Business Times - 19 May 2008
PROPERTY
Pre-sold projects lend support as developers undergo correction
Greater blow from weaker sales will be felt only over next few years: analysts
By LYNETTE KHOO
PROPERTY developers were mostly hit by slower residential sales in their first quarter results, and for some, they also suffered a lack of fair value gains in investment properties. But even as the residential segment undergoes a correction this year, analysts do not foresee significant earnings weakness as revenue from pre-sold projects is still lending support.
For developers with a large amount of pre-sold projects and are able to hold back new units to await better prices, the greater blow from the weaker home sales will only kick in over the next few years if market sentiment does not pick up, analysts say.
'The earnings for this year have been locked in by the sales done in the past two to three years,' said UOB KayHian analyst Vikrant Pandey. 'Sales have slowed down this year, but the impact will only be felt two, three years down the line when the actual construction takes place.'
Investors have been greeted with a mixed bag of earnings results from property developers for the first quarter. The impact of the US housing problems and global economic slowdown was felt in terms of lower transaction volumes as developers held back new launches in a quiet market.
There was also the timing issue in recognising earnings from development projects on a percentage of completion basis, which added to the earnings volatility, analysts say.
'Q1 is typically a slower quarter for developers simply because of the holiday season and development is slower,' said CIMB-GK analyst Donald Chua. The recognition of earnings from developments that are at the initial stages of construction is hence slower.
Keppel Land reported a 3.5 per cent dip in net profit to $60.3 million due mainly to lower contribution from property trading with the completion of several projects in Singapore and overseas and a writeback on provision in its property investment segment.
In the absence of fair value gains, CapitaLand's first-quarter net profit fell 59.3 per cent year on year to $247.47 million; Overseas Union Enterprise's (OUE) net profit slipped 69.2 per cent to $23.67 million and United Engineers' (UE) net profit slumped 90 per cent to $1.2 million. Excluding fair value adjustments, CapitaLand's net profit would have jumped 36.5 per cent year on year, while OUE and UE would have marked smaller net profit declines.
City Developments, however, which adopts the policy of stating net profit at cost less accumulated depreciation and impairment losses, posted a net profit growth of 30.8 per cent to $164.97 million in its fiscal first quarter despite its revenue falling 1.3 per cent from a year ago to $758.75 million.
Analysts noted that the practice of booking in revaluation differences in investment properties under the Financial Reporting Standard 40 is adding to the earnings volatility. This accounting method is seen inflating developers' bottomlines last year and cutting into their bottomlines in a poorer market condition like now.
But analysts added that they do not treat revaluation gains as part of core earnings and strip off revaluation gains from headline numbers before analysis. While there has been suggestions that FRS40 may not be an accurate reflection of earnings, it does provide a clearer picture of the actual values of properties owned by developers.
For the rest of this year, analysts do not expect developers to report fair value losses as there is room for rental upside, particularly in the office segment where new supply is not coming through yet. 'Rentals are coming from a very low base. There's still a lot of catching up to do,' Mr Pandey said, pointing to the heady asking prices for some prime grade office that have shot up to $17 per square foot.
But developers that lack strong cashflow from pre-sold projects will likely find the going tougher in an environment of low or zero revaluation surplus and slower home sales, analysts caution. Without holding power to defer launches, they will have to slash prices for new projects and accept lower margins.
For this year, Mr Pandey is factoring in a 20 per cent correction in the high-end segment, 13 per cent for the mid-end segment and 5 per cent for the mass market segment.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
Tuesday, May 20, 2008
Profiteering adds to construction woes
Business Times - 19 May 2008
Profiteering adds to construction woes
As costs of materials rise, some suppliers default on earlier contracts to make more
By ARTHUR SIM
(SINGAPORE) The last thing the construction industry needs now is another roadblock. But with the cost of materials and shortages soaring, the opportunity to inflate prices is too much for some errant suppliers and sub-contractors to resist.
Sources told BT that some suppliers of building materials have been opting to default on earlier contracts because the current demand and prices are so strong, they can easily secure more profitable contracts elsewhere, stock piling materials in the meantime.
To add to the strain, labour supply has become so tight that crane operators, for instance, are said to be commanding salaries upwards of $8,000 per month.
A check with the Building and Construction Authority (BCA) reveals, however, that this opportunistic behaviour is not widespread - yet.
A BCA spokesman also said it has not received feedback of contract defaults by suppliers of steel and other construction materials, or of any delay in construction works due to such default of contractual obligations.
However, BCA said: 'We do understand that the suppliers have increased their importation and stocking up of steel rebars in view of the surging prices. Suppliers have also shortened the period of supply contract for rebars from the previous 12 months to the current six months.'
'Contractors and developers have to resolve the price issue based on their business practices, relationship and understanding. For projects which adopt price fluctuation for these materials, the cost impact on the contractors will be minimal,' added BCA.
Construction companies that BT spoke with had mixed reactions to the situation.
A spokesman for United Engineers Ltd said: 'The industry is particularly seeing some delays in projects, either in the midst of or commencing construction, that were awarded before the construction boom as prices negotiated at that time were definitely lower compared to now.'
Straits Construction director Wong Chee Herng said the industry has seen some smaller suppliers defaulting on contracts and causing delays but the level is still 'manageable'.
He added: 'Prices have moved up and there is no point lamenting . . . It's a choice of either negotiating or just walking away.'
With so much uncertainty, Straits Construction is more selective about tendering for jobs. 'If we feel we can't deliver, we won't tender,' Mr Wong said.
Other construction companies like Hiap Hoe and Sim Lian say they are not facing any delays.
Giving an insight into how suppliers are also facing the same challenges, Lee Metal Group executive director Lee Heng Thiam revealed how a steel supplier for Marina Bay Sands was contracted to supply 85,000 tonnes over a two- year period at US$600 per tonne. However, the price of this steel has since risen to US$1,000. 'It is too much for anyone to bear,' he said. And while the particular supplier was able to renegotiate the contract, Mr Lee said: 'I think they will still make a loss.'
To mitigate the risks, Lee Metal has to hedge its position. 'In the past, the practice was to sell first and buy later; now, it's the other way around,' he explained. This means it keeps a stockpile of 6-8 months worth of supply to ensure it can fulfil its obligations.
Price fluctuation clauses are not a big help to suppliers who stockpile. 'If prices are on a downward trend, we are in trouble,' he explained. 'Buying and selling needs to be managed tightly.'
HG Metal manages its stock on a tighter basis by maintaining 3-4 months worth of inventory amounting to as much as $200 million worth in stock at any one time. HG Metal CEO Wee Piew also said that it does not 'lock in' its prices. 'Most major suppliers don't set contracts,' he added.
'The only issue is when a big contractor wants to lock in prices. Then they have to deal with steel mills directly,' he added.
These mills are usually in China but both HG Metal and Lee Metal say their supply comes from international traders instead because of the uncertain supply from Chinese mills.
PSL Holdings, a foundation engineering specialist contractor, says that its operators of construction cranes and other vehicles are commanding 'very high salaries' but it has managed to factor increasing manpower costs into its contracts. 'The effect on our margins is minimal,' added a PSL spokesman.
PSL says it has not encountered delays so far but apart from rising salaries, it is faced with rising costs due to surging diesel prices as well as shortage of personnel. PSL said: 'We have managed to mitigate the higher costs because of the short duration of our projects.'
Developers that BT spoke too also say they are not facing delays.
City Developments Ltd (CDL) says it has not encountered any significant delays from its contractors. 'Perhaps they have made early confirmation orders on the construction materials and are not really affected by the present rising costs of materials,' added CDL's spokesman.
Frasers Centrepoint COO Cheang Kok Kheong did say that to counter rising costs, it has had to take certain steps including continuously reviewing its plans and specifications to ensure that cost-effective construction methods and alternatives are considered. 'In addition, we have improved and streamlined our procurement methods to get bulk pricing for construction supplies from our associates,' he added.
The construction industry is perhaps beginning to show signs of strain, and may need more help.
To this end, BCA says it is also working with the Real Estate Developers' Association of Singapore to encourage their member developers to make prompt payment to help ease the cashflow of the contractors.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
Profiteering adds to construction woes
As costs of materials rise, some suppliers default on earlier contracts to make more
By ARTHUR SIM
(SINGAPORE) The last thing the construction industry needs now is another roadblock. But with the cost of materials and shortages soaring, the opportunity to inflate prices is too much for some errant suppliers and sub-contractors to resist.
Sources told BT that some suppliers of building materials have been opting to default on earlier contracts because the current demand and prices are so strong, they can easily secure more profitable contracts elsewhere, stock piling materials in the meantime.
To add to the strain, labour supply has become so tight that crane operators, for instance, are said to be commanding salaries upwards of $8,000 per month.
A check with the Building and Construction Authority (BCA) reveals, however, that this opportunistic behaviour is not widespread - yet.
A BCA spokesman also said it has not received feedback of contract defaults by suppliers of steel and other construction materials, or of any delay in construction works due to such default of contractual obligations.
However, BCA said: 'We do understand that the suppliers have increased their importation and stocking up of steel rebars in view of the surging prices. Suppliers have also shortened the period of supply contract for rebars from the previous 12 months to the current six months.'
'Contractors and developers have to resolve the price issue based on their business practices, relationship and understanding. For projects which adopt price fluctuation for these materials, the cost impact on the contractors will be minimal,' added BCA.
Construction companies that BT spoke with had mixed reactions to the situation.
A spokesman for United Engineers Ltd said: 'The industry is particularly seeing some delays in projects, either in the midst of or commencing construction, that were awarded before the construction boom as prices negotiated at that time were definitely lower compared to now.'
Straits Construction director Wong Chee Herng said the industry has seen some smaller suppliers defaulting on contracts and causing delays but the level is still 'manageable'.
He added: 'Prices have moved up and there is no point lamenting . . . It's a choice of either negotiating or just walking away.'
With so much uncertainty, Straits Construction is more selective about tendering for jobs. 'If we feel we can't deliver, we won't tender,' Mr Wong said.
Other construction companies like Hiap Hoe and Sim Lian say they are not facing any delays.
Giving an insight into how suppliers are also facing the same challenges, Lee Metal Group executive director Lee Heng Thiam revealed how a steel supplier for Marina Bay Sands was contracted to supply 85,000 tonnes over a two- year period at US$600 per tonne. However, the price of this steel has since risen to US$1,000. 'It is too much for anyone to bear,' he said. And while the particular supplier was able to renegotiate the contract, Mr Lee said: 'I think they will still make a loss.'
To mitigate the risks, Lee Metal has to hedge its position. 'In the past, the practice was to sell first and buy later; now, it's the other way around,' he explained. This means it keeps a stockpile of 6-8 months worth of supply to ensure it can fulfil its obligations.
Price fluctuation clauses are not a big help to suppliers who stockpile. 'If prices are on a downward trend, we are in trouble,' he explained. 'Buying and selling needs to be managed tightly.'
HG Metal manages its stock on a tighter basis by maintaining 3-4 months worth of inventory amounting to as much as $200 million worth in stock at any one time. HG Metal CEO Wee Piew also said that it does not 'lock in' its prices. 'Most major suppliers don't set contracts,' he added.
'The only issue is when a big contractor wants to lock in prices. Then they have to deal with steel mills directly,' he added.
These mills are usually in China but both HG Metal and Lee Metal say their supply comes from international traders instead because of the uncertain supply from Chinese mills.
PSL Holdings, a foundation engineering specialist contractor, says that its operators of construction cranes and other vehicles are commanding 'very high salaries' but it has managed to factor increasing manpower costs into its contracts. 'The effect on our margins is minimal,' added a PSL spokesman.
PSL says it has not encountered delays so far but apart from rising salaries, it is faced with rising costs due to surging diesel prices as well as shortage of personnel. PSL said: 'We have managed to mitigate the higher costs because of the short duration of our projects.'
Developers that BT spoke too also say they are not facing delays.
City Developments Ltd (CDL) says it has not encountered any significant delays from its contractors. 'Perhaps they have made early confirmation orders on the construction materials and are not really affected by the present rising costs of materials,' added CDL's spokesman.
Frasers Centrepoint COO Cheang Kok Kheong did say that to counter rising costs, it has had to take certain steps including continuously reviewing its plans and specifications to ensure that cost-effective construction methods and alternatives are considered. 'In addition, we have improved and streamlined our procurement methods to get bulk pricing for construction supplies from our associates,' he added.
The construction industry is perhaps beginning to show signs of strain, and may need more help.
To this end, BCA says it is also working with the Real Estate Developers' Association of Singapore to encourage their member developers to make prompt payment to help ease the cashflow of the contractors.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
Retailers expect more belt tightening at this year's GSS
Business Times - 19 May 2008
Retailers expect more belt tightening at this year's GSS
By SARA LIM
(SINGAPORE) As Singaporeans tighten their belts amid higher inflation and concerns about a slowing economy, mass and mid-market brands are expecting to do better than their luxury counterparts in this year's Great Singapore Sale.
'With a less vibrant economic outlook, consumers are more inclined to spend cautiously at mass and mid-priced boutiques with more savings, rather than on luxury items,' said a spokesman for Wing Tai, which distributes popular fashion brands such as Topshop and Fox.
While the distributor was unable to provide any figures, it is 'conservatively optimistic' that overall sales this year will be higher than last year's. It expects new stores added to its mass and mid-market chains - G2000, Topshop, Dorothy Perkins, Ms Selfridge and Warehouse - to perform well.
On the overall retail scene, however, expectations for this year's sale are less rosy compared with 2006 and 2007, when strong consumer confidence and economic growth kept cash registers ringing. Takings during the sale period in June and July last year totalled $5.5 billion, up from $4.9 billion for the same period in 2006.
'While takings from the GSS might not necessarily fall, I would expect growth to slow compared with the same period last year, when we saw retail sales jump more than 15.4 per cent in June,' said Citigroup economist Kit Wei Zheng.
Mr Kit cited the 'artificial' surge in purchases of big-ticket items ahead of the two-point GST hike and lower consumer confidence in July last year as reasons for his less sunny outlook.
He also warned: 'Rising costs of living could continue to erode the purchasing power of households, and may be a drag on retail sales volumes.'
Retailers are hoping that deep discounts and other promotions available during the sale will entice more cost-conscious shoppers to hunt for bargains.
'Certainly, people are understandably more cautious about their spending, but this is exactly why they should take advantage of the Great Singapore Sale for the great buys and great value, and benefit from the savings that they can achieve,' said Lau Chuen Wei, executive director of the Singapore Retail Association.
Andre Lobo, senior advertising and promotions manager of mall operator Frasers Centrepoint Malls, agreed. 'Shoppers will respond to real bargains and attractive offers which will translate into overall savings, especially with the rise in the cost of living,' said Mr Lobo.
Frasers Centrepoint will offer a 7 per cent rebate in the form of shopping vouchers at its seven malls, including its flagship, The Centrepoint, at Orchard Road.
Mall operators in particular are pulling out all stops to draw the crowds.
Instead of relying on the usual lucky draw prizes to attract shoppers, CapitaLand Retail, is bringing six giant robots developed by the creators of science fiction film E T to its IMM, Junction 8 and Plaza Singapura malls.
CapitaLand hopes that the robots, which will appear in Asia for the first time, will 'provide education through entertainment'.
Shoppers at Frasers Centrepoint malls will be treated to stand-up comedy acts by Hossan Leong and Pamela Oei of the Dim Sum Dollies and have a chance to participate in talent shows hosted by MediaCorp artistes Kym Ng, Chen Li Ping and Pornsak.
As tourists dollars accounted for 40 per cent of retail sales in last year's GSS, retailers also hope that tourists will continue to bolster demand.
With a total of 10.3 million tourist arrivals in Singapore last year, the Singapore Tourism Board (STB) expects the GSS to attract even more visitors. It has been focusing its marketing efforts on the Asia-Pacific and Middle Eastern markets in particular.
'Even as the Singapore dollar strengthens against the US dollar, we hope visitors will continue spending at the GSS with the many promotions and exclusive tourist privileges available,' said Andrew Phua, the STB's director of cluster development, tourism shopping and dining.
Visitors will be treated to exclusive privileges, including a range of 'Best Buys', 'Hot Deals' and a privilege card which offers additional perks and free gifts.
Retailers expect more belt tightening at this year's GSS
By SARA LIM
(SINGAPORE) As Singaporeans tighten their belts amid higher inflation and concerns about a slowing economy, mass and mid-market brands are expecting to do better than their luxury counterparts in this year's Great Singapore Sale.
'With a less vibrant economic outlook, consumers are more inclined to spend cautiously at mass and mid-priced boutiques with more savings, rather than on luxury items,' said a spokesman for Wing Tai, which distributes popular fashion brands such as Topshop and Fox.
While the distributor was unable to provide any figures, it is 'conservatively optimistic' that overall sales this year will be higher than last year's. It expects new stores added to its mass and mid-market chains - G2000, Topshop, Dorothy Perkins, Ms Selfridge and Warehouse - to perform well.
On the overall retail scene, however, expectations for this year's sale are less rosy compared with 2006 and 2007, when strong consumer confidence and economic growth kept cash registers ringing. Takings during the sale period in June and July last year totalled $5.5 billion, up from $4.9 billion for the same period in 2006.
'While takings from the GSS might not necessarily fall, I would expect growth to slow compared with the same period last year, when we saw retail sales jump more than 15.4 per cent in June,' said Citigroup economist Kit Wei Zheng.
Mr Kit cited the 'artificial' surge in purchases of big-ticket items ahead of the two-point GST hike and lower consumer confidence in July last year as reasons for his less sunny outlook.
He also warned: 'Rising costs of living could continue to erode the purchasing power of households, and may be a drag on retail sales volumes.'
Retailers are hoping that deep discounts and other promotions available during the sale will entice more cost-conscious shoppers to hunt for bargains.
'Certainly, people are understandably more cautious about their spending, but this is exactly why they should take advantage of the Great Singapore Sale for the great buys and great value, and benefit from the savings that they can achieve,' said Lau Chuen Wei, executive director of the Singapore Retail Association.
Andre Lobo, senior advertising and promotions manager of mall operator Frasers Centrepoint Malls, agreed. 'Shoppers will respond to real bargains and attractive offers which will translate into overall savings, especially with the rise in the cost of living,' said Mr Lobo.
Frasers Centrepoint will offer a 7 per cent rebate in the form of shopping vouchers at its seven malls, including its flagship, The Centrepoint, at Orchard Road.
Mall operators in particular are pulling out all stops to draw the crowds.
Instead of relying on the usual lucky draw prizes to attract shoppers, CapitaLand Retail, is bringing six giant robots developed by the creators of science fiction film E T to its IMM, Junction 8 and Plaza Singapura malls.
CapitaLand hopes that the robots, which will appear in Asia for the first time, will 'provide education through entertainment'.
Shoppers at Frasers Centrepoint malls will be treated to stand-up comedy acts by Hossan Leong and Pamela Oei of the Dim Sum Dollies and have a chance to participate in talent shows hosted by MediaCorp artistes Kym Ng, Chen Li Ping and Pornsak.
As tourists dollars accounted for 40 per cent of retail sales in last year's GSS, retailers also hope that tourists will continue to bolster demand.
With a total of 10.3 million tourist arrivals in Singapore last year, the Singapore Tourism Board (STB) expects the GSS to attract even more visitors. It has been focusing its marketing efforts on the Asia-Pacific and Middle Eastern markets in particular.
'Even as the Singapore dollar strengthens against the US dollar, we hope visitors will continue spending at the GSS with the many promotions and exclusive tourist privileges available,' said Andrew Phua, the STB's director of cluster development, tourism shopping and dining.
Visitors will be treated to exclusive privileges, including a range of 'Best Buys', 'Hot Deals' and a privilege card which offers additional perks and free gifts.
More analysts sanguine about US economy
Business Times - 19 May 2008
More analysts sanguine about US economy
They cite strength of recent data, but others caution against reading too much into it
(WASHINGTON) A growing number of analysts are expressing confidence that the worst may be over for the US economy, even if it struggles for some time due to weak housing, tight credit and high energy costs.
The latest data suggests that the world's biggest economy may have averted a calamitous downturn, and could even escape a recession, by the most common definition.
'The US economy continues to labour under the adverse effects of three powerful shocks: the housing slump, the credit crunch, and the spike in energy prices,' says Josh Feinman, chief economist of Deutsche Bank's DB Advisors. 'Remarkably, the economy has been able (barely) to keep its head above water despite all the negative shocks, a testament to its underlying resiliency, an aggressive policy response, and the relative strength of global growth.'
He predicts that the US economy, which saw sluggish growth at a 0.6 per cent pace in the past two quarters, will see a pickup to a one per cent pace in the second quarter and 2 per cent in the July-September quarter. He sees a softening to 1.5 per cent expansion in the fourth quarter and then a return to 2 per cent growth in the first quarter of 2009.
Some of the recent economic reports have defied forecasts of a sharp decline in US growth. Retail sales fell 0.2 per cent last month but, excluding vehicle sales, were up 0.5 per cent, suggesting resilience in consumer spending, the backbone of US economic activity.
'We think the economy is beginning to recover after a sharp two-quarter slowdown,' said Bear Stearns economist David Malpass. 'We still don't expect a recession. We think consumer resilience, as shown in April's non-auto consumption and sales data, is likely, not the deeper slump assumed in recession forecasts.'
Spending should get a further lift as the government sends out tax rebates of about US$107 billion in the coming weeks as part of a US$168 billion economic stimulus package.
'The impact of fiscal stimulus is probably the most important issue in the US economic outlook during the summer months,' said Goldman Sachs economist Andrew Tilton. 'A significant rebound in confidence and spending could fan hopes of a quicker recovery, while a failure of the economy to respond to the stimulus would be a significant disappointment to policymakers and the markets.'
New home construction starts rose 8.2 per cent last month to an annual rate of 1.032 million units. Even though the gains were in the multi-family segment and single-family homes slumped, analysts said that it was good news.
The labour market has also held up better than expected, and increased exports helped by a weak dollar have underpinned growth.
The broad US stock market has rebounded some 10 per cent since mid-March, when the Federal Reserve helped support a rescue of investment giant Bear Stearns, which was widely seen as a turning point for the credit crisis and market confidence.
Analysts credit the aggressive cuts in interest rates by the Fed along with efforts to boost liquidity to the troubled finance sector, as well as the government's stimulus package.
Nigel Gault, economist at Global Insight, said that the US economy has shown resilience but that it 'is still too early to turn our thoughts away from recession and towards recovery' as the impacts of the financial turmoil on the economy will linger. Global Insight is predicting a contraction of 0.9 per cent in the second quarter. Largely due to the impact of tax rebates, it sees 2.3 per cent growth in the third quarter and overall yearly growth at a tepid 1.2 per cent.
Paul Kasriel, director of economic research at Northern Trust, cautions against reading too much into recent data. 'Any blue skies you see are likely to be short-lived. The mortgage credit problems are not over. And credit problems in other sectors are just beginning as the housing recession spreads to the rest of the economy.' - AFP
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
More analysts sanguine about US economy
They cite strength of recent data, but others caution against reading too much into it
(WASHINGTON) A growing number of analysts are expressing confidence that the worst may be over for the US economy, even if it struggles for some time due to weak housing, tight credit and high energy costs.
The latest data suggests that the world's biggest economy may have averted a calamitous downturn, and could even escape a recession, by the most common definition.
'The US economy continues to labour under the adverse effects of three powerful shocks: the housing slump, the credit crunch, and the spike in energy prices,' says Josh Feinman, chief economist of Deutsche Bank's DB Advisors. 'Remarkably, the economy has been able (barely) to keep its head above water despite all the negative shocks, a testament to its underlying resiliency, an aggressive policy response, and the relative strength of global growth.'
He predicts that the US economy, which saw sluggish growth at a 0.6 per cent pace in the past two quarters, will see a pickup to a one per cent pace in the second quarter and 2 per cent in the July-September quarter. He sees a softening to 1.5 per cent expansion in the fourth quarter and then a return to 2 per cent growth in the first quarter of 2009.
Some of the recent economic reports have defied forecasts of a sharp decline in US growth. Retail sales fell 0.2 per cent last month but, excluding vehicle sales, were up 0.5 per cent, suggesting resilience in consumer spending, the backbone of US economic activity.
'We think the economy is beginning to recover after a sharp two-quarter slowdown,' said Bear Stearns economist David Malpass. 'We still don't expect a recession. We think consumer resilience, as shown in April's non-auto consumption and sales data, is likely, not the deeper slump assumed in recession forecasts.'
Spending should get a further lift as the government sends out tax rebates of about US$107 billion in the coming weeks as part of a US$168 billion economic stimulus package.
'The impact of fiscal stimulus is probably the most important issue in the US economic outlook during the summer months,' said Goldman Sachs economist Andrew Tilton. 'A significant rebound in confidence and spending could fan hopes of a quicker recovery, while a failure of the economy to respond to the stimulus would be a significant disappointment to policymakers and the markets.'
New home construction starts rose 8.2 per cent last month to an annual rate of 1.032 million units. Even though the gains were in the multi-family segment and single-family homes slumped, analysts said that it was good news.
The labour market has also held up better than expected, and increased exports helped by a weak dollar have underpinned growth.
The broad US stock market has rebounded some 10 per cent since mid-March, when the Federal Reserve helped support a rescue of investment giant Bear Stearns, which was widely seen as a turning point for the credit crisis and market confidence.
Analysts credit the aggressive cuts in interest rates by the Fed along with efforts to boost liquidity to the troubled finance sector, as well as the government's stimulus package.
Nigel Gault, economist at Global Insight, said that the US economy has shown resilience but that it 'is still too early to turn our thoughts away from recession and towards recovery' as the impacts of the financial turmoil on the economy will linger. Global Insight is predicting a contraction of 0.9 per cent in the second quarter. Largely due to the impact of tax rebates, it sees 2.3 per cent growth in the third quarter and overall yearly growth at a tepid 1.2 per cent.
Paul Kasriel, director of economic research at Northern Trust, cautions against reading too much into recent data. 'Any blue skies you see are likely to be short-lived. The mortgage credit problems are not over. And credit problems in other sectors are just beginning as the housing recession spreads to the rest of the economy.' - AFP
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
Consumers demanding better service: survey
Business Times - 19 May 2008
Consumers demanding better service: survey
By OH BOON PING
A MAJORITY of consumers here have quit doing business with at least one company in the past year due to poor service, a survey shows.
The latest Accenture Survey on Customer Service Standards also found that half of the consumers surveyed rate the overall quality of service they received as 'fair' or 'poor/terrible', while 63 per cent said their customer expectations are seldom met.
This was based on a poll of some 300 consumers in Singapore, and the results are similar to an Accenture survey last year in which more than 3,500 consumers in countries including Australia, Brazil, China and the US were polled.
In that survey, 59 per cent of all respondents said they had switched at least one service provider in the prior 12 months due to poor customer service, while the equivalent figure in Singapore was 75 per cent.
About 50 per cent of consumers here felt that service quality was excellent or good - lower than the global figure of 59 per cent.
The latest results come as some 78 per cent of Singaporean consumers have raised their customer service expectations from five years ago, and nearly half said their expectations rose in the past year - significantly higher than the 33 per cent equivalent figure in the global survey.
Woody Driggs, managing director of Accenture's customer relationship management global practice, said: 'Consumers have more information and choices than ever - driving a seismic shift in the balance of power to the consumer and adding to the complexities that companies today face as they seek to attract and retain customers.'
The survey found that the most customer churn occurred in the retail, banking and Internet industries, even though switching providers due to poor services was prevalent across industries here.
Some 32 per cent of respondents said they switched retailers due to poor service, while the figures for the banking and Internet industries were 32 per cent and 24 per cent respectively.
Commenting on this trend, Teo Lay Lim, managing director of Accenture Singapore and Accenture's customer relationship management practice in Asia Pacific, said: 'Few banks and retailers worry about 'churn' the same way a telecommunications company does. Very few companies engage in customer retention programmes proactively. For example, a customer may still retain the bank account, or visit the retailer - and hence the bank or retailer thinks they have not experienced 'churn'. However, the reality is that the share of the wallet may have moved in favour of a competitor.'
The vast majority (89 per cent) of consumers in Singapore also said they expect better service in exchange for spending or purchasing more frequently from a company.
In fact, two-thirds (67 per cent) said they expect 'much better' service for their customer loyalty, compared with only 44 per cent in the global survey.
Ms Teo said the good news to service providers is that price is not the most important thing. 'Accenture's research shows that 69 per cent of respondents said they switched providers because of poor service or product versus 48 per cent who switched because of a lower price. This means that some customers will prioritise service over price in a relationship. Knowing who these customers are will allow a company to provide a higher service level to a customer who chooses to pay a premium for service,' she said.
'This translates into the need to segment customers - because service is not a one-size-fits-all approach if you truly want to excel at it. Service providers need to do it in a way which allows them to actually act on each segment in a differentiated way, so that they are able to translate what they know about the customers into what they do for them. The prize for delivering good service is that Singaporeans will move their business to where the service is better,' added Ms Teo.
Consumers demanding better service: survey
By OH BOON PING
A MAJORITY of consumers here have quit doing business with at least one company in the past year due to poor service, a survey shows.
The latest Accenture Survey on Customer Service Standards also found that half of the consumers surveyed rate the overall quality of service they received as 'fair' or 'poor/terrible', while 63 per cent said their customer expectations are seldom met.
This was based on a poll of some 300 consumers in Singapore, and the results are similar to an Accenture survey last year in which more than 3,500 consumers in countries including Australia, Brazil, China and the US were polled.
In that survey, 59 per cent of all respondents said they had switched at least one service provider in the prior 12 months due to poor customer service, while the equivalent figure in Singapore was 75 per cent.
About 50 per cent of consumers here felt that service quality was excellent or good - lower than the global figure of 59 per cent.
The latest results come as some 78 per cent of Singaporean consumers have raised their customer service expectations from five years ago, and nearly half said their expectations rose in the past year - significantly higher than the 33 per cent equivalent figure in the global survey.
Woody Driggs, managing director of Accenture's customer relationship management global practice, said: 'Consumers have more information and choices than ever - driving a seismic shift in the balance of power to the consumer and adding to the complexities that companies today face as they seek to attract and retain customers.'
The survey found that the most customer churn occurred in the retail, banking and Internet industries, even though switching providers due to poor services was prevalent across industries here.
Some 32 per cent of respondents said they switched retailers due to poor service, while the figures for the banking and Internet industries were 32 per cent and 24 per cent respectively.
Commenting on this trend, Teo Lay Lim, managing director of Accenture Singapore and Accenture's customer relationship management practice in Asia Pacific, said: 'Few banks and retailers worry about 'churn' the same way a telecommunications company does. Very few companies engage in customer retention programmes proactively. For example, a customer may still retain the bank account, or visit the retailer - and hence the bank or retailer thinks they have not experienced 'churn'. However, the reality is that the share of the wallet may have moved in favour of a competitor.'
The vast majority (89 per cent) of consumers in Singapore also said they expect better service in exchange for spending or purchasing more frequently from a company.
In fact, two-thirds (67 per cent) said they expect 'much better' service for their customer loyalty, compared with only 44 per cent in the global survey.
Ms Teo said the good news to service providers is that price is not the most important thing. 'Accenture's research shows that 69 per cent of respondents said they switched providers because of poor service or product versus 48 per cent who switched because of a lower price. This means that some customers will prioritise service over price in a relationship. Knowing who these customers are will allow a company to provide a higher service level to a customer who chooses to pay a premium for service,' she said.
'This translates into the need to segment customers - because service is not a one-size-fits-all approach if you truly want to excel at it. Service providers need to do it in a way which allows them to actually act on each segment in a differentiated way, so that they are able to translate what they know about the customers into what they do for them. The prize for delivering good service is that Singaporeans will move their business to where the service is better,' added Ms Teo.
Punggol to have new shopping mall, more flats
May 19, 2008
Punggol to have new shopping mall, more flats
RESIDENTS in Punggol will have a new shopping mall and more fellow residents within the next three years.
The new town, which already has 16,700 flats, has another 2,100 being built now.
The Housing Board also recently launched 1,700 flats and will launch another 4,000 by year's end, said National Development Minister Mah Bow Tan last Saturday at the launch of a two-day exhibition on the progress in Punggol.
He added that, with more residents calling Punggol home, it would become feasible to build more commercial and public facilities.
One being planned is a shopping mall about the size of Junction 8 in Bishan.
The first sale site for a mixed commercial and private residential development will be launched in the town centre in the next two to three years.
Punggol's 4.2km waterway through the town will be used to bring water closer to the community. The Housing Board recently completed technical studies on it and works will begin next year.
A landscape masterplan design competition is being held to tap the expertise of urban planners, architects and landscape architects, who will be expected to contribute designs and concepts for the waterway, two tributaries and 10m-wide promenades along the waterway and town park.
The HDB plans to launch the first public housing site along a waterfront after major works of the waterway are completed in the next two to three years.
Several plots of land will also be set aside for private residential projects.
Work on the coastal promenade will begin soon, while the development of a rustic park on Coney Island will start next year. Other facilities being worked on include a horse-riding centre and a golf range.
SUJIN THOMAS
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
Punggol to have new shopping mall, more flats
RESIDENTS in Punggol will have a new shopping mall and more fellow residents within the next three years.
The new town, which already has 16,700 flats, has another 2,100 being built now.
The Housing Board also recently launched 1,700 flats and will launch another 4,000 by year's end, said National Development Minister Mah Bow Tan last Saturday at the launch of a two-day exhibition on the progress in Punggol.
He added that, with more residents calling Punggol home, it would become feasible to build more commercial and public facilities.
One being planned is a shopping mall about the size of Junction 8 in Bishan.
The first sale site for a mixed commercial and private residential development will be launched in the town centre in the next two to three years.
Punggol's 4.2km waterway through the town will be used to bring water closer to the community. The Housing Board recently completed technical studies on it and works will begin next year.
A landscape masterplan design competition is being held to tap the expertise of urban planners, architects and landscape architects, who will be expected to contribute designs and concepts for the waterway, two tributaries and 10m-wide promenades along the waterway and town park.
The HDB plans to launch the first public housing site along a waterfront after major works of the waterway are completed in the next two to three years.
Several plots of land will also be set aside for private residential projects.
Work on the coastal promenade will begin soon, while the development of a rustic park on Coney Island will start next year. Other facilities being worked on include a horse-riding centre and a golf range.
SUJIN THOMAS
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
Frasers Centrepoint Trust completes first mall revamp
May 19, 2008
Frasers Centrepoint Trust completes first mall revamp
By Michelle Tay
FRASERS Centrepoint Trust has completed the first revamp of a multimillion-dollar plan to jazz up its malls.
Anchorpoint Shopping Centre was relaunched last Thursday after a $13 million makeover, setting the stage for similar transformations at Frasers' Northpoint and Causeway Point shopping centres.
The suburban mall in Alexandra Road used to house mainly furniture stores. The makeover, which took a year to complete, has turned it into an 'outlet mall' filled with food and beverage stalls, and shops selling year-round discounted fashion merchandise.
Anchorpoint opened for business in March, when the renovations ended - and the results so far have been impressive.
Average rents are now about $7.50 per sq ft (psf), up from $5.40 psf in late 2006, when the revamp plans commenced, said chief executive Christopher Tang.
Occupancy has also risen, from 92 per cent to 98 per cent, while gross revenue, according to the trust's second- quarter results this year, has doubled over the previous year.
The previously lacklustre sales were because the mall did not have 'the right tenant mix' with the furniture stores, said Mr Lee Hsien Yang, the chairman of Fraser & Neave, Frasers' parent company.
Frasers plans to transform Northpoint and Causeway Point, as well as add three soon-to-be-built malls - Yew Tee Mall, Bedok Mall and Northpoint 2 - to its $989 million portfolio by 2010.
Northpoint 2, which will cost $38.6 million to build, will add 80,000 sq ft of retail space to the existing Northpoint mall in Yishun by the middle of next year.
Frasers also plans to grow its existing portfolio of suburban malls in Malaysia and is looking to enter Vietnam, said Mr Tang.
Frasers Centrepoint Trust completes first mall revamp
By Michelle Tay
FRASERS Centrepoint Trust has completed the first revamp of a multimillion-dollar plan to jazz up its malls.
Anchorpoint Shopping Centre was relaunched last Thursday after a $13 million makeover, setting the stage for similar transformations at Frasers' Northpoint and Causeway Point shopping centres.
The suburban mall in Alexandra Road used to house mainly furniture stores. The makeover, which took a year to complete, has turned it into an 'outlet mall' filled with food and beverage stalls, and shops selling year-round discounted fashion merchandise.
Anchorpoint opened for business in March, when the renovations ended - and the results so far have been impressive.
Average rents are now about $7.50 per sq ft (psf), up from $5.40 psf in late 2006, when the revamp plans commenced, said chief executive Christopher Tang.
Occupancy has also risen, from 92 per cent to 98 per cent, while gross revenue, according to the trust's second- quarter results this year, has doubled over the previous year.
The previously lacklustre sales were because the mall did not have 'the right tenant mix' with the furniture stores, said Mr Lee Hsien Yang, the chairman of Fraser & Neave, Frasers' parent company.
Frasers plans to transform Northpoint and Causeway Point, as well as add three soon-to-be-built malls - Yew Tee Mall, Bedok Mall and Northpoint 2 - to its $989 million portfolio by 2010.
Northpoint 2, which will cost $38.6 million to build, will add 80,000 sq ft of retail space to the existing Northpoint mall in Yishun by the middle of next year.
Frasers also plans to grow its existing portfolio of suburban malls in Malaysia and is looking to enter Vietnam, said Mr Tang.
US property to rebound this year: Deutsche chief
May 19, 2008
'CREDIT CRISIS ENDING SOON'
US property to rebound this year: Deutsche chief
ZURICH - THE end of the global credit crisis is getting closer and the United States real estate market should recover in the second half of the year, Deutsche Bank chief executive (CEO) Josef Ackermann said in a newspaper interview.
'I think that we are getting closer to the end of the financial crisis,' he told the Swiss Sunday newspaper SonntagsBlick. 'It is not fully over yet, but the signs from the US are encouraging.'
He said the pragmatic approach being taken in the US to resolve the crisis should start to pay off soon.
'We should feel the effects in the second half of the year already and should see a strong recovery of the US real estate market,' he told the paper.
His comments add to growing optimism among analysts who say the worst might be over for the US economy, even if it still struggles for some time because of weak housing, tight credit and high energy costs.
The latest data suggests the world's largest economy might have averted a calamitous downturn and could even escape a recession, by the most common definition, Agence France-Presse reported.
'Remarkably, the economy has been able (barely) to keep its head above water despite all the negative shocks - a testament to its underlying resiliency, an aggressive policy response and the relative strength of global growth,' said Mr Josh Feinman, the chief economist with Deutsche Bank's DB Advisors.
He predicts the US economy, which saw sluggish growth at a 0.6 per cent pace in the past two quarters, will grow 1 per cent for the second quarter and 2 per cent for the July to September quarter.
But Mr Paul Kasriel, the director of economic research at Northern Trust, cautions against reading too much into recent data.
'Any blue skies you see are likely to be short-lived. The economy is in the relative calm of the eye of the business-cycle hurricane. The mortgage credit problems are not over. And credit problems in other sectors are just beginning as the housing recession spreads to the rest of the economy.'
REUTERS, AGENCE FRANCE-PRESSE
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
'CREDIT CRISIS ENDING SOON'
US property to rebound this year: Deutsche chief
ZURICH - THE end of the global credit crisis is getting closer and the United States real estate market should recover in the second half of the year, Deutsche Bank chief executive (CEO) Josef Ackermann said in a newspaper interview.
'I think that we are getting closer to the end of the financial crisis,' he told the Swiss Sunday newspaper SonntagsBlick. 'It is not fully over yet, but the signs from the US are encouraging.'
He said the pragmatic approach being taken in the US to resolve the crisis should start to pay off soon.
'We should feel the effects in the second half of the year already and should see a strong recovery of the US real estate market,' he told the paper.
His comments add to growing optimism among analysts who say the worst might be over for the US economy, even if it still struggles for some time because of weak housing, tight credit and high energy costs.
The latest data suggests the world's largest economy might have averted a calamitous downturn and could even escape a recession, by the most common definition, Agence France-Presse reported.
'Remarkably, the economy has been able (barely) to keep its head above water despite all the negative shocks - a testament to its underlying resiliency, an aggressive policy response and the relative strength of global growth,' said Mr Josh Feinman, the chief economist with Deutsche Bank's DB Advisors.
He predicts the US economy, which saw sluggish growth at a 0.6 per cent pace in the past two quarters, will grow 1 per cent for the second quarter and 2 per cent for the July to September quarter.
But Mr Paul Kasriel, the director of economic research at Northern Trust, cautions against reading too much into recent data.
'Any blue skies you see are likely to be short-lived. The economy is in the relative calm of the eye of the business-cycle hurricane. The mortgage credit problems are not over. And credit problems in other sectors are just beginning as the housing recession spreads to the rest of the economy.'
REUTERS, AGENCE FRANCE-PRESSE
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
Monday, May 19, 2008
Doubts linger despite positive signs in financial markets
May 19, 2008
TAKING STOCK
Doubts linger despite positive signs in financial markets
By Goh Eng Yeow
LIFE is slowly but surely returning to normal in the financial markets, as another humdrum week slipped by without any cliffhangers to set the pulse racing.
May, however, has traditionally been a dreary month, a time when investors sell their stocks and go away - and this year has been no exception.
Thus, it is not surprising to find many investors still huddled along the sidelines and not taking any chances.
A few weeks after the self-serving predictions made by a couple of bank bosses that the worst of the global credit crisis was over, the world's financial markets appeared to be climbing back up on their feet again.
Even the stream of write-downs by global banks and insurance giants was shrugged off with hardly a note of concern among investors.
Many dismiss reports of the credit crunch as yesterday's news.
In the past few weeks, credit markets have thawed. Fresh deals are now being executed daily.
Investors are willing to stick their necks out and snap up offerings made by battered banks to repair their capital base.
Even well-capitalised Singapore firms are making the most of the balmy weather.
Last week, DBS Group Holdings raised an eye-popping $1.5 billion from a preference share offering - a feat that some would have considered impossible as recently as in January.
And after months of sitting on cash, investors are stirring again.
They are nibbling at blue chips, such as Singapore Airlines and Keppel Corp, which pay out decent dividends.
Yet, despite the positive signs in the financial markets, doubts continue to gnaw at traders.
True, the life-and-death struggle in the credit markets appears to be over, and there is no longer a fear that a global bank may collapse under the massive weight of bad mortgages in the United States.
The huge amount of money poured into financial markets by the US Federal Reserve and other central banks in the past eight months, however, has stoked fears of a runaway inflation.
Investors have had a taste of what might be in store, with crude oil prices soaring past US$127 a barrel last Friday.
In the 1970s, when inflation was a serious threat, equities produced miserable returns as an asset class, with listed firms struggling to cope with the price distortions that blew holes in their balance sheets.
So, while the benchmark Straits Times Index rose 79.46 points to 3,241.49 last week, overall market conditions stayed quiet.
Investors turned their attention to assessing how the dust would settle in a world humbled by a severe credit crisis.
Until a clearer picture emerges, expect more nail-biting among investors.
engyeow@sph.com.sg
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
TAKING STOCK
Doubts linger despite positive signs in financial markets
By Goh Eng Yeow
LIFE is slowly but surely returning to normal in the financial markets, as another humdrum week slipped by without any cliffhangers to set the pulse racing.
May, however, has traditionally been a dreary month, a time when investors sell their stocks and go away - and this year has been no exception.
Thus, it is not surprising to find many investors still huddled along the sidelines and not taking any chances.
A few weeks after the self-serving predictions made by a couple of bank bosses that the worst of the global credit crisis was over, the world's financial markets appeared to be climbing back up on their feet again.
Even the stream of write-downs by global banks and insurance giants was shrugged off with hardly a note of concern among investors.
Many dismiss reports of the credit crunch as yesterday's news.
In the past few weeks, credit markets have thawed. Fresh deals are now being executed daily.
Investors are willing to stick their necks out and snap up offerings made by battered banks to repair their capital base.
Even well-capitalised Singapore firms are making the most of the balmy weather.
Last week, DBS Group Holdings raised an eye-popping $1.5 billion from a preference share offering - a feat that some would have considered impossible as recently as in January.
And after months of sitting on cash, investors are stirring again.
They are nibbling at blue chips, such as Singapore Airlines and Keppel Corp, which pay out decent dividends.
Yet, despite the positive signs in the financial markets, doubts continue to gnaw at traders.
True, the life-and-death struggle in the credit markets appears to be over, and there is no longer a fear that a global bank may collapse under the massive weight of bad mortgages in the United States.
The huge amount of money poured into financial markets by the US Federal Reserve and other central banks in the past eight months, however, has stoked fears of a runaway inflation.
Investors have had a taste of what might be in store, with crude oil prices soaring past US$127 a barrel last Friday.
In the 1970s, when inflation was a serious threat, equities produced miserable returns as an asset class, with listed firms struggling to cope with the price distortions that blew holes in their balance sheets.
So, while the benchmark Straits Times Index rose 79.46 points to 3,241.49 last week, overall market conditions stayed quiet.
Investors turned their attention to assessing how the dust would settle in a world humbled by a severe credit crisis.
Until a clearer picture emerges, expect more nail-biting among investors.
engyeow@sph.com.sg
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
Sunday, May 18, 2008
En-bloc woes at Toh Tuck Road
En-bloc woes at Toh Tuck Road
Residents complain of noise, dust, as developer builds showflat
'It's like living in a shipyard'
IT'S not chirping birds that wake them now, but pounding hammers.
By Zaihan Mohamed Yusof
18 May 2008
IT'S not chirping birds that wake them now, but pounding hammers.
And it has been driving some Goodluck View residents up the wall.
The 20-year-old Toh Tuck Road estate has been sold en-bloc, but residents have been given a six-month grace period and need to move out only by August.
Long before that, in March, developer Hiap Hoe Limited started building the show flat.
Mr Paul Makselon, who rents an apartment there, said he has to endure the 'noise outside his window', every day from 8am.
Said the engineering consultant: 'It's like I'm living in a shipyard. It's all right if they build the showflat in the middle of the road or somewhere further away, but it's hard to live here when there's all that noise so close to your home.'
The fence surrounding the showflat sits barely 2m from his window.
From his three-bedroom apartment, he can see and hear the workers.
Work on the showflat is expected to be completed by the end of July, according to a circular distributed by the estate's management agent.
Yet, Mr Makselon's patience is wearing thin.
Said the Singapore permanent resident: 'My son has to prepare for an exam and he has complained that he is finding it hard to focus. He shuts his windows to block off the noise.
'I find it difficult too because I work from home.'
His neighbour upstairs, Madam Tracy Dean, said that sometimes the noise can be a little too much for her.
At such times, she leaves the apartment.
Said the IT consultant: 'I really look forward to rain because I know the workers will have to stop work. All that grinding and banging can drive you up the wall.
'Even with the windows closed, the noise filters into my flat.'
Mr Makselon and his family plan to move out within three weeks.
Madam Dean will leave for Bangkok in August.
Said Mr Makselon: 'We didn't sign up to live like this. They work without considering that there are still people living here. I've had enough.'
And it's not just the noise. MrMakselon claims dust and mosquitos have also been invading their homes.
He said he complained to the estate management when construction workers used the swimming pool toilet, leaving trails of mud.
He claimed that by starting work on the showflat, the developer was breaking the en-bloc agreement.
His landlord, Mr John Tilley, also said the developers should not be working there before August.
'We (tenants and owners) are expected to leave by 21 Aug. But it's extremely unreasonable for my tenant to live in such conditions,' Mr Tilley said. 'The six months grace period is meant for those still living here to find alternative accommodation.'
INCONVENIENCE EXPECTED
But a spokesman for Hiap Hoe said the company had not broken any rules.
There are no 'hard and fast rules' on building a showflat during the six-month free stay period, she said.
She added: 'Some inconvenience is expected. But so long as we abide by the construction rules and try to minimise the inconveniences, the issue is unavoidable.
'Building showflats during the free stay period is a very common practice in en-bloc developments. There is no clause that says we start work (on the showflat) only after all the occupants have left.'
The spokesman said they had received some feedback expressing unhappiness over the construction work.
She said no piling work was done, except for the erection of metal beams for the showflat.
The sale of the new development is scheduled for the third quarter of 2008
Residents complain of noise, dust, as developer builds showflat
'It's like living in a shipyard'
IT'S not chirping birds that wake them now, but pounding hammers.
By Zaihan Mohamed Yusof
18 May 2008
IT'S not chirping birds that wake them now, but pounding hammers.
And it has been driving some Goodluck View residents up the wall.
The 20-year-old Toh Tuck Road estate has been sold en-bloc, but residents have been given a six-month grace period and need to move out only by August.
Long before that, in March, developer Hiap Hoe Limited started building the show flat.
Mr Paul Makselon, who rents an apartment there, said he has to endure the 'noise outside his window', every day from 8am.
Said the engineering consultant: 'It's like I'm living in a shipyard. It's all right if they build the showflat in the middle of the road or somewhere further away, but it's hard to live here when there's all that noise so close to your home.'
The fence surrounding the showflat sits barely 2m from his window.
From his three-bedroom apartment, he can see and hear the workers.
Work on the showflat is expected to be completed by the end of July, according to a circular distributed by the estate's management agent.
Yet, Mr Makselon's patience is wearing thin.
Said the Singapore permanent resident: 'My son has to prepare for an exam and he has complained that he is finding it hard to focus. He shuts his windows to block off the noise.
'I find it difficult too because I work from home.'
His neighbour upstairs, Madam Tracy Dean, said that sometimes the noise can be a little too much for her.
At such times, she leaves the apartment.
Said the IT consultant: 'I really look forward to rain because I know the workers will have to stop work. All that grinding and banging can drive you up the wall.
'Even with the windows closed, the noise filters into my flat.'
Mr Makselon and his family plan to move out within three weeks.
Madam Dean will leave for Bangkok in August.
Said Mr Makselon: 'We didn't sign up to live like this. They work without considering that there are still people living here. I've had enough.'
And it's not just the noise. MrMakselon claims dust and mosquitos have also been invading their homes.
He said he complained to the estate management when construction workers used the swimming pool toilet, leaving trails of mud.
He claimed that by starting work on the showflat, the developer was breaking the en-bloc agreement.
His landlord, Mr John Tilley, also said the developers should not be working there before August.
'We (tenants and owners) are expected to leave by 21 Aug. But it's extremely unreasonable for my tenant to live in such conditions,' Mr Tilley said. 'The six months grace period is meant for those still living here to find alternative accommodation.'
INCONVENIENCE EXPECTED
But a spokesman for Hiap Hoe said the company had not broken any rules.
There are no 'hard and fast rules' on building a showflat during the six-month free stay period, she said.
She added: 'Some inconvenience is expected. But so long as we abide by the construction rules and try to minimise the inconveniences, the issue is unavoidable.
'Building showflats during the free stay period is a very common practice in en-bloc developments. There is no clause that says we start work (on the showflat) only after all the occupants have left.'
The spokesman said they had received some feedback expressing unhappiness over the construction work.
She said no piling work was done, except for the erection of metal beams for the showflat.
The sale of the new development is scheduled for the third quarter of 2008
Not too late to cash in on office boom
May 18, 2008
PROPERTY
Not too late to cash in on office boom
Demand and rentals likely to stay healthy as supply remains limited, say analysts
By Fiona Chan
The housing market in Singapore has started to turn bearish and investors are duly retreating from residential properties and property-related stocks.
But there are other classes of properties that may be worth a look for those still seeking to profit from property investments.
Offices seem the most obvious choice. The segment is still going strong even in the current market malaise, fuelled by a persistent supply crunch and strong demand for space from expanding businesses.
Investors may fear they have missed the boat, with office prices having soared 32.6 per cent last year alone. Growth in prices and rents has also started to moderate.
However, property consultants say it may not be too late to cash in on the office boom.
Demand is likely to stay healthy in the short- to medium-term even as new supply remains limited. Only one million sq ft of new space will be completed this year, according to Corporate Locations, which helps companies lease office space.
'There is currently an excess of demand over available space,' said Mr Moray Armstrong, executive director of office services at property consultancy CB Richard Ellis, in a recent report.
'Landlords will still be able to achieve high rents on rent reviews or lease renewals, due to the absence of alternatives for occupiers.'
Property firm Colliers International also still sees 'immense potential upside' in office rents and values, noting that office values are still about 27 per cent lower than their peak in the mid-1990s.
Buoyant yields
Recently, office prices have started to flatten out with fewer transactions taking place. Rents, however, are projected to keep rising at least until 2010, when more substantial space comes onto the market.
Prices of offices inched up just 1.1 per cent in the first quarter, but rents jumped 7.3 per cent. This indicates that annual rental yields are on the rise and may climb further, property experts say.
Traditionally, yields of office space have been higher than most other types of property. In the last two years, net rental yields for offices largely ranged from 5 to 7 per cent - almost double the usual rental yield for homes, which is about 2 to 4 per cent.
The strong rental yield may also mean that investors can get away without forking out cash for the mortgage payments, said Colliers in a research paper last month.
It said the current fixed interest rate loan for commercial properties is between 4 and 4.5 per cent for the first two years, which means the rent will probably be enough to cover the mortgage instalments.
Higher yields also mean that investors in strata-titled office properties would be able to double their investment in a much shorter time than for homes, said Colliers. It projects 13 to 14 years for offices to reach that stage, compared to 18 to 29 years for homes.
Higher risks
With the greater returns from office investments also come greater risks, warns Colliers.
For one thing, it is more difficult to obtain financing, as banks generally lend only 60 to 70 per cent of the property's sale price or market value, compared to between 80 and 90 per cent for homes. And interest rates tend to be higher for office loans.
Also, buyers cannot use their Central Provident Fund savings to pay for office purchases.
Investors hoping to reap windfall gains by buying older buildings with 'collective sale potential' should also be cautious, as the process is much more difficult for office buildings compared to condos.
How to buy an office unit?
Obviously, most casual investors are unable to afford entire office buildings. What they usually do is to buy strata-titled office units, which are sold singly. But these properties are few and far between.
There are probably fewer than 350 completed office and industrial buildings in Singapore that are available for sale on a strata basis, estimated Colliers.
Most of these, especially offices, are likely to be leasehold and more than 20 years old. These include Golden Mile Complex in Beach Road and High Street Centre in North Bridge Road, both of which have leases that started in 1969.
Investors looking for newer buildings can check out Suntec City Tower, Southbank at North Bridge Road and The Central near Clarke Quay. Units sold in these buildings between last July and February averaged $2,277 per sq ft (psf), $941 psf and $1,749 psf respectively, said Colliers.
Buyers of office units must first place an option fee of 1 per cent of the property's purchase price, said Colliers. They have two weeks to decide if they want to exercise the option, by paying another 9 per cent.
After that, the buyer's lawyer will conduct checks on the property's title, tax, floor plans, tenancy schedule, and so on.
The sale is usually completed three months after the option is exercised, when the remaining 90 per cent of the price is payable.
RARE INVESTMENT
· There are probably fewer than 350 office and industrial buildings in Singapore available for sale on a strata basis.
-- PHOTOS: ST FILE PHOTO, UOL GROUP
RARE INVESTMENT · Office units at Golden Mile Tower (above) are among the older ones on the market, while Southbank is one of the newer developments.
fiochan@sph.com.sg
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
PROPERTY
Not too late to cash in on office boom
Demand and rentals likely to stay healthy as supply remains limited, say analysts
By Fiona Chan
The housing market in Singapore has started to turn bearish and investors are duly retreating from residential properties and property-related stocks.
But there are other classes of properties that may be worth a look for those still seeking to profit from property investments.
Offices seem the most obvious choice. The segment is still going strong even in the current market malaise, fuelled by a persistent supply crunch and strong demand for space from expanding businesses.
Investors may fear they have missed the boat, with office prices having soared 32.6 per cent last year alone. Growth in prices and rents has also started to moderate.
However, property consultants say it may not be too late to cash in on the office boom.
Demand is likely to stay healthy in the short- to medium-term even as new supply remains limited. Only one million sq ft of new space will be completed this year, according to Corporate Locations, which helps companies lease office space.
'There is currently an excess of demand over available space,' said Mr Moray Armstrong, executive director of office services at property consultancy CB Richard Ellis, in a recent report.
'Landlords will still be able to achieve high rents on rent reviews or lease renewals, due to the absence of alternatives for occupiers.'
Property firm Colliers International also still sees 'immense potential upside' in office rents and values, noting that office values are still about 27 per cent lower than their peak in the mid-1990s.
Buoyant yields
Recently, office prices have started to flatten out with fewer transactions taking place. Rents, however, are projected to keep rising at least until 2010, when more substantial space comes onto the market.
Prices of offices inched up just 1.1 per cent in the first quarter, but rents jumped 7.3 per cent. This indicates that annual rental yields are on the rise and may climb further, property experts say.
Traditionally, yields of office space have been higher than most other types of property. In the last two years, net rental yields for offices largely ranged from 5 to 7 per cent - almost double the usual rental yield for homes, which is about 2 to 4 per cent.
The strong rental yield may also mean that investors can get away without forking out cash for the mortgage payments, said Colliers in a research paper last month.
It said the current fixed interest rate loan for commercial properties is between 4 and 4.5 per cent for the first two years, which means the rent will probably be enough to cover the mortgage instalments.
Higher yields also mean that investors in strata-titled office properties would be able to double their investment in a much shorter time than for homes, said Colliers. It projects 13 to 14 years for offices to reach that stage, compared to 18 to 29 years for homes.
Higher risks
With the greater returns from office investments also come greater risks, warns Colliers.
For one thing, it is more difficult to obtain financing, as banks generally lend only 60 to 70 per cent of the property's sale price or market value, compared to between 80 and 90 per cent for homes. And interest rates tend to be higher for office loans.
Also, buyers cannot use their Central Provident Fund savings to pay for office purchases.
Investors hoping to reap windfall gains by buying older buildings with 'collective sale potential' should also be cautious, as the process is much more difficult for office buildings compared to condos.
How to buy an office unit?
Obviously, most casual investors are unable to afford entire office buildings. What they usually do is to buy strata-titled office units, which are sold singly. But these properties are few and far between.
There are probably fewer than 350 completed office and industrial buildings in Singapore that are available for sale on a strata basis, estimated Colliers.
Most of these, especially offices, are likely to be leasehold and more than 20 years old. These include Golden Mile Complex in Beach Road and High Street Centre in North Bridge Road, both of which have leases that started in 1969.
Investors looking for newer buildings can check out Suntec City Tower, Southbank at North Bridge Road and The Central near Clarke Quay. Units sold in these buildings between last July and February averaged $2,277 per sq ft (psf), $941 psf and $1,749 psf respectively, said Colliers.
Buyers of office units must first place an option fee of 1 per cent of the property's purchase price, said Colliers. They have two weeks to decide if they want to exercise the option, by paying another 9 per cent.
After that, the buyer's lawyer will conduct checks on the property's title, tax, floor plans, tenancy schedule, and so on.
The sale is usually completed three months after the option is exercised, when the remaining 90 per cent of the price is payable.
RARE INVESTMENT
· There are probably fewer than 350 office and industrial buildings in Singapore available for sale on a strata basis.
-- PHOTOS: ST FILE PHOTO, UOL GROUP
RARE INVESTMENT · Office units at Golden Mile Tower (above) are among the older ones on the market, while Southbank is one of the newer developments.
fiochan@sph.com.sg
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
Kallang Leisure Park is now a dining haven after a $70-m makeover
May 18, 2008
Kallang with more bite
Kallang Leisure Park is now a dining haven after a $70-m makeover
By Rebecca Lynne Tan
Once a quiet mall, Kallang Leisure Park (below) has had a swanky $70-million facelift and become a dining haven.
The place, which unveiled its new look in November last year, is slowly drawing in the crowds, especially on weekends and when there are concerts at the nearby Singapore Indoor Stadium.
But there is potential for far more traffic.
A spokesman for Jack Investment, which owns and manages the building, says the revamp was timely as the building is about 15 years old. It also wanted to spruce up for increased traffic that will come when the new Circle Line station in front of the mall opens by 2010.
Other developments that will bring traffic include the Sports Hub, to be ready in 2011.
Currently, the four-storey mall houses Filmgarde - a six-screen cineplex run by Jack Investment - a bowling alley, an ice rink and a karaoke outlet.
But those looking for food will find an interesting mix of eateries including a Koufu food court and several one-of-a-kind restaurants such as Rosti, which specialises in the Swiss potato pancake dish, and Donut & Donuts, a Korean doughnut store.
There is also a branch of Korean supermarket chain Sol Mart, which caters to students from the Singapore Korean School located just off nearby Guillemard Road.
Also in the mall is Korean yogurt bar Yoguru, the Korean term for yogurt, which sells a special pomegranate and red dragonfruit-flavoured frozen yogurt.
Owner Sam Lee, 32, says: 'It's hard to find good retail space these days. I see this as a long-term investment. With the opening of the Circle Line and the Sports Hub, traffic flow would definitely increase.'
Restaurant owners say the mall can be a little quiet on weekdays, but many ride on their reputations and loyal customer bases.
Mr Maxtein Oh, 42, group general manager of Thai Village Holdings which manages the Thai Village chain of restaurants, says: 'A lot of our customers come to our restaurant because they know our brand. We opened here the day after our Oasis outlet closed.'
The Akashi Japanese Restaurant chain opened Akashabu in late March, offering shabu shabu, or a Japanese-style hot pot.
Mr Mervyn Goh, 36, who owns the chain with his two brothers, says: 'We chose Kallang because the concept suited the crowd there.'
And the crowds go there because of the convenience. The building has ample parking in the surrounding open-air carparks and there are more than 250 lots in the basement.
Sales operations manager David Chin, 48, who was there for lunch on a weekday, says: 'I work around here and it's easy to find parking.'
David Tan, 37, a doctor, adds: 'It's convenient and the food standard at Kallang Leisure Park is quite good. You can get good value for money.'
The mall, which has a Cold Storage outlet, also attracts residents who live in nearby Tanjong Rhu, a condominium haven that is just a five- to 10-minute walk away.
Ms Kylie Bond, 36, an Australian mother of four who lives down the road from the mall, says: 'I love that there's parking on just one level, and how it leads straight to the supermarket.'
Housewife Nariko Kong, 34, says she used to go to the mall even before the renovations, mostly to dine. She now goes there more often for foot reflexology, food and grocery shopping.
She says: 'It's so much better. It's cosy and clean, and there's so much more variety now.'
rltan@sph.com.sg
Kallang with more bite
Kallang Leisure Park is now a dining haven after a $70-m makeover
By Rebecca Lynne Tan
Once a quiet mall, Kallang Leisure Park (below) has had a swanky $70-million facelift and become a dining haven.
The place, which unveiled its new look in November last year, is slowly drawing in the crowds, especially on weekends and when there are concerts at the nearby Singapore Indoor Stadium.
But there is potential for far more traffic.
A spokesman for Jack Investment, which owns and manages the building, says the revamp was timely as the building is about 15 years old. It also wanted to spruce up for increased traffic that will come when the new Circle Line station in front of the mall opens by 2010.
Other developments that will bring traffic include the Sports Hub, to be ready in 2011.
Currently, the four-storey mall houses Filmgarde - a six-screen cineplex run by Jack Investment - a bowling alley, an ice rink and a karaoke outlet.
But those looking for food will find an interesting mix of eateries including a Koufu food court and several one-of-a-kind restaurants such as Rosti, which specialises in the Swiss potato pancake dish, and Donut & Donuts, a Korean doughnut store.
There is also a branch of Korean supermarket chain Sol Mart, which caters to students from the Singapore Korean School located just off nearby Guillemard Road.
Also in the mall is Korean yogurt bar Yoguru, the Korean term for yogurt, which sells a special pomegranate and red dragonfruit-flavoured frozen yogurt.
Owner Sam Lee, 32, says: 'It's hard to find good retail space these days. I see this as a long-term investment. With the opening of the Circle Line and the Sports Hub, traffic flow would definitely increase.'
Restaurant owners say the mall can be a little quiet on weekdays, but many ride on their reputations and loyal customer bases.
Mr Maxtein Oh, 42, group general manager of Thai Village Holdings which manages the Thai Village chain of restaurants, says: 'A lot of our customers come to our restaurant because they know our brand. We opened here the day after our Oasis outlet closed.'
The Akashi Japanese Restaurant chain opened Akashabu in late March, offering shabu shabu, or a Japanese-style hot pot.
Mr Mervyn Goh, 36, who owns the chain with his two brothers, says: 'We chose Kallang because the concept suited the crowd there.'
And the crowds go there because of the convenience. The building has ample parking in the surrounding open-air carparks and there are more than 250 lots in the basement.
Sales operations manager David Chin, 48, who was there for lunch on a weekday, says: 'I work around here and it's easy to find parking.'
David Tan, 37, a doctor, adds: 'It's convenient and the food standard at Kallang Leisure Park is quite good. You can get good value for money.'
The mall, which has a Cold Storage outlet, also attracts residents who live in nearby Tanjong Rhu, a condominium haven that is just a five- to 10-minute walk away.
Ms Kylie Bond, 36, an Australian mother of four who lives down the road from the mall, says: 'I love that there's parking on just one level, and how it leads straight to the supermarket.'
Housewife Nariko Kong, 34, says she used to go to the mall even before the renovations, mostly to dine. She now goes there more often for foot reflexology, food and grocery shopping.
She says: 'It's so much better. It's cosy and clean, and there's so much more variety now.'
rltan@sph.com.sg
What is TOP?
May 18, 2008
FINANCIAL QUOTIENT
Top? Top of what?
Where do you see this?
On anything that refers to a building under construction, ranging from hoardings to property advertisements.
What does it mean?
When a building is completed, its owners will apply for a Certificate of Statutory Completion (CSC), but this takes some time to obtain.
In the meantime, the owners can ask the Building and Construction Authority to issue a Temporary Occupation Permit, or TOP, for the building. This allows them to occupy the building even before the CSC is received.
During construction, developers often provide an estimated TOP date, which indicates the year - and sometimes even the month - when the building is expected to be completed.
Why is it important?
No one can move into a building, whether office or residential, until it has obtained the TOP.
For many homebuyers, the TOP date also marks the deadline by which they have to pay up the bulk of their home loans. Under some schemes, buyers pay an upfront deposit of 20 per cent of the home's purchase price, with the rest payable upon the TOP date.
So you want to use the term. Just say...
'We're getting married this year but our condo will obtain the TOP only in 2010, so in the meantime, we have to find another place to live in.'
Fiona Chan
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
FINANCIAL QUOTIENT
Top? Top of what?
Where do you see this?
On anything that refers to a building under construction, ranging from hoardings to property advertisements.
What does it mean?
When a building is completed, its owners will apply for a Certificate of Statutory Completion (CSC), but this takes some time to obtain.
In the meantime, the owners can ask the Building and Construction Authority to issue a Temporary Occupation Permit, or TOP, for the building. This allows them to occupy the building even before the CSC is received.
During construction, developers often provide an estimated TOP date, which indicates the year - and sometimes even the month - when the building is expected to be completed.
Why is it important?
No one can move into a building, whether office or residential, until it has obtained the TOP.
For many homebuyers, the TOP date also marks the deadline by which they have to pay up the bulk of their home loans. Under some schemes, buyers pay an upfront deposit of 20 per cent of the home's purchase price, with the rest payable upon the TOP date.
So you want to use the term. Just say...
'We're getting married this year but our condo will obtain the TOP only in 2010, so in the meantime, we have to find another place to live in.'
Fiona Chan
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
A financial tool you can TRUST
May 18, 2008
A financial tool you can TRUST
The usefulness of trusts has not diminished with the recent abolition of estate duty. Lorna Tan looks at why people set up trusts and presents some interesting real-life trusts
DESPITE the scrapping of estate duty in February, trusts - once a financial tool used by families to minimise death duties on the estates of family members who had died - have not lost their shine.
In fact, they are still the chosen instrument for those with certain purposes to fulfil, such as succession planning or wealth protection.
Trusts are legal arrangements that allow you to give away your assets, such as shares or property, to named beneficiaries. A trustee, typically an institution, will administer these assets.
Before its abolition, estate duty was imposed on the estate of a person who had died if his assets exceeded certain limits - more than $9 million for residential properties and more than $600,000 for movable assets.
Why people set up trusts
· Guarding against spendthrift heirs
Trusts are still the best way to guard against the dissipation of a family fortune by spendthrift or quarrelling heirs.
Rather than making outright bequests, you can use a trust to provide your heirs with a regular income while preserving the capital for future generations, said Ms Claire Tham, a partner at Hin Tat Augustine & Partners.
After all, studies have generally shown that the old saying about family wealth disappearing in three generations is true.
· Fending off unfavourable divorce settlements
Closely linked to the issue discussed above is the distrust some might feel towards a son-in-law or daughter-in-law.
The desire not to have this 'interloper' make off with the family's riches is strong motivation for many entrepreneurs to structure their wealth in such a way that divorce settlements do not result in a transfer of wealth to the interloper, added Ms Tham.
· Warding off creditors
Individuals who are in business might want to ring-fence the assets they have set aside for loved ones so potential creditors cannot touch these assets.
However, an individual who transfers his assets less than five years before he becomes bankrupt could find that they are not actually protected from creditors, said law firm Characterist LLC.
Some might want to ensure that certain persons do not benefit from their estates, for instance, the black sheep who might blow away the family fortune, said OCBC Trustee director Raymond Chee.
· Philanthropy
Instead of making a one-time gift to a charity, you can use a trust as a platform for sustainable philanthropic activities.
In most cases, the underlying assets are invested to generate a regular stream of income that is then used to fund charitable purposes. This creates a legacy that will survive long after the individual dies, said Mr Chee.
· Maintaining confidentiality
Publicity-averse individuals might find it comforting that their trustees are obliged under Singapore law to keep their affairs secret, highlighted Ms Tham.
This gives trusts an added advantage over wills. One of the drawbacks of a will is that the executors have to obtain probate, which means that the contents of the will enter the public domain. Trusts, in contrast, can be kept confidential.
In Singapore, the trustee has a duty to keep confidential the details of the trust. This duty arises both under common law and under the Trust Companies Act.
How much trusts cost
Fees are charged on a case-by-case basis, with the two main components being the set-up fee and the annual fee.
According to Mr Luke Peng, the chief executive of SG Trust (Asia), fees vary depending on the complexity of the trust structure, the volume of activity carried out and the size of the assets held.
For instance, for a simple trust that holds US$5 million (S$6.9 million) in assets with minimal transactions, SG Trust's set-up fee starts at US$5,000. The annual fee is based on 0.2 per cent of the assets held, with the minimum fee being US$5,000 to US$7,500.
British and Malayan Trustees (BMT) recently launched a trust aimed at the mass affluent market. This can be started with as little as $50,000 for a set-up fee of $3,000 to $5,000 and an annual fee that might be as low as $1,000.
According to its brochure, the BMT Provident Trust caters to individuals who might decide to transfer some of their assets into a trust at a later date.
This is because the time might not be right yet for them to make key decisions about the disposal of their assets.
For trusts with lower initial amounts, the investments will usually be conservative in nature, and could include fixed-term deposits, money market instruments, capital-protected funds and unit trusts.
lorna@sph.com.sg
--------------------------------------------------------------------------------
Reasons for setting up trusts
Here are some real-life trusts provided by lawyers and trust firms.
Cases from Characterist:
Money safe from creditors
Businessman Leslie Tong (not his real name) set up a trust immediately after receiving a large inheritance of $4 million from his father.
He is married to a housewife and has young children. He allotted the entire inheritance he received to the trust for the benefit of his spouse and children.
By doing so, he knows that if his business fails, his inheritance will not be lost as it will be safe from creditors.
He can then have the peace of mind to be aggressive in his business deals, knowing that his inheritance will be passed on to the next generation.
As he considers himself to be savvy about investments, he appointed himself as the trustee during his lifetime, and a corporate trustee in the event of his death.
Maintaining grave
A traditional Chinese man, Mr Wee Hock Leng (not his real name), wanted certain ceremonial traditions to be observed after his death, and to ensure that his children would maintain his grave.
He set up a trust to put aside $200,000 for the children to carry out the requisite traditional rites and to maintain his grave for 20 years.
He directed that after 20 years, any remaining monies could be distributed to designated beneficiaries.
Protecting stamp collection
Mr Michael Lim, an ardent stamp collector, has a 12-year-old grandson who shared his hobby.
His collection was of substantial value and he did not want anyone to sell the stamps for money.
So he set up a trust for a trustee to take possession of the stamps, with directions for the trustee to hand over the stamps to his grandson when he turns 25.
Cases from SG Trust (Asia):
Providing for disabled child
Mrs Patricia Tan (not her real name) has several children, one of whom is mentally disabled. She was concerned that upon her death, her disabled child would not be properly taken care of by his siblings, so she set up a trust to provide for his needs.
Cash not squandered
A successful entrepreneur with many children, Mr Benjamin Tay (not his real name) had accumulated much wealth.
Unfortunately his children were spendthrift and lazy, choosing to live off his wealth rather than supporting themselves.
Mr Tay decided to set up a trust, allowing his children to receive only lump sum distributions on a regular basis. Only his grandchildren could benefit from the trust assets.
Cases from Amolat & Partners:
Setting marriage conditions
A rich Indian woman, Madam Supiah Jayakumar (not her real name), set up a trust of her bungalow and directed that her youngest son - then leading quite a wild love life - should get a share only if he married a woman of the Indian race and of the Hindu religion.
The trust was set up five years ago and back then, the property was worth about $3 million.
Helping good causes
Mr Philip Khoo (not his real name) set up a trust of $500,000 to provide for an orphanage in Vietnam. He directed that the trustees should help the orphanage in providing shelter and food.
One of his trustees was a monk involved with the orphanage and another trustee was an accountant, an old friend of his.
Case from Goodwins Law Corp:
Not affected by divorce rules
The United States and Canada are countries with high tax jurisdictions. Mr Bill Andrews (not his real name) has an only daughter who is 24 years old and married to an American.
He would have liked to give her a huge sum of money, but was afraid of the liberal division rules on divorce in the US.
He decided to put the money into a trust that would not be affected by matrimonial division rules on divorce. This is because the trust would own the money and not his daughter.
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
A financial tool you can TRUST
The usefulness of trusts has not diminished with the recent abolition of estate duty. Lorna Tan looks at why people set up trusts and presents some interesting real-life trusts
DESPITE the scrapping of estate duty in February, trusts - once a financial tool used by families to minimise death duties on the estates of family members who had died - have not lost their shine.
In fact, they are still the chosen instrument for those with certain purposes to fulfil, such as succession planning or wealth protection.
Trusts are legal arrangements that allow you to give away your assets, such as shares or property, to named beneficiaries. A trustee, typically an institution, will administer these assets.
Before its abolition, estate duty was imposed on the estate of a person who had died if his assets exceeded certain limits - more than $9 million for residential properties and more than $600,000 for movable assets.
Why people set up trusts
· Guarding against spendthrift heirs
Trusts are still the best way to guard against the dissipation of a family fortune by spendthrift or quarrelling heirs.
Rather than making outright bequests, you can use a trust to provide your heirs with a regular income while preserving the capital for future generations, said Ms Claire Tham, a partner at Hin Tat Augustine & Partners.
After all, studies have generally shown that the old saying about family wealth disappearing in three generations is true.
· Fending off unfavourable divorce settlements
Closely linked to the issue discussed above is the distrust some might feel towards a son-in-law or daughter-in-law.
The desire not to have this 'interloper' make off with the family's riches is strong motivation for many entrepreneurs to structure their wealth in such a way that divorce settlements do not result in a transfer of wealth to the interloper, added Ms Tham.
· Warding off creditors
Individuals who are in business might want to ring-fence the assets they have set aside for loved ones so potential creditors cannot touch these assets.
However, an individual who transfers his assets less than five years before he becomes bankrupt could find that they are not actually protected from creditors, said law firm Characterist LLC.
Some might want to ensure that certain persons do not benefit from their estates, for instance, the black sheep who might blow away the family fortune, said OCBC Trustee director Raymond Chee.
· Philanthropy
Instead of making a one-time gift to a charity, you can use a trust as a platform for sustainable philanthropic activities.
In most cases, the underlying assets are invested to generate a regular stream of income that is then used to fund charitable purposes. This creates a legacy that will survive long after the individual dies, said Mr Chee.
· Maintaining confidentiality
Publicity-averse individuals might find it comforting that their trustees are obliged under Singapore law to keep their affairs secret, highlighted Ms Tham.
This gives trusts an added advantage over wills. One of the drawbacks of a will is that the executors have to obtain probate, which means that the contents of the will enter the public domain. Trusts, in contrast, can be kept confidential.
In Singapore, the trustee has a duty to keep confidential the details of the trust. This duty arises both under common law and under the Trust Companies Act.
How much trusts cost
Fees are charged on a case-by-case basis, with the two main components being the set-up fee and the annual fee.
According to Mr Luke Peng, the chief executive of SG Trust (Asia), fees vary depending on the complexity of the trust structure, the volume of activity carried out and the size of the assets held.
For instance, for a simple trust that holds US$5 million (S$6.9 million) in assets with minimal transactions, SG Trust's set-up fee starts at US$5,000. The annual fee is based on 0.2 per cent of the assets held, with the minimum fee being US$5,000 to US$7,500.
British and Malayan Trustees (BMT) recently launched a trust aimed at the mass affluent market. This can be started with as little as $50,000 for a set-up fee of $3,000 to $5,000 and an annual fee that might be as low as $1,000.
According to its brochure, the BMT Provident Trust caters to individuals who might decide to transfer some of their assets into a trust at a later date.
This is because the time might not be right yet for them to make key decisions about the disposal of their assets.
For trusts with lower initial amounts, the investments will usually be conservative in nature, and could include fixed-term deposits, money market instruments, capital-protected funds and unit trusts.
lorna@sph.com.sg
--------------------------------------------------------------------------------
Reasons for setting up trusts
Here are some real-life trusts provided by lawyers and trust firms.
Cases from Characterist:
Money safe from creditors
Businessman Leslie Tong (not his real name) set up a trust immediately after receiving a large inheritance of $4 million from his father.
He is married to a housewife and has young children. He allotted the entire inheritance he received to the trust for the benefit of his spouse and children.
By doing so, he knows that if his business fails, his inheritance will not be lost as it will be safe from creditors.
He can then have the peace of mind to be aggressive in his business deals, knowing that his inheritance will be passed on to the next generation.
As he considers himself to be savvy about investments, he appointed himself as the trustee during his lifetime, and a corporate trustee in the event of his death.
Maintaining grave
A traditional Chinese man, Mr Wee Hock Leng (not his real name), wanted certain ceremonial traditions to be observed after his death, and to ensure that his children would maintain his grave.
He set up a trust to put aside $200,000 for the children to carry out the requisite traditional rites and to maintain his grave for 20 years.
He directed that after 20 years, any remaining monies could be distributed to designated beneficiaries.
Protecting stamp collection
Mr Michael Lim, an ardent stamp collector, has a 12-year-old grandson who shared his hobby.
His collection was of substantial value and he did not want anyone to sell the stamps for money.
So he set up a trust for a trustee to take possession of the stamps, with directions for the trustee to hand over the stamps to his grandson when he turns 25.
Cases from SG Trust (Asia):
Providing for disabled child
Mrs Patricia Tan (not her real name) has several children, one of whom is mentally disabled. She was concerned that upon her death, her disabled child would not be properly taken care of by his siblings, so she set up a trust to provide for his needs.
Cash not squandered
A successful entrepreneur with many children, Mr Benjamin Tay (not his real name) had accumulated much wealth.
Unfortunately his children were spendthrift and lazy, choosing to live off his wealth rather than supporting themselves.
Mr Tay decided to set up a trust, allowing his children to receive only lump sum distributions on a regular basis. Only his grandchildren could benefit from the trust assets.
Cases from Amolat & Partners:
Setting marriage conditions
A rich Indian woman, Madam Supiah Jayakumar (not her real name), set up a trust of her bungalow and directed that her youngest son - then leading quite a wild love life - should get a share only if he married a woman of the Indian race and of the Hindu religion.
The trust was set up five years ago and back then, the property was worth about $3 million.
Helping good causes
Mr Philip Khoo (not his real name) set up a trust of $500,000 to provide for an orphanage in Vietnam. He directed that the trustees should help the orphanage in providing shelter and food.
One of his trustees was a monk involved with the orphanage and another trustee was an accountant, an old friend of his.
Case from Goodwins Law Corp:
Not affected by divorce rules
The United States and Canada are countries with high tax jurisdictions. Mr Bill Andrews (not his real name) has an only daughter who is 24 years old and married to an American.
He would have liked to give her a huge sum of money, but was afraid of the liberal division rules on divorce in the US.
He decided to put the money into a trust that would not be affected by matrimonial division rules on divorce. This is because the trust would own the money and not his daughter.
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
Rental rate to fall 25%: Bank
Rental rate to fall 25%: Bank
Barclays Capital says market has peaked, rent to drop 5% this year and more in next 2 years
Weekend • May 17, 2008
Cheow Xin Yi
cheowxinyi@mediacorp.com.sg
Have home rentals peaked? With a looming rush of new supply, one bank is predicting that they could fall by as much as 25 per cent by 2010.
That is good news for tenants, but not so good news for landlords, who saw private rentals surge an average of 41 per cent last year.
This bold forecast comes in a report from Barclays Capital. Its author, regional economist Leong Wai Ho, expects rentals to fall by 5 per cent this year, with a more severe price correction beginning from next year.
"The market has certainly peaked because vacancy rates are starting to rise and rents are linked to vacancy rates," he said.
Current vacancy rates for completed flats are not particularly high, at 6.3 per cent in the first quarter of this year, according to Urban Redevelopment Authority figures.
Mr Leong said: "The vacancy rises are not strong this year, but it will be exceptional next year due to the huge supply hitting the market."
A surge in reconstruction is taking place across town, following the recent flood of en bloc condominium sales. Some big residential developments around the central business district, including The Sail@Marina Bay, are also nearing completion.
Almost 13,000 new homes could be completed next year, rising to 18,000 the year after. All this, at a time when the global economy is slowing.
On the outlook for rents, other property consultants offered mixed views. Chesterton International's research head Colin Tan believes that the Barclays forecast of a 5-per-cent correction this year is too "conservative".
He believes the recent spike in rental demand was a "one-off". As thousands of home owners cashed in and sold their properties en bloc, there was a surge in instant tenants. Mr Tan believes many of them would have now found accommodation and the en bloc scene has since quietened down.
He added: "Supply will also be greater than usual due to the larger proportion of units owned by investors, as opposed to owner-occupiers, who usually put their properties up for rent." During the recent boom, many people bought second or third homes as rental properties.
Jones Lang La Salle's research head Chua Yang Liang is more bullish. He expects rents to hold steady as demand from foreign workers remains strong. In fact, he predicts that rents will grow "in the teens" this year before moderating to about 6 to 8 per cent next year. "The hiring of upper management level staff may have reached stable levels, but foreign banks such as Standard Chartered are hiring more employees at the middle-management levels, who also need housing," he said.
ERA Singapore's assistant vice-president Eugene Lim said that his company has seen a higher volume of leasing transactions this year and expects rents to rise by another 3 to 4 per cent this year.
Copyright MediaCorp Press Ltd. All rights reserved.
Barclays Capital says market has peaked, rent to drop 5% this year and more in next 2 years
Weekend • May 17, 2008
Cheow Xin Yi
cheowxinyi@mediacorp.com.sg
Have home rentals peaked? With a looming rush of new supply, one bank is predicting that they could fall by as much as 25 per cent by 2010.
That is good news for tenants, but not so good news for landlords, who saw private rentals surge an average of 41 per cent last year.
This bold forecast comes in a report from Barclays Capital. Its author, regional economist Leong Wai Ho, expects rentals to fall by 5 per cent this year, with a more severe price correction beginning from next year.
"The market has certainly peaked because vacancy rates are starting to rise and rents are linked to vacancy rates," he said.
Current vacancy rates for completed flats are not particularly high, at 6.3 per cent in the first quarter of this year, according to Urban Redevelopment Authority figures.
Mr Leong said: "The vacancy rises are not strong this year, but it will be exceptional next year due to the huge supply hitting the market."
A surge in reconstruction is taking place across town, following the recent flood of en bloc condominium sales. Some big residential developments around the central business district, including The Sail@Marina Bay, are also nearing completion.
Almost 13,000 new homes could be completed next year, rising to 18,000 the year after. All this, at a time when the global economy is slowing.
On the outlook for rents, other property consultants offered mixed views. Chesterton International's research head Colin Tan believes that the Barclays forecast of a 5-per-cent correction this year is too "conservative".
He believes the recent spike in rental demand was a "one-off". As thousands of home owners cashed in and sold their properties en bloc, there was a surge in instant tenants. Mr Tan believes many of them would have now found accommodation and the en bloc scene has since quietened down.
He added: "Supply will also be greater than usual due to the larger proportion of units owned by investors, as opposed to owner-occupiers, who usually put their properties up for rent." During the recent boom, many people bought second or third homes as rental properties.
Jones Lang La Salle's research head Chua Yang Liang is more bullish. He expects rents to hold steady as demand from foreign workers remains strong. In fact, he predicts that rents will grow "in the teens" this year before moderating to about 6 to 8 per cent next year. "The hiring of upper management level staff may have reached stable levels, but foreign banks such as Standard Chartered are hiring more employees at the middle-management levels, who also need housing," he said.
ERA Singapore's assistant vice-president Eugene Lim said that his company has seen a higher volume of leasing transactions this year and expects rents to rise by another 3 to 4 per cent this year.
Copyright MediaCorp Press Ltd. All rights reserved.
World's tallest condo in US hit by pullout of many S'pore buyers
May 17, 2008
World's tallest condo in US...
...hit by pullout of many S'pore buyers
Two-thirds backed out after US sub-prime crisis took a turn for the worse
By Fiona Chan
LOCAL condominiums are not the only ones suffering from the recent sharp downturn in property market sentiment.
Two-thirds of Singapore buyers have backed out of their purchases of units in the much-hyped Chicago Spire in the United States, The Straits Times understands.
The iconic condo in Chicago was well-received when it was launched in Singapore in early March. More than 800 people attended the exhibition at the Four Seasons Hotel, and almost 40 buyers were said to have reserved units.
But more than 20 of them withdrew from their deals subsequently, after the US sub-prime crisis threatened to take a turn for the worse in the weeks following the launch, sources said.
The 150-storey Chicago Spire is touted as the world's tallest condo, and boasts a unique spiral-shaped design.
But this was not enough to hook buyers. A number were apparently spooked by the near-collapse of US investment bank Bear Stearns, which took place a week after the Chicago Spire was launched in Singapore.
Many of the buyers who changed their minds may have been first-time punters who got cold feet, property experts suggested.
These buyers paid a US$2,000 (S$2,762) reservation fee for the units, but were refunded this amount in full, thanks to a cooling-off period that is the standard for US home sales.
Mr Colin Tan, the head of research and consultancy at Chesterton International, said it made sense for the buyers to pull out of their deals.
'Housing prices in the US are coming down, and while some properties may look like a good investment now, you can probably get it cheaper later,' he said.
'It doesn't make sense to buy and hold on to US properties when there are still sub-prime problems.'
Experts said those who had seen their purchases through are likely to be more serious buyers who may, for example, have children studying in Chicago.
Most of the units that were sold were reported to be one- or two-bedroom apartments that averaged US$1 million each, or US$1,000 per sq ft.
About half the buyers were said to be Singaporeans or permanent residents, and the rest were expatriates.
It is understood that to date, about 10 of the Singapore buyers have inked their purchase agreements. At least two of them are believed to be Indonesians.
Sources said the Chicago Spire's exhibitions in Shanghai and Hong Kong, which followed its launch in Singapore, received a lukewarm response as the turmoil in the US financial markets deepened in March.
fiochan@sph.com.sg
--------------------------------------------------------------------------------
IT PAYS TO WAIT
'Housing prices in the US are coming down, and while some properties may look like a good investment now, you can probably get them cheaper later.'
MR COLIN TAN, head of research and consultancy at Chesterton International, who said it made sense for Chicago Spire buyers to pull out of their deals
World's tallest condo in US...
...hit by pullout of many S'pore buyers
Two-thirds backed out after US sub-prime crisis took a turn for the worse
By Fiona Chan
LOCAL condominiums are not the only ones suffering from the recent sharp downturn in property market sentiment.
Two-thirds of Singapore buyers have backed out of their purchases of units in the much-hyped Chicago Spire in the United States, The Straits Times understands.
The iconic condo in Chicago was well-received when it was launched in Singapore in early March. More than 800 people attended the exhibition at the Four Seasons Hotel, and almost 40 buyers were said to have reserved units.
But more than 20 of them withdrew from their deals subsequently, after the US sub-prime crisis threatened to take a turn for the worse in the weeks following the launch, sources said.
The 150-storey Chicago Spire is touted as the world's tallest condo, and boasts a unique spiral-shaped design.
But this was not enough to hook buyers. A number were apparently spooked by the near-collapse of US investment bank Bear Stearns, which took place a week after the Chicago Spire was launched in Singapore.
Many of the buyers who changed their minds may have been first-time punters who got cold feet, property experts suggested.
These buyers paid a US$2,000 (S$2,762) reservation fee for the units, but were refunded this amount in full, thanks to a cooling-off period that is the standard for US home sales.
Mr Colin Tan, the head of research and consultancy at Chesterton International, said it made sense for the buyers to pull out of their deals.
'Housing prices in the US are coming down, and while some properties may look like a good investment now, you can probably get it cheaper later,' he said.
'It doesn't make sense to buy and hold on to US properties when there are still sub-prime problems.'
Experts said those who had seen their purchases through are likely to be more serious buyers who may, for example, have children studying in Chicago.
Most of the units that were sold were reported to be one- or two-bedroom apartments that averaged US$1 million each, or US$1,000 per sq ft.
About half the buyers were said to be Singaporeans or permanent residents, and the rest were expatriates.
It is understood that to date, about 10 of the Singapore buyers have inked their purchase agreements. At least two of them are believed to be Indonesians.
Sources said the Chicago Spire's exhibitions in Shanghai and Hong Kong, which followed its launch in Singapore, received a lukewarm response as the turmoil in the US financial markets deepened in March.
fiochan@sph.com.sg
--------------------------------------------------------------------------------
IT PAYS TO WAIT
'Housing prices in the US are coming down, and while some properties may look like a good investment now, you can probably get them cheaper later.'
MR COLIN TAN, head of research and consultancy at Chesterton International, who said it made sense for Chicago Spire buyers to pull out of their deals
Regent Garden owners file appeal despite sale completion
May 17, 2008
Regent Garden owners file appeal despite sale completion
By Joyce Teo
ONE of Singapore's most unusual collective sale disputes, over Regent Garden, is now headed for the Court of Appeal even though the sale was completed yesterday.
Last month, the High Court ruled that the $34 million sale of the West Coast Road condo to Allgreen Properties must go ahead.
But now, the owners of 23 out of the 31 Regent Garden apartments have filed papers to take the case to Singapore's highest court - the Court of Appeal.
They cannot overturn the sale now that it has been completed, but they want the court to rule on certain 'burning' questions, and they might seek remedies if they succeed.
They say other people involved in collective sales might be interested in getting answers to these questions.
These majority owners, including owners of two units who did not join the appeal, had earlier sought to overturn the $34 million deal, claiming among other things that their condo had been undervalued.
In a statement, the sale committee said: 'These questions include whether, in a situation where a minority of owners object to a proposed collective sale, an intending buyer is permitted to go behind the backs of the majority owners and reach a side deal with the minority owners.'
A spokesman for the majority owners said the 'side deal' referred to the fact that six of the owners who had opposed the sale had received an extra $2 million, divided between them, in return for withdrawing their objections.
Those appealing also want to know whether these minority owners are entitled to retain the extra payments without sharing the sum with the majority owners in accordance with the distribution arrangements in the sale agreement.
Yesterday, all the owners at Regent Garden completed their sale, which means they would each have pocketed a large part of their proceeds, which range from slightly over $700,000 to $1.4 million.
The remaining 5 per cent of their proceeds is due to be released to them when they vacate their homes.
In a statement released yesterday evening, Allgreen described the appeal as 'curious', given that the sale and purchase of Regent Garden had been completed earlier yesterday.
'Allgreen intends to vigorously contest the appeal, and all claims and allegations made by the appellants,' it said.
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
Regent Garden owners file appeal despite sale completion
By Joyce Teo
ONE of Singapore's most unusual collective sale disputes, over Regent Garden, is now headed for the Court of Appeal even though the sale was completed yesterday.
Last month, the High Court ruled that the $34 million sale of the West Coast Road condo to Allgreen Properties must go ahead.
But now, the owners of 23 out of the 31 Regent Garden apartments have filed papers to take the case to Singapore's highest court - the Court of Appeal.
They cannot overturn the sale now that it has been completed, but they want the court to rule on certain 'burning' questions, and they might seek remedies if they succeed.
They say other people involved in collective sales might be interested in getting answers to these questions.
These majority owners, including owners of two units who did not join the appeal, had earlier sought to overturn the $34 million deal, claiming among other things that their condo had been undervalued.
In a statement, the sale committee said: 'These questions include whether, in a situation where a minority of owners object to a proposed collective sale, an intending buyer is permitted to go behind the backs of the majority owners and reach a side deal with the minority owners.'
A spokesman for the majority owners said the 'side deal' referred to the fact that six of the owners who had opposed the sale had received an extra $2 million, divided between them, in return for withdrawing their objections.
Those appealing also want to know whether these minority owners are entitled to retain the extra payments without sharing the sum with the majority owners in accordance with the distribution arrangements in the sale agreement.
Yesterday, all the owners at Regent Garden completed their sale, which means they would each have pocketed a large part of their proceeds, which range from slightly over $700,000 to $1.4 million.
The remaining 5 per cent of their proceeds is due to be released to them when they vacate their homes.
In a statement released yesterday evening, Allgreen described the appeal as 'curious', given that the sale and purchase of Regent Garden had been completed earlier yesterday.
'Allgreen intends to vigorously contest the appeal, and all claims and allegations made by the appellants,' it said.
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
Developers face higher funding costs
Business Times - 17 May 2008
Developers face higher funding costs
By CONRAD TAN
PROPERTY developers in Asia face a 'double whammy' of rising credit spreads on loans and banks lending less against the value of new projects, a senior Asian property fund manager said yesterday.
And the wider interest margins that banks have been demanding on loans since the start of the financial market turmoil are likely to be sustained, said Olivier Lim, chief financial officer of CapitaLand, South-east Asia's largest developer.
Mr Lim and Ng Beng Tiong, the Singapore-based director of operations at ARA Asia Dragon Fund, were speaking at a panel discussion on the last day of a conference organised by Merrill Lynch that started on Tuesday.
Mr Ng said that although benchmark interest rates in Singapore and Hong Kong have fallen, 'what we've seen is that the margins have shot up tremendously - more than double in many cases'.
Before the US sub-prime mortgage crisis broke, property companies in Asia could borrow at spreads of less than 100 basis points or one percentage point above interbank lending rates, Mr Ng said.
'Now banks are quoting 200, 300 and for some smaller developers we understand that they're being quoted 400' basis-point spreads.
Besides paying higher interest rate spreads on loans, developers are also finding that the proportion of a project's value that banks are willing to fund - the loan-to-value (LTV) ratio - has shrunk, he said.
'In the bullish days, we were seeing 70-80 per cent LTV. Now banks are quoting 50-60 per cent, so it's a double whammy for project financing.'
ARA Asia Dragon Fund is the flagship private real estate fund of ARA Asset Management, an affiliate of Hong Kong's Cheung Kong Group. At the end of last year, the fund, which invests in major cities throughout Asia, had more than US$1.5 billion of capital from institutional investors worldwide, including Calpers, the largest US public pension fund.
CapitaLand's Mr Lim said the first quarter saw 'the worst credit market situation I've seen in my 19-year career'.
Although spreads have since narrowed slightly, 'I think the blow-out in the credit margins will be sustained', he added. 'I don't see it compressing to where it was last year.'
At CapitaLand, 'we're seeing, on average, rates go up by between 60 to 100 basis points, depending on whether it's corporate risk or project risk'.
'But we are sensing a flight to quality, so for us we've been able to raise about S$4 billion overall of credit debt from multiple sources in the first quarter alone. We still have access, but we do have to adjust to a higher margin. Thankfully, the cost of money is much lower, so the overall cost is about the same as it was last year.'
Last month, the firm raised another S$2 billion of bank funding for its new condominium development at Farrer Court. 'Banks are still lending,' he said.
In Asia, outside its main markets of Singapore, China and Australia, CapitaLand has been 'probing many other markets' including Thailand, Malaysia and the Middle East, 'but it's becoming much clearer to us that two countries are at the top of the list - Vietnam and India', he said. 'We're starting to accelerate our investments in both of those countries.'
Meanwhile, despite suggestions that property prices in Singapore have risen too far too fast, 'I think the market is a lot healthier than people indicate', Mr Lim said.
Developers face higher funding costs
By CONRAD TAN
PROPERTY developers in Asia face a 'double whammy' of rising credit spreads on loans and banks lending less against the value of new projects, a senior Asian property fund manager said yesterday.
And the wider interest margins that banks have been demanding on loans since the start of the financial market turmoil are likely to be sustained, said Olivier Lim, chief financial officer of CapitaLand, South-east Asia's largest developer.
Mr Lim and Ng Beng Tiong, the Singapore-based director of operations at ARA Asia Dragon Fund, were speaking at a panel discussion on the last day of a conference organised by Merrill Lynch that started on Tuesday.
Mr Ng said that although benchmark interest rates in Singapore and Hong Kong have fallen, 'what we've seen is that the margins have shot up tremendously - more than double in many cases'.
Before the US sub-prime mortgage crisis broke, property companies in Asia could borrow at spreads of less than 100 basis points or one percentage point above interbank lending rates, Mr Ng said.
'Now banks are quoting 200, 300 and for some smaller developers we understand that they're being quoted 400' basis-point spreads.
Besides paying higher interest rate spreads on loans, developers are also finding that the proportion of a project's value that banks are willing to fund - the loan-to-value (LTV) ratio - has shrunk, he said.
'In the bullish days, we were seeing 70-80 per cent LTV. Now banks are quoting 50-60 per cent, so it's a double whammy for project financing.'
ARA Asia Dragon Fund is the flagship private real estate fund of ARA Asset Management, an affiliate of Hong Kong's Cheung Kong Group. At the end of last year, the fund, which invests in major cities throughout Asia, had more than US$1.5 billion of capital from institutional investors worldwide, including Calpers, the largest US public pension fund.
CapitaLand's Mr Lim said the first quarter saw 'the worst credit market situation I've seen in my 19-year career'.
Although spreads have since narrowed slightly, 'I think the blow-out in the credit margins will be sustained', he added. 'I don't see it compressing to where it was last year.'
At CapitaLand, 'we're seeing, on average, rates go up by between 60 to 100 basis points, depending on whether it's corporate risk or project risk'.
'But we are sensing a flight to quality, so for us we've been able to raise about S$4 billion overall of credit debt from multiple sources in the first quarter alone. We still have access, but we do have to adjust to a higher margin. Thankfully, the cost of money is much lower, so the overall cost is about the same as it was last year.'
Last month, the firm raised another S$2 billion of bank funding for its new condominium development at Farrer Court. 'Banks are still lending,' he said.
In Asia, outside its main markets of Singapore, China and Australia, CapitaLand has been 'probing many other markets' including Thailand, Malaysia and the Middle East, 'but it's becoming much clearer to us that two countries are at the top of the list - Vietnam and India', he said. 'We're starting to accelerate our investments in both of those countries.'
Meanwhile, despite suggestions that property prices in Singapore have risen too far too fast, 'I think the market is a lot healthier than people indicate', Mr Lim said.
Construction starts on homes rise by 8.2%
Business Times - 17 May 2008
LATEST US DATA
Construction starts on homes rise by 8.2%
Growth comes from a big jump in apartment building construction
(WASHINGTON) Construction starts on new US homes posted the biggest increase in more than two years in April, rising by a surprisingly strong 8.2 per cent and applications for new building permits turned up for the first time in five months, the Commerce Department reported in a rare spot of good news amid the worst downturn in housing in more than two decades.
The report signalled a glimmer of hope that the hard-hit housing sector still had some spring vigour.
However, confidence among US consumers fell in May to the lowest level in almost 28 years as record-high fuel prices, lower home values and fewer jobs rattled Americans.
The Reuters/University of Michigan preliminary index of consumer sentiment decreased to 59.5, the weakest level since June 1980, from 62.6 in April. The measure averaged 85.6 in 2007. Consumer spending, the biggest part of the economy, is cooling as surging food and fuel costs erode Americans' buying power and job losses mount.
Housing starts in April, meanwhile, ran at a 1.032-million-unit annual rate, up from a revised 954,000-unit rate in March, while permits gained 4.9 per cent to 978,000 a year from a revised 932,000 in March.
Building of single-family homes, a better and more stable indicator of new home trends, continued to weaken, however. The growth came from a big jump in apartment construction.
Still, the overall gain represented recovery after a steep slump in March building pushed activity to the slowest pace in 17 years.
The surprising rebound was expected to be temporary given the headwinds builders are confronting, from slumping sales to soaring home foreclosures.
The strength in April came entirely from a huge increase in apartment construction, which can be extremely volatile from month to month. Apartment building, defined as two or more units, jumped by 36 per cent to a seasonally adjusted annual rate of 340,000 units. The larger single-family sector dropped by 1.7 per cent to an annual rate of 692,000 units.
Applications for building permits, considered a good sign of future activity, also recorded an increase in April, rising by 4.9 per cent to 978,000 units. It was the first gain in permits in five months.
But economists believe that housing construction will remain under pressure until builders have more success in reducing a huge backlog of unsold homes.
That effort is being made more difficult by a record wave of foreclosures as millions of borrowers lose their homes because they cannot keep up with escalating payments, particularly on sub-prime mortgages and loans extended to people with weak credit histories. Even with the improvement, housing construction nationwide was 30.6 per cent below the level of activity a year ago.
The National Association of Home Builders reported on Thursday that its monthly survey of builder sentiment edged down in May to a reading of 19, just above the all-time low of 18 set in December. - AP, Reuters, AFP, Bloomberg
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
LATEST US DATA
Construction starts on homes rise by 8.2%
Growth comes from a big jump in apartment building construction
(WASHINGTON) Construction starts on new US homes posted the biggest increase in more than two years in April, rising by a surprisingly strong 8.2 per cent and applications for new building permits turned up for the first time in five months, the Commerce Department reported in a rare spot of good news amid the worst downturn in housing in more than two decades.
The report signalled a glimmer of hope that the hard-hit housing sector still had some spring vigour.
However, confidence among US consumers fell in May to the lowest level in almost 28 years as record-high fuel prices, lower home values and fewer jobs rattled Americans.
The Reuters/University of Michigan preliminary index of consumer sentiment decreased to 59.5, the weakest level since June 1980, from 62.6 in April. The measure averaged 85.6 in 2007. Consumer spending, the biggest part of the economy, is cooling as surging food and fuel costs erode Americans' buying power and job losses mount.
Housing starts in April, meanwhile, ran at a 1.032-million-unit annual rate, up from a revised 954,000-unit rate in March, while permits gained 4.9 per cent to 978,000 a year from a revised 932,000 in March.
Building of single-family homes, a better and more stable indicator of new home trends, continued to weaken, however. The growth came from a big jump in apartment construction.
Still, the overall gain represented recovery after a steep slump in March building pushed activity to the slowest pace in 17 years.
The surprising rebound was expected to be temporary given the headwinds builders are confronting, from slumping sales to soaring home foreclosures.
The strength in April came entirely from a huge increase in apartment construction, which can be extremely volatile from month to month. Apartment building, defined as two or more units, jumped by 36 per cent to a seasonally adjusted annual rate of 340,000 units. The larger single-family sector dropped by 1.7 per cent to an annual rate of 692,000 units.
Applications for building permits, considered a good sign of future activity, also recorded an increase in April, rising by 4.9 per cent to 978,000 units. It was the first gain in permits in five months.
But economists believe that housing construction will remain under pressure until builders have more success in reducing a huge backlog of unsold homes.
That effort is being made more difficult by a record wave of foreclosures as millions of borrowers lose their homes because they cannot keep up with escalating payments, particularly on sub-prime mortgages and loans extended to people with weak credit histories. Even with the improvement, housing construction nationwide was 30.6 per cent below the level of activity a year ago.
The National Association of Home Builders reported on Thursday that its monthly survey of builder sentiment edged down in May to a reading of 19, just above the all-time low of 18 set in December. - AP, Reuters, AFP, Bloomberg
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
Fears of US recession overblown: analyst
Business Times - 17 May 2008
Fears of US recession overblown: analyst
By OH BOON PING
(SINGAPORE) The Federal Reserve is likely to cut interest rates by another 25 basis points, before pausing to monitor the key economic data in US, according to the National Australia Bank.
However, its group chief economist Alan Oster felt that fears of a major US recession is overblown at present and forecast a US GDP growth of 1.2 per cent this year and 1.7 per cent next year.
Since last September, the Fed has slashed its key interest rate by 3.25 percentage points to 2 per cent.
Mr Oster was speaking to BT on the sidelines of a lunch forum organised by the CPA Australia.
On the issue of liquidity trap, Mr Oster said that: 'Where the Fed is at right now, either they do one more or sit around for a while to see what the data says. We actually think they are very close to the bottom.'
In his presentation, Mr Oster also said that a slowdown in US consumption is still to come in 2008, while recovery is expected in 2009.
These forecasts are based on assumptions such as flat equity markets, 1.5 per cent growth in real disposable income, and that oil prices peak at about US$120 before falling to US$90 by later this year.
In Asia, growth is expected to slow only moderately as there are 'enough dynamics' in emerging economies of China and India.
In China, he sees slower growth in exports of around 20 per cent, while 'retail also a touch lower - mainly in real terms given accelerating inflation'.
Overall, Chinese economic growth is expected to slow moderately to 9.5 per cent this year and about 8.9 per cent in 2009.
This year, India's gross domestic product (GDP) could grow by 7.5 per cent, but drop to 6.4 per cent next year.
He remains optimistic about the economic prospects in Singapore, as the city state largely 'reflects what is happening in Asia'.
This year's GDP growth in Singapore is forecast at 5.2 per cent, while next year's could hit 5.8 per cent.
Globally, GDP growth is estimated at 3.4 per cent and 3.2 per cent next year.
On the run-up in commodity prices, Mr Oster said that commodities are 'close to the top . . . And so our forecast is some of them are clearly going to go down, particularly the agricultural side. So the wheat and the rice prices are expected to come down.'
'I am not sure if iron or coal is going to come down, but if China slows, they will.'
The bank sees commodity prices falling 20 per cent from current levels in two to three years' time.
Separately, Morgan Stanley said in a note yesterday that trade trends in Singapore are likely to continue to soften, while cyclical segments will likely face further pressures.
This came after Singapore economy posted higher exports and non-oil domestic exports last month.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
Fears of US recession overblown: analyst
By OH BOON PING
(SINGAPORE) The Federal Reserve is likely to cut interest rates by another 25 basis points, before pausing to monitor the key economic data in US, according to the National Australia Bank.
However, its group chief economist Alan Oster felt that fears of a major US recession is overblown at present and forecast a US GDP growth of 1.2 per cent this year and 1.7 per cent next year.
Since last September, the Fed has slashed its key interest rate by 3.25 percentage points to 2 per cent.
Mr Oster was speaking to BT on the sidelines of a lunch forum organised by the CPA Australia.
On the issue of liquidity trap, Mr Oster said that: 'Where the Fed is at right now, either they do one more or sit around for a while to see what the data says. We actually think they are very close to the bottom.'
In his presentation, Mr Oster also said that a slowdown in US consumption is still to come in 2008, while recovery is expected in 2009.
These forecasts are based on assumptions such as flat equity markets, 1.5 per cent growth in real disposable income, and that oil prices peak at about US$120 before falling to US$90 by later this year.
In Asia, growth is expected to slow only moderately as there are 'enough dynamics' in emerging economies of China and India.
In China, he sees slower growth in exports of around 20 per cent, while 'retail also a touch lower - mainly in real terms given accelerating inflation'.
Overall, Chinese economic growth is expected to slow moderately to 9.5 per cent this year and about 8.9 per cent in 2009.
This year, India's gross domestic product (GDP) could grow by 7.5 per cent, but drop to 6.4 per cent next year.
He remains optimistic about the economic prospects in Singapore, as the city state largely 'reflects what is happening in Asia'.
This year's GDP growth in Singapore is forecast at 5.2 per cent, while next year's could hit 5.8 per cent.
Globally, GDP growth is estimated at 3.4 per cent and 3.2 per cent next year.
On the run-up in commodity prices, Mr Oster said that commodities are 'close to the top . . . And so our forecast is some of them are clearly going to go down, particularly the agricultural side. So the wheat and the rice prices are expected to come down.'
'I am not sure if iron or coal is going to come down, but if China slows, they will.'
The bank sees commodity prices falling 20 per cent from current levels in two to three years' time.
Separately, Morgan Stanley said in a note yesterday that trade trends in Singapore are likely to continue to soften, while cyclical segments will likely face further pressures.
This came after Singapore economy posted higher exports and non-oil domestic exports last month.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
Further drop in new home sales and launches in April
May 16, 2008
Further drop in new home sales and launches in April
Prices also show signs of weakening as buyers adopt a more cautious stance
By Fiona Chan
THE private home market continued to weaken last month, with launches of new homes falling to their lowest level in at least 10 months.
Sales volumes and median prices also dipped, according to monthly figures released by the Urban Redevelopment Authority yesterday.
Developers launched only 271 homes last month, fewer than half the 642 units launched in March.
The number of homes sold also fell, to 274 in the month, from 322 previously. These figures exclude executive condominiums.
'It is clear that homebuyers were in no hurry to make purchases and were taking more time to assess the market,' said Mr Li Hiaw Ho, the executive director of CB Richard Ellis (CBRE) Research.
He attributed this trend to the continuing instability of financial markets and increasing concerns over the higher cost of living.
Perhaps as a result of the slowdown, prices have begun to show signs of strain.
An analysis by property firm Knight Frank found median prices of new homes sold last month had slid 9 per cent to $943 per sq ft (psf), from $1,035 psf in March.
One reason for the lower prices could be that most of the homes launched and sold were in cheaper mass-market developments.
Eight out of 10 homes sold in the month cost $1,000 psf or less. Only seven homes, or about 2 per cent of the total sold, fetched more than $2,000 psf.
This is a major reversal from previous months. As recently as in December, more than 70 per cent of the homes sold for the month cost more than $2,000 psf.
The strength of the mass-market segment last month was the bright spot in an otherwise dismal set of figures yesterday.
The best-selling project was a suburban development: Stadia in Yio Chu Kang Road, which sold more than 90 per cent of its 56 units within the month.
'Latent demand remains strong, especially for the mass-market projects that are reasonably priced between $750 and $850 psf,' said Mr Chua Yang Liang, the head of South-east Asia research at Jones Lang LaSalle.
On the other hand, only three units were launched in the prime core central region. Demand for homes in this high-end area and in the mid-tier city-fringes remained fragmented and weak, said Mr Chua.
Property consultants said they expect buying activity to remain slow in the coming months as the current gloomy sentiment persists.
But some, such as CBRE's Mr Li, expect sales to start improving next month as developers begin stepping up launches.
Mr Ku Swee Yong, Savills Singapore's director of business development and marketing, said buyers are starting to return to the market.
'I dare say last month's sales numbers will be the lowest we will see this year,' he said.
'Showflat crowds are still pretty good, and from now on, we should see launches picking up.'
Having some high-profile launches would give the market a boost, said Mr Nicholas Mak, the director of research and consultancy at Knight Frank.
'Essentially, the lukewarm sentiment can be explained primarily by the lack of launches of major developments that might cause excitement.'
Further drop in new home sales and launches in April
Prices also show signs of weakening as buyers adopt a more cautious stance
By Fiona Chan
THE private home market continued to weaken last month, with launches of new homes falling to their lowest level in at least 10 months.
Sales volumes and median prices also dipped, according to monthly figures released by the Urban Redevelopment Authority yesterday.
Developers launched only 271 homes last month, fewer than half the 642 units launched in March.
The number of homes sold also fell, to 274 in the month, from 322 previously. These figures exclude executive condominiums.
'It is clear that homebuyers were in no hurry to make purchases and were taking more time to assess the market,' said Mr Li Hiaw Ho, the executive director of CB Richard Ellis (CBRE) Research.
He attributed this trend to the continuing instability of financial markets and increasing concerns over the higher cost of living.
Perhaps as a result of the slowdown, prices have begun to show signs of strain.
An analysis by property firm Knight Frank found median prices of new homes sold last month had slid 9 per cent to $943 per sq ft (psf), from $1,035 psf in March.
One reason for the lower prices could be that most of the homes launched and sold were in cheaper mass-market developments.
Eight out of 10 homes sold in the month cost $1,000 psf or less. Only seven homes, or about 2 per cent of the total sold, fetched more than $2,000 psf.
This is a major reversal from previous months. As recently as in December, more than 70 per cent of the homes sold for the month cost more than $2,000 psf.
The strength of the mass-market segment last month was the bright spot in an otherwise dismal set of figures yesterday.
The best-selling project was a suburban development: Stadia in Yio Chu Kang Road, which sold more than 90 per cent of its 56 units within the month.
'Latent demand remains strong, especially for the mass-market projects that are reasonably priced between $750 and $850 psf,' said Mr Chua Yang Liang, the head of South-east Asia research at Jones Lang LaSalle.
On the other hand, only three units were launched in the prime core central region. Demand for homes in this high-end area and in the mid-tier city-fringes remained fragmented and weak, said Mr Chua.
Property consultants said they expect buying activity to remain slow in the coming months as the current gloomy sentiment persists.
But some, such as CBRE's Mr Li, expect sales to start improving next month as developers begin stepping up launches.
Mr Ku Swee Yong, Savills Singapore's director of business development and marketing, said buyers are starting to return to the market.
'I dare say last month's sales numbers will be the lowest we will see this year,' he said.
'Showflat crowds are still pretty good, and from now on, we should see launches picking up.'
Having some high-profile launches would give the market a boost, said Mr Nicholas Mak, the director of research and consultancy at Knight Frank.
'Essentially, the lukewarm sentiment can be explained primarily by the lack of launches of major developments that might cause excitement.'
CDL chief Kwek Leng Beng awaiting right time to buy
May 16, 2008
CDL chief Kwek Leng Beng awaiting right time to buy
By Joyce Teo
PROPERTY tycoon Kwek Leng Beng has warned that most property investors follow the herd instinct and wait too long in a cautious market - then make a wrong move.
The executive chairman of City Developments (CDL) said he remains upbeat about prospects for the real estate scene in Singapore, despite recent weak sales volumes.
Mr Kwek, who was a panellist at the Financial Times Asia Property Summit held at his St Regis Hotel yesterday, said the property market is just consolidating.
The mood in the Singapore property market is cautious in the wake of the United States sub-prime crisis, with many buyers and sellers preferring to remain on the sidelines.
He said he was waiting for the opportunity to 'go in and buy at the right time, be a bottom fisher'.
But most people will do the opposite, he said. 'You notice (people) will keep on waiting... until it's too late,' he said.
'It's the herd instinct... the majority will be wrong.' A shrewd investor will act on his own, he said.
If the casino-led boom in Macau's luxury homes market is anything to go by, Singapore will do even better as it will have two casinos and other major events, he said.
'We are victims of our own success,' Mr Kwek.
'In the old days, we had only regional investors from Indonesia, Malaysia, Taiwan... But today, we have big investors like Morgan Stanley, hedge funds.'
Mr Christopher Fossick, Jones Lang LaSalle's managing director for South-east Asia, who was on the same panel, said there is now a higher proportion of investors than before, compared with occupiers.
Investors tend to be more sensitive to market sentiment, he said.
CDL, which has held back the launch of four residential projects because of poor sentiment, said in its recent earnings announcement that it plans to release them once sentiment improves and when pent-up demand can be realised.
'In the first place, we were sick,' said Mr Kwek of the property market before its recent boom. 'But today, we have shifted to another platform. Instead of relying on technology, we are relying on our status as a global city.'
He also told reporters yesterday that hotel rates will continue to rise this year because of short supply.
The office market will also do well, though rent increases have moderated. As for the much talked-about office oversupply situation come 2010 or 2011, Mr Kwek thinks supply will not pose a problem then because the current construction boom will check that.
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
CDL chief Kwek Leng Beng awaiting right time to buy
By Joyce Teo
PROPERTY tycoon Kwek Leng Beng has warned that most property investors follow the herd instinct and wait too long in a cautious market - then make a wrong move.
The executive chairman of City Developments (CDL) said he remains upbeat about prospects for the real estate scene in Singapore, despite recent weak sales volumes.
Mr Kwek, who was a panellist at the Financial Times Asia Property Summit held at his St Regis Hotel yesterday, said the property market is just consolidating.
The mood in the Singapore property market is cautious in the wake of the United States sub-prime crisis, with many buyers and sellers preferring to remain on the sidelines.
He said he was waiting for the opportunity to 'go in and buy at the right time, be a bottom fisher'.
But most people will do the opposite, he said. 'You notice (people) will keep on waiting... until it's too late,' he said.
'It's the herd instinct... the majority will be wrong.' A shrewd investor will act on his own, he said.
If the casino-led boom in Macau's luxury homes market is anything to go by, Singapore will do even better as it will have two casinos and other major events, he said.
'We are victims of our own success,' Mr Kwek.
'In the old days, we had only regional investors from Indonesia, Malaysia, Taiwan... But today, we have big investors like Morgan Stanley, hedge funds.'
Mr Christopher Fossick, Jones Lang LaSalle's managing director for South-east Asia, who was on the same panel, said there is now a higher proportion of investors than before, compared with occupiers.
Investors tend to be more sensitive to market sentiment, he said.
CDL, which has held back the launch of four residential projects because of poor sentiment, said in its recent earnings announcement that it plans to release them once sentiment improves and when pent-up demand can be realised.
'In the first place, we were sick,' said Mr Kwek of the property market before its recent boom. 'But today, we have shifted to another platform. Instead of relying on technology, we are relying on our status as a global city.'
He also told reporters yesterday that hotel rates will continue to rise this year because of short supply.
The office market will also do well, though rent increases have moderated. As for the much talked-about office oversupply situation come 2010 or 2011, Mr Kwek thinks supply will not pose a problem then because the current construction boom will check that.
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
Design awards for HDB estates
May 16, 2008
Design awards for HDB estates
Sengkang, Ghim Moh estates score well for innovative design, user-friendly features
By Ong Bi Hui
HOUSING Board estates are not known for their innovative designs, but two cutting-edge ones are starting to change all that.
They have just become the first HDB estates to win design awards for both their good looks and user-friendly features.
The Coris, a precinct in Sengkang New Town, and the upgraded Ghim Moh Gardens estate, which is 32 years old, both won bronze awards at the Building and Construction Authority (BCA) Universal Design Awards.
'Universal Design' generally refers to design that allows users to get around easily, with easy-to-use facilities.
The BCA Awards were launched in September last year, and this year saw 34 entries, with most being refurbished buildings.
Both estates stood out due to their accessibility to residents, with seamless connectivity throughout.
The Coris at Sengkang, which has 14 residential blocks, had a comprehensive signage system so visitors can find their way around easily. There are also various recreational and communal facilities, including an area for the elderly to exercise, jogging tracks and pavilions.
Ghim Moh Gardens features wheelchair-friendly lifts that stop at every floor, safer clothes-drying racks and elderly-friendly toilets. Getting around is easy, with markets and bird- viewing spots all linked by sheltered walkways.
This year, three silver and six bronze awards were given in six categories of buildings: commercial, institutional, residential, open spaces, refurbished and open.
Other winners include Terminal 3 at Changi Airport and the National Museum of Singapore.
At last year's awards, Ikea Tampines clinched the top prize, the gold award, but a prize in this category was not handed out this year.
Professor Cheong Hee Kiat, chairman of the award assessment panel, attributes this to it having 'raised the bar' this year.
He said: 'Buildings need to be a holistic package. They must be comprehensive, integrative and have that special touch, while taking into account the owner's corporate philosophy.'
Winners will receive their awards from Minister for National Development Mah Bow Tan next Thursday. Those interested in applying for next year's awards can visit www.bca.gov.sg.
PRETTY AND PRACTICAL: Sculptures adorn the upgraded Ghim Moh gardens estate which is 32 years old. The estate has wheelchair-friendly lifts, safer racks to dry clothes, elderly-friendly toilets and sheltered walkways throughout. -- PHOTO: SURBANA INTERNATIONAL CONSULTANTS
ongbihui@sph.com.sg
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
Design awards for HDB estates
Sengkang, Ghim Moh estates score well for innovative design, user-friendly features
By Ong Bi Hui
HOUSING Board estates are not known for their innovative designs, but two cutting-edge ones are starting to change all that.
They have just become the first HDB estates to win design awards for both their good looks and user-friendly features.
The Coris, a precinct in Sengkang New Town, and the upgraded Ghim Moh Gardens estate, which is 32 years old, both won bronze awards at the Building and Construction Authority (BCA) Universal Design Awards.
'Universal Design' generally refers to design that allows users to get around easily, with easy-to-use facilities.
The BCA Awards were launched in September last year, and this year saw 34 entries, with most being refurbished buildings.
Both estates stood out due to their accessibility to residents, with seamless connectivity throughout.
The Coris at Sengkang, which has 14 residential blocks, had a comprehensive signage system so visitors can find their way around easily. There are also various recreational and communal facilities, including an area for the elderly to exercise, jogging tracks and pavilions.
Ghim Moh Gardens features wheelchair-friendly lifts that stop at every floor, safer clothes-drying racks and elderly-friendly toilets. Getting around is easy, with markets and bird- viewing spots all linked by sheltered walkways.
This year, three silver and six bronze awards were given in six categories of buildings: commercial, institutional, residential, open spaces, refurbished and open.
Other winners include Terminal 3 at Changi Airport and the National Museum of Singapore.
At last year's awards, Ikea Tampines clinched the top prize, the gold award, but a prize in this category was not handed out this year.
Professor Cheong Hee Kiat, chairman of the award assessment panel, attributes this to it having 'raised the bar' this year.
He said: 'Buildings need to be a holistic package. They must be comprehensive, integrative and have that special touch, while taking into account the owner's corporate philosophy.'
Winners will receive their awards from Minister for National Development Mah Bow Tan next Thursday. Those interested in applying for next year's awards can visit www.bca.gov.sg.
PRETTY AND PRACTICAL: Sculptures adorn the upgraded Ghim Moh gardens estate which is 32 years old. The estate has wheelchair-friendly lifts, safer racks to dry clothes, elderly-friendly toilets and sheltered walkways throughout. -- PHOTO: SURBANA INTERNATIONAL CONSULTANTS
ongbihui@sph.com.sg
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
US sub-prime crisis hurting Asian property: GIC
May 16, 2008
US sub-prime crisis hurting Asian property: GIC
By Fiona Chan
THE sub-prime crisis in the United States is starting to weaken Asian property markets, said the real estate arm of the Government of Singapore Investment Corporation (GIC) yesterday.
GIC Real Estate president Seek Ngee Huat told a regional property conference that the impact of the crisis could hasten downtrends in the Asian property markets, according to a report by news agency Reuters.
'The contagion effects of the sub-prime crisis can potentially accelerate the downward spin of the property cycle,' he said in a keynote speech at the Financial Times Asia Property Summit.
'Some market weakening is being sensed in Asia, particularly in Japan and in Australia.'
In Australia, house prices are growing more slowly and demand for mortgages fell 6.1 per cent in March from February, according to the Reuters report.
It added that in Japan, the stock of unsold apartments is rising, while housing starts fell 15.6 per cent in March from a year ago.
Housing starts - the number of new private homes under construction - are used as an indicator of the state of an economy.
On the bright side, the sub-prime carnage presents opportunities for well-positioned players, Dr Seek said.
But he added that any interested party would face competition from other institutional investors.
'As always, weak markets favour those with the capacity to take strategic positions, and so the sub-prime meltdown presents threats as well as opportunities,' he was quoted by Reuters as saying.
Morgan Stanley has estimated that GIC manages more than US$330 billion (S$456.8 billion) of assets. This makes it the world's third-largest sovereign wealth fund, behind the Abu Dhabi Investment Authority and Norway's Government Pension Fund.
GIC Real Estate is also one of the top 10 property investors in the world, with more than 200 investments across more than 30 countries.
Its multibillion-dollar portfolio includes the Queen Victoria Building in Sydney and the Westin Paris in France, among other buildings.
In his speech, Dr Seek said that GIC began by investing in developed markets. It only started to focus on emerging markets in Asia in the mid-1990s.
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
US sub-prime crisis hurting Asian property: GIC
By Fiona Chan
THE sub-prime crisis in the United States is starting to weaken Asian property markets, said the real estate arm of the Government of Singapore Investment Corporation (GIC) yesterday.
GIC Real Estate president Seek Ngee Huat told a regional property conference that the impact of the crisis could hasten downtrends in the Asian property markets, according to a report by news agency Reuters.
'The contagion effects of the sub-prime crisis can potentially accelerate the downward spin of the property cycle,' he said in a keynote speech at the Financial Times Asia Property Summit.
'Some market weakening is being sensed in Asia, particularly in Japan and in Australia.'
In Australia, house prices are growing more slowly and demand for mortgages fell 6.1 per cent in March from February, according to the Reuters report.
It added that in Japan, the stock of unsold apartments is rising, while housing starts fell 15.6 per cent in March from a year ago.
Housing starts - the number of new private homes under construction - are used as an indicator of the state of an economy.
On the bright side, the sub-prime carnage presents opportunities for well-positioned players, Dr Seek said.
But he added that any interested party would face competition from other institutional investors.
'As always, weak markets favour those with the capacity to take strategic positions, and so the sub-prime meltdown presents threats as well as opportunities,' he was quoted by Reuters as saying.
Morgan Stanley has estimated that GIC manages more than US$330 billion (S$456.8 billion) of assets. This makes it the world's third-largest sovereign wealth fund, behind the Abu Dhabi Investment Authority and Norway's Government Pension Fund.
GIC Real Estate is also one of the top 10 property investors in the world, with more than 200 investments across more than 30 countries.
Its multibillion-dollar portfolio includes the Queen Victoria Building in Sydney and the Westin Paris in France, among other buildings.
In his speech, Dr Seek said that GIC began by investing in developed markets. It only started to focus on emerging markets in Asia in the mid-1990s.
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
Developers have lowered asking price to bring in buyers
Dive in property launches
Developers have lowered asking price to bring in buyers
Friday • May 16, 2008
Esther Fung
esther@mediacorp.com.sg
Singapore's much-anticipated property market slowdown is here.
April saw a 58-per-cent dive in new property launches by developers as buyer sentiments soured.
According to data released by the Urban Redevelopment Authority (URA) yesterday, developers put 271 new private homes on sale last month, down from 642 in March.
Sales dropped by another 13 per cent with just 279 homes changing hands across Singapore, down from 322 in March. This is a sharp contrast to the 1,885 units launched and 1,731 sold at the peak of the housing boom last August.
"There is still a bit of a stand-off between developers and buyers," said DTZ Debenham Tie Leung's senior research director Chua Chor Hoon.
"Buyers are still taking a wait-and-see approach as they are not sure how things are going to unfold. It doesn't make sense for them take the plunge and buy unless they have a strong reason to."
To lure buyers, some developers have lowered the asking price.
According to Mr Nicholas Mak, a director at Knight Frank, the median prices of new sales dipped 8.9 per cent to $943 per sq ft (psf) last month.
The URA does not release monthly changes in price statistics. Its last set of figures shows private home prices rose 3.7 per cent in the three months to end-March, albeit at a slower pace.
Mr Colin Tan, head of consultancy and research at Chesterton International, said: "The evidence is mounting that the market may reached a declining stage."
The asking price has been dropped in some new developments such as Far East Organisation's The Lakeshore in Jurong West and World-Class Capital's Blu Coral in Telok Kurau, which has resulted in higher sales.
Buyers snapped up 18 units in Blu Coral — up from nine in February — after its median price fell to $657 psf last month.
"The question is, can they sustain sales at this price level or do they have to continue to lower it further," said Chesterton's Mr Tan.
City Developments has held back its property launches so far this year, but may launch this year's first new development in the second quarter or third quarter if market conditions permit, its executive chairman Kwek Leng Beng told Dow Jones Newswires.
GIC Real Estate president, Dr Seek Ngee Huat, yesterday warned that Wall Street's credit crisis may flow into Asia's "main street".
"The contagion of the sub-prime crisis can potentially accelerate the downward spin of the cycle," Dr Seek was quoted as saying by Bloomberg.
"Its ripple effects are certainly being felt here in Asia. While Wall Street is picking up the pieces, the problems on Main Street are just beginning."
Copyright MediaCorp Press Ltd. All rights reserved
Developers have lowered asking price to bring in buyers
Friday • May 16, 2008
Esther Fung
esther@mediacorp.com.sg
Singapore's much-anticipated property market slowdown is here.
April saw a 58-per-cent dive in new property launches by developers as buyer sentiments soured.
According to data released by the Urban Redevelopment Authority (URA) yesterday, developers put 271 new private homes on sale last month, down from 642 in March.
Sales dropped by another 13 per cent with just 279 homes changing hands across Singapore, down from 322 in March. This is a sharp contrast to the 1,885 units launched and 1,731 sold at the peak of the housing boom last August.
"There is still a bit of a stand-off between developers and buyers," said DTZ Debenham Tie Leung's senior research director Chua Chor Hoon.
"Buyers are still taking a wait-and-see approach as they are not sure how things are going to unfold. It doesn't make sense for them take the plunge and buy unless they have a strong reason to."
To lure buyers, some developers have lowered the asking price.
According to Mr Nicholas Mak, a director at Knight Frank, the median prices of new sales dipped 8.9 per cent to $943 per sq ft (psf) last month.
The URA does not release monthly changes in price statistics. Its last set of figures shows private home prices rose 3.7 per cent in the three months to end-March, albeit at a slower pace.
Mr Colin Tan, head of consultancy and research at Chesterton International, said: "The evidence is mounting that the market may reached a declining stage."
The asking price has been dropped in some new developments such as Far East Organisation's The Lakeshore in Jurong West and World-Class Capital's Blu Coral in Telok Kurau, which has resulted in higher sales.
Buyers snapped up 18 units in Blu Coral — up from nine in February — after its median price fell to $657 psf last month.
"The question is, can they sustain sales at this price level or do they have to continue to lower it further," said Chesterton's Mr Tan.
City Developments has held back its property launches so far this year, but may launch this year's first new development in the second quarter or third quarter if market conditions permit, its executive chairman Kwek Leng Beng told Dow Jones Newswires.
GIC Real Estate president, Dr Seek Ngee Huat, yesterday warned that Wall Street's credit crisis may flow into Asia's "main street".
"The contagion of the sub-prime crisis can potentially accelerate the downward spin of the cycle," Dr Seek was quoted as saying by Bloomberg.
"Its ripple effects are certainly being felt here in Asia. While Wall Street is picking up the pieces, the problems on Main Street are just beginning."
Copyright MediaCorp Press Ltd. All rights reserved
In Hong Kong, you are where you live
Home, sweet home
In Hong Kong, you are where you live
Friday • May 16, 2008
Topping my list of things to do the moment I touched down at Chek Lap Kok airport was to find a place to live.
Despite the dire warnings I had been given about how rents in Hong Kong are the highest in Asia, if not the world, I wasn’t too worried.
Unlike in Singapore, property agents have brick-and-mortar shops here.
There is no need to wade through the classifieds to find them — they are everywhere. If an area is very popular — such as the Mid-Levels — there are rows of such shops, all displaying enticing photos in their windows. All you have to do is pick one and pop in.
But I had reckoned without a few things. One was that owners don’t tie up exclusively with an agent here, which means there could be up to a dozen trying to rent you the same flat.
It may sound convenient — one agent can show you every flat available in the area if you wish — but it also means you don’t get a chance to bargain prices down.
With so many agents competing, the owner is likely to choose the one who comes up with the best offer. So, most agents try to get prospective tenants to go for the flat with the highest rent.
Having dealt with nightmarish realtors in Singapore, aggressive sales tactics were the least of my worries. The real headache was trying to decide which area to live in. It was no use asking the locals.
Don’t get me wrong. It’s not that they don’t care. Hong Kongers are as obsessed about land as Singaporeans — perhaps more so, given how much of Hong Kong Island (the most desired piece of real estate in the Special Administrative Region) is made up of mountains so that the only build-able areas are along the coastline.
The problem is, if you ask a local where the good areas are, you never get a straight answer. Instead, he is more likely to profile you: “Hmm, you strike me as someone who likes to shop, has no children, so you don’t need to be close to schools … try Causeway Bay.”
Even strangers you have spoken to for about one second at a party will try their hand at this amateur personality profiling.
It was only after I arrived that I realised why the Hong Kong-based friends I had emailed before the move refused to commit themselves to which would be a good area to live in.
“It depends,” they had said. If pressed, they would reluctantly tell you where they are living but added quickly: “It suits me, but I don’t know about you.”
Eventually, someone spelt it out for me: “Where you live says something about who you are. If you pick The Peak or Repulse Bay, you are old money. If you plumb for the Mid-Levels, you are either a new expat or an upper-middle class local. If you live in the Outlying Islands, you are either a farmer or a hippie expat.”
It finally made sense. It wasn’t how much you could pay, but what sort of image you wanted to project.
I was shown flats in North Point — an area that had no recommendable qualities other than being an interchange station for even more ulu areas with flats costing as much as those in the Mid-Levels.
We have the same thing in Singapore too, don’t we? Katong for old money, Marine Parade for beach-loving family types, Toa Payoh for heartlanders, Orchard Road and Tanglin for the expats — every area has a personality.
My problem now was to pick a place that would suit a laidback Katong Girl who loves bargain shopping and a city-lover who wants to be within walking distance of Central, the equivalent of our CBD.
I wanted Wan Chai, the world of Suzie Wong, with its wet markets and dark alleys selling counterfeit goods. My husband wanted somewhere in the city, as close to his office as possible.
We settled for the Mid-Levels, wheremost first-time expats end up, because it’s only 10 minutes’ walk to Central. So, what does it say about us?
I don’t know and I don’t care because the flat has a roof terrace with a view of The Peak and that’s good enough for me.
Tabitha Wang loves her roof terrace, never mind that it’s grubby, hot and good only for hanging the laundry out to dry.
Copyright MediaCorp Press Ltd. All rights reserved.
In Hong Kong, you are where you live
Friday • May 16, 2008
Topping my list of things to do the moment I touched down at Chek Lap Kok airport was to find a place to live.
Despite the dire warnings I had been given about how rents in Hong Kong are the highest in Asia, if not the world, I wasn’t too worried.
Unlike in Singapore, property agents have brick-and-mortar shops here.
There is no need to wade through the classifieds to find them — they are everywhere. If an area is very popular — such as the Mid-Levels — there are rows of such shops, all displaying enticing photos in their windows. All you have to do is pick one and pop in.
But I had reckoned without a few things. One was that owners don’t tie up exclusively with an agent here, which means there could be up to a dozen trying to rent you the same flat.
It may sound convenient — one agent can show you every flat available in the area if you wish — but it also means you don’t get a chance to bargain prices down.
With so many agents competing, the owner is likely to choose the one who comes up with the best offer. So, most agents try to get prospective tenants to go for the flat with the highest rent.
Having dealt with nightmarish realtors in Singapore, aggressive sales tactics were the least of my worries. The real headache was trying to decide which area to live in. It was no use asking the locals.
Don’t get me wrong. It’s not that they don’t care. Hong Kongers are as obsessed about land as Singaporeans — perhaps more so, given how much of Hong Kong Island (the most desired piece of real estate in the Special Administrative Region) is made up of mountains so that the only build-able areas are along the coastline.
The problem is, if you ask a local where the good areas are, you never get a straight answer. Instead, he is more likely to profile you: “Hmm, you strike me as someone who likes to shop, has no children, so you don’t need to be close to schools … try Causeway Bay.”
Even strangers you have spoken to for about one second at a party will try their hand at this amateur personality profiling.
It was only after I arrived that I realised why the Hong Kong-based friends I had emailed before the move refused to commit themselves to which would be a good area to live in.
“It depends,” they had said. If pressed, they would reluctantly tell you where they are living but added quickly: “It suits me, but I don’t know about you.”
Eventually, someone spelt it out for me: “Where you live says something about who you are. If you pick The Peak or Repulse Bay, you are old money. If you plumb for the Mid-Levels, you are either a new expat or an upper-middle class local. If you live in the Outlying Islands, you are either a farmer or a hippie expat.”
It finally made sense. It wasn’t how much you could pay, but what sort of image you wanted to project.
I was shown flats in North Point — an area that had no recommendable qualities other than being an interchange station for even more ulu areas with flats costing as much as those in the Mid-Levels.
We have the same thing in Singapore too, don’t we? Katong for old money, Marine Parade for beach-loving family types, Toa Payoh for heartlanders, Orchard Road and Tanglin for the expats — every area has a personality.
My problem now was to pick a place that would suit a laidback Katong Girl who loves bargain shopping and a city-lover who wants to be within walking distance of Central, the equivalent of our CBD.
I wanted Wan Chai, the world of Suzie Wong, with its wet markets and dark alleys selling counterfeit goods. My husband wanted somewhere in the city, as close to his office as possible.
We settled for the Mid-Levels, wheremost first-time expats end up, because it’s only 10 minutes’ walk to Central. So, what does it say about us?
I don’t know and I don’t care because the flat has a roof terrace with a view of The Peak and that’s good enough for me.
Tabitha Wang loves her roof terrace, never mind that it’s grubby, hot and good only for hanging the laundry out to dry.
Copyright MediaCorp Press Ltd. All rights reserved.
Anchorpoint relaunched as first 'outlet' mall
Business Times - 16 May 2008
Anchorpoint relaunched as first 'outlet' mall
FRASERS Centrepoint Trust (FCT) has relaunched Anchorpoint, the suburban shopping mall in Bukit Merah, after giving it a $13 million makeover.
The mall is branded as Singapore's first 'outlet mall', with several brand- name chains setting up 'outlet' stores which offer heavily discounted goods.
Already, the strategy seems to be paying off.
Christopher Tang, CEO of Frasers Centrepoint Asset Management, the manager of FCT, said that in the three months following the progressive relaunch of Anchorpoint in February, shopper traffic has shot up 20 per cent. Rentals have also jumped to $7.50 per square foot, up from $5.40 psf a year ago.
Anchorpoint's revamp, Mr Tang said, is part of FCT's enhancement and acquisition strategy in the next few years.
Following Anchorpoint, the next suburban mall in line for a facelift is Singapore's first suburban mall, Northpoint. It will be integrated with a new building, Northpoint 2, at a total cost of $38.6 million, and will be completed by year-end.
Mr Tang also says FCT will be acquiring existing malls such as Yew Tee Point and Bedok Mall as part of its strategy. 'All the new malls that we add are very well located, with high catchment area, are next to MRTs, and have very good connectivity,' he said.
Although more mega malls are expected to enter the market soon, Mr Tang remains confident that FCT's suburban malls will not be facing a rush for tenants. 'Generally, there is additional retail space, and the bulk of it is in the Orchard Road belt and Marina Square,' he said, adding that suburban malls were a 'totally different market'.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
Anchorpoint relaunched as first 'outlet' mall
FRASERS Centrepoint Trust (FCT) has relaunched Anchorpoint, the suburban shopping mall in Bukit Merah, after giving it a $13 million makeover.
The mall is branded as Singapore's first 'outlet mall', with several brand- name chains setting up 'outlet' stores which offer heavily discounted goods.
Already, the strategy seems to be paying off.
Christopher Tang, CEO of Frasers Centrepoint Asset Management, the manager of FCT, said that in the three months following the progressive relaunch of Anchorpoint in February, shopper traffic has shot up 20 per cent. Rentals have also jumped to $7.50 per square foot, up from $5.40 psf a year ago.
Anchorpoint's revamp, Mr Tang said, is part of FCT's enhancement and acquisition strategy in the next few years.
Following Anchorpoint, the next suburban mall in line for a facelift is Singapore's first suburban mall, Northpoint. It will be integrated with a new building, Northpoint 2, at a total cost of $38.6 million, and will be completed by year-end.
Mr Tang also says FCT will be acquiring existing malls such as Yew Tee Point and Bedok Mall as part of its strategy. 'All the new malls that we add are very well located, with high catchment area, are next to MRTs, and have very good connectivity,' he said.
Although more mega malls are expected to enter the market soon, Mr Tang remains confident that FCT's suburban malls will not be facing a rush for tenants. 'Generally, there is additional retail space, and the bulk of it is in the Orchard Road belt and Marina Square,' he said, adding that suburban malls were a 'totally different market'.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
Property seems paler, but it's anyone's call
Business Times - 16 May 2008
Property seems paler, but it's anyone's call
Volumes shrink, prices weaken but some segments are holding firm
By ARTHUR SIM
(SINGAPORE) Based on the latest monthly developer sales data from the Urban Redevelopment Authority (URA), property prices could be on the downward trend.
Developer sales fell, with April seeing only 274 transactions. This is about 9 per cent lower than the 301 units sold in March, though still higher than the 174 units sold in February.
And while it is difficult to accurately pinpoint price movements with such low volume, an analysis by Knight Frank of overall median prices achieved nevertheless registered an 8.9 per cent drop in April, falling to $943 psf compared to $1,035 psf in March.
The peak median price of over $1,400 psf was reached in August 2007.
Knight Frank director (research and consultancy) Nicholas Mak also explained that the analysis was a 'median of median prices', and so may not be a precise reflection of price movements.
Mr Mak also said that applying a different mode of analysis to the same data - the formula used to calculate URA's quarterly property price index for instance - could even show that prices have increased slightly.
Still, a comparison of monthly median prices of recently launched developments does suggest that prices could be falling.
The 79-unit Blu Coral was launched in February with nine units sold at a median price of $872 psf. In March, 28 units were sold at a median price of $802 psf, while in April, 18 units were sold at a median price of $657.
Similarly, 53 units of the 106-unit, The Verve, were launched in March with 36 units sold at a median price of $1,187 psf. In April, 8 units were sold at a median price of $1,055 psf.
And nine units of the 625-unit, The Quartz, were sold in March at a median price of $742 psf, followed by 14 units sold in April at a median price of $721 psf.
Interestingly, one unit of Waterfront Waves was sold at $909 psf in April, higher than the median price of $806 in March when 14 units were sold.
Perhaps another indication of the weakening market is that 43 units of 659-unit The Parc Condominium, previously reported as being fully sold, have re-emerged on the market. According to the monthly data, the returned units first appeared in February.
A source that did not want to be named also said that these units were returned by buyers who chose not to exercise their options, forfeiting a quarter of the 5 per cent downpayment in the process.
Jones Lang LaSalle head of research (South-East Asia) Chua Yang Liang has also analysed median prices as a measure of volatility and suggests that this has increased in the Outside Central Region (OCR).
Dr Chua explained that volatility, as a measure of how wide market prices are per unit dollar of the median price achieved could also reflect, 'the market's speculative level'. As such, he said: 'It would appear that upgraders may be returning, with entry level projects that are moderately priced between $750 to $850 psf as the preferred choice.'
Supporting this were the healthy sales of the 56-unit Stadia at Yio Chu Kang, which saw 52 units sold. Two units were sold for under $750 psf while the remaining 50 were sold at between $750 and $1,000 psf.
In the OCR, Dr Chua said based on the analysis, median prices continued to soften by 4.2 per cent. But he also added that the analysis was just an 'indication of the market's mood', and does not account for product differentiation or physical attributes of each development.
While the volume of sales was low in the Central Core Region with just 19 non-landed homes transacted, Dr Chua believes that the low volatility in median prices there suggests that market activity and future prices in the high end market are likely to remain stable.
Also holding this view is CB Richard Ellis Research executive director Li Hiaw Ho who noted that two units in Scotts Square were sold at around $4,300 psf, a unit at Orchard Scotts was sold at $2,520 psf and two units at Skypark were sold at around $2,300 psf.
'Although high-value transactions were limited, the individual transactions seemed to indicate that prices in the high-end market were still holding firm,' he added.
The analysis of price movements will however, remain an academic one, and as such will remain open to debate.
Colliers International director (research and advisory) Tay Huey Ying said there were too few transactions at the higher end of the market to comment fairly on the sector.
And even for the OCR, she noted that the median transacted price for mass-market units averaged $792 psf in April, about 8 per cent higher than the average median price of $729 in August 2007 when the highest sale volume for the sector was registered.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
Property seems paler, but it's anyone's call
Volumes shrink, prices weaken but some segments are holding firm
By ARTHUR SIM
(SINGAPORE) Based on the latest monthly developer sales data from the Urban Redevelopment Authority (URA), property prices could be on the downward trend.
Developer sales fell, with April seeing only 274 transactions. This is about 9 per cent lower than the 301 units sold in March, though still higher than the 174 units sold in February.
And while it is difficult to accurately pinpoint price movements with such low volume, an analysis by Knight Frank of overall median prices achieved nevertheless registered an 8.9 per cent drop in April, falling to $943 psf compared to $1,035 psf in March.
The peak median price of over $1,400 psf was reached in August 2007.
Knight Frank director (research and consultancy) Nicholas Mak also explained that the analysis was a 'median of median prices', and so may not be a precise reflection of price movements.
Mr Mak also said that applying a different mode of analysis to the same data - the formula used to calculate URA's quarterly property price index for instance - could even show that prices have increased slightly.
Still, a comparison of monthly median prices of recently launched developments does suggest that prices could be falling.
The 79-unit Blu Coral was launched in February with nine units sold at a median price of $872 psf. In March, 28 units were sold at a median price of $802 psf, while in April, 18 units were sold at a median price of $657.
Similarly, 53 units of the 106-unit, The Verve, were launched in March with 36 units sold at a median price of $1,187 psf. In April, 8 units were sold at a median price of $1,055 psf.
And nine units of the 625-unit, The Quartz, were sold in March at a median price of $742 psf, followed by 14 units sold in April at a median price of $721 psf.
Interestingly, one unit of Waterfront Waves was sold at $909 psf in April, higher than the median price of $806 in March when 14 units were sold.
Perhaps another indication of the weakening market is that 43 units of 659-unit The Parc Condominium, previously reported as being fully sold, have re-emerged on the market. According to the monthly data, the returned units first appeared in February.
A source that did not want to be named also said that these units were returned by buyers who chose not to exercise their options, forfeiting a quarter of the 5 per cent downpayment in the process.
Jones Lang LaSalle head of research (South-East Asia) Chua Yang Liang has also analysed median prices as a measure of volatility and suggests that this has increased in the Outside Central Region (OCR).
Dr Chua explained that volatility, as a measure of how wide market prices are per unit dollar of the median price achieved could also reflect, 'the market's speculative level'. As such, he said: 'It would appear that upgraders may be returning, with entry level projects that are moderately priced between $750 to $850 psf as the preferred choice.'
Supporting this were the healthy sales of the 56-unit Stadia at Yio Chu Kang, which saw 52 units sold. Two units were sold for under $750 psf while the remaining 50 were sold at between $750 and $1,000 psf.
In the OCR, Dr Chua said based on the analysis, median prices continued to soften by 4.2 per cent. But he also added that the analysis was just an 'indication of the market's mood', and does not account for product differentiation or physical attributes of each development.
While the volume of sales was low in the Central Core Region with just 19 non-landed homes transacted, Dr Chua believes that the low volatility in median prices there suggests that market activity and future prices in the high end market are likely to remain stable.
Also holding this view is CB Richard Ellis Research executive director Li Hiaw Ho who noted that two units in Scotts Square were sold at around $4,300 psf, a unit at Orchard Scotts was sold at $2,520 psf and two units at Skypark were sold at around $2,300 psf.
'Although high-value transactions were limited, the individual transactions seemed to indicate that prices in the high-end market were still holding firm,' he added.
The analysis of price movements will however, remain an academic one, and as such will remain open to debate.
Colliers International director (research and advisory) Tay Huey Ying said there were too few transactions at the higher end of the market to comment fairly on the sector.
And even for the OCR, she noted that the median transacted price for mass-market units averaged $792 psf in April, about 8 per cent higher than the average median price of $729 in August 2007 when the highest sale volume for the sector was registered.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
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