Saturday, November 14, 2009

Sports Hub developer seeks bank financing


Source : Business Times – 14 Nov 2009

It’s expecting to receive loan offers before year-end

SINGAPORE Sports Hub Consortium (SSHC), the winning bidder for the Singapore Sports Hub project, said yesterday that it has kickstarted efforts to raise bank debt finance to build the mega project. ‘SSHC intends to raise bank debt financing and expects to receive financing offers before year-end,’ the consortium said in a statement.

The consortium is made up of construction firm Dragages Singapore, HSBC Infrastructure Fund, United PREMAS and Global Spectrum Asia. SSHC is redeveloping the National Stadium at Kallang into the Singapore Sports Hub under a private-public-partnership scheme with the Singapore Sports Council (SSC). SSHC will design, build and operate the hub for 25 years.

The project has suffered its fair share of delays and hiccups since it was announced. The completion date has been postponed repeatedly. It was first expected to be completed in 2010, but is now likely to come onstream only in 2013 at the earliest.

One reason for the delay is that banks turned cautious during the economic downturn, making it harder for the winning bidder to raise funds. The cost of building the Sports Hub has also increased – from the initial estimates of $650-800 million to $1.2 billion – as construction costs surged and a watersports centre was worked into the plans.

The total price, after factoring in maintenance and operating costs, is expected to be around $1.87 billion – which is what the government will pay the operator for use of the hub over the 25-year period.

The delays have also put a crimp in Singapore’s plans to host the South-east Asia (SEA) Games in 2013, as the hub may not be ready by then. Covering 35 hectares, it will include a National Stadium that can seat 55,000, a 6,000-capacity indoor aquatic centre, a 3,000-capacity multi-purpose indoor arena and an indoor stadium.


The void that is alive


Source : Straits Times – 14 Nov 2009

IN A quiet corner of Sengkang town, six women and a drowsy terrier hold a conference in the shady spot at the foot of their apartment block. The women share just five available seats – but the discomfort is no barrier to conversation. When another turns up bearing a stone pestle, fruit knife and bag of gingko nuts, the rest instinctively reach across the table to help her crack them open.

One of the group members, retiree Tok See An, 65, says they were all strangers nine years ago when they first moved into the then bare and new estate.

Today, they share an easy camaraderie forged through small talk at their Housing Board void deck: a feature almost sy-nonymous with public housing in Singapore and one that is nearly 40 years old.

Since its introduction in 1970, it has served as social space and shelter – dolled up overnight for a Malay wedding only to be covered up the next day for a Chinese funeral.

In between, it has also played host to daredevil teenage boys practising parkour stunts, and the odd toddler trying out his new tricycle.

True to its name, the void deck consists of mostly empty space. Any suggestion that it was inspired by the minimalist designs of the late French modernist architect Le Corbusier is laughed off by HDB veterans.

The former chief architect of the HDB, Mr Tony Tan Keng Joo, says the void deck was simply devised to create an informal space for residents to meet and talk.

‘Public housing in Singapore is social engineering,’ he says. The void decks set the stage for interaction.

Dr Lai Ah Eng, an anthropologist from the Asia Research Institute, sees them providing valuable external social space in tropical Singapore, where the midday sun can make sitting outdoors unbearable.

‘It’s a place that you pass through, a space that you sit and wait, where you meet people for a brief chat,’ she says.

In addition to providing social space, void decks have helped to deter crime.

Housing planners wary of the crime that often thrived in public housing estates elsewhere placed chairs and tables near lift lobbies so that residents could keep an eye on those going in and out of their blocks.

The empty space beneath blocks also provided through paths for passers-by and made HDB blocks less imposing at the ground level.

Left to themselves, void decks have taken on the quirks of their residents, who often furnish them with their own belongings. Mr Tan recalls how some have carted entire sofas and fish tanks downstairs so that they can better enjoy them with their neighbours.

Housewife Peh Gek Choo leaves two armchairs in the void deck just outside the front door of her ground-floor flat in Sengkang. Neighbours are free to rest there on their way to the market.

One night, she says, a young man passing by fell asleep in one of the chairs and did not wake up until 8am, when her husband left for work.

Ms Pek says with a shrug: ‘He said he was really tired from the night before. We are all neighbours anyway – you have to give and take.’

In Pandan Gardens, the relatively bare void deck is filled with the strains of Chinese folk songs blasting from the Rediffusion sets installed at its lift lobbies.

Resident Hayati Ali Rahman, 65, says good-naturedly: ‘The music is okay lah. But no Malay songs.’

The Michelin Green Guide to Singapore terms void decks a ‘barometer of racial integration in Singapore’.

British-born Bukit Panjang resident Anthony Michael Fulwood takes this definition further, calling them a symbol of the ‘circle of life’.

‘It’s where people have weddings and funerals, and babies have first-month ce-lebrations,’ he says. ‘It’s almost like Va-ranasi city on the Ganges River, where people live, play and conduct their fune-ral rites by the river.’

Adding to the variety of void deck activity is the proliferation of voluntary welfare organisations that have set up shop to take advantage of the low rent, which ranges from $3 to $5 per square metre.

The number of such void deck set-ups – which include kidney dialysis centres and advocacy groups – has grown from 320 in 2000 to 530 this year.

But hectic lifestyles, greater demand for privacy and, more significantly, relatively lower usage could well spell the end of the void deck as we know it.

In 2003, the HDB Household Sample Survey revealed that only 20.3 per cent of residents used their void decks at least once a week.

Tampines resident and part-time graphic designer Siti Sarah Salim, 22, says people don’t bother to linger much at void decks in her locality these days.

‘It is really quiet… People just walk in and out of them. The warm feel of the void deck being a communal space is definitely missing.’

Over the years, void decks have shrunk in size because the footprint of each HDB block is getting smaller. There are just six to eight units now on each floor of the newer blocks, compared to almost double that number before. New block designs have also reduced the amount of unobstructed void deck space.

In some of the newer estates in Punggol, the typical ground-floor void deck has even ceased to exist. The scaled-down void decks have been moved one floor up and carparks now occupy the bottom of the block.

But, to keep pace with changing lifestyles, the HDB is trying out new ways to bring the void deck ‘to the people’.

In Sengkang, it has created a ‘community mall’, where common void deck facilities are clustered with playgrounds around a central pedestrian spine near the MRT station.

For very tall blocks, it has created sky gardens to tempt residents out of their flats and back into communal spaces. These mid-level green spaces allow residents to take a stroll without having to set foot on the ground floor.

Such interaction is going to be important to keep Singaporeans attuned to the lives of their countrymen of different classes, ages, religions and races, says Dr Lai.

‘If you have enough of this awareness of others through your living environment – even if it is in a temporary space like a void deck – you will accept these everyday differences,’ she says.

With such changes afoot, what will the void deck of the future look like?

If the HDB’s former head of planning and regulatory control, Mr Loh Swee Seng, had his way, the greenery around apartment blocks would also wend its way under them.

‘There may be a time when the void deck is part and parcel of the scenery outside. You could even have a stream flowing through the void deck,’ he says.

Four young designers were recently asked by The Straits Times to give their takes on what the future void deck could look like.

Their ideas ranged from the very high-tech to something as simple as improved seating and tables.

The HDB’s former chief architect, Mr Tan, thinks less is more. As far as he is concerned, void decks can pretty much take on any form.

But, he insists, ‘the only thing they should retain is the void’.

For, even as fancier social spaces come around, void decks will still be hard to beat for their shade, intimacy and constant ability to surprise.


Sports Hub still has financing concerns


Source : Straits Times – 14 Nov 2009

THE troubled Sports Hub is still facing difficulties and the expected construction date could possibly be pushed back further to 2014.

It is understood that the preferred bidder for the $1.87 billion project, the Singapore Sports Hub Consortium, has yet to raise the money necessary for construction to begin at the site of the National Stadium.

The inability to secure funds from the private sector has been a problem plaguing the SSHC since last year, partly as a result of the economic recession.

The consortium said yesterday it had recently launched a financing competition, and that it intends to raise bank debt financing.

Led by construction firm Dragages Singapore, the SSHC expects to receive offers before the end of this year.

‘It’s essentially trying to get loans on the best terms,’ said a source.

A spokesman declined to reveal how much needed to be raised, although it is believed to be at least $1.2 billion, the hub’s estimated construction cost.

The source added: ‘It now all depends on whether we can raise the necessary funds. When that happens, then we can proceed.’

Dragages managing director and SSHC head Ludwig Reichhold said yesterday he was targeting to sign the final contract with the Singapore Sports Council by early next year. In August, he had set the end of this year as a target.

The SSHC had hoped to pull down the National Stadium by the first quarter of next year, but this is dependent on the final contract being signed first.

Demolition will take about three months. Construction can then begin and will take about three years.

Since the project was announced in 2005, its completion date has been pushed back repeatedly from 2010, to 2011, 2012 and then 2013.

Singapore’s hosting of the South-east Asia Games in 2013 is now uncertain.

The hub is a public-private partnership (PPP) project. This means the Government will pay the SSHC – which will design, build, and operate the facility – a monthly unitary payment throughout the project’s 25-year term once the final contract is inked.


Getting back on track


Source : Straits Times – 14 Nov 2009

Stopping the bubbles

HONG KONG Chief Executive Donald Tsang warned yesterday that asset prices in places like Singapore, South Korea and Taiwan were ‘incompatible and inconsistent with economic fundamentals’ and could lead to bubbles.

Mr Tsang told the Apec CEO Summit at the Suntec ballroom that the seeds of financial crises often come from government-implemented fiscal and monetary policies.

He cited the steps Japan took during its recession in the early 1990s and cautioned that the measures the United States is now implementing may lull it into a similar policy trap.

In the 1990s, near zero interest rates drove resources out of Japan and into the rest of Asia, which was experiencing rapid growth. This led to Tokyo becoming one of the biggest lenders in the world.

But it eventually led to asset bubbles forming in Asian countries, which imploded during the 1997 financial crisis and hurt Japan.

‘Leaders need to watch out… America is doing exactly what Japan did the last time with reduced interest rates and encouraged lending,’ said Mr Tsang.

He added that the weakening US dollar has replaced the yen as the currency of choice for carry traders with investments pouring into Asia.

He said the influx of capital was driving up asset prices in Asian countries – a worrying trend because they were ‘out of sync’ with the Asian export portfolio and its internal capacity.

‘Leaders need to look at these issues with foresight to prevent a repeat… There is a need for global cooperation since the world is so well connected now,’ he added.

World Bank president Robert Zoellick also identified Asian asset bubbles in an interview with Bloomberg on Wednesday, warning that they that could pose risks to the global economy next year.

He said that the region must be vigilant and that solutions will not be easy, although he suggested using other tools before raising interest rates to contain asset price surges.


Floor art


Source : Business Times – 14 Nov 2009

Customise your own, or indulge in tradition

Fine homes in Singapore have long boasted of customised features – from plush furnishing to elaborate fittings. And then there’s commissioned art work, especially if the homeowner is an art collector. What’s less known – and practised – is the art of customising and designing one’s own carpets.

That service and facility is now available at The Orientalist Singapore (Woven Art) which launched its interior designer’s corner last year to encourage customisation.

The ability to design carpets and have them made in high quality, handknotted versions, puts Singapore right up there on the global carpet map and makes sure that it’s ahead of the Asian market, besides keeping in step with the European market, says Amin Bagheri, director of The Orientalist and president of the Handknotted Carpet Association in Singapore.

The company welcomes interior designers and graphic artists to design contemporary carpets – as it has inhouse designers advising on colour, material, texture and carpet ‘carving’ to create a 3D look.

‘We went on this track even though our roots are in traditional Oriental carpets. But if you look at the fine carpet industry, it’s not been following or keeping up with fashion all this while. It’s not keeping up with modern furniture, or even colours,’ says Mr Bagheri, whose interest and experience in carpets makes him an ideal candidate to take carpet design to a modern level.

Contemporary carpets are usually machine-made (think shaggy), he points out. So what The Orientalist is doing is to tap its extensive traditional carpet network to create handknotted carpets with modern designs. ‘We plan to position the carpet as an art piece – and art doesn’t have to be hung; it can be on the floor also.’

So far, Mr Bagheri has commissioned a fine art artist to come up with two designs, and the company is working on a Middle East project now as well as on a carpet project with a ski lodge in Canada. ‘We’re also working on a design for a baby’s room – with a pop artist!’

The key to retaining their exclusivity is to have limited editions – there are no more than three pieces made of the same design. The price is usually about 20-30 per cent higher than a readymade carpet, and one takes about 4-6 months for completion as the design is not complicated and there are generally fewer colours used.

‘But what we don’t do is to customise traditional designs – because it’ll take too long. Plus, the interesting bit is in designing your own carpet,’ he says.

The Orientalist also carries renowned international carpet designers such as Haynes Robinson, Jan Kath and Mischioff at its 6,000 sq ft showroom on Cuscaden Road.

The case for tradition

Don’t chuck out that 100-year-old carpet yet, however, as the mainstay of the fine carpet industry is still handwoven carpets with traditional designs, says Sulaiman Hamid, MD of Hassan’s Carpets.

‘Classical carpets have hundreds of years of history behind them – so they have a proven lifespan,’ he says.

While contemporary carpets with their abstract designs and splashes of colour are the current fashion – usually among young couples – it is a more niche market. Classical carpet designs have also kept up with furnishing trends primarily in the colours used, highlights Mr Sulaiman. ‘The colours these days are softer shades and pastels to suit modern furniture, such as the zen look.’

He does carry contemporary carpets, of course, in line with the evolving nature of art and consumer tastes. However, the classical carpet market is still strong in Singapore, given the increasing number of collectors of antique and silk carpets as well, says Mr Sulaiman.

‘The number of investors have grown in the past few years, owing to affluence, and also a better knowledge of carpets. At the same time, antique carpets are also more rare, and their value has been increasing.’

Collectible carpets include tribal, village, and city carpets – all of which have different styles. ‘Tribal carpets tend to be more stylised, angular and these tend to be made by nomadic people. Over the years, they’ve settled down now and have gotten more urbanised, so the real tribal rug is surely but slowly disappearing. Those made today might have similar designs, but are made in workshops, so they have a different aura as opposed to rugs tribes made for themselves,’ he points out.

This is one of the reasons older rugs are gaining more value. A good piece which sold for some $800 to $900 10 years ago, won’t be less than $4,000 to $5,000 these days. ‘So prices have gone up considerably. Some are even higher. It depends on rarity,’ he says.

As he puts it, village and city carpets also used to be made with passion, according to the whims of the artists, but carpets today are made for market needs, and have become more commercial. ‘Older pieces have their own aura and artistry,’ points out Mr Sulaiman.

‘The serious collector and discerning buyer wants pieces with provenance as well, and even who made it has become important to the buyer.’

Words can’t express the beauty of some of these carpets, he adds – which is why when it comes to carpet selection, it’s best to take your time to ponder on their patterns, and feel their plush softness under your feet.


Home interiors: Vision 2010


Source : Business Times – 14 Nov 2009

WHAT will home interiors look like in 2010? It’s not an easy question to answer, due to individual lifestyles, tastes and spaces. Still, one can look to those in the home decorating industry for some clues.

For one, Selina Tay, principal designer at Collective Designs, is hoping to see more colour. “A lot of people want a cool, resort look, so colours have been very pale,” she says. “But colours make a refreshing change and I’d like to see some exciting hues, such as oranges, reds and blues, on pieces of furniture or even walls and cabinets, just for a statement.”

It’s a sentiment that is shared by those on the retail side of home decoration.

According to Raymond Phua, managing director of Da Vinci Collection – which carries fashion furniture brands such as Fendi, Versace, Kenzo and Cerruti – softer and brighter colours are on the cards. “These are colours that would liven up the home,” he says, venturing that the direction could be related to where the markets are heading.

The Executive Home Store’s (XZQT) chief executive officer, Lim Chee Hwee, goes further – stating that purple is the colour of choice for 2010, although some may go with red or other bold shades. The furniture retailer recently opened a 10,000 sq ft flagship showroom at Ion Orchard and carries a wide range of Italian furniture.

“Modern minimalist furniture will again be the trend next year,” he says. “For wood finished furniture, walnut finishes are favoured. Metallic finishes cleverly combined with acid-treated, painted glass finishes will also continue to do well on products.”

And instead of plain leathers, expect to see more intricate varieties which carry prints, or are woven together, says Da Vinci’s Mr Phua. ‘You will also see more gloss on products instead of the usual matte finishing, and more square dining tables, as opposed to round ones.’

According to Nonie Chen, art director at Home & Decor magazine, miniature versions of signature furniture designs will also be popular, as they are less bulky and still make valuable collector’s items. In terms of lighting, she sees LEDs (light emitting diodes) – more commonly used in commercial spaces – being applied in homes.

‘The design is simplified for the home, so you will see it around the mirror frame or in the powder room,’ she says. ‘These are very subtle LEDs that can be used in dark spaces such as inside drawers, along staircases and in the garden.’

Ms Chen also expects more eco-friendly items to make their way into the home, as the back-to-nature theme comes into play, with re-cycled wood and second-hand furniture in vogue.

But while that reflects the greater interest in sustainability, Cameron Woo, principal designer at Cameron Woo Design, says it’s also a return to artisanal roots. ‘By that, I mean things that appear or may be more homemade, things that are more organic,’ he says. ‘There are a lot of manufactured items out there, for obvious reasons, but for a Christmas table setting recently, I picked up things that are all available here in Singapore, so the carbon footprints are small. I found items literally in the garden or off the street, such as a palm frond, and dressed the dining table befitting of tropical Singapore. So all we need to do is go back to appropriateness, context, source and sustainability.’

The fact that residential spaces are getting smaller these days also has an impact on what we can expect to see in home interiors going forward. This means every room has to fulfil at least two purposes, says Mr Woo.

‘For instance, I created a console table in the foyer which also acts as a writing desk for a client. So you can put keys on the table, but it also hides a laptop and converts into a writing desk. This way, when you come in, you are greeted with a beautiful console dressed with flowers, but you can also use it as a study.’

Similarly, this concept of versatility can be created in the dining room, where bench seating can be placed by the window, so when needed, the dining table can be pushed against it to create a dining nook and a foldable mahjong table can go where the dining table was.

‘Rooms performing double duty are more in demand now as apartments become smaller and our lives become more complicated,’ explains Mr Woo. ‘And it is through design that the two can meet.’


Occupancy at ready-built JTC facilities dip


Source : Business Times – 14 Nov 2009

Net allocation remains in negative territory in Q3 2009 at negative 10,300 sq m against Q2’s negative 7,800 sq m

JTC Corp yesterday reported that the occupancy level at its ready-built facilities (RBF) fell slightly in Q3, by 0.3 percentage points to 97.1 per cent. In Q2, the occupancy level was stable at 97.4 per cent.

The industrial landlord also said in its quarterly facilities report that net allocation of its RBF remained in negative territory in Q3 2009 at negative 10,300 square metres, which was weaker than the negative 7,800 sq m recorded in the previous quarter.

On a year-on-year basis, the negative net allocation of RBF saw a steeper fall, from the negative 500 sq m recorded in Q3 2008. The decrease in net allocation came as termination rose by 3 per cent to 26,200 sq m from 25,600 sq m in Q2 2009. However, this is a slowdown from the 30 per cent rise in termination seen in Q2 over Q1.

The top three industry segments that contributed to the RBF termination in Q3 2009 were electronics (which accounted for 34 per cent of termination), chemicals (21 per cent) and precision engineering (21 per cent). A large proportion (some 33 per cent) of companies that terminated said that ‘consolidation of operations’ was their primary reason. But for JTC’s prepared industrial land (PIL), the net allocation bounced back into positive territory, achieving 14.7 hectares in Q3 2009 from negative 32.8 ha in the previous quarter.

JTC said that the swing into positive territory was caused mainly by a manufacturing-related company that took up 12 ha of land during the quarter.

Gross allocation in Q3 climbed to 25.7 ha, compared to 5.4 ha in Q2 2009. Termination registered a 71 per cent fall from the previous quarter to 11 ha in the third quarter. However, on a year-on-year basis, net allocation declined by 66 per cent from 43.5 ha in Q3 2008.

During the quarter, a larger proportion (83 per cent) of the gross allocation of PIL went to manufacturing related and supporting sector. The main segment contributing to the PIL termination was the construction industry, which accounted for 65 per cent of termination.

JTC also said that Fusionopolis phase 2A is currently under construction and is expected to be completed by 2014. The project will have a gross floor area of 103,630 sq m.


Malls are big in China’s smaller cities


Source : Straits Times – 14 Nov 2009

Ms Mandy Jin may not know much about Singapore, but she knows about VivoCity – the gigantic 400,000 sq m mall that will open next year in her neighbourhood in north-western China.

‘Vivocity is the biggest mall in Singapore. But that one will still be much smaller than the VivoCity here,’ said the marketing executive in her 30s, a resident in Xian, the capital of Shaanxi province.

Ms Jin’s excitement about the foray of mega malls into second-tier Chinese cities like Xian reflects the wave of consumer anticipation marking the comeback of China’s retail mall boom.

Amid a nationwide effort this year to boost domestic consumption as an engine of economic growth and a growing appetite among affluent Chinese for high-end goods, malls are sprouting up not just in first-tier cities, but fanning out into the relatively smaller ones as well.

Roughly 3 million sq m of new shopping centre space may come into the market in the three top cities of Beijing, Shanghai and Guangzhou over the 12 months to June 2010.

This supply spurt is driven by an expected rise in demand from the World Expo in Shanghai and the Asian Games in Guangzhou next year, according to real estate consultant Knight Frank.

Another 2 million sq m to 3 million sq m of retail space may debut in the 10 smaller cities, dubbed ‘Tier 2′ cities, such as Xian, Chengdu, Tianjin, Chongqing, Wuhan and Hangzhou, according to back-of-the-envelope estimates by Chinese retail space analysts.

‘It is very difficult to estimate exactly how much new retail mall space is being built in the Tier 2 and 3 cities as no comprehensive data has been compiled on this. But clearly the growth will be much faster in these smaller cities, where there are previously no major malls.’ said Mr Deng Heping, spokesman for the China Shopping Mall Association in Beijing.

Despite the paucity of information on the retail space boom in second-tier cities, analysts point to the recent aggressive moves by developers to bring in snazzy, Western-style shopping complexes to meet Chinese shoppers’ more sophisticated tastes as an indication that this time, ‘the boom is for real’.

‘Developers are turning to second-tier cities because that’s where the consumer masses, who are growing in affluence, are,’ said Guangdong-based commerce professor Zheng De.

Several years ago, bullish developers bet on a shopping revolution and built malls en masse, including putting one of the largest malls in the world – the 890,000 sq m South China Mall – in the small city of Dongguan, a manufacturing hub in Guangdong.

However the mega mall, like the bumper crop of malls in the so-called first-tier major cities, soon made headlines for having everything a mall should have and more – except shoppers. Having been burnt, developers were unwilling to release more retail space unless they are assured of a steady flow of shoppers to their malls, said Prof Zheng.

The mood seems to have shifted now, he suggested, based on a rough tally of at least 27 announcements in the past few months that large shopping malls are to be built in second- and third-tier cities.

China’s retail sales will grow around 16 per cent next year as the government continues to focus on stimulating domestic consumption to support growth, the China Securities Journal recently quoted a commerce official as saying.

Foreign developers are also bullish on the China market. Tycoon Henry Sy, the Philippines’ richest man, will build an American-style SM Shopping Mall in the Chongqing municipality. He had earlier announced plans to build three malls a year in China’s second-tier cities.

Another developer looking to expand in these cities is Capitaland. In all, it has 50 malls, with five malls slated for completion next year and another 11 set to come on stream in 2011 and beyond.

Ms Jin said that the Raffles City Beijing mall ‘was a tourist attraction’ for her.

‘I may come from a second-tier city, but I’m as demanding about a beautiful ambience and shopping experience as anyone from Beijing. We need more Singapore-style and American-style malls,’ she said.


SPENDING POWER

‘Developers are turning their attention to second-tier cities because that’s where the consumer masses – who are growing in affluence – are.’Guangdong-based commerce professor Zheng De


Kitchen couture


Source : Business Times – 14 Nov 2009

Gaggenau takes a purist approach in appliances

Think German appliances, and you think technology and reliability. So it comes as a bit of a surprise that one leading German maker of premium kitchen appliances actually makes a deliberate decision not to go after the latest technology. The reason, however, is simple – Gaggenau is just more concerned about reliability. ‘Technology is very fast, but we try not to go with every new one,’ explains Sven Baacke, one of five designers at Gaggenau, and whose areas of focus are ovens as well as the presentation of the Gaggenau brand and its showrooms worldwide.

‘It’s not about gadgets for the brand. For our ovens, we take seven to eight years before a new design comes out. We don’t just get a new technology every six months because we have to research what is a really good invention and what is not and think forward, in terms of years. The life cycles of our products are very long, and they take a long time to create because they are part of a whole system that comes together.’

And Gaggenau does well, he says, not so much because it rushes out the latest models fast as it can, but because ‘what we really do is cooking’.

‘We work with many chefs and people who try to do new things,’ explains Mr Baacke on a recent visit. ‘And we really like cooking – otherwise you can’t really do kitchen appliances because it’s not just about the look. All our appliances are professional.’

Gaggenau, for instance, stakes its claim as the first to introduce professional combination steam and convection ovens into households 10 years ago. These ovens offer the same power and strength as those in professional kitchens. ‘What we really try to do is invent things first and not just put a cover on it,’ says Mr Baacke. ‘It’s function first, aesthetics after.’

And the German penchant for functionalism is perhaps why people tend to describe German designs as being ‘very straight’ he says. ‘Other than functionality, we try to keep the products very pure. We avoid plastics and instead use real materials such as wood, aluminium and stainless steel.’

This is why Gaggenau, despite not having a new oven line presented since 2007 is still so successful. Global economic woes notwithstanding, the brand is expected to grow its 2008 turnover of just under 200 million euros by a healthy 9 per cent this year.

Looking ahead, quality kitchen appliances will increasingly be in demand, and kitchens of the future will have to be able to serve the needs of different cooking cultures, says Mr Baacke. ‘Besides ovens, they may have to incorporate things like a teppanyaki griddle, rotisserie, wok burner and powerful hood. All the different cooking needs will be found inside.’


Thursday, November 12, 2009

Don’t give up confirmed list card again


Source : Business Times – 12 Nov 2009

Maintaining land supply will help alleviate volatilities in property prices and rents when cycles change suddenly

LAST week, the Ministry of National Development (MND) revealed a slate of eight residential sites that it would sell on the confirmed list starting January 2010. This came after a break of about a year on the sale of such sites.

Should confirmed list land sales have been suspended for such a long period? When markets suddenly pick up and land prices shoot up – as they have this year – it translates to less affordable homes in the mass-market segment.

For the Government Land Sales Programme to be effective, both the confirmed and reserve lists need to operate side by side. By restricting state land sales to the reserve list system – where sites are triggered for launch only upon successful application by developers – the state may effectively be giving all the cards to developers, who have their own self-interest at heart, first and foremost.

For instance, it would not be in a major office landlord’s interest to make an application seeking the release of an office site from the reserve list if it is trying to fill a major office development and hopes that office rents will increase. However, if there is suddenly a pick-up in office demand – for example, if major financial institutions and funds resume their strategy of expanding in Asia and setting up hubs in Singapore – office rents could suddenly spike. Having sales of sites on the confirmed list would help to mitigate this.

Mass-market condo sites

Another drawback of selling land only through the reserve list has emerged of late, with prices of mass-market condo sites soaring at state tenders.

In October last year, MND suspended confirmed list land sales. That made sense at the time, during the dark days of the global financial crash. However, it continued the suspension for the first-half 2009 Government Land Sales programme and later, for the H2 2009 programme, even though developers’ home sales had shown clear signs of revival by the time the H2 2009 slate was announced in early June.

After several months of strong home sales, especially in the mass-market segment, developers found that they had started to run out of entry-level private residential land. However, it was only in July that they began triggering residential sites for release through the reserve list. To date, six sites have been released, of which tenders for five have closed and been awarded – amid rising land prices.

Many of the sites are well located – near MRT stations, or near reservoirs. These are naturally the type of sites that developers would want released in the reserve list during a mass-market housing boom. However, such prime sites, because they are worth more, also lead to rising land values when there is a shortage of such plots in developers’ landbanks. A rapid hike in land prices is not compatible with the national goal of keeping mass-market private home prices affordable.

Had the confirmed list not been suspended for the current half, the government could have used it to introduce some less-choice sites further away from MRT stations and not so near the city, just as it has now done for the H1 2010 confirmed list.

One can’t blame developers for not wanting land released too early in the cycle from the reserve list. Frankly, it’s not in their interest. Their motivation is to increase the value of their landbanks and existing properties; and having less land supply is generally better than having more supply.

There are also other factors at play. Developers don’t have the best information – such as the size of new investments flowing into Singapore in the near future, how many permanent residents and new citizens Singapore will take in each year, and how much monies high net worth foreigners are parking in Singapore. The government has a much better idea.

Always maintaining at least a minimum supply in the confirmed list – in both good times and bad – will help alleviate the volatilities in land values, property prices and rents that come when cycles change suddenly, as they have in the mass-market private housing sector this year.

Booms and busts

While the government has, in the past, suspended the confirmed list midstream of its half-yearly programme when the market turns south, it has never restarted the confirmed list midstream when things suddenly picked up. Instead, it has waited for the prevailing half-year period to end before restarting the confirmed list. The argument for this would be that the authorities want to play by the rules and give more notice to market participants.

However, the substantial time-lag in resuming the confirmed list exaggerates the booms and busts in the property market.

That is why both lists need to operate side by side.

The government does not sell confirmed list sites if bids come in too low. Its usual policy is to award sites only if the top bids are at least 85 per cent of the Chief Valuer’s assessed market value. This reserve-price formula – if rigorously applied – acts as a safety mechanism that would create a price floor for state land sites so that land prices don’t crash and further erode market confidence in a downturn.

As the Singapore property market matures, it will be able to absorb news of confirmed list sites attracting no bids or low bids – and the sites subsequently not being sold by government. Over time, they will come to be seen as part of natural market cyclical fluctuations. The government should hold some of the cards by maintaining a confirmed list throughout instead of leaving everything in the hands of developers.


Preserving the past in print as well


Source : Straits Times – 12 Nov 2009

A SENIOR consultant at Singapore General Hospital, Professor Lee Seng Teik, has fond memories of the hospital grounds from when he started working there 35 years ago.

‘There were many low-rise buildings with plenty of green around. The hospital had a wonderful garden feel to it, and going there was like going to the Botanic Gardens, said Prof Lee, 68.

Back then, the three-storey Bowyer Block was the tallest building on the premises. Today that may no longer be the case but the historical importance of the building has not diminished.

Bowyer Block, named after Dr John Herbert Bowyer, a former chief medical officer who was closely associated with the hospital, is in the latest batch of six buildings that have been gazetted as national monuments.

Besides Bowyer Block, the other five new national monuments are Keng Teck Whay building at Telok Ayer Street, the former Command House at Bukit Timah, the former St James Power Station, Church of St Teresa and the former Raffles College, now part of the National University of Singapore.

With the addition of these six buildings, Singapore now has 61 national monuments.

Other national monuments include the Sultan Mosque, the Istana and Sri Temasek and City Hall.

Apart from Bowyer Block which has a distinctive clock tower, there are two more national monuments in the SGH grounds – the Tan Teck Guan Building and the College of Medicine Building.

‘The preservation of these three buildings is important, as they are the link to our past,’ said Prof Lee, who is also the director of the SGH Museum which is housed in Bowyer Block.

The news of the latest monuments was announced by Acting Minister for Information, Communications and the Arts Lui Tuck Yew at the National Museum of Singapore yesterday.

He was speaking at the launch of a photography book published by the Preservation of Monuments Board. Titled Resonance – Songs Of Our Forefathers, it features photographs of 24 national monuments.

Rear-Admiral (NS) Lui said of Singapore’s preservation efforts: ‘Buildings and other physical structures are an important part of our collective memory and they serve as an important anchor for the younger generation.’

The Preservation of Monuments Board was formed in 1971 and it aims to preserve monuments of historic, traditional, archaeological, architectural or artistic interest.

Owners of non-commercial and non-government national monuments, such as religious institutions, can apply for a grant for urgent repair works.

Over at the former Raffles College, which is now the NUS Bukit Timah campus, six buildings including the Eu Tong Sen and Oei Tiong Ham Buildings are now national monuments. The former college was the first institution of higher learning in Malaya.

NUS president Tan Chorh Chuan said that NUS is ‘deeply encouraged that our heritage as Singapore’s home-grown leading global university is acknowledged and that these structures signify and speak to others as one of Singapore’s architectural merits.’

Real estate company Mapletree, which owns St James Power Station, Singapore’s first municipal-operated power station and now a nightlife complex of 10 clubs, said it was ‘conscious of the need to preserve this iconic 82-year-old building while ensuring that it was given a new lease of life’.

Ms Shae Hung Yee, its vice-president of corporate communications, said: ‘The fact that it is gazetted as a national monument has made St James Power Station an even more important destination for locals and visitors.’


group8asia-Aedas design for Punggol homes


Source : Business Times – 12 Nov 2009

THE design for the first public housing project along the upcoming Punggol waterway has been chosen.

International architectural firm group8asia has emerged as winner of the Housing & Development Board’s Punggol Waterfront housing design competition. Group8asia teamed up with local firm Aedas to come up with the winning design.

The development, which will be launched in mid-2010, will have about 1,200 mostly four-bedroom apartments and will offer residents an eco-friendly housing experience, HDB said.

National Development Minister Mah Bow Tan announced the winner at an HDB awards ceremony yesterday.

The design will set the benchmark for other developments along the 4.2km waterway. Mr Mah said: ‘I am glad to note that the private sector has responded enthusiastically to the challenge of coming up with truly innovative design proposals for this highly anticipated housing project.’

More than 100 firms took part in the contest, half of them foreign firms from as far as Spain, the Netherlands, Japan and Hong Kong.

The government’s plans call for about 21,000 homes to be built along the Punggol waterway – comprising 60 per cent public housing and 40 per cent private housing. The waterway is slated to be completed by end-2010.

The winning design will take shape on the first residential plot to be developed along the waterway.

HDB said that the design by group8asia and Aedas stood out from the rest for its sky terrace concepts, with spaces for roof gardens. Other winning attributes include the resort-like design of the development, the ‘functional and workable layout’ of the site, and the refreshing housing forms that could be replicated along the waterway.

Chong Fook Loong, HDB’s deputy director for physical planning, said that homes in the development will be kept affordable. In the same vein, Mr Mah said during the awards ceremony that HDB must be mindful to be cost-effective when designing and building its flats.

The ceremony recognised seven winners with a total of 12 awards in the categories of construction safety, quality and design. Two companies, China Construction and Surbana International, won multiple awards. The other five winners were Thong Huat Brothers, Kian Hiap Construction, Kienta Engineering Construction, Sim Lian Construction and United Premas.


Five lawyers sued over sale of house


Source : Straits Times – 12 Nov 2009

A PRIVATE investigator is suing five lawyers for professional negligence over the sale of his house in 2002.

Mr Simon Suppiah Sunmugam, 62, alleged that they had mistakenly paid property agency ERA $28,000 as a commission.

He said in his affidavit that he found the buyer of the property. The agency, therefore, did not deserve any payment.

The lawyers he is suing are Ms Amarjit Kour, Mr Gregory Tang Wee Thiang, Ms Belinda Ang Choo Poh and Mr Peter Cuthbert Low of the now-defunct firm Peter Low Tang & Belinda Ang. The firm represented his ex-wife Nee Shyam Huey in their May 1996 divorce.

The fifth lawyer he is suing is Mr Andrew John Hanam, who acted for him in the divorce.

The defence of the four lawyers is that they were hired by Madam Nee and not by Mr Suppiah, and thus owed him no professional obligation.

Mr Hanam is denying responsibility on the grounds that the sale of the Suppiahs’ matrimonial home after the divorce was arranged by the other lawyers, so Mr Suppiah should refer to them to recover his losses.

Court documents showed that when Mr Suppiah defaulted in the divorce settlement, Madam Nee obtained a court order to sell the matrimonial home in Punggol.

She found a buyer for $1.6 million but Mr Suppiah objected because the price was too low. He then found a neighbour who was willing to pay $1.75 million.

He was expecting his share of the sales proceeds to reach $240,000, but received only $212,000 in July 2002.

When he discovered that a commission of $28,000 had been paid to the housing agent, he instructed Mr Hanam to write to the other lawyers to withhold payment. But it was too late.

At the opening of the civil suit yesterday, Mr Suppiah took the stand to tell his lawyer Alain A. Johns that despite the sale-and-purchase agreement, which did not authorise payment of the housing agent’s commission, the five lawyers failed to protect his interest.

The hearing will continue next year.


Kwek launches ‘cool’ Studio M hotel brand


Source : Straits Times – 12 Nov 2009

PROPERTY tycoon Kwek Leng Beng launched an ‘utterly cool’ hotel brand boasting a Singapore label yesterday. He aims to have at least 50 outlets across the world in five years.

The Studio M in Singapore brand is being unleashed through the Millennium & Copthorne Hotels (M&C) chain with the first to open at 3, Nanson Road in the Robertson Quay area around April next year.

Singapore could eventually have three to five Studio Ms, which Mr Kwek describes as a ‘cross-breed between a boutique hotel and the normal type of hotels’.

The brand will cater to mostly savvy business and leisure travellers but not tour groups, said Mr Kwek, who is executive chairman of Hong Leong Group, the parent of M&C.

Studio M outlets have been earmarked for the Middle East, India, China, Vietnam and possibly Britain – through management contracts and ownership.

The debut hotel at Nanson Road will cost $120 million and will be built on a site Hong Leong bought in late 2006. It paid $45.8 million, or $518 per sq ft of potential gross floor area, in the tender.

The hotel will have 365 rooms with interiors and open-air tropical decks designed by Italian architect Piero Lissoni.

‘It is chic, stylish, and you don’t have to pay a bomb for it,’ said Mr Kwek. ‘It is like a five-star hotel, but you pay four-star rates.’ Rates have not been finalised, but a room will likely cost $230 to $250 a night, he said.

Mr Kwek described the Studio M brand as ‘utterly cool’ and a ’21st century new generation type of hotel’ that will boast the best technology and pack efficiency into mostly standard rooms of 270 sq ft.

He hatched the idea of creating a new hotel brand about four years ago, and said the brand will fill a gap in the market here. There is increasing demand from business travellers who want a distinctive and unique experience from their hotel in addition to functional services such as wireless connectivity, he said.

Room rates here have fallen this year, and while the hotel market is not as good as in pre-crisis days, Mr Kwek said it is set to improve.

‘It is my belief that the IRs (integrated resorts) will bring different types of customers here,’ he said, adding that a second Studio M could be built within the next 12 months.

A likely venue is the sleepy Orchard Hotel Shopping Arcade. Mr Kwek said they are studying the possibility of converting it into a Studio M.

He also believes the central business district and the Bukit Timah area could support Studio M outlets. And as if Studio M is not enough, Mr Kwek wants to create another hotel chain as ‘the world is running out of brands’.

Creating another brand will allow M&C to leverage on its vast experience in running hotels across the world.


All Reits must hold AGMs from next year


Source : Business Times – 12 Nov 2009

WITH effect from Jan 1 next year, all real estate investment trusts (Reits) are required to hold annual general meetings (AGMs).

This mandate from the Monetary Authority of Singapore is seen as boosting corporate governance and giving more flexibility to Reits in their fund-raisings.

Under the revised rules announced yesterday, Reits will be required to hold an AGM once every calendar year and not more than 15 months from the last preceding AGM. This means that by the end of next year, all Reits would have held an AGM.

In line with SGX’s rule on the timing of AGMs for other listed issuers, Reits will have to hold their AGMs within four months from their financial year end.

MAS said it has considered the merits of this requirement, which ‘will enhance corporate governance for Reits by providing an important channel for communication between Reit managers and unitholders, allowing Reit managers to be more accountable to unitholders’.

AGMs will also provide a regular opportunity for Reit managers to seek general mandates from unitholders for the issuance of new units, giving greater flexibility for equity raising.

The past year has seen Reit managers putting up urgent extraordinary general meetings (EGMs) notices to obtain shareholders’ approval for fund-raising exercises to refinance their debts.

With the exception of Ascendas Reit (A-Reit), which has been holding AGMs for the past three fiscal years, other Reits have not held an AGM though they may have other regular communication touch-points.

But some are now looking forward to holding their first AGM.

‘AGMs will promote the exchange of ideas between the company and unitholders, which will ultimately contribute towards the long term growth of the organisation,’ said Yong Yean Chau, chief executive of Parkway Trust Management, the manager of Parkway Life Reit.

‘We are looking forward to holding our first AGM next year.’

Simon Ho, deputy CEO of CapitaMall Trust Management, noted that the AGM requirement will further enhance the transparency of the Reits industry and offer another platform for CapitaMall Trust to engage its investors.

Added Yeo See Kiat, CEO of Suntec Reit’s manager ARA Trust Management (Suntec) Ltd: ‘The AGMs will allow the Reit managers to clarify questions from unitholders, facilitate better understanding of the Reit’s performance and enable the unitholders to know the Reit managers better.’

The cost of holding an AGM does not seem to bother some Reit players.

A spokeswoman from A-Reit noted that the cost is affordable and worthwhile.

A general mandate for the issue of new units passed at these AGMs has allowed A-Reit to make two cash calls this year swiftly and price the units at a smaller discount because of the shorter exposure period.

‘Our latest private placement in August was done above net asset value (NAV),’ she said.

‘I believe we are the only Reit that has issued units above NAV this year.’

Singapore Reits are regulated under the Collective Investment Scheme (CIS). MAS said it made revisions to CIS after taking in feedback from public consultation in May and discussions with Reit players.

Under the latest revisions, MAS also scrapped the requirement for Reit managers seeking authorisation for a new Reit to submit information in a prescribed form since Reit managers are now subject to the capital markets services licensing regime.

The Securities and Futures Act was amended on Aug 1, 2008, to regulate Reit managers through the licensing regime.


High-spec space losing favour due to low office rents


Source : Business Times – 12 Nov 2009

HIGH-spec industrial space has lost favour with tenants in the past few months. As office rents plunged, some companies have gone back to leasing commercial space, says Colliers International.

The move has, in turn, driven down rents for high-spec space. According to the property consultancy, the average monthly gross rent of high-spec space fell 14.1 per cent to $2.93 per square foot at end-September from $3.41 psf at end-March.

The lower rents reflect stiff competition for tenants, Colliers said, adding that some companies had taken advantage of the sharp drop in office rents to relocate to office premises.

This marks a reversal of the trend that started in 2007. As office rents soared on the back of a booming economy, more firms moved away from the central business district to cheaper high-spec industrial space.

But office rents have plummeted amid the economic slowdown. CB Richard Ellis said in September that monthly prime office rents averaged $7.50 psf in the third quarter, dropping 12.8 per cent from the previous quarter. They have fallen 53.4 per cent from their peak in Q3 last year.

Colliers said that on top of shrinking demand, a large supply of high-spec space is expected to appear next year, which has also contributed to falling rents.

In contrast, rents for some factories and warehouses have been relatively stable. Colliers said that from end-March to end-September, the average monthly gross rent of single-user factories in central Singapore stayed firm at $1.30 psf, while that of warehouses in eastern Singapore held up at $1.20 psf.

And on a positive note, Colliers said that there has been a noticeable pick-up in sales of industrial space. These involved mainly private investors, owner-occupiers and domestic companies.

While industrial space markets across the Asia-Pacific appear to be bottoming out, Colliers remains cautious in its outlook. It believes that these markets could stay subdued in the next 12 months, given that the global economy is still recovering and excess manufacturing capacity still exists.

Colliers research and advisory director Tay Huey Ying expects rents and capital values of factories and warehouses in Singapore to rise by up to 5 per cent in the next 12 months ‘on the back of the expected improvement in the economy and the manufacturing sector, as well as more optimistic business sentiment’.


Resort-style design for waterfront flats


Source : Straits Times – 12 Nov 2009

SINGAPORE’S first waterfront public housing project in Punggol will offer 1,200 flats featuring sky terraces, roof gardens and panoramic views of the Punggol Waterway.

The Housing Board (HDB) yesterday unveiled the winning design for the first batch of flats that will line the 4.2km waterway. They will be launched for sale by the middle of next year.

The 4.9ha project’s unique design will feature blocks of flats that will ’step down’ towards the water like terraces, and have solar panels on their rooftops to supply power to common areas.

National Development Minister Mah Bow Tan said the winning design ‘offers a new lifestyle option for Punggol residents’.

‘Its distinctive sky terrace concept will create quality public spaces along the waterway for the community, keeping the kampung spirit alive,’ said Mr Mah, who announced the winning team behind the design at the HDB’s annual awards held at HDB Hub yesterday.

International architectural firm Group8asia and local firm Aedas clinched the top prize for their refreshing, resort-style design, which was inspired by Asia’s rice fields and dense rainforests, said Group8asia’s principal architect, Mr Manuel Der Hagopian.

‘Singapore has a close relationship with water and we wanted to design something that reflected that,’ said Mr Hagopian, who is Swiss and has 10 years of industry experience.

The project’s design enables a high percentage of flats to have views of the waterway, and allows for many green, open spaces such as open courtyards and sky gardens – all leading to the water.

Mr Hagopian incorporated high Swiss standards of sustainability in the project, maximising natural light and ventilation. The project will aim to achieve the highest green building award, he said.

The naming of the winning design brings to a close the Punggol Waterfront Housing Design Competition that the HDB launched in December last year.

The two-stage design competition, which attracted 108 entries with a good mix of local and foreign firms, had a theme of Green Living By The Waters.

Surbana International Consultants, B4FS Arquitectos and RSP Architects received merit awards for their designs.

HDB deputy director (physical planning) Chong Fook Loong said the board wanted to seek innovative ideas on how to get the best value out of the waterway.

The new housing project and the upcoming Punggol Waterway and Promenade are part of the ‘Punggol 21-plus’ vision unveiled by Prime Minister Lee Hsien Loong in his National Day Rally speech in 2007.

By 2011, there will be 23,000 completed homes in Punggol, said HDB.

The Government aims to build an extra 21,000 homes along the waterway – 60 per cent HDB flats and 40 per cent private ones.

HDB hopes to offer the first batch of waterfront flats for sale next year, and residents are expected to get their flats by 2014 or 2015.

Mr Mah also presented 12 awards to seven winners in the categories of construction safety, quality and design.

He recognised the contribution by industry partners towards Singapore’s successful public housing programme.

‘But, success brings with it a new set of challenges, one of which is meeting the rising expectations of Singaporeans for quality public housing,’ he said.

This is why HDB and its partners should continue to keep abreast of technological improvements and innovation to make HDB flats and estates even better, said Mr Mah.

Among the winners were China Construction and Surbana International, which won multiple awards.


HDB award winners

Construction Safety Award

China Construction (South Pacific) Development (Building)

Thong Huat Brothers (Main upgrading)

Design Award

Surbana International Consultants (Three awards for new housing, two for main upgrading)

Quality Award

China Construction (South Pacific) Development

Kian Hiap Construction

Kienta Engineering Construction

Sim Lian Construction

United Premas


ING raises UK bubble fears


Source : Business Times – 12 Nov 2009

No underlying fundamentals for sector’s performance

ING Real Estate has raised concerns that a recent rise in UK commercial property prices could lead to a bubble, possibly causing values to fall again by end-2010, one of its senior executives said on Tuesday.

‘The size of that downturn will depend on the actual rate of the capital appreciation that we see now . . . if it’s too big, you could create a bubble,’ Kevin Aitchison, CEO of ING Real Estate Investment Management UK told Reuters in an interview.

The view echoed other major property investors who warned this month that Britain’s commercial property market recovery could be short-lived, if prices rise too quickly without growth in the economy and rental rates.

UK values rose 1.1 per cent in September, as they started to recover from a two-year downturn that saw valuations plunge 45 per cent, the benchmark Investment Property Databank (IPD) index showed last month.

ING Real Estate, one of the world’s largest property investors with a portfolio of 100 billion euros (S$208 billion), estimates actual UK market prices to have risen up to 23 per cent so far this year, however, due to huge investor demand.

‘At the moment, investor demand is huge but because the occupier side continues to deteriorate, the underlying fundamentals for property performance actually aren’t there,’ Mr Aitchison said on the sidelines of an ING Real Estate seminar.

He remains bullish about the long-term prospects for UK commercial property and sees the next three to five years as a positive time for UK assets as the occupier market recovers and rents start rising in 2011.

The company still has equity of between £200 million (S$462.9 million) and £300 million available for UK real estate, but is in no hurry to invest the money right now, due to continued risks in the market, Mr Aitchison said.

‘We are treading with caution. We will certainly try to invest that amount of money but it has got to be the right stock,’ he said, adding that weak occupier demand also makes this a bad time to invest in the development of new projects.

ING prefers UK real estate sectors such as retail properties like shopping centres and retail warehouses, and multi-tenanted industrial estates, in particular focusing on assets on long leases.

It is focused mainly on raising a UK property fund in partnership with private equity firm Hamilton Bradshaw, and does not have imminent new fund launches in the UK, Mr Aitchison said.

‘We’re always conscious of the fact that we still have cash for existing clients, and we need to make sure that we’re not raising money for the sake of it,’ he said.

Asked about the impact of an imminent split of ING Real Estate’s parent, the Dutch bancassurer ING Group, Mr Aitchison said that it ‘will be business as usual’.

ING Group is selling its worldwide insurance operations over the next four years as part of a restructuring ordered by the European Commission.

‘Even if we were real estate on its own, or part of insurance – real estate is one of the biggest managers in the world, insurance is fifth or sixth biggest in the world – so we will remain part of a substantial business,’ Mr Aitchison said.


High luxury-home prices are good


Source : Business Times – 12 Nov 2009

I WORK in the real estate sector in Hong Kong but do not cover the residential property market. Nevertheless, like many residents of the Special Administrative Region, I have been fascinated by recent market developments. Over the past few months, prices have been rising, China buyers have been increasingly active, developers have been launching units and analysts have been talking about the lack of supply. Debate raged over the sustainability of price rises with the argument centring on lingering economic weakness versus abundant liquidity coupled with early signs of economic improvement.

News then broke in late October of Henderson Land’s sale of a duplex at 39 Conduit Road for HK$439 million (S$78.54 million) or a world record HK$71,280 per square foot. What has since ensued is heated discussion over whether dreams of home ownership for the middle class in Hong Kong have been shattered in part due to rich China buyers driving up prices. Calls are being made for the government to tame the raging animal spirits in the Hong Kong residential market.

The themes playing out in the Hong Kong market are to some extent applicable to Singapore, although the Singapore private residential market rally this time round has been mass-market-led while that in Hong Kong is driven by the high end. Still, with Singapore’s imminent opening of the integrated resorts, there could be a new spring in step for high-end properties.

In Hong Kong, questions being discussed include: Are foreigners pricing out locals? Do sky high prices for luxury units matter? What can and should government do to control property prices? What help if any should government render middle-class locals in owning their homes? Are the controversies in the property market a reflection of economic growth in recent years benefiting high-income earners disproportionately while the rest lag behind?

Invariably, there will be some degree of envy when wealthy foreigners come to any city and lord it over the locals. Such a scenario emerges in many a successful city, with rich Russians and Arabs in London, rich China nationals in Hong Kong and rich Indonesians in Singapore. However, should one follow the head rather than the heart, it is not just the Hong Kong property tycoons who ought to celebrate the sale of a luxury unit for HK$71,280 psf but everyone.

Wealthy people have a choice of where to invest their money. Hong Kong people should be proud that there are a fair number of rich people confident enough in Hong Kong’s prospects to pay princely sums for property in the territory. Indeed, having millions poured into residential property helps generate real-estate-related jobs plus spending by the dwellers of luxury properties. Real estate investment may not generate the same amount of economic spin-offs as investment into manufacturing but they still bring economic benefits.

Singapore and Hong Kong share many similarities, key of which is that both cities, in my view, have a bright future catering to a rapidly growing Asia as hubs of finance, trade, transport, tourism, and various other services. Economic success of both cities does depend on keeping an open door to foreigners and this includes being broadly welcoming to participation by foreigners in the property market. Hong Kong has an important strategic fight on its hands of being competitively positioned as Shanghai and Beijing make strides up the league of global cities. The people of Hong Kong should be more concerned with the city’s ability to thrive in an ever-changing global landscape than the state of the property market. Of course, should Hong Kong continue to grow as a key business hub, expect more reports of developers selling luxury units for mind-boggling sums.

Shelter is a basic need of man and owning a home is a key purchase decision for many people. Defining the type of housing that the middle class should be able to afford is, however, tricky. I believe that all policymakers can largely do is to ensure that there is adequate land supply such that there is a range of property types at different price points available. Just as with any consumer product, we should rely on developers to offer choice to meet a variety of needs.

It is not surprising that developments in the residential property market generate strong emotions. Very high prices at luxury projects are not mere aberrations and high prices at the high end can lead the rest of the market up. Nonetheless, the high end typically forms a small part of the wider market and purchasers at the high end tend to be financially strong, Thus, it would be wrong to see high luxury-unit prices as indicative of a property bubble, which is what policymakers rightly fret about. Instead, what policymakers could do is to be more effective in winning hearts and minds – that high prices at the high end are generally a good thing.

More critically, what policymakers in successful Asian cities can focus on is to put any discussion of residential real estate in a wider context. While anxieties of the middle class with regards to home ownership may be difficult to assuage, the state can focus on doing more in other areas to alleviate life’s anxieties such as providing low-cost quality education, healthcare coverage and help with retirement savings. Let the pursuit of making a city a great place to work, live and play go together with ensuring that a range of needs of local residents are well taken care of. While not everyone can live in a prime neighbourhood, everyone can perhaps get reasonably good health care and education.

The writer is a Hong Kong-based real estate executive with extensive experience in the Singapore property market


Don’t give up confirmed list card again


Source : Business Times – 12 Nov 2009

Maintaining land supply will help alleviate volatilities in property prices and rents when cycles change suddenly

LAST week, the Ministry of National Development (MND) revealed a slate of eight residential sites that it would sell on the confirmed list starting January 2010. This came after a break of about a year on the sale of such sites.

Should confirmed list land sales have been suspended for such a long period? When markets suddenly pick up and land prices shoot up – as they have this year – it translates to less affordable homes in the mass-market segment.

For the Government Land Sales Programme to be effective, both the confirmed and reserve lists need to operate side by side. By restricting state land sales to the reserve list system – where sites are triggered for launch only upon successful application by developers – the state may effectively be giving all the cards to developers, who have their own self-interest at heart, first and foremost.

For instance, it would not be in a major office landlord’s interest to make an application seeking the release of an office site from the reserve list if it is trying to fill a major office development and hopes that office rents will increase. However, if there is suddenly a pick-up in office demand – for example, if major financial institutions and funds resume their strategy of expanding in Asia and setting up hubs in Singapore – office rents could suddenly spike. Having sales of sites on the confirmed list would help to mitigate this.

Mass-market condo sites

Another drawback of selling land only through the reserve list has emerged of late, with prices of mass-market condo sites soaring at state tenders.

In October last year, MND suspended confirmed list land sales. That made sense at the time, during the dark days of the global financial crash. However, it continued the suspension for the first-half 2009 Government Land Sales programme and later, for the H2 2009 programme, even though developers’ home sales had shown clear signs of revival by the time the H2 2009 slate was announced in early June.

After several months of strong home sales, especially in the mass-market segment, developers found that they had started to run out of entry-level private residential land. However, it was only in July that they began triggering residential sites for release through the reserve list. To date, six sites have been released, of which tenders for five have closed and been awarded – amid rising land prices.

Many of the sites are well located – near MRT stations, or near reservoirs. These are naturally the type of sites that developers would want released in the reserve list during a mass-market housing boom. However, such prime sites, because they are worth more, also lead to rising land values when there is a shortage of such plots in developers’ landbanks. A rapid hike in land prices is not compatible with the national goal of keeping mass-market private home prices affordable.

Had the confirmed list not been suspended for the current half, the government could have used it to introduce some less-choice sites further away from MRT stations and not so near the city, just as it has now done for the H1 2010 confirmed list.

One can’t blame developers for not wanting land released too early in the cycle from the reserve list. Frankly, it’s not in their interest. Their motivation is to increase the value of their landbanks and existing properties; and having less land supply is generally better than having more supply.

There are also other factors at play. Developers don’t have the best information – such as the size of new investments flowing into Singapore in the near future, how many permanent residents and new citizens Singapore will take in each year, and how much monies high net worth foreigners are parking in Singapore. The government has a much better idea.

Always maintaining at least a minimum supply in the confirmed list – in both good times and bad – will help alleviate the volatilities in land values, property prices and rents that come when cycles change suddenly, as they have in the mass-market private housing sector this year.

Booms and busts

While the government has, in the past, suspended the confirmed list midstream of its half-yearly programme when the market turns south, it has never restarted the confirmed list midstream when things suddenly picked up. Instead, it has waited for the prevailing half-year period to end before restarting the confirmed list. The argument for this would be that the authorities want to play by the rules and give more notice to market participants.

However, the substantial time-lag in resuming the confirmed list exaggerates the booms and busts in the property market.

That is why both lists need to operate side by side.

The government does not sell confirmed list sites if bids come in too low. Its usual policy is to award sites only if the top bids are at least 85 per cent of the Chief Valuer’s assessed market value. This reserve-price formula – if rigorously applied – acts as a safety mechanism that would create a price floor for state land sites so that land prices don’t crash and further erode market confidence in a downturn.

As the Singapore property market matures, it will be able to absorb news of confirmed list sites attracting no bids or low bids – and the sites subsequently not being sold by government. Over time, they will come to be seen as part of natural market cyclical fluctuations. The government should hold some of the cards by maintaining a confirmed list throughout instead of leaving everything in the hands of developers.

Wednesday, November 11, 2009

Singapore most integrated of the 21 APEC economies


Source : Channel NewsAsia – 11 Nov 2009

Singapore is the most integrated of the 21 economies which make up the Asia Pacific Economic Cooperation (APEC), according to an index released by the Pacific Economic Cooperation Council (PECC) on Wednesday as part of its annual State of the Region report.

In fact, the Asia Pacific region, as a whole, has become more integrated since APEC was founded 20 years ago.

The PECC index of economic integration tracks the extent to which the APEC economies are becoming more alike in their economic characteristics.

It also looks at the relative importance of regional trade, investment and human flows compared to economic relations with the rest of the world.

Said Woo Yuen Pau, coordinator of the report: “The path of integration has been rising pretty much through the entire two decade period, and we think that APEC can take some credit in enhancing the deepening of regional integration which surely is one of the fundamental goals of the APEC forum.”

Mr Woo said the index made use of 2006 data, and the integration levels now would be even deeper than the report.

“Integration will continue to have deepened through the 2006 to 2009 period, simply because the share of inter-regional trade and investment and human flows would have increased through this period because of the downturn in the United States and the European Union, he explained. “So, I’m fully expecting that when we produce our index next year, and the year after, we will find that integration will continue to be on the rise.”

PECC said it believes the findings to be significant as a measure of APEC’s success and a factor in assessing its progress towards the 2010 Bogor target.

The Bogor Goals, adopted at the 1994 APEC summit, calls for industrialised members to achieve free trade and investment targets by 2010.

Developing member economies have until 2020.


Property cycles hard to predict


Source : Straits Times – 11 Nov 2009

PROPERTY cycles are hard to predict, but the Government will try to avoid boom-bust cycles, said Finance Minister Tharman Shanmugaratnam yesterday.

‘We will keep our eyes on the ball and use all the tools at our disposal, but in a calibrated fashion,’ he told about 80 business leaders at a forum to garner feedback for the Economic Strategies Committee. Mr Tharman is heading this committee to look into new ways for Singapore to grow.

The Government will probably not use ‘macro tools’ to manage property cycles, such as changing interest rates or exchange rates, because these rates have many other effects such as on businesses as well, said Mr Tharman in his concluding remarks at the forum.

But there are other options. These include tweaking rules on credit, adjusting land supply and – in extreme situations – amending tax policies, he said.

Two months ago, the Government introduced measures to help cool the property market, including removing the interest absorption payment scheme and significantly increasing land supply.

On Monday, the Monetary Authority of Singapore also highlighted the possibility that additional cooling measures may be needed if there is a renewed surge in property speculation.

‘We do want to manage the property cycle as best we can, prevent boom and bust,’ said Mr Tharman, adding that this is not easy as it is difficult to anticipate Singapore’s property needs four or five years in advance. As for broader economic cycles, Singapore will always be exposed to ups and downs beyond its control, he said.

‘As a city, and a global city at that, we will always be subject to global cycles in specific industries as well as the global macro cycle,’ he said.

The important thing is to achieve good average growth over the cycle, rather than go for a lower growth path to avoid volatility, said Mr Tharman. ‘If you try to dampen all volatility, you usually end up with a lower average as well.’

The unusually strong growth that Singapore enjoyed in 2006 and 2007 helped pull the average growth across the most recent business cycle up to 5 per cent, he added. Without this, wage growth in particular would have been weak.

So Singapore should opt for a path of good growth in incomes, but prepare its businesses and workers well for occasional shocks and respond quickly when they come, said Mr Tharman.

Singapore has ‘not come out too badly’ in the downturn in terms of its ability to buffer companies and employees and to prepare for recovery, he said. But for its next growth phase, the country must undergo a ’step change’. What are needed are higher skills, higher productivity and a higher level of expertise across the board.

Singapore could not engage in strategies of the industrial policy type, that try to plan well ahead of the market. But it moves quickly to identify emerging market trends and work with early adopters to develop clusters of real strength, Mr Tharman said.

One advantage that Singapore can use is its diversity of both people and companies. This will prove a big boon in an age where the Asian consumer is expected to be a key driver of economic growth, Mr Tharman said.

‘In Singapore, you can get a feel of what is happening all around Asia… a sense of what the emerging drivers are.’


This for developers and their customers


Source : Straits Times – 11 Nov 2009

NO PROPERTY bubble shall be tolerated. This bald assertion went down like a splash of cold water on the fast heating market when, in September, the Government stopped home loans on easy terms and chose not to extend concessionary support for developers upon its scheduled expiry next year. These concessions were granted in the last Budget. Speculative demand did slow as a result of these moves, but price levels were still too high for comfort. Developers were pushing their luck cashing in after a fallow period. Last week came an early announcement that land sales targeted at mass market buyers, including parcels for executive condominiums, will be available for bids early next year. Land releases have a gestation period between tender and launch, but the depressant effect on sentiment is immediate. The market understands that, like nothing else. This undoubtedly was the intention of the National Development Ministry, as the consensus among government trend trackers is that the variable economic recovery is hard to chart. It makes sense that asset price inflation associated with unjustified market exuberance has to be checked.

Within days, the Monetary Authority of Singapore reinforced the message with a prominent warning on real estate activity in its year-end Financial Stability Review. It cited risks covering the opposing contingencies of a faltering economic recovery leading to property portfolio devaluations, and a sustained recovery leading inevitably to higher interest rates, which would be trouble for the over-leveraged and the illiquid. The central bank’s concern about macro stability is naturally holistic, seeing what adverse impact unrestrained stock and property bets in a period of unstable growth can have on the soundness of the banking system. Household debt shall not grow onerous, it is saying by extension. Banks’ lending capacity must remain unimpeded so as to keep the economy oiled. It would be compromised if the rebound falters and brings in its train business failures, job losses and the ultimate danger of soured loans forcing banks to be again stringent with credit. The MAS bottom line (developers should prick their ears up here) is that further intervention in the property market would be necessary if ’speculative momentum’ re-emerged.

Buying activity and price levels for the rest of the year and up till the next Budget is presented will tell if the industry and its customers see the inherent risks of acting too hastily on the rebound. It took Hong Kong a dozen years for property values to right themselves. But stable growth never stood a chance in that archetypal monetised enclave. Its government is now desperately acting to head off a bubble forming.


Group8asia wins Punggol Waterfront Housing Design Competition


Source : Channel NewsAsia – 11 Nov 2009

Architecture firm Group8asia, in partnership with Aedas, was on Wednesday declared winner of the Punggol Waterfront Housing Design Competition.

Residents can look forward to resort-style housing, which will set the benchmark for the rest of the developments along the 4.2-kilometre waterway.

Announcing this at an HDB awards ceremony, National Development Minister Mah Bow Tan said its distinctive sky terrace concept will create quality public spaces along the waterway for the community, keeping the ‘kampung spirit’ alive.

It offers residents an eco-friendly housing experience by the waterway.

Mr Mah also said the construction cost, as well as its maintenance, will be within the benchmarks set for public housing.

The winner was picked through a two-stage competition, which tapped on the private sector’s expertise to generate exciting housing design forms to realise the theme of ‘Green Living by the Waters’.

The development, comprising 1,200 units, is scheduled for launch in the middle of next year.


Six local buildings added to national monuments list


Source : Channel NewsAsia – 11 Nov 2009

Another six buildings will be preserved as national monuments.

They are Church of St Teresa, Command House, Keng Teck Whay temple, the former Raffles College, the former St James Power Station, and Bowyer Block at the Singapore General Hospital.

Acting Minister for Information, Communications and the Arts, RADM (NS) Lui Tuck Yew, in announcing the latest buildings to be gazetted on the National Monuments, said the six preserved buildings will help enhance Singapore’s community spaces and make the city even more distinctive.

The Church of St Teresa was officially opened in 1929, and serves the religious community in the area, and is a landmark in the heartlands of Kampong Bahru.

In the same area is the former St James Power Station which was Singapore’s first municipal operated power station. Built in 1926, it generated electricity until the late 1970s.

Not too far away, is the Singapore General Hospital where Bowyer Block stands with its distinctive Clock Tower. It is one of the few original hospital buildings from 1926 and was named after Dr John Herbert Bowyer, the former Chief Medical Officer who died during the war.

In the central business district, is the Keng Teck Whay temple that stands beside Thian Hock Keng. It was established in 1831 by 36 members of Hokkien Chinese heritage.

Over at the Bukit Timah area, hailing from Singapore’s colonial past, Command House formerly known as ‘Flagstaff House’, once served as the official residence of 16 successive General Officers Commanding (GOC) Malaya, and its notable residents include Admiral Lord Louis Mountbatten.

Nearby is the Former Raffles College which was officially opened in 1929. It was the first institution for higher learning in Malaya and produced many eminent political and economic leaders for Singapore. The institution evolved into the to the National University of Singapore now based at Kent Ridge.

RADM (NS) Lui said Singapore is committed to preserving its built heritage to leave a lasting legacy for future generations and celebrate the social memory of these places.

“We need to keep our history and heritage alive and relevant to our future” he said.

RADM (NS) Lui was speaking at the launch of Resonance – Songs of our Forefathers, a book on Singapore’s built heritage and history captured through the camera lens of photographers such as property developer Kwek Leng Joo.

The project was initiated by architect and former Chairman of the Preservation of Monuments Board, Alfred Wong.


SPH-led venture puts in top bid for Clementi mall1


Source : Straits Times – 11 Nov 2009

A JOINT venture between Singapore Press Holdings, NTUC Income and NTUC FairPrice has topped the tender for a mall at Clementi Town Centre with a bid of $541.9 million.

This is nearly 42 per cent above the se-cond-highest bid of $382 million from a venture between Keppel Land’s Alpha Investment Partners and Guthrie.

The top bid was submitted through CM Domain, which is 60 per cent owned by SPH’s Times Properties, with 20 per cent stakes held by NTUC Income and NTUC FairPrice.

Frasers Centrepoint was third, with a bid of $352.1 million, followed by Capita-Mall Trust at $338.8 million and Lend Lease Retail Investments 3 at $303.3 million. Sim Lian Holdings was last with a bid of $170 million, according to the Housing Board yesterday.

The 99-year leasehold mall at the junction of Commonwealth Avenue West and Clementi Avenue 3 has direct links to the Clementi MRT station. It is part of a larger development being built by the HDB comprising two 40-storey blocks of flats, a two-storey carpark serving 388 HDB flats, a roof garden and a bus interchange.

The Clementi mall will occupy basement one, the third and fourth floors as well as part of the fifth storey. A library will take up 1,975.7 sq m on the fifth floor and there is a carpark at basement two. Levels one and two are for the air-conditioned bus interchange. Total gross floor area is about 25,000 sq m while the net floor area is up to 18,000 sq m.

CM Domain will need to fit out the mall as the HDB is building only the shell structure. Property consultants estimate the fit-out cost at $40 million to $50 million. That would put the top bid at around $3,000 psf of retail net floor area.

Consultants said this could be a record level as the price of suburban malls has generally not crossed $2,500 psf.

Jones Lang LaSalle’s head of investments, Ms Stella Hoh, said CM Domain could be looking at an average rent of $16 to $17 psf, assuming a capitalisation rate of 5.5 per cent and a $50 million fit-out cost.

Knight Frank’s managing director Danny Yeo said it depends on the expected returns. ‘If they are looking at a net yield of 4 to 4.5 per cent, the achievable rent is $14 psf. But if they are expecting returns of 5.5 to 6 per cent, they would need to do close to $18 psf.’

An SPH spokesman said the company decided to bid for the mall because it is in a good catchment area and there are not many shopping centres nearby.

‘Suburban malls are well patronised, with resilient rentals and sustainable income,’ he said yesterday. The property is in a high traffic area due to the integrated transport amenities and the business will provide a solid and steady income stream to the joint-venture parties, he added.

Colliers International’s executive director (investment sales) Ho Eng Joo said students from nearby institutions like the National University of Singapore and Ngee Ann Polytechnic like to gather in the area.


Mustafa Warehouse closes doors to shoppers


Source : Business Times – 11 Nov 2009

URA case against company due for mention in court today

THE shutters finally came down at Mustafa Warehouse in Kallang Pudding Road yesterday afternoon after the company was slapped with a writ of summons last Thursday by Urban Redevelopment Authority (URA) for unauthorised use of the warehouse building.

The case against the building’s owner, Mohamed Mustafa & Samsuddin Co Pte Ltd, is due to be mentioned in the Subordinate Courts today.

The six-storey building is approved for warehouse use but for the past four weeks or so, a department store has been operating on the first level and a supermarket on level two. Commercial activities like these are not permitted in warehouse developments. The building’s upper levels are used as a warehouse.

Yesterday afternoon, around 2pm, customers shopping in the facility were told to leave, after which staff started to close the shutters on the first two levels, BT understands. Customers were told to shop at Mustafa Centre in Little India instead.

Last week, when URA served the writ of summons to Mustafa, a URA spokeswoman said that approval to use the premises as a warehouse was given in 2001. Its owner subsequently submitted an application in 2004 to change the building’s use to a wholesale centre for household goods and appliances.

‘The application was not approved and URA advised the owner that the proposed wholesale centre use involves sale of products and is considered commercial use, which is not allowed in a warehouse development. URA recently received feedback regarding the unauthorised commercial activities,’ URA’s spokeswoman said last Thursday.

If found guilty, Mustafa could be fined up to $200,000 for the breach, which is classified as a planning offence under the Planning Act.