminium panels.

The design, by DP Architects, means higher and bolder shopfronts for designer outlets such as Salvatore Ferragamo, Prada, Tod’s, Miu Miu and Gucci.

‘The design was partly prompted by luxury retailers looking for space to expand and an opportunity to do something different,’ says Paragon general manager Linda Kwan. ‘The new facade provides these tenants with significant visibility and brand expression.’

The revamp is also in line with the Urban Redevelopment Authority’s push to add more colour to Orchard Road by encouraging building owners to develop unique facades.

Besides the new facade, consumers can expect additions to Paragon’s array of international luxury goods. For instance, Jimmy Choo and Coach are set to open flagship stores in May and November this year respectively.

‘With the facelift, Paragon has secured stronger positioning as an upscale shopping mall with its diverse mix of international brands appealing to the discerning fashionista,’ says Mrs Kwan.

Besides these changes, Paragon has expanded the commercial space above its retail podium by 29,000 square feet to accommodate medical and fitness facilities.

The mall has also participated in the Customer Centric Initiative programme - a project led by Spring Singapore - to ensure that its standard of service lives up to its classy exterior.

Marina Bay Sands to be 15% bigger

Source : Business Times - 5 Mar 2009

Marina Bay Sands, which is targeted to open around the end of the year, will be 15 per cent bigger in terms of gross floor area (GFA).

The four level casino area will, however, only occupy about 3 per cent of the total GFA.

The GFA for the integrated resort was initially expected to be 570,000 sq m (6.14 million sq ft). A 15 per cent increase could take it up to 655,500 sq m (7.06 million sq ft).

MBS general manager and vice-president George Tanasijevich said that since the design of MBS was first revealed, the design of the integrated resort (IR) had undergone ‘refinement and redesign’ to become both ‘bigger and better’.

This increase in size also partially accounts for the current budget for the IR which stands at US$5.4 billion, up from previous estimates of US$3.6 billion and US$4.5 billion.

About 2 per cent of additional GFA can be attributed to the $50 million that will be spent on art at MBS. This is through an Urban Redevelopment Authority art incentive scheme which allows property developers of new projects to gain additional GFA, over and above the maximum allowed, if they integrate art permanently in the design of new commercial or residential buildings in the Central Area.

Mr Tanasijevich was speaking at a media briefing yesterday at the construction site of MBS where it was revealed that the IR will now also be 5-storeys higher.

Structural works are almost 75 per cent completed with the structure for the casino building already ‘topped up’ and the topping up for the three 55-storey hotel towers expected by July.

The hotel towers, which are currently at about the 28-storey level are simultaneously being fitted out.

All this with the aim of opening in time.

While Mr Tanasijevich said they hope to open by the end of 2009, ‘or close to it’, it is not clear yet which parts of the IR will open first.

He said what will likely open first will be the ‘primary contributors of revenue’. He added that MBS was currently in discussions with the authorities on the phasing of the ‘progressive opening’ of the IR.

Separately, Las Vegas Sands (LVS) chairman and CEO Sheldon Adelson, who was speaking in the US, said that estimates made by analysts for earnings by MBS were ’somewhat low’.

According to a Reuters report, analysts had estimated that MBS could generate Ebitda of between US$500 million and US$900 million.

But citing Singapore’s favourable tax regime, Mr Adelson said: ‘We will save 25 per cent on average on taxes.’

Mr Adelson’s comments come after LVS reported a loss of US$136.5 million in the fourth quarter of 2008, down from a profit of $39.9 million a year ago.

At the time of the filing on Feb 25, LVS also said that it had raised its annual cost savings target to US$250 million.

In addition to this, Mr Adelson said yesterday that it would try and ’squeeze out another US$200 million to US$250 million’. ‘If we do that, we are home free,’ he added.

According to its Q4′08 filings, LVS has unrestricted cash balances as of December 31 of US$3.04 billion while restricted cash balances were US$194.8 million.

Of the restricted cash balances, it said US$124.1 million is restricted for Macau-related construction and US$61.9 million is restricted for construction of MBS.

Total debt outstanding, including the current portion, was US$10.47 billion. Principal payments required to be repaid in 2009 and 2010 total US$114.6 million and US$197.6 million, respectively.

Resort at three-quarter mark

Source : Today - 5 Mar 2009

First batch of hotel rooms will be ready by August

COME year-end, Marina Bay Sands will usher visitors in to at least half of the property’s gross floor area.

That was the assurance given for Singapore’s first integrated resort, although Marina Bay Sands executives yesterday stopped short of revealing an opening date.

The project is already three-quarters completed, they said, during a press tour for some 40 journalists.

“Everyone at Marina Bay Sands is working aggressively towards our target opening date. This is our total focus and we are confident of delivering on all fronts,” said Marina Bay Sands president Nigel Roberts in a statement.

The crowning glory of Marina Bay Sands is the roof garden atop the three hotel towers - which have now hit the halfway mark of between 26 and 28 floors.

From end-August, 4,000 tonnes of steel beams will be hauled 200m skywards to build the 340m-long, 38m-wide sky park. When completed, the park will have three linked 50m swimming pools to provide a 146m-long infinity edge overlooking the city.

Building the park‚s 66m cantilever - the longest in the world - will be an engineering feat, said senior vice-president of construction (Asia) Matthew Pryor. He said it takes 18 hours to lift each steel beam.

The hotel towers, which feature a vertical west wall and an arched east wall each, will now enter a comparatively simpler construction phase. Progress will be more “rapid”, Mr Pryor said.

Between now and July, the hotel towers will rise by at least five storeys each month to reach its eventual 55 floors.

VIEW FROM HALF WAY UP

From the 21st floor of Marina Bay Sands‚ hotel tower 1, company officials gave a show-and-tell update of the progress of each structure on its grounds - including the four-storey casino building, the 120,000 sq m Expo and Convention Centre, the ArtScience Museum, and two theatres.

Four of the five storeys at the convention centre are complete, and work is underway on the top floor, which will house a grand ballroom. Much of the casino structure is also done.

Journalists also got a peek of the views some of the 2,600 hotel rooms will have - the CBD skyline and the Marina Barrage.

Interior fitting-out of some hotel rooms have begun, said Mr Pryor. The first batch will be ready by August.

About 90 per cent of the construction costs have been locked in, said Marina Bay Sands general manager George Tanasijevich. The eventual cost of the entire project will be US$5.4 billion ($8.4 billion).

Parent company Las Vegas Sands lost94 per cent of its market value last year amid a plunge in gaming revenues in Las Vegas and Macau. The company suspended all development works in Macau and its St Regis condominium on the Las Vegas strip to focus on its resort in Singapore and Bethlehem.

OTHER NUGGETS
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- Construction of Marina Bay Sands goes on round-the-clock, with 7,500 workers on-site at any time.

- The length of the sky park is approximately the height of the Eiffel Tower, and the cantilever alone can fit an A380 aircraft.

- The three swimming pools, which contain about 1.6 million litres of water altogether, are the world‚s largest outdoor pools.

- Marina Bay Sands is spending over $50 million on artwork to be displayed on its property.

- 40 per cent of the Marina Bay Sands project is underground.