Marina Bay Sands’ 55 floors all built

Source : Straits Times – 27 Jun 2009

ALL 55 floors of the Marina Bay Sands integrated resort overlooking Marina Bay have been built.

Next up: Putting the one-hectare sky park in place atop the three hotel towers, 200m off the ground.

This update came yesterday from the resort.

Meanwhile, parts of the sky park are being fabricated off-site. It will take 14 lifts to get all the pieces of it up there.

Mr Sheldon Adelson, chairman and chief executive officer of parent firm Las Vegas Sands, will be in town on July 8 for a ceremony to mark the milestone completion of the three hotel towers.

Auction sales surge in first half to $72m

Source : Straits Times – 27 Jun 2009

AUCTION sales have surged in the first half of this year, with the number of transactions dramatically higher than what was clocked up last year.

The numbers tell a story of a property market rapidly gaining in confidence, especially in recent months, according to consultancy Colliers International yesterday.

Sales in the first half reached $72.39 million. That is 61 per cent up on the $45 million recorded in the second half of last year, and 87 per cent higher than the $38.64 million racked up in the same period a year ago.

Much of the pickup happened in the second quarter, after the stock market rallied and sentiment improved. This month has seen strong sales of $24.7 million, compared with the miserable $3.6 million sales in January and $1.4 million in February.

Jones Lang LaSalle, which conducted the last auction for this month yesterday, said it sold four properties worth $11.29 million, including a $3.45 million Leonie Towers apartment.

Sales were lacklustre in the first quarter because buyers had bid very low and opportunistic prices, said Ms Grace Ng, Colliers’ deputy managing director (agency and business services) and auctioneer.

The mood in auction rooms now is decidedly more upbeat, with sellers keen on repricing properties about 5 per cent to 10 per cent higher, said Knight Frank auctioneer Mary Sai.

But the increased expectations do not signal a clear price rise yet. ‘Prices were lagging behind the market so the sellers were moving up to match the market,’ Ms Sai said. ‘Those that we sold were mostly the $800,000 to $1 million types. These are the safe buys as mass market homes aren’t likely to retreat much.’

The buying mood has even carried over from mass market homes to some landed and high-end property, said Ms Ng. These include two apartments at The Clift worth $605,000 and $1.047 million.

Few mortgagee sales have occurred this year despite the weak economic climate. The 103 repossessed units on the block represented only about 23 per cent of total properties put up for auction in the first half. This compares with 28 per cent last year, 44 per cent in 2007 and 50 per cent in 1998.

The number is about half of what was put up during the Asian financial crisis in 1998.

In all, there were 54 homes sold through auction in the first half.

‘The continued low number of mortgagee sales could be partly attributed to financial institutions attempting to manage their distressed asset portfolio by giving property owners the opportunity to dispose of the property of their own accord,’ said Ms Ng. ‘There will be less contention over the sale price, as the price is determined through a consultation process with the owner.’

Ms Ng expects to see more mortgagee sales in the second half of the year due to the general lag time of approximately six months or more.

Ms Ng also expects the buying momentum to persist in the next few months, possibly leading average monthly auction sales to surpass $30 million in some months. That could send auction sales over $160 million for the year, almost twice the $83.67 million achieved last year, she said.

Property investors eye China, Australia

Source : Business Times – 27 Jun 2009

CHINA and Australia are seen as good bets in the Asia-Pacific for real estate investments, according to two recent reports.

A survey of 73 investors, fund managers and fund of funds managers showed that they rank China, Australia and Japan as the three most appealing locations.

Singapore, on the other hand, was ranked last among seven places in terms of preferred location – after China, Australia, Japan, South Korea, Hong Kong and India. The survey was conducted by the Asian Real Estate Association (AREA) together with its partners.

Investors were especially bullish on the residential and retail sectors in China, as well as the Australian office market.

In the same vein, property firm DTZ said in a report that it expects continued weakness in property markets across the region through 2009 and into 2010, but a divergent profile of recovery – with Australia and China ahead of other key markets.

While total returns are forecast to be negative in 2009 across the region, China and Australia will be back in positive territory in 2010, ahead of Japan, Hong Kong and Singapore, DTZ’s June 24 report predicted.

‘2009 will continue to be a difficult year for investor and occupier markets,’ said David Green-Morgan, head of Asia-Pacific research at DTZ. ‘We see fair-value opportunities emerging in Australia and China towards the end of 2009 and 2010 as the two economies embark on a period of recovery.’

In 2008, the Asia-Pacific felt the full effects of the global downturn – and property markets were not spared.

‘The value of the invested real estate stock in the Asia-Pacific declined in 2008, for the first time since 2001,’ DTZ said. The fall in value amounted to 8 per cent in local currency terms, but a more moderate one per cent in US dollar terms.

Transaction volumes almost halved in 2008 from 2007.

AREA’s survey, conducted in April this year, also showed a downturn in sentiment over the past 12 months. In the 2008 survey, all respondents – institutional investors, fund managers and fund of funds managers – indicated that they wanted to increase their activity in Asian non-listed real estate.

Since then, there has been a big drop in the number of investors who intend to allocate funds to Asian non-listed real estate in the short term. The percentage has fallen from 88 per cent of respondents in 2008 to just 24 per cent in the latest survey.

However, the respondents are more upbeat about mid-term prospects for Asian real estate. Twice as many intend to increase allocations to non-listed real estate over the medium term – three to five years – versus the short term. This is consistent with most investors’ expectations of a market recovery in 2010.

DTZ reckons that things are beginning to look up for the key property markets in the Asia-Pacific. Opportunistic deals are continuing to occur across the region and a broad ‘hunting season’ should emerge over the next 12-18 months. Looking at specific markets, Sydney is expected to reach ‘fair value’ in the second half of 2009, followed by Shanghai in early 2010.

However, some concerns remain. ‘While we will start to see value returning to markets in the Asia-Pacific, funding remains a concern, and may become a bottleneck for the recovery of activity in the commercial property markets both in Asia-Pacific and worldwide,’ said DTZ’s Mr Green-Morgan.

Investors should not lose sight of the fact that economic growth across the region is expected to be lower in 2009 and still below trend growth in 2010, DTZ warned. ‘The implications for property markets, through below-trend occupational demand and, in some cases, the required clearing of excess supply, will translate into continued weakness in the near-term,’ it said.

Likewise, in the AREA survey, respondents said that obstacles remain when it comes to investing in Asian non-listed real estate funds. Market conditions were identified as the top challenge faced. This was followed by ‘transparency and market information on non-listed vehicles’ and ‘availability of suitable products’.

DTZ also said that it may be too soon to call a bottom as research shows that the historic series is volatile. ‘We need to see a few more quarters of data before we can call the bottom of the market,’ Mr Green-Morgan said.

First-half auction sales top $72m

Source : Business Times – 27 Jun 2009

A STRONG showing at auctions this week raised the tally for properties sold under the hammer in the first half-year to $72.4 million – just 13 per cent shy of the $83.7 million for the whole of last year, based on figures compiled by Colliers International. The second quarter of 2009 saw a total $54.5 million of auction deals after a quiet Q1, with $17.9 million.

The momentum is expected to continue. Colliers’ deputy managing director and auctioneer Grace Ng predicts that full-year 2009 auction sales could exceed $160 million – almost twice the figure in 2008.

Jones Lang LaSalle, which yesterday conducted its last scheduled auction for Q2, saw four properties change hands for a total of $11.3 million. One was a 7,232 square foot vacant freehold plot in Fernhill Road that was sold for $6.4 million, working out to $632 per square foot (psf) of potential gross floor area. The Singaporean buyer is expected to develop the residential site, which can be built up to five storeys, for his family’s use, according to JLL’s head of auctions, Mok Sze Sze.

Another big-ticket item sold was a 12th floor unit in Leonie Towers, a freehold condo that is more than 30 years old. The 2,906 sq ft maisonette sold for $3.45 million or $1,187 psf of strata area. ‘The buyer is a company. We held two viewings for the property over the past week, and it attracted around 70-80 parties,’ Ms Mok said. The sheriff’s sale was held to recover a debt owed by the owner to two individuals. There is also an oustanding mortgage on the asset.

Residential properties accounted for almost half of the $72.4 million of auction sales in the first half, followed by industrial properties, with a 19 per cent share, Colliers’ analysis shows.

It noted that activity in the auction market picked up dramatically from late March, when the stock market rallied. ‘Based on historical observations, property auctions have always been an accurate barometer of market confidence, and are usually swift in reflecting any changes in market sentiments,’ the firm said.

Colliers also noted that 77 per cent of the 440 properties put up for auction in the first half were offered by their owners, leaving only a 23 per cent share for mortgagee sales. ‘Historically, from 1998 to 2006, the number of mortgagee properties always tended to be higher than the number of properties put up by owners. The trend started to reverse in 2007,’ said Colliers’ Ms Ng.

DTZ senior director and auctioneer Shaun Poh has noticed keen participation by property investors at his firm’s recent auctions. ‘Small investors are particularly aggressive in bidding for smallish apartments in the central area, for example, Icon, The Clift, even an old development like International Plaza,’ he said. ‘Generally, properties priced between $700,000 and $1.3 million tend to move very fast.’

Knight Frank executive director Mary Sai, another veteran auctioneer, said that attendances, as well as success rates, at auctions have gone up markedly since April.

‘However, there is a sense of caution among bidders. They don’t want to be overly financially stretched,’ she said. ‘A clever move by some bidders now is to make a counter offer to the auctioneer’s opening price. So they start within their comfort zone. Eventually, however, the bidding competition will draw out the true price level, often surpassing the opening price.’

Hotel 81 in Tiong Bahru?

Source : Straits Times – 26 Jun 2009

YES

ALTHOUGH the concerns raised by residents are not baseless, approval of a hotel development in the area is in line with demand for more hotels as Singapore gears up for the integrated resorts launch and major events like Formula One and the Youth Olympic Games.

It is shortsighted to claim that an hourly hotel will encourage vice in the area. Vice can be conducted in any hotel. Major five-star hotels see engagements between high-class call girls and their high-net-worth customers. Tiong Bahru residents may have overlooked the fact that the area was once home to drug peddlers and loan sharks. It was not exactly wholesome to begin with.

Hotel 81 started next to Upper Serangoon Shopping Centre in 2007 in the midst of landed properties and HDB flats. I have lived in this area for more than two decades and even after the opening of the hotel, there have been no vice activities.

Raymund Koh

NO

AS NEW home owners in Tiong Bahru, my wife and I are naturally anxious about the imminent presence of Hotel 81 in Eng Hoon Street.

The crux of the matter is that if the hotel institutes hourly and transitory rates, it sets environmental conditions and encourages vice activities.

We choose to live in Tiong Bahru because of its vibrant community, rich history and robust heritage.

I find it difficult to appreciate the evolution of the neighbourhood without being critical about what this means to residents and how changes affect the community’s values and way of life.

In an estate with conservation status and tremendous cultural legacy, it is perplexing that there is a distinct lack of collaborative and consultative approach by the authorities in planning and developing the neighbourhood.

Sean Ng

$44m bid triggers tender for New Bridge Road site

Source : Straits Times – 26 Jun 2009

HOTEL site on New Bridge Road is up for public tender after an unnamed buyer put in a bid that matched or exceeded the Government’s minimum price. This has triggered the tender process.

The site was on a reserve list and goes on sale only when developers indicate a certain level of interest. In this case, an undisclosed developer committed to a bid of at least $43.8 million.

The Urban Redevelopment Authority (URA) said yesterday that it will launch the tender for the 99-year leasehold site in about two weeks and the launch date will be announced later.

The land parcel has a site area of about 0.45ha and can generate a maximum permissible gross floor area of 15,687 sq m and is ideal for a boutique hotel, said the URA.

This site is in Chinatown and suitable for a three- or four-star hotel.

A recent survey conducted by the Asian Real Estate Association showed that the hotel sector was the least preferred segment this year compared with land for residential, retail, office and industrial uses.

But there will still be keen investors given the improved sentiment, said a property expert.

He said that some hotel investors may believe that the worst is behind them and that the market will improve by the time the project is completed.

They could also be banking on the integrated resorts to bring more tourists to Singapore, he added.

Industry watchers said the triggering bid for the New Bridge Road site is also another sign of increased optimism about the economy.

Earlier this month, a small Short Street hotel site received 15 bids with the winning tender offering 76 per cent above the trigger price.

60% of Sentosa IR will be ready when it opens

Source : Straits Times – 26 Jun 2009

THE Sentosa integrated resort (IR) is all set to throw open its doors in the first quarter of next year – but visitors will not get to see the finished product.

When the resort opens, just 60 per cent of it will be ready: four hotels, the casino, the Universal Studios theme park, the theatre and the retail and dining area.

Construction of the other attractions at the 49ha resort – including the world’s largest oceanarium, a marine museum and two more hotels – will begin next year and is slated for completion by 2012.

Giving an update on the progress of the IR yesterday, Resorts World at Sentosa (RWS) executive vice-president of projects Michael Chin said some 80 per cent of construction for the first phase of the resort has been completed.

What remain to be done are exterior works and outfitting the rides for the theme park.

This should be completed by August.

After that, the resort will be testing the rides and other amenities, and getting staff up to speed on operations.

Asked about prices for the rides, the resort’s head of communications Krist Boo declined to give details. But she said that charges would be kept ‘affordable’ and that they would be competitive when compared with other theme parks.

She added that prices would be comparable and likely cheaper, dollar-for-dollar, than those at Universal Studios’ other parks in Orlando and Osaka, where day passes go for US$70 (S$100) and 6,000 yen (S$90), respectively.

Ms Boo acknowledged that there are some clouds on the horizon for the IR.

Because of the tough economic times, the resort would have to slash its visitor forecast for the first year from 15 million to 12 million, she said.

She added that it had also lowered the expected growth rate of returns on investment for the $6.59 billion project by one to two percentage points from the previously projected 15 per cent.

Spending by visitors is also expected to be less, she said, but did not elaborate.

Also, there are no takers for some of the retail space at the resort.

‘To be honest, the retail landscape is a little challenging now,’ she said.

Despite these concerns, however, the Sentosa IR is still confident of pulling in large crowds.

‘For visitors in this region, they don’t have to travel too far to enjoy a world-class attraction,’ she noted.

The resort’s main target will be visitors from countries within a seven-hour flight range of Singapore.

The exact date of the IR’s opening is expected to be firmed up by the end of the year.

Singapore’s other IR, the Marina Bay Sands, is also scheduled to open in stages, with the first opening expected at the end of this year.

Guide for waters design launched

Source : Business Times – 26 Jun 2009

A HANDBOOK for incorporating waterscapes in developments was launched yesterday at Singapore International Water Week.

‘The ABC Waters Design Guidelines handbook is meant to be a ‘living’ document that provides general guiding principles,’ said Tan Nguan Sen, PUB’s director of catchment and waterways.

Launched in 2006 by national water agency PUB, the ABC programme aims to transform Singapore’s drains, canals and reservoirs into streams, rivers and lakes. Progress has already been made, with the completion of three demonstration projects at Kolam Ayer, Bedok Reservoir and MacRitchie Reservoir.

‘In the next two to three years, we can look forward to over 20 ABC projects around the island, of which nine are already under construction,’ Dr Amy Khor, Senior Parliamentary Secretary (Environment and Water Resources), said at the handbook launch yesterday morning. ‘Over 100 other projects will be realised in the next 10 to 15 years.’

The Sengkang floating wetland at Sungei Punggol is among the projects that will come on stream in the next couple of years.

PUB hopes to attract support from the public and private sectors to enable catchment-wide implementation and the long-term sustainability of the programme.

‘It’s important that developers take on projects,’ said Herbert Dreiseitl, founder of landscape architecture firm Atelier Dreiseitl, adding that such projects offer them opportunities. ‘This is the market for the future,’ he said.

Mr Dreiseitl also said that Singapore may see more such projects closer to its urban centre.

Some private developers have already started incorporating such design features in their projects. GuocoLand Group’s Goodwood Residence will have features such as vertical green walls that incorporate a rain-water harvesting system.

ABC guide to green design for developers

Source : Straits Times – 26 Jun 2009

RAIN gardens and plant-covered condominiums could become commonplace if new design guidelines from the PUB are implemented by developers.

The guide, part of the Active Beautiful Clean Waters (ABC Waters) Programme, is aimed at developers, both public and private, and details ways in which drainage systems and water features can filter rainwater before it reaches the canals and reservoirs.

One of the ways this can be done is by using bioswales or rain gardens – shallow ditches containing top soil and plants with drainage pipes beneath. The top soil acts as a filtration system, slowing down and cleansing the water before it reaches the public drains, cutting down on dirt and reducing surges.

The founder of city planning firm Atelier Dreiseitl Asia, Mr Herbert Dreiseitl, who contributed to the drafting of the guidelines, said the process mimics nature. ‘Rainwater very quickly goes down drains, taking all litter, rubbish and dirt with it to the the reservoirs. Top soil is like a treatment plant – it can filter out nitrates and phosphates, as a forest does, and it can really purify the water perfectly.’ The hope is that this will one day lead to cleaner reservoirs and thus cut down on treatment costs.

DP Architects director Tai Lee Siang, who is on the programme’s review panel, said that with climate change having a high profile, more developers are now taking an interest in green buildings. ‘It will be interesting to know if the private sector will take it up. For very small projects…it won’t be easy as there are already many constraints with land and cost pressures, but for larger projects, it will be considered.’

One private developer already implementing such ideas is GuocoLand Group, which was praised by Senior Parliamentary Secretary (Environment and Water Resources) Amy Khor at yesterday’s launch.

Its up and coming Goodwood Residence and Sophia Residence projects both have water recycling systems and have won the Building and Construction Authority (BCA) Green Mark Platinum Award – the highest accolade for green buildings here.

Green Mark points await developers which implement the ABC guidelines, and PUB director of catchment and waterways Tan Nguan Sen hopes the BCA will up the allotted points for ABC features.

He said the guidelines are not mandatory now.

There are now about 10 private-sector projects looking at incorporating water recycling in their designs, he said.

The guide is the final part of the ABC Waters Programme, launched in 2006 to transform Singapore’s 15 reservoirs, 32 major rivers and 7,000km of waterways into places of beauty for recreation.

RWS structural works ending

Source : Business Times – 26 Jun 2009

RESORTS World at Sentosa (RWS) will complete all structural buildings by next month – 27 months after it broke ground in April, 2007.

Michael Chin, RWS executive vice-president, said yesterday that the Ministry of Manpower (MOM) has approved the company’s request to increase the quota of foreign workers on site.

MOM is also understood to have approved an increase in the foreign worker quota at Marina Bay Sands (MBS) resort.

Mr Chin said that there are about 6,500 workers on the RWS site and this will increase to 8,000-9,000. ‘All effort is being made to open as early as we can.’

The first-mover advantage will be important, especially as both RWS and MBS have casinos and are likely to open around the same time. Mr Chin would not discount opening during the lucrative Chinese New Year period in February 2010 when gambling is a popular activity.

With about 80 per cent of the main construction work already completed, all that is left is to fit out the buildings. This will include Universal Studios Singapore, four hotels and the casino. Mr Chin said that by August, most of the rides and shows at USS will be ready for testing.

RWS is confident that its resort will attract 12-13 million visitors in the first year. But spokeswoman Krist Boo said that visitor spending may be affected by the global downturn. As a result, RWS has reduced its investor rate of return (IRR) by one to 2 percentage points. Ms Boo would not reveal the IRR on its $6.6 billion investment, but it is likely to be in the region of 15 per cent. She said that more than half of RWS’s revenue is likely to be generated by the casino.

USS will also be a revenue generator, but Ms Boo said that RWS is aware that ‘USS will have to be affordable’. Entry prices will be lower than those at other Universal Studios theme parks in Japan and the US, she said. A check with the Universal Studios websites shows a one-day pass costs 5,800 yen (S$88) at Universal Studios Japan and US$75 (S$109) at Universal Studios Orlando.

URA tender for hotel site coming up

Source : Business Times – 26 Jun 2009

THE Urban Redevelopment Authority (URA) will launch a public tender for a hotel site at New Bridge Road in two weeks’ time, it said yesterday.

The 0.45ha site was made available for sale through the government’s reserve list system in April 2007. Under the reserve list system, the government will put up a site for public tender only if it receives an application from a developer who commits to bid for the site at or above the minimum price which is acceptable to the government.

URA said that it has received an application from a developer who has committed to bid at a price of not less than $43.9 million for the land parcel, which triggers the public tender.

Analysts said that interest seems to be returning to small development sites with good attributes.

Earlier this month, a government tender for a small hotel site on Short Street closed with a whopping 14 valid bids received. The number of bids – 15 in all, including one bid judged invalid because it was below the minimum bid price – is one of the highest received for a Government Land Sales tender.

The New Bridge Road site, which can house a boutique hotel development with about 200 rooms, is also thought to be attractive as it is very close to Outram Park MRT Station and should receive several bids, analysts said. It has a maximum permissible gross floor area of 168,853 sq ft.

Current quarter sees big jump in property investment sales

Source : Business Times – 26 Jun 2009

Investment sales of Singapore real estate so far this quarter have hit $953.9 million, a jump of 248 per cent from $273.8 million in the first quarter, says CB Richard Ellis (CBRE).

The increase came as residential investment sales quadrupled on the back of a growing number of high-end condo purchases, a pick-up in transactions of Good Class Bungalows (GCBs) and the acquisition of a few small residential sites.

The sale of three office blocks – Parakou and VTB buildings on Robinson Road, and Anson House – for a total of $259.6 million also helped breathe some life into the moribund office investment sales market.

Investment sales are a gauge of developers’ and investors’ medium to long-term confidence in the property sector. The pick-up in Q2 was against the backdrop of a dramatic stock-market rally that has led to an improvement in home buying.

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

With a tally of $1.2 billion so far in the first half, CBRE executive director (investment properties) Jeremy Lake reckons full-year investment sales could come in at $2 billion to $2.5 billion, ‘depending on how long the burst of activity in the residential sector lasts’.

The figure for the whole of last year was about $18 billion, down from the record $54 billion in 2007.

As for the latest Q2 showing, 63.5 per cent or $605.6 million was from the residential sector.

This sum included 14 GCB deals, up from just three GCB transactions in the first quarter.

‘For the Singapore investment market, the first movers are the Asian private investors who are willing to buy at current prices which they deem reflect an attractive discount from the peak,’ Mr Lake said.

‘Their sweet spot is $20 million to $85 million and their focus is office and/or residential investments.’

On the other hand, institutional investors are mostly adopting a wait-and-see strategy for Singapore, judging that the fundamentals are weak and better opportunities will arise in six to 12 months.

‘For second-half 2009 there will be more investment deals, although most of the owners who wanted or needed to sell have already done so, and accordingly the choice of investment opportunities could be limited,’ Mr Lake said.

Agreeing, DTZ’s senior director for investment advisory services Shaun Poh said investment sales activity may ease slightly in Q3 because of a limited supply of small investment-quantum commercial properties available for sale.

‘However, we may see some deals that are currently cooking being sealed in Q3,’ he said.

‘For the residential sector, some developers who have enjoyed strong sales at their showflats over the past few months are looking to restock their residential land bank selectively,’ he added.

S’pore’s rich list takes a beating

Source : Straits Times – 26 Jun 2009

SINGAPORE’S rich were not spared the effects of the global financial meltdown last year, with the number of millionaires here shrinking 22 per cent to 61,000 people.

A year earlier, Singapore boasted one of the world’s top 10 fastest-growing millionaires’ clubs, with a 15.3 per cent expansion to 78,000.

A millionaire is defined as a person having net assets of at least US$1 million (S$1.45 million), excluding his main residence and everyday possessions.

Observers say the sharp drop is probably because the well-heeled here were invested heavily in equities and real estate, both of which have suffered in the crisis.

The figures emerged in the 13th annual World Wealth Report released yesterday by banking group Merrill Lynch and research firm Capgemini.

On average, Singapore’s ‘high net worth individuals’ were worth about US$3 million each, said Mr Kong Eng Huat, managing director and head of South Asia advisory at Merrill Lynch Global Wealth Management.

‘A lot of these (individuals) are in the US$1 million to US$5 million range. So that’s why you find a greater drop in terms of the high net worth population because…when the market comes down and they have invested heavily in equities then they would not be a high net worth individual any more,’ he added.

Globally, the number of people in the millionaires’ club fell by about 15 per cent to 8.6 million, which is below the figure in 2005. North America, Europe and the Asia-Pacific registered the largest declines.

The total wealth of these individuals fell to US$32.8 trillion, also below the levels in 2005. However, this is forecast to recover in all regions by 2013, with Asia-Pacific leading the growth.

More than half of the world’s millionaires last year came from three countries – the United States, Japan and Germany. The proportion is a slight increase from the year before.

China climbed one rung to become the country with the fourth largest millionaires’ population of 364,000.

The World Wealth Report also indicated that the millionaires have reacted to the crisis by moving more of their assets into cash and fixed-income securities – and away from equities.

A larger proportion of wealth was allocated to art collections and jewellery, gems and watches. This category hit 47 per cent last year, up from 38 per cent in 2006.

Mr Bhalaji Raghavan, Capgemini’s banking solutions leader for Asia-Pacific, said: ‘One of the reasons is that people believe that (these items) over a long period of time increase in value, so it’s a lot safer than putting their money in financial markets.’

Giving to charity was forecast to be on the decrease on average across the globe this year, especially in North America, but increasing in the Asia-Pacific region.

Private banks contacted by The Straits Times said their clients are now staying away from high-risk investment products.

‘Currently, it is back to basics of investment, and we have seen that cash positions in portfolios are high,’ said Mr Rajesh Malkani, Standard Chartered Private Bank’s head of Southeast Asia.

Mr Raj Sriram, RBS Coutts’ head of private banking in Singapore, agreed: ‘From a private bank perspective, the main challenge is that clients have become more risk averse due to volatility in the markets…Clients today largely prefer simpler, liquid investments.’

Retail gets a facelift in Orchard Road

Source : Today – 26 Jun 2009

ORCHARD Road, Singapore’s most famous retail belt, is set to be the densest shopping street in the region, according to the Orchard Road Business Association.

With three new mega-malls scheduled to open for business by the end of the year, about 1.8 million sq ft of new retail space will be added, bringing the total space available on Orchard Road to 8 million sq ft. And the 2.2km stretch of road is also set to reveal a new look as $40 million worth of refurbishments and enhancements to infrastructure are nearing completion.

Naturally, the Orchard Road Business Association is pleased with the makeover.

“We see 2009 as a year that we will remember as a milestone in the modern Orchard Road, ” said chairperson Sng Ngoi May. “The government is spending about $40 million, resulting in wider, re-tiled pedestrian walkways, urban green rooms and state-of-the-art lighting, all of which will lend the environment for more street activities.”

The revamped Orchard Road is expected to draw in larger crowds. Already, it attracts more than 7 million foreign visitors every year, along with hordes of local shoppers. It has, in fact, been consistently ranked as Singapore’s most-visited, free-access tourist attraction.

Cushman & Wakefield’s associate director of retail, Mr Turner Canning, said the three new malls would allow existing brands to expand and provide “a format for them to express themselves in Singapore where they’ve never done so before”.

Orchard Central will be first new mall to open in the Orchard area in more than a decade when its soft launch takes place on July 2. The new kid on the block is upbeat about business prospects.

“This part of Orchard Road has not been maximised in terms of its potential, ” said Ms Susan Leng, director of retail management at Far East Organisation. “With the new Somerset precinct, and with ourselves, with established neighbours like Centrepoint, we’ll create a stronger magnet for both locals and tourists.”

ION Orchard is also set to open next month. It will change the look and feel of the shopping belt with its media wall, which will showcase the mall’s brands, and serve as a canvas for multimedia art.

The overall transformation is timely. Said Mr Canning: “18 months ago, Orchard Road was a bit behind the curve. There had been no significant developments or changes along the road for roughly 10 years, since the crash in 1997. What we’re seeing now is a rejuvenation.”

Not collectively speaking

Source : Today – 26 Jun 2009

IN HIS Monday Blues column, Today Editor-At-Large Conrad Raj opined that it is “Time to revamp the Strata Titles (ST) Boards” (June 22) .

In fact, it is not merely the composition of the ST Boards, but the present ST rules as well that need to be looked into, and a thorough “revamp” made in the larger interests of subsidiary proprietors (SP), as unit owners in private estates are described.

A report in The Business Times in March 2008 reported that “The Ministry of Law is understood to be planning a review soon (sic) of the revised en bloc legislation, which took effect on Oct 4 (2007)”, with a Ministry of Law spokeswoman on record as saying: “Since the amended Land Titles (Strata) Act came into effect, we have received feedback mainly from affected owners to make the collective sale process even more rigorous by introducing more safeguards”.

That was well over a year ago. All that has happened since is that there have been several legal suits involving collective sales, with some startling decisions. There is no escaping the stark reality that the threat of an en bloc sale will always exist whether the property market is robust or moribund as long as a collective sale will fetch more than scattered sales of individual units.

It is only fair to all who own and live in private estates that the Government makes known speedily whether the changes, once proposed, are likely to be reviewed.

For the huge majority, the purchase of a property is without question the biggest capital investment they make in their lifetime, and typically they spend most of their working lives to pay off for their homes. Seen in this light, and against the Government’s once-avowed objective of promoting self-houseownership, and its natural extension to sinking roots in Singapore, it bucks logic or even a sense of justice that many or even just some of them should be compelled to move out of such homes against their will because of an en bloc sale, even if some capital profit is realised in the process.

There are plenty of areas where the present rules can, and in fact, urgently need to, be changed.

The rate of success of collective sales varies depending on the age of the estate. In public-listed companies, where the individual stakes can be quite minimal and the emotional impact much less in comparison, the rule is that as long as 10 per cent of the capital still remains in the hands of minority shareholders, they cannot be compulsorily bought out.

Legislation should also be introduced that SPs who have an alternative property to which they can move in the event of a successful en bloc sale should be automatically disbarred from voting in favour of such sale, as they are in the privileged position vis-a-vis SPs who own just the property they stay in.

I have heard of some who buy a property with the intention of starting an en bloc sale, in the hope of benefiting from the resultant increased price at which it would most probably be sold.

SPs themselves and/or those who have close relatives in the property business should also similarly be disbarred from participating, as there is bound to be the suspicion of a conflict of interest, or even collusion.

One thing is certain when en bloc sales come into the picture: The harmony of neighbourly living is disrupted, and probably lost for ever, sometimes leading to acrimony and unsocial, even criminal, acts of vandalism as was widely reported in the media. If the changes in rules made in October 2007 have according to the Ministry of Law led to complaints by affected owners, it is probably time to scrap those rules altogether, and leave the purchase and sale process to individuals, and a collective sale to proceed only where there is total unanimity among owners, as is the case in landed property.

A Singaporean’s home should remain his castle, in which he can lock himself securely against en bloc raiders bent on ejecting families for their own purely selfish ends. It is imperative that Govenment moves swiftly towards the changes they intended to make early last year.

Narayana Narayana

A homely HDB neighbourhood is no longer a question

Source : Straits Times – 25 Jun 2009

A homely HDB neighbourhood is no longer a question of bricks and mortar

I REFER to the Ministry of National Development’s proposed Town Council Management Report, which is intended to better inform and involve HDB residents ‘in shaping our housing estates into a more pleasant place for all to live in’.

In general, HDB dwellers already enjoy relatively well-managed estates, which have resulted in a good quality of life.

However, as the population grows and more affluent neighbourhoods are twinned with HDB estates, estate managers must move beyond bricks-and-mortar management and consider strategies that will allow residents to enjoy their home free from any nuisance, annoyance and disturbance.

Needless to say, to meet these challenges, managers of today’s HDB estates will need to go out more often and work more closely in partnership with other agencies and residents, to produce the highest possible quality of service and life for the communities in the estate they manage.

As residents can have a direct influence on the success or failure of estate management works, they too need to be assessed in terms of their cooperation with estate managers and other partners in making the estate they live and play in, clean and well-maintained; and in keeping the peace and forging neighbourliness and harmony among residents.

The Town Council Management Report should not be misused as a fault-finding mechanism by residents, or it will fail to deliver the desired outcome sought by them and estate managers alike.

Jolly Wee

ION Orchard to use technology to stand out from competition

Source : Channel NewsAsia – 25 Jun 2009

ION Orchard is set to be only the second new mall to open on Orchard Road in the past decade on July 21, but it will face competition from new malls springing up along the iconic shopping belt in the next few months.

The shopping centre said it is looking to stand out from the rest through the use of technology, such as a multi-media wall that can change the appearance of Orchard Road.

It said it will be offering a unique shopping experience for patrons, and hopes to draw shoppers with a mix of large outlets and new concepts.

Said Soon Su Lin, chief executive officer of ION Orchard: “We wanted our tenant profile to be engaging and refreshing, and we set ourselves the ambitious target of having more than 60 per cent flagships, new to market, new concepts.

“Today we have exceeded this target – we have 70 per cent of tenants who are flagships, new to markets, new concepts.”

Among the new brands that have yet to be introduced to Singapore include the trendy Japanese restaurant Itacho Sushi.

Meanwhile, local tea salon TWG Tea Company will be making its largest investment to date at ION.

Said Maranda Barnes, director of TWG Tea Company: “The boutique will also be a bit larger. We can feature some museum pieces as well. Different teas, tea samovars, tea accessories that are one-of-a-kind pieces that we were not able to feature before.”

ION Orchard is pulling all the stops to make sure it is a success.

Apart from its retail offering, ION Orchard will also change the look and feel of Orchard Road.

For example, a multimedia wall will be programmed to display different lights and colours at different intervals to match different themed events.

Said Soon: “There are various factors to make the success of a mall. We felt we need to integrate all of this. Besides a strategic location, having a unique iconic building is important as well because we want to this be a must-visit destination in Singapore for shoppers as well as visitors to Singapore.”

The mall has its own art programme and a 5,000 square foot art gallery.

There will also be a calendar of events and promotions to be held at ION Square, which is right in front of Orchard Road.

The mall is jointly owned by Singapore’s CapitaLand and Hong Kong’s Sun Hung Kai Properties.

Resorts World at Sentosa cuts expected visitor arrivals

Source : Channel NewsAsia – 25 Jun 2009

Resorts World at Sentosa has cut its visitor arrivals forecast to 13 million visitors during its first year of operations, down from an earlier estimate of 15 million, due to the global financial meltdown.

The operator is also projecting a lowered 13 per cent internal rate of return for the integrated resort.

The resort is still very much a work in progress, but Resorts World at Sentosa said it expects two-thirds of its attractions and hotels to be completed by the first quarter of 2010.

These include the casino, which will be located at basement one, near the luxury Maxims Hotel.

Fittings will start in August for rides and shows at Universal Studios Singapore, including the 3,500-seater Waterworld and the world’s tallest duelling roller coasters.

Despite cutting back on expected visitors for the first year, Resorts World is confident of attracting the crowd as the economy improves.

Michael Chin, executive vice-president of projects at the Resorts World at Sentosa, said: “We take a bit of precaution at reviewing our numbers. But as the economy picks up, things turn up, I’m sure the numbers will look better for us.”

“Our focus is on the Asia market, within the seven-hour flight radius. We’re looking at markets like China and India.”

To complement the neighbouring shopping centre, Vivocity, Resorts World is in talks for niche tenants for its 500-metre stretch of retail, food and beverage outlets – also expected to be ready in early 2010.

So far, it has secured Malaysia’s luxury goods retailer Valiram, which owns the Jimmy Choo brand.

Construction for the second and final phase of Resorts World will start early next year, and is expected to be completed in two years. It will include two new hotels, a spa and a Marina Life Park.

Tenders have not been called, but Resorts World said it will keep construction costs within the overall S$6.6 billion budget.

Source : Channel NewsAsia – 25 Jun 2009

The government will launch a tender for a hotel site at New Bridge Road in two weeks’ time, after a developer committed to at least S$43,888,888 for the land parcel.

The site is under the Reserve List of the Government Land Sales programme.

It has an area of about 0.45 hectares and will be able to generate a maximum permissible gross floor area of about 15,687 square metres with a lease period of 99 years.

The site is located within the Chinatown Historic District, and can be developed into a boutique hotel.

Under the Reserve List system, a site will be put up for sale only if a developer commits to bid at or above the minimum price which is acceptable to the government.

Analysts see increased activity in investment sales market in Q2

Source : Channel NewsAsia – 25 Jun 2009

There has been a huge spike in activity in the investment sales market in Singapore during the second quarter this year.

According to property consultancy CB Richard Ellis, total property investment sales in the period so far have amounted to some S$954 million.

The amount is up by more than three times from the previous quarter.

CBRE said Thursday the good showing was due to the sharp recovery in the stock market.

In particular, the residential market witnessed a substantial increase in buying activity.

Total residential investment sales, including Good Class Bungalows, accounted for 63.5 per cent of the total, or S$605 million in transacted value.

The figure is up sharply from S$150 million in the January to March period.

There was a sharp pickup in sales of Good Class Bungalows with 14 transactions, including the sale of 2 Binjai Rise, which was reportedly bought by actor Jet Li.

A hotel site at Short Street was also sold during the second quarter, under the government’s land sales programme.

Fragrance Assets was awarded the site after submitting the highest bid of S$15.5 million.

Asia developers eye new projects

Source : Business Times – 25 Jun 2009

Asian property firms are beginning to see light at the end of the tunnel and several are positioning for an upturn even as the world economy struggles to recover from its worst recession in decades.

The mood among US and European executives at this week’s Reuters Global Real Estate Summit is glum, but Asian counterparts are more upbeat with some revealing plans for new projects in anticipation of an upturn later this year.

For instance, Chinese commercial property developer SOHO said it has built up a war chest of US$1.9 billion to replenish its land bank and intends to start new projects in Shanghai and Beijing in coming months.

Indiabulls, India’s third-largest listed property developer, aims to launch six to seven residential projects in the financial year ending in March 2010 on the back of an expected recovery in demand.

‘The general mood has been cautious, but there is also optimism. Asian companies in general are in much better shape compared to their peers in other regions,’ said Ayala Land chief financial officer and Asian Public Real Estate Association president Jaime Ysmael.

Spurring the optimism in Asia is a recovery in residential markets, with price cuts drawing buyers in China, Hong Kong and Singapore, where saving rates are high and banks are prepared to lend.

The volume of transactions in these places are close to levels seen during the bull market of 2007 and residential property values have begun to edge upwards as developers such as Singapore’s City Developments raise prices.

Asian property values did not rise as much as in the US and parts of Europe this decade. In dollar terms, property in countries such as the Philippines are cheaper than before the onset of the Asian crisis in late 1997.

Interest rate cuts and government stimulus plans are also helping regional property markets recover.

Singapore residential prices were supported by mortgage rates that were below rental yields, a Bank of America Merrill Lynch report said this week.

‘At the current mortgage rate of around 2.75 per cent, our net cost of carry model implies that prices can rise by 30 per cent before home buyers enter negative carry,’ it said. The bank predicts Singapore home prices will rise 20 per cent next year.

Singapore’s housing market has been hit hard by the downturn, with home prices plunging nearly 14 per cent in the first quarter of this year, the steepest drop in over 30 years, according to government data.

Separately, Nomura said unemployment was stabilising in Hong Kong and forecasts home prices and rents in the Chinese territory will rise by 22 per cent and 11 per cent, respectively, this year.

A poll of 10 analysts conducted in conjunction with the Reuters Global Real Estate Summit showed China home prices are expected to gain an average of 10 per cent between now and the end of 2010.

The outlook for Asia’s office market remained negative but most developers said rents have stabilised after falling sharply in the fourth quarter of 2008 and earlier this year.

Some investors said any pick-up may not be sustainable.

Ion Orchard, Orchard Central have healthy lease figures

Source : Business Times – 25 Jun 2009

Ion is 94% leased, Orchard Central is 80% leased, say their developers

ION Orchard, which is due to open in a month, is 94 per cent leased, the mall’s developer, Orchard Turn Developments, said yesterday.

Previously, the developer said the mall was 80 per cent leased and it was in advanced negotiations for the remaining space.

At the other end of Orchard Road, 80 per cent of space in Orchard Central is also committed. Previously, developer Far East Organization said the mall was 65 per cent leased.

Orchard Central is already open to shoppers. Tenants have progressively opened for business since early June. The mall’s soft opening is slated for early July, by which time about 100 shops should be open, Far East says.

As for Ion Orchard, management hopes many of the 333 shops will open in time for the mall’s soft opening on July 21.

‘They (the tenants) are rushing to finish renovations and we hope as many of them as possible will open with us,’ said Soon Su Lin, chief executive of Orchard Turn Developments, which is building the mall. Orchard Turn Developments is jointly owned by CapitaLand and Hong Kong’s Sun Hung Kai Properties.

To give tenants an incentive to open on time, Ion Orchard said in March that they would get 30 per cent rebates off base rents if they opened for business by July 21. The response has been ‘very positive’ so far, Ms Soon said.

Neither Ion Orchard nor Orchard Central have given a recent update on asking rents. Ion Orchard has said previously that its rents range from $20 to $80 per sq ft per month (psf pm). Rents at Orchard Central range from $20 psf pm to more than $70 psf pm, Far East Organization said late last year.

But industry watchers have said that signing rents at most existing Orchard Road malls have since fallen, which means asking rents at Ion Orchard and Orchard Central could also have edged down.

Ion Orchard said yesterday that more than 21 per cent of its 640,000 sq ft of retail space will be dedicated to food and dining – with many casual and fine dining outlets offering local and international fare, plus food and confectionary stores and a gourmet supermarket.

28 restaurants and cafes will be spread over different levels of the mall, with the largest clusters on level 4 for fine dining, and basements 2 and 3 for casual dining. In addition, basement 4 will feature a food hall, with 80 stalls offering a range of cuisines for all tastes.

Ms Soon said that Ion Orchard remains on the lookout for suitable retail and F&B concepts for the 6 per cent of space that has yet to be leased.

Boom in resale homes

Source : Straits Times – 25 Jun 2009

THE mini boom that started in the sale of new flats has now spread to the resale homes market, with transactions rocketing 71 per cent in the second quarter.

Sellers have quickly become attuned to the unexpected resurgence in demand and are jacking up asking prices, according to consultants Jones Lang LaSalle.

Much of the demand is coming from HDB upgraders who are still able to get reasonable prices for their flats, allowing them to move up the housing ladder.

The activity in the resale market follows strong sales of new private homes. Levels have exceeded 1,000 units every month since February compared with a monthly average of 330 units last year. Prices are also showing resilience amid the downturn, with resale prices beginning to rise in all categories.

The property sector rallies seem to contradict prevailing economic realities, industry experts acknowledge. DTZ’s head of Southeast Asia research, Ms Chua Chor Hoon, told a property seminar yesterday that it is too early to tell if the Singapore market is on its way to recovery: ‘Unlike Hong Kong, we don’t have a China behind us.’

Jones Lang LaSalle’s head of research for Southeast Asia, Dr Chua Yang Liang, told The Straits Times: ‘My concern is that the price rise in the resale market is not supported by economic growth or personal income growth.’ It is instead largely backed by money earned in the previous bull run, which is not sustainable, he said.

Resale demand, said Jones Lang LaSalle, is largely for finished projects, driven by the need for immediate occupation and good rental yields. Prelimary second-quarter estimates show HDB upgraders accounted for 46 per cent of resale deals, up 11 percentage points from a year ago.

HDB prices have not fallen much, so owners can still sell at attractive prices and upgrade to a private home. The demand has pushed up resale prices, even though affordability remains key.

While prices of freehold units were down 14.6 per cent on a per square foot (psf) basis in the second quarter, new mass market home prices were up nearly 7 per cent, said a CBRE Research statement yesterday. Subsale prices of 99-year leasehold apartments rose by 22 per cent in the second quarter.

When compared with prime market sectors, the mass market segment shows the highest rebound, said Jones Lang LaSalle. Average resale prices were up 9.4 per cent to $580 psf in the second quarter compared with the first quarter.

They are now 49 per cent above the low point of the second quarter of 2005 but remain about 17 per cent below the first quarter peak last year.

Average resale prices of prime luxury homes rose 7.8 per cent from the first quarter to $1,800 psf in the second quarter. But this is a fall of 45 per cent from the second quarter of 2008.

Some buyers are increasingly more willing to commit as they believe this discount is sufficient, said Jones Lang LaSalle. For instance, resale deals at Ardmore Park were done at an average of $2,146 psf in the second quarter compared with one deal at $1,976 psf in the first quarter.

Some analysts warn of too much exuberance given the ample supply and falling rents but others are more positive. A recent Credit Suisse report said that while new homes sales may slow, the resale market is likely to pick up the slack. An earlier UBS Investment Research report highlighted the rise in resale deals as evidence of sustainable recovery in the physical property market.

Private resale home deals shoot up in Q2

Source : Business Times – 25 Jun 2009

Average resale prices up from Q1 but still significantly below peak levels last year

THE buying frenzy at property launches has spread to the secondary market. The number of private homes sold in the resale market – excluding sub-sales – has risen to 1,464 units this quarter, based on Urban Redevelopment Authority caveat data at June 19.

The figure is 71 per cent higher than the 856 units in Q1 this year, according to an analysis by Jones Lang LaSalle (JLL).

And more caveats could surface when full Q2 data emerges, with sales matching – or even surpassing – the 1,706 units sold in the resale market in Q2 last year, JLL reckons.

Average resale capital values have risen in Q2 from Q1 but are still below last year’s peaks across all tiers – mass market, prime and luxury prime. This could be a key factor fuelling resale deals. Another factor could be HDB upgraders keen on buying a completed private home they can move into immediately. Also, rental yields from investing in completed property are higher than the measly interest rates earned on fixed deposits.

In another development yesterday, CB Richard Ellis said the median price per sq ft of freehold non-landed private homes sold by developers slipped 14.6 per cent from $1,051 psf in Q1 2009 to $898 psf in Q2, based on caveat data as at June 24.

However, once caveats for higher-priced projects like Martin Place Residences, The Wharf Residences and One Devonshire are lodged, the median psf price for Q2 is expected to be higher than the Q1 figure, CBRE added.

The firm expects developers to sell 3,500 to 4,000 new private homes this quarter, which would be 35 to 54 per cent higher than the Q1 figure of 2,596. The expected Q2 sales tally would be similar to levels achieved during the peak year of 2007, when developers sold an average of 3,700 units per quarter.

‘The stock market rally, coupled with strong liquidity and developers’ discounts, have resulted in a surge in new home sales this quarter,’ CBRE executive director (residential) Joseph Tan said.

JLL’s head of research (South-east Asia) Chua Yang Liang said additional factors buoying buying sentiment include pent-up demand and the interest absorption schemes. However, he cautioned: ‘I don’t reckon the current activity in the market is likely to remain if prices continue to rise unsupported by GDP growth.’

CBRE said that based on caveats lodged so far, HDB upgraders accounted for 65 per cent of buyers of new homes in the first half of 2009, higher than their 44 per cent share for the whole of last year. HDB upgraders have also been active in the secondary market, accounting for 49 per cent of buyers of resale and sub-sale units, up from their 33 per cent share last year, the firm added.

Sub-sales and resales are secondary-market transactions. Sub-sales involve projects that are yet to obtain a Certificate of Statutory Completion (CSC). Resales relate to projects that have received CSC.

JLL’s analysis shows the average resale capital value for non-landed homes in the mass market was $580 psf in Q2, up 9.4 per cent from Q1. It is also 17 per cent below the Q1 2008 peak and remains highly affordable to most HDB upgraders, JLL said.

In the luxury market, the average resale capital value rose 7.8 per cent quarter on quarter to $1,800 psf in Q2. Against the peak in early 2008, the latest Q2 figure was down 34 per cent.

Signs of upturn in resale market: JLL report

Source : Today – 25 Jun 2009

As buyers thronged showflats amid improved sentiment in recent months, the resale market also saw an uptick in the second quarter, according to a report by Jones Lang LaSalle (JLL).

Using recent housing data, the consultancy estimated that resale volumes increased more than 70 per cent from the first quarter to reach 1,464 transactions.

The two main reasons were pent-up demand from Housing Development Board (HDB) upgraders – whose own flats were seeing slower price declines than private homes – and the affordable pricing despite marginal increases, said JLL.

HDB upgraders made up almost half the buyers in the second quarter’s resale market, some 11 percentage points above the 35 per cent recorded in the same period a year earlier.

Further attracting HDB upgraders was the fact that resale prices for private homes remain “highly affordable”, JLL said. While current average resale prices in the mass market have surged 9.4 per cent from the previous quarter to $580 per square foot (psf) – the highest rebound across other submarkets – they remain 17 per cent below the peak of the first quarter of last year, the firm estimated.

In the luxury segment, it found that buyers were more willing to commit, seeing that average prices of $1,800 psf represented a 34-per-cent discount from peak. This is despite current prices being 53 per cent above the last trough in the first quarter of 2005, JLL noted.

South East Asia head of research Dr Chua Yang Liang believes the uptick is not sustainable, as the buoyancy is coming from short-term factors such as pent-up demand, discounted pricing and attractive mortgage packages.

The sustainability of any market recovery, he said, depends on longer-term factors such as growth in demand and economic production.

“I do not reckon the current activity in the market is likely to remain if prices continue to rise unsupported by growth of gross domestic product,” Dr Chua said.

Are investors banking on a rental recovery?

Source : Today – 25 Jun 2009

Consider this: Rentals are sliding while residential property sales continue to scale new heights in the current troubled times. With almost half of recent buyers being potential investors with private addresses, could these people be punting on a rental recovery?

If so, they may be staring at a wait of several years for the uptick.

“I don’t expect any rental recovery for the rest of this year,” said PropNex chief executive Mohamed Ismail.

ERA Asia Pacific associate director Eugene Lim concurred. “Tenant demand has nothing to do with property prices, so even though sales have gone up, the rental market is still challenging,” he said.

Some analysts are even projecting that a rental recovery will not kick in until three years later.

According to the Urban Redevelopment Authority, rentals slid 8.5 per cent in the first quarter of this year – down from 5.3 per cent in the fourth quarter of last year – as the double whammy of a weak economy and new supply hit the market.

Mr Mohamed expects second-quarter rental rates to be even more dismal than those of the first quarter. After all, rentals went up 40 per cent in the two-and-a-half years since 2006 as the property market boomed, he noted.

Still, residential property buyers continue to pile in, shrugging off predictions that rentals would continue sliding for the rest of the year. Perhaps they are not even interested in rental yields.

Said Cushman and Wakefield Singapore’s residential head Connie Looi: “Buyers are rushing in to buy because there has been a downward adjustment in prices. It’s not so much because of rental yields, which is about 3.5 per cent on average. It’s more for capital appreciation down the road.

Mr Mohamed cautioned: “Even if you buy property from an investment angle now, it’s very hard to predict what the market will be in three years”.

Some market watchers, however, are bullish on the rental market. UBS Investment Research analysts said in a report dated June 18 that they expected rents to “stay flat for the rest of the year and potentially rise 2 to 15 per cent in 2010″. They calculated that prime rents had fallen 12 per cent in the year to date.

So who should invest now? “You need to have a greater appetite for risk and greater holding power to go in now – these are investors with mid- and long-term views, about five years and beyond,” said Mr Mohamed.

Hotel 81 in Tiong Bahru hasn’t got a licence yet

Source : Straits Times – 24 Jun 2009

WE REFER to the letter, ‘Don’t tarnish image’ (June 13). We thank the residents of Tiong Bahru for their feedback.

On the feedback that the Singapore Tourism Board (STB) has allowed Hotel81 to operate in close proximity to the Tiong Bahru residential area, we would like to clarify that no licence has been issued for the hotel to start operations in Tiong Bahru. Before they begin operations, hotel developments must be licensed by the Hotels Licensing Board (HLB), and applications to the board are required to comply with the requirements of the relevant government agencies.

A licence will be issued only if the application meets all requirements stipulated in the Hotels Act. However, HLB can also revoke the licence if there is any deviation from the hotel licensing conditions, such as evidence of vice activity in the hotel.

The Urban Redevelopment Authority (URA) had granted approval for a hotel use at 1-9 Eng Hoon Street, as it is located in a mixed-use area where there are existing hotel developments in the vicinity.

With regard to the heritage value of Tiong Bahru, URA is mindful of maintaining the unique charm of the area. In fact, this was the reason why URA decided to conserve the flats at Tiong Bahru. Regarding the concern on illegal operations of workers’ dormitories, URA has already served Enforcement Notices on the persons responsible for converting the residential premises in Tiong Bahru to unauthorised workers’ dormitories. If the unauthorised use does not cease by the stipulated date, court actions will be taken against the persons responsible for the infringements.

STB and URA believe that the residents’ concerns can be addressed through collaboration with law enforcement agencies, and other government bodies to ensure that the Tiong Bahru area retains its distinct charms.

Muhamad Rostam Umar
Director (Communications)
Singapore Tourism Board

Peter Tan
Director (Development Control, Central)
Urban Redevelopment Authority

Check out SAEA if you have property brokering queries

Source : Straits Times – 24 Jun 2009

WE REFER to Mr Roger Lim’s Forum Online letter, “Time to set up agency to regulate property brokering”, yesterday.

We take this opportunity to inform Mr Lim that the Singapore Accredited Estate Agencies (SAEA) was launched as an accreditation scheme for estate agencies and agents in November 2005. Major government bodies, namely the Ministry of Finance, Inland Revenue Authority of Singapore and Housing Board, were involved in its inception.

Now an accreditation body, SAEA has accredited key estate agencies with approximately 23,000 agents on their registers. In May last year, SAEA implemented a Common Examination for Salespersons (CES) to provide a basic competency yardstick for agents primarily active in the HDB resale sector. There are now more than 2,500 who have passed the CES.

We would like to clarify that HDB lessees and buyers need not engage the services of an estate agent for the resale transaction. However, there are benefits in appointing an estate agent, such as convenience and tapping on the networks of the agent to sell/purchase expeditiously.

An estate agent appointed by the seller does not have the prerogative to insist that the prospective buyer use his services or to refrain from selling to the buyer who refuses his services. Such an agent is also not acting in the interests of the lessee (seller) if he does not reveal the prospective buyer’s offer to him or declines to co-broke to ensure he gets more commission.

It is recommended that an agent acts and collects commission only from one party to the transaction, who could either be the seller or buyer. However, an exception may be made if both seller and buyer are aware and consent to the agent acting for both parties. The agent should preferably obtain both parties’ consent in writing.

Further, a visit to our website at www.saea.org.sg will lead Mr Lim to our Seller’s and Buyer’s Guides, which we believe will come in handy when he is selling or buying properties. If Mr Lim has yet to engage an agent, he may wish to consider SAEA accredited agents or salespersons as they are bound by a strict code of conduct and ethics.

SAEA has also set up a Disciplinary Panel and Mediation Centre to look into the misconduct of accredited agencies/agents/salespersons and mediate disputes among parties to a real estate transaction.

Dr Tan Tee Khoon
Chief Executive Officer
Singapore Accredited Estate Agencies Ltd

First payouts from HDB lease buybacks

Source : Straits Times – 24 Jun 2009

RETIRED taxi driver Chia Boon Chuan was all smiles yesterday as he became one of the first home owners to receive a payout from the Housing Board’s new Lease Buyback Scheme (LBS).

The 68-year-old bachelor has been living alone in his two-room Queensway flat for more than 40 years. With no children to provide financial support, he has been dipping into his savings and annuities for the past eight years.

Now, under the LBS, he has received a $5,000 upfront payment and will be paid more than $400 a month for the rest of his life, in exchange for the tail-end of the 99-year lease of his flat.

‘I’m very, very happy,’ Mr Chia said. ‘I even tried to persuade some of my neighbours and friends to apply…I’m saving up my money for a rainy day, but I’ll probably buy a laptop later as at the moment I’ve no computer.’

Five other home owners also received cheques from the HDB yesterday. A total of 344 applications had been received as of yesterday.

Under the scheme, the HDB will buy back the tail-end of a flat’s lease at market rate, leaving the household with a remaining 30-year lease. A $10,000 subsidy will be given and half of this paid upfront. The other half, along with the money for the lease, will be used to buy a new CPF Life annuity in the home owner’s name that will provide a monthly stream of income for life.

Applicants have to undergo financial counselling to ensure they understand the terms and conditions of the scheme. For instance, they cannot bequeath the flat to their children.

The LBS targets those without the option of living in a rental flat, downgrading to a smaller flat, sub-letting their entire flat, or relying on family support, said Mr Tay Kim Poh, HDB’s chief executive.

He explained: ‘The applicants (so far) are…mostly retirees who don’t have other sources of incomes. Most of them are living (only) with their spouse, so in that sense they do not get much family support from their children.

‘This is a good scheme for them as it provides a steady source of income for their retirement needs. And they can continue to live in the same flat – the same environment which they’re familiar with.’

Another of those who received a payout yesterday was retired driving instructor Koh Meng Seng, 78. He thinks the monthly income will enable him to go for a holiday and reduce the financial burden on his son, who gives him $6,000 a year.

Madam Ng Siew Yong, 58, who works part-time at Sheng Siong Supermarket, lives in a Commonwealth flat with her retired husband Ng Tiong Gee, 72. They do not take money from their two sons, both married and with children, as ‘they have their own families to raise’.

‘I will save this money so that if anything happens, I can use it and won’t have to borrow money from other people,’ said Madam Ng.

The HDB has been conducting outreach programmes since March to promote the LBS. Mr Tay estimated 90 per cent of the 25,000 low-income elderly residents eligible for the scheme are now in the know. He added that the response to the LBS has been ‘encouraging’.

Some residents have requested that the scheme be extended to cover a wider range of flats, including four- and five-roomers.

Mr Tay said the scheme is relatively new, with feedback still coming in, but added that ‘we’ll have to review and see whether we can extend the scheme to the other groups’.

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How it works

~ THE Lease Buyback Scheme (LBS) was launched on March 1. As of yesterday, the HDB had received 344 applications and given payouts to six households.

~ The scheme is available to low-income Singapore citizens who own three-room or smaller flats, with an outstanding mortgage loan of $5,000 or lower.

~ Applicants must be at least 62 years old.

How it works:

~ The HDB will buy back the tail-end of the flat lease at market rate, leaving the household with a remaining 30-year lease.

~Out of the $10,000 government subsidy given to those on the scheme, $5,000 is paid up front as a lump sum.

~ The other $5,000, along with the money for the lease, is used to buy a new CPF Life annuity in the home owner’s name.

~ The amount of monthly income that a household receives from the scheme depends on the market value of the flat, the amount of remaining lease, and the age and gender of the applicant.

World Bank-Singapore Urban Hub launched

Source : Business Times – 24 Jun 2009

THE World Bank-Singapore Urban Hub was launched on the sidelines of Singapore International Water Week yesterday. Its aim is to use Singapore’s expertise in urban development and the World Bank’s knowledge and operational experience to benefit developing countries.

The launch of the hub comes after Singapore and the bank signed a memorandum of understanding last year to expand cooperation on urban development solutions.

Using Singapore as a test-bed, the hub will bring together Singapore’s public agencies, research institutes as well as private sector players to look into solutions for developing cities.

The hub will work with bodies such as International Enterprise Singapore, the Urban Redevelopment Authority, Public Utilities Board and Centre for Liveable Cities.

Finance Minister Tharman Shanmugaratnam said: ‘The Urban Hub is a major step forward in Singapore’s strategic partnership with the World Bank. It allows Singapore to share its experience on a whole set of issues to do with making cities liveable – from water and waste management, to land use planning and urban conservation. Meanwhile, James Adams, the World Bank’s vice-president for East Asia and the Pacific, said: ‘We will now be able to develop a centre of excellence in Singapore to more effectively leverage our global knowledge and Singapore’s recognised experience in urban management and finance to provide more timely advice and solutions to developing countries in Asia.’

Separately, Mr Adams also announced that the World Bank Office in Singapore will be led by Kamran M Khan from Aug 1.

Mr Khan, who is an American national, was most recently the bank’s infrastructure finance adviser for East Asia and the Pacific.

Singapore real estate ‘not hot’ for investors

Source : Straits Times – 24 Jun 2009

SINGAPORE no longer appears on the radar screen of most non-listed institutional investors and fund managers, according to the latest survey by Asian Real Estate Association (Area).

This year’s hottest picks are China, Australia and Japan, said its Investment Intentions Asia Survey 2009.

The online survey of 73 organisations active in the Asian non-listed real estate funds market found that less than 20 per cent of fund managers and just 10 per cent of investors chose Singapore as their preferred investment location.

China is the most appealing location in terms of Asian performance prospects – it is the choice of 90 per cent of investors and 81 per cent of fund managers.

Japan was the top fund choice for fund of funds managers, firms that hold a portfolio of various investment funds, with 88 per cent of them opting for the country.

Australia, a new entrant, was also a firm favourite.

‘With the exception of China, investors generally appear to have a lower regard than fund of funds managers or fund managers on the prospect of other Asian markets delivering target performances,’ said the survey.

This year, Singapore did not figure at all in respondents’ preferred locations and sectors in Asia.

In last year’s survey, the Singapore office market was ranked seventh on the list of respondents’ preferred locations and sectors in Asia – though fund of funds managers were already not keen.

The number of institutions interested in Singapore has certainly diminished due to the downturn, said Mr Craig Ward, director of regional capital markets at Savills Singapore.

‘There are still some institutions keen on the Singapore office market, but pricing has not reached an equilibrium.’

According to the survey, investors this year are most keen on the residential sector in China, followed by its retail market.

Fund of funds managers, however, prefer the Australian and the Japanese office sectors.

About 60 per cent of the respondents believe Singapore to be most hit by the global downturn, while just 20 per cent of them thought Hong Kong and Australia to be worst hit by the slump.

‘Singapore is one of the most open economies in the world, so it is more than averagely affected by the downturn,’ said Mr Robert Lie, co-director of Area’s executive committee.

But it is an attractive mature market over the medium term, he added.

‘A lot of investors are cautious. Basically, indicated prices have to correct,’ said Mr Lie, who is also managing director of Redevco Asia.

Asia is the second home market of Redevco, which owns one of the largest retail real estate portfolios in Europe.

94% of ION Orchard’s leasable space committed

Source : Channel NewsAsia – 24 Jun 2009

Almost all of ION Orchard’s space has been leased out and it is eager to pull in the crowds with its fashion and lifestyle boutiques. The upcoming shopping mall above the Orchard MRT station is set to open on July 21.

Some 94 per cent of the leasable space has been committed – 70 per cent of which is taken up by flagship stores and new or new-to-market concepts stores.

Food will also be big on the plate. More than one fifth of the 640,000 square feet available for leasing in the mall is dedicated to dining.

Itacho Sushi is just one of 60 food and dining outlets there that are either entirely new to the market or have new concepts.

Soon Su Lin, CEO, ION Orchard, said: “For new concepts, we have worked with the established local operators – both in fashion and food – to come up with new concepts that will be interesting for shoppers. We are happy to say many of them have, and we have them at our mall.”

ION Orchard boasts some 125 food and beverage outlets. Businesses said the prime location is a key factor in their decision to sign up amid the weak economic environment.

Maranda Barnes, director, TWG Tea Company, said: “We position ourselves as the finest tea company in the world. We wanted to be based in the finest mall, the most luxurious mall in Singapore and it’s a mall that has a little bit of everything.”

Dunkin Donuts, which shut down a few years back, is returning with an outlet in ION Orchard.

Benedict Tee, operations director, Golden Donuts, said: “We feel that ION has a strategic platform here in Orchard Road. We think that with its current branding and our branding, we will make a good partnership together.

“We are coming in with a different lifestyle, a cafe concept lifestyle. Besides donuts we are going to do coffee specialities. Ice blended coffees, hot beverages like lattes, and on top of that, sandwiches which will cater to the lunch crowd and younger generation.”

The mall said it is seeing multiple enquiries and very strong demand for the remaining six per cent of its net lettable space. However, the mall added that it will continue to be very selective about its tenants.

Property to lead India rebound

Source : Straits Times – 24 Jun 2009

RESIDENTIAL real estate will lead the recovery of India’s wounded property market in 2010 thanks to accelerating economic growth, lower interest rates and improved liquidity, Indian ratings and research agency CRISIL said Wednesday.

Prices for commercial and retail space will likely remain weak through 2010 because of oversupply and slack demand, CRISIL said in a new study of 10 cities across India.

‘Residential real estate is where we think by 2010 we can look for some kind of recovery,’ head of research Sudhir Nair said in a conference call with reporters. ‘There is a significant overhang of supply in commercial projects. … You can’t see a lease rental increase for a couple of years in this market.’

India’s property market, like many around the globe, boomed from 2005 to mid-2008. Average prices of both commercial and residential space more than doubled during that period, according to CRISIL.

In some high-demand places, like Mumbai, the nation’s financial capital, commercial prices went up 231 per cent, while residential prices rose 121 per cent.

Since July, prices have softened. CRISIL predicts commercial lease and rental rates will fall by 38 per cent from early 2008 peaks. Residential prices have already fallen by an average of about 20 per cent, and will likely correct another 10 per cent, CRISIL said.

But falling prices have done little to redress fundamental mismatches of supply and demand in the residential market, Nair said.

From 2009 to 2011, an additional 110 million square meters of residential real estate has been planned – far more than predicted demand of 47 million square meters – but most of that has been targeted at high-end luxury properties, where demand has withered.

What India needs is affordable housing close to jobs. Developers who snapped up pricey land in urban centers during the boom, however, can’t afford to build cheap housing there and instead are sitting on the land, Nair said.

Investors expect Asian real estate market recovery to start in 2010

Source : Channel NewsAsia – 24 Jun 2009

Investors are optimistic that the Asian real estate market will bounce back soon after being battered by the global financial crisis.

A survey by the Asian Real Estate Association (AREA) showed that more than half of the investors polled expect signs of improvements in the market by 2010.

This optimism has prompted investors to allocate more funds into all real estate investment categories in the next three to five years.

The optimism is due to continued growth in emerging Asian economies like China and India, as well as increasing levels of professionalism and transparency in markets like Singapore.

Observers said this is expected to fuel investor interest in the regional property market.

There has also been a shift in the perception of investors in favour of Asia.

Robert T. Lie, managing director of Redevco Asia, said: “When we look back a couple of years, Asia was seen as a very risky market so investors who are allocating funds to Asia are also demanding high returns. A lot of fund managers did what investors asked and developed a lot of opportunistic products.

“What we see now, more and more, is that Asia becomes part of the normal investment world, with room for opportunistic and value-added products, but increasingly for qua-type products – that’s definitely a development that we see.”

A survey by AREA also highlighted China, Australia and Japan as the top three countries for investments. China’s residential and retail, and Australia’s and Japan’s office markets were the preferred sectors in the region.

Among the three types of investors polled, institutional investors favoured residential and retail sectors in China.

Fund managers focused their investments on China’s retail sector as well as Australia’s and Japan’s office sectors, with Japan office investments the favourite among fund managers.

Interestingly, compared to last year’s survey results, Australia posted a huge leap in terms of investors’ preferences. AREA attributed this surge to possible property prices and currency effects, as well as a change of sentiments among investors.

The annual survey, which is into its second year, aims to provide a global view on the trends in Asia’s non-listed property market.

A total of 73 organisations in Europe, Asia and the US, including institutional investors and fund managers, participated in the online survey this year.

Singapore home prices rise in Q2 on stronger demand

Source : Channel NewsAsia – 24 Jun 2009

Prices of non-landed homes sold in Singapore in the second quarter of this year rose 28 per cent from the first quarter.

CB Richard Ellis (CBRE) said the quarter-on-quarter increase was the largest for sales of new freehold non-landed residential projects.

Prices of freehold units averaged S$938,000 in the second quarter, up from S$733,000 the previous quarter.

A large proportion of the units sold were family-sized units in projects such as IResidences, The Arte, Versilia On Haig – which reflected a median price of S$830 to S$925 per square foot (psf).

On a unit rate basis, CBRE said home prices sold in the second quarter was 14.6 per cent lower than that in the first quarter. This was because the caveats for higher-priced condominiums such as Martin Place Residences, The Wharf Residences and One Devonshire have not been lodged yet.

CBRE said once these caveats are lodged, it expects the unit rate to be higher than the S$1,051 psf rate in the first quarter.

Meanwhile, sales of new 99-year leasehold projects such as the Caspian (S$580 psf), Mi Casa (S$625 psf), and Double Bay Residences (S$650 psf) were lower compared to freehold non-landed projects.

Prices of leasehold units averaged S$788,000 in the second quarter, up 13.2 per cent from the first quarter, where prices averaged S$696,000. Based on the unit rate, the second quarter’s price of S$655 psf was 6.9 per cent higher than a quarter ago.

Resale prices for freehold non-landed properties increased 8.2 per cent, while leasehold resale prices saw a 2.9 per cent rise from the first quarter.

CBRE said it expects sales of 3,500 to 4,000 units at the end of the second quarter, much higher than the 2,596 units in the previous quarter.

In the first half of 2009, HDB upgraders made up 65 per cent of buyers of new homes, compared to 44 per cent in the whole of last year. They have also been active in the secondary market, making up 49 per cent of buyers of resale units – compared with 33 per cent in 2008.