Gillman Heights sale finally completed

THE $548 million sale of Gillman Heights Condominium to Ankerite Pte Ltd, a subsidiary of CapitaLand, was completed yesterday, the developer said in a statement. Ankerite will redevelop the site into a condominium with about 1,000 apartments.

The sale was not completed by the previous deadline of May 15, leading to some speculation that the collective sale might be off. But lawyers for the buyers and sellers quickly clarified that they were looking at the new deadline of May 22 instead.

The sale of the 99-year-leasehold estate on Alexandra Road dragged on for two years since the deal was first inked in 2007. The sale of Gillman Heights finally got the go-ahead this February after the Court of Appeal dismissed a last-ditch plea by minority owners to overturn the deal.

But last week, last-minute hurdles emerged.

One sticking point was the transfer of $750,000 from the management corporation’s (MCST) management fund to the sinking fund in August 2007 and March 2008, which was discovered during the due diligence exercise.

The lawyers for the buyers wanted the transfer reversed. That issue, and a separate suit by a local contractor against the MCST, were both eventually resolved – clearing the way for the sale to go through.

Earlier reports had indicated that owners of the estate’s 607 units stood to receive between $870,000 and $950,000 for their apartments.

Source : Business Times – 23 May 2009

Ferrell puts 80 RiverGate units back on market

FERRELL Asset Management, which counts Indonesia’s Lippo Group as one of its investors, has put around 80 apartments at the RiverGate back on the market for sale, BT understands.

According to agents, a private preview began a few days ago and around 30 to 40 units have been taken up. The 545-unit freehold condominium in the Robertson Quay area received Temporary Occupation Permit in March, and was a joint development between CapitaLand and Hwa Hong Corporation.

The apartments on sale are spread over several floors and comprise three-bedders, four-bedders and penthouses. They are selling at $1,450 – $1,550 psf, one source said. Prices of lower-level units may even start from $1,380 psf.

According to Urban Redevelopment Authority data on caveats lodged, recent transactions of RiverGate units took place between $1,150 – $1,470 psf.

The seller of the apartments is believed to be fund manager Ferrell Asset Management. One of its funds, the Ferrell Premier Real Estate Investment Fund, had paid over $180 million for 100 units in 2005, bought in two separate tranches of 80 and 20 units.

Previous reports did not mention the per-square-foot price of the fund’s units. When RiverGate was first launched in 2005, units were priced at $1,080 psf on average. That subsequently rose to $1,600 psf in the final phase of release in 2006.

Ferrell Premier Real Estate Investment Fund’s website states that the fund invests in the ‘high-yielding sector’ of Singapore’s property market.

‘The objective of this sub-fund is to achieve returns of 10 – 15 per cent per annum through investments in properties with medium to long-term capital appreciation potential.’

BT understands that associates of Knight Frank and DTZ are marketing the units. Savills could also be marketing the units.

Source : Business Times – 23 May 2009

CapitaCommercial Trust to raise $828m

THE commercial real estate investment trust CapitaCommercial Trust (CCT) announced a cash call yesterday to raise about $828.3 million.

CCT unit holders can subscribe for one new unit in CCT for every existing unit held, at a price of 59 cents a piece. This is a 44.3 per cent discount to Thursday’s closing price of $1.06.

Ms Lynette Leong, chief executive of the trust’s manager CCT Management, said the rights issue will ‘reduce CCT’s gearing to the low end of our target gearing range of 30 per cent to 45 per cent through property market cycles’.

The net proceeds of the rights issue will be used mainly to reduce borrowings with the rest going to capital expenditure, asset enhancements and working capital.

Developer CapitaLand, which owns 31.4 per cent of CCT, will subscribe to its full entitlement for $260.4 million.

CapitaLand chief financial officer Olivier Lim said that when CCT approached CapitaLand for support, ‘we agreed wholeheartedly’.

‘I think the management has displayed a tremendous ability to refinance existing debts.’

In a separate announcement to the Singapore Exchange yesterday, CCT’s manager said it had obtained new independent valuations for properties owned by CCT here, including Capital Tower, Robinson Point and HSBC Building. The valuer is Jones Lang LaSalle Property Consultants.

The value of CCT’s Singapore properties, including its 60 per cent interest in Raffles City through RCS Trust, is $6 billion, as at yesterday.

This represents a downward revaluation of $681 million, or 10.15 per cent, from $6.7 billion as of Dec 1 last year.

Ms Leong said: ‘The key reason for the decline is due to a significant rental decline that the valuers had assumed. From December last year to June this year, they have factored the declines that are in line with the market.’

Earlier this year, CapitaLand and its listed retail trust CapitaMall Trust (CMT) announced rights issues.

CapitaLand had said that it will raise $1.84 billion in a one-for-two rights issue to build up its war chest to $6 billion. The issue was over-subscribed when the rights offer closed on March 12.

CMT said it would raise $1.23 billion in a nine-for-10 rights offer. Its offer was also over-subscribed, based on initial tallies on March 25.

CCT recently posted a 26.6 per cent rise in distributable income of $45.4 million for the three months ended March 31. Its distribution per unit was 3.24 cents, up from 2.59 cents in the same period last year.

DBS Bank, Cazenove & Co (Singapore) and United Overseas Bank have been appointed as joint lead managers and underwriters for the CCT cash call.

Trading in CCT’s shares was suspended yesterday.

Source : Straits Times – 23 May 2009

Gillman Heights sale finally goes through

THE protracted and controversial sale of Gillman Heights finally came to an end yesterday when owners and buyers completed the $548 million deal.

Lawyers Lee and Lee, acting for the Alexandra Road estate’s sale committee, told The Straits Times last night that the deal had finally gone through.

The fate of the estate’s sale seemed to hang in the balance when purchasers Ankerite, led by property developer CapitaLand, did not complete the sale by its May 15 due date.

The estate’s owners were concerned that the buyers had got cold feet but Ankerite’s lawyers, Rajah and Tann, said the buyers had every intention to complete the sale.

Ankerite had raised some issues regarding the estate’s management funds and an outstanding legal suit, and wanted proof that these matters were resolved before going ahead with the deal. Rajah and Tann said it received the relevant documents on May 16 – after the completion date.

In a separate statement, CapitaLand confirmed that the 607-unit Gillman Heights purchase by its indirect unit Ankerite was completed yesterday.

This puts an end to a saga that began when the sale was first inked in February 2007. Each owner is expected to get between $870,000 and $950,000 for their units.

The sale was fought at every turn by minority owners, but the Court of Appeal in February dismissed their last-ditch plea to reverse the deal.

Management committee chairman Kok Chong Weng said yesterday that residents are relieved the sale is finally over: ‘We have to move on from here.’

The only issue left is whether any compensation will be paid for the one-week delay in the sale. Resident Lim Ah Kim said she felt that owners should be compensated by being paid interest.

Lawyers from both sides are said to be considering the issue. ‘If this interest issue should arise, it will be dealt with accordingly,’ said a Rajah and Tann spokesman.

The site will now be redeveloped by Ankerite ‘into a condominium with approximately 1,000 apartments’, said CapitaLand.

Source : Straits Times – 23 May 2009

Renewal programme to benefit some 2,100 units in Serangoon North

Minister in Prime Minister’s Office, Lim Hwee Hua, has announced a S$7.05 million Neighbourhood Renewal Programme (NRP) for some 2,100 units in Serangoon North.

Residents can look forward to new facilities like covered linkways, footpaths, fitness corners and surveillance systems.

Aljunied Town Council says it is a fully-funded government project.

A polling exhibition will be held and the upgrading will only proceed if 75 per cent or more of the eligible household units in the precinct are in favour.

The NRP involves 25 blocks which are located at Blocks 121-127, 142-148, 151-154, Serangoon North Ave 1, and Blocks 135-141 Serangoon North Ave 2.

The project is scheduled to begin in the fourth quarter of 2010 and complete by the fourth quarter of 2012.

Source : Channel NewsAsia – 23 May 2009

Developer Far East Organisation wins its 5th FIABCI real estate award

Singapore developers continued to perform well at the annual FIABCI Prix d’Excellence competition this year.

Far East Organisation won the top prize in the Residential Category with its Orchard Scotts project.

This is the company’s fifth FIABCI award to date, making it the only developer in the world to snag five wins in the prestigious competition.

Its previous wins were for developments including The Bayshore, Far East Square, Gardenville and Fullerton Square.

City Developments Limited, Hong Leong Holdings and TID clinched the top prize in the Hotel Development Category with their joint-venture project, St. Regis Singapore.

UOL Group was awarded the First Runner-Up for its residential development, Newton Suites.

The FIABCI Awards recognises excellence in all aspects of real estate developments.

In a statement, the Real Estate Developers’ Association of Singapore said the awards are coming at a time when the Singapore brand has won wide international recognition with property purchasers in China, India, Vietnam and other countries.

Separately, Far East Organisation said its mixed-used development, Central, located along the Singapore River, has received the Cityscape Asia Real Estate Award.

The Cityscape Awards rewards excellence in architecture and design for projects in the region.

Source : Channel NewsAsia – 21 May 2009

Singaporean developers win international awards

THREE property projects in Singapore have picked up honours at the Fiabci Prix d’Excellence Competition this year.

Orchard Scotts, by Far East Organization, came out tops in the residential category, while Newton Suites, by UOL Group, took second spot. The St Regis Singapore, by City Developments, Hong Leong Holdings and TID Pte Ltd, won in the hotel category.

Fiabci is the French acronym for the International Real Estate Federation, which organises the annual Prix d’Excellence to recognise excellence in property development.

Entrants are evaluated on five criteria: global concept, architecture and design, development and construction, community benefit and environmental impact, and financials and marketing.

Singapore developments have consistently performed well in the Fiabci competition.

Republic Plaza, by CityDev, was the first project to bag the Fiabci Prix d’Excellence overall winner prize, in 1997.

Other top winners over the years include Suntec City, Prudential Tower and Caribbean at Keppel Bay, the Esplanade Theatres on the Bay, 1 Moulmein Rise and One Raffles Quay.

The win by Orchard Scotts is the fifth Fiabci award for Far East. The company is the only developer in the world to have five Fiabci wins.

Chia Boon Kuah, chief operating officer, property sales, said: ‘Our five Fiabci awards in residential, leisure and the specialised categories underscore Far East Organization’s growing capabilities in real estate development.’

Chia Ngiang Hong, CityDev group general manager, said that The St Regis Singapore was envisioned as an emblem of the city’s emergence into the new millennium.

It is an honour that the six-star hotel has been internationally recognised, he said.

Singapore property projects won honours at the Cityscape Asia Real Estate awards this week.

CityDev’s luxury residential development, The Sail @ Marina Bay, was named the best built waterfront development, while Far East’s The Central emerged as the best built mixed-use development. Keppel Land’s Ocean Financial Centre won the prize for best future green development.

Fusionpolis 2A came up tops in the best urban design and master planning category, while CapitaLand’s Muchuan Green Hope School was honoured in the best corporate social responsibility development category.

Source : Business Times – 22 May 2009

Bukit Sembawang posts $61.4m Q4 loss

BUKIT Sembawang Estates has posted a $61.4 million net loss for the fourth quarter ended March 31, 2009, against a $3.5 million net profit in the same year-ago period.

The red ink flowed mainly from a $70 million provision for foreseeable losses for its Fairways residential project at Telok Blangah as a result of the weakening property market, the company said in its results statement yesterday.

Q4 saw an $8.7 million gain on disposal of available-for-sale financial assets.

For the year ended March 31, Bukit Sembawang posted a $48.4 million net loss, against a net profit of $74.9 million in the preceding year.

Besides the $70 million provision for the Fairways site, the weaker full-year bottomline was due to the absence of a one-time capital gain arising from the sale of HSBC shares in the previous year; reduced development profit recognised on Mimosa Terrace projects in the latest period; and the suspension of capitalisation of borrowing costs, property tax and other development costs on certain development projects, which have been deferred.

Last month, the group issued a profit warning that it expected to report a loss for the year ended March 31, and that this will be due primarily to the recognition of an allowance for foreseeable losses for a development project as a result of the weakening property market.

It did not identify the project, although some analysts had surmised it was the Fairways property. It bought the freehold plot for $785 psf per plot ratio in 2007 during the en bloc sale bull run.

Looking ahead, Bukit Sembawang said that it has launched the marketing of Verdure at Holland Road, where already 90 per cent of the apartment units have been sold.

‘We will also continue to market the landed properties in Seletar Hills and Sembawang areas in the current financial year. However, profit from property development based on the percentage of completion method will be determined by the progress of construction of development projects,’ the group noted in its results statement.

‘Parc Mondrian and Paterson Suites will be completed after the financial year ending March 31, 2010 and the units of the other development projects to be sold will be in the early stage of construction,’ it added.

The group is proposing a two cents per share final cash dividend based on the enlarged issued capital base following the rights issue last month.

Revenue for Q4 ended March 31, 2009, slipped 59.1 per cent to $4.9 million, due mainly to reduced development revenue recognised (based on percentage of completion method) on Mimosa Terrace projects.

Full-year revenue fell 17.2 per cent to $62.6 million.

The group’s net asset value per share stood at $3.77 as at March 31, 2009, down from $4.53 a year earlier.

The stock closed four cents higher at $3.10 yesterday.

The group raised $245.7 million net proceeds from its recent rights issue.

Source : Business Times – 23 May 2009

Najib to pitch Iskandar to S’pore investors

Malaysian Prime Minister Najib Razak will make a pitch for the Iskandar Malaysia project as a promising venture for Singaporeans to invest in when he meets Prime Minister Lee Hsien Loong today.

Having said that he will place cooperation in Iskandar high on his agenda, Datuk Seri Najib made a trip to the economic corridor in Johor yesterday, just before travelling overland to Singapore for his first visit as Prime Minister.

First, he surveyed the 2,200 sq km project by helicopter for a bird’s-eye view.

Then, he officially launched a cooling plant which uses an environmentally friendly, centralised network to cool all the buildings in Kota Iskandar, the new administrative centre of the Johor government.

Mr Najib said at the launch that the Johor project not only creates economic opportunities, but also offers a ’sustainable and balanced’ environment for the next generation.

He later told reporters that his message in Singapore would be that Iskandar ‘is a very promising and exciting development for Singapore to consider’.

And that assessment applies ‘whether at the strategic level, for their participation at the equity and development level, or for individual Singaporeans to consider, like purchasing houses and properties’.

Launched in November 2006 by former Malaysian premier Abdullah Badawi, Iskandar is about three times the size of Singapore and is expected to be completed in 20 years.

A state administrative centre, a financial district, a medical hub and a waterfront city are among its key features.

Mr Najib said the Malaysian government would continue to support the development of Iskandar, which has attracted RM42.6 billion (S$17.6 billion) in investments so far.

He does not expect foreign direct investment to suffer, despite the global economic downturn.

‘Those people who have committed to their development here are not slowing down. In fact, they’re pursuing their development,’ he said.

Iskandar has attracted foreign property investors from the Middle East, as well as manufacturing companies from Japan, Spain and Singapore.

Ahead of Mr Najib’s visit to Singapore, there has been much speculation about the nature of the ‘iconic’, high-value joint projects under discussion by both sides.

Both prime ministers were said to have discussed this issue on the sidelines of the aborted Asean summit in Pattaya last month.

Mr Najib yesterday declined to say more about the possibility that one of these projects might be a bridge to replace the Causeway – a thorny issue that has strained ties in the past.

Questions on whether the alternative of a crooked bridge would be up for discussion similarly drew a blank.

‘Crooked or straight, I will discuss it only tomorrow. Crooked or underground or above ground, let us wait and see,’ he said.

Mr Najib’s two-day visit to Singapore is the first by a Malaysian premier since 2004.

He travelled by car from Johor via the Second Link, arriving in Tuas in the afternoon.

Accompanying him were his wife Rosmah Mansor and an official delegation which includes Johor Menteri Besar Abdul Ghani Othman, International Trade and Industry Minister Mustapa Mohamed, and Minister in the Prime Minister’s Department Nor Mohamed Yakcop.

Yesterday, he had a game of golf with Senior Minister and Coordinating Minister for National Security S. Jayakumar at the Sentosa Golf Club, followed by a private dinner.

Today, Mr Najib will meet both President SR Nathan and PM Lee at the Istana. Mr Lee will also host Mr Najib at an official dinner.

Source : Straits Times – 22 May 2009

MND will ensure property sector remains stable

It will also help build capabilities of construction firms

THE government will continue to monitor the property and construction markets and adopt more measures to keep them stable if needed, said National Development Minister Mah Bow Tan yesterday.

The Ministry of National Development (MND) will also introduce measures to build up the capabilities and productivity of construction firms, and make the industry more attractive to Singaporeans, he added.

‘As we help Singaporeans tide over the current economic uncertainty, we will press on with our long-term plans to make Singapore an attractive and highly liveable city,’ he highlighted in his ministry’s addendum to the President’s address in Parliament.

MND is overseeing several projects to transform Singapore into an exciting metropolis. For instance, the government has invested close to $5.7 billion in infrastructure in Marina Bay, and will continue to inject more than $1 billion in more works over the next 10 to 15 years.

Beyond Marina Bay, it will also invest in infrastructure in the new growth areas at Jurong Lake District, Kallang Riverside and Paya Lebar.

To ensure that Singapore’s growth is sustainable, MND will push harder for the adoption of energy efficient technologies in buildings, and embark on a large-scale solar test-bed within HDB estates.

Recognising that public housing remains a key pillar of the country’s social security system, Mr Mah said that the government will help HDB households affected by the downturn to manage immediate mortgage repayments and to work out longer-term solutions, such as switching to smaller flats.

MND will also increase the supply of rental, 2-room and 3-room flats. It will also step up the construction of studio apartments for the elderly looking to monetise their flats.

MND will kick off the Concept Plan 2011 exercise this year to draw up long-term plans for Singapore’s growing economy and population.

Source : Business Times – 21 May 2009

Hougang HUDC proposal in limbo

SOME 17 months after the idea was mooted, a proposal to privatise an HUDC estate in Hougang remains in limbo.

This, despite the fact that to date, 282 resident owners have voted in favour of it, more than the 75 per cent required.

The Housing and Development Board (HDB) says that it is still working out the conversion costs.

However, some residents wish that the HDB could act faster to decide on the fate of the seven blocks of HUDC units overlooking the scenic Serangoon River at Hougang Avenue 7.

The seven blocks, 344 to 350, occupy some 420,000 sq ft of land, the size of seven football fields.

Five of them are low-rise, four-storey blocks, while the other two, 10- and 14-storeys.

According to an estimate by long-time resident Ong Boon San, the whole area if sold collectively, could fetch more than $1.5 million per apartment.

“According to the air ratio, they can build up to 30 storeys. And our blocks here … are low-rise four-storeys, so if they build up to 30 storeys, they’ve a 26-storey gain,” Mr Ong said.

Mr Lee Meng Chin, chairman of the nine-member privatisation protem committee for the area, said, some 80 per cent of residents, including those who were overseas, had voted for privatisation.

However, even with the majority vote, they had been told by the HDB that it still needed time to calculate the cost of converting the estate into a private one, Mr Lee said.

The same reason was given when Mr Lee contacted the HDB in August last year and in January.

“So we’re quite disappointed and disillusioned. Maybe bad timing because last year was a very eventful year,” Mr Lee said.

The HDB told 938 LIVE that it is still looking into the matter.

Mr Lee said the committee plans to wait a couple of more months before seriously discussing their next move.

Some residents seemed more resigned than disappointed.

“Whether you privatise or not I still stay here … At this point in time, who’s going to buy at the price they dream about?,” one said. So far, 13 of the 18 HUDC estates in Singapore have been privatised.SOME 17 months after the idea was mooted, a proposal to privatise an HUDC estate in Hougang remains in limbo.

This, despite the fact that to date, 282 resident owners have voted in favour of it, more than the 75 per cent required.

The Housing and Development Board (HDB) says that it is still working out the conversion costs.

However, some residents wish that the HDB could act faster to decide on the fate of the seven blocks of HUDC units overlooking the scenic Serangoon River at Hougang Avenue 7.

The seven blocks, 344 to 350, occupy some 420,000 sq ft of land, the size of seven football fields.

Five of them are low-rise, four-storey blocks, while the other two, 10- and 14-storeys.

According to an estimate by long-time resident Ong Boon San, the whole area if sold collectively, could fetch more than $1.5 million per apartment.

“According to the air ratio, they can build up to 30 storeys. And our blocks here … are low-rise four-storeys, so if they build up to 30 storeys, they’ve a 26-storey gain,” Mr Ong said.

Mr Lee Meng Chin, chairman of the nine-member privatisation protem committee for the area, said, some 80 per cent of residents, including those who were overseas, had voted for privatisation.

However, even with the majority vote, they had been told by the HDB that it still needed time to calculate the cost of converting the estate into a private one, Mr Lee said.

The same reason was given when Mr Lee contacted the HDB in August last year and in January.

“So we’re quite disappointed and disillusioned. Maybe bad timing because last year was a very eventful year,” Mr Lee said.

The HDB told 938 LIVE that it is still looking into the matter.

Mr Lee said the committee plans to wait a couple of more months before seriously discussing their next move.

Some residents seemed more resigned than disappointed.

“Whether you privatise or not I still stay here … At this point in time, who’s going to buy at the price they dream about?,” one said. So far, 13 of the 18 HUDC estates in Singapore have been privatised.

Source : Today – 21 May 2009

Joint committee on Iskandar Malaysia working on easy modes of transport

Implementing easy transport links between Singapore and the mega Iskandar Malaysia project is one of the aims of the Joint Ministerial Committee.

Iskandar Malaysia’s CEO, Harun Johari, said this when asked about the progress of the rail link between Singapore and Iskandar Malaysia.

Malaysian Prime Minister Najib Razak, who is in Singapore for an introductory visit, toured the project at Nusajaya before making his way to the Republic.

Mr Najib arrived via the Tuas Checkpoint and was met at his hotel by National Development Minister Mah Bow Tan, who is the Minister-in-attendance.

The joint ministerial committee on Iskandar Malaysia has so far met four times and among the areas it is looking at is transportation to the mega project. Improvements have been made to the bus system, and taxis are next.

Mr Harun said: “Taxis, as you know, are for the business people moving across (to Malaysia) and that’s one target we want to go along. And with time, (when) we have confidence working together, we will then move to other modes of transportation.

“On trial now is an automated system of immigration clearance involving some 60,000 people. By doing this system, we will facilitate movements, and without using the (immigration) white card.”

Mr Harun added that 90 percent of the US$13 billion investment target has been realised.

While Singapore is the third largest investor in the Iskandar Malaysia project, there has been some anti-Singaporean sentiments across the Causeway, once in a while.

But the CEO of Iskandar Malaysia said the key is to continuously educate the public, especially the Johoreans, of the benefits of foreign investments in this mega project.

He said: “People worry about whether they have been sidelined. But this whole thing about the project in Iskandar Malaysia is about the nation-building of Johor and that would create employment, some 800,000 (jobs), and business opportunities – so it is a good thing.

“When we have big changes (like the Iskandar Malaysia project)… people ask questions. So if we are not able to answer those questions, there would be suspicion… So we need to explain.”

There will be an open house in Johor Bahru over the weekend for Malaysians to better understand Iskandar Malaysia and put Malaysia on the global radar screen.

Source : Channel NewsAsia – 21 May 2009

Property investors going back to basics

Source : Business Times – 20 May 2009

THE property investment landscape has changed significantly because of the global financial crisis, speakers at a panel discussion said yesterday.

For a start, investors are going ‘back to basics’, said Blake Olafson, director and head of the Asia real estate group at international investment bank Arcapita.

For example, pension funds that used to invest in riskier asset classes are now beginning to redirect their investments into less risky assets, he said.

Agreeing that the industry is going back to basics, John Evans, managing director of Tractus Asia, said: ‘Looking at it from a global economic perspective, the Asian real estate market had become a market where everyone was trying to get in, everyone was becoming a property developer.’

Mr Olafson and Mr Evans were speaking at Cityscape Asia, an annual real estate exhibition and conference aimed at investors.

The ‘back-to-basics’ approach includes a focus on making existing assets work harder.

‘There’s a lot more emphasis around true asset management, a shift towards hiring third-party facilities managers, and much more effort is going into tenant retention strategies,’ Mr Olafson said. ‘Before the downturn the focus was on building development, now asset management has become a lot more important.’

Players in the industry are going back to their core competencies and this, combined with tighter credit conditions, is driving a ‘flight to quality’ and a focus on assets that generate cashflows from day one, he said. ‘There is liquidity, but it is being driven towards good quality projects.’

Panellists agreed that liquidity is beginning to return to the Asian market, although banks are still very selective about which projects to back.

Speakers were also quizzed about when they expect real estate markets to emerge from the current slump. In response, the panellists said there was no way to put a timeline to recovery.

‘Everyone is trying to tell where the bottom is,’ said panellist Stuart Labrooy, chief executive of Malaysia’s Axis Reit Management. ‘I think the full effects of the recession have not reached Asia yet.’

Property valuations should start to bottom out in Asia in the second half of 2009, he said.

More than 3,000 real estate developers, investors and regulators are expected to attend Cityscape Asia, which focuses on all aspects of real estate development, on May 19, 20 and 21.

UK office property values fall 2.3% in April

Source : Business Times – 19 May 2009

Falling rents helped to drive British commercial property values down a further 2.3 per cent in April, although the month-on-month rate of decline has slowed substantially, data showed on Friday.

Investment Property Databank (IPD), which compiles benchmark data used as the basis for trading in Britain’s property derivatives market, said UK commercial property rental values hit a 16-year low in April, offsetting relief from the slowdown in falling values.

The index registered a 3.1 per cent drop in March.

‘The demand shock has been so severe, given the breadth of industries affected by the downturn and the scale of companies downsizing, that office relocations and expansions have been off the agenda,’ IPD research director Malcolm Frodsham said. ‘Given the pace of rental adjustment to date, it suggests that when the wider economy does recover that the UK commercial property market will be well placed to recover from a low base.’

IPD said April’s decline in values was the shallowest since August 2008, the month before the collapse of US investment bank Lehman Brothers.

UK commercial property is now on average 42.7 per cent cheaper to buy than at the peak of the market in June 2007.

Average office prices have fallen 42.6 per cent since then, compared with falls of 44.4 per cent for shops and 39.4 per cent for industrial and warehouse real estate.

IPD said UK commercial property generated a minus 17.9 per cent six-month total return in April, compared with a 1.9 per cent six-month total return for UK equities measured by the FTSE All Share Index.

Bonds, tracked by the FTSE UK Gilts Index (5-15 years), have returned 11.2 per cent over the same period.

Australian housing most affordable in seven years

Source : Business Times – 19 May 2009

Static house prices and low interest rates have improved housing affordability for first- time buyers, to the best levels in seven years, a survey says.

The Housing Industry Association (HIA)-Commonwealth Bank of Australia housing affordability index for first home buyers rose 22.3 index points in the March quarter to 175.8 points.

‘This took housing affordability to levels not seen since 2002,’ the report said. ‘Further drops in interest rates and moderation in house prices in some regions drove continued improvement in housing affordability,’ it added.

Moreover, the index was 69.9 points higher than in Q1 2008 – an improvement of 66 per cent.

HIA CEO Chris Lamont told the Australian Associated Press that despite the current economic conditions, ‘there has never been a better time to enter home ownership’.

Mr Lamont said the boost to the first homeowner grant, when combined with significant builder discounts on housing and land packages, had increased the number of people entering the new home market.

‘The grant has been highly successful in creating and securing jobs in the residential construction sector,’ Mr Lamont said.

‘It is also assisting in boosting the supply of housing, which we know to be grossly short of the nation’s requirements,’ he added.

Among the state capital cities, housing affordability improved most in Sydney, Adelaide and Hobart

Leases at Seletar Camp to be extended

Source : Straits Times – 19 May 2009

COMPANIES operating at Seletar Camp, which is set to be transformed into an aerospace hub, are to have their leases extended when they expire in December.

The one-year renewal – with an option to extend for an additional year – will be offered to more than 20 mainly aerospace businesses operating in the vicinity of Seletar Airport.

JTC Corporation, which is spearheading the development of the aerospace hub, said the economic downturn had prompted it to work with the current lessor Civil Aviation Authority of Singapore to extend the leases.

A JTC spokesman said: ‘We believe that this extension can give the companies more time to chart their business plans.’

The global downturn has meant many companies are reluctant to confirm whether or not they want to invest in the development of Seletar Aerospace Park.

Managing director of Fokker Services Asia Raj Ramanujam said: ‘Our current facility at Seletar meets our needs reasonably well, so we are quite happy with the extension because it gives us more breathing space to work out what we want to do next.’

Work has started to transform Seletar Airport and its surroundings into a 300ha aerospace hub.

The project, which will be fully completed by 2018, includes lengthening the existing runway, expanding the airport and building a new air traffic control tower.

But the recession has already put the brakes on Phase I of the development, and delayed the construction of new facilities by engine-makers Rolls Royce and Pratt and Whitney.

Key infrastructure construction, however, has already begun.

Roads are being upgraded and work has also started on a new substation that will supply power to the entire aerospace park and airport.

JTC’s spokesman said: ‘Despite the challenging times, JTC is forging ahead with the exciting developments at Seletar and working with the companies to ride over this economic situation.’

Mr Aloysius Tay, chief executive of the Association of Aerospace Industries Singapore, said the decision to extend the leases was wise.

Given business uncertainty, it was to be expected that those companies already operating at Seletar, as well as those keen to move in, would be unwilling to commit resources at this time, he said.

He added: ‘The initial plan was for the construction of the new facilities and development of infrastructure works to take place concurrently.

‘The good thing is that the roads and other works are coming along nicely, so that when companies are ready to move in, everything will be in order.’

Like Fokker, the other tenants at Seletar said they had not finalised their long- term plans.

Mr Prithpal Singh, chief executive of Executive Jets Asia, said: ‘In the end, it all depends on costs and we will have to do our sums before we decide on what next. If not Seletar, the alternatives for us are either Senai or Subang in Malaysia.’

Price cuts draw buyers to 3 condo relaunches

Source : Straits Times – 19 May 2009

THREE prime condominium projects that struggled to generate interest last year saw a surge of buyer activity over the weekend after developers cut their prices.

The freehold 19-storey Parc Centennial in Kampong Java Road – where all 51 units are served by private lifts – sold 32 units at $1,115 per square foot (psf) to $1,233 psf, or from $1.27 million to $1.93 million. This price level is about 20 per cent lower than last year’s $1,450 psf, and the interest absorption scheme is included.

Developer EL Development sold only six units in April and May last year when the project was originally released for sale. And at a private preview in March this year, it sold a 2,486 sq ft penthouse unit for $1,005 psf.

It held a preview this past weekend and has now sold all the two-bedroom units, which start from 1,098 sq ft. The three-bedders increase in size to 1,572 sq ft.

Managing director Lim Yew Soon said he had raised the prices of the remaining 12 three-bedroom units at Parc Centennial by 2 per cent.

Over at the 302-unit Martin Place Residences in River Valley, a soft launch over the weekend saw sales of 80 units at $1,450 psf on average, out of a total of 100 units launched.

Developer Frasers Centrepoint Homes said the ‘attractive pricing’ drew buyers. It released units priced from $1,260 psf to $1,700 psf, compared with the initial 28 units sold at $1,700 psf to $2,000 psf last year.

Singaporeans made up 62 per cent of the buyers at Martin Place Residences, with the rest being permanent residents and foreigners.

Earlier, CapitaLand had reported strong weekend sales at its 173-unit The Wharf Residence. About 95 per cent of the buyers chose not to take up the stamp duty waiver and interest absorption, preferring a straight 8 per cent price cut, it said yesterday.

Prices started at just below $1,000 psf for units with private enclosed space and many of the weekend deals were done at less than $1,300 psf, industry sources said.

Attractive price cuts, coupled with the recent stock market rally and a fear of losing out, are some of the key factors spurring buyer interest, experts said.

Compared with the situation late last year, buyers are more confident and developers seem to be taking advantage of improving sentiment to relaunch projects at attractive prices, said PropNex chief executive Mohamed Ismail.

Eight winners for BCA awards

Source : Business Times – 19 May 2009

Six awards and two certificates of merit will be given out in the Building and Construction Authority (BCA) Construction Excellence Awards this year, out of 15 nominations.

There was notable improvement in the quality of the projects and performance of the winners, BCA said.

Of the eight winners, five were private residential developments.

Woh Hup won two Construction Excellence Awards for their projects Blossoms @ Woodleigh and Icon this year, both private residential developments achieving high Conquas (Construction Quality Assessment) points of 92.6 and 90.4 respectively.

The company built nine out of 16 private residential projects which have a Conquas score of 90 and above, and seven of these have also received the BCA Quality Mark certification.

The other winning projects are St Regis Hotel, Residences @ Evelyn, Citylights Condominium, The Tresor, Ferry Terminal at Marina Coastal Drive and 36 Kaki Bukit Place.

The assessment of nominations is based on the builder’s overall management of the project, the builder’s technical capability and innovations, and the quality of the completed project.

Launched in 1986, the annual competition principally recognises builders’ workmanship, focusing on downstream post-design work such as project management, technical capability and quality of the completed project.

BCA added that about 44 per cent of units launched last year were committed to their BCA Quality Mark Scheme, which seeks to ensure the consistent delivery of quality homes from a prescribed standard.

About 26,000 residential units have been committed or assessed to date.

Projects that received the mark have reportedly scored much higher in Conquas and received little or less feedback on defects, BCA said.

Potential major defects and leakages in about five per cent of total units assessed were also detected and rectified before being handed over to home owners.

The awards ceremony will be held next Wednesday.

Asia-Pac market for factory space falls

Source : Business Times – 19 May 2009

Industrial property markets in the Asia-Pacific region deteriorated from October 2008 to March 2009 as the global financial crisis rolled on, Colliers International said in a report yesterday.

And more declines are expected. ‘The economies of most cities in the Asia-Pacific region are likely to be in recession in the next 12 months notwithstanding the interest rate cuts and large stimulus budget,’ Colliers said. ‘As such, demand for industrial property is likely to stay weak.’

Except for Jakarta and Shanghai – where rents, land and capital values are expected to hold – those in other cities surveyed are forecast to decline as much as 30 per cent over the next 12 months.

In Singapore, average rents and capital values of factory space dipped 12.8 per cent and 17.6 per cent respectively between October 2008 and March 2009, compared with growth of 6.4 and 6.9 per cent in previous April-September 2008 review period.

‘The decline in exports as a result of the contraction in global demand led to excess capacity at manufacturing plants and prompted many firms to shelve expansion plans or downsize premises, leading to lower demand for industrial property,’ Colliers said.

Weakening exports also resulted in softer demand for warehousing space. Average rents and capital values of this space dropped 13 and 13.3 per cent respectively in the six months under review.

The Singapore government has cut its 2009 economic growth forecast to between minus-10 and minus-13 per cent, from between minus-6 and minus-9 per cent. And this will weigh heavily on demand for industrial property in the next 12 months, Colliers said. It reckons land prices, capital values and industrial rents here could drop as much as 15 per cent in that time.

Rents for high-spec industrial building space will also be hit, according to Colliers. ‘Moving forward, the influx of high-spec space completing in 2009, amounting to an estimated 2.5 million sq ft, coupled with sluggish demand, are likely to exert downward pressure of up to 30 per cent on rents in the next 12 months,’ it said.

Opportunities for property investors

Source : Business Times – 19 May 2009

THESE are troubled times, and the global real estate sector has borne the brunt of the sub-prime fallout.

But now the property world is turning its attention to Asia as investors are hoping that 2009 will be the year to begin picking up undervalued assets ahead of economies in the region emerging from the global financial crisis, say the organisers of Cityscape Asia.

The annual real estate exhibition and conference – which is being held in Singapore from today until Thursday – comes amid talk of ‘green shoots’ of recovery for the Singapore and global economies.

Cityscape Asia focuses on all aspects of real estate development.

The real estate investment market in the Asia-Pacific region and the rest of the world saw a further contraction of market volume in the first quarter of 2009 against the backdrop of the global financial turmoil and the sustained problem of a credit crunch. However, analysts are beginning to see opportunities as the world and Asia rides out the crisis.

‘Established firms, family enterprises and individuals with cash reserves, limited debt and an appetite for risk are expected to be among the first to begin searching the Asian market for bargains in the coming months,’ said Graham Wood, group exhibition director of Cityscape.

This year’s Cityscape Asia will examine topics relevant to the downturn such as surviving the global financial crisis, the future for real estate funds, and markets to invest in for long-term growth and returns.

But long-standing topics such as Asian real estate investment trusts (Reits), green investments and the retail scene in Asia will also be explored.

More than 4,000 top deal-makers from leading developers, banks, institutional investors and investment authorities, as well as senior officers from the foremost private equity funds and investment advisory firms will gather in Singapore over these three days to discuss key issues and investment opportunities.

This year, more networking functions and face-to-face interaction have been factored in to ensure that delegates have ample opportunity to conduct real business at Cityscape Asia. Participants could well walk away from the conference with signed deals.

Cityscape Asia is an extension of the successful Cityscape Dubai exhibition, which has grown to include Abu Dhabi, India, Saudi Arabia, Russia, the United States and Latin America.

The Singapore conference will focus on Asia. It will discuss and debate the recovery, opportunities, and the strategies adopted by leading real estate investment and development firms across Singapore, Malaysia, the Philippines, Thailand, Vietnam, Hong Kong, Indonesia, China and India.

In its recent inaugural Asia-Pacific investment market overview report, Colliers International said that opportunities remain in the region for investors. ‘Although the regional real estate investment market in Q1 2009 was relatively quiet and despite the fact that the market will continue to be challenged by the economic environment for the rest of 2009, we believe there are still potential investment opportunities in the region in the coming quarters,’ said Piers Brunner, Colliers’ chief operating officer for Asia.

Real estate investment yields in the Asia- Pacific region have gone up further by 25-75 basis points in the first quarter of the year as investors held back from entering the real estate market, Colliers said. This should make investing more attractive now compared to a few quarters ago.

One market that will be much debated at this year’s Cityscape Asia is China. ‘In current times, the brightest light glows in China with the economy seeing a huge inventory adjustment,’ said DTZ in April.

In the first quarter of 2009, mainland China’s residential property sector staged a recovery of sorts, with transactions in some cities rebounding to levels not seen in years. However, the recovery did not spill over to the commercial sector as office markets in the major cities remained sluggish with fewer transactions amid declining rents and prices. A recovery in China could do much to help property markets in the rest of the region, analysts said.

Cityscape Asia also incorporates a host of ‘mini events’ designed to create business opportunities, such as developer project showcases, interactive discussion forums and investor roundtables.

Developers and other stakeholders from Europe and the US will be at Cityscape Asia looking for Asian investors. In its May bulletin, Citi Private Bank said that it expects to see a new global consumerism marked by a thrifty West and an affluent East, which should see investment flow from the East to the West.

Just one example – Philippe Chaix, director of La Defense, the prime office district of Paris, will be in Singapore during the conference to discuss the future of business property in the French capital, specifically, what it means for Asian investors.

London is also expected to get its share of attention. Asian interest in London properties is growing on the back of a devaluation in the pound, market watchers say. For example, the value of the British pound has fallen about 30 per cent against the Singapore dollar since December 2007. With London property prices down by about 15 per cent from their peak, Singaporean investors could reap savings of about 45 per cent off prices if they choose to invest in London.

Interest absorption greasing market – selectively

Source : Business Times – 19 May 2009

Is the interest absorption scheme (IAS) helping to grease home sales?

The answer seems to be yes, if there is no price premium charged by developers for the IAS. However, if developers charge more in exchange for interest absorption, then the buyers’ profile may decide whether they opt for IAS, industry players say.

Generally, buyers in projects targeted primarily at owner occupiers, such as suburban, mass-market condos prefer to buy on normal progress payment scheme (NPS) rather than IAS, under which they may pay only the initial 20 per cent with no further payments until the project is completed.

For example, slightly over a quarter of those who bought 626 units at Caspian near Jurong Lake since its release in February and 100 units at Waterfront Waves in the Bedok Reservoir area relaunched at lower prices since March have opted for IAS.

At Double Bay Residences in Simei, the proportion of IAS buyers is said to be higher, at 40-50 per cent. At Mi Casa in Choa Chu Kang, no buyer has opted for IAS. Those who bought on IAS in these projects paid 2 or 3 per cent more for their units. The thinking is that mass-market home buyers are usually more price sensitive and prefer NPS if it costs them less, say property pundits.

Projects that have drawn investors may see more buyers inclined to opt for IAS even though there is a price premium. Here, again, the quantum of premium may matter.

For instance, Frasers Centrepoint, which is charging 2 per cent more under IAS for Martin Place Residences, has found that 75 per cent of those who picked up the 80 units in the condo over the weekend opted for IAS. On the other hand, only 5 per cent of buyers of the 109 units that CapitaLand sold since last Friday at The Wharf Residence (nearby) chose IAS. This could be due to the heftier premium of 5 per cent for IAS.

However, some observers suggest another reason: Wharf Residence could have drawn a fair number of short-term investors.

With IAS, buyers have to immediately sign up for a housing loan (even if they don’t need to make a drawdown until much later). And they will have to pay a penalty if they redeem their loan early.

‘So short-term buyers in an investment grade project may prefer to opt for NPS to avoid being tied down to a loan and having to pay a penalty to the bank for early loan repayment,’ explains Knight Frank executive director Peter Ow.

Agreeing, EL Development managing director Lim Yew Soon told BT that feedback from some buyers who chose NPS for its Illuminaire On Devonshire project (despite the group not charging any price premium for IAS) indicates that they did not intend to hold their units till the project was completed.

The penalty for early loan redemption is typically said to about 1.5 per cent of the loan quantum. ‘So it may be a deterrent for smaller speculators,’ as Mr Lim suggests. However, this may not be a serious issue for deep-pocketed investors eyeing bigger gains.

‘Investors are taking advantage of IAS, which is the old DPS (deferred payment scheme) all over again, except that you have to talk to the banks earlier. Essentially IAS, like DPS, provides a financial option on the real estate market. By paying just 20 per cent of the value of the property, you can take a (bet) that property prices will appreciate by when it’s time to pay up,’ said a property analyst.

Under IAS, buyers have to sign up at once for a home loan. This is unlike DPS, where they could wait much later, closer to the project receiving Temporary Occupation Permit, when they have to pay the bulk of the purchase price to the developer.

Still, some like Mr Ow argue that IAS does not encourage speculation. ‘Whether speculation kicks in depends on the stage of the market. In today’s condition, only the very brave will come in to speculate.

‘IAS involves obtaining a bank loan approval upfront and banks are cautious about granting loans to property investors. It is quite unlikely banks will approve mortgages for those buying multiple units in a project.’

Others point out the current buying flurry does not stem from IAS. ‘The buying interest seems spurred by positive sentiments about the market as people are drawn to buy/upgrade due to reasonable prices,’ a spokesman for Far East Organization said.

Singapore property market records region’s worst contraction in Q1

Source : Channel NewsAsia – 19 May 2009

Singapore’s property market is among the worst-performing in Asia for the first quarter of this year.

A report by property consultant CB Richard Ellis (CBRE) found that Singapore’s prime office rents recorded the region’s worst contraction.

Compared with the first quarter of 2008, prime office rents in Singapore fell by 34 per cent, followed by Hong Kong which was down by 32 per cent.

In terms of retail rents, Singapore – along with Shanghai, Guangzhou, Tokyo and Beijing – saw declines, despite retail rents in other Asian cities holding up relatively well over the same period.

Shrinking global demand also put downward pressure on rents at industrial properties in Singapore and elsewhere.

In addition, Singapore, Hong Kong and Japan suffered the biggest fall in property investment sales volume.

The CBRE report, examining the impact of the global downturn on real estate, also found that Asian property investment sales fell 83 per cent to US$3.1 billion.

CBRE added that the commercial real estate market worldwide will continue to remain challenging for the rest of the year.

Real estate investors see opportunities in Asian markets

Source : Channel NewsAsia – 19 May 2009

Global real estate investors are looking to tap on to growing opportunities in Asian markets.

Experts speaking at an industry event, Cityscape Asia 2009, in Singapore on Tuesday said China currently offers the most potential.

This is due to a number of good valuations available in the market, and the economy’s positive growth outlook.

China’s industrial property sector has been hit hard by the global economic downturn — over 100,000 factories closed shop in 2008. But experts say these properties offer good value as they are now undervalued.

And once these properties get snapped up, re-employment will start to boost commercial and residential real estate sectors.

John Evans, Managing Director, Tractus Asia, said: “In the Asian region there are opportunities across most of the countries. However, if you look at what’s happening with the economies, the only one that is showing significant growth is still China. And while that growth is nowhere near the sort of stated eight per cent that the government said, it is still a healthy three to four per cent.

“With the crisis here, you’ve seen a decrease in property prices and… a lot of investors are trying to get out of non-performing assets, so you are seeing a lot of opportunities in China. In the real estate sector (China) is one place I will recommend.”

Duncan Owen, CEO, Invista Real Estate, said: “Many of our investors that followed us from the UK and into continental Europe are looking increasingly to diversify, and diversify into long-run growth markets. And the mature Asian markets potentially give us just that type of opportunity to deploy capital and get the long-run types of returns that investors are looking for.”

But market watchers say not all markets are equally attractive and warn of potential risks in the region.

Despite growing global investor interest in opportunities in the Asian property market, experts say that investors should be wary of the Thai property market as further decreases are expected in the year ahead.

They say prices in the Bangkok residential property market could decrease by some 25 to 30 per cent in the coming year.

Mr Evans said: “One to steer clear right now is Thailand. It is pretty obvious with political and economic instability that property values will be going down. Foreign direct investment has basically dried up in Thailand.

“My personal opinion is that we are going to see some further political instability. The Thai market tends to lag behind the economy and political situation by at least a year if not 18 months. So I think we are going to see a big decrease, maybe even 25 to 30 per cent in residential property in Bangkok as there is an oversupply and more supply coming online.”

But observers also do not rule out future opportunities in the Thai market if the global economy and the Thai political situation begin to stabilise.

Gillman Heights en-bloc deal is on

Source : Straits Times – 18 May 2009

GILLMAN Heights owners can heave a sigh of relief now that the estate’s buyers Ankerite have confirmed that the group will go ahead with the purchase of the development.

Property giant CapitaLand, majority shareholder of Ankerite, told The Straits Times in a statement last night that ‘lawyers of both parties are working towards May 22 to complete the purchase of the site’.

Its latest move follows a report in The Straits Times over the weekend that Ankerite had failed to complete the sale by its due date, last Friday.

This caused anxiety amongst some owners at the 607-unit estate in Alexandra Road, who feared that the buyers got cold feet, as some owners had committed to buying other properties.

Earlier reports indicated that owners stood to get between $870,000 and $950,000 for their units.

The sale – first inked in early 2007 for a record $548 million at the height of the property market boom – has been dogged by controversy as minority owners fought at every turn to overturn the sale.

It was finally thought to be a done deal in February after the Court of Appeal dismissed a last-ditch plea by minority owners to reverse the transaction.

However, just two weeks before the sale completion date, on April 30, Ankerite raised some issues. Two points of contention were: a sum of $750,000 transferred out of the estate management fund; and separate monies allocated for a lawsuit against the estate’s management corporation (MCST) by a contractor who built the estate’s clubhouse and swimming pool in 2002.

MCST members said these issues were raised ‘at the last minute’, but Ankerite clarified yesterday that it took time to carry out the ‘due diligence process’ and access to relevant documents was granted by the MCST only on Apr 23 and Apr 24.

Ankerite said the sales committee lawyers Lee and Lee notified them that these issues were resolved on the afternoon of May 15 – the sale completion date. However, Rajah and Tann wanted proof that the outstanding lawsuit had been settled, and only received a copy of the settlement agreement on Saturday, May 16.

‘With this settlement agreement…the lawyers are working to complete the purchase as soon as possible,’ said Ankerite’s lawyers.

MCST chairman Kok Chong Weng said he was glad to hear a date has been set to complete the deal, but added that residents might be looking at options to see if any compensation can be claimed for the delay.

Meanwhile, chief executive of CapitaLand Residential’s Singapore operations Patricia Chia said in a statement yesterday that ‘going forward, we are looking at presenting our other projects such as the proposed development at the Gillman Heights Condominium site at the appropriate time’.

Time for mall owners to help with rent cuts

Source : Business Times – 18 May 2009

IF ONE accepts that FJ Benjamin’s latest financial numbers are a fair reflection of what is happening in the retail industry, then the time might be right for mall owners to cut rents, if only to ensure their own survival.

FJ Benjamin saw its turnover shrink significantly in the quarter ended March 31. It registered a net loss (attributed to lower sales and foreign exchange losses), even after struggling with cost-cutting measures.

Reporting its quarterly financial results last Monday, it said gross margins slipped to 38 per cent from 40 per cent due mainly to higher promotional activities (such as sales).

Staff costs dipped 9 per cent to $9.5 million, and other operating expenses fell 38 per cent to $4.6 million.

Still it was not enough to displace the 21 per cent fall in turnover to $69.1 million, down from $87 million in the previous corresponding quarter.

Apart from continuing to squeeze margins and cut costs there is very little else FJB can do, which is probably why its CEO Nash Benjamin said earlier this year that it would need to ‘focus our efforts on working with our landlords to reduce rental and other overheads.’

Rental of premises registered $10.32 million in its current reporting quarter, down marginally from $10.6 million a year ago. However, as a proportion of turnover, rentals have increased to about 15 per cent, up from 12 per cent a year ago. This in turn was an increase from 10 per cent in 2007.

FJB is one of the top 10 tenants of Starhill Global Reit which holds stakes in Wisma Atria and Ngee Ann City. The reluctance of landlords to give substantial rental rebates is perhaps best represented by retail rental revenue generated at Wisma Atria of $11.56 million for the quarter ended March 31, down only marginally by 0.8 per cent from a year ago. RSH, which has brands like Zara and Mango, also reported poorer results recently, with net profit contracting by 45.1 per cent to $8.41 million for the quarter ended December 31, 2008. It also reported that its Singapore business saw profit before tax fall by 26 per cent due to higher operating expenses and lower revenue.

RSH spoke out against high rents here recently after several retail associations led by the Singapore Retailers Association publicly asked landlords to cut rents by between 20-30 per cent in February.

BT had reported then that major mall earners were not convinced that occupancy costs were too high. However, RSH responded by saying that every tenant has a level of profitability they have to achieve to sustain their business, and that level varies from retailer to retailer.

There are not many retailers in Singapore that are publicly listed so FJB and RSH’s reported financial numbers are a useful barometer of how the entire retail industry is doing as a whole.

Mall owners, on the other hand, still appear to be doing well. Many of Singapore’s malls are owned by Reits like CapitaMall Trust, Starhill Global Reit and Frasers Centrepoint Trust. All three Reits reported increases in net property income. One Reit saw this rise by as much as 17 per cent for the current quarter.

Perhaps more interesting is that some are still increasing rents when leases come up for renewal. According to filings by CapitaMall Trust, rents were increased by 6.8 per cent at both Plaza Singapura and Junction 8 compared to preceding rents.

Being publicly listed entities, Reit managers are probably more constrained when it comes to offering rental rebates. However, if the retail industry is doing as badly as numbers show, the Reit managers may have no choice.

As FJB’s Mr Benjamin said: ‘It’s better to lower rents than not have a tenant.’

Gillman Heights site sale: last-minute hurdles cleared

Source : Business Times – 18 May 2009

The consortium that bought the Gillman Heights condo site in a collective sale has ‘every intention’ of completing its purchase, its lawyers said in a statement.

While the sale was not completed by the previous deadline of May 15, lawyers for the buyers and sellers are now looking at the new deadline of May 22 after two last-minute hurdles were cleared.

The buyer of Gillman Heights – a group called Ankerite, which is led by property giant CapitaLand – was supposed to have completed the $548 million purchase last Friday.

But the sale of the 99-year-leasehold estate on Alexandra Road, which has dragged on for two years now, has not been signed off yet. The deal was first inked in 2007.

Ankerite’s lawyers, Rajah & Tann, had on April 30 queried the sales committee on two issues, which have since been resolved. With those obstacles cleared, Rajah & Tann is now working with the sales committee’s lawyers from Lee and Lee to close the deal as soon as possible.

‘The lawyers of both parties are working towards May 22, 2009 to complete the purchase of the site,’ said a CapitaLand spokeswoman yesterday.

One sticking point was the transfer of $750,000 from the management corporation’s (MCST) management fund to the sinking fund in August 2007 and March 2008, which was discovered during the due diligence exercise.

Rajah & Tann wanted the money transferred back into the management fund, as money from this fund goes to the buyers upon the completion of the sale.

This issue has since been resolved. Rajah & Tann said in its statement that the money will remain in the management fund, as the management council of the MCST has annulled its previous resolutions transferring money to the sinking fund.

The second contentious point was a separate suit by a local contractor against the MCST. But this appears to have been settled as well. Rajah & Tann said that on Saturday it received a copy of the settlement agreement signed by the MCST’s solicitors and the solicitors for the contractor.

Ankerite initially comprised CapitaLand, Hotel Properties and two private funds, but CapitaLand will buy up another 5.5-10 per cent of the company from the stake now held by one of the private funds. This will make Ankerite a CapitaLand subsidiary.

The sale of Gillman Heights finally got the go-ahead in February this year after the Court of Appeal dismissed a last-ditch plea by minority owners to overturn the deal. Earlier reports had indicated that owners of the estate’s 607 units stood to receive between $870,000 and $950,000 for their apartments.

80% of Martin Place Residences units launched sold over weekend

Source : Channel NewsAsia – 18 May 2009

Eighty per cent of the high-end Martin Place Residences condominums launched were sold over the weekend.

A third of the 302 units available have been launched.

The freehold Martin Place Residences is just a few minutes from the heart of Singapore’s prime Orchard Road shopping belt.

Developer Frasers Centrepoint said the units were transacted at between S$1,260 and S$1,700 per square foot.

Six in 10 buyers were from Singapore, while the rest were foreigners from countries like Malaysia and Indonesia.

Frasers Centrepoint attributed the strong response to its pricing.

The initial 28 units that were sold last year were priced between S$1,700 and S$2,000 per square foot.

Source : Channel NewsAsia – 18 May 2009

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CapitaLand’s The Wharf Residences continues to see strong sales

Posted by luxuryasiahome on May 18, 2009

CapitaLand’s newly released units at The Wharf Residences continued to see strong sales over the weekend, with another 24 units transacted.

The developer had earlier sold 85 per cent of the 100 units launched on May 15.

All in, CapitaLand said 134 units out of the 173 unit at The Wharf Residences have been sold.

Apartments at the 999-year leasehold project are priced at between S$1,300 and S$1,600 per square foot.

The developer said 8 in 10 of the homebuyers are Singaporeans, with the rest coming from China, Japan, Canada, Vietnam, Malaysia and Indonesia.

The Wharf Residences is located at Tong Watt Road, off Mohamed Sultan Road near the city centre.

CapitaLand added that it will present other projects, like the proposed development at Gillman Heights Condominium site, at an appropriate time.

Singapore’s industrial space rents to fall 15% in next 12 months

Source : Channel NewsAsia – 18 May 2009

Real estate consultancy firm Colliers International says the industrial properties market has been hit by the global financial crisis.

Its latest bi-annual survey found that rents, land and capital values of industrial properties in most cities across the Asia Pacific, except for Jakarta, contracted by up to 40 per cent.

The study of 13 key cities in the region was conducted between October 2008 and March 2009.

Colliers said that with the significant depreciation of Australia and New Zealand dollars against the US dollar, cities like Sydney, Melbourne, Auckland and Wellington have recorded a more severe decline in their rents, land and capital values.

Tokyo benefited from the strengthening of the Japanese yen against the US dollar during the period and saw improvement in rents, land and capital values.

Looking ahead, Colliers said demand for industrial properties is likely to remain weak across the region.

It forecast that many cities could see declines of up to 30 per cent in rents, land and capital value over the next 12 months, while Singapore could see a 15 per cent drop.

Nonetheless, Colliers said the mid-term outlook for Singapore’s industrial sector remains favourable.

It said some companies are taking a long-term view and investing in capabilities to prepare themselves for the upturn when it comes.

For example, Indian telecommunications giant Tata Communications is investing US$180 million in a state-of-the-art data centre in Paya Lebar, which is scheduled for completion in 2010.

Meanwhile, Abbott Laboratories will be investing US$20 million in a nutrition science research and development centre at Biopolis to develop food and nutrition products for Asia.

Analysts say S’pore private property market could pick up this year

Source : Channel NewsAsia – 18 May 2009

Brokerage DBS Vickers said the Singapore private property market could pick up this year.

In a research report, the firm said the prices of mass market private homes are likely to rise by the second half of this year if demand continues to hold.

Mid-tier private residential homes, meanwhile, could see price stability towards the later part of the year.

However, DBS Vickers added that the high-end segment will remain subdued for at least the next few months.

The brokerage noted that developers have launched more new homes for sale in April, with buyers eyeing a wide variety of projects in different locations.

Last Friday, data released by the Urban Redevelopment Authority showed that private home sales for April remained strong, with some 1,200 units sold.

Condo-style HDB flats selling well

Source : Sunday Times – 17 May 2009

Account manager Samuel Lee and his wife were among those who bought a five-room flat at Parc Lumiere in Simei.

Although the recently launched condo- style HDB project offers something more than a regular HDB flat, its location – more than anything else – was what sealed the $477,000 deal for Mr Lee, 27.

‘Facilities-wise, it can’t beat The Peak and Natura Loft,’ he said, referring to two similar projects.

‘It’s the location. It is literally just across the road from my in-laws’.’

Thanks to buyers like him, Parc Lumiere is nearly sold out, even though its first-come, first-served sale method meant that many buyers had to brave the heat and queue for hours before they got to book a unit.

However, those keen on a condo-style HDB flat – or what HDB terms a Design, Build and Sell Scheme (DBSS) flat – need not fret because there are still units available.

The 360-unit Parc Lumiere, for instance, has 30 five-room units left for sale, while the 480-unit Natura Loft in Bishan has more than 100 five-room units left.

DBSS projects are designed, built and sold by private developers.

They are ungated and are subject to public housing rules, such as the $8,000 household income ceiling, ethnic quota and a five-year minimum occupation period.

But unlike regular HDB flats, they offer condo-style fittings and layouts.

There are balconies, bay windows and timber flooring in the bedrooms. The kitchen comes with built-in cabinets and the rooms with built-in wardrobes.

They do not come cheap though. As HSR Property Group executive director Eric Cheng said: ‘DBSS projects offer very good concepts, interior finishes and layouts, but the only problem is the price. Those with insufficient CPF savings will feel the pinch of the premium for those extras.’

ERA Asia Pacific associate director Eugene Lim pointed out that at their current pricing of $500,000 to $730,000, DBSS flats are priced just a shade below mass market condos in the range of $650,000 to $900,000. ‘There is already a slight overlap,’ he said.

Property agents said last month before the launch of Parc Lumiere and The Peak that there might be some resistance if DBSS flats were priced above $500,000, particularly given the recession.

Prices at the 1,203-unit The Peak @ Toa Payoh go up to $722,000. At Natura Loft, developer Qingjian Realty said five-room units are available at $590,000 to $739,000, or from $456 per square foot to $578 psf.

PropNex spokesman Adam Tan said that while DBSS projects come with designer furnishings that are typical of condominium units, buyers need to be aware of the fact that outside of one’s door, the environment is like that of an HDB estate.

‘There are no facilities like pools,’ he said.

DBSS projects are for those who want the interior atmosphere of a condo but not the facilities and the relatively hefty maintenance charges that come with them, he added.

HSR’s Mr Cheng said DBSS flat buyers are also buying a home in a conducive environment that has been carefully planned by the developer. DBSS flats are also usually in very tall blocks, and some have high ceilings typical of private flats.

Indeed, each DBSS project is different in design and size. Each will attempt to offer features that promise a bit more exclusivity than your regular HDB estate.

Parc Lumiere and Natura Loft offer elevated landscape decks. The Peak has a card-access security system at all ground-floor lift lobbies.

At Park Central in Ang Mo Kio, the rooftop garden above the carpark features a 400m jogging track.

Unlike regular flats, DBSS projects may offer premium appliances. Natura Loft, for instance, offers rain showers and Electrolux cooker hobs, while The Peak offers Daikin air-conditioning systems.

Currently, there is just one other vacant DBSS site in Bedok Reservoir Crescent, but the Government has yet to launch it for sale.

Although falling private-home prices have presented low-end home buyers with more options, some have their hearts firmly set on a DBSS project.

Mr Lee, for instance, compared Parc Lumiere to a Melville Park condo apartment but decided against the smaller unit in the latter.

‘I’ve also considered the resale value. When the Tampines DBSS project came out, people said the price was very high. Now, based on the experience of the Tampines DBSS, I don’t think we will lose out.’

In late 2006, the first DBSS project, Premiere @ Tampines, drew nearly 6,000 applications for 616 flats priced from $138,000 to $450,000. Housing prices have risen since.

But whether DBSS buyers can make a profit on resale will depend on how the mass market moves, said ERA’s Mr Lim.

For DBSS flats to be resold at say $600,000 to $850,000, mass market condo prices will need to move up higher to between $800,000 and more than $1 million, he said.

‘This is possible if there is another economic boom that brings all-round prosperity and the whole property market moves up across all categories,’ said Mr Lim.

‘Whether it can happen in seven to eight years, it is difficult to predict. If it does happen, it will likely be a window period for these DBSS flat owners to make the resale profits. Usually, the best time to sell a new flat on the resale market is when it is about five to eight years old. Thereafter, prices may dip again.’