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Tuesday, March 2, 2010

The Laurels @ Cairnhill Road




Location: 38 & 40 Cairnhill Road (District 9)
Tenure: Freehold
Expected Completion: 2014
Site Area: 78,047sqft
Total Units: 229 (2 blocks, 20 storeys)

Unit Types:
1 bedroom ~ 549sqft, 667sqft, 721sqft
2 bedroom ~ 883sqft, 1001sqft, 1345sqft
3 bedroom ~ 1281sqft, 1302sqft, 1313sqft, 1765sqft, 1927sqft
4 bedroom ~ 1819sqft, 2573sqft
Penthouse ~ 3853sqft, 4768sqft, 4833sqft

Facilities:
Swimming Pool (50m x 12m), Jacuzzi, Fitness Station, Playground, BBQ, Function Room, Gym, Tennis Court, Sky Terrace

Preview soon. Presentation and floor plans available upon request.

Contact me at propertydollars@gmail.com or +65 9650 2709 with the following for more information:

Laurels / Name / Contact # / Unit Type Interested

76 SHENTON WAY

Location: Shenton Way
Total Units: 202 (39 storeys)
Unit Types:
1 bedroom ~ 592-624 sqft
2 bedroom ~ 968-975 sqft

Contact me at propertydollars@gmail.com or +65 9650 2709 with the following to register your interest:

76 Shenton Way / name / contact # / unit type interested

Asian property prices expected to continue to rise despite govt measures

Recent measures to cool the property market in China, Hong Kong and Singapore are seen as the right moves to temper speculation and rapidly rising prices.

Still, industry watchers said that prices will have room to move upwards over the next two years.

This is because interest rates in Hong Kong continue to be low, and high-end property prices in Singapore are still below their peak.

Private home prices in Singapore rose by 24 per cent in the second half of last year, causing the government to step in.

Over in Hong Kong, the government also announced measures to avoid an asset bubble – after property prices rose by some 30 per cent last year.

The Chinese government is also doing its part to cool its red-hot property sector by tightening credit.

Analysts said these moves will limit price growth this year, but overall, they still expect prices to move upwards, even if at a slower pace.

Donald Han, managing director, Cushman & Wakefield, said: “With the introduction of these measures, and the fact that the government is keeping a lookout on the market, they may continue to intervene.

“We would expect the market currently to come down to between 8-15 per cent, depending on what market you are in in Asia Pacific. So it would probably come down by a few percentage points in terms of price increases.”

Analysts note that Singapore’s high-end residential market remains below 2008 peaks by some 20 per cent.

Meanwhile – they also say, the measures are only aimed at moderating the price increases.

Karamjit Singh, managing director, Credo Real Estate, said: “The measures that were announced by the Singapore government on February 19 do not address the root cause of the problem yet. The root cause of the problem is a short-term supply crunch at the lower end of the market, but it definitely helps mitigate the risk of bubbles being formed in the future.”

Experts said the factors set to drive prices higher this year are investors searching for higher yields, continuing hot money inflows and continuing low interest rates causing lower borrowing costs for buyers.

Source : Channel NewsAsia – 2 Mar 2010

Straits Trading Company to develop 12 bungalows at Chancery Lane

The property unit of Straits Trading Company will be developing a cluster of freehold bungalows at the prime Chancery Lane area as the mainboard-listed company is acquiring the original developer, Tertius Development.

The project, called Chancery Five, will have 12 bungalow units and sits on a land plot of 27,600 square feet. The size of the bungalows will range between 4,800 square feet to 6,500 square feet each.

Each of the two-storey bungalows will have five rooms, an entertainment room, an attic, a private basement car park, a swimming pool and a lift.

Eric Teng, chief executive officer of Straits Trading, said the Chancery Five project is in line with its overall strategy of developing properties that are both exceptional and of high quality.

While the company did not disclose the value of the development, property analysts estimate it to be worth about S$58 million.

Based on the project’s estimated worth, Cushman & Wakefield’s regional managing director Donald Han said that the bungalows would be priced at slightly less than S$1,000 per square feet (psf).

This means each unit would be priced at about S$4.8 million, which he said is “a fair price for a bungalow on Chancery Lane”.

Mr Han added that its close proximity to top schools such as the Anglo-Chinese and Singapore Chinese Girl’s schools, as well as to Orchard Road, makes it a hit with families and sub-letters.

Meanwhile, Nicholas Mak, real estate lecturer at Ngee Ann Polytechnic, said that based on similar properties in the vicinity, Chancery Five should fetch about S$500 to S$600 psf.

“With the largest unit at about 6,500 square feet, I have a feeling that they will price it above S$4 million per unit,” said Mr Mak.

“Landed property will always have a place with investors. It has the highest price increase in 2009 compared to other types of properties,” said Mr Han.

Source : Channel NewsAsia – 2 Mar 2010



Location: 5 Chancery Lane
Development Type: Cluster Bungalows
Tenure: Freehold
Expected Completion: 2013
Total Units: 12
Unit Size: 4801-6491sqft (5 / 6 Bedroom)
Features:
~ All rooms ensuite
~ Private pool and lift
~ Kitchen fully equipped with Gaggenau appliances
~ Entertainment room
~ 2 private carpark lots

Contact me at propertydollars@gmail.com or +65 9650 2709 for more information.

9% of CBD blocks have over 20,000 sq ft floor plates

Upgrading quality of stock crucial for S’pore’s status as financial hub: JLL

As of December last year, only 9 per cent of Singapore’s CBD office buildings had floor plates of over 20,000 sq ft, which are favoured by big occupiers, particularly financial institutions.

In Raffles Place and the New Downtown (Singapore’s financial district) alone, only 13 per cent of buildings have floor plates in excess of 20,000 sq ft, according to a Jones Lang LaSalle white paper titled Future Proofing Singapore’s Office Market.

However, the new supply of offices being built presents a great opportunity to enhance the quality of Singapore’s office stock to meet the requirements of financial occupiers, not just in terms of bigger floor plates but also technological specifications, security requirements, catering to lifestyle needs of office workers as well as to address sustainability issues.

The white paper, authored by the property consulting group’s regional director and head of markets Chris Archibold, says: ‘Singapore’s CBD currently only has 3.5 million sq ft of Grade A space with floor plates of at least 18,000 sq ft.

‘The upcoming supply will increase this to about 10 million sq ft by 2012 and enhance the quality of office stock offered in the market. This amount of space is needed to house Singapore’s financial occupiers,’ says the white paper.

Currently financial institutions occupy 83 per cent of international grade A office space in Singapore; hence addressing their requirements is critical if Singapore is to position itself as a major global financial hub.

More than 60 per cent of occupiers in JLL’s recent survey viewed floor plates of over 15,000 sq ft at the top of the scale in terms of importance when considering future space. Other key considerations included 24-hour chilled water supply (for air conditioning), dual power source and generator capacity for general use, and security issues.

Unfortunately, much of the island’s existing office stock now is not in sync with the needs of modern MNCs, especially those in the financial industry.

JLL said that besides large floor plates, most occupiers are also looking for modern square or rectangular floor plates with raised floors (to facilitate cabling) and the latest technological infrastructure.

But much of the current CBD office stock does not match this need because the bulk of the current office stock was built prior to today’s technology.

As of December 2009, 68 per cent of the CBD office buildings were more than 11 years old. In Raffles Place and New Downtown, the proportion of office blocks over 11 years old was 62 per cent.

‘This demonstrates that much of the existing CBD office stock suffers from functional obsolescence and needs upgrade works and refurbishments,’ JLL said.

The white paper noted that the massive increase in reliance on IT within MNCs, specifically in the financial services industry, over the past 10 years, has left much of the Singapore CBD office stock unable to cope fully with the needs of these occupiers.

‘Major banks and trading houses are looking for functional buildings with infrastructure that supports business growth and reduces occupational costs.’

These include telecoms infrastructure, multiple telecom providers and fibre-optic network options, open and flexible space, back-up power supplies, a high floor-load capacity, a high floor-to-ceiling height, raised floors as well as large, regular-shaped floor plates.

The shape, size and layout of a building’s floor plates will affect efficiencies. For instance, a regular (square or rectangle) shaped floor, especially if it is built with modern system furniture, will minimise space wastage.

A building with bigger column-free floor plates similarly allows for higher occupational density and minimises circulation areas like corridors.

Besides physical considerations, occupiers also weigh a building’s technical specs in evaluating their choice of premises.

Buildings designed with the occupier in mind substantially reduce upfront fitting-out capital expenditure costs and reinstatement costs at the end of the lease by providing infrastructure such as water supply to each floor (for internal pantries or extra washrooms) and knock-out panels for internal staircases.

JLL also highlighted that with the growing focus on corporate social responsibility, occupiers that are currently considering new premises are looking for environment-friendly buildings to minimise their carbon footprint.

‘Most of the older buildings are very expensive to retrofit with environmentally friendly or sustainable building systems and infrastructure.

‘Meanwhile many new developments are now focusing on attaining either the Singapore Building & Construction Authority (BCA) Green Mark or the US Leed – with some even getting both.’

Source : Business Times – 2 Mar 2010

Suntec Reit eyes convention centre

But ARA has to first reposition centre for more stable income

There are plans for Suntec Real Estate Investment Trust (Suntec Reit) to purchase the entire Suntec International Convention & Exhibition Centre. But this is unlikely to happen until the latter has been repositioned to produce a more stable income stream.

John Lim, chief executive of ARA Asset Management, which has a unit that manages Suntec Reit, told BT: ‘Eventually, we hope for Suntec Reit to acquire the asset.’

But ‘we have to spend some time and money to reposition the convention centre, and that may take about two to three years’.

ARA is yet to approach the Urban Redevelopment Authority, though its plans are subject to approval. ‘We will have to work with the authorities closely on how to reposition the asset,’ Mr Lim said.

Last year, ARA bought Suntec convention centre for $235 million and placed it under a newly created private real estate fund called the ARA Harmony Fund. Suntec Reit has a 20 per cent stake in this fund.

The convention centre did not go to Suntec Reit entirely because its earnings fluctuate, depending on the size and frequency of events held.

Reits tend to prefer properties with steady income, so they, in turn, can make steady payouts to unit-holders.

According to Ngee Ann Polytechnic real estate lecturer Nicholas Mak, ‘putting up tenants that pay regular rents’ would be one way to inject more stability into the convention centre’s income. But the amount of space that can be converted for other uses could be limited, he said.

Mr Lim raised the possibility of more food and beverage outlets at Suntec convention centre. ‘There are quite a number of activities you can look at,’ he said.

In the meantime, Suntec Reit has been busy with other asset enhancement works. It said in January that it would build a glass facade and covered walkway to link Suntec City Mall to the upcoming Promenade MRT station. It is also creating new retail units.

Suntec Reit units gained one cent on Friday to close at $1.30.

Source : Business Times – 2 Mar 2010

Protect reluctant parties in en bloc sales

MR TAN Keng Ann’s letter last Saturday (‘Review law on en bloc sales’) revealed the unfair predicament suffered by a good number of people amid the frenzy of many collective property sale exercises. Instead of leaving them alone to retire in peace and contentment, young speculators callously go out of their way to make home owners like Mr Tan miserable, all to make a quick buck.

I am not involved in any collective sale, but from what I have heard from friends who are, the situation is dire and shameful. Meetings of condo owners to discuss such sales are invariably boisterous. Some turn ugly with owners hurling verbal abuse at one another, with those who refuse to sell on the receiving end. They are also harassed between meetings.

It is clear that those who put pressure on reluctant owners have much to gain if the sale goes through. Some speculators have bought several units earlier in anticipation of a successful sale. It is purely business and their aim (and that of the would-be developers) is to make money. The feelings of people like Mr Tan do not concern them in the least.

Yes, the law must change if we are serious about curbing speculation. It would protect the interest of owners who cherish their homes. Why take away the rights of owners who are not interested in the money and want to stay put? Besides, many of the condos involved are not by any stretch of the imagination obsolete in design, or in a state of disrepair.

Lee Seck Kay

Source : Straits Times – 2 Mar 2010

Move forward with refreshing sentiment on homes

THANK you for publishing the thought-provoking concerns of Mr Tan Keng Ann last Saturday (‘Review law on en bloc sales’).

There is a growing band of condominium owners who continue to live in fear of being ousted from our precious chosen homes by property speculators or often-misguided secondary proprietors in a lemming-like pursuit of a perceived windfall profit.

With the refreshing sentiment of regarding a house as a home, I hope there will be concrete action to tighten appropriate legislation and curb collective property sales exercises.

Dennis Butler

Source : Straits Times – 2 Mar 2010

New building-tax scheme panned at roundtable

Participants say govt should rethink Land Intensification Allowance

THE new tax allowance scheme that replaces the Industrial Building Allowance (IBA) and aims to raise land productivity is not business friendly.

In fact, restricted to too few sectors, the Land Intensification Allowance (LIA) may actually inhibit the growth of industry ecosystems and raise business costs to uncompetitive levels, participants at a post-Budget roundtable said yesterday.

Ascendas chief financial officer Chia Nam Toon said that there is a ‘need to address this very carefully’, lest the nine qualifying sectors – singled out as ones which will move Singapore manufacturing up the value-added chain – are hurt too.

As a business park developer, Ascendas looks into the clustering effect of industries – where core players are supported by small and medium sized enterprises (SMEs) that may not fall in the same sector.

The LIA’s sectoral restriction could be counterproductive if it discourages such clustering, Mr Chia said.

KPMG executive director of tax David Lee agreed that phasing out the IBA seemed contrary to the strategy of nurturing industry ecosystems.

This involves attracting MNCs, he said, and the IBA continues to be a key incentive offered by locations such as Hong Kong, which compete with Singapore for global investments.

Building costs are significant expenses forked out, said Ernst & Young international and corporate tax services partner Choo Eng Chuan, who also called for the move to be re-examined.

Those who spoke up were in favour of not abolishing the IBA entirely and relaxing restrictions on the LIA.

Among numerous other Budget measures debated at the Institute of Certified Public Accountants of Singapore (ICPAS) roundtable, was the hike in foreign worker levies.

Steering away from usual comments about its impact on the construction sector, National Volunteer and Philanthropy Centre corporate development director Chang Che Hsien asked if non-profit and healthcare sectors could be exempted.

National Kidney Foundation financial controller Ingrid The said that up to 80 per cent of nursing homes’ employees are foreign and not easily replaced, and that costs cannot be passed on to needy patients.

Mr Choo added that the levy hike was unlikely to induce productivity gain in an already overstretched healthcare workforce.

SME voices were also represented at the table. Michael Tien, CEO of Atlas Sound & Vision, spoke about the gap in training grants for basic degrees while CEO of Greenpac Susan Chong proposed that the government provide bridging loans for SMEs to embark on patenting.

Yesterday’s session was co-chaired by ICPAS president Ernest Kan and MP Jessica Tan. Ms Tan chairs the Finance and Trade & Industry government parliamentary committee and will speak in Parliament when the Budget debate begins this afternoon.

Source : Business Times – 2 Mar 2010

Australian property sales hit record

Australian property prices are rising strongly and show no signs of abating, analysts said yesterday, after weekly sales in one state hit a record A$1.03 billion (S$1.3 billion).

The Real Estate Institute of Victoria said last week saw ‘the largest dollar volume of transactions ever recorded’ amid growing confidence in the economy as people took advantage of low interest rates.

‘We’ve seen more physical sales in a week period, but never have they passed the billion dollar mark,’ research manager Robert Larocca told AFP.

‘So that’s partly a sign of how strong the market is and it’s also a sign that people are spending more than they have in the past.’

Mr Larocca said that the surge in sales was the result of historically low interest rates following the global financial crisis and the growing population in Melbourne, Australia’s second largest city, outstripping available housing.

‘People are confident, they are confident because the economy is going much better than they expected it to,’ he added.

David Airey, president of the Real Estate Institute of Australia (REIA), said that Melbourne was one of the country’s strongest markets, but noted that Australian property prices were in general very strong and rising.

‘The property market in all Australian capital cities has had a rapid recovery from mid-2009 on, and noticeably in Melbourne and Sydney with property prices rising quite significantly over that six month period,’ he said.

‘I think that will be reflected again this quarter with further growth in all capital cities.’

Mr Airey said that Australians felt property was a safe investment, with median house prices rising by 18.5 per cent in Melbourne and around the country by more than 12 per cent in 2009.

Source : Business Times – 2 Mar 2010

Monday, March 1, 2010

Prices of London luxury homes up 17% in February

More buyers chasing fewer properties fuels sharpest increase in 2 years

Luxury home prices in central London jumped 17 per cent in February from a year earlier, the biggest gain in almost two years, as more buyers competed for a dwindling number of properties, Knight Frank LLP said.

The value of houses and apartments costing more than £1 million (S$2.1 million) rose 3.2 per cent from January, the London-based property broker said in a statement yesterday. The annual increase was the largest since the market peaked in March 2008 and compares with an 11.5 per cent advance in January. Prices are still 10 per cent lower than the peak.

‘The continuation of the growth in prices and the recent increase in the speed of such growth has been caused by a dramatic shortage of supply,’ Liam Bailey, head of residential research at Knight Frank, said.

The lack of properties for sale, combined with a surge in overseas buyers drawn by a weaker pound, helped London’s prime real estate perform better than the residential market as a whole. House prices across the country fell last month for the first time in 10 months, Nationwide Building Society said on Feb 26.

Knight Frank registered 10 new potential buyers last month for every additional property it was asked to sell in the centre of the UK capital, twice the average since the broker started tracking the ratio five years ago.

The company now has 30 per cent more new buyers than in any comparable period in the past five years, while it has 22 per cent fewer properties for sale than is normal for this time of the year.

The pound’s 22 per cent decline against the euro in the past three years attracted purchasers from Russia, Italy and Greece, in particular, Mr Bailey said. Foreigners bought 45 per cent of properties sold for more than £2 million in the past year, according to the broker.

Prices for the best properties in the Mayfair, Kensington, Holland Park and Knightsbridge districts are reaching or exceeding levels from when the prime central London market peaked in 2008, Knight Frank said.

The broker recently sold a modernised property in Mayfair for near the record price of £3,700 a square foot achieved in 2007, Richard Cutt, head of Knight Frank’s office in the district, said. He declined to be more specific because of confidentiality agreements.

‘Newly refurbished properties done to the right standard are back to their peak and are in very short supply,’ he said.

The market’s revival is drawing developers back into neighbourhoods such as Chelsea, Belgravia, Kensington and Mayfair after a gap of 18 months, Knight Frank said. Construction starts in the municipality of Kensington & Chelsea rose 43 per cent between July and December.

Consumer confidence rose to a four-month high in February as the UK emerged from the longest recession on record, market researcher GfK NOP said on Feb 26. The British economy grew at a faster pace in the fourth quarter than previously estimated, the Office of National Statistics reported the same day.

Gross domestic product increased 0.3 per cent from the third quarter, compared with a previous calculation of 0.1 per cent, the statistics office said.

The median forecast in a Bloomberg News survey of 27 economists was a 0.2 per cent gain. Prices of luxury properties in central London surged 82 per cent during the last boom, between January 2005 and March 2008, Knight Frank’s data show.

The broker compiles its luxury home index from estimated values of properties in the Mayfair, St John’s Wood, Regent’s Park, Kensington, Notting Hill, Chelsea, Knightsbridge, Belgravia and South Bank neighbourhoods of London.

Source : Business Times – 2 Mar 2010

UK mortgage approvals in January have dropped by more than economists forecast to an eight-month low, adding to evidence that the housing market rec

UK mortgage approvals in January have dropped by more than economists forecast to an eight-month low, adding to evidence that the housing market recovery may be losing momentum.

Lenders granted 48,198 loans to buy homes, compared with 58,223 in December, the Bank of England said yesterday. The median of 22 economist forecasts in a Bloomberg News survey was for a result of 50,000. Gross mortgage lending has fallen to its lowest level since 2000.

Bank of England policymaker Kate Barker said last week that the property market may face ‘adjustments’ as banks curb lending, and Hometrack Ltd said yesterday that price gains observed last month don’t have solid foundations. The UK’s longest cold snap in 30 years and an increase in a tax on housing transactions may have also damped activity, economists said.

‘There will be a bit of a slowdown this year,’ Vicky Redwood, an economist at Capital Economics, said in a telephone interview before the figures were released. ‘Credit conditions are still pretty tight and incomes are set to be squeezed.

There are not the fundamentals there to keep the recovery going.’

The pound fell as much as 0.1 per cent against the dollar after the report, and traded at $1.5162 as at 9.33 am in London, down 0.6 per cent on the day. The yield on the benchmark two-year gilt was up 0.5 of a basis point yesterday at 0.977 per cent.

House price data have shown a mixed picture of the property market. Values increased 0.3 per cent on the month in February, Hometrack said yesterday. Nationwide Building Society said last week that prices fell one per cent, the first decline in 10 months.

Net mortgage lending rose in January to £1.5 billion (S$3.16 billion) from £1.2 billion the previous month, the Bank of England said. Overall gross home loans dropped to £10.2 billion, the lowest level in more than nine years.

HSBC Holdings plc said yesterday that it ‘continued to support its customers’ in a ‘challenging period’ by offering £15 billion in new mortgage lending in the past year.

‘Average loan-to-value ratios were less than 55 per cent, and we grew our market share of net new mortgage lending to 11 per cent,’ the bank said in a statement.

Yesterday’s central bank report showed that consumers added to their unsecured debts in January. Net consumer credit rose by £500 million.

Economists predicted a £100 million drop, according to the median of 20 forecasts. Credit-card lending rose by £171 million, while personal loans and overdrafts increased by £330 million.

Source : Business Times – 2 Mar 2010

US, Japan to see leap in distressed property sales: poll

The US and Japan are expected to see the biggest rise in distressed property sales in the first quarter, as the fallout from the global property downturn intensifies, the results of a survey showed yesterday.

By contrast, respondents in Brazil, India, Hong Kong and Australia are more optimistic and expect fewer distressed property listings, the Royal Institution of Chartered Surveyors (RICS), which surveyed 430 of its members in 25 countries, said.

RICS, which last polled its members in the final quarter of 2009, defines distressed properties as those with a foreclosure order or are advertised for sale by their mortgagee, and which tend to fetch a lower price than their market value.

It said that the net balance of 85 per cent more respondents in the US polled during the fourth quarter expect distressed property sales to rise in the first three months of 2010, compared with about 68 per cent in Q3.

The turnaround was even more distinct in Japan, where the net balance of respondents predicting an increase in distressed sales this quarter jumped from 12 per cent in the Q3 2009 poll, to 80 per cent in the Q4 poll.

Rounding out the top five markets expected to be worst hit by distressed sales this quarter are Ireland, Scandinavia, and Spain, the survey showed.

It is the major property markets of the world, namely the US and Japan, where agents expect the strongest growth in distressed sales in the first quarter of 2010,’ Oliver Gilmartin, RICS senior economist, said.

RICS also asked its members whether the levels of interest from specialist funds that buy distressed properties was rising, finding that 21 out of 25 countries saw increased interest, with interest in Spain, Ireland, the UK, and the US rising at a faster pace.

‘Significantly, whilst the US is seeing ongoing rises in interest from specialist funds, Japan is not the recipient of the same level of investor appetite for distressed property assets,’ Mr Gilmartin said.

Source : Business Times – 2 Mar 2010

Turning old CBD offices into prime new homes

Some one million square feet of office space in the Central Business District (CBD) is likely to be converted into at least 1,000 private homes over the next three years.

Property analysts say that with the Marina Bay financial district now taking distinct shape, developers are looking to recycle older office buildings in the current CBD in anticipation of business activity moving to the new hotspot.

Redevelopment plans are also motivated by climbing luxury home prices which contrast sharply with falling office rents.

City Developments said at its results briefing last Thursday that it was looking to see if it could convert any of its office buildings in the ‘old’ CBD to residential use.

‘It is a question of demand,’ said CityDev chairman Kwek Leng Beng at the briefing.

CityDev’s parent company Hong Leong Holdings is already redeveloping 76 Shenton Way, which has a net lettable area (NLA) of about 92,700 square feet of office space.

The 202-unit residential project due to come up on the site is likely to be launched within the next few weeks.

Other similar conversions in the pipeline include UIC Building on Shenton Way and Starhub Centre on Cuppage Road.

‘With the theme of working, living and playing in 21st century Singapore fast becoming a lifestyle reality, we see great potential in quality residential developments in the core central region,’ said a Hong Leong spokesman.

The trend is not new. Developers were looking to convert selected office space into residential use as far back as 2007. City- Dev, for example, launched its One Shenton residential project in January 2007, converting an office block into residential space. Since then, 316 apartments in the 341-unit project have been sold, with many going for more than $2,000 per sq ft (psf).

But other such plans were put on hold when in May 2007, fearing a shortage of office space, the Urban Redevelopment Authority (URA) called a halt to all conversion of offices in the central area to curb further depletion of existing stock.

The ban was lifted in late 2008 as fears of an office space oversupply emerged.

Knight Frank chairman Tan Tiong Cheng said that with the Marina Bay Sands integrated resort (IR) now ready to open its doors and the entire Marina Bay area taking shape, developers are now taking another look at their buildings located in the current CBD.

‘It is the government’s intention to have a new CBD in Marina South. So there is concern that some of the older office buildings may not be relevant to future needs,’ said Mr Tan. ‘Office rents have also dipped, so it is a good time to look at redeveloping some of these buildings now that the ban has been lifted.’

Elsewhere on Shenton Way, UIC has received permission to redevelop UIC Building into a mostly residential project. UIC’s board says it is still assessing all alternatives to ensure the best use for the building. But sources told BT that the conversion could start some time this year. The property has close to 400,000 sq ft of office space.

Office real estate investment trust (Reit) CapitaCommercial Trust also said in January that it is looking at redeveloping Starhub Centre on Cuppage Road into a residential and commercial project with up to 80 per cent of the gross floor area devoted to residential use. The property currently has an NLA of about 280,000 sq ft and analysts estimate that 200-300 upmarket homes could be built on the site.

Other office properties that could be converted (either fully or partly) into private homes include KOP Capital’s The Spazio on Cecil Street, and three buildings owned by Fission Group and Yi Kai Group – VTB Building on Robinson Road, and Aviva Building and Cecil House on Cecil Street.

In all, around one million square feet of office space could be removed from the market and transformed into upmarket homes.

City living has, in recent years, become more popular and luxury home prices are expected to climb this year. UBS Investment Research, for example, expects luxury home prices to rise 40 per cent in 2010 to reach $4,000 psf and maintains that prime home prices (in districts 9, 10, 11) could reach 2007 levels this year.

Falling office rents and an upcoming glut of office supply also means that office rents are widely expected to continue falling. Property firm Savills expects a 20-25 per cent fall in Grade A office rents in Singapore this year.

But Knight Frank’s Mr Tan says that not all office buildings in the present CBD can be converted into homes.

‘City living is only attractive if you have a view of the sea or you have some kind of a city vista,’ he said.

The conversion of some office space into residential units will lend support to rents, analysts said.

UBS Investment Research said in late January that it now expects over one million sq ft of office space to be removed in 2010 and 2011, instead of the 550,000 sq ft expected earlier.

‘As a result, we upgrade our prime office rents in 2010-2013 by 5 per cent,’ said UBS analyst Regina Lim. ‘We now expect prime office rent of $8.70 psf per month by end-2010 and $9.70 psf per month by end-2011.’

Source : Business Times – 1 Mar 2010

Fresh curbs not stopping property buyers

They came, they saw, they bought.

As of yesterday, more than 300 of about 350 units in The Estuary condominium that were released for sale have been snapped up.

The MCL Land project in Yishun is the first major property launch since measures were announced by the Government last week to curb speculation.

These were: stamp duty to be paid if the buyer sells the property within a year, and lending institutions allowed to lend only up to 80 per cent of the property’s value, not 90 per cent.

Yesterday, more than 80 pairs of shoes were seen outside The Estuary’s showflat when The Sunday Times visited at 1.30pm.

The number increased steadily to more than 100 pairs by 2pm as people came to check out the 99-year leasehold condo.

Most were families with young children or young couples, lured by the condo’s proximity to Lower Seletar Reservoir and attractive prices of about $750 per sq ft.

Inside, all the 15 tables set aside for prospective buyers were filled most of the afternoon.

Sales of the 350 released units began last week. The project has 608 units – comprising one-, two-, three- and four-bedroom types.

‘It’s been encouraging so far despite the measures,’ said an MCL Land staff member, noting that demand was evenly distributed across the various apartment types.

‘At first, there was more interest in the one-bedroom units but when the measures were announced, this died off a little.’

One- and two-bedroom units have usually been popular among speculators at launches over the past year. They make up nearly 40 per cent of units in The Estuary, which is near Khatib MRT station.

Small apartments have been targets for speculators because the lump-sum outlay is relatively more affordable.

The Government’s measures to curb excesses have come at the right time, said Madam Angie Ng who bought a three-bedroom unit at The Estuary for about $930,000 yesterday.

‘I’m relieved actually. We were waiting for this launch and then the measures came. That’ll help curb speculators and prices won’t be jacked up,’ she said.

Madam Ng, 36, who works in the banking industry, is married with two children and lives in a five-room flat in Yishun.

Property agents said The Estuary’s relatively distant location from the city also meant it might not be as attractive for speculators.

The prices were the key lure for the buyers, about 70 per cent of whom live nearby in Woodlands and Marsiling.

‘For upcoming projects in Singapore, the prices are at least $900 psf,’ said ERA agent Shayne Lim, 34, noting that prices have even reached $1,200 psf in Ang Mo Kio.

‘And there hasn’t been a new condo in the Yishun area for over 10 years,’ she said of the good buying response.

People in the real estate sector will also be monitoring sales at another condo – Vision@West Coast – which is set to be launched soon.

Located on West Coast Highway, the 99-year leasehold development has 281 apartments and 14 strata houses. Sizes start at about 800 sq ft for a two-bedroom unit and rise to 5,000 sq ft for the strata houses.

‘Demand should be strong as the location also boasts sea views,’ predicted property agent Jimmy Tan.

The asking price for the project, he added, could be around $1,100 psf.

Source : Sunday Times – 28 Feb 2010

Anatomy of a good home buy

I am no expert when it comes to investing in property, but as I have invested in numerous properties over the last decade, I have gained some valuable experience.

I made money from some and lost money from others. Some say you need luck to make money in real estate, but I believe there are some fundamentals that one can use as a guide to make as infallible a decision as possible.

1 Good location

In property selection, particularly for investment purposes, the key is location. For owner-occupied properties, location may be less significant as individuals have different preferences. Some like

quieter locations away from commercial activities while others choose to be close to specific amenities.

Proximity and accessibility to schools, transport lines, shopping centres, factories and specific suburbs are some important factors to consider.

Even for an owner-occupied property, it is important to consider how other people would view the location should you decide to sell it one day. In short, try to be as objective as possible when it comes to location.

2 Good site

Is the property in a good site? Is it next to an MRT station, bus stop, monsoon drain or power cables? Or is it at a T-junction? There is nothing technically wrong with T-junctions, but some people believe it obstructs the flow of good luck in one’s life.

Is the site prone to flash floods and so on? Many people like to live near MRT stations, but some foreigners prefer to avoid the constant noise of the trains. They may prefer quieter areas.

When choosing the site of the property, consider the points that will appeal to your potential buyers in the future.

3 Good layout

Do you like the layout of the apartment or house? Many people prefer their living rooms to feel spacious. Are there many angles and nooks in the house? Some people may consider them bad fengshui.

A more practical consideration is whether the living room and bedrooms are irregularly shaped, with lots of unusable space. A good, clean layout will save you the time, effort and money that you otherwise would have to spend on redesigning around oddly shaped and oddly positioned living areas.

4 Good address

Securing a good address without paying a premium for it is like a windfall. It may not matter much to you now but a good address, such as a nice sounding road name or an auspicious sounding unit number like #08-08, may attract more interest and demand in the property and also a higher price when it is time to sell.

5 Good history

Many potential buyers like to know the background of the property they are buying. Who are the current owners? Why are they selling? Who built the property and how old is it? Is the property owner-occupied or rented out? These things matter in the making of personal and economic decisions.

If the property is for investment, then the purchaser should look into two other areas:

6 Good rental yield

What is the expected rental yield for the property? Is this an acceptable level for you? What is the median rent for properties in that area?

7 Good potential for capital appreciation

What is the median price for property prices in that area? What is the highest and lowest price for properties in that area over the last three, five and 10 years?

The writer is managing director of mortgage consultant Global Creatif Financial. The views expressed are her own.

Lucky numbers

Securing a good address without paying a premium for it is like a windfall…A good address, such as an auspicious unit number, may attract more interest and a higher price when it is time to sell.

Source : Sunday Times – 28 Feb 2010

HDB may tweak rules to curb property speculators

Frustrated buyers have pointed their fingers at permanent residents and private property speculators for pushing up HDB resale flat prices to record levels.

They claim the speculators snap up resale flats and then rent them out illegally or sell them quickly but legally after the stipulated one-year period.

A week ago, National Development Minister Mah Bow Tan said the Government is looking into ’something’ regarding measures for the HDB market.

Property experts reckoned the Government could extend the minimum occupation period for those who bought their flats with bank loans as well as make checks to ensure owners are not flouting the rules.

Under HDB rules, those who buy resale flats without housing grants can sell their flats after 21/2 years if they take a loan from HDB, or one year if they take a bank loan.

They can rent out the entire flat only if they have lived in it for at least three years.

Buyers who take up housing grants for their purchases can sell only after a minimum occupation period of five years.

‘Speculation is not an issue right now. But it may become an issue if buyers are sure that prices will continue to rise for the next year,’ said the managing director of C&H Realty, Mr Albert Lu.

ERA Asia-Pacific associate director Eugene Lim said the Government has already started to rein in the sizzling HDB resale market with the lowering of the loan-to-value limit (LTV) for housing loans taken from banks.

This means buyers can borrow less than before – at up to 80 per cent of the property’s valuation instead of 90 per cent previously.

This will likely affect deals for the high-value resale flats involving cash-over-valuation (COV) of anywhere from $50,000 to $90,000, as buyers will now have to fork out more down payment, in addition to the cash, said Mr Lim.

COV is the amount over and above the flat’s valuation that is payable only in cash.

There are not many other things the Government can look at, as it will not want to affect genuine demand, property experts said.

While the lower LTV limit will have an impact, it won’t be big, said Mr Chris Koh, director of Dennis Wee Properties.

‘It is the 5 per cent cash down payment and the COV that the buyers find challenging to come up with,’ he said.

An industry observer suggested that the Government may raise the first-time applicant’s housing grant to buy resale flats.

The Government can also extend the minimum occupation period for those who bought resale flats with bank loans to as long as 21/2 years, though this may not go down well with the banks as this may increase their risk exposure, property pundits said.

‘The banks may not agree to extending the period, but this area needs to be looked into so that people will not look at flats as a quick one-year turnaround investment,’ said Mr Koh.

Mr Lu suggested that the Government ban private property owners from buying resale flats if their sole intention is to rent them out.

HDB flats are in demand as the well-located ones can easily command a rental yield of 7 per cent to 8 per cent.

HDB, he said, can conduct regular checks to see that the private property owners are living in their flats instead of renting them out during the minimum three-year occupation period.

‘This, however, does not solve the problem of private property owners renting out their HDB flats legally after the minimum three-year occupation period,’ Mr Lu said.

HDB owners can buy private property but they must continue to live in their flats.

However, those who have obtained prior approval from HDB to sublet their flats can live in the private property.

Some property experts suggest going back to the days when flats could not be easily rented out.

‘One possible measure is to revert to the old system of allowing HDB flats to be rented out only if the owner has valid reasons such as being posted overseas to work,’ said Mr Lu.

Mr Koh added that HDB flats should not be seen as a short-term investment as this changes the whole concept of government housing.
SUGGESTED CHANGES

~ Extend minimum occupation period for those who buy HDB flats with a bank loan
~ Check to ensure that owners are not flouting occupation rules
~ Raise first-time applicant’s housing grant to buy resale flats
~ Ban private property owners from buying resale flats to use as rental property
~ Revert to old system where HDB flats may be rented out only for valid reasons

Source : Sunday Times – 28 Feb 2010

Copthorne Orchid to go ahead with condo plans

Tenants had heard it before: The Copthorne Orchid Hotel would be torn down for a condominium.

So there was a sense of deja vu when they learnt from reading The Straits Times last Monday that the 440-room hotel in Dunearn Road would go.

In 2005, City Developments Ltd (CDL) had said it planned to turn the hotel’s site into a condominium. But that did not happen.

CDL owns hotelier Millennium & Copthorne (M&C), which operates the Copthorne Orchid Hotel.

But its latest announcement seems to be for real. A CDL spokesman told The Sunday Times it wants to launch the condominium project as early as this July.

The property developer has not decided on a firm date to put the 150 units of the project on sale as it ‘had just obtained provisional permission to redevelop’.

Depending on how well the condominium sells and existing tenancy obligations, the building may be torn down only next year or later.

M&C held back its plans in 2005 ‘as there was a projected shortage of hotel rooms’, its spokesman said.

But its recent announcement was not good news to its tenants – one of which has been leasing space in the hotel for 35 years.

Madam Anne Lee, 52, owner of Anne Salon, was upset that the hotel withheld such important information as she renewed her lease just three months ago.

‘They must tell us so we can start looking for another landlord,’ said Madam Lee, who has been running her salon there since 1975.

Nice Express, which operates its Singapore-Kuala Lumpur express bus service from the hotel, was also not informed about the plans.

Mr Charles Lawrence, 56, operations and sales supervisor at Nice’s Singapore office, said: ‘I do not know whether to move or stay.’

This comes at a bad time for Nice as it spent $100,000 last year to renovate its office at the hotel.

When asked why tenants were not informed, an M&C spokesman said: ‘We have not sent out any notices as there is no firm date yet.

‘The terms of the tenancy agreement contain a three-month notice clause. We have sufficient time on hand to serve proper and timely notice to all our tenants.’

Source : Sunday Times – 28 Feb 2010

‘Residences’ expert@work in naming a condo

What’s the name of your condo?

If you bought a unit in the 1980s, you probably live in a project with words like ‘palm’, ‘garden’ or ‘park’ in the name.

In more recent times, it became fashionable to incorporate auspicious numbers, like Scotts 28 and 8@Woodleigh.

Now, many developers have plumped for Residences.

Examples include Residences Botanique in Serangoon, Kovan Residences in Upper Serangoon, The Shore Residences in Katong, Vista Residences in Balestier, Holland Residences in the Holland Road area and Tembeling Residence in the East Coast area.

A spokesman for the Street and Building Names Board said that of the 25 to 30 condominium names it approved in 2008 and last year, names with terms like ‘residences’, ’suites’ and ‘@’ were most popular.

New property player Ferrell Asset Management opted for Ferrell Residences for its first condo in Bukit Timah, saying thatthe word ‘residences’ evokes ‘a very personal and intimate feeling towards the development’.

Ho Bee’s general manager of marketing and business development, Mr Chong Hock Chang, shares a similar view. ‘The word conjures a very homely image,’ he said. The firm’s projects include Orange Grove Residences and Dakota Residences.

For developer TG Group, there is a more mundane reason for naming its 102-unit development in the East Coast, St Patrick’s Residences.

It conforms to the residential zoning of the area, and differentiates itself from industrial or commercial zones, said its head of corporate affairs, Mr Lowell Loh.

Frasers Centrepoint Homes, which is launching Residences Botanique this weekend, also drew attention to the word Botanique.

It reflects the wide array of plants and landscaping of the resort-style condo, said a spokesman.

Far East Organization said it tries to express what makes a development unique via the condo’s name.

Its The Shore Residences is so named because its ‘large waterscape with mini beaches and coconut trees’ aims to recapture the old Katong ambience with a long shoreline.

But do names really matter with buyers? Apparently not, it seems. Mrs Debora Neo, 44, who lives in Rivervale Crest condo in Sengkang, said price and location matter more.

Proximity to schools is also crucial, said the mother of two teenage children.

As for the use of ‘residences’, she said it reminded her not of a home or condominium, but of serviced apartments for foreigners here for a short stay.

Source : Sunday Times – 28 Feb 2010

Don’t be chained to loan woes

It must be tempting to splash out a bit now that the worst of the recession – and the belt-tightening that it forced on us – is over.

After all, some firms have started restoring pay cuts to employees and year-end bonuses have been paid.

With the mood improving, the urge to snap up that big-ticket item with cash or a loan is getting stronger.

Using cash is one thing, but excessive borrowing can lead to financial trouble.

‘Loans can help us to purchase high-value items or essentials that we do not have the savings or the full amount for at the moment – but it should be something we can afford in the long run,’ said GE Money Singapore’s president and chief executive, Mr Rahul Gupta.

And the same principle should apply, whether for a home loan, a car loan, a home renovation loan, one for education, or even one for a holiday.

‘Consumers need to ensure that loans taken are well within their means,’ said Mr Gupta.

Here are eight things to consider when taking out a loan:

1 A need or a want?

Before taking a loan, ask yourself if the item or service is meant to satisfy a need or a want.

Ms Tan Huey Min, assistant director at Credit Counselling Singapore, suggests that if it is a ‘want’ – not necessary and just for consumption – perhaps it would be better to save for it rather than to pay a ‘premium’ price (that is, the interest cost of borrowing). For instance, don’t borrow to pay for a vacation or a new kitchen appliance.

Take time to consider if there is an alternative to borrowing now or borrow a smaller amount instead. Better still, don’t buy it at all if it is unnecessary.

However, if the purchase is for investment purposes, then perhaps it is okay to get a loan. This could be for renovations that add value to your home, or enhancing your future income earning ability via training and education.

2 Interest cost of borrowing

Consumers should be aware of the type of interest rate that is stated in the loan agreement or marketing material.

And when considering loan options, compare like with like, said Mr Gupta.

Some loans use the annual percentage rate (APR), which reflects the actual interest cost of borrowing, while others refer to the simple interest rate. Shop around for the lowest APR.

The simple interest rate is calculated by applying a flat rate on the original principal amount for the entire loan tenure.

The APR is interest calculated based on the declining principal balance over the tenure of the loan.

As the borrower makes monthly repayments, the principal is reduced every month, so the interest payable on the principal also reduces each month.

Sometimes a loan comes with a zero per cent interest cost if it’s paid via a credit card. Make sure you pay off the debt before the interest starts to build up. If you miss a payment, you may be automatically bumped up to the highest annual interest rate of 24 per cent.

3 Current debt service ratio

Before taking the loan, calculate your debt service ratio. It is the percentage of your monthly income needed to service long-term liabilities.

It provides a useful guide to how much of your take-home pay – that is gross pay less 20 per cent employee CPF contribution and personal income taxes – is used to pay debts.

Debt payments are monthly expenses like mortgage, car loans, personal loans or even credit card debts. A healthy debt servicing ratio – debt divided by income – should be 35 per cent or less.

To put it another way, out of every $1,000 of after-tax and CPF income, you should spend $350 or less on debt repayments.

Ms Tan cautions that if the consumer already has a high amount of outstanding debt to service, it is best to pay down existing debt first before incurring more.

And even if your debt service ratio is less than 35 per cent, it is prudent to consider if you have surplus funds to take on another loan repayment after paying monthly living expenses.

Make sure you know your cash inflow and outflow before taking on another loan.

4 Loan tenure

It is worth considering the optimal loan tenure as it affects monthly repayments and interest paid.

Generally a longer loan tenure means smaller monthly repayments but a shorter loan tenure may lead to lower interest paid, says GE Money.

For example, Mr Mark Tan takes a $10,000 loan for a period of five years at an APR of 18per cent per annum (pa).

His monthly repayment is $254 so the total interest he will pay over the five-year loan tenure is $5,236, over and above the $10,000 loan amount.

If he takes a loan period of three years at an APR of 18 per cent pa, his monthly repayment will be $362 but the total interest paid over three years will be $3,015.

So to minimise the interest payable, a shorter loan tenure may be an option, but the repayments will be higher.

Some financial experts suggest you make the highest repayments you can manage so that you clear the debt in the shortest possible time.

When deciding on a loan tenure, consider your monthly commitments and take the appropriate loan tenure based on your monthly cash flow.

5 Early payment options

Not all loans allow customers to settle early, so read and understand the terms and conditions of the loan before signing up.

An early settlement fee is usually imposed if a loan is paid off early.

For example, if you redeem your GE Money personal loan before the full term expires, an early redemption fee of 3 per cent to 5 per cent of the outstanding amount at the time will apply.

Home loan customers are urged to look beyond interest rates and consider factors such as the lock-in period and penalty fees.

Another potential cost is the loan cancellation fee. An investor who buys a property on speculation and then applies for a loan might be hit with a cancellation fee if the property is sold before the loan is disbursed.

Cancellation fees can range between 0.75per cent and 1.5per cent of the loan amount, and can be quite substantial. For example, if the loan amount is $1million, the cancellation fee works out to $15,000.

6 Late payment fees

Most loans stipulate late payment fees. These are over and above the interest charged for late payment, so go through the terms and conditions of loan agreements thoroughly to ensure you understand them clearly.

Pay special attention to fees incurred for late payment.

For instance, credit cards typically charge a one-time administrative fee of $50 to $80 for late payment. This is besides the 24per cent interest charged on the sum that is rolled over.

So keep track of the payment dates and remember to pay before the due date. Try to have fewer loans or credit facilities and avoid having multiple sources of credit. In order not to incur interest and penalty fees, pay your outstanding credit in full.

7 Payment flexibility

Avoid defaulting on loan repayments as it will hurt your credit history. However, a typical loan tenure is for at least a year, and sometimes it is hard to predict what will happen so far into the future.

You might hit cash flow difficulties at some point, so it is worth looking for loans that offer some payment flexibility and provide rewards for prompt payment.

For example, Mr Gupta says that GE Money’s James personal loan, which caters to people earning $30,000 and above, offers several flexible payment options. They include allowing customers to defer two payments a year, paying only the interest component or paying higher or lower instalments at the start, or end of their loans.

Such features offer flexibility in managing your cash flow, particularly during unforeseen circumstances. GE Money customers are also rewarded for prompt payment by having part of their interest component, or their last instalment amount of the loan, waived.

For those who can’t meet their monthly payments, experts suggest that they approach their lender first for assistance to restructure a loan. Financial institutions will usually review such requests on a case by case basis. A responsible lender will work with its customers to provide a solution.

8 Other loan terms and conditions

Make sure you understand the key fees and charges stipulated by a loan agreement. This makes you aware of what to expect when a loan is taken and reduces any surprises after it has commenced.

If you are acting as a guarantor for a loan, be clear about the terms and conditions of the agreement, especially those related to your obligations as a guarantor.

Ms Tan says: ‘In the eyes of the creditor, the guarantor is the ’same’ as the borrower, meaning, both the borrower and the guarantor are jointly and severely liable for the loan.’

This means that even if you are willing to act as a guarantor, you should also consider your own ability to make repayments in case the principal borrower fails to repay.

She recalled a case in which a person (let’s call him John) became a guarantor for a stranger (Jim), who wanted to buy a car, in return for a fee.

When Jim defaulted on his car loan, the car financier pursued legal action against both people.

Jim could not repay and became a bankrupt. In the end, John assumed the balance of the loan, which was $30,000, after the car was sold and makes regular payment to avoid being made a bankrupt by the car financier.

Source : Sunday Times – 28 Feb 2010

Housing in S’pore still affordable

HOUSING is a perennial hot topic of discussion, especially in Singapore where it touches almost every segment of society – from the low to middle income in public housing to the middle and higher income aspiring to upgrade to private property.

The recent spikes in both public and private housing prices have added fuel to the debate on affordability. Analysts and experts have attributed the price increase to a rise in demand, especially from foreigners and permanent residents.

What is clear is that housing demand changes constantly, which means that government policies seeking to offer decent and affordable homes have to keep changing too.

The International Housing Conference last month, organised by the Housing and Development Board (HDB) to mark its 50th anniversary, gave the housing authorities a platform to share ideas and strategies.

Even with the best of intentions, it is often hard to give people equal access to affordable housing because of uncertainty about the number who need it as well as an inelastic housing supply.

This commentary aims to compare the housing situation in Singapore, Hong Kong, London and Sydney.

As with most countries, Singapore’s housing provision system is rooted in its historical and political background. During the initial years of independence, the Government adopted a subsidised rent system to resolve an urgent housing shortage.

However, by 1964, it was decided that home ownership was a better strategy as it was thought that citizens would be more likely to sink their roots in the country if they owned a stake in it. This marks the first deviation from public housing systems in countries with a strong welfare focus, such as the United Kingdom and the Netherlands. By the late 1970s, when many welfare countries were starting to revamp their public housing systems due to economic reasons, public home ownership was thriving in Singapore because of the development of the resale market for public housing.

Over the last few decades, the HDB has become the dominant housing provider, accounting for the homes of 82 per cent of the population. Table 1 shows the key differences between the housing systems in four major cities, including Singapore. It provides a broad picture of the composition of public and private housing and the proportion of rental and ownership for each category.

Table 1 makes two key points: One, these cities differ from Singapore in that most of their housing is provided by the private sector. This is also the case in most countries.

Two, only Singapore has a significant proportion of ownership when it comes to public sector housing. In fact, public housing in London and Sydney is solely rental, while Hong Kong has 35 per cent public housing ownership as compared with more than 95 per cent here.

Clearly, housing systems in different countries are shaped by their respective history, economy and the cultural and social needs of their people. Each system has its own merits and limitations; what matters is whether it can offer decent and affordable housing. We assess these two criteria in terms of living space, ratio of income to housing price as well as housing options. Table 2 compares the population density, ratio of median housing price to median annual household income and the average living space per person in Singapore, Hong Kong and London.

Table 2 shows that it is not meaningful to rate housing systems based on one factor alone. Take population density, for example. While Singapore scores the highest of the three, much of Hong Kong’s land area is unbuildable because of the terrain, which means that the living space per person in the territory is less than half of that in Singapore. In fact, living space per person in Singapore compares favourably to that in London, where land supply is not a constraint.

In terms of affordability, Singapore has achieved a lower housing price to income ratio. On the whole, the figures reveal that the housing system here does deliver comfortable and affordable housing to the majority of Singaporeans.

As for housing options, some countries offer greater diversity. In London, for example, if a family is unable to buy or rent a good home from the open market, a range of affordable options is available, including public housing from the local authorities at a subsidised rent. There is also the possibility of buying a home through shared ownership, a part-buy, part-rent scheme from one of the independent, non-profit associations providing low-cost housing.

In Singapore, the HDB has diversified its housing types over the years through design, construction and technology. For example, besides the bulk of build-to-order flats, it also engages private developers to build public housing under the Design, Build and Sell Scheme.

While housing systems vary from country to country, what is important is the ease with which people can live in quality homes, defined as housing with water, sewerage and electricity.

In Singapore, all this – together with estate maintenance and neighbourhood amenities – has been achieved by the HDB over a relatively short history of 50 years.

Perhaps the success has also raised expectations. Each spike in house prices – fluctuations in prices will likely increase, given Singapore’s open economy and rapidly changing global economic climate – will heighten the anxiety of potential buyers, despite the empirical evidence that housing in Singapore is still very much affordable by any standard.

The writers are from the Department of Real Estate, National University of Singapore.

In terms of affordability, Singapore has achieved a lower housing price to income ratio. On the whole, the figures reveal that the housing system here does deliver comfortable and affordable housing to the majority of Singaporeans.

Source : Straits Times – 27 Feb 2010

Residential development charges up

THE improved property market has prompted the Government to raise the fees developers pay to enhance the use of residential sites.

The fee – called a development charge (DC) – closely reflects recent land and property values as it is adjusted every six months.

A developer pays a DC if he wants to intensify the use of a site, for instance, by redeveloping an existing project into a bigger one.

Rising values – and developers bidding aggressively for suburban residential land – have forced the Government’s hand, although the increases were mostly within expectations.

From next Monday, the DC will go up by about 12 per cent on average for landed homes and around 8 per cent for non-landed properties. But the rate for commercial sites has dipped given the muted market.

The new rates highlight the rapid rebound in residential property. The DC for landed homes had not been revised for two years, while the non-landed rate was down 2 per cent six months ago.

Experts say the higher charges will add to developers’ costs and could affect collective or en bloc sales and the conversion of office buildings to residential use.

The DC rises vary across the island.

While the average rise for landed properties is 12 per cent, the DC will jump by around 17 per cent in the prime areas of Tanglin, Holland and Bukit Timah, the HDB towns of Hougang, Toa Payoh and Ang Mo Kio, and Sentosa.

The DC for Sentosa rose the most – by 17.3 per cent – this round, supported by the recent strong transaction volume in that area, said Jones Lang LaSalle.

The largest rise in the non-landed homes sector will be a hike of 15 per cent in the mass-market areas of Mountbatten and Katong, as well as in Paya Lebar, Eunos, Bedok North, Simei and Tampines.

The central areas of Spottiswoode Park and Cantonment, Orchard Road and Sentosa Island also saw double-digit rises, because of surging prices and some recent land acquisition activity.

‘Overall, the rise in non-landed residential (development charge) rates is expected to add to developers’ land banking costs – particularly for collective sale sites that require payment (of the charge),’ said Colliers International’s executive director of investment sales, Mr Ho Eng Joo.

This may hamper or derail their land banking plans, he added.

It is a different story in the commercial sector, where DCs will go down 2 per cent on average, with the exception of booming Sentosa, where the rate will go up by 13 per cent.

Rates will fall by up to 13.3 per cent around Raffles Quay and Shenton Way.

The dip for commercial property will be welcomed. The office sector has been subdued, land sales during the review period have been muted and the business environment is still uncertain despite signs of recovery, said Colliers International.

The Central Business District (CBD) will also see the completion of about 2.2million sq ft of office space this year, raising the real threat of a damaging oversupply.

‘A cut in DC rates in these locations will hence provide the necessary stabilising effect to the market, amid daunting concerns about the potential supply,’ said Mr Ho.

Consultants also noted that the fall in commercial DC rates in the CBD will be met with a rise in residential rates.

‘This would affect the conversion of office buildings to residential uses in the CBD, especially those on leasehold land as they would also have to top up the lease,’ said DTZ’s head of South-east Asia research, Ms Chua Chor Hoon.

There are a number of players that are keen to convert and they will have to recalculate their sums as the DC rates have increased, said Mr Ho.

Sentosa is the only area of the country that registered a rise – of 12 per cent – in the DC for the hotel and hospital sector, which will remain untouched everywhere else.

Sentosa is paying the price of the integrated resort, which has pushed up values and, hence, the DC increases in the landed residential, commercial and hotel/hospital sectors, said Ms Chua.

The National Development Ministry sets the rates every March and September in consultation with the Chief Valuer.

Source : Straits Times – 27 Feb 2010

China property price gains unsustainable, says S&P

China’s property market will probably go through a “more meaningful correction” this year because the price gains in 2009 aren’t sustainable, according to Mr Christopher Lee, corporate ratings director at Standard and Poor’s.

The outlook for the Chinese market is “neutral” for this year, Mr Bei Fu, an associate director of corporate ratings at S&P, said during a conference call with Mr Lee on Thursday.

“The middle of this year could be a potential turning point for many developers,” Mr Fu said. “A combination of slower demand, higher supply and various government initiatives will dampen market sentiment.”

China’s property prices surged 9.5 per cent in January, the most in 21 months, as total new loans surged to 1.39 trillion yuan ($287 billion), more than in the previous three months combined.

The China Banking Regulatory Commission ordered banks last month to “strictly” follow property lending policies.

Investors tend to “sit on the sidelines” in anticipation of more tightening measures to curb property price gains this year, Mr Lee said.

Gradual and Cautious

Beijing will scrap some home-purchase incentives after the jump in prices, reducing the scope of a housing sales-tax exemption and enforcing a 40-per-cent down-payment requirement for second homes, the capital’s Municipal Commission of Housing and Urban-Rural Development said earlier this week.

The People’s Bank of China raised the reserve requirement by 50 basis points for the second time this year on Feb 12 to slow bank lending. The hike came into effect on Thursday.

The central bank said in its quarterly report that it wanted to gradually normalise monetary conditions from a “crisis mode” after gross domestic product grew 10.7 per cent in the fourth quarter, the fastest pace in two years.

“Policy introduction this year will be in a gradual and cautious manner,” Mr Fu said.

“Stability will be the focus.”

The Chinese government will increase supply of subsidised public housing this year to provide affordable accommodation for people with lower incomes, and there will be a “surprise” in the number of available luxury homes by the middle of this year, when projects started one year ago are completed, leading to stronger competition among developers, she said.

Industry Consolidation

“Bigger and stronger property players will do even better as they have the scale and financial resources to grow, and smaller companies will find the market condition more challenging,” Mr Fu said. “We expect to see more merger and acquisition activities in the sector.”

China Overseas Land & Investment, a developer with a BBB- credit rating from S&P, the highest among 11 Chinese developers the ratings company analysed, will benefit from industry consolidation this year, S&P said. China Overseas, which is owned by the nation’s construction ministry, is poised for a “possible upgrade,” the report said.

Companies rated B+ and below, including Greentown China Holdings and Shanghai Zendai Property, may become potential acquisition targets, according to the report.

Source : Today – 27 Feb 2010

Another Yishun industrial site up for tender

Knight Frank sees interest in plot near ITE East (Yishun) due to recent strong take-up in Woodlands

FOR the second time in a week, the government will be putting an industrial site in Yishun up for tender.

According to the Urban Redevelopment Authority (URA) yesterday, a developer triggered the sale of a 60-year leasehold site at Yishun Avenue 6 (Parcel 8). The developer – which was not identified – committed to pay at least $11.5 million, or around $30 per sq ft per plot ratio (psf ppr), for the land.

The 1.43 ha plot on the reserve list has been available for sale since November 2007. It is zoned for Business 1 use and has a maximum permissable gross plot ratio of 2.5.

This parcel is across the road from ITE East (Yishun) and is near Yishun Industrial Park and Yishun MRT station. It also seems to be adjacent to another site – at Yishun Avenue 6 (Parcel 1) – which was similarly triggered for sale on Tuesday. For the latter, a developer also committed to pay at least $11.5 million.

Knight Frank’s head of industrial business space Lim Kien Kim believes that there will be interest in Parcel 8. This is because industrial space end-users have been looking for land in the northern part of the island, he said.

He added that industrial space in Woodlands has recently seen strong take-up, and this could encourage developers to bid for the site.

Mr Lim felt that offers could reasonably be expected to come in at around $35 psf ppr, or $13.4 million. But he pointed out that with buoyant sentiment in the market, higher bids are possible.

URA will launch the public tender for the site in about two weeks.

Demand for industrial plots has been strong in the last few months. In December, a 30-year leasehold site at Pioneer Road North/Soon Lee Drive drew eight bids, with the highest coming in at $19.4 million, or $48 psf ppr.

Source : Business Times – 27 Feb 2010

Review law on en bloc sales

IF MONDAY’S advice to treasure our homes and not use them to make a quick buck is to be heeded (‘Homes are for keeps, not speculation: PM’), the Government should review the law permitting collective property sales.

Such sales exercises invite speculation in the private property market at the expense of a home owner’s security.

I have not lived in peace for the past three years because my neighbours voted to go en bloc. The main argument of the pro-collective sale lobby had nothing to do with urban renewal. It was about reaping a windfall.

The bid at my condominium, Green Lodge in Toh Tuck Road, fell through last month, but there is nothing to stop my neighbours from trying again.

I dissented because I treasure my home for the reasons implied in Monday’s report: It gives me peace, familiarity and stability in the twilight of my life; and it is my nest egg which I do not wish taken away from me by others’ temptation to make a fast buck.

But how can I take good care of my treasured asset if I have no control over it?

The power to sell my home lies not in me but in 80 per cent of my neighbours. And that is why the law must be changed.

Tan Keng Ann

Source : Straits Times – 27 Feb 2010

DC rates take striking hike in scenic Sentosa

RWS effect reflected in higher land values on island while interesting trend emerges in CBD

SENTOSA has seen a big jump in development charge (DC) rates, reflecting higher land values on the island following this month’s opening of Resorts World Sentosa (RWS).

On average, the government is raising DC rates (payable for intensifying or enhancing the use of some sites) about 12 per cent for landed residential use from March 1; but in Sentosa, they will climb 17.3 per cent. For non-landed residential use, Sentosa saw a 10 per cent hike in DC rates compared to the average rise of about 8 per cent. And while DC rates for commercial use will be cut roughly 2 per cent on average against the backdrop of weak office rentals, Sentosa is the only location where they will be raised – to the tune of 12.5 per cent.

It is also the only location where the government increased the hotel-use DC rate; the hike was 12.2 per cent. In all other locations, the DC rate for hotel use (which also covers hospitals) was left untouched.

DC rates – which are revised on March 1 and Sept 1 each year – are specified by use groups across 118 geographical sectors throughout Singapore. The review is conducted by the Ministry of National Development in consultation with the Chief Valuer, who takes into account current market values.

Some analysts pointed to an interesting trend emerging in the Central Business District. DC rates for commercial use in the CBD fell further while non-landed residential rates rose and actually surpassed the commercial rates. This could mean paying a higher DC for those who redevelop old CBD office blocks into apartments and could impact such conversions, especially in the case of 99- year leasehold sites as their owners would also want a lease top- up, says DTZ’s South- east Asia research head Chua Chor Hoon.

Jones Lang LaSalle’s SE Asia research head Chua Yang Liang goes a step further, predicting that the new trend could have an ‘unexpected effect of encouraging the redevelopment of existing older office stock into the same office use and discouraging conversions to residential’. Jones Lang LaSalle’s (JLL) analysis showed that DC rates for non-landed residential use were raised for 116 geographical sectors and left unchanged for the remaining two areas.

The biggest hike of 15.4 per cent was seen in three sectors: 91 (which covers the Mountbatten, Meyer and Broadrick areas); 98 (Tampines, Bedok Reservoir, Bedok North, Kembangan); and 101 (Paya Lebar Way/Eunos/Sims Avenue).

This was followed by Sector 76 (Everton/Spottiswoode Park) with a 14.5 per cent increase. Market watchers attribute this to last October’s en bloc sale of Dragon Mansion at a land price about 68 per cent above the land value implied by the prevailing Sept 1, 2009 DC rate for the location.

Also, the geographical sectors covering Serangoon Ave 3, Upper Thomson Rd and Sengkang West Avenue – where residential sites have been sold at bullish prices at state tenders in the past six months – were raised 12.5 per cent, 10.5 per cent and 9.1 per cent respectively.

Colliers International executive director (investment sales) Ho Eng Joo said that overall, the growth in non-landed residential DC rates may hamper developers’ landbanking plans, especially for collective sales sites that require DC payment.

Credo Real Estate managing director Karamjit Singh, however, said yesterday: ‘Three quarters of the en bloc projects our company is working on don’t involve any DC payment. As for the rest, DC as a component of the entire land cost is not very high and hence the increase in DC rates will have minimal impact on the en bloc sale exercise.’

For landed residential use too, charges were raised in 116 sectors and left unchanged in the other two.

Besides Sentosa, other areas with the biggest hikes include Holland/Dunearn Rd/Sixth Avenue (up 17.1 per cent) as well as the Good Class Bungalow areas of Botanic Gardens/Gallop Rd/Tyersall and Ridout/Peirce Hill/Swettenham Road (each up 16.9 per cent), JLL’s analysis shows.

Commercial DC rates were trimmed between 3.2 and 13.3 per cent in 23 sectors. The biggest chop was in the Cecil St/Robinson Road area. There were also cuts in other parts of the financial district, such as Marina Bay, Raffles Place and Fullerton Road, as well as in the Thomson/Moulmein, Newton Circus, Bugis and Tanglin/Cuscaden areas.

Source : Business Times – 27 Feb 2010

Downtown Taipei land sold at record prices

TAIWAN’S government has sold land in downtown Taipei at record prices, indicating demand for premium housing units amid improving ties with China, the island’s biggest property broker said.

A 401 square metre site fetched NT$731 million (S$32 million) at an auction yesterday, after NT$789 million for 384 sq m sold on Jan 28, data from the National Property Administration website showed. These were the highest prices for residential land in Taipei, said Stanley Su, a senior researcher at Sinyi Realty Co.

‘These prices indicate optimism for the high-end market,’ Mr Su said. ‘There’s demand, as China-based businessmen and overseas Chinese may be coming back amid strengthening cross-strait relations.’

China and Taiwan plan a trade agreement to reduce import tariffs. The government of President Ma Ying-jeou, who was elected in March 2008 on a platform of improving relations with the island’s biggest trading partner, has eased restrictions on investments between banks, brokerages and insurers on the two sides, as well as transportation links.

Revenue from government land auctions last year totalled NT$10.8 billion, according to the Ministry of Finance.

Prices of residential property in the Taipei metropolitan area rose 20 per cent last year after banks cut mortgage rates to the lowest since records began, according to Sinyi Realty.

The central bank has held its key interest rate at a record low of 1.25 per cent in the past 12 months to help boost the economy. Gross domestic product in Taiwan expanded at the fastest pace in five years in the fourth quarter.

Taiwan and China have been ruled separately since Chiang Kai-shek’s Kuomintang, or Nationalists, fled to the island after being defeated by Mao Zedong’s Communists in 1949. China regards Taiwan as part of its territory.

Source : Business Times – 27 Feb 2010

Missing lawyer squirrelled away more than $10m

RUNAWAY lawyer Zulkifli Mohd Amin had moved more than $10 million out of his firm’s client’s account over a 10-month period in 2007, a sum larger than the $6 million previously thought.

These details emerged in a 56-page report by a disciplinary tribunal comprising retired Judge of Appeal L.P. Thean and lawyer Tan Chuan Thye.

The tribunal, appointed in August last year by the Chief Justice to formally investigate the case, found Zulkifli guilty of a total of 211 charges of misconduct.

Zulkifli was one of three partners of the now-defunct firm of Sadique Marican and ZM Amin.

He is not around to face the music, but his partners, Mr Mohd Sadique

Ibrahim Marican and Mr Anand Kumar Toofani Beldar, will have to face a Court of Three Judges for breaching accounting rules and failing to safeguard clients’ money.

Out of the 211 charges against Zulkifli, 208 are related to unauthorised withdrawals of funds from the account used to hold clients’ money.

The remaining charges were for failing to ensure that the client’s account was not overdrawn and failing to keep the books in order.

The accounts of the firm were managed by Zulkifli.

The other partners have each been found guilty of three charges of failing to keep the books in order and failing to supervise transactions involving clients’ money.

In November 2007, Mr Sadique and Mr Anand told the Law Society that Zulkifli was missing and they suspected him of misappropriating money from the firm.

The firm’s accounts were inspected.

Among other things, it was found that the firm had been issuing cash cheques after May 15, 2007 even though it was no longer allowed to do so under the rules.

Fund transfers were made and cash cheques were issued without supporting documents.

Although Mr Sadique’s signature appears on some forms and cheques, a handwriting expert has concluded that they were forged.

The 211 charges form the most serious of three separate disciplinary proceedings against Zulkifli. The tribunal has found that the case is serious enough to be referred to the Court of Three Judges, which has the power to suspend or strike lawyers off the rolls.

On Tuesday, another of the three cases, involving Zulkifli’s inaction in a conveyancing transaction that caused his clients to lose out on a property deal, was brought before the Court of Three Judges by the Law Society seeking to disbar Zulkifli.

This drew criticism from the judges, who questioned why the society brought up less serious charges when it was well-known that Zulkifli had done worse. The court asked for more details about his other disciplinary proceedings.

Yesterday, it emerged that Zulkifli was found guilty earlier this month of the 211 charges. Both cases will be dealt with together by the court.

The third case is pending.

According to sources, the less serious complaint was made in November 2007 and the disciplinary tribunal, in its report in October last year, said the matter should be brought to the Court of Three Judges.

By law, the society had a one-month deadline to make the application.

It is understood that the society had considered deferring the less serious case, but as it was unsure how long it would take to investigate the 211 charges, it decided to go ahead with the less serious case.

Source : Straits Times – 27 Feb 2010

Govt to increase development charge rate for residential homes in S’pore

The government has increased the development charge rate for both non-landed and landed residential homes. Analysts said this is in line with the strong rebound in home sales and prices over the last six months.

The rise in non-landed residential DC rates, in particular, is expected to add on to developers’ land banking cost.

Private homes were hot property in 2009. Some 6,300 units have been sold in the last six months.

And market watchers said the upward revision in development charge for residential homes is widely expected.

A development charge is the tax payable by the developer when a property site is developed into more valuable project.

This allows the government to have a share of the gains from the enhanced value.

The DC Rate for non-landed home will go up by eight per cent on average with prime areas like Orchard Road, Sentosa and Cantonment seeing double-digit increase.

The DC rates for suburban locations like Paya Lebar, Eunos, Bedok North and Tampines also went up .

Some observers said the upward revision could have a marginal impact on developers’ land banking plans.

Dr Chua Yang Liang, head of Research, Southeast Asia, Jones Lang LaSalle, said: “The DC rate revision will have some bearing on potential developers looking at en bloc deal especially those which have an increase in plot ratio, it might have some effect.”

DC rates for landed residential homes will also go up by an average 12 per cent.

The largest increase of 17 per cent will apply to developments in Sentosa, Tanglin and Holland and even Hougang, Toa Payoh and Ang Mo Kio.

In contrast, the levy for commercial sites will fall by two per cent on average.

Sites in Raffles Quay and Shenton way will see a 13 per cent reduction.

Sentosa is the only sector in the Commercial category to see an uptick in DC rate by 12.5 per cent.

Mr Chua believes the opening of the Integrated Resort and its retail spaces has put an upward pressure to close the gap between sectors like Sentosa and World Trade Center where Vivocity is located.

With this revision, the gap has narrowed from S$1,750 to S$1,400.

Some said this reduction could have an unintended effect.

Dr Chua added: “If you look at DC rate between residential and commercial, residential continues to rise in the downtown areas, whereas the office market, office use, continue to contract.

This means there will be a wider gap between these two land use groups suggesting redevelopment into office use rather then conversion into residential.”

The change in DC rate will take effect from March 1 and will last for six months.

Source : Channel NewsAsia – 26 Feb 2010

Developers ‘limited by land bank’

PROPERTY developers say they are eager to bring forward project launches to ride the buoyant market but are being held back by their limited land bank.

They were caught by surprise at the rapid market recovery, they say.

‘Many of us are now caught with a depleting land bank,’ the Real Estate Developers’ Association of Singapore (Redas) president Simon Cheong said.

‘We believe the long-term solution to a sustainable and stable market is still adequate supply,’ he added.

Credo Real Estate’s deputy managing director Tan Hong Boon summed up the mood: ‘You never know what will happen. While the going is still good, developers will want to launch quickly. This is particularly so for mass market projects.

The Government recently stepped up the supply of development sites after a lull, and believes supply is adequate.

Yesterday, a 3.02ha site at Hougang Avenue 2 was offered to developers. If interest is adequate, a tender will proceed.

Another reserve list site will be offered by May, on top of confirmed list sites, which are tendered without precondition.

The comments by Mr Cheong and Mr Tan at the Redas Chinese New Year lunch at Capella Singapore yesterday came a week after market cooling measures.

The Government imposed a duty sellers must pay if they sell within a year of purchase. It also capped bank loans at 80 per cent of a sale price, from 90 per cent.

Mr Cheong said developers want land supply fast-tracked to satisfy buyer demand to minimise speculation to ease the pressure for more anti-speculative steps.

‘Given the unexpected return of an active property market, developers over the next few months would also be actively bidding for more land,’ he said.

Redas members look forward to more confirmed list sites to replenish land banks, he said. They are looking to Government land, given limited sources of private land. A developer who declined to be named said private land owners were asking for the sky ’so we can’t buy’.

Mr Cheong said developers would rather have this problem than the bleak effects of last year’s meltdown in the banking system. ‘Managing upside is always easier than managing downside.’

The anti-speculative steps were a timely reminder, said Frasers Centrepoint chief executive Lim Ee Seng at the lunch. ‘Exceptional jumps in prices are not good for us.’ Still, he said: ‘No matter how high it gets, it will still obey the law of gravity.’

An anonymous developer said the measures had hurt sentiment a little. ‘If there are 100 buyers, maybe 10 will change their minds. I expect volume to moderate a bit.’

Still, so far the measures appear to have had little or no impact on recent sales. ‘The market is still hot,’ said an industry observer. The 608-unit The Estuary in Yishun, whose preview opened on Wednesday, has sold over 200 units.

The average price for the 99-year leasehold condo is $750 per sq ft, with units facing the Lower Seletar reservoir costing around $800 psf on average.

Separately, City Developments boss Kwek Leng Beng said at a results briefing for CDL yesterday that sentiment would remain strong among genuine buyers, despite the government measures.

Mr Cheong addressed guest of honour Finance Minister Tharman Shanmugaratnam, saying developers were disappointed at being left out of the Budget.

But they were happy at the productivity push given the long-term gains. Redas called this ‘a deferred payment hongbao’.

Looming launches include the 151-unit Seascape in Sentosa Cove and Cheung Kong Holdings’ 295-unit The Vision. Far East Organization and Frasers Centrepoint plan to release Waterfront Gold in Bedok Reservoir soon. Allgreen may launch RV Residences in River Valley and unsold units at Cascadia in Bukit Timah.

Source : Straits Times – 26 Feb 2010

CDL plans to start $2.5b mega project next year

CITY Developments (CDL) is aiming to start building its landmark $2.5 billion South Beach project in Beach Road next year, said its boss Kwek Leng Beng yesterday.

Mr Kwek gave an update on the project – shelved in late 2008, owing to high construction costs, then slated for a start this year – as he unveiled a far- better-than-expected 77 per cent surge in fourth quarter net profits for CDL.

He brushed aside financial worries over the mega project, which is set to boast offices, luxury hotels, retail space and residences when completed in 2016.

CDL bought the site in 2007 jointly with Dubai World and El-Ad Group, which have since been hit by debt woes.

Mr Kwek, the executive chairman, said: ‘We cannot presume that the two partners have no money. If the two partners have no money, then their share will be diluted,’ he said, of the Dubai partners.

Hong Kong’s Nan Fung group emerged as a new investor in the project last June under a refinancing exercise.

‘The verbal understanding with Nan Fung is that both of us will put in more money if so required,’ Mr Kwek said.

CDL’s net profit for the three months ended Dec 31 shot up 77 per cent to $176.7 million, as the group booked profits in projects such as Cliveden at Grange, The Arte and One Shenton.

That beat the average estimate of six analysts polled by Dow Jones Newswires of $129 million. Fourth quarter revenue rose 28.6 per cent to $922.4 million.

‘The global economic recovery is better than expected,’ he said, adding that prospects were good for the residential, hospitality and commercial sectors.

Full-year earnings rose 2.1 per cent to $593.4 million, on the back of better income from strong property prices.

Last year also marked the group’s highest ever revenue of $3.27 billion, up 11.1 per cent, and second highest profit since its inception in 1963. It expects to stay profitable over the next 12 months.

Mr Kwek said that the firm will continue to focus on the local market, capitalising on its land bank and experience – but said China is promising.

‘That is not to say that we will never go abroad… But why would we want to go in a big way at the moment when I still believe that we can make a lot of money in Singapore. We know Singapore best, can read the trends better and are here most of the time,’ he said.

CDL expects sentiment among genuine buyers to remain strong despite recent government measures to cool speculation in the property market.

Full-year earnings per share were 63.8 cents, up from 62.5 cents a year earlier. Net asset value per share rose to $6.57 as at Dec 31, from $5.97.

The group is recommending a dividend of eight cents a share, up from 7.5 cents the previous year. CDL shares rose two cents yesterday to close at $10.34.

OCBC Investment Research analyst Foo Sze Ming said he expects CDL to deliver strong earnings this year, underpinned by its sold residential projects last year – The Gale, Volari and Hundred Trees – that have yet to book in profits.

Property measures: Keep them guessing

IF THERE was a party in the property market going on after the Chinese New Year, the Government would have been the party pooper. Barely a week into the new year, it introduced measures to cool the febrile-prone property market. A new seller’s stamp duty was introduced, together with a reduction in the loan-to-value limit for home loans, from 90 per cent to 80 per cent. The measures came just five months after the Government implemented moves to kill innovative interest absorption home loan schemes.

For property prices to go up is patently reasonable. After all, the property market is now seeing ample liquidity, low interest rates and growing consumer confidence buoyed by a recovering economy. That said, however, the speed at which the market is heating up is puzzling. In January, property developers sold 1,476 units – a figure treble that of the preceding month. Prices have increased at a faster rate compared to rebounds from the troughs of previous property cycles. Mortgage lending has also increased steadily by about 12 per cent year-on-year through the whole of last year. Market watchers can only surmise that the strong demand could be coming from either pent-up demand or buyers flush with cash from collective sales.

Typically, official measures to cool the market are inevitably late, given that they occur after the fact. But thankfully, they do not come so late as to fail to pre-empt any speculative bubble. In essence, the Government is doing what it has been adept at doing – precision targeting to put a brake on speculative demand before it spirals out of control. The stamp duty will hit short-term speculators, while the bank loan limit will affect buyers at the margins.

The most powerful weapon in the Government market-cooling arsenal, however, is not the series of measures already announced, but those yet to be. This is one of the oldest tricks in the book, be it in fields as diverse as nuclear strategy, politics or an endeavour as earthy as property: to receive pain in one big dose is bad; to get the same pain in small but discrete instalments is worse, but to have no certainty as to when the dose will come is the worst. As one industry watcher noted, if the Government can enact the measures so fast and without warning, it can do something ‘faster and more painful’ if prices continue to head north. Here, in essence, is the nub of the Government’s pre-emptive strategy that will keep property developers and speculators awake at night: keep them guessing.

Source : Straits Times – 26 Feb 2010