Office rents to ease SOON
Thursday • August 14, 2008
Chua Chor Hoon
WITH no new major buildings yet completed, supply of office space continues to be tight in the Central Business District (CBD).
In the wake of unceasing uncertainties in the wider economy and high office rentals, more companies are adopting a cautious business approach, gravitating towards cheaper premises like decentralised office buildings, industrial properties, business parks and disused State buildings.
Hence, average occupancy of office space across most areas had dipped slightly in the second quarter of this year. Islandwide average occupancy eased by0.2 percentage points from the previous quarter, to 96.9 per cent. Average occupancy ofoffice buildings in Raffles Place and Marina Centre dropped slightly due mainly to tenants moving out to cheaper locations after lease expiration.
At the same time, supported by comparatively lower rentals, decentralised areas like Novena and HarbourFront have enjoyed modest increases in occupancy.
Growth in office rentals have started to taper off after the meteoric rise last year,reflecting the increased resistance to higher rents.
Apart from Raffles Place, Shenton Way, Robinson Road, Cecil Street and decentralised areas, growth in office rentals in other areas like Marina Centre, Orchard Road, Anson Road and Tanjong Pagar were flat.
The Government’s efforts to create more immediate office space has also eased the supply crunch and pressure on rentals.
Apart from an estimated 1.9 million square feet of office space from transitional offices and disused State properties that were awarded between last year and the first six months of this year, occupiers can find more relief in the coming months.
Two disused State properties — the former Phoenix Park Complex and former Singapore Badminton Hall — were released for tender in thesecond quarter of this year. In addition, two more transitional office sites at Mohamed Sultan Road and Mountbatten Road will be released for tender under the Government Land SalesProgramme for the second half of this year.
Following an earlier announcement to relocate several Government agencies out of the CBD, other Government agencies in the city centre were tasked to streamline their office space utilisation and free up more office space to the private sector in the process.
The supply crunch in the CBD will be eased from 2010 with new office buildings being completed. Potential supply of office space from the second half of the year to 2013 is estimated to be 12.1 million sq ft.
With sufficient office space supply in the pipeline, the number of sites under the Government Land Sales Programme for the second half of the year has been reduced.
Only three commercial sites were added to the confirmed list while the reserve list includes three commercial sites and two white sites.
With the Urban Redevelopment Authority’s ban on the conversion of office buildings in the central area to be lifted at the end of next year, some projects in the pipeline may be delayed or aborted as developers review their plans in light of the huge potential supply and slowing economy.
Going forward, as companies and Government agencies start to move out of the CBD and more new supply comes on stream, office occupancy is likely to ease and limit rental growth in the city centre for the rest of the year.
The writer is senior director of research at DTZ. The opinions expressed are her own.
Copyright MediaCorp Press Ltd. All rights reserved.
Thursday, August 14, 2008
SC Global's Q2 net rises 117% to $11.47m
August 14, 2008
SC Global's Q2 net rises 117% to $11.47m
By ARTHUR SIM
SC Global Developments has reported a net profit of $11.47 million
for Q2 2008, up 117 per cent from the $5.28 million in the year-ago
period.
Revenue for the quarter was $32.4 million, marginally lower by 5 per
cent compared with $34 million in Q2 2007.
The group saw revenue recognition from residential units sold in its
Singapore development projects, namely, The Marq on Paterson Hill and
Hilltops. This was also the first quarter of revenue recognition for
Hilltops.
SC Global said that its development project under its Kairong brand
in Shenyang, China, called Kairong International Gardens, also made a
positive contribution for the quarter as construction progressed.
Gross profit for the quarter increased 116 per cent to $16.5 million
compared with $7.7 million in the same period last year. Gross
margins were also higher at 51 per cent for the quarter versus 23 per
cent in 2007.
On a half year basis, gross profit for 1H 2008 was $41.6 million, up
48 per cent compared with $28.1 million a year ago.
SC Global said that higher selling prices achieved for the projects
coupled with management of construction costs enabled the group to
attain a high gross margin of 55 per cent for 1H 2008 against 32 per
cent recorded in the year-ago period.
The group's associate company in Australia, AVJennings Ltd (AVJ),
reported that its pre-tax profit for the full year ended 30 June 2008
was A$15.5 million (S$18.8 million) compared with A$17.8 million for
the 15-month period ended 30 June 2007 (A$14.2 million annualised).
In Q208, the group increased its investment in AVJ through the
subscription of its full entitlement under a rights issue undertaken
by AVJ and acquired 32.6 million new shares at an issue price of
A$0.67 each, increasing its shareholding from some 43 per cent to
about 49 per cent.
Earnings per ordinary share for the quarter period was 2.9 cents
compared with 1.65 cents (adjusted) a year ago.
At the close of trading, SC Global shares ended at $1.10 per share,
down one cent.
SC Global added that operationally, its developments under
construction are proceeding as planned and new projects in Ardmore
Park and Sentosa Cove are continuing to progress in the planning
stage.
SC Global's Q2 net rises 117% to $11.47m
By ARTHUR SIM
SC Global Developments has reported a net profit of $11.47 million
for Q2 2008, up 117 per cent from the $5.28 million in the year-ago
period.
Revenue for the quarter was $32.4 million, marginally lower by 5 per
cent compared with $34 million in Q2 2007.
The group saw revenue recognition from residential units sold in its
Singapore development projects, namely, The Marq on Paterson Hill and
Hilltops. This was also the first quarter of revenue recognition for
Hilltops.
SC Global said that its development project under its Kairong brand
in Shenyang, China, called Kairong International Gardens, also made a
positive contribution for the quarter as construction progressed.
Gross profit for the quarter increased 116 per cent to $16.5 million
compared with $7.7 million in the same period last year. Gross
margins were also higher at 51 per cent for the quarter versus 23 per
cent in 2007.
On a half year basis, gross profit for 1H 2008 was $41.6 million, up
48 per cent compared with $28.1 million a year ago.
SC Global said that higher selling prices achieved for the projects
coupled with management of construction costs enabled the group to
attain a high gross margin of 55 per cent for 1H 2008 against 32 per
cent recorded in the year-ago period.
The group's associate company in Australia, AVJennings Ltd (AVJ),
reported that its pre-tax profit for the full year ended 30 June 2008
was A$15.5 million (S$18.8 million) compared with A$17.8 million for
the 15-month period ended 30 June 2007 (A$14.2 million annualised).
In Q208, the group increased its investment in AVJ through the
subscription of its full entitlement under a rights issue undertaken
by AVJ and acquired 32.6 million new shares at an issue price of
A$0.67 each, increasing its shareholding from some 43 per cent to
about 49 per cent.
Earnings per ordinary share for the quarter period was 2.9 cents
compared with 1.65 cents (adjusted) a year ago.
At the close of trading, SC Global shares ended at $1.10 per share,
down one cent.
SC Global added that operationally, its developments under
construction are proceeding as planned and new projects in Ardmore
Park and Sentosa Cove are continuing to progress in the planning
stage.
CPF keeps OA interest rate at 2.5%
August 14, 2008
CPF keeps OA interest rate at 2.5%
Concessionary rate for HDB mortgage loans remains 2.6%
THE Central Provident Fund Board (CPF) will continue to pay 2.5 per
cent interest per annum for members' savings in their Ordinary
Account (OA) from Oct 1 to Dec 31.
CPF said that although its computed interest rate derived from the
rates of major local banks for the period May 1 to July 31 works out
to be 0.74 per cent per annum, the higher rate of 2.5 per cent will
be paid because that is the minimum specified under the CPF Act.
The Housing and Development Board (HDB), meanwhile, has announced
that the concessionary interest rate for HDB mortgage loans, pegged
at 0.1 of a percentage point above the CPF interest rate for the OA,
will remain unchanged at 2.6 per cent per annum from Oct 1 to Dec 31.
The interest rate for Special, Medisave, and Retirement accounts
(SMRA) for October to December will be announced next month.
The prevailing CPF interest rate for SMRA is 4 per cent, based on the
12-month average yield of the 10-year Singapore Government Security
plus one per cent.
To help members adjust to this floating rate, the 4 per cent floor
for the SMRA rate will be maintained for the first two years, as
earlier announced.
An extra one per cent interest will continue to be paid on the first
$60,000 of a member's combined balances, with up to $20,000 from the
OA.
The extra interest from the OA will go into members' Special or
Retirement accounts to enhance their retirement savings.
CPF keeps OA interest rate at 2.5%
Concessionary rate for HDB mortgage loans remains 2.6%
THE Central Provident Fund Board (CPF) will continue to pay 2.5 per
cent interest per annum for members' savings in their Ordinary
Account (OA) from Oct 1 to Dec 31.
CPF said that although its computed interest rate derived from the
rates of major local banks for the period May 1 to July 31 works out
to be 0.74 per cent per annum, the higher rate of 2.5 per cent will
be paid because that is the minimum specified under the CPF Act.
The Housing and Development Board (HDB), meanwhile, has announced
that the concessionary interest rate for HDB mortgage loans, pegged
at 0.1 of a percentage point above the CPF interest rate for the OA,
will remain unchanged at 2.6 per cent per annum from Oct 1 to Dec 31.
The interest rate for Special, Medisave, and Retirement accounts
(SMRA) for October to December will be announced next month.
The prevailing CPF interest rate for SMRA is 4 per cent, based on the
12-month average yield of the 10-year Singapore Government Security
plus one per cent.
To help members adjust to this floating rate, the 4 per cent floor
for the SMRA rate will be maintained for the first two years, as
earlier announced.
An extra one per cent interest will continue to be paid on the first
$60,000 of a member's combined balances, with up to $20,000 from the
OA.
The extra interest from the OA will go into members' Special or
Retirement accounts to enhance their retirement savings.
Sub-prime losses incurred by banks top US$500b
August 14, 2008
Sub-prime losses incurred by banks top US$500b
(NEW YORK) Banks' losses from the US sub-prime crisis and the ensuing
credit crunch crossed the US$500-billion mark as writedowns spread to
more asset types.
The writedowns and credit losses at more than 100 of the world's
biggest banks and securities firms rose after UBS AG reported second-
quarter earnings on Tuesday, which included US$6 billion of charges
on sub-prime related assets.
The International Monetary Fund in an April report estimated banks'
losses at US$510 billion, about half its forecast of US$1 trillion
for all companies. Predictions have crept up since then, with New
York University economist Nouriel Roubini predicting losses to reach
US$2 trillion.
'It just keeps spreading from one asset to another, so it's hard to
know when these writedowns will stop,' said Makeem Asif, an analyst
at KBC Financial Products in London. 'The US economy needs to
stabilise first. But even then, Europe could lag and recover later.
There's still a lot more downside.'
Auction-rate securities have begun adding to the losses as regulators
and prosecutors force banks to buy back bonds they had sold as safe
investments. UBS set aside US$900 million to cover potential losses
from repurchasing the securities, while Citigroup Inc and Wachovia
Corp estimated losses at US$500 million each.
The collapse of the US sub-prime mortgage market last year has
saddled banks worldwide with US$501 billion of losses from declining
values of securities tied to all types of home loans and commercial
mortgages as well as leveraged loan commitments.
Banks and brokers have raised US$353 billion of capital to cope with
the writedowns, according to data compiled by Bloomberg. The gap
between losses and capital infusions, which now stands at US$148
billion, has regularly narrowed to about US$80 billion as capital
raising follows writedown announcements.
Sub-prime losses incurred by banks top US$500b
(NEW YORK) Banks' losses from the US sub-prime crisis and the ensuing
credit crunch crossed the US$500-billion mark as writedowns spread to
more asset types.
The writedowns and credit losses at more than 100 of the world's
biggest banks and securities firms rose after UBS AG reported second-
quarter earnings on Tuesday, which included US$6 billion of charges
on sub-prime related assets.
The International Monetary Fund in an April report estimated banks'
losses at US$510 billion, about half its forecast of US$1 trillion
for all companies. Predictions have crept up since then, with New
York University economist Nouriel Roubini predicting losses to reach
US$2 trillion.
'It just keeps spreading from one asset to another, so it's hard to
know when these writedowns will stop,' said Makeem Asif, an analyst
at KBC Financial Products in London. 'The US economy needs to
stabilise first. But even then, Europe could lag and recover later.
There's still a lot more downside.'
Auction-rate securities have begun adding to the losses as regulators
and prosecutors force banks to buy back bonds they had sold as safe
investments. UBS set aside US$900 million to cover potential losses
from repurchasing the securities, while Citigroup Inc and Wachovia
Corp estimated losses at US$500 million each.
The collapse of the US sub-prime mortgage market last year has
saddled banks worldwide with US$501 billion of losses from declining
values of securities tied to all types of home loans and commercial
mortgages as well as leveraged loan commitments.
Banks and brokers have raised US$353 billion of capital to cope with
the writedowns, according to data compiled by Bloomberg. The gap
between losses and capital infusions, which now stands at US$148
billion, has regularly narrowed to about US$80 billion as capital
raising follows writedown announcements.
China a key contributor to Keppel Land's profits
August 14, 2008
China a key contributor to Keppel Land's profits
Its main focus there is on building premier residential properties
and townships
By CHUANG PECK MING
OVERSEAS operations account for about half of Keppel Land's profits -
and China is the main contributor.
The property arm of Singapore-based Keppel Group, Keppel Land, first
ventured into China in the 1990s as part of its regionalisation drive
which also covered Vietnam and Indonesia. There, it has focused on
developing premier residential properties, townships and waterfront
lifestyle projects. Evergo, Keppel's China-focused subsidiary, has a
land bank of 4.5 million square metres in Chinese second-tier cities.
'At present, we have more than 60,000 residential and township homes
spread across Asia,' a Keppel spokeswoman says. 'Our current focus is
on the key regional economies of China, Vietnam, India and Indonesia
as we believe these markets have substantial growth potential, with
sustainable demand for quality housing underpinned by strong economic
fundamentals, urbanisation and favourable demographic trends.'
Keppel Land, which posted sales turnover of $459 million in the first
half of this year, has operations in the northern Chinese cities of
Beijing, Tianjin and Shenyang.
'We entered these markets in 2002, 2005 and 2007 respectively,' the
spokeswoman says. 'Beijing is the capital of China and a key gateway
city. We began our northern operations here to bring the Keppel
hallmark of quality and innovation to the Beijing market.'
She notes that Tianjin, China's third largest city, is one of the
four autonomous municipalities along with Beijing, Shanghai and
Chongqing. 'Under China's national strategic development plan,
Tianjin is poised to become the centre of the Huan Bohai Economic Rim
and serve as the next engine of growth.'
Shenyang, the capital city of Liaoning Province, is an important
economic, industrial, commerce and transportation centre in north-
east China. 'As the Chinese government implements its plan to
revitalise the north-east, the fast track economic and income growth
in Shenyang will continue to spur housing demand,' the spokeswoman
says.
She says the city offers a good market not just because of its
healthy economic growth, but also its business-friendly
environment. 'More importantly, we believe we have a competitive edge
in this market.'
The Chinese market is challenging - and it requires some good local
insights and understanding, especially for north China, according to
her.
'Relationships are also very important,' she says. 'A successful
business deal here is highly dependent on good connections between
transacting parties.'
On Keppel's venture into Shenyang last year, the spokeswoman
says: 'We need to quickly understand it and incorporate requirements
which are different from those in our current projects in Beijing,
Shanghai, etc. We are doing so by localising our management and
operational team with staff that are familiar with such extreme cold
weather environment as well as the unique local industry practices.'
Being a newcomer, Keppel Land has to build up connections and
experience from scratch. But the spokeswoman adds: 'We are (also)
leveraging on the good brand equity of Singapore and Keppel Group's
network with the local government authorities and business community.'
Keppel currently has a staff of about 50 on its payroll in Beijing,
where the company has sold out 1,859 residential units in a housing
project. It has around 40 employees in Tianjin where Sembcorp is
developing its first 168-unit villa project. More than half of the
units launched has been sold, according to the Keppel Land
spokeswoman.
As for Shenyang, the company has begun assembling a core team. Its
present staff is about 30-strong. 'Piling work has just started last
month and we are looking forward to clinching more projects in
Shenyang,' the spokeswoman says.
Keppel will continue to explore new opportunities in north China,
especially in key cities and growth zones in the Huan Bohai region,
according to her. The company will focus on 'city in-fill' and
township developments.
Keppel is also gearing up for the Eco-City project in Tianjin. In
November 2007, Singapore and China inked a framework agreement to
build an Eco-City in Tianjin. The project covers 30 sq km within a
designated resort and recreation zone in Tianjin Binhai New Area. The
latest green technology and environmentally friendly systems in water
recycling and waste treatment will be used in constructing Eco-City.
Upon completion in 10-15 years, Eco-City will be a showcase for
sustainable development and a model for other Chinese cities striving
to balance rapid economic growth and environmental protection.
'The Eco-City will be developed by consortia from Singapore and
China, with Keppel Corporation playing a lead role,' the spokeswoman
says. 'Keppel Land, as part of the Keppel Group, will be involved in
the development of this Eco-City.'
China a key contributor to Keppel Land's profits
Its main focus there is on building premier residential properties
and townships
By CHUANG PECK MING
OVERSEAS operations account for about half of Keppel Land's profits -
and China is the main contributor.
The property arm of Singapore-based Keppel Group, Keppel Land, first
ventured into China in the 1990s as part of its regionalisation drive
which also covered Vietnam and Indonesia. There, it has focused on
developing premier residential properties, townships and waterfront
lifestyle projects. Evergo, Keppel's China-focused subsidiary, has a
land bank of 4.5 million square metres in Chinese second-tier cities.
'At present, we have more than 60,000 residential and township homes
spread across Asia,' a Keppel spokeswoman says. 'Our current focus is
on the key regional economies of China, Vietnam, India and Indonesia
as we believe these markets have substantial growth potential, with
sustainable demand for quality housing underpinned by strong economic
fundamentals, urbanisation and favourable demographic trends.'
Keppel Land, which posted sales turnover of $459 million in the first
half of this year, has operations in the northern Chinese cities of
Beijing, Tianjin and Shenyang.
'We entered these markets in 2002, 2005 and 2007 respectively,' the
spokeswoman says. 'Beijing is the capital of China and a key gateway
city. We began our northern operations here to bring the Keppel
hallmark of quality and innovation to the Beijing market.'
She notes that Tianjin, China's third largest city, is one of the
four autonomous municipalities along with Beijing, Shanghai and
Chongqing. 'Under China's national strategic development plan,
Tianjin is poised to become the centre of the Huan Bohai Economic Rim
and serve as the next engine of growth.'
Shenyang, the capital city of Liaoning Province, is an important
economic, industrial, commerce and transportation centre in north-
east China. 'As the Chinese government implements its plan to
revitalise the north-east, the fast track economic and income growth
in Shenyang will continue to spur housing demand,' the spokeswoman
says.
She says the city offers a good market not just because of its
healthy economic growth, but also its business-friendly
environment. 'More importantly, we believe we have a competitive edge
in this market.'
The Chinese market is challenging - and it requires some good local
insights and understanding, especially for north China, according to
her.
'Relationships are also very important,' she says. 'A successful
business deal here is highly dependent on good connections between
transacting parties.'
On Keppel's venture into Shenyang last year, the spokeswoman
says: 'We need to quickly understand it and incorporate requirements
which are different from those in our current projects in Beijing,
Shanghai, etc. We are doing so by localising our management and
operational team with staff that are familiar with such extreme cold
weather environment as well as the unique local industry practices.'
Being a newcomer, Keppel Land has to build up connections and
experience from scratch. But the spokeswoman adds: 'We are (also)
leveraging on the good brand equity of Singapore and Keppel Group's
network with the local government authorities and business community.'
Keppel currently has a staff of about 50 on its payroll in Beijing,
where the company has sold out 1,859 residential units in a housing
project. It has around 40 employees in Tianjin where Sembcorp is
developing its first 168-unit villa project. More than half of the
units launched has been sold, according to the Keppel Land
spokeswoman.
As for Shenyang, the company has begun assembling a core team. Its
present staff is about 30-strong. 'Piling work has just started last
month and we are looking forward to clinching more projects in
Shenyang,' the spokeswoman says.
Keppel will continue to explore new opportunities in north China,
especially in key cities and growth zones in the Huan Bohai region,
according to her. The company will focus on 'city in-fill' and
township developments.
Keppel is also gearing up for the Eco-City project in Tianjin. In
November 2007, Singapore and China inked a framework agreement to
build an Eco-City in Tianjin. The project covers 30 sq km within a
designated resort and recreation zone in Tianjin Binhai New Area. The
latest green technology and environmentally friendly systems in water
recycling and waste treatment will be used in constructing Eco-City.
Upon completion in 10-15 years, Eco-City will be a showcase for
sustainable development and a model for other Chinese cities striving
to balance rapid economic growth and environmental protection.
'The Eco-City will be developed by consortia from Singapore and
China, with Keppel Corporation playing a lead role,' the spokeswoman
says. 'Keppel Land, as part of the Keppel Group, will be involved in
the development of this Eco-City.'
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