CapitaCommercial Trust (CCT) said on Tuesday almost half of its leases expiring this year have been renewed.

The REIT has also signed on new leases and renewals for an aggregate area of some 336,000 square feet in the first four months of 2009. Key tenants include Legg Mason, BNI, Koufu and parent company, CapitaLand.

It gave the update as ratings agency Moody’s upgraded its outlook. The ratings agency had changed CCT’s rating, saying the move is in response to CCT’s completion of its rights issue.

Moody’s said the move is expected to materially improve CCT’s credit metrics and enhance its financial flexibility.

Source : Channel NewsAsia – 7 Jul 2009

Wee Hur Development has submitted the highest bid of S$22.9 million for an industrial site at Woodlands Avenue 4.

The Urban Redevelopment Authority (URA) has closed the tender on Tuesday for the site after receiving 8 bids in total.

The site spans about 2.5 hectares and has a gross plot ratio of 2.5.

Wee Hur’s bid translates to about S$34 per square foot.

Soilbuild Group put in the second highest bid of S$21 million.

The lowest bid of S$12.5 million came from Precise Development.

The site was offered for sale in May on a 60-year lease.

Property consultancy CB Richard Ellis said the top bid is about 45 per cent higher than the application bid of S$12.5 million.

Executive Director at CBRE Research Li Hiaw Ho said the healthy response to the tender could be a reflection of the expected turnaround for the manufacturing sector.

After six consecutive months of negative figures, the manufacturing output finally recorded positive figures in April and May 2009.

URA said it will decide on the winning bidder after evaluating the offers.

Source : Channel NewsAsia – 7 Jul 2009

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LANDLORDS took a one-two punch in the second quarter, with rents continuing to decline for offices and industrial space as vacancies kept rising.

Rents were under the most pressure in the city-fringe and high-tech sites while more space was vacated, particularly in the core Central Business District (CBD) area.

Consultants DTZ said office rents in Beach Road and North Bridge Road fell 20 per cent to $6.20 per sq ft (psf) per month in the second quarter. This followed a 13 per cent fall in the first quarter.

Rents along the Alexandra Road belt fell 23 per cent to $5 psf a month in the April to June period, compounding a 13 per cent drop in the first quarter.

The decline was driven mainly by competition from a converted state property and high-tech industrial sites in the area.

Generally, rents in the office market have been falling as demand weakens in the face of rising supply. The amount of grade A space, in particular, will double in the next five years.

CBRE said monthly prime office rents fell about 18 per cent to $8.60 psf in the second quarter, after a 18.6 per cent quarter-on-quarter drop in the first quarter.

Grade A office rents are down 17.5 per cent to $10.l5 psf a month. They also fell 18 per cent in the first quarter.

DTZ said Raffles Place office rents are now close to the levels at the end of 2006 and are 49 per cent below the peak in the third quarter last year.

The rental gap between office space in the CBD and that elsewhere has narrowed. Offices in Marina Centre are now 12 per cent cheaper to rent than those of prime space in Raffles Place, compared with a rental gap of 18 per cent at the peak of the market. The gap has closed even more in the Harbourfront area – from 47 per cent at the peak to 35 per cent in the second quarter.

Some firms, particularly those driven to relocate outside the CBD during the 2006-2007 boom, are now likely to return, said DTZ.

Office leasing activity continues to be driven mainly by lease renewals as firms downsize. Take-up has been negative for the past two quarters and is likely to remain so for the rest of the year, said CBRE’s executive director (office services), Mr Moray Armstrong.

‘We are seeing greater incentives including, for instance, capital expenditure contributions to attract or retain quality tenants,’ he said.

The good news is that the rate of rental decline will ease from the dramatic falls seen since last September but demand will still be ’severely constrained’.

Vacancy rates across the island are tipped to be in the double digits in the next few years and leasing deals will stay highly competitive, added Mr Armstrong.

Still, office capital values held firm in the second quarter as improved buying sentiment in the residential sector spread to other sectors, DTZ said.

In the industrial market, the high-tech space segment – this includes business park space that caters to both markets – continued to be the hardest hit and is forecast to remain under pressure, it said.

High-tech industrial rent fell 12.8 per cent – the most in six years – to $3.40 psf in the second quarter. It is down 24.4 per cent from the peak of $4.50 psf in the third quarter last year, said DTZ.

First-storey industrial space slid 6.8 per cent to $2.05 psf a month.

Ms Chua Chor Hoon, DTZ’s head of South-east Asia research, said ample supply will keep the office and industrial markets soft until 2011.

Source : Straits Times – 7 Jul 2009

LOWER occupancy rates and cheaper rents in office buildings around the central business district (CBD) may prompt some firms to move back into the city, property experts said.

In the second quarter, office rentals declined to less than $10 per square foot (psf) per month compared with a whopping $19 psf a month a year ago.

“Companies are beginning to re-look opportunities to go back to the CBD as rents are a lot more affordable than 2007,” said Ms Cheng Siow Ying, DTZ Debenhem Tie Leung executive director of business space. “Some offices which are already fitted out make the sums look good,” she told Today.

DTZ said in a release that “as the gap in rental values between the CBD and CBD fringe office space narrows, some companies, particularly those driven to relocate outside the CBD during the boom times in 2006-2007, are likely to return”.

DTZ added that monthly rents in Raffles Place, the heart of the CBD, fell 19 per cent quarter on quarter to $9.70 psf, close to the levels recorded at the end of 2006.

During the property market boom in 2007, many firms moved out of the CBD area to cheaper locations. For instance, banking group HSBC moved some of its operations to The Comtech, a building in Alexandra.

Meanwhile, property consultant Nicholas Mak believes that among the firms that will likely make a return to the CBD area are “small companies with less than 40 staff, as they are nimble enough to do so without having to take up two floors or more.”

“What we’re seeing now is a flight to quality,” said Mr Mak. “Generally, six months before the lease expires, people will be looking around and checking to see if it’s worthwhile to move. They’ve got to consider relocation and renovation costs, and it must make sense to stay there for at least two cycles, or six years. Moving again after three years doesn’t make sense.”

At the same time, property consultants have also reported increased enquiries about office leasing islandwide in the second quarter compared with the first. There has also been intense competition between landlords engaged in lease restructuring, too, they added.

In a separate report, property consulting firm CB Richard Ellis said Grade A office vacancy rose 3.6 per cent in the second quarter, up from 2.9 per cent in the previous quarter.

Still, property consultants expect the office rental market to remain soft as vacancies are expected to rise when developments including Marina Bay Financial Centre, 71 Robinson Road and 50 Collyer Quay are completed.

Source : Today – 7 Jul 2009

DTZ notes decline rate eased slightly after Q1’s plunge

OFFICE rents in Raffles Place fell 19 per cent in the second quarter of this year, after sinking 25 per cent in Q1, according to a new report from DTZ.

The average monthly gross rent for prime office space in Raffles Place slipped to $9.70 per sq ft per month (psf pm) in Q2. The figure has now fallen close to the level at end-2006 – and is 49 per cent below the Q3 2008 peak.

However, DTZ notes that the rate of decline eased slightly in Q2 2009, after a deep plunge in Q1.

Research from CB Richard Ellis (CBRE) shows the same trend. Prime office rents averaged $8.60 psf pm in Q2 – an 18.2 per cent quarter-on-quarter fall. This was a slight moderation from the 18.6 per cent drop in Q1.

‘While office rents fell for the third consecutive quarter, the rate of decline showed signs of easing as sentiment improved and the economy stabilised,’ CBRE said.

But DTZ says that office rents on the CBD fringe and in decentralised areas fell faster in Q2 than in Q1. The firm’s data shows rents in Beach Road/North Bridge Road slid 20 per cent to $6.20 psf pm in Q2, after a 13 per cent fall in Q1.

Along the Alexandra belt, competition from converted state property and hi-tech industrial property also led to a bigger decline in office rents in Q2 than in Q1. Rents there fell 23 per cent to $5 psf pm, after dropping 13 per cent in Q1.

With CBD office rents falling, the rental gap between office space in the CBD and outside it has narrowed.

In Q2, office rents in Marina Centre were 12 per cent lower than those for prime offices in Raffles Place, compared with an 18 per cent gap during the peak in Q3 2008.

In the Harbourfront area, the gap closed even more – from 47 per cent in Q3 2008 to 35 per cent in Q2 2009. As the gap in rents between CBD and CBD fringe narrows, some companies driven to relocate outside the CBD during the boom years are likely to return, DTZ reckons.

Occupancies were hit further in Q2, although at a slower rate than in Q1. DTZ says the island-wide average office occupancy rate eased 0.9 of a percentage point to 92.8 per cent, lower than the 1.9 percentage point contraction in Q1. Average occupancy in Raffles Place fell 1.1 percentage points to 91.8 per cent in Q2, lower than the 2.7 per cent drop in Q1. Among the micro markets, offices in Orchard Road saw the biggest drop in occupancy. The rate slid 2.8 percentage points to 91.5 per cent as more shadow space became available there.

But CBRE and DTZ say leasing enquiries are starting to pick up. ‘It is likely to be a busy H2 for the office leasing market,’ said CBRE’s executive director for office services Moray Armstrong.

‘New lease transaction volumes will be higher, but the focus is likely to remain on lower-cost and better-value options. The best occupier deals may well emerge in the next six to 12 months before market recovery is at hand.’

But take-up is likely to remain in negative territory for the rest of 2009 and occupancies are expected to dip further, according to CBRE and DTZ. The office market is expected to stay soft until 2011, says Chua Chor Hoon, head of DTZ’s Southeast Asia research.

‘A large supply of space overhangs the office market over the next few years, which will delay the recovery of the sector even though the economy is expected to recover by 2010,’ she said.

Source : Business Times – 7 Jul 2009

THE Singapore economy should recover in year-on-year terms by the fourth quarter and grow 5.5 per cent in 2010, according to economists at Barclays Capital.

Peter Redward and Leong Wai Ho say that Q4 GDP could increase 2.2 per cent from last year – after five quarters of declines – boosted by the opening of three new biologics plants and the anticipated opening of Shell’s US$3 billion petrochemical cracker that quarter.

‘The downside risks to GDP are decreasing,’ Mr Leong told reporters yesterday. ‘We are seeing a more lasting bounce in industrial production in Singapore.’

In quarter-on-quarter terms, the April-June quarter could show a sharp improvement, he said. Annualised seasonally adjusted growth could hit 17 per cent, compared with Q1’s 14.6 per cent fall. ‘Recent remarks by officials suggest that lay-offs were down sharply in May and June,’ he added.

GDP forecasts for 2009 remain at minus-4 per cent, but 2010 growth has been revised upwards to 5.5 per cent, Mr Leong said.

‘This revision reflects the improved outlook for Singapore’s key trading partners – most notably China and other Asian economies.’

The revised forecasts signal that the present recession could be shorter – if deeper – than that in 2001-2003. Barclays said that the output gap – the difference between actual growth and long-term trend growth – could close within 10 quarters and trough at 9.2 per cent of potential GDP, compared with 18 quarters and a trough of 6.3 per cent in 2001-2003.

As growth risks fade, the Monetary Authority of Singapore is likely to maintain its neutral policy stance at its next meeting in October. A resurgence of inflation will favour the Sing dollar, Mr Leong said.

Mr Redward said that Asian currencies in general are expected to benefit from fund flows from the West.

Interest rates in the region are above these for US-dollar deposits, which will encourage the appreciation of Asian currencies, as well as equity markets and other asset classes, he said.

Economic growth in Asia will be underpinned by re-stocking of inventory, massive fiscal and monetary stimulus programmes and recovering US manufacturing.

As a result, growth will be ‘robust’ – 4.8 per cent this year in Asia, and 7.7 per cent next year, compared with previous estimates of 3.8 per cent and 6.6 per cent in March.

Strong growth will also mean disinflation will likely prove temporary. ‘Regional inflation is likely to get back to one-3 per cent trend rate by mid-2010,’ Mr Redward said.

With recovery more rapid than anticipated, fiscal stimulus is looking more and more pro-cyclical, he noted.

Mr Leong said that in Singapore, official attention appears to be turning to mid-term ‘more fundamental competitiveness issues’, and a supplementary ‘recession’ budget here is looking less and less likely.

Source : Business Times – 7 Jul 2009

DEMAND for private industrial space continued to shrink in the second quarter of this year, says property firm DTZ.

And private industrial rents – in decline since Q4 2008 – registered steeper falls in Q2 2009 than in the two preceding quarters.

Average monthly gross rent fell 6.8 per cent for first-storey private industrial space and 8.1 per cent for upper-storey space in Q2 this year. This was the sharpest contraction since Q3 2003, when rents tumbled 8.3 per cent and 11.1 per cent respectively for first and upper-storey space.

Compared with the peak in Q3 2008, average rents for first-storey and upper-storey private conventional industrial space have fallen 12.8 per cent and 17.1 per cent.

Hi-tech industrial properties were again hit harder than other types of industrial properties space in Q2.

Amid lower demand in the industrial and office markets, hi-tech industrial rents posted their biggest contraction since Q2 2003, falling 12.8 per cent in Q2 2009 to 24.4 per cent below the peak in Q3 2008. Hi-tech industrial properties include business park and science park space.

New private industrial space of 30.6 million sq ft is expected to be completed between Q2 2009 and 2013. According to Urban Redevelopment Authority statistics, 24.6 million sq ft – or 80 per cent of the 30.6 million sq ft of private industrial space in the pipeline – is already under construction, with most scheduled for completion by 2011.

‘2009 will see substantial new supply of 16.9 million sq ft private industrial space, which is 46 per cent above average annual demand of 11.6 million sq ft per annum during the past five years,’ said Chua Chor Hoon, DTZ’s head of South-east Asia research. ‘The outlook for the industrial market remains weak through 2009 to 2011 due to demand-supply imbalances and weakness in the office sector.’

The hi-tech segment is likely to be most affected, with 5.1 million sq ft of private business park space in the pipeline, on top of 8.6 million sq ft of existing stock, Ms Chua said.

Source : Business Times – 7 Jul 2009

VAN der Horst Energy’s (VDHE) expansion strategy to boost its logistics capabilities took a concrete step forward yesterday, with the ground-breaking for its new warehouse and office complex.

At the ground-breaking ceremony for the complex at Pioneer Road, chief executive Peter Cheng emphasised his company’s desire to ‘expand…(and) expand quickly’ in order to ‘counter the (economic) crisis’.

With an expected investment cost of more than $28 million, the facility will be built on a site area of 18,653 sq metres, with a total gross floor area of 26,112 sq m. It will also give VDHE an additional 18,000 sq m of storage space.

A seven-storey office complex will house VDHE’s new headquarters, while a four-storey warehouse will serve the needs of the company’s subsidiary, GKE Warehousing and Logistics.

The facility will also ‘consolidate all the subsidiaries of Van der Horst…under one roof’ and represents an ‘expansion and enhancement over (VDH’s) current logistics capabilities’. Construction is expected to be completed by September 2010.

Speaking at the ceremony, Minister of State for Trade & Industry and Manpower, Lee Yi Shyan praised VDHE’s ‘eco-friendly’ plans for an underground rainwater tank, extensive LED lighting, and solar panelling in the building.

If realised, the proposed 5,000 sq m of solar panels will be the largest solar system installation in Singapore.

VDHE and GKE’s efforts in what Mr Cheng calls the ‘niche logistics market’ are indicative of the strengths of Singapore as a logistics hub.

Mr Lee identified the country’s infrastructure, location, and competitive advantages as key attractions for manufacturers to set up logistics bases here. He also highlighted ‘a range of capability schemes’ that were available to logistics companies, such as Spring Singapore’s Logistics Capability Development Programme.

Separately, VDHE said yesterday that the group has, through a married deal, acquired a 9.51 per cent stake in Novena Holdings for $3.2 million.

Source : Business Times – 7 Jul 2009

Plunge in revaluation gains drags down profit even with higher rental income

MAPLETREE Investments saw net profit plunge to $210.3 million for FY 008 ended March 31, 2009 from $1.04 billion a year earlier, on a sharp fall in revaluation gains.

The company, which is fully owned by Temasek Holdings, said in its latest annual report that revaluation gains from investment properties fell from $1.09 billion in FY 2007 to $36.1 million in FY 2008.

This dragged profit down even though revenue climbed on the back of higher rental income. Total revenue rose 21.7 per cent to $444.9 million, from $365.6 million in FY 2007. ‘The higher rental revenue was contributed mainly by improved occupancy and rental rates in Singapore as a result of pro-active asset management initiatives,’ Mapletree said.

The company gets 73 per cent of its income from rents, even though it has been working to diversify its revenue base in recent years.

Mapletree said it saw ‘healthy’ rental reversions at its properties in FY 2008. The occupancy rate also grew to 98 per cent, from 95 per cent the year before. The focus on diversification meant that fee income, which made up 7 per cent of revenue in FY 2007, grew to contribute 16 per cent of revenue in 2008.

Recurrent management fee income from its listed Mapletree Logistics Trust and two private real estate funds launched during the year – Mapletree India China Fund and Mapletree Industrial Trust – drove a 160 per cent jump in fee income to $72.6 million.

Mapletree has also diversified in another way – by increasing its exposure to neighbouring economies. In FY 2008, 74 per cent of its real estate asset base was in Singapore. In contrast, 99 per cent of assets were located here in 2004.

Outside Singapore, Mapletree has a presence in Hong Kong, Indonesia, Malaysia, China, Japan and elsewhere.

It grew its owned and managed real estate assets to $11.8 billion in FY 2008, from $8.9 billion in FY 2007, was due to a $400 million increase in owned assets and a $2.5 billion increase in assets under management. The increase in owned assets resulted from the completion of Merrill Lynch Harbourfront in Singapore, among other things.

Mapletree chairman Edmund Cheng said in his chairman’s address that FY 2009 looks challenging.

‘However, the group is financially strong, has a good-quality diversified earnings base and is uniquely positioned to capitalise on any opportunity that may arise,’ he said. ‘We have the people, assets, experience and drive to emerge from this global crisis stronger than ever.’

Source : Business Times – 7 Jul 2009

TAN Chong International yesterday officially opened its $40 million TC Nissan Hub – a four-storey building for new car storage, inspection and delivery, and the first in the auto sector here to use radio frequency identification (RFID).

When cars arrive from Japan, they are taken to the 400,000 sq ft hub at Sixth Lok Yang Road where they are tagged and stored in a high-tech 3×3 modular automated parking lot.

With RFID, each car can be tracked during the pre-delivery process up to the point of delivery. Up to 900 cars can be stored using 110 automated parking modules.

The parking system, developed in Japan and made in China, uses software programmed in Singapore, says Tan Chong International (TCIL) managing director Joseph Ong.

‘The system maximises the use of storage space and minimises the risk of cars being damaged during storage and retrieval,’ he said. ‘Vehicle identification and retrieval is shortened from an average of 24 hours to two hours.’

More importantly for new Nissan owners, TC Nissan Hub cuts the mileage on the odometer to less than 5 km – from about 50 km previously. Less fuel is wasted and pollution is minimised.

Before the hub started operating in April, new cars were handed over to customers at Tan Chong’s various showrooms.

Now they are delivered in a spacious air-conditioned showroom with 12 bays and an exhaust-extraction system.

Tan Chong has represented Nissan here and in Malaysia since 1957. The Hong Kong-listed company started building its new hub in 2007. Besides car storage and pre-delivery functions, the hub houses a service centre and spare parts warehouse.

The hub was officially opened by Acting Minister for Information, Communications and the Arts Lui Tuck Yew.

TCIL’s ‘latest investment demonstrates a novel use of RFID technology in reducing fuel consumption and increasing efficiency in the auto industry, thereby contributing to enhanced productivity, cost efficiency and service standards’, he said.

The project is also a good example of local RFID technology, he said. The active RFID devices were manufactured and provided by Singaporean companies.

‘Over the past year, Singapore’s infocomm sector has seen positive revenue growth of 12.4 per cent,’ he said.

Source : Business Times – 7 Jul 2009

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Property consultancy firm CB Richard Ellis (CBRE) has said the fall in office rents is showing signs of easing, thanks to improved sentiment and stabilisation of Singapore’s economy.

According to CBRE, monthly prime office rents averaged S$8.60 per square foot in the second quarter, representing an 18.2 per cent fall quarter-on-quarter. This was slightly lower than the 18.6 per cent quarter-on-quarter decline seen in the first quarter of the year.

Similarly, monthly Grade A rents registered a 17.5 per cent quarter-on-quarter decline to average S$10.15 per square foot. That was also lower than the 18 per cent drop recorded between January and March.

Moray Armstrong, CBRE’s Executive Director of Office Services, said: “Whilst the economy is still technically in a recession, the office leasing market was far more active in the second quarter, particularly in the month of June.

“We are seeing greater incentives – including, for instance, capital expenditure contributions to attract or retain quality tenants. Tenants that committed space this quarter included those from the insurance and healthcare sectors, as well as government-related companies.”

CBRE said occupancy levels is expected to continue its downward trend and office space take-up rate will most likely remain negative for the rest of this year.

This is largely due to the residual effect from previous downsizing exercises and an addition of at least 1.9 million square feet of office space by the end of this year.

Looking ahead, it expects islandwide vacancy rates to remain above double-digits for the next few years.

An addition of 8.3 million square feet of new office space is expected between the second quarter of 2009 to 2013, resulting in an excess supply in the market.

CBRE said Grade A office rents will face the greatest pressure, with the supply doubling its current available office space to 13.48 million square feet.

Source : Channel NewsAsia – 6 Jul 2009

SINGAPORE : The Sixth Avenue MRT station will be the first to be located in a private residential estate once it is ready in 2015.

Residents in the area welcome the new station and hope it will lead to fewer traffic jams in the area.

The elderly and school-goers are expected to benefit from the convenience of having an MRT station close by. Nearby shops are also optimistic that the station will help bring in more customers.

However, some residents are concerned that it may lead to a surge in human traffic with more people flocking to use the station.

Real estate agents said the new station will not benefit the prices and rental rates of landed properties in the area.

This is because the owners and tenants of such properties tend to be car owners and do not use public transport such as the MRT.

However, they said it could lead to a 5-10 per cent increase in the prices of condominiums located nearby.

Source : Channel NewsAsia – 6 Jul 2009

Singapore’s property sales increased in the second quarter, according to a report by property consulting firm DTZ released today.

Homes in the city’s so-called core central area, known as districts nine, 10 and 11, rose 11.3% to $1,247 per square foot, DTZ said.

Last quarter, prices fell 3.7%. Outside of those districts, average home prices increased 3.2% to $573 per square foot in the second quarter, DTZ said.

“After the flurry of mass-market launches in the first quarter, buying spilled onto the mid-tier and upper-end segments,” the property company said.

Singapore’s government expects the economy may contract as much as 9% this year as the global recession saps demand for the island’s exports. Government statistics released yesterday showed a 5.9% drop in second-quarter private home prices, the fourth straight quarter of decline.

Source : The Edge – 4 Jul 2009

Property consultancy DTZ said office and industrial rents here continued their downward trend in the second quarter this year.

For the office market, average monthly gross rents of prime offices in Raffles Place fell by 19 per cent to S$9.70 per square foot, compared to a 25 per cent fall in the previous quarter.

Office rents in the Central Business District (CBD) fringe and de-centralised areas suffered a larger fall compared to the previous quarter.

The rent in Beach Road and North Bridge Road slid by 20 per cent to S$6.20 per square foot per month, worse than the previous quarter’s 13 per cent fall.

With office rents – especially those in the CBD – falling substantially, the rental gap between those in the CBD and those outside has narrowed.

Office rents in Marina Centre were 14 per cent lower than those in Raffles Place, less than the 23 per cent gap recorded during the peak last year.

Turning to the industrial market, DTZ said average monthly gross rents fell by 6.8 per cent for first-storey private industrial space and by 8.1 per cent for upper-storey space. This is the largest rental contraction since the third quarter in 2003.

Due to the large supply overhang in the office and industrial markets, DTZ expects the two sectors to remain soft until 2011.

Source : Channel NewsAsia – 6 Jul 2009

DESPITE the current global economic downturn, home buyers today are still spoilt for choice when it comes to taking a loan from financial institutions here.

Since January 2003, buyers of Housing and Development Board (HDB) flats no longer have to take a loan from the Government-backed provider of more than 82 per cent of Singapore’s homes. And since then, the HDB has stopped giving out what it terms “market rate” mortgage loans.

Instead of getting financing from the HDB, home buyers can obtain cheaper loans from a number of financial institutions who have since entered the HDB mortgage loan market.

Promotional rates from these institutions range from 1.5 per cent at Standard Chartered Bank for the first year to United Overseas Bank’s (UOB) 3.15 per cent for the first two years.

Yet despite the higher rate charged by the HDB there is still a significant number of HDB home buyers who take housing loans from the HDB at the “concessionary” rate of 2.6 per cent per annum which is pegged at 0.1 percentage point above the Central Provident Fund (CPF) rate. This, at a time when deposit rates are almost next to nothing and when the three-month Singapore Inter Bank Offered Rate (Sibor) is just 0.7 per cent.

Those with outstanding loans at the HDB’s market interest rate are charged 3.82 per cent per annum. This is based on the average of the non-promotional HDB housing loan rates of our three local banks – DBS (under its POSB arm), Oversea-Chinese Banking Corporation (OCBC) and UOB. This is reviewed on the 15th of every month.

For the financial year which ended March 30, 2008, some $2.36 billion was drawn in mortgage loans from the HDB, somewhat less than the $2.57 billion drawn in the previous year.

But looking at the relatively piddling returns the HDB makes on its mortgage financing scheme, one wonders whether the HDB should still be in the housing loan market at all.

For the financial year ended March 2008, the HDB made just $37 million in profits compared with its total income of just over $3 billion and expenditure of $4.25 billion. This however, was up from the measly $1 million it eked out in the previous year, compared with the $51 million it lost the year before that.

Even the term “concessionary” for its present scheme appears to be a misnomer – where is the concession compared with the promotional rates of the other financial institutions and Sibor rates? And even then, this concession is given to only those who meet certain conditions set by the HDB.

Perhaps many home buyers are afraid that should interest rates become too volatile and they start rising rapidly (and this has happened many times before), they cannot go back to the HDB. Although it allows existing HDB mortgagers to transfer their remaining loan amounts to other financial institutions for refinancing, those who do so “will not be allowed to refinance that loan with HDB subsequently”.

Many perhaps may have taken National Development Minister Mah Bow Tan to heart when he cautioned just after the HDB mortgage market was opened to the private sector: “Buying a flat is a long-term commitment. It’s not something that you decide because you can save a few dollars in the first or second year … Bear in mind that those rates (private sector’s) are valid only for the first two years.”

But that does not mean that HDB rates remain constant during the loan period. They too have to move up and down with the rest of the market, or the HDB could earn even less than what it does now.

Perhaps like other developers, the HDB should stick to its main purpose of providing affordable homes for the vast majority of Singaporeans who are not able to buy private property.

The housing needs of the most needy should of course continue to be taken care of. It may not be worth the effort and the criticism it draws from providing home loans.

Source : Today – 6 Jul 2009

THE new malls taking shape in Singapore are offering lower rents to lure tenants in trying times but existing complexes are demanding higher renewal rates, said a senior executive of retail giant RSH Group.

Chief operating officer Kesri Kapur pointed to a paradox in the local market: Most retailers are grappling with falling profits, yet most lease renewals are done at higher levels.

One suburban mall is even asking RSH for 20per cent more to renew the lease of a shop of less than 3,000 sq ft.

‘We are moving out of that particular location. Obviously, business is not what we would have expected when we signed the lease,’ said Mr Kapur.

‘This is one example where we have taken a decision… There are a couple of other locations that we are reviewing.’

Mr Kapur conceded that landlords may have lowered their expectations of how much more they might get in rent renewals, but they are still renewing leases at a higher level.

‘Whenever we renew rents in Orchard Road, the rents have not declined,’ he said. ‘For the newer malls, for those who have not signed before December, their offers would probably be better.’

A typical retail lease lasts three years so a higher rent now means one above the level committed three years ago.

Retail rents have indeed fallen from the peak rates of last year, but they may not all have dropped to levels done three years ago.

According to consultancy DTZ, rents of prime retail space in Orchard Road, Scotts Road and other city areas have fallen by more than 6per cent from last year’s peak and are close to 2006 levels.

But suburban rents have fallen by only 2.1per cent and are at 2007 levels.

Property experts said the rental declines would be more evident in malls that still have space to lease.

These include new complexes, such as those in the Orchard strip, as well as nearby existing malls that may have lost some tenants to the recent arrivals.

DTZ’s associate director of retail, Ms Anna Lee, said in a report on Friday that many retailers and food and beverage (F&B) operators have delayed expansion plans or changed their business strategies under the pressure of the economic downturn.

‘Some F&B operators have or are considering moving to business parks, where rents are much lower and the worker catchment is considerable,’ she said.

More retailers are also feeling the pressure of having to move out of unprofitable locations, said an industry source.

The Singapore Retailers Association had earlier called for landlords to lower rents, saying many firms will go under if something is not done.

Executive director Lau Chuen Wei said the association started its ‘crusade’ to highlight to landlords that their high rents may cause the closure of some retail stores – and cost retail jobs.

They have since seen indications that some landlords are more open to exploring creative ways of collaboration, though most would not reduce rents.

‘However, we also hear that new sign-ups have seen more success in achieving rents that are lower than initially offered,’ she said.

Mr Kapur said he anticipates consumer demand to be challenging in the next 12 to 18 months.

‘Everybody is facing challenges now. What is important is whether you can hold hands and work together.’

Source : Straits Times – 6 Jul 2009

HPL Hotels & Resorts, the hotel arm of Hotel Properties Ltd (HPL), is spending $13 million to renovate and refurbish its four-star Concorde Hotel Singapore.

The work has been taking place in phases to ensure business continuity and is expected to finish early next year, general manager Andrew Khoo told BT. Response to the overhaul has been good, he said. ‘Regular customers who have stayed with us under Le Meridien have said very positive things. They like what they see.’

The hotel was previously managed under the Le Meridien brand. When the contract ended in September last year, HPL Hotels & Resorts took over and rebranded it Concorde Singapore.

Meanwhile, as the travel and tourism industries deal with the fallout from the H1N1 flu outbreak, the hotel has received emails asking whether it is safe to travel to Singapore, but there are few cancellations, Mr Khoo said. Most countries have reacted pro-actively to the outbreak, he pointed out. ‘People are still travelling.’

But the hotel, like most, is feeling the impact of the economic downturn. Occupancy has dropped about 15 percentage points this year from an average of 70 per cent, and room rates have come down 27 per cent. Rates start around $198++.

Bookings also tend to be made with shorter lead-time, such as two or three days, versus two to three weeks previously, Mr Khoo said.

Still, events such as CommunicAsia and Water Week have helped bolster occupancy. The hotel is managing costs by negotiating terms with suppliers, rather than cutting jobs or wages. Retrenchment benefits no one, said Mr Khoo. ‘It takes one year to train someone. It’s cutting your nose off to spite your face.’

Concorde Singapore is HPL Hotels & Resorts’ fourth Concorde hotel – the other three are in Malaysia. HPL Hotels & Resorts is looking to expand the brand in other markets, such as Thailand, Indonesia and India.

Source : Business Times – 6 Jul 2009

FRASERS Commercial Trust (FCOT) last week announced a series of bold steps to recapitalise the group in a bid to address the refinancing concerns raised by investors and analysts.

But while FCOT unitholders will no doubt be following the developments with interest, shareholders of parent Fraser and Neave (F&N) should also take note as the recapitalisation exercise will affect their company directly as well.

FCOT, which has a $1.5 billion property portfolio spanning Singapore, Australia and Japan, plans to raise $213.9 million in a three-for-one rights issue.

It will also acquire Alexandra Technopark from sponsor Frasers Centrepoint (F&N’s property arm) for $342.5 million. FCOT will pay for the purchase by issuing convertible perpetual preferred units (CPPUs) – a financial instrument which to date has only been used by banks in the Singapore market.

FCOT announced as well on the same day that it has secured financing for $675 million from a consortium of lenders. The offers of finance are conditional upon the recapitalisation exercise, which now has to be approved by shareholders.

There can be little argument that the outcome of the proposed recapitalisation exercise is something to be desired. The rights issue and acquisition will see FCOT’s gearing fall from 58.3 per cent at end-Q1 2009 to 38.5 per cent.

And upon completion of the rights issue, the acquisition and issue of the CPPUs, and the refinancing exercise, FCOT will not have any debt due until 2012.

The trust’s gearing hit 58.3 per cent at the end of Q1 2009 as it booked a massive revaluation deficit. And analysts say that more write-downs are likely in the second half of 2009. If the problem is not addressed now, this could push FCOT’s gearing to well beyond 70 per cent – past the 60 per cent limit mandated by the Monetary Authority of Singapore (MAS).

While the real estate investment trust (Reit) will still technically not breach MAS guidelines (as the expected rise in gearing will be driven by the deterioration of the asset base rather than by an increase in gross borrowings), the high gearing would have made it very hard for FCOT to refinance its loans – and downright impossible to refinance at a decent interest rate. The fact that the $675 million refinancing arrangement is dependent on the recapitalisation exercise says a lot.

Less easy to swallow is the three-for-one dilution caused by the rights issue. Once the rights issue is completed, FCOT will have some three billion units in the market. The trust will consider consolidating the units in future, management said.

But FCOT unitholders can at least draw comfort from the fact that parent F&N is going all out to show support for the Reit.

Frasers Centrepoint (which has a deemed stake of 22.2 per cent in FCOT now) will take up its entire pro-rata entitlement of the rights units and is also willing to subscribe for up to 32.7 per cent of the total number of rights units.

And in addition to accepting payment for Alexandra Technopark through the CPPUs – which entitles holders to a distribution of 5.5 per cent a year from the Reit – F&N will also undertake the master lease for the 99-year leasehold property for five years and give FCOT an annual rental guarantee of $22 million, which works out to a 6.4 per cent yield.

This makes Alexandra Technopark the property with the highest yield among FCOT’s Singapore-based assets. FCOT’s Singapore properties have a yield of about 4 per cent currently.

However, what’s good for FCOT unitholders may not be so good for F&N shareholders. First, analysts say that F&N could have gotten a better price for Alexandra Technopark if it had sold the property to a third party buyer. Having said that, there are few benchmarks for comparison as there have not been many large investment transactions in Singapore’s property market so far this year.

The rental guarantee of $22 million that F&N is giving is also more than what the group will receive from all the CPPUs that it got in return for the property (less than $19 million). The company’s deputy group financial controller Hui Choon Kit said that F&N is selling the property to FCOT to support the trust and to strengthen its capital structure.

F&N bought 17.7 per cent of Allco Commercial Reit and 100 per cent of the Reit’s manager for $180 million in July 2008. The Reit was renamed Frasers Commercial Trust, and the plan was to inject Alexandra Technopark and two other properties into the portfolio. While F&N has done this now, it may not be on the terms envisaged by some of its own shareholders, and it may face questions on whether the conglomerate is supporting FCOT at the expense of its own interests.

Asked if F&N regretted buying Allco in the first place, Mr Hui admitted that ‘it has been a lot more challenging than we had anticipated’. But now, the issues have been resolved and F&N has put the Reit in a stronger position, he said. It remains to be seen if F&N shareholders buy that argument.

Source : Business Times – 6 Jul 2009

MR Daniel Cheong, 37, has an optical shop at Marine Parade Central, rented from the Housing Development Board. But he is a landlord too. For the past two years, he has been leasing the space in front of his store to a woman selling mobile phones and accessories.

Since October 2007, he has paid about $100 a month to the town council for that space, marked out as a red box, and lets it out for as much as $1,500.

Mr Cheong says the money helps pay for his own rent and utilities bill, which can go up to $12,000 a month.

His tenant, who wanted to be known only as Lynn, had her own shop nearby until the rent there bled her dry. Being able to keep her business at a fraction of its original cost has been a life-saver, says the 32-year-old. ‘As long as I don’t affect his business, I think it’s fine.’

Mr Cheong said: ‘We need only the shop space, not the outside. We’re not earning much renting out the outdoor area, we’re just trying to stay afloat and make ends meet since costs are so high.’

Heartlanders will be familiar with the red or yellow boxes that line the walkways in neighbourhood centres. Of the 20 shops in Mr Cheong’s neighbourhood, more than half have leased their outdoor space, for about $1,500 a month.

Some shops can charge as high as $3,000 a month because they front the hawker centre, for example. Not bad for a space measuring just 2m by 1m.

The result: Makeshift stalls dot neighbourhoods, selling everything from baby clothes and lingerie, to handbags and toiletries. The most familiar sight is counters selling cellphones and accessories.

But what used to be a good thing for shopkeepers has become more of a lifebelt. The recession has hit trade and shops need these tenants to help get by, they say.

However, even that source of income is hard to come by in some places: A shopkeeper in Jurong West Avenue1 only recently managed to procure a tenant selling wallets and clothes after a long dry spell. The 50-year-old, who runs a store selling religious artefacts, said in Mandarin: ‘Times are bad, so there isn’t high demand anymore.’

Also, since a clampdown on cluttering shophouse walkways, tenants are finding it hard to store their wares after hours – unless the shopowner has space indoors.

One Ghim Moh Road shopowner who sells electrical appliances thinks such stalls bring in more than just help with the rent: variety brings in the crowds.

He has 12 regular tenants, mainly retirees and housewives whose husbands have been retrenched from work. They book fixed days to come and hawk wares like clothing, lingerie and CDs.

On a few occasions, he has let the space to salesmen looking to hawk wares such as hotplates. He has even had requests from durian sellers.

‘The products I sell can’t compete with Courts and Best Denki. Besides, this estate has more elderly people. How can I make money if I don’t attract crowds?’

For some tenants, the stalls are a good way to pass the day. Madam Ti, for example, has been running a tailoring counter in the display area outside a pet shop at Marine Parade Central for the past five years. All she has is a table for her sewing machine, a counter for all the clothes and a plastic chair to sit on. ‘Business is all right and I have my regulars. It helps me pass the time,’ said the seamstress, who is in her early 60s.

But the recession has taken its toll on tenants too. Despite cheaper rent and more flexible hours – many work only half a day – people are spending less.

An Ang Mo Kio Central tenant who sells T-shirts said she used to pull in as much as $2,000 on a good day last year. Now, she barely makes a quarter of that.

There are some rules landlords have to abide by, and a particular one has them riled: Their tenants must be selling more or less the same stuff as the main shop.

Said Mr Cheong: ‘It’s a rule that really inconveniences people, and it takes away whatever little we are doing to help our businesses survive.’

A Ghim Moh shopowner selling garments said it was not practical to lease the space to a competitor. ‘If they were selling the same things as me, I wouldn’t allow it. It would hurt my business because they can afford to sell cheaper.’

Over at Tampines Central, for example, about a third of the tenants do not sell items similar to their landlords.

The Ghim Moh shopkeeper who sells electrical appliances has been fined three times, paying $300 in all for this, but remains adamant it was worth his while.

But there are shopowners wary of flouting the rules. A shopkeeper selling women’s clothing in Bukit Batok Central has repeatedly refused offers to lease her outdoor display area to people wanting to sell phones. One deterrent: The office of Jurong Town Council which conducts regular patrols is just a stone’s throw away.

Jurong West textile merchant Mr Ng, 52, has been saying no to prospective tenants too. ‘I know it’s against the by-laws and since officers patrol regularly, I don’t want to get into trouble.’

Checks are carried out by Certis Cisco officers or officers from the various town councils. While most inspections are focused on ensuring cluttered walkways do not breach fire safety regulations, other violations, such as leasing space to unrelated trades, are also picked up.

Residents, too, alert the councils if they see displays obstructing walkways.

Shopowners who have to deal with the keener competition are not too flustered.

Said a garment shopkeeper in Marine Parade: ‘We have to make sure we appeal to a different market by selling clothes of a higher quality and bring in things they don’t have, so we have more variety.’

Said Mr Harris Cheong, 28, of the phone counters sprouting up next to his phone store in Hougang: ‘We’re targeting different markets. It’s comparable between a hawker centre and a restaurant. Our customers trust we are not a ‘hit and run’ store. The only thing we lose out on in terms of pricing are the accessories. Other than that, we don’t suffer much.’

While landlord and tenant have a mutually rewarding relationship, the real beneficiaries of the red box phenomenon are the neighbourhood residents who now have cheaper choices and variety.

Student Gareth Goh, 21, who lives in Toa Payoh, said: ‘The shops add to the atmosphere…It feels more Singaporean.’

Taxi driver Tan Eng Wah, 36, agreed, adding: ‘I’ll go to a proper shop if I need something of higher quality.’

There are some rules landlords have to abide by, and one particular one has them riled: Their tenants must be selling more or less the same stuff as the main shop.

Source : Straits Times – 6 Jul 2009

The stream of new property projects being launched continues to be strong. Another mass-market development, Oasis@Elias, has officially hit the market, after a quiet round of sales.

The 388-unit condominium near Pasir Ris beach was launched yesterday after it sold 71 units – or half of the units previewed – at $670 per sq ft on average at last week’s preview.

CB Richard Ellis, which is marketing the condo, said units with a sea view were popular. Some 80 per cent of the buyers were HDB upgraders. The units are fairly large, ranging in size from 947 sq ft to 2,659 sq ft.

Generally, developers are rushing new launches to capitalise on the strong buying wave, particularly for affordably priced mass-market developments.

Releases in the past three weeks include Vista Residences in Jalan Datoh, Residences @ Killiney and the already sold-out 8@Woodleigh.

Developments that are available for sale this month include Ascentia Sky, next to Metropolitan condominium in Alexandra Road, Silversea in Amber Road, The Gale in Loyang and Sophia Residence on the former Sophia Court site near Selegie Road. An 85-unit development in Balmoral Road (Volari) is also coming to market soon.

The 373-unit, 99-year leasehold Ascentia Sky is expected to hold a public preview in the middle of the month, said a Wing Tai spokesman. The indicative price before the preview discount is $1,300 psf to $1,500 psf, he said.

Wing Tai and Greatearth Developments had bought the Ascentia Sky site for a bullish $639 per sq ft per plot ratio in late 2007. Property analysts had said then that the land price would translate into an estimated breakeven price of $1,000 psf to $1,100 psf for the future condo, and the units there should sell for at least $1,100 psf to $1,200 psf.

Projects such as Ascentia Sky, Silversea and Sophia Residence have been lined up for launch for some time now.

In late 2007, developer GuocoLand had said it hoped to push out the 272-unit Sophia Residence in the third quarter of last year. But that did not happen.

As for the 383-unit Silversea, there was already talk as early as late 2007 that it would be launched soon. It did go out to market for a while last September, selling several units at a median price of $1,400 psf and three at a median level of $1,242 psf in October. Because of the poor market conditions, sales were then stopped.

Developers are a bit more upbeat now that buyers, including speculators, have been coming out in droves, though they remain fairly cautious and price-sensitive.

Still, buyers should exercise prudence in the light of market uncertainty, advised property experts. Ms Chua Chor Hoon, head of DTZ South-east Asia research, said in a report last Thursday that the rise in prices in the second quarter is likely a ‘temporary blip’ as it is largely due to the fear among buyers of missing out on the bottom, pent-up demand and low interest rates.

Average resale prices have fallen by only 10 per cent to 35 per cent from the fourth quarter of 2007 to the first quarter of this year, compared with a larger fall of 35 per cent to 45 per cent during the Asian financial crisis, she said.

‘Without a clear recovery in sight for the United States and Singapore economies, the price recovery in the second quarter is not sustainable and sales volume would be affected if prices continue to rise,’ said Ms Chua.

Ascentia Sky

Where: Alexandra Road next to Metropolitan condominium
How big: 373 units
How much: Indicative pricing, before a preview discount, is from $1,300 psf to $1,500 psf.

Sophia Residence

Where: Adis Road near Parklane Shopping Mall
How big: 272 units
How much: Indicative pricing said to be $1,500 psf to $2,000 psf.

Silversea

Where: Amber Road on the former Amberville site
How big: 383 units
How much: Preview prices said to start from $1,300 psf

The Gale

Where: Flora Road
How big: 329 units
How much: Indicative pricing said to be $650 psf to $700 psf

Source : Sunday Times – 5 Jul 2009

The property market has been picking up fast and furious since March, when 1,220 units were sold. April saw 1,214 units snapped up. And in May, 1,668 units were sold, the highest level since the property boom of 2007. Last weekend, the strong sales continued as buyers thronged the mass-market and upper-middle condo launches.

The upper-middle condo launches, with prices ranging from $1,000 per sq ft to $2,000 per sq ft, registered brisk sales. In the mass market, several developments have sold out or are nearly sold out.

Those in the property business observed that unlike in the boom years, when foreigners made up the bulk of buyers, it is mainly locals who are on this buying spree. They are drawn by the relatively lower prices and the interest absorption scheme, which allows them to pay a deposit and postpone monthly home loan payments until the project is completed.

In land-scarce Singapore, property is always a good long-term investment. So those who can afford it and are planning to live in their new homes may not have a problem. But speculators who aim to flip their units for a profit before the monthly mortgage payments kick in are taking a huge risk. The economy has not recovered yet, and may still take a while to do so, the experts tell us.

The other vulnerable group comprises those rushing into the market because they fear they will miss the boat, having seen how fast prices climbed in 2007. Developers feed their fears by announcing that they will be raising their prices. But these buyers may over-commit themselves as a result. This is so especially among young couples who believe their combined incomes can afford them the condo lifestyle. No allowance is made for contingencies such as when a spouse loses his or her job. They should not follow the herd blindly. Buy an HDB flat first.

Source : Sunday Times – 5 Jul 2009

When Mr Foo Suan Pin got a contractor to chop down three fruit trees in his garden in the Holland Road area in September 2007, it did not occur to him that he was committing a crime.

But in February this year, he was slapped with a $6,000 fine after he submitted a plan to the authorities for approval of construction works to his house.

The reason? He had removed trees in a tree conservation area.

‘I decided to cut the trees because they looked sickly and were infested with red ants, and the leaves were clogging up the gutters,’ Mr Foo, 52, told The Sunday Times.

‘Before this, I had not even heard of a tree conservation area. I thought I could remove the trees because they were in my own private property.’

Under the Parks and Trees Act, you can’t fell any tree with a girth exceeding 1m growing on any land within a designated tree conservation area, or on any vacant land, except with the approval of the National Parks Board (NParks).

There are two designated tree conservation areas in Singapore. One covers the Tanglin-Bukit

Timah-Pasir Panjang area and the other is in Changi. They were chosen because of the large number of clusters of mature trees and wooded areas there.

Offenders pay a composition fine of $2,000 to NParks but can also be fined up to $50,000 if charged in court.

Singapore also has what are known as heritage trees – mature trees within and outside the tree conservation areas – that are protected by law. These trees are noted for their historical value and contribution to Singapore’s landscape.

In Mr Foo’s case, the authorities stepped in after they found that a land survey report of the property done in April 2007 had mentioned the trees, whereas Mr Foo’s new plan did not.

He is apparently not the only one who is clueless about the scheme.

The Sunday Times interviewed 12 residents of the two areas and all said they did not know that trees there were protected.

Housewife Lily Lean, 63, who lives in a semi-detached house off Farrer Road, said: ‘I had no idea that my house was in a tree conservation area, but I’ve never thought about cutting down my tree.’

She has an olive tree that is six years old and more than 1m in girth.

She is all for the law.

‘It takes years for a tree to grow, but only minutes to cut it down. I think Singaporeans need to learn that trees have life-giving qualities,’ she said.

NParks said there have been 40 trees felled without approval since 2005.

A total of 37 people have been issued with a composition fine of $2,000 for each tree felled. Seven of them removed more than one tree.

Last month, a property owner and contractor landed in court and were fined $25,000 each for cutting a 21m-tall tembusu tree in the Bishopsgate area in Tanglin. This happened in February.

It was the first case to be taken to court since 2003.

NParks decided on this course of action because the owner had blatantly disregarded its notice to retain the tree, it said.

An NParks officer examined the tree in November last year and found it to be stable and healthy.

Although instructions were given to the owner to retain the tree, he told the contractor to cut it down.

In Mr Foo’s case, he said he was misled by his contractor, who was recommended to his mother by NParks when a tree fell in her property. The contractor had said it was okay to chop it.

‘If he did not know the regulations, then how was I expected to know?’

The two mango trees and one rambutan tree had girths of between 1.2m and 2.8m.

Mr Foo said they were already there when he bought the house.

The Sunday Times understands that the contractor was also fined.

Mr Foo sought help from Holland-Bukit Timah MP Christopher De Souza, who wrote a letter of appeal on his behalf.

‘I lost my job as an IT consultant in May last year. I was hoping the fine would be lowered. I even offered to plant three fruit trees back to replace those that were felled,’ he said. He is still unemployed and looking for a job.

In the end, he decided to pay the fine to avoid going to court.

While the chapter is now closed, what bugs him is that no one had informed him of the legislation when he bought the property in 2007.

‘I think the Government should do more than enforce the law. They should have more public education on this,’ he said.

‘If they knew I had bought a property in a tree conservation area, they could have sent me a notice to remind me not to remove trees within the property.’

In response, Mr Simon Longman, director of streetscape from NParks, said that land owners or developers are required to engage a registered architect or engineer in any development project, and they would be aware of the tree conservation provisions in the Parks and Trees Act.

He said that the tree conservation areas have also been widely publicised, in particular in 2003 when property developer DTZ Debenham Tie Leung felled a 150-year-old Hopea Sangal tree without permission.

Information on the areas is also available on government websites.

Dr Shawn Lum, president of the Nature Society, said that while one could always argue that more can be done to increase awareness about policies, it is also up to the individual to know what is happening in the community.

‘If people just don’t pay attention or are apathetic, then no amount of education can help.’

Meanwhile, Mr Foo is looking forward to moving into his $2.5 million Holland Road home at the end of this month.

Despite being poorer by $6,000 because of the trees, he intends to plant some in his garden. He is considering jackfruit or palm trees.

‘As long as you keep them in good condition, they won’t be a problem,’ he said.

Source : Sunday Times – 5 Jul 2009

1 Do I need to seek NParks’ approval if I want to remove a tree in my garden?

Approval from the National Parks Board (NParks) is needed only if the tree is within one of the two tree conservation areas, or has been deemed a heritage tree. You can call NParks’ helpline on 1800-4717300. If necessary, officers will pay you a visit to inspect the trees.

2 Do private developers need to seek NParks’ approval to remove trees if they wish to develop a plot of land?

Only if the land is within a tree conservation area or has heritage trees.

Private developers must engage a registered architect or professional engineer to submit their proposed layout plans to NParks. These would include the number of trees, tree species, girth and height. The trees to be removed are required to be marked on the plans for NParks’ approval.

3 Does NParks conduct tree pruning or tree removal services for private homes?

No. Residents can get an arborist to do this. A list of aborists certified by the International Society of Arboriculture can be found at http://www.cuge.com.sg/Listing-of-Certified-Arborists

Source : NParks

Last year, American consulting firm McKinsey predicted an unpleasant surprise that China might spring on the world this year: that a major office block would collapse in Chaoyang, Beijing’s central business district.

Such an unthinkable scenario, perhaps reflecting the firm’s reservations about the quality of economic growth in China, unfortunately came true last week.

The only difference was that it was not an office block in Beijing that collapsed but an unfinished residential block in an upmarket, middle-class residential district in Shanghai.

The article – Seven Ways China Might Surprise Us In 2009 – by McKinsey’s Shanghai director, Mr Gordon Orr, was published in the Oct 30, 2008 issue of the McKinsey Quarterly.

He wrote: ‘True, construction standards came under fire after the May 2008 Sichuan earthquake felled many school buildings. But the reaction to that tragedy would pale beside the response to a similar one in a rich urban area with immediate media access.’

In other words, the earthquake provided an excellent excuse for the collapse of the thousands of jerry-built structures. Officials could put the blame squarely on force majeure, and no one needed to be held accountable.

After due investigations, the Sichuan government was able to declare proudly that there were no substandard buildings before the quake.

The collapse of the Shanghai residential block on June 27, on the other hand, provided no such excuse.

In fact, to have such a mishap happen in China’s most affluent city is totally unacceptable. After all, Shanghai has its sights set on becoming the country’s international financial centre by 2020.

So, if the tragedy in Sichuan is not enough of a wake-up call, surely the Shanghai incident is.

Mr Orr was certainly not the only person to have accurately predicted that such a construction disaster was just waiting to happen, but he did so openly.

In 2007, when a brand-new highway bridge in Fenghuang, in western Hunan province, collapsed just days before its inauguration, many Chinese were already saying that a building collapse could happen sooner or later.

But why do such infrastructure collapses take place in the first place?

An anonymous civil engineer, who felt duty-bound to follow his conscience, wrote a long piece to the People’s Daily forum detailing the hidden rules in the construction industry and their extension to the Chinese society at large.

Any civil engineering project, by law, has to clear several stages: geological prospecting, architectural design, quality checks, material surveys, as well as quality and safety supervision. Each stage plays a role in ensuring the building’s safety.

Greed drives some developers and builders to cut costs – and corners – by skipping some of the stages.

They are able to get away with it because impartial and substantive government supervision and professional ethics are absent.

On the face of it, China has among the best laws and regulations governing the construction industry, including detailed and specific requirements on the standard of materials used.

But according to the civil engineer, not all of these rules and regulations are strictly adhered to.

For example, Chinese laws require a site of a certain size and geological formation to sink a specified number of wells to ensure that the foundation is stable.

Yet, more often than not, fewer wells than mandated are sunk – to cut costs.

The architectural firm making the lowest bid usually clinches the job. In recent years, it has been found that the amount of steel used per square metre in high-rise buildings has fallen from 80kg-90kg to 30kg. This clearly compromises safety.

Quality control of the foundation is also lax. Industry regulations require that, in a project, a specific number of piles must undergo static loading test continuously for a specific duration. However, it is not uncommon to find that only 10 per cent of the required number of piles are tested.

Three different tests are required to assess the stability of the foundation, but this regulation is never followed because of the high cost of conducting three tests.

So why have the developers and builders been able to escape scrutiny?

The reason is that they fork out money to buy the necessary signature that goes on the certificate of quality.

‘It would be hard to believe that the buildings built in this social and political ecology could stand for long,’ the disgruntled civil engineer wrote.

He is right. Recently constructed buildings are surprisingly short-lived.

Take the award-winning China Sports Museum. Built in 1990 as part of the Asian Games sports complex, the structure should come with a 100-year guarantee.

Yet, just 15 years later, long cracks on its floor and walls have practically rendered the building a dangerous structure.

Perhaps, China’s most short-lived building was in the city of Chongqing, where a residential building had to be torn down just six months after its completion, in 2007.

After the collapse of the Fenghuang bridge, officials disclosed that there were 10 other cases of comparable severity between 2000 and 2007, with the bulk occurring after 2004.

Simply put, the older the bridge, the sturdier and safer it is.

Shoddy projects are so prevalent in recent years that civil engineers have lamented that buildings put up in the reform and open-door era last only about 30 years.

It is an alarming state of affairs.

Mr Orr noted: ‘Although officials would scramble to rewrite construction regulations, a disaster in the capital or another large city would change the relationship between the country’s growing middle class and the government and might threaten its ability to keep social unrest in check.’

He knows just too well the social fabric that makes for shoddy constructions and the political ecology that perpetuates them.

Cutting corners

Greed drives some developers and builders to cut costs – and corners – by skipping some of the construction stages. They are able to get away with it because impartial and substantive government supervision and professional ethics are absent.

Source : Sunday Times – 5 Jul 2009

There was a significant jump in the number of secondary market transactions at projects near the CBD earlier this month. In the Thomson area, at Sky@eleven, three units were sold in the first week of June for between $1,140 psf and $1,200 psf. The most recent transaction was a 1,851 sq ft unit on the 24th floor, which changed hands at $2.2 million or $1,200 psf. The seller had purchased the unit from the developer for $1.7 million or $931 psf in 2007 when the project was launched. This represents a gain of over 28%.

On the 25th floor, a larger unit was sold for $2.59 million or $1,140 psf. It was the third time in two years that the property changed hands. It was sold for $2.5 million or $1,101 psf in April 2007 and $2.08 million or $917 psf in February 2007.

The project, by Singapore Press Holdings, is targeted for completion next year. Less than 1% of resale units were sold below launch price according to SPH’s 1H2009 results presentation slides dated April 13.

Over at the 545-unit RiverGate along Robertson Quay, a spike in transactions in the resale market is also evident. There were 16 transactions ranging from $1,270 psf to $1,582 psf from May 30 to June 5 according to caveats lodged with URA Realis. The largest unit sold during the period was a 3,842 sq ft apartment on the 38th floor that changed hands for $6.08 million or $1,582 psf.

Sentiment has improved in recent months. From January to March, the project saw only 11 transactions in the secondary market in the price range of $1,130 psf to $1,416 psf. Sales started to pick up thereafter, with 51 transactions for the period from April 1 to June 5 with prices trending higher, ranging from $1,146 psf to $1,582 psf.

As one of the few waterfront sites along the Singapore River, the 43-storey development was highly sought after by foreign and local buyers during its launch in 2005. RiverGate, a joint-venture project by CapitaLand and Hwa Hong Corp, received its TOP in March. In 2007, at the peak of the property market, prices of one of its units soared to as high as $2,701 psf.

Over at Orchard, a unit at Vida sold for more than $2,000 psf. The buyer of a 527 sq ft apartment on the 13th floor paid $1.07 million or $2,029 psf to the developer at the launch of this exclusive condominium. At Scotts Highpark, a 4,208 sq ft unit on the 17th floor changed hands at $8 million or $1,901 psf. The seller had purchased it for $8.05 million or $1,914 psf from the developer in 2006 during the launch.

About 10 minutes away from Orchard Road, along Leonie Hill Road, two leasehold apartments at Horizon Tower were sold at below $1,000 psf. On the 15th floor, a 2,486 sq ft unit changed hands for $2.03 million or $816 psf. On the 13th floor, a smaller unit was sold at $1.82 million or $751 psf. The seller had purchased the unit for $1.135 million or $439 psf in 2003.

While prices and sales volume have moved up, some market watchers warn that the upswing may not be sustainable given a weak rental market and oversupply.

Soure : The Edge – 29 Jun 2009

12.8% increase in average price of 2-bedroom units; firm expects full-year primary market sales to top 2006 figure of 11,147 units

THE average price of freehold non-landed resale private homes in prime districts 9, 10 and 11 increased 11.3 per cent to $1,247 per sq foot in the second quarter from Q1, says DTZ.

This followed a 3.7 per cent quarter-on-quarter (q-o-q) price fall in Q1.

Two-bedroom units posted a 12.8 per cent q-on-q gain in Q2, as their lower quantum prices stimulated interest among people hoping to own prime district property.

But DTZ considers the Q2 price gain a blip supported by buyers’ fears of missing the bottom, pent-up demand and low interest rates – rather than economic fundamentals.

As for primary market sales, the property firm is now projecting that developers’ private home sales for the whole of 2009 are likely to surpass the 11,147 units achieved in 2006, which was the second-highest performance after the 14,811 homes they sold in 2007.

In the first six months of this year, the tally was about 6,700 to 6,900 units.

DTZ’s figures also show the average price of luxurious non-landed resale homes rose 9.6 per cent q-o-q to $2,060 psf in Q2.

Outside the prime districts, the average resale price of 99-year leasehold homes rose 3.2 per cent q-o-q to $573 psf in Q2, as prices had fallen less and there are fewer ’specu-vestors’ in this segment.

Earlier this week, the Urban Redevelopment Authority’s flash estimate showed the overall private home price index declined 5.9 per cent in Q2 from Q1.

Despite DTZ’s figures showing an increase in resale prices of non-landed homes in Q2, DTZ’s head of South-east Asia Research Chua Chor Hoon said: ‘Without a clear recovery in sight for the US and Singapore economies, the price recovery in Q2 2009 is not sustainable and sales volume would be affected if prices continue to rise.’

She noted that average resale prices have fell only 10-35 per cent between Q4 2007 and Q1 2009, compared with the fall of 35-45 per cent from the Q2 1996 peak to the Q4 1998 Asian financial crisis trough.

The number of caveats lodged for resales and sub-sales in April and May this year exceeded that for the whole of Q1 by 70 per cent. The proportion of foreign buyers, excluding Singapore permanent residents, rose from 5 per cent in Q1 to 8 per cent in April and May.

Indonesians and Malaysians accounted for 49 per cent of caveats lodged in April and May by foreigners and Singapore PRs, compared with 40 per cent in Q1.

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

Meanwhile, as new supply came on stream amid waning demand, rents continued to fall in Q2, although at a slower pace than in Q1.

The average rental value of prime district homes slipped 9.1 per cent to $3.32 psf per month in Q2, after a 16.2 per cent slide in Q1.

Rents for luxury homes were the hardest hit, with a 10.6 per cent decline to $4.65 psf per month – back to their Q4 2005 level.

Source : Business Times – 4 Jul 2009

David Lawrence is, however, bearish on Singapore office market

WHEELOCK Properties (Singapore) CEO David Lawrence is sanguine about the island’s residential market and predicts the luxury segment will be ‘doing very well within two years’.

But he is bearish on the office sector. ‘I don’t know what the policy is, but if I were running the Urban Redevelopment Authority, I would make sure I kept releasing land so that office rents are reasonable and more financial companies relocate to Singapore,’ Mr Lawrence said in a recent interview with BT. ‘So you’re not going to make money buying office buildings now,’ he quipped.

Mr Lawrence, who has a track record of astute property investments, is a chartered surveyor by training. He formerly headed Richard Ellis International in Singapore and Indonesia, and was a founding director of the company’s Thai office.

On Singapore’s residential sector, he said: ‘The mass and mid segments are doing well at the moment. Quality property is the best long-term hedge against inflation. And inflation is definitely going to come in a few years, whether you like it or not, whether governments like it or not.’

Low interest rates are also spurring home sales in the mass and mid-market segments, Mr Lawrence said. ‘The banks have woken up and started lending. They’re not being so ridiculously unrealistic about valuations. They are quite keen to lend to the lower to mid-end of the market at the moment.’

The luxury market is starting to move, but not in such a big way. ‘Sub-sale prices are going up,’ he said. ‘Although there is a bit of over-supply, actually buyers are very focused on certain developers and certain projects. A lot of the supply, people aren’t interested in really because it isn’t good investment-quality product.

‘New entrants into the market who are not developers, like the contractors, for example’, will just have to reduce their prices, he pronounced. BT understands that luxury residential developers are starting to see a trickle of sales above $3,000 per sq ft – after a hiatus of more than six months.

Another factor that is helping to draw home buyers again is ‘a lack of trust in international banks and the financial instruments they are trying to sell’, Mr Lawrence said. As well, the weaker Singapore dollar is making direct property investment attractive for overseas buyers. And there’s a shortage of investment-grade stock in all sectors.

Mr Lawrence notes there haven’t been any large distressed asset sales, due to the generally low gearing of major property companies.

Singapore’s reputation as a well-governed and safe place to live is also a strong pull for foreign buyers. It emerged as the 18th most liveable city in a recent ranking of the 25 most liveable cities by the magazine Monocle. It was the only tropical financial centre in the list, Mr Lawrence said.

On his bearish take on the office market, he said: ‘(Minister for National Development) Mah Bow Tan has managed supply and demand for the office market well in the past 10 years, but everything went up a bit crazy in the past two years and office rents got too high for the long-term development of Singapore as a financial centre.

‘The current crisis has brought rents down to a more reasonable level. My guess is the best way forward for Singapore is to have a reasonably low-cost office sector to attract financial businesses. The government has prepared a lot of infrastructure, land, ready to expand the office market, particularly in the Marina Bay area. The land should be released on a regular basis so we don’t get any more spikes in office rents.’

Grade A office rents here doubled in 2007, but have fallen about 45 per cent since peaking in Q3 last year.

A policy of keeping office rents competitive will create spin-offs for the residential sector ‘because you get more companies coming in to lease or buy’ homes, Mr Lawrence said.

As well, the opening of new offices in Singapore, with an increase in the population, will help generate more sales for retailers and ameliorate the effects of over-supply in the retail property market arising from the completion of new malls.

Source : Business Times – 4 Jul 2009

A YEAR after it started, the recession to end all recessions has yet to hit bottom officially.

But private home buyers in Singapore don’t seem to care. Since February, they have been snapping up almost as many homes each month as during the frenzy of 2007.

The strong demand has caught even property veterans by surprise, and set off furious discussions among property-obsessed Singaporeans.

Their million-dollar question: is this rally for real?

Opinion is divided. For every analyst proclaiming a sunny recovery, there is another warning of a false dawn.

To recap: after a hiatus of several months following the credit crunch last year, the property sector came back to life in February with unexpectedly healthy sales of new condominiums.

Even the stock market collapse in March didn’t deter buyers of new homes, who picked up more than 1,000 units that month for the second time in a row – 10 times what was sold at the low point in October last year. The buying momentum has held steady since then, despite more doomsayers predicting anew each month that the numbers are unsustainable.

Interest in new homes has spilled over to resale homes in the secondary market – which clocked a 70 per cent increase in sales in the second quarter over the first – as well as the harder-hit luxury home segment, where sellers are starting to turn a profit again.

As confidence in the property market builds up, boom times seem to have returned to the showflats. At the recent launch of One Devonshire in Somerset, the two-bedders were so much in demand that buyers had to ballot for them.

Agents for the upcoming Ascentia Sky project in Redhill have begun to take orders – and cheques – even before the showflat opens in the coming weeks.

There is certainly no denying that the property market is faring much better than expected, given that in the first quarter of this year, the economy contracted a record 10.1 per cent and shed the most number of jobs since Sars in 2003.

But some industry veterans, such as Knight Frank managing director Danny Yeo, are reluctant to call the increased buying activity a true rally. Even though sales are up, prices generally are not.

Between April and June, even as buyers returned to the market, the price index for private homes dropped 6 per cent, according to estimates released by the Urban Redevelopment Authority on Wednesday. Prices have now fallen for four straight quarters and are about 25 per cent off their peak last year.

Experts say that demand for private homes is returning precisely because prices have nosedived. They plunged a precipitous 14.1 per cent in the first quarter, the biggest drop in history.

This is a far cry from 2007’s property boom, when some developers raised prices for their projects multiple times in a single weekend.

Some consultants believe the price index is lagging and will show a slight increase when all the second-quarter sales are taken into account at the end of the month. Wednesday’s estimates are mostly based on deals done in April and May.

But even if this happens, the index isn’t expected to keep rising. Analysts say a sustained increase in the price index that develops into a full-blown rally by the end of the year is unlikely.

A more probable scenario is a plateau: prices and sales stabilising at their current levels for the next few months, with occasional moderate dips or increases, until there is more certainty about the economic outlook next year.

Would-be buyers hoping for another crash in the market are likely to be disappointed unless a major shock takes place, such as a delayed economic recovery, a stock market collapse, or the H1N1 virus turning more deadly, analysts say.

In fact, many dire predictions trumpeted by bears have failed to materialise. Fewer expatriates have left the country than expected. Unemployment is below the all-time high in 2003.

Home-owners and buyers are still able to afford their properties, especially as they have lowered their debt levels and increased their savings. The surprisingly low level of mortgagee sales so far this year – half of that during the Asian Financial Crisis – seems to bear this out.

Concern about oversupply of new homes crashing prices have abated in the light of the robust take-up of recent launches. Instead, low interest rates are encouraging buyers to take up mortgages.

The gravity-defying rise in HDB resale flat prices, which hit an all-time high in the second quarter, provides a firm floor for prices of mass market condos and helps support all the other price levels.

On the other hand, sellers who hope to hold out for a marked improvement in prices, could end up waiting a long time.

For one thing, the stock market resurgence appears to be tapering off, as sentiment gives way to the sobering fundamentals of an uncertain economic recovery, underscored by still-rising unemployment in the United States.

Anecdotally, buyers are also still price-sensitive, a further sign of the fragility of their confidence, although more seem willing to jump on the buying bandwagon for fear of rising prices in future.

Demand may also be limited. Most buyers now are owner-occupiers who were shut out of the 2007 market surge and are unleashing their pent-up demand. When this runs out, sellers and developers will be relying on investors and foreigners to pick up the slack, which may not happen as rentals are expected to continue falling with more homes being completed.

Then there is the deferred payment scheme. Properties sold via the scheme reach completion this year and next, and analysts fear some buyers will dump their units when full payments are due.

In the near term – say, six months – the market should be stable, given that supply and demand factors seem more or less balanced at this point.

But Singapore’s sentiment-driven property market has seldom been rational and hardly predictable, as the last six months have shown.

So it ultimately comes down to which typical Singaporean home-buyer behaviour wins out: the panic of being left out of a property boom, or the fear of buying now and being left high and dry if there is a slump.

Source : Straits Times – 4 Jul 2009

To be completed in 2015, it is the second phase of the Downtown Line

WORK started yesterday on the second phase of the Downtown Line (DTL2), which will take commuters through the Bukit Timah corridor to the city centre.

When completed in 2015, the 16.6km long DTL2 will give Bukit Panjang and Bukit Timah residents a direct rail link to the Central Business District (CBD) and Marina Bay.

More than 30 schools with about 60,000 students in all – including Hwa Chong Institution and National Junior College – will also benefit as train stations open near them.

Transport Minister Raymond Lim said at the groundbreaking ceremony yesterday: ‘Those who live, work and go to school in this area will enjoy a completely new way to travel, with convenient connections to every part of the city.’

A dozen stations will be strung out along DTL2, which will start in Bukit Panjang, pass through Bukit Timah and run to Rochor. There, it will link up to the first phase of the Downtown Line, which loops around Marina Bay and the CBD.

Those living and working in Bukit Timah are looking forward to having an MRT station open near them.

Mr Low Meng Hai, the 59-year-old chairman of the Beauty World Merchants Association, said with a laugh: ‘I might sell my car when the new line opens!’

Madam Ong Guat Ngo, 62, who lives in Jalan Jurong Kechil, is pleased that the upcoming Beauty World station will be a stone’s throw from her home.

The retiree now relies on buses to get around. A journey to People’s Park Centre in Chinatown takes her 1-1/2 hours by bus, including waiting time.

When the DTL2 opens, she will take only 40 minutes – less than half the time.

Sections of Upper Bukit Timah Road will be diverted from as early as the fourth quarter of this year; extensive diversions are also expected in Rochor.

The Land Transport Authority (LTA) stressed that the capacity of the roads will not drop significantly because there will be a lane-for-lane replacement in the diverted roads.

The LTA will award four more civil contracts for the DTL2 by September. Six, worth $2.6 billion in all, have been awarded so far.

LTA chief executive Yam Ah Mee said the entire Downtown Line, projected to cost $12 billion, is within budget. Almost $6 billion in contracts have been awarded so far.

Tendering of civil contracts for the third and final phase of the line begins next year. Due for completion in 2016, this section will thread through eastern Singapore, ending at Expo.

Source : Business Times – 4 Jul 2009

REAL estate investment trusts in Singapore or S-Reits will be underpinned by the cashflow resilience of their underlying properties, strong management of operations and capital, and the strength of their sponsors or key shareholders, Standard and Poor’s (S&P) said in a report published yesterday.

Still, in light of the currently sluggish economic climate, S-Reits will have much to contend with as leverage and refinancing risks increase while rents, occupancy rates, cashflows and capital values are on the decline, said S&P credit analyst Allan Redimerio.

‘Most S-Reits have high levels of encumbered assets on their balance sheets – meaning they have little to pledge to banks if conditions worsen.’

‘Given the strong emphasis currently on refinancing risk, we expect S-Reits to continue to assess their options on reducing their financial leverage, as well as increasing the number of unencumbered properties on their balance sheet to provide them with greater financial flexibility,’ said Mr Redimerio.

According to S&P, CDL Hospitality Trust, Parkway Life Reit, Frasers Commercial Trust, First Reit and MacarthurCook Industrial Reit appear to be among the most vulnerable, while CapitaMall Trust, Ascendas Reit, Frasers Centrepoint Trust and CapitaCommercial Trust are expected to be the most resilient against real estate and external shocks.

S&P noted that the government’s decision to increase its share of default risk on certain bank loans to small and medium-sized enterprises will contribute to the recovery of the S-Reits.

Industry watchers have said that more than $4 billion in S-Reit debt is estimated to be due this year for refinancing and a further $2 billion estimated to be due next year.

However, the easing of credit conditions has allowed vital bank funding to flow more easily, aiding the Reits. In an earlier report, UOB Kay Hian cited lower refinancing risks as the reason for its bullish take on the sector.

Source : Business Times – 4 Jul 2009

RETAIL rents continued to fall in the second quarter of 2009 amid economic contraction and new supply, according to a report released yesterday by DTZ Research.

Prime first-storey rents in the Orchard/Scotts Road area fell 0.8 per cent to $39.60 per sq ft per month (psf pm). This was a slower pace of decline, after rents fell 4.8 per cent in Q1. Rents for second-storey space fell 4.5 per cent in Q2 – also less than a 6.4 per cent fall in Q1. Rents in suburban areas fell marginally in Q2, supported by resident catchments. Prime first-storey rents eased 0.6 per cent in Q2 – the same as the fall in Q1.

However, rents in ‘other city areas’ fell more in Q2 than Q1, partly due to new supply that will be completed in the second half of 2009. Prime first-storey rents declined 3.1 per cent to $25.40 psf pm in Q2, more than the previous quarter’s fall of 2.2 per cent. 1.3 million sq ft or 56 per cent of new retail space that will be completed in the rest of the year will be in ‘other city areas’, DTZ estimates.

Anna Lee, associate director of retail at DTZ, said that many retailers and F&B operators have delayed expansion plans or changed their business strategies because of the economic downturn. Some F&B operators have or are considering moving to business parks, where rents are much lower and there is a considerable worker catchment to tap on, she added.

Looking forward, the retail sector will remain under pressure this year because of the downturn in visitor arrivals and the economic contraction, said Chua Chor Hoon, head of DTZ South-east Asia research. ‘Orchard/Scotts Road and other city areas will be more affected due to substantial new supply,’ Ms Chua said.

Other analysts likewise expect retail rents to keep falling this year, with the prime Orchard/ Scotts Road area tipped to be worst hit.

Macquarie Research, for example, said in a June 15 report that it expects prime Orchard Road rents to fall 10-15 per cent this year given new supply coming on stream. For suburban retail rents, a smaller 5-10 per cent year-on-year fall is expected.

‘Historically, retail rent growth is closely aligned with retail sales growth,’ said the firm’s property analysts Tuck Yin Soong and Elaine Cheong.

Source : Business Times – 4 Jul 2009

Always close, but never too close. That is the carrot dangled before extended families buying new condominium units which come with adjoining studio apartments.

Apart from the usual two-, three- or four- bedroom layout options, property developer Frasers Centrepoint Homes has introduced what it calls ‘dual key’ apartments at two recent two projects, Caspian at Lakeside and 8@Woodleigh.

This new layout has a studio apartment attached to a two-bedroom unit and is about 10 per cent larger than a regular three-bedroom unit.

And it has been an unqualified success.

At the recently sold out 8@Woodleigh at Potong Pasir, the 390 sq ft studio apartment comes fully equipped with its own kitchen, bathroom and dining and living areas. It also has its own entrance, which opens up to a foyer that is shared with the 682 sq ft two-bedroom unit.

Frasers’ chief operating officer Cheang Kok Kheong says such units are ’specially conceptualised to promote inter-generational ties within families’.

All 30 units of this new layout at Woodleigh have been sold. Scheduled to be completed in 2013, the project has a total of 330 units, including one-, two-, three- and four-bedroom types.

Over at Caspian, a 712-unit project, all 17 such 2+1 bedroom units are also sold out.

Global investor Simon Yong, 50, bought one such unit at Woodleigh. He nows lives with his wife in a semidetached home at Braddell. When the Woodleigh project is completed, he hopes to move in with his mother, who is in her 90s. She will live in the studio apartment.

‘My wife and I still have our privacy, but we can take care of my mum easily too,’ he says.

CapitaLand is another developer that has offered a similar adjoining unit option to encourage multi-generational living.

Its The Metropolitan at Tanglin contains 29 single units with two entrances. In these apartments, a partition wall can be built to divide the living space.

Another option the development offers for multi-generational living are adjacent separate units. There are 14 pairs of such units, which offer buyers the option of removing the partition between the two units to create a single living and dining area.

The condominium was completed recently. At its launch in 2006, Ms Patricia Chia, chief executive of CapitaLand Residential Singapore, said: ‘Many families today would like to live near to, or with, their ageing parents, while enjoying a certain amount of privacy.

‘We also recognise that every family’s lifestyle needs would change with time. The flexibility that we have built into the unit layouts at The Metropolitan is ideal to meet these needs.’

There is another use for 2+1 bedroom units: rental.

Frasers’ Mr Cheang says: ‘The new layout also gives buyers the option to finance their purchase by renting out the studio component of the unit.’

It is still about four years before they can move in, but buyers of units at Woodleigh that Life! spoke to are already thinking the same way.

Ms Teresa Kwan, a manager in a financial institution who is in her 50s, has bought a 2+1 bedroom unit at Woodleigh. She says: ‘I can live in one and rent out the studio, or I can rent both units out.’

At Lippo Realty’s Newton One, one of the bedrooms in its five-bedroom units comes with its own kitchenette and entrance – ideal for extended families and also rental.

Mr Chris Koh, director of Dennis Wee Properties, says these units are a good option for property hunters, particularly those who are looking to lease out the unit. ‘Both the tenant and the landlord still have their privacy.’

Such apartments are a new trend in the private property sector, but HDB introduced them about two decades ago. In 1987, it launched multi-generation flats, or ‘granny flats’. They comprised a four- or five-room flat with an adjoining studio apartment with a separate entrance. Around 367 units were built in Bishan, Tampines and Yishun.

However, HDB stopped building them ‘as the demand then was not high. The completed multi-generational flats are still available in the resale market’, says a spokesman.

Dennis Wee’s Mr Koh believes that 2+1 units are a hit now because they can generate extra income.

A check with other property developers, such as UOL Group and City Developments, showed that they are not implementing these special two-in-one units in their upcoming projects.

Still, tutor Leah Teo, 35, hopes that more developers will offer such units. ‘I can rent out one unit for extra income, and later on, I can have my elderly parents living next to me,’ she says.

Source : Straits Times – 4 Jul 2009

IT’S hard to believe, but more than 10 years have passed since a new mall opened on Orchard Road. Naturally, the stakes are high for Orchard Central, the new shopping and dining destination which opens in the Somerset precinct this week.

Long-starved of fresh and exciting options on Singapore’s prime shopping belt, locals and tourists alike are looking for something distinctly different – will the mall consistently please, or turn out to be a hit-and-miss?

On its part, Orchard Central’s developer, Far East Organization, has pulled out all the stops as far as creating uniqueness is concerned, positioning the 12-storey mall as the ‘Centre of New’.

There are new retail concepts, brands, architecture and designs, and a new approach to shopping, dining and service – all aiming to provide new experiences for the shopper, whose needs are at the centre of it all. International establishments making their debut include Japan’s Yamano beauty retailer, popular English shirt-maker, TM Lewin, well-known Japanese eatery Ootoya, and Duo Le – a Chinese restaurant specialising in cold dishes and cuisine from the Shaanxi region.

Then there’s Orchard Central’s largest F&B tenant, Heaven’s Loft – a new and unique all-day dining and dessert concept from the team behind the Ben & Jerry’s outlets in Singapore.

For easy navigation, related shops and dining outlets are grouped in clusters according to distinct lifestyle experiences. These include fashion, food, pampering, and active lifestyles.

In addition, renowned Japanese interior designer Takashi Sugimoto of Super Potato has created a visual feast using lighting, design and creative features on the dining levels along the open-air Verandah on levels 7 and 8 and the Rooftop on levels 11 and 12. Some 30 per cent of the floor space at the topmost floor on level 12 is outdoors, including a public Rooftop Garden. Incorporating indigenous plants, water features and infinity pools, the sky-high dining experience under the stars will open later this year.

Shopping and dining aside, Orchard Central is home to the world’s tallest indoor Via Ferrata climbing wall, the first-of-its-kind in Asia.

And of course, there is the much-talked about collection of contemporary artworks specially commissioned for the mall. Costing over $9 million, this is the largest permanent public commission for a single property in Singapore. With installation art – including sculpture, automation art, interactive digital art, light and sound installation art and multimedia art – integrated into the mall’s architectural and design elements, visual art is thus extremely accessible and non-threatening even to those new to the form. One can expect to see works by internationally renowned artists.

Topping off the entire experience is a pioneering concierge service that truly focuses on the shopper – service staff who will fan out from the mall’s information desk, roaming every floor to help shoppers with information, directions and even restaurant reservations.

Orchard Central is open till 11pm daily, with its Rooftop Garden and air-conditioned shopping street, Discovery Walk, accessible 24/7. Combined with its late-night dining options, it’s a panacea for those who’ve long wished for Orchard Road malls to open till late.

‘Looking at the bigger picture with our new and existing neighbours, mid-town Orchard Road presents an exciting new shopping precinct in the near future,’ says Susan Leng, Far East’s director, retail management, Retail Business Group.

Climbing an indoor wall on Orchard Road, dining at a rooftop verandah and getting assistance without having to look for the assistant – these are not the usual mall experiences. But if the newest shopping destination to open in Singapore’s beloved shopping street in over a decade succeeds in what it set out to do, then Orchard Central will indeed be the ‘Centre of New’.

Source : Business Times – 4 Jul 2009

WHILE shoppers can flex their muscles by choosing where to spend their hard-earned cash, shareholders are showing that they can force mall managers to stay ahead of the retail curve.

It is no coincidence that among the first malls to embark on renovations were those backed by listed companies or real estate investment trusts (Reits) – in other words, entities with investors demanding a return on their money.

The need to meet dividend payments and distribution targets for their unit holders and investors have driven managers to smarten up their malls, improve the store mix – and raise rents.

Wisma Atria, built in 1986, was first to undergo an extensive revamp in 2004 to keep it up to speed with the fast-changing retail mix on Orchard Road.

The mall is 74.23 per cent owned by Starhill Global Reit of Malaysia’s YTL Group.

It was the first mall to take advantage of an Urban Redevelopment Authority (URA) scheme that allowed it to have a ‘pop-out’ glass facade, as well as external escalators taking shoppers directly to Food Republic on the fourth floor.

Mr Kevin Chee, senior vice-president of asset management at YTL Pacific Star, told The Straits Times: ‘Wisma Atria boasts 123m of prime Orchard Road street frontage, and we are actively exploring ways to heighten the visibility of the stores to derive maximum mileage for our tenants.’

In fact, Starhill announced last week it was looking into raising $337.3 million via a rights issue and using some of the money to add up to 40,000 sq ft of retail space to Wisma Atria. It plans to push the frontage even further out towards Orchard Road and convert some carpark space into retail space.

Ngee Ann City next door, which is 27.3 per cent owned by Starhill, has also had a finger on the retail pulse since it opened in 1993.

Long before the latest round of rejuvenation started, it had duplexes for jewellery brands Tiffany, Bulgari and Cartier.

In December 2007, it announced that another two of its luxury tenants – Louis Vuitton and Chanel – were going to double the size of their Orchard Road-facing flagship stores at the Takashimaya Shopping Centre.

A spokesman for Toshin Development Company, a Takashimaya subsidiary that manages speciality shops at the mall, said: ‘Duplexes are not new for us, but an ongoing development according to tenants’ needs and desires for expansion.’

And Paragon Shopping Centre, owned by Orchard 290, a subsidiary of Singapore Press Holdings, is no laggard either.

The mall, which was merged with the old Promenade in 1996, is prized as a hot spot for international designer brands such as Gucci, Bottega Veneta, Tod’s, Prada and Ermenegildo Zegna.

In October, it will unveil duplex stores for five luxury labels, including a five-storey facade for Gucci.

While brands with deep pockets are splashing out at these malls, other retailers struggling to maintain their bottom line in the recession have accused mall managers of ’squeezing them for higher rents, even though they cannot afford to pay them’.

YTL’s Mr Chee, however, retorted: ‘Like any other business concern, we have a duty to our owners to deliver returns.’

Reits collect rental income from mall tenants and distribute it to unit-holders.

Frasers Centrepoint Trust said: ‘While we have a responsibility to ensure adequate returns to shareholders, it is certainly not in our interest to see our tenants fail. Rental increases are by no means unduly onerous, as they usually work out to annual increases of 2 per cent to 3 per cent, well in line with the national inflation rate for the past three years.’

Mr Gabriel Yap, senior dealing director at DMG & Partners Securities, said: ‘Reits are no different from normal property developers as landlords. If a Reit consistently underperforms as a landlord, other Reits will be very happy to swallow it.’

Clearly, no one wants to be left behind.

As Mrs Sng Ngoi May, director of Orchard 290, which manages Paragon, put it: ‘We are just moving with the times. We don’t take our customers for granted and have to tell them we’re not dated.’

Source : Straits Times – 4 Jul 2009

THREE sites have been added to the government’s industrial land sales programme for second-half 2009, which was launched yesterday by the Ministry of Trade and Industry (MTI).

The three sites have been added under the reserve list to continue to meet potential demand for industrial land, MTI said. This brings the total number of industrial sites on the reserve list to nine.

The confirmed list, on the other hand, remains suspended.

‘In view of current economic uncertainties, MTI will continue to suspend the confirmed list for the second half of 2009,’ the ministry said in a statement. ‘This will provide flexibility for the market to adjust supply in accordance with the current economic conditions.’

Market watchers said that the continued suspension of the confirmed list was expected. Using the reserve list only means the market will have the final say on when a site is released.

Under the reserve list system, the government puts up a site for public tender only if it receives an application from a developer who commits to bid for the site at or above the minimum price acceptable to the government.

‘This is in line with the government’s aim of letting developers decide if they are interested in a site and letting them trigger the sites they like,’ said Savills Singapore managing director Michael Ng.

The three new sites on the reserve list are at Woodlands Avenue 12, Kaki Bukit Avenue 4 and Ubi Road 1/Ubi Avenue 4. In addition, six sites from the first-half 2009 reserve list have been carried forward to the second-half list.

The nine sites on the reserve list have a combined area of about 19 hectares.

It is unclear if the demand for these will be strong, analysts said. Singapore experienced a sharp drop in industrial investment sales in the first quarter of this year, with only a few isolated transactions completed.

However, sentiment picked up in the second quarter. Data from CB Richard Ellis (CBRE) showed there were at least six investment transactions in the industrial sector in Q2 – totalling $58.9 million. Most of the buyers were end-users, CBRE said.

Singapore-listed real estate investment trusts (Reits), which bought up a significant amount of industrial property during the boom in 2007, are still holding back on acquisitions this year as dividend yields have increased significantly and it would be extremely challenging to make purchases that are yield accretive. Obtaining finance also continues to be difficult.

Source : Business Times – 3 Jul 2009

YI Kai Group and Fission Group, the duo that recently paid $71 million for VTB Building in Robinson Road, are said to have joined forces to buy Aviva Building in Cecil Street and next-door Cecil House from insurer Aviva for a total of $101 million.

Aviva is understood to be selling the assets that it considers ‘non-core’.

Market watchers reckon Fission and Yi Kai hope to redevelop all three CBD office blocks they have snapped up lately into residential projects – subject to official approval.

The three sites are zoned for commercial use with an 11.2-plus plot ratio and 35-storey maximum height, according to the Urban Redevelopment Authority’s Master Plan (MP) 2008.

In October last year, URA lifted its ban on converting office blocks in the Central Area to other uses.

Aviva and VTB buildings are freehold. Cecil House is on a site with a remaining lease of 71 years.

Analysts suggest that Yi Kai and Fission’s plans to redevelop the Cecil House plot into apartments will be subject to getting a lease top-up to 99 years from the state. ‘Otherwise, they may redevelop the property to a new office block,’ a market watcher suggested.

BT understands the freehold Aviva Building is being sold for about $65 million, which translates to roughly $960 per sq ft of existing net lettable area (NLA).

Based on the site’s 11.2-plus plot ratio under MP 2008, the unit land price works out to about $590 psf of potential gross floor area (GFA), excluding any development charge (DC) that may be payable.

Cecil House was priced at $36 million or about $710 psf of NLA in the sale to Yi Kai and Fission.

It is believed there is untapped potential to develop a further 20,000 sq ft GFA each for the Cecil House and Aviva Building plots.

The earlier sale of VTB Building for $71 million worked out to $1,061 psf of NLA and a unit land price of about $700 psf per plot ratio – based on an 11.2 plot ratio and assuming no DC is payable.

Jones Lang LaSalle’s director of investment sales Stella Hoh is understood to have brokered the sale of Aviva Building and Cecil House. JLL is also the marketing agent for two office floors at Parkway Parade that Aviva is looking to sell.

BT understands both buildings are currently almost 100 per cent occupied. Aviva uses about 60 per cent of Aviva Building.

Source : Business Times – 3 Jul 2009

EAGER shoppers may be on tenterhooks as they wait for Ion Orchard to fling open its doors on July 21, but they’ll also be pleased to know that as the Orchard Road revamp unfolds over the coming months, there’ll be enough new malls to keep them busy for a pretty long time.

In fact, any shopper with Sloane Ranger aspirations can strut their stuff on Knightsbridge – London’s most prestigious address – without having to fly to the United Kingdom, thanks to a chic four-storey retail podium opening next year.

The 83,000 sq ft luxury shopping destination that will house between eight to 10 luxury brands will be integrated within an $80 million makeover of the former Park Hotel Orchard (across Bideford Road from Paragon Shopping Centre).

‘The Knightsbridge branding is in line with our vision for Grand Park Orchard to become synonymous with fashion and luxury,’ says Allen Law, director of Park Hotel Group.

‘Our unique concept and strategic location has attracted many sought-after international brands and we are confident that Grand Park Orchard is set to become an iconic landmark on Orchard Road.’

Meanwhile, art lovers dreaming of the Tate Modern or Saatchi Gallery can find distraction by marvelling at the $9 million worth of contemporary art that Far East Organization has showcased in the mall.

The collection that features the creations of renowned artists such as Gary Carsley, Hans Peter Kuhn and Inges Idee is the largest permanent public commission by a developer for a single property in Singapore.

Artistic nightowls will also be able to enjoy the mall’s 24-hour public rooftop garden that will be transformed into a sculptural haven, showcasing a series of 11 wire sculptures by local sculptural artist, Victor Tan.

Not to be outdone, ION Orchard will also be contributing to the local artscape through ION Art – a structured art and design programme which introduces new and multi-media art outside the traditional museum venue, into the integrated mall experience.

The initiative includes permanent and changing signature sculptural and media installations positioned throughout the mall, as well as a spectrum of art-based events and exhibitions held throughout the year in the ION Art gallery (a dedicated art space in excess of 5,600 sq ft), and at other locations in the mall.

With all these in the pipeline, in these tough economic times, rather than waste money travelling abroad, a quick visit down Orchard Road might just be a cool, affordable alternative.

Source : Business Times – 3 Jul 2009

THE Ministry of Trade and Industry (MTI) will continue to suspend the confirmed list for its industrial government land sales (GLS) programme for the rest of the year.

This would provide flexibility for the market to ‘adjust supply in accordance with the current economic conditions’, it said in a statement yesterday.

But the MTI has put three new sites on its reserve list to meet potential demand for industrial land.

Under the reserve list system, a site is offered for public tender only if a developer commits to bid at an acceptable price.

The three sites are a 3.2ha plot in Woodlands Avenue 12, a 2.99ha plot in Kaki Bukit Avenue 4 and a 1.24ha plot in Ubi Road.

All three have 60-year leases and are estimated to become available in the last quarter of this year.

In the first half of the year, two reserve list sites – in Woodlands Industrial Park E5 and Kaki Bukit Road 2 – were triggered.

The Woodlands plot went up for tender recently when an unnamed applicant undertook to bid at least $12.5 million or $18.57 per sq ft of potential gross floor area.

This tender closes next Tuesday.

Mr Colin Tan, Chesterton Suntec International’s head of research and consultancy, said the MTI’s announcement yesterday is unsurprising given the uncertain climate, but he added that buyers are starting to emerge.

‘There’s interest in industrial properties, especially from owner occupiers who want to own their own business space,’ he said.

Perhaps the perception is that prices are more reasonable and lower than at the peak, he added, suggesting that more industrial sites may be activated for tender before the end of the year.

The reserve list for the second half of the year comprises nine sites with a total area of 19ha, said MTI.

Source : Straits Times – 3 Jul 2009

WE ARE a small- and medium-sized enterprise (SME) located in a building owned by the Central Provident Fund (CPF) Board. Like many companies, we are constantly examining ways to manage our costs that will allow us to retain our valuable team members in this time of economic upheaval.

I was pleased to read the news earlier this year that a number of other government landlords (HDB, Singapore Land Authority and JTC Corporation, among others) had offered their tenants a 15 per cent rent rebate from Jan 1 to Dec 31, providing them with some relief.

Understanding the consistency and transparency that exists here, I anticipated a similar announcement from the CPF Board, yet none was forthcoming. To its credit, it passed on the 40 per cent tax rebate without us asking. However, this equates to only a 4 per cent reduction in our rent.

We queried the CPF Board via e-mail on April 3, asking if the 15 per cent rent rebate would be extended as other government landlords had done, but received no response. Two weeks later, we called the CPF Board, and were told the request was under review.

On May 6, I e-mailed the CPF Board again, and on May 8 received a response that it had a number of properties under its portfolio and the review would take some time. Almost two weeks later, we called again to check the status and were told there was no response from management and were given the deputy director’s name and address to contact.

On May 20, I sent our request to the deputy director and received a response on May 25, stating that still more time was needed to collate and review the figures. I was assured my request would be considered and we would be informed ‘in due course’. I responded with some questions and an alternative solution on May 26, and I am still waiting for a response, more than one month later.

It has been more than 13 weeks since my initial e-mail, and more than four weeks from the CPF Board’s last response. I am not clear why this decision is taking so long to make, and the unresponsiveness of our landlord is disheartening. The year is half over, and while other government tenants have got six months of relief, we are still waiting for a decision from our landlord.

Steven Stearns

Source : Straits Times – 3 July 2009

CEL Development is launching the remaining units of its Oasis @ Elias condominium at Pasir Ris on Saturday.

Half of the 142 units previewed have been sold, at an average price of S$670 per square foot.

The units that have been sold included six of nine penthouses in the property.

Marketing agent CB Richard Ellis said HDB upgraders made up 80 per cent of the buyers.

The strong take-up rate reflects the current popularity of mass market private property among homebuyers.

The recently launched 8 @ Woodleigh condominium at Potong Pasir was fully sold within two weeks, while Vista Residences in Balestier has also seen a strong take-up rate for the units launched so far.

Oasis @ Elias is a 99-year leasehold property, and comprises six blocks of two to five-room apartments.

Source : Channel NewsAsia – 2 Jul 2009

While several new malls are being built along Orchard Road, Meritus Mandarin Hotel has been quietly renovating its shopping wing.

Mandarin Gallery will re-open in December, competing with new entrants on the prime shopping district for the retail dollar.

Meritus Mandarin Hotel is turning its lobby, ballrooms and function rooms into retail space – offering four floors of shopping.

The new mall will have a net lettable area of about 130,000 square feet. It is being marketed by OUE Group, which is seeing strong interest from retailers.

Patrina Tan, senior vice-president of retail, marketing and leasing, OUE Group, said: “We are slightly over 90 per cent leased in the mall. Being intimate-sized, we need to take a focus in the positioning and product mix that we offer as a shopping mall.

“In our brand mix, we will have reputable international luxury brands like Emporio Armani, Mont Blanc, D&G, Marc by Marc Jacobs, Y3, which will be a new entry to Singapore, (and) jewellery brands like Maboussin. These are some of the brands that you will find in Mandarin Gallery when we open.”

And what used to be a carpark outside the hotel will also be transformed into a pedestrian walkway.

Mandarin Gallery is well aware of the competition it faces, with three new, large malls opening along the same stretch of Orchard Road.

Tan said: “Based on the new projects coming on stream, all within this quarter to the end of this year, I personally see all the malls have carved out their own niche in terms of positioning and offering for different market segments.

“Mandarin, because it is an intimate-sized mall, our whole intent and purpose when we decided on the mix and positioning was to look at our immediate adjacencies in this junction – what are their success factors and who they already have. And what we try to do is to complement it, versus going head on in terms of competition.”

Mandarin also plans to target a niche group of customers – the affluent and well-travelled younger generation.

Tan said: “We target the segment of the market where we feel there is a gap – the younger, affluent, well-travelled and discerning (shoppers)… I suppose that’s the difference for us.”

In the past, the shops at Mandarin catered to hotel guests, but the new gallery marks a change in the hotel’s business strategy.

Tan said: “In the past, I must say the owners never really saw retail as a key component for the property. With the size of 60,000 square feet, it was mainly to just cater to the needs of hotel guests. As such, the tenancy mix was a bit of everything that would provide convenience to the hotel guests.

“The decision was made some time in early 2006 or so when owners felt it would be a good opportunity to look at maximising the value of the property. Because what we have here, the Meritus Mandarin Hotel, is situated on a very prime location.”

Source : Channel NewsAsia – 2 Jul 2009

Global luxury retailer Louis Vuitton has said it is in discussions to open a store at one of the two upcoming integrated resorts in Singapore scheduled to open next year.

This was revealed at a preview of its latest global store, which will open at ION Orchard on Friday.

Jean-Baptiste Debains, president of Louis Vuitton Asia Pacific, said: “We’re looking at it seriously. No decision has been taken now, but for sure it is an exciting project.

“We believe that Singapore has a real role to play as a hub for Southeast Asia in retail, and in luxury retail in particular.”

The store at ION Orchard is Louis Vuitton’s first and largest global store in Southeast Asia, and only its second in the world to showcase Louis Vuitton’s full range of products, including shoes, watches and its trademark leather goods.

Louis Vuitton has three other stores in Singapore – Ngee Ann City, Raffles Hotel and DFS Scotts Walk – but they do not have its full range of products.

The retailer has some 77 stores across the Asia Pacific region, with another five stores slated to open in the region later this year.

Source : Channel NewsAsia – 2 Jul 2009

An increasing number of people have been taking on green initiatives, including companies.

But what about cities?

The World Bank has just launched its Eco2 Cities programme which proposes a set of guidelines that will help cities and governments move in the right direction. The programme is aimed at encouraging cities to think of longer term, sustainable options.

The World Bank said if developing economies continue to expand at the pace of developed cities, it will take the equivalent of four planet earths to sustain the growth.

But if every city adopt sustainable practices such as economical travel options, water resource management and quality public housing, they can potentially save billions of dollars each.

Arish Dastur, co-team leader, Eco2 Cities, The World Bank, said: “What we hope to achieve, I guess, is that 30 or 40 years down the line, when we look back at the urbanisation that’s happening in the cities of developing countries, we would see that these followed models and followed examples, are more sustainable and that these cities are now benefiting because they took this action. In a nutshell, we would really like cities to be ecologically and economically sustainable.

Over in China, experts said now is an opportune time to invest in sustainable development.

A number of Singapore consortiums have come together to develop more sustainable cities in one of the world’s most rapidly developing countries. Among them are the Tianjin Eco city, and the US$50.5 billion Singapore-Nanjing Eco High-Tech Island project.

Globally, countries are continuing to push for more sustainable options. The US has just approved a legislation to reduce the emission of carbon dioxide and other greenhouse gases by 17 per cent by 2020.

This is slightly higher than the 15 per cent proposed by President Obama, but lower than the initial target of 20 per cent.

The legislation has also set longer term target of pollution reduction goals of 42 per cent by 2030 and 83 per cent by 2050.

Source : Channel NewsAsia – 2 Jul 2009

Singapore’s government said on Thursday it will continue to suspend the sale of land on its ‘confirmed list’ in the second half of 2009 due to economic uncertainties.

The government did, however, add three sites to its ‘reserve list’, increasing the number of land parcels that may be sold to nine from six.

Singapore will only release a site on its ‘reserve list’ for sale if an interested party submits an application for the site at a price that is acceptable to the government.

Source : Business Times – 2 July 2009

The government will introduce three new sites in its industrial land sales programme for the second half of the year.

The Trade and Industry Ministry says this is to meet potential demand for industrial land. With the addition, there will be nine sites on the Reserve List.

The three new sites are parcels at Woodlands Avenue 12, Kaki Bukit Avenue 4 and Ubi Road 1/Ubi Avenue 4.

The nine sites on the Reserve List cover a total area of some 19 hectares.

Under the Reserve List, the government will only release a site for sale if an interested party submits an application for the site to be put up for tender with a minimum purchase price offer that is acceptable to the government.

The government will, however, continue to suspend the sale of land on its Confirmed List in the second half of 2009 due to economic uncertainties.

Source : Channel NewsAsia – 2 July 2009

Location: Balmoral Road (District 10)
Tenure: Freehold
Site Area: 102,183 sqft
Expected Completion: June 2014
Total Units: 85
Unit Types:
2 bedroom ~ 1,324 sqft (20 units)
3 bedroom ~ 1,636 – 2,809 sqft (31 units)
4 bedroom ~ 2,174 – 2,745 sqft (29 units)
Penthouse ~ 3,509 – 6,168 sqft (5 units)

Preview soon, email lushhome@gmail.com or SMS +65 9631 8037 with the following to register your interest:

Volari / Name / Contact # / Unit Type Interested

URA flash estimates show 5.9% fall but many expect final showing to be better

Singapore’s private home prices fell for a fourth straight quarter in Q2 2009 – but the marked slowdown in the rate of decline shows that the residential market here is recovering, analysts said.

The private residential price index fell 5.9 per cent in the second quarter, according to flash estimates from the Urban Redevelopment Authority (URA) yesterday. By contrast, the index fell 14.1 per cent in Q1.

The continuing fall in the index caught many analysts by surprise, as anecdotal evidence showed that private home prices started climbing again in the second quarter.

‘The decline is surprising as prices have picked up in the latter part of the second quarter, especially in the prime districts of 9, 10 and 11,’ said DTZ’s head of South-east Asia research Chua Chor Hoon.

Echoed Li Hiaw Ho, executive director of CBRE Research: ‘This smaller decline in the price index is contrary to the present market perception where actual price levels in the second quarter were known to be more than 10 per cent above those in the first quarter.’

CBRE’s data showed that the median price registered in the second quarter for new 99-year leasehold projects was $788,000 – some 13.2 per cent higher than the median of $696,000 in Q1. For new freehold non-landed properties, it was $928,000 – 26.6 per cent higher than the first quarter’s $733,000. Some 3,800- 4,000 new homes were estimated to have been sold in Q2, 50 per cent more than the 2,596 units sold in the first quarter, the firm said.

DTZ’s Ms Chua pointed out that URA’s flash estimates are based on transaction prices from caveats lodged during the first ten weeks of the quarter, while the buying frenzy gained pace in June. ‘I expect the final price index to fall less or show some increase when more caveats in June are included in the computation of the index,’ she said.

A URA spokesman said that while some developers had started raising prices recently, the extent of price increase quarter-on-quarter was small and pertained to selected projects.

‘On the other hand, more projects had seen a fall in prices over Q2 2009,’ said the spokesman. ‘Hence, overall prices in Q2 2009 as reflected by the flash index fell in comparison with Q1 2009.’

The revised index (which will be out on July 24) will capture caveats beyond the first 10 weeks of the quarter.

Meanwhile, the slower pace of decline for private home prices was seen across the whole island.

In Q2, prices of non-landed private residential properties decreased 6.6 per cent in the core central region (which includes the prime districts, financial district and Sentosa Cove), 6.3 per cent in the rest of central region, and 2.6 per cent in the outside central region (which is a proxy for suburban mass-market locations).

In comparison, in Q1 2009, prices fell 16.2 per cent in the core central region, 17 per cent in the rest of central region and 7.3 per cent in the outside central region.

The improved sentiment was also evident in the resale prices of Housing and Development Board (HDB) flats.

The HDB resale price index, which fell for the first time in Q1 2009 after nine straight quarters of growth, also recovered somewhat to climb 1.2 per cent in Q2. The resale price index fell 0.8 per cent in the first quarter.

‘This price rebound shows that demand for HDB flats is still very strong despite current economic challenges,’ said Eugene Lim, ERA Asia Pacific’s associate director.

ERA, which says it has a 45 per cent market share of the HDB resale market, observed that its transaction volume surged some 52 per cent in Q2 over Q1.

Buyers are returning to the HDB market because sellers have become more realistic about asking prices – especially those selling five-room and executive flats, analysts said. Rather than holding out for higher cash-over-valuation (COV) amounts, most are now willing to sell at valuation or with a slight COV.

Analysts expect the property market recovery to continue – but cautioned against over-exuberance.

OCBC Investment Research analyst Foo Sze Ming said that property prices in Singapore are unlikely to surge to 2007 levels, even with the current recovery.

Then, prices were boosted by global real estate funds that bought up homes here for investment. ‘Since the economic crisis is still ongoing, I doubt that there will be that much interest from funds in the Singapore property market to drive prices up to 2007 levels this year,’ Mr Foo said.

‘We retain our cautious outlook for the Singapore residential market,’ said Nomura analysts Tony Darwell and Min Chow Sai in a June 29 report.

‘In our view, the directional trend in the market will be driven by the competing forces of inventory clearance and buyers motivated by current ‘value’ rather than expectations of a sustained recovery in asset prices.’

The analysts see the likelihood of a W-shaped recovery in asset prices, rather than their previous expectations of a U-shaped recovery, the note said.

Source : Business Times – 2 July 2009

PRIVATE home prices slowed their downward slide in the second quarter, with suburban homes helping to hold up the market.

The Urban Redevelopment Authority (URA) announced yesterday that its initial estimates showed a 5.9 per cent fall in private home prices from April to last month, following a record 14.1 per cent slide in the first quarter.

Some property experts yesterday expressed surprise at the larger-than-expected drop. And with the recent strong demand, they are expecting to see a much smaller fall in four weeks’ time, when final second-quarter figures are released.

A few are even expecting to see a small price rise by then because of last month’s buying craze, which saw project launches attracting rising numbers of investors and speculators.

But given that the current frenzy is being whipped up against a still-weak economic backdrop, more analysts are turning cautious, saying it is unsustainable.

Yesterday, the URA reported prices of non-landed homes in the suburban areas falling just 2.6 per cent in the second quarter, compared with a bigger 6.6 per cent slide in city-centre prices and a 6.3 per cent decline in city-fringe prices.

The smaller mass-market price fall reflected the strong buying support from upgraders in the HDB market, where resale prices reversed a marginal fall to rise by 1.2 per cent in the second quarter.

The stock market rally, coupled with strong liquidity, has resulted in a surge in second-quarter new home sales. CBRE Research estimated that 4,000 new homes were sold – more than 50 per cent above the 2,596 units sold in the first quarter.

The volume lent support to home prices and, in some cases, allowed developers to raise their prices when supply was tight, it said.

The second quarter also saw more new launches at higher price levels because they were located either on the city fringe or in prime districts, CBRE Research added. These include Martin Place Residences, The Wharf Residence, One Devonshire and the sold-out 8@Woodleigh.

CBRE Research executive director Li Hiaw Ho said the 5.9 per cent decline in private home prices is ‘contrary to the present market perception’ as actual price levels in the second quarter are known to have risen more than 10 per cent from the first quarter.

DTZ head of South-east Asia research Chua Chor Hoon described the fall as ’surprising’ because prices picked up around last month – especially in the prime districts of 9, 10 and 11.

Average home prices were still relatively flat in April and May – some developments saw price increases, while others saw price falls – she said. But last month, resale home prices rose from 3 per cent in the mass-market segment to as much as 11 per cent in prime areas, she added.

‘Going forward, developers are likely to test the market with gradual price increases. Should the current momentum hold, we can expect private property prices to increase by 5 per cent to 8 per cent in the second half of the year,’ said ERA Asia-Pacific associate director Eugene Lim.

While local buyers are now supporting the market, more foreign investors may come when the integrated resorts open, he added.

Colliers International director for research and advisory Tay Huey Ying thinks the strength of pent-up demand should not be underestimated as new home sales had sunk to a low of 4,264 units last year – half of the annual average of about 8,500 new units since 2000.

Home sales could remain robust in the second half of this year, possibly reaching 12,000 units or more. This will hinge on price rises not exceeding 5 per cent for mass-market homes and 10 per cent for higher-tier homes, as buyers remain price sensitive in view of the absence of economic expansion and growth in employment and personal income, she said.

If the positive buying mood continues, the third-quarter price index may show a rise, said OrangeTee’s executive director (residential), Mr Steven Tan.

Others, like Ms Chua, think the final second-quarter index may already show some increase when more June caveats are included in the computation of the index. But she thinks this could be a ‘temporary blip’ with resistance setting in at some levels and prices possibly stagnant or falling from as early as the the third quarter onwards.

POSSIBLE PICKUP

‘Should the current momentum hold, we can expect private property prices to increase by 5 per cent to 8 per cent in the second half of the year.’ – ERA Asia-Pacific associate director Eugene Lim

Source : Straits Times – 2 July 2009

PRICES of HDB flats have staged a surprising comeback, reversing a first-quarter dip of 0.8 per cent to rise 1.2 per cent in the second quarter and reach a historical high.

Flash estimates from the Housing and Development Board (HDB) released yesterday show the resale price index rising to 140 – a record level not seen since the current index started in 1990.

It beats the previous record set in the fourth quarter of last year when it hit just over 139.

Market analysts said they were caught off-guard by the turnaround, as many had been predicting 2 to 10 per cent declines in HDB resale flat prices for this year after a descent began in the first quarter – the first one since 2006.

Yesterday’s numbers have changed expectations, with analysts reversing their forecasts for HDB flat prices to hold or increase by up to 5 per cent this year.

Industry observers attribute the latest surprise figures to three factors.

First, talk of an economic recovery has gathered momentum, backed by the recent stock market rally and brisk private property sales. This has slowed the slide in private property prices islandwide.

Flash figures capturing sales prices in the first 10 weeks of the quarter, released by the Urban Redevelopment Authority yesterday, show prices falling 5.9 per cent in the second quarter, compared to a 14.1 per cent decline in the previous quarter.

The marked slowdown in the price decline is in line with rising transaction prices evident since the strong rebound in home sales since February, said Colliers International’s director for research and advisory, Ms Tay Huey Ying.

More bullish sentiment, coupled with the strength in HDB resale prices, has supported the private market, say analysts.

High HDB valuations is another key factor. HDB upgraders – buyers with HDB addresses buying private property – have been able to sell their units at high valuations and for tidy profits to fund private property purchases.

Banking executive Vic Cheow, 28, is one such HDB upgrader who recently sold a four-room HDB flat to buy a three-bed condominium unit in Jurong.

Due to the high valuations, buyers do not need to dig deep for upfront cash – otherwise known as cash-over-valuation – to purchase resale flats.

‘We found selling at a profit easier as a result of this,’ said Mrs Cheow.

ERA Asia-Pacific associate director Eugene Lim reports that the agency, which accounts for more than 40 per cent of the HDB resale market, saw transaction volumes surge 52 per cent in the second quarter compared to the first.

‘The feeling in the second quarter is the recession hasn’t been as bad as it seems,’ said Mr Lim. Many sellers have become more willing to negotiate and are realistic, especially those selling larger flats, he added.

The third factor, flagged by Chesterton Suntec International head of research Colin Tan, is that demand far outstrips supply. HDB launched 7,793 new flats last year and will launch another 3,700 in the first nine months of this year.

‘HDB may have ramped up the supply of new flats recently, but it’s not enough and it takes too long,’ said Mr Tan. ‘There is still a lot of pent-up demand from a needs-based group of people. And they have no choice but to pay high prices because they cannot wait.’

A Credit Suisse report released recently notes that total public and private housing supply for 2008 to 2012 is 16,000 on average per year – 42 per cent lower than the 10-year historical average.

‘This does not look excessive versus the annual average 24,000 household formations or marriages,’ said the report.

But, added Mr Tan, it seems ‘unnatural for prices to rise against the fundamentals of the economy’, which is still in recession.

More detailed public and private housing data for the second quarter is set to be released at the end of this month.

Source : Straits Times – 2 July 2009

The property rush continues to grab the headlines with queues at new launches and crowds at show flats. Perhaps a sobering reminder would be the still declining prices based on the Urban Development Authority’s (URA) flash estimates released earlier this Wednesday. The price index for private residential property is still falling, albeit at a slower rate. Overall residential prices fell by 5.9% in 2Q09 (q-o-q) compared to 14.1% decline in the previous quarter.

Prices declined by 2.6% outside the central region (representing the mass market), by 6.6% in the core central region (Orchard Road and its environs), and 6.3% in the rest of the central region. These declines were markedly slower than the 7.3% (outside central region), 16.2% (core) and 17% (outside central region) declines in 1Q09.

And some analysts remain skeptical about signs of a recovery in the physical property market. “I am cautious about the renewed interest in the Singapore property market” says Singapore-based Thomas Kraegi, head of macro-economic research for Asia-Pacific at UBS. “I’m surprised by the activity,” he admits. He puts it down to price cuts.

“Transactions are being driven by domestic buyers. Foreigner are absent,” he adds. This is a marked difference to the gains in 2006 and 2007, where foreigners figured largely in driving up prices in the luxury segment. What’s more, Kraegi is expecting unemployment to get worse with 30,000 to 40,000 people losing their job as a base case scenario over the whole (recessionary) cycle so its not likely that more people will keep jumping on the property buying bandwagon.

Nomura Research in a report released on Wednesday, concurs, saying that a faltering economy puts “further downside risks to rents, tempering current optimism (in part driven by the buy/rent trade-off) and subsequently investor/end user demand and asset price expectations.” Besides rising inventory, weak residential leasing demand and lower rents fundamentally are likely to continue weighing on underlying asset prices, the report states.

“Our sensitivity analysis suggests that stocks have simply run too far, too fast even assuming an aggressive up-tick in residential property prices from 2H09 through to 2011” the report adds. “Consequently, we reaffirm our bearish stance on the developers, and retain our reduce calls on CapitaLand, City Developments and Keppel Land.”

Over at Kim Eng Research, Wilson Liew sounds more upbeat. He singles out Wing Tai Holdings as an interesting play.

“After speaking to property agents, we believe that the launch of Ascentia Sky (on Alexandra Road) is imminent. We have raised our average selling price assumption to $1,100 psf, and based on an estimated breakeven of $984 psf, we no longer believe that a provision is necessary for this site – Wing Tai may in fact make a small profit,” he observes.

Interestingly, hordes of owners who had bought units under the deferred payment scheme were reported to be at the adjacent The Metropolitan (which recently received its temporary occupation permit) over the weekend trying to ‘flip’ their units. They were reported to be asking for $1,100 psf to $1,200 psf from interested buyers.

Liew has a buy recommendation on Wing Tai. “Buying the stock is cheaper than physical property,” he reckons. “As the sales outlook improves, we have upgraded our FY09-10 forecasts by 4.9% and 13.2% respectively.” He has a target price of $1.79, and the counter closed at $1.42 on Wednesday. Missed the queue? Consider property stocks.

Source : The Edge – 1 Jul 2009

Private home prices in Singapore have fallen for the fourth straight quarter, though at a slower pace.

Initial estimates from the Urban Redevelopment Authority (URA) on Wednesday showed that the cost of private residential properties fell by 5.9 per cent in the second quarter, compared to the record drop of 14.1 per cent in the previous quarter – the steepest fall since 1975.

Observers projected that some 4,000 new private homes were sold between April and June, 50 per cent more than the previous quarter.

Strong sales volume and improved market sentiment drove prices up, narrowing the decline in the second quarter.

Donald Han, managing director, Cushman and Wakefield, said: “We are going into a scenario of an upturn. (For) the third quarter, we may look at a potential positive number.

“There is still liquidity in the market and system, looking for good yielding assets. There is still a lot of activity out there and that will continue for the next two to three quarters.”

According to the latest numbers, prices for homes in the second quarter slid across the board, dipping by 6.6 per cent in the central region, 6.3 per cent in the city fringe and 2.6 per cent in suburban areas.

Going forward, experts say developers will continue to launch mass market projects starting at S$800 per square foot (psf).

Overall, prices for the second half of the year is expected to rise by up to 10 per cent, with prospects for mid-tier properties also looking up.

Liang Thow Ming, director, Residential Services, Credo Real Estate, said: “Mid-end market has basically gone to the four-digit region at this point in time. I expect mid-end (market) will start at S$1,000 (psf) upwards. There has been a lot of activity which will sustain very well. In fact, I think it may be the out performer for the rest of this year.”

More expensive luxury apartments averaging between S$3,000 and S$4,000 psf may also be placed for sale, though on a selective private preview basis.

Market watchers say foreign investors will take positively to the latest figures. And they expect some foreign buyers to return in the next six to eight months, with the majority of them likely to be looking at properties above S$5 million.

A minor recovery was also seen in the resale prices of public flats.

The Housing and Development Board said preliminary data showed that the resale price index rose 1.2 per cent between April and June, to an all-time high of 140 points since records began in 1990.

This was a 1.2 per cent price increase in the second quarter, reversing a dip of 0.8 per cent in the previous quarter.

Property agents say this is on the back of greater job security and realistic home prices.

For the whole year, observers expect resale prices of public flats to go up by some three to five per cent.

The figures captured transaction prices in the first 10 weeks of the quarter. The data for the full second quarter will be released on July 24.

Source : Channel NewsAsia – 1 July 2009

CapitaLand unit, Ascott, has opened two new serviced residence apartments in China.

Somerset JieFangBei is in Chongqing, while Somerset Garden City is located in Shenzhen. The properties are Ascott’s first in each city.

Ascott now has 26 properties in 12 cities across China, making it the largest international serviced residence owner and operator in the country.

Ascott CEO Lim Ming Yan said the addition of the two new properties signals the firm’s confidence in the Chinese market.

The company plans to open seven more properties in China by 2010.

Source : Channel NewsAsia – 1 July 2009

The Land Transport Authority (LTA) has awarded another contract worth S$378 million for Downtown Line 2 (DTL2).

The contract for civil works went to local firm, Sembawang Engineers and Constructors.

The firm will design and build stations and tunnels at Botanic Gardens and Stevens.

Construction of the stations is scheduled to start in the third quarter of 2009 and targeted to complete by 2015.

DTL2 is a fully-underground line with 12 stations and one depot. When completed, it will link commuters from the Bukit Timah corridor to the North East Line, North South Line and Circle Line.

Source : Channel NewsAsia – 1 July 2009

The official price index for private homes slipped 5.9 per cent in second quarter 2009 over the preceding quarter, according to a flash estimate released on Wednesday by the Urban Redevelopment Authority (URA).

The Q2 drop is smaller than the 14.1 per cent quarter-on-quarter decline in the index in Q1 this year.

URA also released on Wednesday the flash estimates of the price changes in the three geographical regions for Q2.

Prices of non-landed private residential properties decreased by 6.6 per cent in Core Central Region, 6.3 per cent in Rest of Central Region and 2.6 per cent in Outside Central Region in Q2 over Q1.

In comparison, for the first three months of this year, prices of non-landed private residential properties posted quarter-on-quarter drops of 16.2 per cent in Core Central Region, 17.0 per cent in Rest of Central Region and 7.3 per cent in Outside Central Region.

Source : Business Times – 1 July 2009

The Housing & Development Board’s (HDB) flash estimate of the resale price index for HDB flats in second quarter 2009 rose 1.2 per cent over the preceding quarter. This reverses a marginal quarter-on-quarter drop of 0.8 per cent registered in Q1.

The resale price index for the full Q2 2009, along with more detailed public housing data for the period and upcoming new flat supply, will be released at the end of this month, HDB said in news release.

Source : Business Times – 1 July 2009

Private home prices in Singapore have fallen for the fourth straight quarter, though at a slower pace.

Initial estimates from the Urban Redevelopment Authority (URA) showed Wednesday that the cost of private residential properties fell by 5.9 per cent in the second quarter, compared to the record drop of 14.1 per cent in the previous quarter – the steepest fall since 1975.

According to the latest numbers, prices for homes slid across the board, dipping by 6.6 per cent in the central region, 6.3 per cent in the city fringe and 2.6 per cent in suburban areas.

Minor recovery was also seen in the resale prices of public flats.

The Housing and Development Board said preliminary data shows that resale price index rose 1.2 per cent between April and June, to an all-time high of 140 points since records began in 1990.

This comes after a marginal drop of 0.8 per cent in the first quarter.

Source : Channel NewsAsia – 1 July 2009

The Urban Redevelopment Authority (URA) will put an industrial site at Kaki Bukit up for sale through a public tender.

It says it has accepted an application from a developer who has agreed to bid for the land parcel at or above the minimum acceptable price of S$5 million. The identity of the developer was not revealed.

The 1.07 hectare site, located at Kaki Bukit Road 2, has a 30-year lease period.

The site can be developed for clean, light and general industrial purposes and was made available for sale through the Reserve List System in May this year.

Under this system, a site will be released for sale only if a bid with an acceptable minimum price is received.

URA will launch the public tender in about two weeks’ time.

Source : Channel NewsAsia – 1 July 2009