THE brief was simple. Stroll down Orchard Road’s pedestrian mall with a giant luggage trolley and two stilt walkers in tow for a high viewpoint. Look out for hapless shoppers with heavy festive loads and lend a helping hand.
And the offer proved too good to refuse. The three-metre luggage trolley soon became a refuge for tired legs as women and children hopped on. But the extra-heavy load did not deter Park Hotel’s staff from carrying on with their mission – to help shoppers and drive home the hotel’s new ‘larger-then-life’ service standards.
Park Hotel Group also held a Christmas charity auction last week in aid of Singapore’s Breast Cancer Foundation. Some 10 well-known local hunks entertained guests at the event, inviting bids. More than $30,000 was raised, with the highest bid of $2,700 going to actor Hansen Lee, for a lunch date and two economy air tickets sponsored by Qatar Airways to any destination on its network.
Park Hotel Group director Allen Law said: ‘We are ending the year on a high note. Our two hotels in Singapore have done very well, closing the year with occupancies in the high 80s.
‘The growth momentum is setting us on the right track as we prepare to unveil our flagship hotel – Grand Park Orchard – in May next year.’
Source : Business Times – 12 Dec 2009
Saturday, December 12, 2009
Surge in asset prices to fuel inflation: HSBC
INFLATION could hit a high of 4 per cent in the next six months on account of the surge in asset prices here, according to a new report by HSBC.
It said investors feeling rich from the stock market rally are likely to spend more, raising demand – and prices – for goods and services.
At the same time, a continued increase in property prices will also lead directly to a rise in inflation.
This will help boost the consumer price index – the key indicator of inflation here – next year, said HSBC economist Robert Prior-Wandesforde.
He has raised his inflation forecast for next year to 2.9 per cent from 2.5 per cent previously, with inflation expected to peak at about 4 per cent probably in the second quarter of next year.
Investors who have made money from shares will naturally spend more, helping fuel inflation, but even people who do not buy shares will feel the ‘confidence effects’, said Mr Prior-Wandesforde.
‘It is easy to believe that hearing about rapidly rising stock markets will lead people to believe that things are getting better, and vice versa if stock prices are falling.’
He said the Straits Times Index is on course to rise by 6 per cent in the fourth quarter from the third. This suggests that consumer spending will rise by more than 2 per cent in the same period, he said, just in time for a nice Christmas boost for retailers.
HSBC also expects the property market to continue to strengthen. Interest rates are still low, banks are still prepared to lend and households are not saddled with a lot of debt, which means borrowing to buy a home should be relatively cheap and easy.
Also, the huge number of property deals between March and September this year augurs well for prices, said Mr Prior- Wandesforde. According to his data, a jump in transactions often leads to a surge in housing prices.
The price gap between HDB flats and private homes is also close to the narrowest it has been since the 1990s, before which data is not available.
A narrow price gap usually means that more HDB dwellers will upgrade to private housing, Mr Prior-Wandesforde said.
He believes concerns of an oversupply are overblown. The 34,100 figure of unsold units in the third quarter of this year is much lower than the 43,400 in the fourth quarter of last year, and not far from the all-time low of 30,300 in 2007, he said.
All this means that Mr Prior-Wandesforde expects private home prices to rise an average of 2 per cent to 3 per cent for each quarter next year.
This will undoubtedly feed into higher inflation, although private home prices do not have as big an impact on inflation as HDB prices do.
According to HSBC’s model, a 1 per cent rise in private home prices leads to a 0.03 per cent rise in consumer price inflation. But the same increase in HDB flat prices adds 0.13 per cent to inflation.
Indeed, the recent revision in annual values for HDB properties has already caused a spike in next year’s official inflation forecast. The Government is now predicting that inflation will come in at 2.5 per cent to 3.5 per cent next year, from its previous tip of 1 per cent to 2 per cent.
Source : Straits Times – 12 Dec 2009
It said investors feeling rich from the stock market rally are likely to spend more, raising demand – and prices – for goods and services.
At the same time, a continued increase in property prices will also lead directly to a rise in inflation.
This will help boost the consumer price index – the key indicator of inflation here – next year, said HSBC economist Robert Prior-Wandesforde.
He has raised his inflation forecast for next year to 2.9 per cent from 2.5 per cent previously, with inflation expected to peak at about 4 per cent probably in the second quarter of next year.
Investors who have made money from shares will naturally spend more, helping fuel inflation, but even people who do not buy shares will feel the ‘confidence effects’, said Mr Prior-Wandesforde.
‘It is easy to believe that hearing about rapidly rising stock markets will lead people to believe that things are getting better, and vice versa if stock prices are falling.’
He said the Straits Times Index is on course to rise by 6 per cent in the fourth quarter from the third. This suggests that consumer spending will rise by more than 2 per cent in the same period, he said, just in time for a nice Christmas boost for retailers.
HSBC also expects the property market to continue to strengthen. Interest rates are still low, banks are still prepared to lend and households are not saddled with a lot of debt, which means borrowing to buy a home should be relatively cheap and easy.
Also, the huge number of property deals between March and September this year augurs well for prices, said Mr Prior- Wandesforde. According to his data, a jump in transactions often leads to a surge in housing prices.
The price gap between HDB flats and private homes is also close to the narrowest it has been since the 1990s, before which data is not available.
A narrow price gap usually means that more HDB dwellers will upgrade to private housing, Mr Prior-Wandesforde said.
He believes concerns of an oversupply are overblown. The 34,100 figure of unsold units in the third quarter of this year is much lower than the 43,400 in the fourth quarter of last year, and not far from the all-time low of 30,300 in 2007, he said.
All this means that Mr Prior-Wandesforde expects private home prices to rise an average of 2 per cent to 3 per cent for each quarter next year.
This will undoubtedly feed into higher inflation, although private home prices do not have as big an impact on inflation as HDB prices do.
According to HSBC’s model, a 1 per cent rise in private home prices leads to a 0.03 per cent rise in consumer price inflation. But the same increase in HDB flat prices adds 0.13 per cent to inflation.
Indeed, the recent revision in annual values for HDB properties has already caused a spike in next year’s official inflation forecast. The Government is now predicting that inflation will come in at 2.5 per cent to 3.5 per cent next year, from its previous tip of 1 per cent to 2 per cent.
Source : Straits Times – 12 Dec 2009
CapLand aims for 5,000 homes a year in China
CAPITALAND, which has a pipeline of more than 14,000 homes in China, said yesterday that it plans to launch an average of 5,000 homes a year there with its strategic partners.
The property group celebrated the 15th anniversary of its entry into China with a gala dinner in Shanghai.
CapitaLand has announced that its asset size in China at Sept 30 was $6.7 billion, or 28 per cent of the group’s total business. Its target is to grow its China business to between 35 and 45 per cent of total business in the next three to five years, which will amount to about $10 billion.
‘Potentially, the group can double its growth in China over the next five years, given the strong demand for affordable housing, organised retail, quality serviced residences and integrated developments,’ CapitaLand said in a filing to the Singapore Exchange. ‘China will be the major foreign market for the group.’
Today, CapitaLand has a portfolio in China worth more than $20 billion on a when-completed basis, comprising over 100 projects in 40 cities, such as Beijing, Shanghai, Chengdu, Hangzhou, Ningbo and Shenzhen.
Looking ahead, besides expanding its China residential business, the company has growth plans for its other business units.
For retail, 33 shopping malls in China are currently operational and another 11 are slated to open over the next two years. And for serviced residences, subsidiary The Ascott plans to open seven properties with about 1,600 units by 2011.
CapitaLand shares closed unchanged at $4.19 yesterday.
Source : Business Times – 12 Dec 2009
The property group celebrated the 15th anniversary of its entry into China with a gala dinner in Shanghai.
CapitaLand has announced that its asset size in China at Sept 30 was $6.7 billion, or 28 per cent of the group’s total business. Its target is to grow its China business to between 35 and 45 per cent of total business in the next three to five years, which will amount to about $10 billion.
‘Potentially, the group can double its growth in China over the next five years, given the strong demand for affordable housing, organised retail, quality serviced residences and integrated developments,’ CapitaLand said in a filing to the Singapore Exchange. ‘China will be the major foreign market for the group.’
Today, CapitaLand has a portfolio in China worth more than $20 billion on a when-completed basis, comprising over 100 projects in 40 cities, such as Beijing, Shanghai, Chengdu, Hangzhou, Ningbo and Shenzhen.
Looking ahead, besides expanding its China residential business, the company has growth plans for its other business units.
For retail, 33 shopping malls in China are currently operational and another 11 are slated to open over the next two years. And for serviced residences, subsidiary The Ascott plans to open seven properties with about 1,600 units by 2011.
CapitaLand shares closed unchanged at $4.19 yesterday.
Source : Business Times – 12 Dec 2009
Hotel room rates start edging upward
Occupancy rates picking up as corporate travel improves; hoteliers expect leisure travel to rise with IRs’ opening
WITH hotel occupancies having clawed their way up to healthier levels this quarter and tourism starting to show signs of recovery, the hotel industry appears to be regaining lost ground.
Room rates, which also came under pressure this year thanks to a slump in travel demand, are also likely to start increasing gradually in line with the market, some hotels said.
According to Hong Leong Group subsidiary Millennium & Copthorne (M&C) Hotels, its hotels pulled off a solid showing in the third quarter, with average occupancy rate (AOR) jumping to 86.1 per cent, up from 74.8 per cent in the first quarter and 75.5 per cent in the second quarter.
‘Occupancy for 4Q09 is expected to continue in this recovery trend,’ said a spokesperson for M&C, whose portfolio includes Orchard Hotel and the Grand Copthorne Waterfront.
For the Rendezvous Hotel, occupancy is at the 80 per cent mark currently, compared to 70 per cent in the early part of the year.
‘Average room rate has gone up by more than 10 per cent compared to the low rates experienced in July-August, which is a lull period for us,’ said its general manager Kellvin Ong.
Over at the Pan Pacific, booking trends have been picking up, compared to the first half of this year where occupancy rate was softer year-on-year.
Fourth-quarter figures are expected to be bolstered by Apec week in November which brought 10,000 dignitaries and members of the international media to Singapore. Food and beverage sales for the year-end festivities are also expected to prove better than last year in light of the recovering economy.
For luxury hotel St Regis – which played host to President Hu Jintao and the delegation from China during Apec week – fourth-quarter occupancy has grown by 14 percentage points year on year.
Corporate travel – which took a nosedive in the earlier part of this year as companies slashed travel budgets to contain costs – also seems to be picking up.
‘The last quarter of 2009 has been positive with an increase in corporate room bookings, which has helped to boost our average occupancy and rates,’ said Pan Pac’s public relations manager, Cheryl Ng. She also added that room rates are likely to grow marginally in 2010, while the occupancy level should also do so by at least five percentage points.
The Rendevous Hotel, which expects to gradually start revising its rates upward in line with the recovering industry, is also banking on the corporate demand to push up room rates.
Others, such as the Marriott, are upbeat that 2009 will end on a better note than it began.
‘Room occupancy has risen and the general business sentiment has lightened up,’ said Marriott’s marketing director Julie Yeong.
Meanwhile, M&C said that it will ’scale back’ on existing discounted packages, given that occupancy is treading above 80 per cent, but plans to introduce other higher value-added packages. M&C also expects next year’s revenue per available room (RevPar) to grow year-on-year as the recovery in the tourism sector picks up steam.
And with the much- talked-about Resorts World at Sentosa (RWS) and Marina Bay Sands (MBS) slated to open their doors next year, hoteliers expect to benefit from the new kids on the block, despite the hefty injection of industry supply. RWS alone adds some 1,800 rooms.
‘We expect the increase in hotel rooms will initially displace the equilibrium in the market. However, in the long-run, demand will grow,’ reckons Ms Ng.
For starters, visitors may prefer to be away from the crowds or require more affordable accomodation. Traditionally, hotels within theme parks tend to charge a premium compared to hotels in the surrounding area.
The presence of the integrated resorts could also boost weekend rates and occupancies.
‘Hotels currently tend to experience weaker occupancies and rates during the weekends. With the expected spike in leisure visitors to Singapore over the weekend, it may not be surprising to see hotels registering higher occupancies and possibly even higher rates,’ M&C’s spokesperson pointed out.
Source : Business Times – 12 Dec 2009
WITH hotel occupancies having clawed their way up to healthier levels this quarter and tourism starting to show signs of recovery, the hotel industry appears to be regaining lost ground.
Room rates, which also came under pressure this year thanks to a slump in travel demand, are also likely to start increasing gradually in line with the market, some hotels said.
According to Hong Leong Group subsidiary Millennium & Copthorne (M&C) Hotels, its hotels pulled off a solid showing in the third quarter, with average occupancy rate (AOR) jumping to 86.1 per cent, up from 74.8 per cent in the first quarter and 75.5 per cent in the second quarter.
‘Occupancy for 4Q09 is expected to continue in this recovery trend,’ said a spokesperson for M&C, whose portfolio includes Orchard Hotel and the Grand Copthorne Waterfront.
For the Rendezvous Hotel, occupancy is at the 80 per cent mark currently, compared to 70 per cent in the early part of the year.
‘Average room rate has gone up by more than 10 per cent compared to the low rates experienced in July-August, which is a lull period for us,’ said its general manager Kellvin Ong.
Over at the Pan Pacific, booking trends have been picking up, compared to the first half of this year where occupancy rate was softer year-on-year.
Fourth-quarter figures are expected to be bolstered by Apec week in November which brought 10,000 dignitaries and members of the international media to Singapore. Food and beverage sales for the year-end festivities are also expected to prove better than last year in light of the recovering economy.
For luxury hotel St Regis – which played host to President Hu Jintao and the delegation from China during Apec week – fourth-quarter occupancy has grown by 14 percentage points year on year.
Corporate travel – which took a nosedive in the earlier part of this year as companies slashed travel budgets to contain costs – also seems to be picking up.
‘The last quarter of 2009 has been positive with an increase in corporate room bookings, which has helped to boost our average occupancy and rates,’ said Pan Pac’s public relations manager, Cheryl Ng. She also added that room rates are likely to grow marginally in 2010, while the occupancy level should also do so by at least five percentage points.
The Rendevous Hotel, which expects to gradually start revising its rates upward in line with the recovering industry, is also banking on the corporate demand to push up room rates.
Others, such as the Marriott, are upbeat that 2009 will end on a better note than it began.
‘Room occupancy has risen and the general business sentiment has lightened up,’ said Marriott’s marketing director Julie Yeong.
Meanwhile, M&C said that it will ’scale back’ on existing discounted packages, given that occupancy is treading above 80 per cent, but plans to introduce other higher value-added packages. M&C also expects next year’s revenue per available room (RevPar) to grow year-on-year as the recovery in the tourism sector picks up steam.
And with the much- talked-about Resorts World at Sentosa (RWS) and Marina Bay Sands (MBS) slated to open their doors next year, hoteliers expect to benefit from the new kids on the block, despite the hefty injection of industry supply. RWS alone adds some 1,800 rooms.
‘We expect the increase in hotel rooms will initially displace the equilibrium in the market. However, in the long-run, demand will grow,’ reckons Ms Ng.
For starters, visitors may prefer to be away from the crowds or require more affordable accomodation. Traditionally, hotels within theme parks tend to charge a premium compared to hotels in the surrounding area.
The presence of the integrated resorts could also boost weekend rates and occupancies.
‘Hotels currently tend to experience weaker occupancies and rates during the weekends. With the expected spike in leisure visitors to Singapore over the weekend, it may not be surprising to see hotels registering higher occupancies and possibly even higher rates,’ M&C’s spokesperson pointed out.
Source : Business Times – 12 Dec 2009
New kid on the Johor block
CHILDREN might think the Johor government’s new administrative centre is home to a cat. After all, a theme park featuring Hello Kitty is in the works.
But others in Johor Baru are not so excited.
Kota Iskandar, as it is called, is in Nusajaya, about 30km south of JB and about 15 minutes drive from the Johor side of the Second Link.
The Johor state secretariat building, offices of the menteri besar and state secretary, and government office complexes are not all that Nusajaya has to offer on its 53 sprawling hectares.
A Legoland theme park is under construction, not to mention an indoor park featuring characters like Hello Kitty. Both will open in 2012.
Nusajaya is on former plantation land that is being transformed into a modern township. Targeted for completion in 30 years, at a cost of RM55 billion (S$22.5 billion), it will have 100,000 homes and a population of 500,000 when built.
Some 75,000 people already live there, as the government is marketing the area as an education and health-care hub.
The Columbia Asia Hospital, Britain’s Newcastle University’s medical faculty and British boarding school Marlborough College are under construction.
Owners of restaurants, shops and other attractions in JB are worried they will lose business to the new kid on the Johor block.
They say the relocation of about 6,000 civil servants to Kota Iskandar, now being carried out in stages, has already had an impact.
Fewer people have entered downtown JB since the opening of the new customs and immigration complex in December last year.
There are concerns about crime, too. But the government has promised to strengthen the police force, and Nusajaya is setting up gated residential areas.
Source : Straits Times – 12 Dec 2009
But others in Johor Baru are not so excited.
Kota Iskandar, as it is called, is in Nusajaya, about 30km south of JB and about 15 minutes drive from the Johor side of the Second Link.
The Johor state secretariat building, offices of the menteri besar and state secretary, and government office complexes are not all that Nusajaya has to offer on its 53 sprawling hectares.
A Legoland theme park is under construction, not to mention an indoor park featuring characters like Hello Kitty. Both will open in 2012.
Nusajaya is on former plantation land that is being transformed into a modern township. Targeted for completion in 30 years, at a cost of RM55 billion (S$22.5 billion), it will have 100,000 homes and a population of 500,000 when built.
Some 75,000 people already live there, as the government is marketing the area as an education and health-care hub.
The Columbia Asia Hospital, Britain’s Newcastle University’s medical faculty and British boarding school Marlborough College are under construction.
Owners of restaurants, shops and other attractions in JB are worried they will lose business to the new kid on the Johor block.
They say the relocation of about 6,000 civil servants to Kota Iskandar, now being carried out in stages, has already had an impact.
Fewer people have entered downtown JB since the opening of the new customs and immigration complex in December last year.
There are concerns about crime, too. But the government has promised to strengthen the police force, and Nusajaya is setting up gated residential areas.
Source : Straits Times – 12 Dec 2009
Construction costs in Singapore slide: study
Fall takes nation’s index close to Dubai’s; most cities showing a rise are in China, including Beijing, Shanghai, Guangzhou and Shenzhen
CONSTRUCTION costs in Singapore have dropped more than those in other cities, a study by Rider Levett Bucknall (RLB) found.
The construction cost consultancy gathered data from more than 30 markets to construct indexed measures of cost. In its International Construction Cost Relativities ranking, the Singapore index fell to 93 in October from 112 in January – a 17.3 per cent decrease.
The decline took Singapore’s index close to that of Dubai. The Dubai index slipped to 93 from 110 over the same period – the second-largest percentage decline of 15.5 per cent.
‘Construction costs have been reduced by up to 30 per cent with major slowdowns and renegotiations for projects under construction, regardless of contractual arrangements,’ RLB said of the situation in Dubai, in its October international report.
Construction costs in Macau also fell considerably – the Macau index slid 12 per cent to 92 from 104.
With the big fall in construction costs in Singapore, it has become slightly cheaper to build here than in Hong Kong. The Hong Kong index dropped to 99 in October from 107 in January, down 7.9 per cent.
Most of the cities that displayed a rise in construction costs in RLB’s study are in China – Beijing, Shanghai, Guangzhou and Shenzhen. But on the whole, these cities remained some of the cheapest for building.
Construction costs in Singapore rose steadily during the boom years as more projects – ranging from residential developments to civil engineering works – streamed into the market. The increased demand coincided with spikes in material and commodity prices to drive up costs.
The value of private and public sector contracts awarded for new works grew from $16.8 billion in 2006 to $24.5 billion in 2007 and $34.6 billion in 2008. Also trending up was the Building and Construction Authority (BCA) Tender Price Index, from 103.2 points in 2006 to 122.5 in 2007 and 137.3 in 2008.
But with the onset of the financial crisis and economic slowdown from end-2008, developers held back plans. BCA’s forecasts up to October point to construction demand of just $17.3 billion this year – a potential 50 per cent drop from last year.
Fewer projects will lead to lower construction costs. The BCA Tender Price Index as at the third quarter was 113.6 points – down 17.3 per cent from 2008.
‘Building tender prices continued their downward trend for the first six months of 2009, as the reduced volume of available building tenders in contrast with the 2008 peak, resulted in greater competition among contractors,’ RLB says in its report.
It estimates that it would cost between $195 and $344 per square foot of gross floor area to build a multistorey residential development for owner-occupation in Singapore. When it comes to a retail mall, the equivalent cost would be between $181 and $274.
Source : Business Times – 12 Dec 2009
CONSTRUCTION costs in Singapore have dropped more than those in other cities, a study by Rider Levett Bucknall (RLB) found.
The construction cost consultancy gathered data from more than 30 markets to construct indexed measures of cost. In its International Construction Cost Relativities ranking, the Singapore index fell to 93 in October from 112 in January – a 17.3 per cent decrease.
The decline took Singapore’s index close to that of Dubai. The Dubai index slipped to 93 from 110 over the same period – the second-largest percentage decline of 15.5 per cent.
‘Construction costs have been reduced by up to 30 per cent with major slowdowns and renegotiations for projects under construction, regardless of contractual arrangements,’ RLB said of the situation in Dubai, in its October international report.
Construction costs in Macau also fell considerably – the Macau index slid 12 per cent to 92 from 104.
With the big fall in construction costs in Singapore, it has become slightly cheaper to build here than in Hong Kong. The Hong Kong index dropped to 99 in October from 107 in January, down 7.9 per cent.
Most of the cities that displayed a rise in construction costs in RLB’s study are in China – Beijing, Shanghai, Guangzhou and Shenzhen. But on the whole, these cities remained some of the cheapest for building.
Construction costs in Singapore rose steadily during the boom years as more projects – ranging from residential developments to civil engineering works – streamed into the market. The increased demand coincided with spikes in material and commodity prices to drive up costs.
The value of private and public sector contracts awarded for new works grew from $16.8 billion in 2006 to $24.5 billion in 2007 and $34.6 billion in 2008. Also trending up was the Building and Construction Authority (BCA) Tender Price Index, from 103.2 points in 2006 to 122.5 in 2007 and 137.3 in 2008.
But with the onset of the financial crisis and economic slowdown from end-2008, developers held back plans. BCA’s forecasts up to October point to construction demand of just $17.3 billion this year – a potential 50 per cent drop from last year.
Fewer projects will lead to lower construction costs. The BCA Tender Price Index as at the third quarter was 113.6 points – down 17.3 per cent from 2008.
‘Building tender prices continued their downward trend for the first six months of 2009, as the reduced volume of available building tenders in contrast with the 2008 peak, resulted in greater competition among contractors,’ RLB says in its report.
It estimates that it would cost between $195 and $344 per square foot of gross floor area to build a multistorey residential development for owner-occupation in Singapore. When it comes to a retail mall, the equivalent cost would be between $181 and $274.
Source : Business Times – 12 Dec 2009
Friday, December 11, 2009
Office rents may end long slide to basement
Bottom in sight in 2010, observers say; leasing activity is gathering steam
The Singapore office market has seen its prospects improve dramatically since a gloomy start this year.
While office rents are still expected to dip further next year, although at a much slower pace than over the past 15 months, an unexpected flurry of leasing activity recently has led some to predict a bottoming-out of office rents as early as mid-2010.
‘We are currently witnessing a strong recovery in leasing activity. Some tenants are even starting to look at expansion,’ says CB Richard Ellis executive director (office services) Moray Armstrong.
Property consultants are predicting a return to positive office demand to the tune of more than one million sq ft next year on the back of economic growth. But with over 2.7 million sq ft of new space slated for completion in 2010, vacancies will continue to rise and rents dip, albeit at a slower clip than in 2009.
Older buildings suffering a flight of tenants to new projects still face a challenging year ahead. Still, some expect the authorities to keep a close watch on the Republic’s competitiveness in office rents. Mr Armstrong suggests ‘it is not unrealistic to foresee that the government may release a couple of prime office sites in the Marina Bay area in the second half next year’.
‘A lot will hinge on how the office market performs in the next three months. The government wants to ensure the supply pipeline is healthy so that businesses feel confident about Singapore’s ability to meet long-term demand for growth from headquarters and corporates.’
Jones Lang LaSalle’s regional director and head of markets Chris Archibold acknowledges ’some talk in the market that office supply may become limited in 2013 and 2014 in the CBD Core’. ‘The Singapore government is likely to continue monitoring the office market and inject supply into the market through the reserve list in anticipation of an upturn to avoid the supply crunch we saw in 2007,’ he added.
CBRE data shows gross average monthly rental value for Grade A office space has slipped 7.95 per cent quarter on quarter to $8.10 per square foot in Q4 this year. This is the smallest q-on-q drop since office rents began falling in Q4 last year. The latest Q4 2009 figure reflects declines of 46 per cent for the whole of 2009 and 57 per cent from the peak of $18.80 psf in Q2/Q3 last year. CBRE is projecting a further contraction of 13.6 per cent next year to reach $7 psf by end-2010.
Colliers International’s average grade A rental data for various CBD micromarkets show q-on-q dips of 1.9 per cent in Raffles Place/New Downtown and one per cent in Bugis/ Beach Road in Q4 2009, with rents unchanged in Shenton Way/Tanjong Pagar, City Hall/Marina Centre and Orchard Road. For the whole of 2009, the falls ranged from 42 to 53 per cent, but Colliers predicts rental declines will moderate to ‘within 5 per cent’ in the first six months of next year from current levels.
DTZ projects a 15-20 per cent drop in average monthly rental value for prime office space in Raffles Place next year, which it says has halved this year to $7.90 psf from $16 psf in Q4 2008.
Mr Armstrong sees rentals stabilising around mid-2010 particularly for better-quality buildings. DTZ’s SE Asia head of occupational and development markets Angela Tan says rents will likely bottom in 2011. ‘If the economy grows more strongly than expected, rents could bottom earlier in end-2010.’
The completion of new projects is creating a two-tier market. Says JLL’s Mr Archibold: ‘Given the pick-up in leasing activity, we expect the bottom in rentals for new prime Grade A office buildings to be as close as H2 2010. However, there’s likely to be longer downward pressure on rentals in existing prime Grade A office buildings as landlords seek to backfill vacancy caused by tenants relocating to new developments.’
Mr Archibold points to a ‘flight to quality’ by occupiers with leases expiring in older buildings to newer, higher-quality buildings, riding on lower rents and the larger contiguous spaces that could enable them to consolidate operations into a single location.
On a brighter note, CBRE’s Mr Armstrong says he has started seeing some of the resurgence in leasing activity being driven by expansion and not just replacement needs. This is laying the foundation for decent positive take-up.
Analysts expect positive demand to continue this quarter following the modest turnaround in Q3. However, with some 570,000 sq ft of negative demand in H1 2009, the year will still end in negative territory. Colliers’ executive director (commercial) Calvin Yeo forecasts positive demand of 1.55 million sq ft in 2010; CBRE predicts positive take-up of about one million sq ft next year and 2 million sq ft in 2011.
Meanwhile, shadow office space – surplus stock put up for subletting – has fallen to about 256,000 sq ft from 583,000 sq ft at its peak in June 2009, says Mr Yeo. ‘We expect shadow space to dissipate by H2 2010 as the economy recovers.’
Colliers estimates islandwide office vacancy rose from 12.2 per cent as at end-Q3 2009 to 12.8 per cent as at end-2009. On a full-year basis, this is a 4 percentage point rise. Mr Yeo expects the figure to inch up 1.1 points to 13.9 per cent by end-2010.
Source : Business Times – 11 Dec 2009
The Singapore office market has seen its prospects improve dramatically since a gloomy start this year.
While office rents are still expected to dip further next year, although at a much slower pace than over the past 15 months, an unexpected flurry of leasing activity recently has led some to predict a bottoming-out of office rents as early as mid-2010.
‘We are currently witnessing a strong recovery in leasing activity. Some tenants are even starting to look at expansion,’ says CB Richard Ellis executive director (office services) Moray Armstrong.
Property consultants are predicting a return to positive office demand to the tune of more than one million sq ft next year on the back of economic growth. But with over 2.7 million sq ft of new space slated for completion in 2010, vacancies will continue to rise and rents dip, albeit at a slower clip than in 2009.Older buildings suffering a flight of tenants to new projects still face a challenging year ahead. Still, some expect the authorities to keep a close watch on the Republic’s competitiveness in office rents. Mr Armstrong suggests ‘it is not unrealistic to foresee that the government may release a couple of prime office sites in the Marina Bay area in the second half next year’.
‘A lot will hinge on how the office market performs in the next three months. The government wants to ensure the supply pipeline is healthy so that businesses feel confident about Singapore’s ability to meet long-term demand for growth from headquarters and corporates.’
Jones Lang LaSalle’s regional director and head of markets Chris Archibold acknowledges ’some talk in the market that office supply may become limited in 2013 and 2014 in the CBD Core’. ‘The Singapore government is likely to continue monitoring the office market and inject supply into the market through the reserve list in anticipation of an upturn to avoid the supply crunch we saw in 2007,’ he added.
CBRE data shows gross average monthly rental value for Grade A office space has slipped 7.95 per cent quarter on quarter to $8.10 per square foot in Q4 this year. This is the smallest q-on-q drop since office rents began falling in Q4 last year. The latest Q4 2009 figure reflects declines of 46 per cent for the whole of 2009 and 57 per cent from the peak of $18.80 psf in Q2/Q3 last year. CBRE is projecting a further contraction of 13.6 per cent next year to reach $7 psf by end-2010.
Colliers International’s average grade A rental data for various CBD micromarkets show q-on-q dips of 1.9 per cent in Raffles Place/New Downtown and one per cent in Bugis/ Beach Road in Q4 2009, with rents unchanged in Shenton Way/Tanjong Pagar, City Hall/Marina Centre and Orchard Road. For the whole of 2009, the falls ranged from 42 to 53 per cent, but Colliers predicts rental declines will moderate to ‘within 5 per cent’ in the first six months of next year from current levels.
DTZ projects a 15-20 per cent drop in average monthly rental value for prime office space in Raffles Place next year, which it says has halved this year to $7.90 psf from $16 psf in Q4 2008.
Mr Armstrong sees rentals stabilising around mid-2010 particularly for better-quality buildings. DTZ’s SE Asia head of occupational and development markets Angela Tan says rents will likely bottom in 2011. ‘If the economy grows more strongly than expected, rents could bottom earlier in end-2010.’
The completion of new projects is creating a two-tier market. Says JLL’s Mr Archibold: ‘Given the pick-up in leasing activity, we expect the bottom in rentals for new prime Grade A office buildings to be as close as H2 2010. However, there’s likely to be longer downward pressure on rentals in existing prime Grade A office buildings as landlords seek to backfill vacancy caused by tenants relocating to new developments.’
Mr Archibold points to a ‘flight to quality’ by occupiers with leases expiring in older buildings to newer, higher-quality buildings, riding on lower rents and the larger contiguous spaces that could enable them to consolidate operations into a single location.
On a brighter note, CBRE’s Mr Armstrong says he has started seeing some of the resurgence in leasing activity being driven by expansion and not just replacement needs. This is laying the foundation for decent positive take-up.
Analysts expect positive demand to continue this quarter following the modest turnaround in Q3. However, with some 570,000 sq ft of negative demand in H1 2009, the year will still end in negative territory. Colliers’ executive director (commercial) Calvin Yeo forecasts positive demand of 1.55 million sq ft in 2010; CBRE predicts positive take-up of about one million sq ft next year and 2 million sq ft in 2011.
Meanwhile, shadow office space – surplus stock put up for subletting – has fallen to about 256,000 sq ft from 583,000 sq ft at its peak in June 2009, says Mr Yeo. ‘We expect shadow space to dissipate by H2 2010 as the economy recovers.’
Colliers estimates islandwide office vacancy rose from 12.2 per cent as at end-Q3 2009 to 12.8 per cent as at end-2009. On a full-year basis, this is a 4 percentage point rise. Mr Yeo expects the figure to inch up 1.1 points to 13.9 per cent by end-2010.
Source : Business Times – 11 Dec 2009
Tweak law on ‘late completion interest’ for HDB flats
I RECENTLY bought a resale flat and the completion was scheduled for October.
However, the seller refused to move out of her home then as she had not obtained the keys to her new flat. So, she asked HDB to delay the completion to November.
Delaying completion invites ‘late completion interest’. In private property transactions, this interest is deducted from the sales proceeds before they are disbursed to the seller. However, in HDB transactions, I have been told that the seller has to issue a separate cheque to pay the interest.
And to my understanding, if the seller refuses to pay the interest on completion, I will have to seek legal action to pursue it.
I was also told by HDB that most buyers desist from legal action to avoid the hassle.
Why is there a difference in the law governing ‘late completion interest’ in private and HDB property transactions?
Buyers become innocent victims when sellers come up with a selfish reason not to complete the transaction on time. The law governing ‘late completion interest’ in HDB transactions needs to be tweaked so sellers do not abuse the system and abide by the schedule set by HDB.
Cheryl Tan (Miss)
Source : Straits Times – 11 Dec 2009
However, the seller refused to move out of her home then as she had not obtained the keys to her new flat. So, she asked HDB to delay the completion to November.
Delaying completion invites ‘late completion interest’. In private property transactions, this interest is deducted from the sales proceeds before they are disbursed to the seller. However, in HDB transactions, I have been told that the seller has to issue a separate cheque to pay the interest.
And to my understanding, if the seller refuses to pay the interest on completion, I will have to seek legal action to pursue it.
I was also told by HDB that most buyers desist from legal action to avoid the hassle.
Why is there a difference in the law governing ‘late completion interest’ in private and HDB property transactions?
Buyers become innocent victims when sellers come up with a selfish reason not to complete the transaction on time. The law governing ‘late completion interest’ in HDB transactions needs to be tweaked so sellers do not abuse the system and abide by the schedule set by HDB.
Cheryl Tan (Miss)
Source : Straits Times – 11 Dec 2009
Head of property agent watchdog picked
MND tipped to announce Chionh Chye Khye’s appointment next year
THE Ministry of National Development (MND) has picked someone from within its ranks to head the new government agency that will be set up to regulate property agents in Singapore.
Sources said that the new agency, which is likely to be a statutory board, will be helmed by Chionh Chye Khye, currently executive director (designate) with MND.
Before joining MND in 2006, Mr Chionh was the chief executive of the Building and Construction Authority. During his four years there, he spearheaded initiatives to raise the quality and productivity of the construction industry, ensure building and infrastructure safety and also foster a regulatory framework.
MND is expected to announce his appointment and provide more details on the new government agency by early next year.
When contacted, MND said that views received from various channels and stakeholders are now being consolidated and studied, and will be considered in refining the new regulatory framework. Key elements are expected to be ready for announcement by early next year.
‘In the meantime, it would not be appropriate for us to comment on speculation,’ the Ministry said.
MND in October shared some details of the new regulatory framework that it is proposing for the real estate industry, which includes the creation of a new government agency to take on enhanced regulatory powers.
The move came as property agents here have come under increasing fire over the last few years for not having the right qualifications and for unethical practices. Minister for National Development Mah Bow Tan commented in March this year that the status quo was ‘not tenable’ and that the whole system was ‘not satisfactory’.
Legislative enactment is expected by the second half of next year once the key elements are unveiled.
With the planned changes, agents’ activities will be monitored more closely and rules enforced more keenly. For example, real estate agents will no longer be allowed to be freelancers (agents who are not contracted with any accredited agencies). They will also be prevented from representing more than one agency.
Agents must also pass an industry examination and be accredited by a new accreditation body (to be set up next year) before they can practise.
The new government agency headed by Mr Chionh will be charged with enforcing the rules.
Right now, there are an estimated 25,000 to 30,000 real estate agents in the market with varying degrees of training and professional standards.
Source : Business Times – 11 Dec 2009
China scraps tax break on property sales
It will extend subsidies for purchases of cars, home appliances
China scrapped a tax break on property sales and extended subsidies for car and home appliance purchases, seeking to cool speculation while sustaining a recovery in the world’s third largest economy.
The State Council will re-impose a sales tax on homes sold within five years after cutting the period to two years in January, the Cabinet said in a statement on Wednesday. The government will scale back some tax breaks for car buyers, while continuing to fund vehicle purchases in rural areas.
China’s property prices rose in November at the fastest pace in 16 months, a government survey showed yesterday, reinforcing concern that record lending and a US$586 billion stimulus package may lead to asset bubbles.
The nation’s economic growth accelerated to 8.9 per cent in the third quarter, helping Asia to lead the recovery from the global economic slump.
‘The government is clearly in a dilemma,’ said Clement Luk, a Shanghai- based analyst at Centaline Property Agency Ltd. It ‘wants to address the surging property prices and concerns of a bubble, yet it dares not to take drastic measures for fear of hitting the market too hard’.
The government’s reversal of the tax on home sales ‘is much milder than the market had expected’, he said.
China’s economy faces difficulties and challenges next year, the State Council, China’s Cabinet, said yesterday. The nation needs to keep expanding consumption to drive growth, it said.
‘The government is refining its policy to promote domestic consumption,’ Jun Ma, Deutsche Bank AG’s Hong Kong-based chief economist for Greater China, said in a phone interview.
‘The reinstatement of the property tax period to five years is an early signal that the government is concerned about speculative demand in the property market.’
China announced plans to reduce the real estate sales tax and extend preferential lending rates for buyers of second homes in December 2008. Prices in 70 major Chinese cities fell for the first time on record that same month and did not post an increase until June this year, according to government data.
Prices rose 5.7 per cent in November after gaining 3.9 per cent in October, the National Bureau of Statistics said yesterday on its website.
Premier Wen Jiabao said on Nov 28 in Shanghai that the government will support the development of affordable housing for low and middle-income earners, the official Xinhua News Agency reported. Property speculation must also be suppressed to promote a healthy real estate industry, Xinhua cited Mr Wen as saying.
‘The Chinese central government wants to gradually control the bubble in the real estate market,’ Andy Xie, former Morgan Stanley chief Asian economist, said by phone.
‘At the same time, the government does not want to see a sharp fall in property prices after a rapid rise since the sector plays an important role in the country’s economy.’
The government will also scale back preferential tax rates offered for purchases of vehicles with engines of 1.6 litres or smaller, according to the statement.
China in January cut the sales tax on the vehicles to 5 per cent from 10 per cent between Jan 20 and Dec 31. It introduced the incentive to revive demand after car sales rose at the slowest pace in a decade last year. The rate will be 7.5 per cent next year, the statement said.
Government support helped fuel a 42 per cent jump in nationwide vehicle sales to 12.2 million in the year till November, putting China on course to surpass the US as the world’s largest car market.
Source : Business Times – 11 Dec 2009
China scrapped a tax break on property sales and extended subsidies for car and home appliance purchases, seeking to cool speculation while sustaining a recovery in the world’s third largest economy.
The State Council will re-impose a sales tax on homes sold within five years after cutting the period to two years in January, the Cabinet said in a statement on Wednesday. The government will scale back some tax breaks for car buyers, while continuing to fund vehicle purchases in rural areas.
China’s property prices rose in November at the fastest pace in 16 months, a government survey showed yesterday, reinforcing concern that record lending and a US$586 billion stimulus package may lead to asset bubbles.
The nation’s economic growth accelerated to 8.9 per cent in the third quarter, helping Asia to lead the recovery from the global economic slump.
‘The government is clearly in a dilemma,’ said Clement Luk, a Shanghai- based analyst at Centaline Property Agency Ltd. It ‘wants to address the surging property prices and concerns of a bubble, yet it dares not to take drastic measures for fear of hitting the market too hard’.
The government’s reversal of the tax on home sales ‘is much milder than the market had expected’, he said.
China’s economy faces difficulties and challenges next year, the State Council, China’s Cabinet, said yesterday. The nation needs to keep expanding consumption to drive growth, it said.
‘The government is refining its policy to promote domestic consumption,’ Jun Ma, Deutsche Bank AG’s Hong Kong-based chief economist for Greater China, said in a phone interview.
‘The reinstatement of the property tax period to five years is an early signal that the government is concerned about speculative demand in the property market.’
China announced plans to reduce the real estate sales tax and extend preferential lending rates for buyers of second homes in December 2008. Prices in 70 major Chinese cities fell for the first time on record that same month and did not post an increase until June this year, according to government data.
Prices rose 5.7 per cent in November after gaining 3.9 per cent in October, the National Bureau of Statistics said yesterday on its website.
Premier Wen Jiabao said on Nov 28 in Shanghai that the government will support the development of affordable housing for low and middle-income earners, the official Xinhua News Agency reported. Property speculation must also be suppressed to promote a healthy real estate industry, Xinhua cited Mr Wen as saying.
‘The Chinese central government wants to gradually control the bubble in the real estate market,’ Andy Xie, former Morgan Stanley chief Asian economist, said by phone.
‘At the same time, the government does not want to see a sharp fall in property prices after a rapid rise since the sector plays an important role in the country’s economy.’
The government will also scale back preferential tax rates offered for purchases of vehicles with engines of 1.6 litres or smaller, according to the statement.
China in January cut the sales tax on the vehicles to 5 per cent from 10 per cent between Jan 20 and Dec 31. It introduced the incentive to revive demand after car sales rose at the slowest pace in a decade last year. The rate will be 7.5 per cent next year, the statement said.
Government support helped fuel a 42 per cent jump in nationwide vehicle sales to 12.2 million in the year till November, putting China on course to surpass the US as the world’s largest car market.
Source : Business Times – 11 Dec 2009
US apartment vacancy rate set to remain high in 2010
THE US apartment vacancy rate is expected to remain high in 2010 and rent growth is not seen to resume until 2011, according to a forecast by CBRE Econometric Advisors.
CBRE-EA, the market forecasting arm of real estate services company CB Richard Ellis, expects the US apartment vacancy rate to fall to 7 per cent in 2010, down from 7.3 per cent in the third quarter and 7.4 per cent in the second quarter 2009.
‘Overall, the US apartment market remains in uncharted waters with vacancies at high levels historically, amid continued job losses and a glut of housing for rent and for sale,’ Gleb Nechayev, CBRE-EA senior economist, said. ‘While the economic outlook does call for job growth to resume next year, vacancy rates will remain at historically elevated levels in most markets.’
The long-term vacancy rate for professionally managed US apartments has been about 5 per cent.
‘We’re a long way from that. It will be at least a couple of years before we move closely to a more normal level,’ Mr Nechayev said.
The slump in demand has severely damaged the sector, which until last month had the highest delinquency rate among US property types. Apartment loan delinquencies rose to 7.4 per cent in November, second only to hotels, which reached 7.8 per cent, according to ratings agency Moody’s Investors Services.
Apartments and hotels suffer downturns first, because of their short-term leases, but traditionally lead a rebound when an economy improves.
A glut of single-family homes and condominiums on the market has been a double-edged sword for apartment landlords, Mr Nechayev said.
Lower home ownership and the reduced demand for houses has forced people to become renters, he noted.
New households formed from immigration, divorce and graduation has helped counter the damaging effect from job losses.
‘Without the growth in overall rental demand, the effect of job losses on apartments would be much more severe than it has been so far,’ Mr Nechayev pointed out.
But the housing supply will continue to compete with and mitigate demand for apartments, which actually has risen over the past two quarters, he added.
CBRE-EA forecasts effective rents will drop to US$1,147 in 2010, down 0.8 per cent from the third quarter 2009.
Markets such as Austin, Baltimore, Boston, Chicago, Denver, Los Angeles, Seattle, San Diego, and Washington DC have reported more occupied than vacant apartments. Landlords in those cities offered rent concessions to lure tenants or keep existing ones, Mr Nechayev said.
CBRE-EA does not expect rents nationally to start growing in earnest until the second half of 2011. The average US apartment rent has been falling for the past year, down to US$1,156 in the third quarter.
‘We still expect some weakness in rents and occupancy next year,’ Mr Nechayev said. ‘All in all, 2010 should be a somewhat better year than 2009.’
Source : Business Times – 12 Dec 2009
CBRE-EA, the market forecasting arm of real estate services company CB Richard Ellis, expects the US apartment vacancy rate to fall to 7 per cent in 2010, down from 7.3 per cent in the third quarter and 7.4 per cent in the second quarter 2009.
‘Overall, the US apartment market remains in uncharted waters with vacancies at high levels historically, amid continued job losses and a glut of housing for rent and for sale,’ Gleb Nechayev, CBRE-EA senior economist, said. ‘While the economic outlook does call for job growth to resume next year, vacancy rates will remain at historically elevated levels in most markets.’
The long-term vacancy rate for professionally managed US apartments has been about 5 per cent.
‘We’re a long way from that. It will be at least a couple of years before we move closely to a more normal level,’ Mr Nechayev said.
The slump in demand has severely damaged the sector, which until last month had the highest delinquency rate among US property types. Apartment loan delinquencies rose to 7.4 per cent in November, second only to hotels, which reached 7.8 per cent, according to ratings agency Moody’s Investors Services.
Apartments and hotels suffer downturns first, because of their short-term leases, but traditionally lead a rebound when an economy improves.
A glut of single-family homes and condominiums on the market has been a double-edged sword for apartment landlords, Mr Nechayev said.
Lower home ownership and the reduced demand for houses has forced people to become renters, he noted.
New households formed from immigration, divorce and graduation has helped counter the damaging effect from job losses.
‘Without the growth in overall rental demand, the effect of job losses on apartments would be much more severe than it has been so far,’ Mr Nechayev pointed out.
But the housing supply will continue to compete with and mitigate demand for apartments, which actually has risen over the past two quarters, he added.
CBRE-EA forecasts effective rents will drop to US$1,147 in 2010, down 0.8 per cent from the third quarter 2009.
Markets such as Austin, Baltimore, Boston, Chicago, Denver, Los Angeles, Seattle, San Diego, and Washington DC have reported more occupied than vacant apartments. Landlords in those cities offered rent concessions to lure tenants or keep existing ones, Mr Nechayev said.
CBRE-EA does not expect rents nationally to start growing in earnest until the second half of 2011. The average US apartment rent has been falling for the past year, down to US$1,156 in the third quarter.
‘We still expect some weakness in rents and occupancy next year,’ Mr Nechayev said. ‘All in all, 2010 should be a somewhat better year than 2009.’
Source : Business Times – 12 Dec 2009
CapitaLand seeks to double shopping malls, housing developments in China
Singapore property developer CapitaLand has set ambitious targets for its China operations, as it marks 15 years of doing business on the mainland.
It wants to double the number of its shopping malls and housing developments in China in the next five years. It is also looking to expand its service apartments business.
CapitaLand is celebrating 15 years in China with a bang. It said China will continue to be the engine of growth for the company and it has long-term plans for the mainland.
Liew Mun Leong, president & CEO, CapitaLand Group, said: “I think in the next five years, I like to do something like… double its size in terms of scope, in terms of number of shopping malls and number of housing we can build and service apartments. The order of things is we should be able to double every five years.”
The company intends to grow its total business assets from the current 28 per cent to between 35 and 45 per cent in the next five years, worth approximately S$10 billion. This will make China the largest overseas market for the company.
CapitaLand first entered the Chinese market in 1994, focusing on Shanghai and 15 years later it has over 100 projects in 40 cities across the mainland.
With China saying it needs 20 million homes every year as the country goes through urbanisation, Mr Liew said CapitaLand’s focus will continue to be in the residential market.
However, there are areas that he would like to expand on as well.
Mr Liew said: “We (are) still focused… (on our) core business of building homes, residential – not necessarily the luxury – but more the commoner’s home. We will concentrate on our shopping malls; we have been very successful, we have 50 shopping malls all over China and we think we can grow it much more.
“The third is building up our service apartments business and operations because the demand for serviced apartments is very high.”
CapitaLand currently has five Raffles City developments in major cities and a sixth one will be announced early next year. Together with four more such projects by 2014, it will bring the total of 10 Raffles City developments in China in five years.
Looking ahead, besides growing in China, CapitaLand is also looking to list on the mainland when the market is ready for international listings. Mr Liew said he does not rule out having a local Chinese be the number one man to the CapitaLand business on the mainland – hopefully in five years.
Source : Channel NewsAsia – 11 Dec 2009
It wants to double the number of its shopping malls and housing developments in China in the next five years. It is also looking to expand its service apartments business.
CapitaLand is celebrating 15 years in China with a bang. It said China will continue to be the engine of growth for the company and it has long-term plans for the mainland.
Liew Mun Leong, president & CEO, CapitaLand Group, said: “I think in the next five years, I like to do something like… double its size in terms of scope, in terms of number of shopping malls and number of housing we can build and service apartments. The order of things is we should be able to double every five years.”
The company intends to grow its total business assets from the current 28 per cent to between 35 and 45 per cent in the next five years, worth approximately S$10 billion. This will make China the largest overseas market for the company.
CapitaLand first entered the Chinese market in 1994, focusing on Shanghai and 15 years later it has over 100 projects in 40 cities across the mainland.
With China saying it needs 20 million homes every year as the country goes through urbanisation, Mr Liew said CapitaLand’s focus will continue to be in the residential market.
However, there are areas that he would like to expand on as well.
Mr Liew said: “We (are) still focused… (on our) core business of building homes, residential – not necessarily the luxury – but more the commoner’s home. We will concentrate on our shopping malls; we have been very successful, we have 50 shopping malls all over China and we think we can grow it much more.
“The third is building up our service apartments business and operations because the demand for serviced apartments is very high.”
CapitaLand currently has five Raffles City developments in major cities and a sixth one will be announced early next year. Together with four more such projects by 2014, it will bring the total of 10 Raffles City developments in China in five years.
Looking ahead, besides growing in China, CapitaLand is also looking to list on the mainland when the market is ready for international listings. Mr Liew said he does not rule out having a local Chinese be the number one man to the CapitaLand business on the mainland – hopefully in five years.
Source : Channel NewsAsia – 11 Dec 2009
Suntec REIT’s unit placement more than five times oversubscribed
Mainboard-listed Suntec REIT says its private placement of 128.5 million units was more than five times oversubscribed.
The trust had priced the new units at S$1.19 each, a discount of 6.5 percent to Thursday’s volume-weighted average price of S$1.2724 per unit.
Suntec REIT said the gross proceeds from the private placement amounted to S$152.9 million.
Net proceeds after deducting the underwriting, selling and management fee and other estimated fees and expenses came to S$149 million.
The trading of the new units on the mainboard is expected to start at 2pm on December 22.
Suntec REIT is raising the cash to strengthen its balance sheet and capital structure. It said the net proceeds will be used to reduce existing indebtedness.
Suntec REIT said the money will also be used to partly or wholly finance its investment activities while maintaining financial flexibility.
It added that the move may possibly increase the trading liquidity of the units.
Source : Channel NewsAsia – 11 Dec 2009
The trust had priced the new units at S$1.19 each, a discount of 6.5 percent to Thursday’s volume-weighted average price of S$1.2724 per unit.
Suntec REIT said the gross proceeds from the private placement amounted to S$152.9 million.
Net proceeds after deducting the underwriting, selling and management fee and other estimated fees and expenses came to S$149 million.
The trading of the new units on the mainboard is expected to start at 2pm on December 22.
Suntec REIT is raising the cash to strengthen its balance sheet and capital structure. It said the net proceeds will be used to reduce existing indebtedness.
Suntec REIT said the money will also be used to partly or wholly finance its investment activities while maintaining financial flexibility.
It added that the move may possibly increase the trading liquidity of the units.
Source : Channel NewsAsia – 11 Dec 2009
Ascott wins contract to manage service residence in Xi’an, China
CapitaLand’s serviced residence unit, Ascott, has clinched a contract to manage its third service residence in Xi’an, China.
No financial details of the contract were given.
The Citadines Xi’an Xingqing Palace is slated to open in 2011.
The property will offer 160 studio apartments, each with a fully-equipped kitchen, an en-suite bathroom and a separate work area.
Ascott’s two other serviced residences in Xi’an are Citadines Xi’an Central, which is currently operational, and Citadines Xi’an Gaoxin, due to open in 2010.
With this latest contract, Ascott now has 26 properties in China, spread across 12 cities.
Source : Channel NewsAsia – 11 Dec 2009
No financial details of the contract were given.
The Citadines Xi’an Xingqing Palace is slated to open in 2011.
The property will offer 160 studio apartments, each with a fully-equipped kitchen, an en-suite bathroom and a separate work area.
Ascott’s two other serviced residences in Xi’an are Citadines Xi’an Central, which is currently operational, and Citadines Xi’an Gaoxin, due to open in 2010.
With this latest contract, Ascott now has 26 properties in China, spread across 12 cities.
Source : Channel NewsAsia – 11 Dec 2009
Integrated resorts set up green initiatives
The two upcoming integrated resorts in Singapore, which open in the first quarter of next year, are not planning to gamble with the environment.
In fact, they have spent millions of dollars on green technologies and sustainable building concepts to conserve resources.
It has been a roller coaster ride for the environment, and climate change is a real threat. So companies, like Singapore’s two integrated resorts, are striving for greener practices.
Resorts World Sentosa, for instance, transplanted 900 trees affected by construction work. It is now replanting them – along the streets of Hollywood and New York – within its Universal Studios theme park.
The resort also has Singapore’s largest solar installation, that can generate over 500,000 kilowatts per hour of energy a year.
Noel Hawkes, vice president, Resort Operations, Resorts World Sentosa, said: “(With regards to) the solar power, we reckon we can save half a million Singapore dollars easily on electricity bills.
“We also have a very interesting ETFE roofing system over many of the al fresco dining areas of the resort, as well as in the Universal Studios where people are queuing, and this reduces the amount of sunlight by almost half.
“And we couple that with an eco-cooling system, which we have developed; it is not air conditioning, but it is cooling and it costs one-third of the cost of air conditioning.”
The ETFE plastic roofing will shelter about 70 per cent of the pedestrian walkways at the resort.
Another cost saving of over S$160,000 a year will come from a lagoon, which will harvest rainwater to be used for irrigation.
Meanwhile, Marina Bay Sands resort is also doing its part – by recycling paint from previous projects, as well as recycling construction waste. When completed, guests staying in the 2,500 luxury rooms at the three hotel towers can also play a role.
Thomas Arasi, CEO, Marina Bay Sands, said: “We have spent S$25 million on an intelligent building management system, and what that would do is that it would automatically record the customer’s needs and energy saving patterns.
“On the remote control in our guest room, there will be an eco button that you can hit and it will just take things up a notch and hopefully you will not feel it.”
Marina Bay Sands said it has also invested a substantial amount of money on the construction and operation of a massive chilled water plant to be located just off its third hotel tower. This will be done on a cost sharing basis between the resort and public entities.
The plant is expected to be ready in late 2010. Marina Bay Sands said it will provide chilled water to cool the resort as well as new buildings in the surrounding districts.
Observers said the use of chilled water could help lower air conditioning costs by up to 20 per cent.
Source : Channel NewsAsia – 11 Dec 2009
In fact, they have spent millions of dollars on green technologies and sustainable building concepts to conserve resources.
It has been a roller coaster ride for the environment, and climate change is a real threat. So companies, like Singapore’s two integrated resorts, are striving for greener practices.
Resorts World Sentosa, for instance, transplanted 900 trees affected by construction work. It is now replanting them – along the streets of Hollywood and New York – within its Universal Studios theme park.
The resort also has Singapore’s largest solar installation, that can generate over 500,000 kilowatts per hour of energy a year.
Noel Hawkes, vice president, Resort Operations, Resorts World Sentosa, said: “(With regards to) the solar power, we reckon we can save half a million Singapore dollars easily on electricity bills.
“We also have a very interesting ETFE roofing system over many of the al fresco dining areas of the resort, as well as in the Universal Studios where people are queuing, and this reduces the amount of sunlight by almost half.
“And we couple that with an eco-cooling system, which we have developed; it is not air conditioning, but it is cooling and it costs one-third of the cost of air conditioning.”
The ETFE plastic roofing will shelter about 70 per cent of the pedestrian walkways at the resort.
Another cost saving of over S$160,000 a year will come from a lagoon, which will harvest rainwater to be used for irrigation.
Meanwhile, Marina Bay Sands resort is also doing its part – by recycling paint from previous projects, as well as recycling construction waste. When completed, guests staying in the 2,500 luxury rooms at the three hotel towers can also play a role.
Thomas Arasi, CEO, Marina Bay Sands, said: “We have spent S$25 million on an intelligent building management system, and what that would do is that it would automatically record the customer’s needs and energy saving patterns.
“On the remote control in our guest room, there will be an eco button that you can hit and it will just take things up a notch and hopefully you will not feel it.”
Marina Bay Sands said it has also invested a substantial amount of money on the construction and operation of a massive chilled water plant to be located just off its third hotel tower. This will be done on a cost sharing basis between the resort and public entities.
The plant is expected to be ready in late 2010. Marina Bay Sands said it will provide chilled water to cool the resort as well as new buildings in the surrounding districts.
Observers said the use of chilled water could help lower air conditioning costs by up to 20 per cent.
Source : Channel NewsAsia – 11 Dec 2009
Prices offered for Balestier plot too low
A TENDER for a Balestier industrial plot that can be converted into a residential project failed to attract a high enough bid when it closed yesterday.
Marketing agent Credo Real Estate received several bids and expressions of interest from developers, but the prices offered were all below the reserve.
The site’s four owners wanted at least $27 million for the freehold 27,838 sq ft plot at 6 Jalan Ampas, which now houses four three-storey terrace factory units.
A successful bidder will also have to pay a development charge of about $18.7 million to re-zone and develop the site near Shaw Plaza.
The indicative price range after factoring in the development charge works out to $586 to $625 per sq ft (psf) per plot ratio. This puts a developer’s break-even point at $950 to $1,000 psf, Credo said.
Colliers International’s executive director (investment sales), Mr Ho Eng Joo, said the tender response showed that developers were still very keen to buy land, but only at a level they think is reasonable.
‘Developers are cautiously optimistic,’ he added.
A government tender for a landed site in Jurong West attracted a whopping 32 bidders earlier this week. This is because it is a landed plot – which is low in supply and high in demand – and the site is of a size that is affordable, said Mr Ho.
Government land tenders also come with lower reserve prices and typically have fewer conditions than a private land site.
At the height of the 2007 boom, the highest number of offers Credo received for a land tender was 10, said its deputy managing director Tan Hong Boon.
The property firm will negotiate with the interested parties to nail down a price.
Marketing agent Credo Real Estate received several bids and expressions of interest from developers, but the prices offered were all below the reserve.
The site’s four owners wanted at least $27 million for the freehold 27,838 sq ft plot at 6 Jalan Ampas, which now houses four three-storey terrace factory units.
A successful bidder will also have to pay a development charge of about $18.7 million to re-zone and develop the site near Shaw Plaza.
The indicative price range after factoring in the development charge works out to $586 to $625 per sq ft (psf) per plot ratio. This puts a developer’s break-even point at $950 to $1,000 psf, Credo said.
Colliers International’s executive director (investment sales), Mr Ho Eng Joo, said the tender response showed that developers were still very keen to buy land, but only at a level they think is reasonable.
‘Developers are cautiously optimistic,’ he added.
A government tender for a landed site in Jurong West attracted a whopping 32 bidders earlier this week. This is because it is a landed plot – which is low in supply and high in demand – and the site is of a size that is affordable, said Mr Ho.
Government land tenders also come with lower reserve prices and typically have fewer conditions than a private land site.
At the height of the 2007 boom, the highest number of offers Credo received for a land tender was 10, said its deputy managing director Tan Hong Boon.
The property firm will negotiate with the interested parties to nail down a price.
Source : Straits Times – 11 Dec 2009
Thursday, December 10, 2009
UK houses make comeback
Buyers reject ‘little box’ apartments; investor demand for rentals disappears
Houses are making a comeback in the UK as buyers reject ‘little box’ apartments and investor demand for rentals evaporates.
Single-family attached homes accounted for about 24 per cent of all residences started in England in the first nine months, the highest proportion since 1992, according to the National House-Building Council. Semi-detached homes made up 17 per cent of all starts, a level not seen since 1999.
‘Most people dream of having a front garden and a back garden, with a little bit of security around them,’ said Alistair Leitch, finance director at Bellway plc in Newcastle, England.
UK homebuilders that once rushed to build flats are now trying to meet demand for private homes. The reversal is occurring as banks restrict lending to buy-to-let apartment investors. That helped push prices down by almost a quarter from the 2007 peak through March of this year, the most of any type of British residential property, according to the Nationwide Building Society, the country’s biggest mortgage lender.
In the first nine months of this year, apartments accounted for around 40 per cent of all starts in England, the least in six years, according to the House-Building Council, the UK’s biggest insurer for new homes. About 60 per cent of the properties Bellway plans to build next year will be houses, compared with just over 50 per cent in the fiscal year through July, Mr Leitch said. The company sold 4,380 homes in the year.
The proliferation in apartments was fuelled by a government policy to emphasise high-density development on disused urban sites. The goal was to preserve the limited supply of undeveloped land, while increasing the number of dwellings in England. In July 2007, the government announced a target of three million new homes by 2020.
The policy worked. As apartment blocks rose, detached houses fell to 12 per cent of the total last year from 44 per cent in 1997. The proportion of apartments rose to 51 per cent from 15 per cent in that period.
‘The industry gets blamed for building little boxes, but we take our lead from the planners,’ Redrow plc founder and chairman Steve Morgan said in an interview. ‘The industry was guided by the government towards a high increase in density.’
The rules also created pent-up demand for family housing, he said.
A decade of soaring home prices, coupled with TV programmes such as Location, Location, Location aimed at amateur property buyers, spurred a 19-fold increase in the buy-to-rent market to £190 billion (S$431.08 billion) from 1997 to 2007, said London-based property broker Savills plc.
Investors helped spur development of high-rise apartment blocks in cities such as Birmingham and Leeds that outpaced demand. Leeds City Council said in April that about 13 per cent of centre apartments were empty, citing local tax returns.
‘With investor demand largely gone, it’s a question of selling new flats to occupiers’, the bulk of who will be first-time buyers requiring larger mortgages, said Richard Donnell, director of research at London-based property research company Hometrack Ltd.
Apartment prices dropped 22 per cent from the peak through March to about £109,708, compared with a 16 per cent decline for detached houses to £211,595, according to Nationwide.
Apartments became ’significantly harder to sell’ through 2008, Peter Redfern, chief executive officer of house builder Taylor Wimpey plc, said in an interview. Prices fell about 30 per cent at the low point of the market earlier this year, twice as much as houses, he said.
In 2000, the price difference between a newly built apartment and its resale value was 55 per cent, according Hometrack. That new-build premium has now vanished for apartments, while it remains at about 15 per cent for new houses.
To reduce risk, builders are focusing on houses and smaller developments that require less investment upfront.
Lenders and new government policies are also helping promote house construction. In April 2007, the government created new zoning guidance to promote a greater mixture of housing types, sizes and values, easing some of the emphasis on higher density.
Barclays plc, Britain’s second-largest lender, is now offering five-year fixed-rate mortgages at 5.49 per cent with a 30 per cent down payment. That compares with 6.39 per cent and a 40 per cent down payment for a buy-to-rent investor.
‘We have reformed the planning system to help local authorities deliver more and better homes,’ said Communities and Local Government, the department responsible for planning. ‘Changes to the planning policy in 2007 require councils to do more to ensure the right mix of housing is built.’
Taylor Wimpey, the UK’s second-largest homebuilder by volume, got around 40 per cent of its sales from apartments at the top of the market in 2007. About 23 per cent of its land is now slated for flats. The company sold 4,702 properties in the UK in the first half of this year.
Clover Bank, a 23-house Taylor Wimpey development near Birmingham in central England, has almost sold out since the first unit was purchased in February. Two properties remained as of Nov 17, according to the company.
That contrasts with its Latitude project, a 189-apartment block about 20 kilometres away. A total of 67 apartments, first marketed in 2006, were still for sale, the development’s estate agents, Knight Frank LLP said last month. Construction was temporarily halted after the property market stalled, before the work was completed earlier this year.
A 1,289 square foot free-standing house at Clover Bank costs £259,995 and includes a garden of a similar size, a garage and a driveway. By contrast, a two-bedroom flat in Latitude costs £195,000 for 677 square feet, a communal garden area, and storage area, an open-plan living room and kitchen and a concierge at the entrance to the block.
Source : Business Times – 10 Dec 2009
Houses are making a comeback in the UK as buyers reject ‘little box’ apartments and investor demand for rentals evaporates.
Single-family attached homes accounted for about 24 per cent of all residences started in England in the first nine months, the highest proportion since 1992, according to the National House-Building Council. Semi-detached homes made up 17 per cent of all starts, a level not seen since 1999.
‘Most people dream of having a front garden and a back garden, with a little bit of security around them,’ said Alistair Leitch, finance director at Bellway plc in Newcastle, England.
UK homebuilders that once rushed to build flats are now trying to meet demand for private homes. The reversal is occurring as banks restrict lending to buy-to-let apartment investors. That helped push prices down by almost a quarter from the 2007 peak through March of this year, the most of any type of British residential property, according to the Nationwide Building Society, the country’s biggest mortgage lender.
In the first nine months of this year, apartments accounted for around 40 per cent of all starts in England, the least in six years, according to the House-Building Council, the UK’s biggest insurer for new homes. About 60 per cent of the properties Bellway plans to build next year will be houses, compared with just over 50 per cent in the fiscal year through July, Mr Leitch said. The company sold 4,380 homes in the year.
The proliferation in apartments was fuelled by a government policy to emphasise high-density development on disused urban sites. The goal was to preserve the limited supply of undeveloped land, while increasing the number of dwellings in England. In July 2007, the government announced a target of three million new homes by 2020.
The policy worked. As apartment blocks rose, detached houses fell to 12 per cent of the total last year from 44 per cent in 1997. The proportion of apartments rose to 51 per cent from 15 per cent in that period.
‘The industry gets blamed for building little boxes, but we take our lead from the planners,’ Redrow plc founder and chairman Steve Morgan said in an interview. ‘The industry was guided by the government towards a high increase in density.’
The rules also created pent-up demand for family housing, he said.
A decade of soaring home prices, coupled with TV programmes such as Location, Location, Location aimed at amateur property buyers, spurred a 19-fold increase in the buy-to-rent market to £190 billion (S$431.08 billion) from 1997 to 2007, said London-based property broker Savills plc.
Investors helped spur development of high-rise apartment blocks in cities such as Birmingham and Leeds that outpaced demand. Leeds City Council said in April that about 13 per cent of centre apartments were empty, citing local tax returns.
‘With investor demand largely gone, it’s a question of selling new flats to occupiers’, the bulk of who will be first-time buyers requiring larger mortgages, said Richard Donnell, director of research at London-based property research company Hometrack Ltd.
Apartment prices dropped 22 per cent from the peak through March to about £109,708, compared with a 16 per cent decline for detached houses to £211,595, according to Nationwide.
Apartments became ’significantly harder to sell’ through 2008, Peter Redfern, chief executive officer of house builder Taylor Wimpey plc, said in an interview. Prices fell about 30 per cent at the low point of the market earlier this year, twice as much as houses, he said.
In 2000, the price difference between a newly built apartment and its resale value was 55 per cent, according Hometrack. That new-build premium has now vanished for apartments, while it remains at about 15 per cent for new houses.
To reduce risk, builders are focusing on houses and smaller developments that require less investment upfront.
Lenders and new government policies are also helping promote house construction. In April 2007, the government created new zoning guidance to promote a greater mixture of housing types, sizes and values, easing some of the emphasis on higher density.
Barclays plc, Britain’s second-largest lender, is now offering five-year fixed-rate mortgages at 5.49 per cent with a 30 per cent down payment. That compares with 6.39 per cent and a 40 per cent down payment for a buy-to-rent investor.
‘We have reformed the planning system to help local authorities deliver more and better homes,’ said Communities and Local Government, the department responsible for planning. ‘Changes to the planning policy in 2007 require councils to do more to ensure the right mix of housing is built.’
Taylor Wimpey, the UK’s second-largest homebuilder by volume, got around 40 per cent of its sales from apartments at the top of the market in 2007. About 23 per cent of its land is now slated for flats. The company sold 4,702 properties in the UK in the first half of this year.
Clover Bank, a 23-house Taylor Wimpey development near Birmingham in central England, has almost sold out since the first unit was purchased in February. Two properties remained as of Nov 17, according to the company.
That contrasts with its Latitude project, a 189-apartment block about 20 kilometres away. A total of 67 apartments, first marketed in 2006, were still for sale, the development’s estate agents, Knight Frank LLP said last month. Construction was temporarily halted after the property market stalled, before the work was completed earlier this year.
A 1,289 square foot free-standing house at Clover Bank costs £259,995 and includes a garden of a similar size, a garage and a driveway. By contrast, a two-bedroom flat in Latitude costs £195,000 for 677 square feet, a communal garden area, and storage area, an open-plan living room and kitchen and a concierge at the entrance to the block.
Source : Business Times – 10 Dec 2009
Clearing the air on agent’s commission and ethical obligation
I REFER to yesterday’s Forum Online letter by Ms Koh Siew Buay, ‘Couple viewed flat and then came hubby’s sister – seeking agent’s commission‘.
It is not clear from Ms Koh’s letter if she had advertised to sell her own property or she is an estate agent acting on the seller’s behalf. In either case, we would like to clarify that it is proper for agents to represent their family members in property transactions.
However, the rules of good practice and disclosure of interest continue to prevail. In this situation, the buyer’s agent should have made contact with Ms Koh in the first instance to identify herself as the brother’s appointed agent and make arrangements to view, even if she is unable to be present at the initial viewing. Doing so would have prevented any controversy or misunderstanding arising subsequently.
If Ms Koh is an agent, we suggest she present the buyer’s offer to her seller as she is expected to do so and resolve her contention with the buyer’s agent over commission separately. There is no cobrokerage contract as yet between Ms Koh and the buyer’s agent even if the seller accepts the offer.
Alternatively, Ms Koh is at liberty to negotiate the proportion of shared commission with the buyer’s agent if she deems it appropriate. In the event that Ms Koh is unable to resolve this, Singapore Accredited Estate Agencies can facilitate mediation for both agents.
If Ms Koh is the property owner, she is, of course, not obliged to accept the offer or pay commission. There is also a potential conflict of interest if the buyer’s agent is asking the seller for commission.
In addition, we would like to add that if the agent is acting on the seller’s behalf, there exists an ethical obligation for him to declare the relative’s interest in the property to his client should a family member wish to buy. This also applies to the agent who may be interested in buying the property he is marketing for the seller.
Dr Tan Tee Khoon
Chief Executive Officer
Singapore Accredited Estate Agencies
Source : Straits Times – 10 Dec 2009
It is not clear from Ms Koh’s letter if she had advertised to sell her own property or she is an estate agent acting on the seller’s behalf. In either case, we would like to clarify that it is proper for agents to represent their family members in property transactions.
However, the rules of good practice and disclosure of interest continue to prevail. In this situation, the buyer’s agent should have made contact with Ms Koh in the first instance to identify herself as the brother’s appointed agent and make arrangements to view, even if she is unable to be present at the initial viewing. Doing so would have prevented any controversy or misunderstanding arising subsequently.
If Ms Koh is an agent, we suggest she present the buyer’s offer to her seller as she is expected to do so and resolve her contention with the buyer’s agent over commission separately. There is no cobrokerage contract as yet between Ms Koh and the buyer’s agent even if the seller accepts the offer.
Alternatively, Ms Koh is at liberty to negotiate the proportion of shared commission with the buyer’s agent if she deems it appropriate. In the event that Ms Koh is unable to resolve this, Singapore Accredited Estate Agencies can facilitate mediation for both agents.
If Ms Koh is the property owner, she is, of course, not obliged to accept the offer or pay commission. There is also a potential conflict of interest if the buyer’s agent is asking the seller for commission.
In addition, we would like to add that if the agent is acting on the seller’s behalf, there exists an ethical obligation for him to declare the relative’s interest in the property to his client should a family member wish to buy. This also applies to the agent who may be interested in buying the property he is marketing for the seller.
Dr Tan Tee Khoon
Chief Executive Officer
Singapore Accredited Estate Agencies
Source : Straits Times – 10 Dec 2009
Suntec Reit’s S$700 mln debt discharged
ARA Trust Management (Suntec) Limited said on Thursday that HSBC Institutional Trust Services (Singapore) Limited has fully discharged Suntec REIT’s indebtedness under the S$700 million commercial mortgage-backed securities.
The securities matured on December 9, 2009 and were discharged with the proceeds from the S$825 million term loan facility
ARA Trust Management (Suntec) Limited is the manager of Suntec Reit.
HSBC Institutional Trust Services (Singapore) Limited is the trustee of Suntec Reit.
Source : Business Times – 10 Dec 2009
Boustead to record a S$17.3 mln gain from property sale
Boustead Singapore Limited on Thursday unvieled plans to sell a building under construction and land at Tampines Industrial Avenue 5 in Tampines Wafer Fab Park Singapore for a about S$67.8 million.
After taking into account the estimated costs of the proposed sale and the share of minority interests, the Boustead Group is expected to record a gain of S$17.3 million from the sale.
The property seller is Boustead Projects Investments Pte. Ltd, a wholly-owned subsidiary of Boustead’s 91.7 per cent owned subsidiary, Boustead Projects Pte Ltd.
The sale is the result of the purchaser exercising its option in accordance with the agreement for lease.
Source : Business Times – 10 Dec 2009
Paradise Island prices back to 2007 peak
Interest in waterfront homes at Sentosa Cove seems to have returned in recent months, as the opening of Resorts World at Sentosa looms. Since the beginning of November, a total of six properties — three luxury condominiums and three landed homes — have changed hands in the resale market at $1,406 to $2,423 psf.
In the week of Nov 6 to 13, one of the 29 villas on Ho Bee Group’s Paradise Island — a double-storey unit on 8,105 sq ft of land — was sold for $11.4 million, or $1,406 psf. The villas were completed in May and Ho Bee sold the last one for $22 million in August. Each villa has a private berth and all rooms have views of the waterways. The owner had purchased the villa in April 2007 for $9.18 million, or $1,133, hence reaping a 24% capital gain. In early November, a 7,029 sq ft villa sold for $10.8 million, or $1,536 psf. The owner had lso purchased it at launch for $7.1 million ($1,010 psf) in April 2007 and saw the price appreciate 52% in the past 2½ years.
When the villas at Paradise Island were launched, prices ranged from $1,047 to $1,208 psf, according to the URA Realis database of caveats. Since then, prices have climbed, reaching $1,500 psf two months ago, a level last seen in October 2007.
Meanwhile, a terraced house in the 99-year leasehold Ocean 8 enclave developed by IJM Properties Sdn Bhd, a unit of the Malaysian conglomerate IJM Corp Bhd, was sold for $6.4 million, or $2,423 psf, in a caveat dated Nov 13. The 2,637 sq ft house had changed hands twice before. The original owner purchased the property in October 2006 for $2.92 million ($1,109 psf), and flipped it in January 2007 for $3.5 million ($1,326 psf), enjoying an 20% gain.
The $2,423 psf is the highest psf price achieved at Ocean 8 to date. The last time a unit in the stretch of eight terraced homes changed hands above $2,000 psf was in May last year, when two units were sold for $5.5 million each — a 2,626 sq ft unit went for $2,097 psf, while a 2,691 sq ft unit was sold for $2,046 psf.
Just up the street along Ocean Drive is the 116- unit The Azure, a 99-year leasehold waterfront condo development by Frasers Centrepoint and completed last year. The property was launched in September 2005 at around $900 psf.
According to a Nov 10 caveat, a 1,701 sq ft apartment on the third floor was sold for $2.9 million, or $1,705 psf. This is the second time this year the unit has changed hands. It was last sold in June for $2.43 million ($1,429). The original owner purchased the property in October 2005 for $1.77 million ($1,043 psf).
At the end of Ocean Drive is the 264-unit The Oceanfront @ Sentosa Cove, which is being developed jointly by TID Pte Ltd and City Developments Ltd and expected to be completed in 1Q2010. A two-bedroom apartment on the eighth floor has changed hands three times since it was purchased in August 2006. The 1,711 sq ft unit was most recently sold for $3.1 million, or $1,811 psf. The seller appears to have made a quick flip as, according to URA Realis, the previous transaction was just this September for $3 million, or $1,753 psf. The initial owner purchased the unit at launch in 2006 for $2.28 million ($1,337 psf) and sold it in April 2007 for $3.25 million ($1,899 psf), a 42% price gain.
Source : The Edge – 7 Dec 2009
In the week of Nov 6 to 13, one of the 29 villas on Ho Bee Group’s Paradise Island — a double-storey unit on 8,105 sq ft of land — was sold for $11.4 million, or $1,406 psf. The villas were completed in May and Ho Bee sold the last one for $22 million in August. Each villa has a private berth and all rooms have views of the waterways. The owner had purchased the villa in April 2007 for $9.18 million, or $1,133, hence reaping a 24% capital gain. In early November, a 7,029 sq ft villa sold for $10.8 million, or $1,536 psf. The owner had lso purchased it at launch for $7.1 million ($1,010 psf) in April 2007 and saw the price appreciate 52% in the past 2½ years.
When the villas at Paradise Island were launched, prices ranged from $1,047 to $1,208 psf, according to the URA Realis database of caveats. Since then, prices have climbed, reaching $1,500 psf two months ago, a level last seen in October 2007.
Meanwhile, a terraced house in the 99-year leasehold Ocean 8 enclave developed by IJM Properties Sdn Bhd, a unit of the Malaysian conglomerate IJM Corp Bhd, was sold for $6.4 million, or $2,423 psf, in a caveat dated Nov 13. The 2,637 sq ft house had changed hands twice before. The original owner purchased the property in October 2006 for $2.92 million ($1,109 psf), and flipped it in January 2007 for $3.5 million ($1,326 psf), enjoying an 20% gain.
The $2,423 psf is the highest psf price achieved at Ocean 8 to date. The last time a unit in the stretch of eight terraced homes changed hands above $2,000 psf was in May last year, when two units were sold for $5.5 million each — a 2,626 sq ft unit went for $2,097 psf, while a 2,691 sq ft unit was sold for $2,046 psf.
Just up the street along Ocean Drive is the 116- unit The Azure, a 99-year leasehold waterfront condo development by Frasers Centrepoint and completed last year. The property was launched in September 2005 at around $900 psf.
According to a Nov 10 caveat, a 1,701 sq ft apartment on the third floor was sold for $2.9 million, or $1,705 psf. This is the second time this year the unit has changed hands. It was last sold in June for $2.43 million ($1,429). The original owner purchased the property in October 2005 for $1.77 million ($1,043 psf).
At the end of Ocean Drive is the 264-unit The Oceanfront @ Sentosa Cove, which is being developed jointly by TID Pte Ltd and City Developments Ltd and expected to be completed in 1Q2010. A two-bedroom apartment on the eighth floor has changed hands three times since it was purchased in August 2006. The 1,711 sq ft unit was most recently sold for $3.1 million, or $1,811 psf. The seller appears to have made a quick flip as, according to URA Realis, the previous transaction was just this September for $3 million, or $1,753 psf. The initial owner purchased the unit at launch in 2006 for $2.28 million ($1,337 psf) and sold it in April 2007 for $3.25 million ($1,899 psf), a 42% price gain.
Source : The Edge – 7 Dec 2009
Pricey is right for 2010 home sales: observers
Mass-market sales may ease, focus is on high-end homes
Markets are stabilising and developers here are ready to roll out pricey homes. Industry watchers are keeping their fingers tightly crossed for the high-end residential sector, which could see more launches next year if economies sail smoothly towards recovery.
According to Colliers International estimates, 10,671 private homes are set for launch next year. And 46 per cent or 4,958 units will be in the core central region (CCR).
Prime proje
cts that could hit the market include the former Farrer Court site, which CapitaLand and partners bought en bloc in 2007, and Wheelock Properties’s Ardmore 3.
Another 33 per cent or 3,498 units will originate from the rest of central region (RCR). The outside central region (OCR) will account for the remaining 21 per cent or 2,215 launch-ready units.
The distribution of homes already launched this year is almost exactly the reverse, with the bulk of units coming from the booming mass-market sector. Colliers estimates that by end-December, 13,542 homes will have been released, of which 43 per cent or 5,822 units will be from OCR.
About 33 per cent or 4,429 units will be from RCR, while 24 per cent or 3,291 units would be from CCR.
‘Developers are likely to be encouraged to release more mid-tier or high-end units in 2010,’ says Colliers research and advisory director Tay Huey Ying. She cites several reasons – signs of investors and foreign buyers returning, improved economic prospects and the opening of the integrated resorts.
The strong take-up rate at Marina Bay Suites’ recent preview has raised hopes. Of the 90 units released, 87 were sold and the average price ranged from $2,200-$2,500 psf.
Jones Lang LaSalle (JLL) head of South-east Asia research Chua Yang Liang adds: ‘Positive sentiment from high net worth individuals and wealthy foreign buyers could return by H1 2010 and support transactional activity.’
Backing this view, a recent study by Barclays Wealth and the Economist Intelligence Unit found that wealthy individuals here plan to allocate a larger share of their investment portfolios to property in the next two years.
The big question is how much developers can sell fancy homes for, as doubts linger over the sustainability of economic recovery. DTZ Southeast Asia research head Chua Chor Hoon is one of several observers who expect ‘more upside potential’ for high-end property prices in the coming year.
According to Urban Redevelopment Authority indices, prices of non-landed CCR properties are still some way below the 2008 peak – 16.8 per cent down at Q3. In comparison, non-landed OCR property prices shot up this year and were just 2.5 per cent short of the peak.
Deutsche Bank analysts wrote in a report on Monday that high-end prices could rise 5-10 per cent in the coming year.
But even as optimism grows, some players are quick to highlight uncertainties. JLL’s Dr Chua stresses that new demand for property has to be backed by global or regional economic growth.
Several economists have flagged the risk of bubbles forming in Asian property markets. The Singapore government introduced cooling measures in September.
The Monetary Authority of Singapore also said more action may be needed if recent measures to dampen speculation prove insufficient.
City Developments executive chairman Kwek Leng Beng told BT last month the private home market here ‘will slow down’, following the MAS warning and the return of the confirmed list.
Source : Business Times – 10 Dec 2009
Markets are stabilising and developers here are ready to roll out pricey homes. Industry watchers are keeping their fingers tightly crossed for the high-end residential sector, which could see more launches next year if economies sail smoothly towards recovery.
According to Colliers International estimates, 10,671 private homes are set for launch next year. And 46 per cent or 4,958 units will be in the core central region (CCR).
Prime proje
cts that could hit the market include the former Farrer Court site, which CapitaLand and partners bought en bloc in 2007, and Wheelock Properties’s Ardmore 3.Another 33 per cent or 3,498 units will originate from the rest of central region (RCR). The outside central region (OCR) will account for the remaining 21 per cent or 2,215 launch-ready units.
The distribution of homes already launched this year is almost exactly the reverse, with the bulk of units coming from the booming mass-market sector. Colliers estimates that by end-December, 13,542 homes will have been released, of which 43 per cent or 5,822 units will be from OCR.
About 33 per cent or 4,429 units will be from RCR, while 24 per cent or 3,291 units would be from CCR.
‘Developers are likely to be encouraged to release more mid-tier or high-end units in 2010,’ says Colliers research and advisory director Tay Huey Ying. She cites several reasons – signs of investors and foreign buyers returning, improved economic prospects and the opening of the integrated resorts.
The strong take-up rate at Marina Bay Suites’ recent preview has raised hopes. Of the 90 units released, 87 were sold and the average price ranged from $2,200-$2,500 psf.
Jones Lang LaSalle (JLL) head of South-east Asia research Chua Yang Liang adds: ‘Positive sentiment from high net worth individuals and wealthy foreign buyers could return by H1 2010 and support transactional activity.’
Backing this view, a recent study by Barclays Wealth and the Economist Intelligence Unit found that wealthy individuals here plan to allocate a larger share of their investment portfolios to property in the next two years.
The big question is how much developers can sell fancy homes for, as doubts linger over the sustainability of economic recovery. DTZ Southeast Asia research head Chua Chor Hoon is one of several observers who expect ‘more upside potential’ for high-end property prices in the coming year.
According to Urban Redevelopment Authority indices, prices of non-landed CCR properties are still some way below the 2008 peak – 16.8 per cent down at Q3. In comparison, non-landed OCR property prices shot up this year and were just 2.5 per cent short of the peak.
Deutsche Bank analysts wrote in a report on Monday that high-end prices could rise 5-10 per cent in the coming year.
But even as optimism grows, some players are quick to highlight uncertainties. JLL’s Dr Chua stresses that new demand for property has to be backed by global or regional economic growth.
Several economists have flagged the risk of bubbles forming in Asian property markets. The Singapore government introduced cooling measures in September.
The Monetary Authority of Singapore also said more action may be needed if recent measures to dampen speculation prove insufficient.
City Developments executive chairman Kwek Leng Beng told BT last month the private home market here ‘will slow down’, following the MAS warning and the return of the confirmed list.
Source : Business Times – 10 Dec 2009
Pioneer Road North site draws 8 bids
Highest bid of $19.4 million came from Kng Realty
A 30-year leasehold industrial site at Pioneer Road North and Soon Lee Drive has attracted strong demand, pointing to sustained confidence in the economy.
By the close of tender yesterday, the Urban Redevelopment Authority (URA) had received eight bids for the 18,958.8 square metre plot, which has a maximum gross plot ratio of two. The top bid came from Kng Realty Pte Ltd, at $19.4 million or $48 per square foot per plot ratio (psf ppr).
CB Richard Ellis Research executive director Li Hiaw Ho expects the development’s breakeven cost to range from $190-$210 psf.
Kng Realty’s bid is more than two times that of the trigger bid – an unnamed developer had committed to pay at least $8.2 million or $20 psf ppr for the land in October.
Kng Realty’s shareholders include Kim Chan Wah and Ng Hock Lye, both of whom are also shareholders of another company, Kng Development Pte Ltd.
Kng Development had won the tender for an industrial site at Kaki Bukit Road 2 in August. This firm’s other shareholders include Ng Teng Yeng, brother of property tycoon Ng Teng Fong.
The next highest bid for the Pioneer Road North site was $18 million or $44 psf ppr, which came jointly from Sia Kong Wah and Gimp Investment Pte Ltd. Kng Realty’s bid exceeded this by 7.8 per cent.
Other companies such as Soilbuild Group and EL Development also took part in the tender. The lowest bid came from Bok Seng Logistics Pte Ltd, at $9 million or $22 psf ppr.
‘The healthy response to the tender reflects the more optimistic business sentiment,’ said CBRE’s Mr Li.
According to Knight Frank head of industrial business space Lim Kien Kim, tender participants could also have been encouraged by good industrial space take-up in the Woodlands and Tuas South areas.
URA said it will evaluate the bids and announce the award of the tender later. Industrial sites it put up for sale in the last few months have seen healthy demand. For example, the one at Kaki Bukit Road 2 which eventually went to Kng Development drew as many as 18 bids.
Source : Business Times – 10 Dec 2009
MAS poll points to 5.5% growth in 2010
Estimate of this year’s contraction falls to 2% from 3.6% a quarter ago
THE economy is likely to grow 4.7 per cent in the current quarter before picking up pace in the first half of next year, with growth averaging 5.5 per cent in 2010, according to a poll of market economists.
The Monetary Authority of Singapore’s latest survey of professional forecasters – conducted the day the third-quarter economic results were released last month – has the median estimate of the current Q4 growth at 4.7 per cent, within a wide 1.2 to 7.5 per cent range.
The 20 economists who responded to the survey also now see the economy contracting 2 per cent in 2009. This compares with a median forecast of a 3.6 per cent decline from the previous poll a quarter earlier.
The official forecast for 2009 has now been narrowed to a half-point range – contraction of between 2 and 2.5 per cent. But some economists reckon that there’s a good chance – close to 50 per cent probability – that the GDP decline this year could be smaller than 2 per cent.
In any case, the focus would have moved on to 2010, where the first quarter is expected to gain from a low-base effect – the economists’ forecasts range from 5 to 11.4 per cent, with a 9.6 per cent median.
Q1 2009 was the weakest quarter during the recent downturn: GDP shrank 9.5 per cent year-on-year, though in momentum terms, the pace of the decline was easing. It was the fourth and final negative quarter in sequential terms.
The economists’ forecasts see GDP growth easing to 6 and 3.7 per cent over the next quarters, before picking up again to 5 per cent in Q4 2010.
Full-year growth is now projected at 5.5 per cent for 2010, one point higher than the median forecast from the September survey.
Meanwhile, the consumer price inflation rate is expected to jump sharply from an estimated 0.3 per cent in 2009 to 1.5 per cent next year.
The economists also now expect the 2009 unemployment rate to be 3.4 per cent by year-end – lower than the 3.8 per cent forecast from the earlier poll. The jobless figure is also expected to further ease to 3 per cent by the end of 2010.
Source : Business Times – 10 Dec 2009
THE economy is likely to grow 4.7 per cent in the current quarter before picking up pace in the first half of next year, with growth averaging 5.5 per cent in 2010, according to a poll of market economists.
The Monetary Authority of Singapore’s latest survey of professional forecasters – conducted the day the third-quarter economic results were released last month – has the median estimate of the current Q4 growth at 4.7 per cent, within a wide 1.2 to 7.5 per cent range.
The 20 economists who responded to the survey also now see the economy contracting 2 per cent in 2009. This compares with a median forecast of a 3.6 per cent decline from the previous poll a quarter earlier.
The official forecast for 2009 has now been narrowed to a half-point range – contraction of between 2 and 2.5 per cent. But some economists reckon that there’s a good chance – close to 50 per cent probability – that the GDP decline this year could be smaller than 2 per cent.
In any case, the focus would have moved on to 2010, where the first quarter is expected to gain from a low-base effect – the economists’ forecasts range from 5 to 11.4 per cent, with a 9.6 per cent median.
Q1 2009 was the weakest quarter during the recent downturn: GDP shrank 9.5 per cent year-on-year, though in momentum terms, the pace of the decline was easing. It was the fourth and final negative quarter in sequential terms.
The economists’ forecasts see GDP growth easing to 6 and 3.7 per cent over the next quarters, before picking up again to 5 per cent in Q4 2010.
Full-year growth is now projected at 5.5 per cent for 2010, one point higher than the median forecast from the September survey.
Meanwhile, the consumer price inflation rate is expected to jump sharply from an estimated 0.3 per cent in 2009 to 1.5 per cent next year.
The economists also now expect the 2009 unemployment rate to be 3.4 per cent by year-end – lower than the 3.8 per cent forecast from the earlier poll. The jobless figure is also expected to further ease to 3 per cent by the end of 2010.
Source : Business Times – 10 Dec 2009
HK luxury home prices may rise 10% in 12 months
Luxury home prices in Hong Kong may rise by 10 per cent in the next 12 months as low interest rates and limited supply fuel demand, Colliers International Ltd said.
Hong Kong home prices have risen 28 per cent this year, according to the weekly Centa-City Leading Index, recovering faster than London and New York on mainland Chinese buyers and record-low mortgage rates. Luxury housing has outperformed the overall property market, according to Colliers, a global real-estate broker and manager.
‘Prospective purchasers are mainly buyers coming from mainland China, 40 per cent of the total, followed evenly by upgraders, expatriates, industrialists and investors,’ Ricky Poon, Colliers’ executive director of residential sales, said in an e-mailed statement today.
Sales of homes worth more than HK$10 million (S$1.79 million) each jumped 44 per cent to 1,231 transactions in the first 11 months of this year from the same period in 2008, and prices rose 40 per cent on the same basis, the statement said.
Homes worth more than HK$10 million or that are larger than 1,000 sq ft are classed as luxury residences in Hong Kong.
Source : Business Times – 10 Dec 2009
Hong Kong home prices have risen 28 per cent this year, according to the weekly Centa-City Leading Index, recovering faster than London and New York on mainland Chinese buyers and record-low mortgage rates. Luxury housing has outperformed the overall property market, according to Colliers, a global real-estate broker and manager.
‘Prospective purchasers are mainly buyers coming from mainland China, 40 per cent of the total, followed evenly by upgraders, expatriates, industrialists and investors,’ Ricky Poon, Colliers’ executive director of residential sales, said in an e-mailed statement today.
Sales of homes worth more than HK$10 million (S$1.79 million) each jumped 44 per cent to 1,231 transactions in the first 11 months of this year from the same period in 2008, and prices rose 40 per cent on the same basis, the statement said.
Homes worth more than HK$10 million or that are larger than 1,000 sq ft are classed as luxury residences in Hong Kong.
Source : Business Times – 10 Dec 2009
Eight bids for industrial site ‘encouraging’
A JURONG West industrial site with a 30-year lease has succeeded in attracting eight bids.
At $19.4 million, or $48 per sq ft per plot ratio, the top bid from Kng Realty is nearly 8 per cent more than the second-highest bid of $18 million.
It is also more than twice the trigger bid of $8.2 million, to which an unnamed party had committed and which activated the sale of the site.
CBRE Research executive director Li Hiaw Ho said the bids were ‘encouraging’.
He said: ‘The healthy response to the tender reflects the more optimistic business sentiment.’
He pointed out that Kng’s offer price was significantly higher than the $37 psf per plot ratio that Soilbuild Group Holdings paid for a 30-year leasehold industrial site along Pioneer Road/Tuas Avenue 11 in November 2007.
The latest site is located at Pioneer Road North and Soon Lee Drive and is better situated, given its proximity to Pioneer MRT station.
Colliers International director (industrial) Tan Boon Leong said the bids were within expectations and showed that developers were optimistic about the future.
He estimated that the break-even cost of the development would be around $150 psf and that the eventual selling price would likely be $170 psf to $200 psf.
CBRE put a higher estimate on the break-even cost for the development – of between $190 psf and $210 psf.
Relatively new industrial player Kng had clinched another 30-year leasehold industrial site along Kaki Bukit Road 2 in August.
Source : Straits Times – 10 Dec 2009
Swire tipped to hire banks for property IPO
It may spin off Swire Properties in deal raising US$2.5-US$3b
Swire Pacific Ltd, the Hong Kong company with businesses ranging from soft drinks to airlines, plans to hire Goldman Sachs Group Inc, HSBC Holdings plc and Morgan Stanley to arrange an initial public offering for its property unit, said four people with knowledge of the plan.
The company may spin off Swire Properties Ltd in a share sale that may raise US$2.5 billion to US$3 billion next year, said two of the people, who declined to be identified because the information is private.
It is likely to be the largest IPO of a property company in the Asia-Pacific region since at least 1999, according to data compiled by Bloomberg.
A separate listing may allow Swire to command a higher valuation for its property assets and raise cheaper capital amid a rebound in Hong Kong’s office rents and home prices.
Swire plans to make a formal announcement through the Hong Kong stock exchange today, said a fifth person familiar with the company’s plan, asking not to be identified before the announcement.
Martin Cubbon, chief executive officer of Swire Properties, declined to comment through e-mail.
Connie Ling, a spokeswoman for Goldman in Hong Kong; Annie Cheng, a HSBC spokeswoman, and Nick Footitt, a Morgan Stanley spokesman in the city, also declined to comment.
Landlord Swire Properties is the biggest commercial landlord in eastern Hong Kong Island.
Property accounted for about 32 per cent of the parent company’s revenue in the first half.
Swire Pacific generated revenue of HK$3.8 billion (S$681.6 million) from its property assets in the first half, according to the company’s last financial report.
That made the business the second-largest contributor to sales after the beverage unit.
The Link Reit’s US$2.8 billion IPO in Hong Kong in November 2005 was the largest property-related IPO in the Asia-Pacific since 1999.
Source : Business Times – 10 Dec 2009
Beijing vows to rein in property speculation
Its planning agency aims to raise housing demand and supply of medium to low-cost property
China will crack down on speculation in the property market and try to increase the supply of lower-cost housing, the head of the country’s powerful planning agency was reported as saying yesterday.
The comments by Zhang Ping, chief of the National Development and Reform Commission, chimed with market expectations that Beijing could use targeted measures in the coming months to quell asset price rises without resorting to broader monetary tightening.
‘Our country will improve housing consumption and macro-control policies, increasing the supply of mid to low-cost and price-controlled commercial property, and curb speculative house purchasing,’ Mr Zhang was quoted as saying by the official Xinhua news agency.
The report did not provide any details about how the government might pursue these objectives.
The property sub-index in the Shanghai stock market ended 2.55 per cent lower, underperforming the main composite index’s 1.73 per cent fall.
China’s housing prices have been rising since March, propelled by a slew of government measures, from lower required downpayments on mortgages to tax cuts.
Nationwide prices rose by an annual 3.9 per cent in October.
Increases have been far more rapid in some cities. In the southern boomtown of Shenzhen, prices have soared 13.8 per cent during the same period.
While the government has welcomed a surge in the construction sector, an important pillar of the economy, some officials worry that property development is outstripping end-user demand in some locales and that prices are not affordable for ordinary citizens.
At China’s key annual economic planning meeting, which ended on Monday, its top leadership said an objective for next year would be to develop smaller urban areas and support demand for ‘normal’ housing.
‘We think this will further encourage local governments to continue the housing construction boom, which will support China’s commodity demand,’ Tao Wang, an economist with UBS in Beijing, said in a research note this week.
‘We also expect the current preferential interest rates and other policies for housing purchases to largely remain in 2010,’ she added.
Source : Business Times – 10 Dec 2009
China will crack down on speculation in the property market and try to increase the supply of lower-cost housing, the head of the country’s powerful planning agency was reported as saying yesterday.
The comments by Zhang Ping, chief of the National Development and Reform Commission, chimed with market expectations that Beijing could use targeted measures in the coming months to quell asset price rises without resorting to broader monetary tightening.
‘Our country will improve housing consumption and macro-control policies, increasing the supply of mid to low-cost and price-controlled commercial property, and curb speculative house purchasing,’ Mr Zhang was quoted as saying by the official Xinhua news agency.
The report did not provide any details about how the government might pursue these objectives.
The property sub-index in the Shanghai stock market ended 2.55 per cent lower, underperforming the main composite index’s 1.73 per cent fall.
China’s housing prices have been rising since March, propelled by a slew of government measures, from lower required downpayments on mortgages to tax cuts.
Nationwide prices rose by an annual 3.9 per cent in October.
Increases have been far more rapid in some cities. In the southern boomtown of Shenzhen, prices have soared 13.8 per cent during the same period.
While the government has welcomed a surge in the construction sector, an important pillar of the economy, some officials worry that property development is outstripping end-user demand in some locales and that prices are not affordable for ordinary citizens.
At China’s key annual economic planning meeting, which ended on Monday, its top leadership said an objective for next year would be to develop smaller urban areas and support demand for ‘normal’ housing.
‘We think this will further encourage local governments to continue the housing construction boom, which will support China’s commodity demand,’ Tao Wang, an economist with UBS in Beijing, said in a research note this week.
‘We also expect the current preferential interest rates and other policies for housing purchases to largely remain in 2010,’ she added.
Source : Business Times – 10 Dec 2009
Australia’s Oct home loan approvals drop
Central bank chief raises interest rate for 3rd straight mth
Australian home loan approvals fell in October after central bank governor Glenn Stevens became the first Group of 20 policymaker to increase borrowing costs since the height of the global financial crisis.
The number of loans granted to build or buy houses and apartments dropped 1.4 per cent to 63,865 from September, when they gained a revised 3.3 per cent, the statistics bureau said in Sydney yesterday. The median estimate of 21 economists surveyed by Bloomberg was for a 2 per cent decline.
Approvals may slide further after Mr Stevens boosted the benchmark interest rate last week for an unprecedented third straight month and the government reduced grants to first-time buyers from as much as A$21,000 (S$27,000) in October. Consumer confidence fell this month, a separate report showed yesterday.
‘Homebuyer numbers will continue to retreat from recent highs and this will weigh on overall approval numbers.’ Alex Joiner, an economist at Australia & New Zealand Banking Group Ltd in Melbourne, said ahead of yesterday’s report.
First-home buyers accounted for 26 per cent of dwellings that were financed in October, down from 26.1 per cent in September, the statistics bureau said yesterday.
Mr Stevens and his board increased Australia’s benchmark lending rate last week by a quarter point to 3.75 per cent, as rising business confidence, a surge in house prices and higher exports to China from companies including BHP Billiton Ltd, drive a ‘new upswing’ in the economy forecast by the central bank to last several years.
‘At the beginning of the year, I would not have expected the economy to be looking as good as it does’ now, Mr Stevens said late on Tuesday in Sydney. ‘I thought things would turn out rather worse than they have. But who’s complaining? Not me.’
Investors are betting there is a 42 per cent chance of an interest rate increase at the central bank’s next meeting in February, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange late on Tuesday.
This year’s interest rate increases have added about A$150 to monthly repayments on an average A$300,000 home loan, and may prompt consumers to trim spending that surged in the first half of the year after Prime Minister Kevin Rudd’s government distributed more than A$20 billion in cash handouts to households.
An index of consumer confidence dropped 3.8 per cent this month, led by waning sentiment among households with mortgages, a report by Westpac Banking Corp showed yesterday.
Demand for mortgages surged in the first half of the year amid record purchases from first-time buyers after Treasurer Wayne Swan tripled to A$21,000 a grant to buyers of new homes, and doubled to A$14,000 payments for those purchasing existing dwellings. House prices have gained 10 per cent this year.
In May, Mr Swan extended the increases through to the end of September, when they were partially reduced. The payments will be cut to their original level of A$7,000 at the end of this year.
The total value of loans fell 1.4 per cent to A$23.3 billion, yesterday’s report showed.
Source : Business Times – 10 Dec 2009
Australian home loan approvals fell in October after central bank governor Glenn Stevens became the first Group of 20 policymaker to increase borrowing costs since the height of the global financial crisis.
The number of loans granted to build or buy houses and apartments dropped 1.4 per cent to 63,865 from September, when they gained a revised 3.3 per cent, the statistics bureau said in Sydney yesterday. The median estimate of 21 economists surveyed by Bloomberg was for a 2 per cent decline.
Approvals may slide further after Mr Stevens boosted the benchmark interest rate last week for an unprecedented third straight month and the government reduced grants to first-time buyers from as much as A$21,000 (S$27,000) in October. Consumer confidence fell this month, a separate report showed yesterday.
‘Homebuyer numbers will continue to retreat from recent highs and this will weigh on overall approval numbers.’ Alex Joiner, an economist at Australia & New Zealand Banking Group Ltd in Melbourne, said ahead of yesterday’s report.
First-home buyers accounted for 26 per cent of dwellings that were financed in October, down from 26.1 per cent in September, the statistics bureau said yesterday.
Mr Stevens and his board increased Australia’s benchmark lending rate last week by a quarter point to 3.75 per cent, as rising business confidence, a surge in house prices and higher exports to China from companies including BHP Billiton Ltd, drive a ‘new upswing’ in the economy forecast by the central bank to last several years.
‘At the beginning of the year, I would not have expected the economy to be looking as good as it does’ now, Mr Stevens said late on Tuesday in Sydney. ‘I thought things would turn out rather worse than they have. But who’s complaining? Not me.’
Investors are betting there is a 42 per cent chance of an interest rate increase at the central bank’s next meeting in February, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange late on Tuesday.
This year’s interest rate increases have added about A$150 to monthly repayments on an average A$300,000 home loan, and may prompt consumers to trim spending that surged in the first half of the year after Prime Minister Kevin Rudd’s government distributed more than A$20 billion in cash handouts to households.
An index of consumer confidence dropped 3.8 per cent this month, led by waning sentiment among households with mortgages, a report by Westpac Banking Corp showed yesterday.
Demand for mortgages surged in the first half of the year amid record purchases from first-time buyers after Treasurer Wayne Swan tripled to A$21,000 a grant to buyers of new homes, and doubled to A$14,000 payments for those purchasing existing dwellings. House prices have gained 10 per cent this year.
In May, Mr Swan extended the increases through to the end of September, when they were partially reduced. The payments will be cut to their original level of A$7,000 at the end of this year.
The total value of loans fell 1.4 per cent to A$23.3 billion, yesterday’s report showed.
Source : Business Times – 10 Dec 2009
Wednesday, December 9, 2009
Canary Wharf sells landmark building for £208m
Canary Wharf Group (CWG), the property firm that operates London’s second-largest financial district, is selling a landmark building for £208 million (S$472.2 million) to tap into surging demand for prime UK property.
CWG, the main operating subsidiary of AIM-listed Songbird Estates, has agreed to sell the 314,000 square foot office building at 5 Churchill Place to a Bermuda-based private investor at a yield in the region of 6 per cent.
The recently developed property, which was originally designed for defunct US investment bank Bear Stearns, was sold at a £38 million premium to its June 30 book value.
The majority of 5 Churchill Place is let to JP Morgan Markets Limited for 20 years from August 2009 at an annual rent of £10.6 million. CWG is providing rent support to the buyer for the two unlet floors totalling £2.16 million a year for a maximum period of five years.
Analysts expect most of the sale proceeds to be used to pay down construction loans, with the remainder set aside for new projects emerging from CWG’s four million square foot landbank.
Songbird shares rose 0.5 per cent to 153.6 pence by 0842 GMT against a 0.3 per cent fall in the FTSE Real Estate Index. The sale of 5 Churchill Place reflects a sharp rise in investor appetite for well-let UK offices following the climax of the worst commercial property slump seen for generations.
The recent market bounce, mostly driven by wealthy investors in search for higher-yielding investments, has fuelled concerns of a pricing bubble in UK property that could pop dramatically in 2010 if banks bring more distressed property to market.
Earlier this week, LaSalle Investment Management warned that government monetary and fiscal stimulus policies could be drawing too much money back into property ahead of a solid recovery in occupier demand.
LaSalle said that this excess liquidity risk was already building in China and, to a lesser extent, Britain. It urged investors to maintain strict investment discipline that focuses on achieving a set return with affordable and realistic leverage.
Source : Business Times – 10 Dec 2009
URA closes tender for Pioneer Rd North site
Property developer Kng Realty has submitted the highest bid of S$19.4 million for an industrial site at Pioneer Road North.
The Urban Redevelopment Authority (URA) has closed the tender for the site after receiving eight bids in total.
The next highest bid came from Sia Kong Wah & Gimp Investment at S$18 million.
Kng Realty’s bid translates to about S$48 per square foot.
Li Hiaw Ho, executive director at CBRE Research, said Kng Realty’s bid was more than twice the application bid of S$20 per square foot.
It is also higher than the S$37 per square foot that Soilbuild Group paid for a 30-year leasehold industrial site along Pioneer Road in November 2007.
Mr Li said the healthy response to the tender reflects the more optimistic business sentiment.
The site was offered for sale in November on a 30-year lease. It was originally on the Reserve List of the Government Industrial Land Sales Programme.
URA said it would decide on the winning bidder at a later date.
Source : Channel NewsAsia – 9 Dec 2009
The Urban Redevelopment Authority (URA) has closed the tender for the site after receiving eight bids in total.
The next highest bid came from Sia Kong Wah & Gimp Investment at S$18 million.
Kng Realty’s bid translates to about S$48 per square foot.
Li Hiaw Ho, executive director at CBRE Research, said Kng Realty’s bid was more than twice the application bid of S$20 per square foot.
It is also higher than the S$37 per square foot that Soilbuild Group paid for a 30-year leasehold industrial site along Pioneer Road in November 2007.
Mr Li said the healthy response to the tender reflects the more optimistic business sentiment.
The site was offered for sale in November on a 30-year lease. It was originally on the Reserve List of the Government Industrial Land Sales Programme.
URA said it would decide on the winning bidder at a later date.
Source : Channel NewsAsia – 9 Dec 2009
Economists upgrade outlook on Singapore’s economy
Private sector economists have further upgraded their outlook on the Singapore economy, and now expect GDP to contract by 2 per cent this year.
In the previous survey of professional forecasters conducted by the Monetary Authority of Singapore (MAS) in September, economists had a median forecast of a 3.6 per cent decline in GDP for the whole of 2009.
For the fourth quarter, the 20 economists who responded to the latest survey expect most sectors to continue posting improved numbers.
They expect financial services to return to positive growth of about 9.9 per cent in the last three months of the year, after declining 0.2 per cent in the previous quarter.
They also projected positive numbers for non-oil domestic exports, giving a median forecast of 3 per cent growth, following last quarter’s 7.8 per cent decline in exports.
Manufacturing is expected to grow at a median rate of 8 per cent, after posting a surprise 6.6 per cent growth in the third quarter.
However, director of Asian economic forecasting at Action Economics, David Cohen, cautioned on Wednesday that manufacturing could also surprise on the downside.
“I guess the uncertainty surrounds the manufacturing sector, where we saw a strong bounce in the prior quarters after the weakness at the beginning of the year,” he said.
“But perhaps it was exaggerated by the pharmaceuticals sector, which can be volatile month-to-month, and it could be pulling back in the fourth quarter.”
The 20 economists who responded to the latest survey have also upgraded their forecast for fourth quarter growth.
They now have a median forecast of a 4.7 per cent expansion in the fourth quarter, up from 1.9 per cent in the previous survey. For 2010, the analysts have projected the economy to grow by 5.5 per cent.
Source : Channel NewsAsia – 9 Dec 2009
In the previous survey of professional forecasters conducted by the Monetary Authority of Singapore (MAS) in September, economists had a median forecast of a 3.6 per cent decline in GDP for the whole of 2009.
For the fourth quarter, the 20 economists who responded to the latest survey expect most sectors to continue posting improved numbers.
They expect financial services to return to positive growth of about 9.9 per cent in the last three months of the year, after declining 0.2 per cent in the previous quarter.
They also projected positive numbers for non-oil domestic exports, giving a median forecast of 3 per cent growth, following last quarter’s 7.8 per cent decline in exports.
Manufacturing is expected to grow at a median rate of 8 per cent, after posting a surprise 6.6 per cent growth in the third quarter.
However, director of Asian economic forecasting at Action Economics, David Cohen, cautioned on Wednesday that manufacturing could also surprise on the downside.
“I guess the uncertainty surrounds the manufacturing sector, where we saw a strong bounce in the prior quarters after the weakness at the beginning of the year,” he said.
“But perhaps it was exaggerated by the pharmaceuticals sector, which can be volatile month-to-month, and it could be pulling back in the fourth quarter.”
The 20 economists who responded to the latest survey have also upgraded their forecast for fourth quarter growth.
They now have a median forecast of a 4.7 per cent expansion in the fourth quarter, up from 1.9 per cent in the previous survey. For 2010, the analysts have projected the economy to grow by 5.5 per cent.
Source : Channel NewsAsia – 9 Dec 2009
S-REITs may pursue more acquisitions in 2010, says OCBC
Singapore REITs are expected to pursue more acquisitions in 2010 to drive growth, with deals likely to be funded by private placements, says OCBC Investment Research.
“Opportunistic acquisitions will be very much in vogue in 2010 as some REITs shore up declining earnings and others exploit favourable market conditions,” it says in a research note although funding sources may be limited as REIT managers unlikely to increase their aggregate gearing level to make new purchases.
OCBC adds that raising equity through rights issues may also be challenging as REIT sponsors, institutional investors are already over-leveraged. Steep discounts to ensure successful rights issues may also obstruct earnings-accretive acquisitions.
“As a result, private placements are likely the most promising source of funds in 2010 in our view.”
Source : The Edge – 9 Dec 2009
“Opportunistic acquisitions will be very much in vogue in 2010 as some REITs shore up declining earnings and others exploit favourable market conditions,” it says in a research note although funding sources may be limited as REIT managers unlikely to increase their aggregate gearing level to make new purchases.
OCBC adds that raising equity through rights issues may also be challenging as REIT sponsors, institutional investors are already over-leveraged. Steep discounts to ensure successful rights issues may also obstruct earnings-accretive acquisitions.
“As a result, private placements are likely the most promising source of funds in 2010 in our view.”
Source : The Edge – 9 Dec 2009
S’pore slips in property investment rankings
Singapore’s property market is looking relatively less attractive to investors as they worry about oversupply and overdevelopment on the island.
According to a joint survey by PricewaterhouseCoopers (PwC) and the US-based Urban Land Institute (ULI), Singapore is fifth in a ranking of Asia-Pacific cities’ property investment prospects, falling three notches from a year ago. In another ranking of development prospects, Singapore took 11th spot, down from seventh.
For the Emerging Trends in Real Estate Asia Pacific 2010 study, PwC and ULI gathered the views of more than 270 real estate investors, developers and other players from mid-September to early November. The report notes that sentiment across the region has improved but also warns against complacency, ‘with the prospects for Western economies precarious’.
One concern participa
nts brought up about the Singapore market is the large supply of property coming on stream. For the residential sector, Urban Redevelopment Authority (URA) data in Q3 showed 59,700 private homes were in the pipeline and that, of these, 34,120 were unsold.
On the commercial front, CB Richard Ellis estimated last month that 7.72 million square feet of office space could be completed between Q4 this year and 2014.
Still, Singapore is one of the top five markets in the region to invest in, said Choo Eng Beng, PwC assurance real estate leader for Singapore. ‘This shows that despite issues with oversupply in Singapore, we are still recognised as a property investment hub.’
And while Singapore’s ranking dropped, its absolute rating actually improved marginally from 5.4 to 5.5 on a scale of one to 9.
Respondents were most optimistic about investing in the residential sector here, with 36.6 per cent of them believing at the time of the survey that it was time to buy. The hotel sector had the fewest supporters, with 21.9 per cent of respondents making a ’sell’ call.
In the ranking of investment prospects, Shanghai jumped four notches to the top of the table, followed by Hong Kong, Beijing and Seoul.
But PwC and ULI noted that ‘the key driver for outperformance in Shanghai, and indeed in China generally, is the government’s decision to inject liquidity into the economy, leading to a surge in bank lending to the property sector and a sharp rebound in commercial property prices’.
Singapore also slipped in the table of development prospects, reflecting concerns about overdevelopment, the report said.
ULI finance senior fellow Stephen Blank suggested another reason for the drop: foreign developers may find it hard to break into the local market, which is ‘dominated by a number of large public and private owners and developers who have a long historical relationship with the city’.
Shanghai also took top spot in the development prospects ranking, with Mumbai and Ho Chi Minh City in second and third places.
Source : Business Times – 9 Dec 2009
According to a joint survey by PricewaterhouseCoopers (PwC) and the US-based Urban Land Institute (ULI), Singapore is fifth in a ranking of Asia-Pacific cities’ property investment prospects, falling three notches from a year ago. In another ranking of development prospects, Singapore took 11th spot, down from seventh.
For the Emerging Trends in Real Estate Asia Pacific 2010 study, PwC and ULI gathered the views of more than 270 real estate investors, developers and other players from mid-September to early November. The report notes that sentiment across the region has improved but also warns against complacency, ‘with the prospects for Western economies precarious’.
One concern participa
nts brought up about the Singapore market is the large supply of property coming on stream. For the residential sector, Urban Redevelopment Authority (URA) data in Q3 showed 59,700 private homes were in the pipeline and that, of these, 34,120 were unsold.On the commercial front, CB Richard Ellis estimated last month that 7.72 million square feet of office space could be completed between Q4 this year and 2014.
Still, Singapore is one of the top five markets in the region to invest in, said Choo Eng Beng, PwC assurance real estate leader for Singapore. ‘This shows that despite issues with oversupply in Singapore, we are still recognised as a property investment hub.’
And while Singapore’s ranking dropped, its absolute rating actually improved marginally from 5.4 to 5.5 on a scale of one to 9.
Respondents were most optimistic about investing in the residential sector here, with 36.6 per cent of them believing at the time of the survey that it was time to buy. The hotel sector had the fewest supporters, with 21.9 per cent of respondents making a ’sell’ call.
In the ranking of investment prospects, Shanghai jumped four notches to the top of the table, followed by Hong Kong, Beijing and Seoul.
But PwC and ULI noted that ‘the key driver for outperformance in Shanghai, and indeed in China generally, is the government’s decision to inject liquidity into the economy, leading to a surge in bank lending to the property sector and a sharp rebound in commercial property prices’.
Singapore also slipped in the table of development prospects, reflecting concerns about overdevelopment, the report said.
ULI finance senior fellow Stephen Blank suggested another reason for the drop: foreign developers may find it hard to break into the local market, which is ‘dominated by a number of large public and private owners and developers who have a long historical relationship with the city’.
Shanghai also took top spot in the development prospects ranking, with Mumbai and Ho Chi Minh City in second and third places.
Source : Business Times – 9 Dec 2009
2 Keppel directors buy Marina Bay units
TWO directors in the Keppel group of companies are shelling out millions of dollars for units in the plush Marina Bay Suites that Keppel Land is involved in developing.
Keppel Corp director Alvin Yeo, who is also the senior partner at law firm Wong Partnership, is paying $6.54 million or $2,442 per sq ft (psf) for a 2,680 sq ft apartment on the 32nd floor of the luxury project.
The details of the transaction were disclosed in an announcement by Keppel Land to the Singapore Exchange yesterday as part of the exchange’s listing rules.
No discount was given by Keppel Land, which is one of the joint-venture partners of the project along with Hongkong Land and Cheung Kong Holdings.
Keppel Land director Niam Chiang Meng is paying $4.577 million or $2,238 psf for his unit, also on the 32nd floor but smaller at 2,045 sq ft.
Mr Niam also did not receive any discount.
The recent preview of Marina Bay Suites saw units snapped by Singaporeans and foreigners, including Indonesians, Malaysians, mainland Chinese, Australians and Americans.
Reports have put the pricing of the units sold at around $2,300 psf.
Source : Straits Times – 9 Dec 2009
Keppel Corp director Alvin Yeo, who is also the senior partner at law firm Wong Partnership, is paying $6.54 million or $2,442 per sq ft (psf) for a 2,680 sq ft apartment on the 32nd floor of the luxury project.
The details of the transaction were disclosed in an announcement by Keppel Land to the Singapore Exchange yesterday as part of the exchange’s listing rules.
No discount was given by Keppel Land, which is one of the joint-venture partners of the project along with Hongkong Land and Cheung Kong Holdings.
Keppel Land director Niam Chiang Meng is paying $4.577 million or $2,238 psf for his unit, also on the 32nd floor but smaller at 2,045 sq ft.
Mr Niam also did not receive any discount.
The recent preview of Marina Bay Suites saw units snapped by Singaporeans and foreigners, including Indonesians, Malaysians, mainland Chinese, Australians and Americans.
Reports have put the pricing of the units sold at around $2,300 psf.
Source : Straits Times – 9 Dec 2009
Real estate investors pick China over S’pore
SINGAPORE’S popularity as one of Asia’s top real estate investment destinations has slipped, according to a new survey of institutional investors by the Urban Land Institute and PricewaterhouseCoopers (PwC).
The report put the Republic in fifth place in the latest rankings of Asia-Pacific cities with the best property investment prospects. It came in second the last time.
The top three cities, overtaking Singapore in the investment league table, are Shanghai, Hong Kong and Beijing respectively, with Seoul in fourth place.
Mr Choo Eng Beng, PwC’s assurance real estate leader, said the results came as no surprise in the light of the remarkable resilience of the Chinese economy.
And Mr Stephen Blank, senior research fellow of finance at the Urban Land Institute, said Singapore’s drop should be put into context, given that the difference between the third, fourth and fifth places was minor.
About 270 industry experts from across the region – including investors, developers, property companies, lenders, brokers and consultants – were questioned about their views on the outlook of the property sector for the survey.
Concern about an oversupply of property in Singapore over the next two years dented the city’s ranking among developers. Experts placed Singapore 11th, compared with seventh last year.
Respondents seemed most bullish about investment prospects for the residential property sector here, whereas other categories, such as retail and office, were placed in the ‘hold’ category.
Almost 37 per cent of those polled believed that it was time to buy residential, while 45 per cent favoured ‘hold’ positions.
This contrasts with the figures last year, when 11.6 per cent of respondents believed it was time to buy and 65.1 per cent urged investors to hold.
But the survey warned that because residential prices rose a record 15.9 per cent in the third quarter over those in the previous period, the ideal moment for buying ‘appears to have passed and most analysts are now concerned about prospects for the sector’.
Mr Choo said the overall sentiment of respondents was cautiously optimistic. ‘There continues to be confidence in terms of the strong fundamentals in Singapore,’ he added.
‘This shows that despite issues with oversupply in Singapore, we are still recognised as a property investment hub.
‘Investors, however, are watching carefully as there are concerns about the city’s development prospects across most asset classes. It would be prudent to tread cautiously going into 2010.’
Source : Straits Times – 9 Dec 2009
The report put the Republic in fifth place in the latest rankings of Asia-Pacific cities with the best property investment prospects. It came in second the last time.
The top three cities, overtaking Singapore in the investment league table, are Shanghai, Hong Kong and Beijing respectively, with Seoul in fourth place.
Mr Choo Eng Beng, PwC’s assurance real estate leader, said the results came as no surprise in the light of the remarkable resilience of the Chinese economy.
And Mr Stephen Blank, senior research fellow of finance at the Urban Land Institute, said Singapore’s drop should be put into context, given that the difference between the third, fourth and fifth places was minor.
About 270 industry experts from across the region – including investors, developers, property companies, lenders, brokers and consultants – were questioned about their views on the outlook of the property sector for the survey.
Concern about an oversupply of property in Singapore over the next two years dented the city’s ranking among developers. Experts placed Singapore 11th, compared with seventh last year.
Respondents seemed most bullish about investment prospects for the residential property sector here, whereas other categories, such as retail and office, were placed in the ‘hold’ category.
Almost 37 per cent of those polled believed that it was time to buy residential, while 45 per cent favoured ‘hold’ positions.
This contrasts with the figures last year, when 11.6 per cent of respondents believed it was time to buy and 65.1 per cent urged investors to hold.
But the survey warned that because residential prices rose a record 15.9 per cent in the third quarter over those in the previous period, the ideal moment for buying ‘appears to have passed and most analysts are now concerned about prospects for the sector’.
Mr Choo said the overall sentiment of respondents was cautiously optimistic. ‘There continues to be confidence in terms of the strong fundamentals in Singapore,’ he added.
‘This shows that despite issues with oversupply in Singapore, we are still recognised as a property investment hub.
‘Investors, however, are watching carefully as there are concerns about the city’s development prospects across most asset classes. It would be prudent to tread cautiously going into 2010.’
Source : Straits Times – 9 Dec 2009
Couple viewed flat and then came hubby’s sister – seeking agent’s commission
RECENTLY, I advertised to sell an apartment unit and a few days later, a woman called and came over to view the unit.
She showed interest and brought her husband for a second viewing. The couple indicated they liked the place and requested another viewing with their family. At the third viewing, the whole family came and the husband’s sister handed me a business card, which showed she was a housing agent from DTZ.
Two days later, the sister called to say she was offering $900,000 ($400,000 below the asking price) on behalf of her brother, and wanted a commission for herself. Or her brother would buy another nearby condominium unit.
Can a housing agent ask for commission after the buyers had already viewed a property twice without the agent being present? Is there a need to pay commission to the buyer’s family member who happens to be a housing agent?
Is such a practice ethical?
Koh Siew Buay (Ms)
Source : Straits Times – 9 Dec 2009
Clearing the air on agent’s commission and ethical obligation
Super-rich Chinese – London’s next big act
Wealth banks look to Chinese who are outspending Arabs
The fear that established clients will flee rising UK taxes might be giving London’s private bankers sleepless nights, but a Chinese remedy is at hand, in the shape of a growing colony of super-rich clients from Asia.
Signs from high-end jewellers, real estate brokers and law firms are signalling the arrival of the Chinese ultra-wealthy in London, following in the footsteps of older billionaire enclaves from Russia, India and the Middle East.
‘The Chinese haven’t arrived in London en masse yet, but they’re going to be the next big act in town,’ said James Fleming, a private banker at Coutts, the wealth management arm of Royal Bank of Scotland.
China’s population of wealthy, defined as having more than US$1 million in investible assets, surpassed that of the UK in 2008, according to a survey by Merrill Lynch, and it now ranks fourth in the world.
In Asia, the number of ultra rich, with at least US$30 million, stands at 14,300, compared with 18,000 in Europe.
Signs that London retains its allure to the world’s super wealthy will come as a relief to a British private banking industry made increasingly nervous by the threats from high earners to leave in large numbers.
A recent poll conducted by law firm Withers of 151 high net worth individuals and their advisers found 64 per cent of rich UK residents are considering leaving, with Switzerland, Hong Kong and Monaco cited as likely destinations.
But traders on London’s Bond Street, a shopping strip of exclusive jewellers, art dealers and fashion retailers that bisects the elite Mayfair district report Chinese shoppers now outspend their Russian and Arab counterparts.
Chinese shoppers spent more than £3 million (S$6.8 million) on Bond Street during the six months to September, more than double the previous period, according to figures from the Bond Street Association of traders on the street.
London’s upmarket estate agents also report a surge in interest from Asian, particularly Chinese, buyers of properties in the prime districts of Mayfair and Belgravia, where little sells for less than £1 million.
‘Besides the Middle East, we are still seeing interest from Russia, and more and more from China,’ said Jonathan Hewlett, who works at upmarket property consultant Savills.
Immigration lawyers servicing rich visa applicants also report growing demand, with no noticeable drop in enquiries since the government revealed plans to hike tax rates.
Samar Shams, an associate specialising in immigration at lawyer Lewis Silkin, said enquiries into the expensive Tier 1 Investor category visa were accelerating.
To qualify, a prospective migrant must have funds of at least £1 million, and once accepted must invest at least £750,000 in government debt, shares in UK companies or UK corporate bonds.
‘The volume of applications has gone up pretty significantly in the last couple of years,’ she said.
Despite reports that planned tax increases would lead to an exodus among Britain’s wealthy, people working in the wealth industry say London remains an attractive tax haven, and enough of its non-domiciled residents may stay.
Global income and capital gains of a non-domiciled resident are not currently taxable in the UK unless remitted, and plans to levy a yearly £30,000 charge on overseas income after seven years will for many of them cause no serious pain.
‘For the super wealthy, for whom such a charge remains proportionately low, the UK still provides tax haven status for those with major income and gains overseas,’ said David Poole, head of Citigroup’s private bank in the UK.
Source : Business Times – 9 Dec 2009
Asia property funds on track to top US$200b
Asia’s property fund size will expand by more than 50 per cent in the next two to three years to US$200 billion, driven by demand from institutional investors from countries including China, industry executives said yesterday.
Pension funds, sovereign wealth funds and affluent individuals would likely boost their portfolios for real estate funds in coming years after appetites waned sharply during the economic downturn earlier this year, the executives told Reuters.
‘The next 12 months will probably be a bit slow because we are still coming out of this difficult global situation, but then I think it will pick up more quickly after that,’ said Nicholas Loup, Asia-Pacific chief executive of UK-based private property group Grosvenor Ltd.
Asia’s fund managers have US$130.9 billion of property assets under management, based on a survey by the Asian Association for Investors in Non-listed Real Estate Vehicles, a non- profit organisation focusing on fund-related companies in the region.
The current global property fund totalled US$409.6 billion, the association’s first-ever survey showed.
Mr Loup, who is also chairman of the association, said Asia’s fund size could easily top US$200 billion over the next few years, barring risks external to the region, such as debt problems faced by financial institutions in markets outside Asia.
‘The big sovereign wealth funds in the region, the Chinese insurance companies, will start investing, (and) you’ll see the Middle East looking more eastwards for their capital to be deployed,’ said Willem de Geus, managing director for Morgan Stanley Asia.
Morgan Stanley, Singapore’s CapitaLand Financial and Australia’s AMP Capital, are Asia’s top three property fund managers, making up nearly 40 per cent of the region’s total property funds, the survey showed.
With growing appetites for property funds in Asia, Morgan Stanley is considering launching products aimed at institutional investors in potentially lucrative emerging markets.
‘We are doing some homework at the moment on domestic Chinese funds and domestic Indian funds. We haven’t decided on anything yet,’ Mr de Geus said.
Source : Business Times – 9 Dec 2009
Pension funds, sovereign wealth funds and affluent individuals would likely boost their portfolios for real estate funds in coming years after appetites waned sharply during the economic downturn earlier this year, the executives told Reuters.
‘The next 12 months will probably be a bit slow because we are still coming out of this difficult global situation, but then I think it will pick up more quickly after that,’ said Nicholas Loup, Asia-Pacific chief executive of UK-based private property group Grosvenor Ltd.
Asia’s fund managers have US$130.9 billion of property assets under management, based on a survey by the Asian Association for Investors in Non-listed Real Estate Vehicles, a non- profit organisation focusing on fund-related companies in the region.
The current global property fund totalled US$409.6 billion, the association’s first-ever survey showed.
Mr Loup, who is also chairman of the association, said Asia’s fund size could easily top US$200 billion over the next few years, barring risks external to the region, such as debt problems faced by financial institutions in markets outside Asia.
‘The big sovereign wealth funds in the region, the Chinese insurance companies, will start investing, (and) you’ll see the Middle East looking more eastwards for their capital to be deployed,’ said Willem de Geus, managing director for Morgan Stanley Asia.
Morgan Stanley, Singapore’s CapitaLand Financial and Australia’s AMP Capital, are Asia’s top three property fund managers, making up nearly 40 per cent of the region’s total property funds, the survey showed.
With growing appetites for property funds in Asia, Morgan Stanley is considering launching products aimed at institutional investors in potentially lucrative emerging markets.
‘We are doing some homework at the moment on domestic Chinese funds and domestic Indian funds. We haven’t decided on anything yet,’ Mr de Geus said.
Source : Business Times – 9 Dec 2009
Jurong West landed housing site draws 32 bids
Top bid of $38.5m for popular plot comes from Kheng Leong unit Chappelis
A LANDED housing site at Jurong West put up for sale by the government drew a whopping 32 bids at the close of the tender yesterday.
The top bid of $38.5 million or $254 per sq ft of land area came from Chappelis, a unit of Wee Cho Yaw’s privately held Kheng Leong.
The huge interest in the 151,759 sq ft site is a stark turnaround from last year. The 99-year leasehold parcel was put up for tender in March 2008 via the government’s confirmed list, but was not awarded because the two bids tendered – $11.8 million and $10.3 million – were considered too low. The top bid then worked out to just $78 psf of land area.
This time around, the site was placed on the reserve list and put up for tender only after an unnamed developer committed to bid at least $15 million, or $99 psf.
‘Now the residential market is performing well, the limited supply of landed sites for development has created substantial demand for this site,’ said Li Hiaw Ho, executive director at CBRE Research.
Market watchers also said the site proved popular because it is small, which means smaller players submitted bids because the amount they would have to fork out would not be too high.
However, there were far more bids than the 10 that most analysts had expected.
‘I’m astounded by the number of bids,’ said Chesterton Suntec International’s research and consultancy director Colin Tan. To meet the strong demand for landed housing plots indicated by this tender, the government might want to release more such plots next year, he added.
Kheng Leong’s bid is just one per cent higher than the next highest bid of $38 million, submitted by Hoi Hup and Malaysia’s Sunway group. But the top bid is 129 per cent higher than the lowest bid of $16.8 million by Boon Keng Development. Boon Keng put in the higher bid of $11.8 million in last year’s tender.
CBRE’s Mr Li said that based on the top bid, terrace houses on the site would be priced around $1.25-1.3 million each. Currently, houses in the nearby Westville and Westwood landed estates are sold in the resale market at $850,000 to $1.1 million each, he pointed out. Another alternative for Kheng Leong would be to build cluster housing.
‘Potential buyers could comprise locals working at manufacturing firms in Jurong and Tuas, as well as academics at nearby Nanyang Technological University,’ Mr Li noted.
The plot is surrounded by other landed estates such as Westwood Park and The Floravale condominium and is near the Pan-Island Expressway.
Source : Business Times – 9 Dec 2009
A LANDED housing site at Jurong West put up for sale by the government drew a whopping 32 bids at the close of the tender yesterday.
The top bid of $38.5 million or $254 per sq ft of land area came from Chappelis, a unit of Wee Cho Yaw’s privately held Kheng Leong.
The huge interest in the 151,759 sq ft site is a stark turnaround from last year. The 99-year leasehold parcel was put up for tender in March 2008 via the government’s confirmed list, but was not awarded because the two bids tendered – $11.8 million and $10.3 million – were considered too low. The top bid then worked out to just $78 psf of land area.
This time around, the site was placed on the reserve list and put up for tender only after an unnamed developer committed to bid at least $15 million, or $99 psf.
‘Now the residential market is performing well, the limited supply of landed sites for development has created substantial demand for this site,’ said Li Hiaw Ho, executive director at CBRE Research.
Market watchers also said the site proved popular because it is small, which means smaller players submitted bids because the amount they would have to fork out would not be too high.
However, there were far more bids than the 10 that most analysts had expected.
‘I’m astounded by the number of bids,’ said Chesterton Suntec International’s research and consultancy director Colin Tan. To meet the strong demand for landed housing plots indicated by this tender, the government might want to release more such plots next year, he added.
Kheng Leong’s bid is just one per cent higher than the next highest bid of $38 million, submitted by Hoi Hup and Malaysia’s Sunway group. But the top bid is 129 per cent higher than the lowest bid of $16.8 million by Boon Keng Development. Boon Keng put in the higher bid of $11.8 million in last year’s tender.
CBRE’s Mr Li said that based on the top bid, terrace houses on the site would be priced around $1.25-1.3 million each. Currently, houses in the nearby Westville and Westwood landed estates are sold in the resale market at $850,000 to $1.1 million each, he pointed out. Another alternative for Kheng Leong would be to build cluster housing.
‘Potential buyers could comprise locals working at manufacturing firms in Jurong and Tuas, as well as academics at nearby Nanyang Technological University,’ Mr Li noted.
The plot is surrounded by other landed estates such as Westwood Park and The Floravale condominium and is near the Pan-Island Expressway.
Source : Business Times – 9 Dec 2009
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