Saturday, March 31, 2007

London house prices driven by strong demand

Strong demand from potential investors and a lack of available properties is driving prices upwards in the London housing market, one expert has claimed.

Speaking on BBC Two's Working Lunch programme, Richard Donnell, director of research at Hometrack, said that demand from the financial services sector and overseas buyers means that London's market is different from others in the UK.

"The lack of supply is a result of higher interest rates, people being worried about interest rates perhaps going up and the fact that a lot of homeowners simply cannot afford to move at the moment without taking quite a large increase of mortgage," he told the programme.

Property prices are being pushed ahead because of this combination of a limited supply and strong demand, he added.

Responding to last week's Budget, Peter Bolton King, chief executive of the National Association of Estate Agents, said that the chancellor had failed to address key issues facing potential homeowners "head on".

Rising house prices and a higher cost of living means many first-time buyers are becoming priced out of the market, he stated.

track© Adfero Ltd...

Rental prices in London are soaring

Rental prices in London are soaring thanks to a severe shortage of suitable properties and an increasing number of prospective tenants entering the market.

The residential agent Hamptons International reveals that rents in the capital have increased by some 18 per cent over the past 12 months as the high cost of purchasing a home forces thousands of prospective buyers into rented accommodation.

It said that one-bedroom flats in city centre locations are in such short supply that properties are being let within hours of them being vacated.

And in many cases tenants are entering into bidding wars in the hope of getting their hands on the property, forcing prices up even further.

Rosanna Caldwell, senior manager at Hamptons International's Kensington branch, said: "We are witnessing offers considerably over the asking price, with tenants increasing original offers, in an attempt to seal the deal.

"With a massive shortage of one bedroom flats available for rent those that do come to the market are being let within hours, securing phenomenal prices."

It is not just rental prices that are rocketing in London. A lack of housing supply in the capital is causing sales prices to expand at an annual rate of 22 per cent compared to less than five per cent in the north of England, according to the property website Rightmove.

track© Adfero Ltd...

"No market is a bad market" for overseas property investors

"No market is a bad market" for overseas property investors

21st March 2007 10:23
Careful planning should ensure that any market that a property investor chooses to target will provide returns, one expert has claimed.

According to Marsha Lu, researcher at Property Frontiers, investors can make a profit from in any country if they research it thoroughly, but returns may still depend on the maturity of a market.

"Normally, if you take higher risks you get better returns, but if you take lower risks then the return is slightly lower as well," she remarked.

Many UK investors seek to invest in a property that they can then use themselves as a holiday home, she added.

Insurance firm Hiscox recently reported that a significant number of first-time buyers would consider purchasing a property overseas in order to gain access to the UK's housing market.

According to the company, 88 per cent of those surveyed said that current house prices are the main barrier to the UK's housing market.

Poland is the top overseas property investment location, a new study shows.

Poland is the top overseas property investment location, a new study shows.

Property investment group Assetz finds property in Poland gave a 165 per cent total cash return in the first quarter of 2007, making it the leading investment hotspot.

The group's quarterly survey also reveals capital gains of 33 per cent were experienced by Polish properties over the same period, with economic growth linked to European Union membership contributing to the strong performance.

Deposit levels of 15 per cent also attracted more investors to Polish property.

"Poland looks set to lead the pack of emerging markets this year, with strong capital growth and excellent local demand as well as foreign investment. Warsaw's property prices remain amongst the lowest in Europe and the introduction of major industry to the city is attracting an increasingly young and wealthy population. I expect to see continued strong growth and a flourishing rental market," commented Stuart Law, Assetz managing director.

He added: "The global housing market is performing well with positive capital growth in every destination on the tracker. Bulgaria, South Africa and Spain are likely to face a slowing in the rate of growth during the next few months, but are still a long way off from falls in house values."

Looking at other overseas property hotspots, Assetz research shows capital growth in Bulgaria has also been increasing, reaching 17.3 per cent across last year.

"Much of this growth has occurred in peripheral locations where prices are catching up with the tourist hotspots, while more popular locations such as the capital Sofia have grown by 9.8 per cent and [the] Bankso district by just 5.3 per cent," Assetz noted.

It added Bulgaria's rental market remained "fairly risky", with average yields around five per cent.

"However, prices remain low and deposit levels have fallen from 35 per cent to 25 per cent, meaning investors who take a long-term view can still do well in Bulgaria if they accept short-term income losses," Assetz advised.

Across other popular overseas property markets, Assetz noted with the US house prices continuing to drop investors may have to wait another year or so before better buying opportunities came up.

Looking at property in France, the group said French homes offered high returns and represented a safe investment. It also noted the German property market was starting to stir in Berlin.

For the full report breakdown see

UEM World works on REIT

UEM World works on REIT


SINCE early last year, companies under UEM World Bhd banner have been generating much interest with many of the more prominent companies, such as UEM Builders Bhd, Pharmaniaga Bhd, Opus International Group plc and Cement Industries of Malaysia Bhd (CIMA) gaining much fanfare.

UEM World itself has been under the spotlight as some of the company’s units have been tipped to win large contracts such as the building of the second Penang Bridge, and its role in developing the Iskandar Development Region in South Johor.

However, market chatter has it that there could be more happening at UEM World. It is understood that the company may rope in several large properties currently under its banner for the purposes of setting up a real estate investment trust (REIT) under its wholly-owned unit UEM Land Sdn Bhd.

It is believed that UEM World is aggressively pursuing this plan, which includes a tie-up with an Australian company.

Sources familiar with the matter say that the company has already crossed the first hurdle as the requisite approvals from governing bodies such as the Securities Commission have already been obtained for the impending REIT.

At press time it is still not clear what properties the sprawling giant, UEM World, plans to inject into the REIT, but chances are that it could involve, among others, the factories and buildings utilised by units such as CIMA, Pharmaniaga Bhd and Opus International Group, and various other properties under its belt.

It is also understood that UEM World may not undertake this initiative alone as several companies, which are affiliated to its parent, state-controlled investment arm Khazanah Nasional Bhd, may also be roped in to strengthen the REIT.

Khazanah Nasional controls about 54.4% of UEM World, via its wholly-owned unit United Engineers (Malaysia) Bhd.

Among the names that have cropped up are Khazanah Nasional’s wholly-owned subsidiary STLR Sdn Bhd, which owns Wisma Time in Jalan Tun Razak, and some buildings under the purview of Faber Group Bhd, such as Faber Towers. Faber Group is a 37.4% unit of Kahzanah Nasional, via equity owned by United Engineers.

The move is believed to be part of a bigger plan to establish UEM Land as Khazanah Nasional’s main property arm. UEM Land is the core landowner for UEM World’s aspirations as part of Johor’s Iskandar Development Region.

In vogue

Saturday March 31, 2007

In vogue


Property companies have won the tag as the most vogue company for the month.

The main sweetener is the recent announcement that real property gains will be abolished effective April 1. Other measures included removing the required approval from the Foreign Investment Committee for purchases of properties priced above RM250,000 and the maximum three credit facilities for purchases by foreigners.

Undoubtedly, this should augur well for property developers. In fact, many property counters have already seen a run up in their share price, which reflects positive sentiments.

Like other property development companies, WCT Land Bhdshares started gaining in early March and to date, the momentum has seen the shares climb by as much as 40%.

Apart from the recent measures, there are also other plus points in the company.

Some of its projects, scheduled for launch last year but were deferred, are expected to take off in the early part of the current financial year.

This includes the RM65mil commercial property in Kelana Jaya, which was deferred to the first half of the current financial year.

WCT Land may also be able to realise the sale of its Bandar Bukit Tinggi Tower 1 office blocks in Klang which is valued at about RM86mil and a residential project at Sutera harbour, in Sabah, valued at about RM196mil. The response to the Bandar Bukit Tinggi 1 and 2 projects has been encouraging.

Despite the glum property market, until the middle of last year, Bandar Bukit Tinggi 1 had registered sales of almost RM1bil, or more than 80% of its gross development value of RM1.2bil, while Bandar Bukit Tinggi 2’s sales also breached the RM1bil-mark, or almost 70% of its gross development value of RM1.5bil.

Bandar Bukit Tinggi is WCT Land’s flagship development with a total gross development value of about RM2.7bil spanning over an area of over 900 acres.

The project commenced in 1998 and the company is currently developing the remaining land, which has a gross development value of about RM900mil and should keep WCT Land busy for the next six years or so.

Its other projects include the AEON Bukit Tinggi Shopping Centre and an adjoining hotel located in Bandar Bukit Tinggi, Klang.

The AEON Bukit Tinggi Shopping Centre will house the largest Jusco mall in Southeast Asia and is slated for completion late this year.

For the year ended December 2006, WCT Land posted a net profit of RM47mil on the back of RM231.7mil in sales, which is a dip of 20.6% and 28.4% respectively from a year earlier.

The fall was attributed to the slow down in property sales, WCT Land said in an announcementaccompanying its financial results.

WCT Land has also stated that it may venture into India to develop mid-sized housing projects but that is likely to materialise in a year or two’s time.

Company officials have also spoken on the possibility of WCT Land venturing into Vietnam, but negotiations are still in the early stage with nothing concrete.

Aiding its potential to get jobs overseas is its strong parentage. The company is 74% controlled by construction company WCT Engineering Bhd, which has had considerable success inking jobs in West Asia and India, among others.

Analysts’ four favoured sectors


Saturday March 31, 2007

Analysts’ four favoured sectors

Stories by KATHY FONG

KUALA LUMPUR: The plantation, construction, property and oil and gas (O&G) sectors are favoured by analysts for the second quarter.

Despite the sharp rise in the price of plantation stocks that fuelled the bull run on Bursa Malaysia since last October, this sector remains attractive.

Analysts said the current upcycle for crude palm oil (CPO) prices was different from the previous ones due to factors such as the high crude oil price and the emerging demand for biofuel.

“The high crude oil price of above the US$60 per barrel makes biodiesel a better substitute,” said TA Securities head of research Kaladher Govindan.

Biodiesel as an alternative energy to fossil fuel will continue to be the selling point for plantation stocks, given that more CPO would be needed by the upcoming biodiesel plants.

“We expect CPO prices to remain strong in the second half, due to demand from the biodiesel plants coming on stream towards year-end,” Hwang-DBS Vickers Securities said in its second-quarter regional equity strategy report.

Hwang-DBS said expectation of lower production growth from Kalimantan due to drought at the end of last year would also support CPO prices, going forward.

Against the backdrop of growing demand and tightening supply, the outlook for the timber sector appears good owing to firm demand from China and India, and Japan's economic recovery.

“The crackdown on illegal logging will help to lift timber prices when supply shrinks,'' said SJ Securities head of research Cheah King Yoong.

Meanwhile, the construction sector, which had been languishing in the past three years, is expected to recover as more public projects roll out.

Analysts said the revival of the RM5bil West Coast Highway and double-tracking railway, which had been shelved during the financial crisis, showed the government's seriousness in stimulating economic growth.

“The Penang monorail is another Government project that we expect to be launched in the coming months.

“We also expect the Government to work on the inter-state water transmission project,” said Kaladher.

CIMB-Principal Asset Manage-ment Bhd head of investment research Chow Quee Lee said the kickstarting of the mega public projects would have spillover effects on the building materials, cement and steel sectors.

Many stockbroking houses now have an overweight rating on the property sector, thanks to the government's recent incentive measures.

“The relaxation of Foreign Investment Committee rules, scrapping of the limit on loans taken by foreigners and the abolishment of real property gains tax will spur demand for properties, especially in the high-end segment,” said Hwang-DBS Vickers.

The research house believes the bullish market and the multiplier effects from the Ninth Malaysia Plan would help to drive buying interest in properties.

The O&G sector is also expected to benefit from projects to be awarded by Petroliam Nasional Bhd (Petronas) and Murphy Oil.

Kaladher said Petronas was projected to give out RM1bil worth of contracts for oil transportation.

The national oil giant had also allocated some RM3bil for oil platform projects, he added.

“We expect earnings visibility for O&G stocks to improve this year, thanks to the higher capital expenditure by Petronas and the rollout of new projects from the Kikeh field in Sarawak,” said Hwang-DBS Vickers.

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Temasek's entry stirs interest in Chase Perdana

Saturday March 31, 2007

Temasek's entry stirs interest in Chase Perdana


TEMASEK Holdings Ltd has long espoused the notion that its investments are purely of a commercial nature. The last time it reiterated this stance, Singapore's national investment arm had received some flak for its purchase of Thailand-based Shin Corp, which reportedly triggered a series of events that led to the ousting of former Prime Minister Thaksin Sinawatra.

Though similar repercussions are probably not in store, more than a few eyebrows were raised when filings to Bursa Malaysia earlier this week revealed that Temasek, Singapore's national investment arm, had emerged as a substantial shareholder of Chase Perdana Bhd with an interest of 5.8% or 7.17 million shares.

Temasek was deemed to have an interest in Chase Perdana because HDM Capital Sdn Bhd owns 5.18 million ordinary shares in the company. HDM is wholly-owned by Hwang-DBS (Malaysia) Bhd, an associate company of DBS Bank Ltd, which is in turn an associate company of Temasek.

The other 1.99 million shares are held by Alliance Group Nominees (Tempatan) Sdn Bhd, following the conversion of Chase Perdana's redeemable convertible preference shares. The former is an indirect subsidiary of Malaysian Plantations Bhd, which is an associate company of Vertical Theme Sdn Bhd, in which Temasek indirectly owns 49%.

From a commercial perspective, Chase Perdana is hardly the sort of company to set investors' pulses racing. Founded in 1970, the construction player grew sufficiently to make its debut on the local bourse in 1991 as Chew Piau Bhd, the flagship of low-profile entrepreneur Tan Chew Piau.

In 1994, following its sale to a Sabah-based business group and subsequent adoption of its current moniker, Chase Perdana diversified into plantation, property development and investment, manufacturing, financial services and civil engineering.

However, the coming decade was not to be kind to the company. From a trading position of around the RM10 mark in 2000, it dropped to under RM4 in 2001. After some financial irregularities, Chase Perdana was classified as a PN4 company in February 2002.

It was then suspended in September 2002 pending debt restructuring, and has been a penny stock since it resumed trading in July 2003.

According to its 2005 annual report, Chase Perdana owns properties worth RM170mil, including Wisma Chase Perdana in Damansara Heights, Kuala Lumpur and the Kurnia Perdana commercial and residential project in Kota Kinabalu, Sabah.

Interestingly, Temasek's entrance into Chase Perdana coincides with a wave of renewed interest in the sector. Most property developers, along with construction companies, are expecting higher demand and profitability following the Government's abolishment of the real property gains tax (RPGT), along with the removal of much of the red tape restricting foreigners' property investments in Malaysia.

The RPGT, which was a flat tax rate of 30% on profits derived from the disposal of properties within five years from their purchase date, will be removed effective April 1, 2007.

Foreign acquisitions of residential properties priced above RM250,000 per unit no longer require approval from the Foreign Investment Committee, while there are no conditions in terms of usage or limit on the number of properties purchased, allowing these properties to be rented, leased or traded.

In addition, there will no longer be a limit on the number of residential property loans obtained by foreigners. Under the previous policy, foreigners were allowed to obtain a maximum of three property loans to finance the purchase of properties in Malaysia.

The sector's abundant growth potential is underpinned by a number of factors, including increased consumer spending sentiment as the ringgit strengthens against the greenback, along with the provisions included in the 9th Malaysia Plan.

It is also recognised that Malaysian real estate is undervalued compared with its immediate neighbours, leading analysts and developers alike to predict an influx of demand from abroad following the latest liberalisation of property rules.

Temasek would hardly be alone in this respect, but a multitude of question marks remain concerning its entry into Chase Perdana, not least of which is the fact that it is already exposed to the global property market via CapitaLand Ltd, in which it has a 46% stake.

CapitaLand, which generates some 80% of its earnings outside the island nation, has already tied up with a number of Malaysian developers. These include YNH Property Bhd, with which it will jointly develop an office tower and retail centre on a piece of freehold land in Kuala Lumpur's Golden Triangle.

Likewise, CapitaLand has joined forces with Malaysian Resources Corp Bhd and the Quill Group to build RM650mil of residential and service apartments close to KL Sentral, the confluence of the city's rail lines. The project, in which CapitaLand has a 39% stake, is expected to commence in 2008.

Also upcoming is the just-approved RM1.5bil Four Seasons Hotel and apartment complex in partnership with Singapore-based tycoon Ong Beng Seng, to be built next to the Petronas Twin Towers.

In addition, CapitaLand is getting in on the ground floor with real estate investment trusts in Malaysia. Besides a 30% stake in Quill Capita Trust, it is also collaborating with the Maybank group for a US$270mil Singapore-based closed-end private equity fund that will invest in the local property sector.

The Malaysia Commercial Development Fund is the largest real estate fund in Malaysia, with an expected gross development value of over US$1bil. CapitaLand will be the largest subscriber, with 28%, followed by the Maybank group's 11% interest.

That's quite the roll call of affiliations, but it brings us no closer to interpreting the role that Chase Perdana will play in Temasek's portfolio. Still, with the recent upheavals in the local property sector leaving most observers uncertain as to their eventual after-effects, a clearer picture may be some time coming.

Brokerages share reasons for their top picks


Saturday March 31, 2007

Brokerages share reasons for their top picks

Asiatic Development Bhd

THIS is one of the laggards among plantation stocks, said OSK Research.

The research house said strong crude palm oil prices would continue to drive the group's earnings.

Besides the anticipated positive earnings growth, the stock might also be on merger and acquisition play. “Genting has refuted market talk on it selling the stake in Asiatic since the subsidiary is generating steady income for the group.

“However, Genting may be tempted to sell when the price is right,” said OSK Research.

Jaya Tiasa

SJ Securities said this was one timber stock that had largely been neglected.

“The valuation of the stock is still attractive. It is trading at a price-to-earnings ratio of 10 times,” it said.

SJ Securities expects Jaya Tiasa to benefit from the high timber price, given the rising demand from India, China and Japan.

Furthermore, the stock is on analysts' and fund managers' radar now that the group has initiated efforts on investor relationship management. “This will help raise the company's profile,” it said.


This is a stock that is proxy to the casino industry.

Dreamgate, a supplier of slot machines and casino games equipment, is one of the top picks by SJ Securities due to its potential earnings growth amid the liberalisation of the global casino industry.

SJ Securities said the demand for slot machines and games equipment would rise as more casinos were opened.

“The stock valuation is very attractive. It is trading at a single-digit price-to-earnings (P/E) ratio, whereas its industry peers are at the P/E ratio of over 20 times,” it said.

The brokerage said Dreamgate's casino in Cambodia could be its trump card to boost earnings growth.

Transmile Group

Transmile is on JP Morgan's recommendation list.

“We like Transmile as a play on the strong growth in the overnight air cargo business in Asia,” it said.

The attractions with Transmile are its landing rights in Asia and the US, also its niche express delivery service to courier companies, factories and fast forwarders.

Transmile has formed a strategic alliance with DHL to develop intra-Asia and inter-continental services to meet the rising demand for overnight air cargo service.

For the financial year 2006, the group posted a net profit of RM157mil, 110% higher than in 2005.

Kinsteel Bhd

The Ninth Malaysia Plan will be the catalyst for the stock because the rollout of mega projects will spur demand for more steel-related products.

Hwang-DBS Vickers Research said Kinsteel, the country's sole manufacturer of H&I beams, had the extra capacity to develop downstream products that were needed for infrastructure projects like the double-tracking railway and Penang monorail.

“There is tremendous potential for Kinsteel, which took over Perwaja last September, to increase production of its downstream products from its Gurun plant, as utilisation was only at 29% last year,” said Hwang-DBS Vickers.

The research house forecast a compounded annual growth rate of 37% on Kinsteel's net profit in the next three years.

KNM Group Bhd

KNM is the top pick of Hwang-DBS Vickers in the oil & gas sector.

The research house expects the group's venture into oil sand development in Edmonton, Canada, to provide another leg of growth for KNM's earnings.

Oil sands are deposits of bitumen that can be converted into upgraded crude oil before refineries can use it to produce gasoline and diesel fuels.

According to Hwang-DBS Vickers, the development cost of oil sands is US$15 per barrel, which makes economic sense to have it as an alternative for fossil energy.

The research house said KNM's venture into oil sands reaffirmed the group's “steroid growth” prospects.

United U-Li

SJ Securities said United U-Li's earnings would ride on the construction and property projects in the country.

The research house expects earnings growth of 40% for United U-Li this year amid expectation of securing more jobs.

In the last financial year ended Dec 31, United U-Li posted a net profit of RM8.3mil against a loss of RM7.4mil in 2005. Its earnings per share rose to 6.30 sen versus loss per share of 5.62 sen.

SJ Securities said the company was indeed the contractor for the cable casing works in Genting's casino.

“United U-Li stands a high chance of securing some jobs from their Singapore casino project,” it said.


Garment manufacturers have been out of favour for many years due to the fierce competition from low labour cost countries like China and Cambodia.

However, SBB Securities is recommending Cheetah Holdings Bhd, given its steady earnings growth.

“Cheetah has achieved astounding growth rate to even rival that of blue-chip companies,” it said.

The research house said Cheetah recorded compounded annual growth rate (CAGR) of 10.7% in the past seven years and 16.3% in net profit.

It forecasts CAGR of 17.7% for financial years 2006 to 2008.

SBB Securities noted that Cheetah's reserve of RM27mil would enable it to offer bonus issue to meet the RM60mil paid-up capital requirement for main board listing.

“The main board listing will give further credence to its consistent track record,” it said.

ASIATIC : [Stock Watch] [News]
JTIASA : [Stock Watch] [News]
DGATE : [Stock Watch] [News]
TRANMIL : [Stock Watch] [News]
KINSTEL : [Stock Watch] [News]
KNM : [Stock Watch] [News]
ULICORP : [Stock Watch] [News]
CHEETAH : [Stock Watch] [News]

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More News:

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* IOI plans to return RM1.37bil
* Brokerages share reasons for their top picks
* Global players courting RHB
* Analysts’ four favoured sectors
* Kuwait Finance scores a first
* Plenitude to unveil more properties
* More volatile Q2 likely, say analysts
* New on the market
* Best quarter for KLCI since 2000
* Unlocking monetary handcuff

Sponsored Links

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Plenitude to unveil more properties


Saturday March 31, 2007

Plenitude to unveil more properties

By Yeow Pooi Ling

Elsie Chua with a model of the Taman Desa Tebrau project in Johor.
KUALA LUMPUR: Plenitude Bhd will be kept busy from the second half of the year as it plans several property launches.

By the fourth quarter, it intends to launch Lot 88 in Sungai Petani, which has a gross development value of RM128mil.

Executive chairman Elsie Chua said by next year's second quarter, the company was set to launch The Batai at Damansara Heights and Ferringhi Heights in Penang, which respectively covered 3.5 acres and 10.6 acres.

While noting that the property market had been soft, she said it was likely to recover in the second half of the year, especially given the recent liberalisations by the Government.

The abolishment of real property tax gains, for example, was anticipated to attract more purchasers as it provided more options and greater flexibility, Chua said in an interview.

Plenitude was also one of the beneficiaries for incentives under the Iskandar Development Region (IDR), as its Taman Desa Tebrau project in Johor formed part of the IDR, she added.

For the year ending June 30, 2007, earnings are likely to be buoyed by Tebrau City, which is within the Taman Desa Tebrau development, according to Chua.

Two out of eight serviced apartment blocks were launched last year and so far, about half the units had been taken up, Chua said, adding that the other blocks would be launched in phases next year.

The mixed development was also expected to benefit from the proposed monorail project in Johor, which would have a stop at Tebrau City, she said.

Besides the 1,088 serviced apartment units, it will also have 400,000 sq ft of retail and commercial space for leasing. Presently, Tebrau City houses the largest Jusco department store in the country.

Hypermarket Tesco is also anticipated to open within Tebrau City, given that it had signed a leasing agreement with Plenitude last year.

It would look at buying more land in Johor. “We're in a strategic position, given our strong cashflow. We're not in a rush to increase our land bank as the existing land will sustain us for 10 to 15 years,” Chua said.

OSK Securities said Plenitude made a strategic move in deferring some of its launches at Taman Desa Tebrau, as it would be able to capture larger profits from the fast growing property region in Johor.

“It will also inevitably compromise earnings expectations in the nearer term,” the brokerage said.

Given Plenitude's strong cashpile of RM36.4mil as at Dec 31, 2006, the company could afford to defer the launches for richer value creation in the longer term, it added.

Its shares were actively traded yesterday. The counter closed up 13 sen at RM2.20, which is still below its net tangible assets of RM3.58 per share. OSK estimated its revised net asset value at RM4.24 per share.

PLENITU : [Stock Watch] [News]

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More News:

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* IOI plans to return RM1.37bil
* Brokerages share reasons for their top picks
* Global players courting RHB
* Analysts’ four favoured sectors
* Kuwait Finance scores a first
* Plenitude to unveil more properties
* More volatile Q2 likely, say analysts
* New on the market
* Best quarter for KLCI since 2000
* Unlocking monetary handcuff

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Friday, March 30, 2007

Sing Holdings plans to place out 40m new shares

Sing Holdings plans to place out 40m new shares

Property firm Sing Holdings plans to place up to 40 million new shares to raise $16.8 million to fund its recent acquisitions.

The new shares will be priced at $0.43 each, representing a 10% discount to the volume weighted average price for trades done in Sing Holdings' shares on Wednesday.

The new shares represent 17.6% of the issued share capital of Sing Holdings.

Sing Holdings plans to place out 40m new shares

Sing Holdings plans to place out 40m new shares

Property firm Sing Holdings plans to place up to 40 million new shares to raise $16.8 million to fund its recent acquisitions.

The new shares will be priced at $0.43 each, representing a 10% discount to the volume weighted average price for trades done in Sing Holdings' shares on Wednesday.

The new shares represent 17.6% of the issued share capital of Sing Holdings.

Sing Holdings plans to place out 40m new shares

Sing Holdings plans to place out 40m new shares

Property firm Sing Holdings plans to place up to 40 million new shares to raise $16.8 million to fund its recent acquisitions.

The new shares will be priced at $0.43 each, representing a 10% discount to the volume weighted average price for trades done in Sing Holdings' shares on Wednesday.

The new shares represent 17.6% of the issued share capital of Sing Holdings.

S'pore properties could grab US$20b of funds in 2007: DTZ

S'pore properties could grab US$20b of funds in 2007: DTZ

SINGAPORE: At least US$20 billion in global funds could be invested into properties in Singapore this year.

This is according to a report by the global office of property consultancy DTZ.

That is about 10 percent of the US$200 billion that DTZ expects will be channelled into properties in the Asia Pacific in 2007.

At US$200 billion, this amount of money is a jump of some two thirds from 2006.

And according to DTZ, the bulk will come from global investment funds.

They are seen as targeting all property sectors – residential, offices, retail and industrial – as real estate has been performing better than equities in recent years.

Joe Valente, Director, Head of Research, DTZ UK, said: "There is a huge wave of worldwide capital waiting and wishing to invest in real estate worldwide. There are all sorts of reasons for that, but we would estimate that at the moment there is something close to US$2.5 trillion looking to be invested in real estate, and probably around 30 to 40 percent of that is looking for a home in the Asia Pacific.

"The key problem in all of this is actually finding sufficient investment grade stock in good locations that are expected to outperform."

Japan will snap up about half of the money coming into Asia-Pacific.

But Singapore is among the top five destinations in the region – along with Australia, China and Hong Kong.

"We're expecting Singapore to capture 10 to 12 percent market share of the total amount of capital that is looking for a home within Asia markets. That hasn't changed quite significantly over the last two or three years. And much of that has to do with the liquidity and transparency of Singapore, which makes it a much more mature market compared with other emerging markets in Asia," said Mr Valente.

In Singapore, DTZ expects residential and office properties to do particularly well.

But it said the retail and industrial sectors would lag behind their counterparts in Japan and China.

The Head of Research said: "On a global basis, the level of performance that I would expect to get in retail within Singapore, and in industrials within Singapore are far in excess of the sort of returns that I would expect to find in European markets or in US markets. So that's a positive point for Singapore.

"However, in relative terms, there are one or two, or three or four other markets in Asia which are likely to outperform Singapore's performance, so all else being equal, that's where I would go for those particular sectors."

Overall property investment sales in Singapore hit over US$6 billion in the first three month of this year.

- CNA/so

Thursday, March 29, 2007

GuocoLand to buy Tianjin site

GuocoLand to buy Tianjin site


GUOCOLAND, the Singapore listed arm of Malaysian billionaire Quek Leng Chan, which already has a third of its assets in China, is pouring even more money into the country.

It announced yesterday that its wholly owned subsidiary GuocoLand (China) has signed a conditional agreement to purchase a 26,000 square metre site in the city of Tianjin, just south of the Chinese capital of Beijing, for about US$52.5 million.

This is the group's first foray into Tianjin and GuocoChina hopes to develop 153,000 sq m of residential homes and offices on the 50-year leasehold site.

GuocoChina managing director Violet Lee said of the proposed acquisition: 'It underlines our strong commitment to be a major player in China as well as our confidence in the growth of China's economy. This will, in turn, continue to generate demand for quality developments such as those developed by GuocoLand.'

At the end of June last year, the group's assets in China amounted to $816 million, with developments in Shanghai, Nanjing and Beijing. Including Tianjin, GuocoChina has about 1.15 million sq m of saleable land in the four cities for development into residential, retail and commercial integrated projects.

The Tianjin deal is conditional on GuocoChina getting approvals from the Tianjin authorities to acquire the company, Tianjin Zhong Xin Ming Shi Real Estate Development Co (Tianjin Zhong Xin), which holds the land use and development rights to the site from its current shareholders Lead Mix Ltd and Reliapoint Ltd. It is also conditional on getting a new business licence from the Tianjin Administration for Industry & Commerce, and other approvals.

The proposed venture by GuocoChina will form part of the overall development of Tianjin's Lao chengxiang area by Hongkong-listed Neo-China Group (Holdings). The area is one of Tianjin's oldest residential districts with a 600-year-old history as a commercial hub.

A major city with a population of over 10 million, half of whom live in the metropolitan area, Tianjin is the economic centre of the Bohai Sea Rim area.

Exporting knowledge: Can S'pore compete?

Exporting knowledge: Can S'pore compete?

The following is excerpted from a speech by NGIAM TONG DOW at CPFB's Learning Forum yesterday. He was chairman of the CPF Board from 1998 to 2001.
I am therefore in full support of A*Star's thrust to train 1,000 PhDs in science and engineering over the next decade. They will indeed be our cutting edge in the tough and demanding world of knowledge-based competition.
- Ngiam Tong Dow

THE CPF, established in 1955, was structured on the assumption of life-long employment. It was a self-funding contributory scheme for retirement, with equal contributions from the employer and the employee.

Each CPF member has his own unique account number, which is portable. Unlike traditional pension schemes, savings remain with the member whoever his employer is.

The CPF has over 1.5 million active members, which makes it the largest savings bank in Singapore.

From its earliest beginnings, it has invested in computerisation.

If my memory serves me well, the CPF was the second government institution to purchase a mainframe computer after the Ministry of Finance. The CPF could have cruised along on auto-pilot if the laws of classical economics had not changed.

When I was at university in the mid-1950s, we were taught that the three factors of production were land, labour and capital. Countries richly endowed with land, labour and capital are likely to be wealthier than countries less endowed, such as Singapore.

So, how has Singapore, a tiny rock outcrop at the southernmost tip of Asia, triumphed over adversity to become today's global city? When I visited the Japanese Ministry of International Trade and Industry (MITI) in the mid-1970s to make out the case for Singapore to host the Sumitomo petrochemical complex, I met with MITI's director of industrial policy.

When I asked him what Japan's industrial policy was, he gave me an enigmatic reply. He said simply that knowledge is power, if applied with insight. But what is knowledge? Knowledge may simply be timely information.

In the early 1960s, the rice and rubber merchants of Carpenter and Hongkong Streets gathered each morning at Lau Pa Sat, the old Ellenborough market, to 'yam cha'. Over their cups of fragrant tea, amid the banter and the gossip, someone may talk about the low rainfall in peninsular Malaya or Sumatra, where their rubber estates were.

Latex yield is lower if the weather is drier. These rubber traders would then sell rubber futures long or short depending on what they expect the weather to be. This was the supply side of the equation. Our rubber merchants made a killing on the demand side during the Korean War boom when demand for all raw materials shot up.

Operating data

Knowledge may also be mined from operating data, which are normally filed away.

As PS (Budget) in the mid-1980s, I was invited by the Environment Ministry to visit the latest incinerator plant built at Tuas. Each plant costs around $500 million and was designed by a German consulting company. The consultant who was showing me around thanked my ministry profusely for what I thought was his handsome consulting fee.

Instead, he thanked me for the operating data he was collecting from our new plant. Unlike incinerator plants in temperate countries, which burnt dry garbage, Tuas had to burn wet waste, in a hot and humid Singapore.

Our data enable the German engineers to be more precise in determining the operating parameters when they design similar incinerator plants in Kuala Lumpur or Jakarta, cities at or near the equator. Market research is not just a random walk in the park sampling opinion of passers-by.

It aims at finding out in depth and detail what a customer really wants in a product or service. In the early 1970s, Toyota and Nissan sent research teams of engineers and industrial designers to Hamburg in Germany to find out what the German motorist requires of the new car he is buying.

The Japanese automakers figured out that if they can satisfy the technically demanding German customer, they would be able to meet the expectations of motorists in other countries as well. After spending three years researching the needs of the German motorist, the teams returned home and designed a technically efficient car to a price set by the president of the company. However technically sound the vehicle is, it has to sell in the volumes to break even and turn a profit.

Market research

Another example of the crucial role of market research is the Boeing aircraft company. When I visited Boeing in Seattle as an SIA director in the early 1970s, its president told me that Boeing is a marketing more than a manufacturing company. When I expressed surprise, he said that his company's research teams assiduously pored over the figures of traffic growth between cities and continents.

The most crucial decision in building a new aircraft is determining its optimum size for the particular sector it is designed to serve. Hence, the legendary 707 series spun off into 737, 747, and now the 777, to serve different market sectors.

Market research is soft knowledge, and companies who are not meticulous enough will rue the day. The Concorde was a technological marvel, but a commercial flop.

As a Singapore administrator, I am more a generalist than a specialist. All of us in the Singapore Civil Service are familiar with the concept of having a helicopter view.

According to the Shell doctrine, a leader in business must fly high enough (in a helicopter) to have an eagle's sweep of the terrain. At the same time, like an eagle he must have the agility to swoop to the ground to pounce on the hapless field mouse for dinner.

Since my retirement as a generalist administrator in the Singapore Civil Service, my hobby is studying business models of enterprises. In assessing a business to invest in or to lend to, I always try to fathom or figure out the most critical piece of knowledge for success.

As chairman of DBS Bank (1990-1998), I was asked to approve a fairly substantial loan to an Indonesian Chinese businessman to build cold storage facilities for his vast prawn farm in Indonesia. The farm was the size of Singapore and it would require me to fly in a helicopter to see it. When asked, he told me that the most important ingredient for success in large-scale prawn farming was the fertility of the mother prawns.

The more fry the mother prawn produces in a season, the greater the output of prawns from the farm.

He did not have the scientific knowledge to increase the fertility of mother prawns. So he hired a top zoologist from Hawaii who devised a technique to stimulate mother prawns to produce more fry.

In the current, sometimes heated, debates on what our R&D directions should be, perhaps we should invite more business entrepreneurs to sit on the research policy panels.

They would be able to point Singapore in directions which would accelerate Singapore's economic transformation. The founding entrepreneurs of Singapore were men who migrated here with barely a shirt on their backs. Fleeing poverty and turmoil, they came from homelands such as Arabia, Iraq and Oman in the Middle East, India and China, and Indonesia which was a country of adoption for some of them.

Most of them had only elementary school education. A few were unschooled.

In a relatively benign and open British colonial administration, they competed fiercely. A few succeeded beyond their wildest dreams. Though without much formal schooling, they became great benefactors of education, endowing schools, polytechnics and universities.

Their foresight and vision laid the foundation for the current generation of Singaporeans to compete in a global knowledge-based world.

Sociologists speak of a digital divide. I prefer the more embracing concept of a knowledge divide. How do we ensure that we fall on the right side of the divide?

Technological competence

Dr Pannenberg, then the R&D director of Philips of Holland, was Singapore's first technology adviser. Without a large population base and depth of talent, he advised us to raise our technological competence first before we embark on cutting edge research on the frontiers of science.

He told us to expand our science and engineering faculties in the universities. NTU was established as a result. Dr Pannenberg's view was that if we have the trained manpower, multinationals would naturally gravitate to Singapore to establish production facilities for fine chemicals, pharmaceuticals, advanced electronics chips, and complex engineering components.

I am therefore in full support of A*Star's thrust to train 1,000 PhDs in science and engineering over the next decade. They will indeed be our cutting edge in the tough and demanding world of knowledge-based competition.

Olivia Lum's Hyflux, a pioneer and leader in membrane water technology, is a forerunner of Singapore's very own knowledge-based industries. Olivia is a BSc in chemistry from NUS.

With more scientific competence, there will be many more Singaporean knowledge-based enterprises in the next decade. The pressing question however is how do we compete in a knowledge-based world? The stakes in the knowledge race are high.

Singapore has chosen to compete in the life sciences domain of stem cell research unravelling the human genome. The world's leading pharmaceutical companies are pouring billions of dollars worth of research effort for therapies that will cure hitherto incurable diseases. At its most fundamental, it is man's search for longevity, if not immortality.

Longevity is in the realm of knowledge. God forbade Adam and Eve to peer into the book of life, which is immortality. However bitter, He allowed them to eat of the fruits of the tree of knowledge. As an individual citizen, I will not prejudge the outcome of research in the life sciences.

Singapore may yet be the first nation to discover some of the secrets of life. I do not know enough to second guess our scientists.

There are however many other knowledge domains where Singapore can compete in. I will start with my own company, Surbana Corporation. Surbana grew out of the Building Department of the Housing Development Board (HDB).

Our urban planners, architects, engineers and project managers have honed their skills, planning and building 28 new towns in Singapore over the last 45 years. This pool of knowledge is invaluable in our search for business overseas. We believe in and project ourselves as a knowledge-based company.

To date we have been engaged to plan, design and build three townships in China: in Chengdu (8,000 residential units of middle-class housing), Wuxi (6,000 units) and Xi'an (30,000 units). The Xi'an project is on the same scale as Toa Payoh.

Surbana has gone beyond just housing. Our clients in Dubai, Abu Dhabi, Bahrain and Oman have asked us to advise them on what they call strategic city planning.

It embraces all the facilities and amenities needed by a modern city, such as power stations, water reservoirs, mass rapid transportation system, schools, hospitals, shopping malls and recreational attractions.

Being wealthy oil countries, they will invest up front in infrastructure. They welcome Singapore companies to manage and operate the hotels, the schools, the hospitals, and the transport systems. The UAE and neighbouring countries are in the midst of a paradigm shift from total dependence on oil to more sustainable growth strategies.

Singapore as a successful city-state has a golden opportunity to participate in this transformation of Middle East countries. Over the last 50 years of rapid economic development, Singapore has acquired expertise and experience in knowledge domains which will stand us in good stead for competition in a global knowledge-based world. PSA, CAAS, and Jurong Town Corporation (JTC) have used their knowledge base in seaport and airport development, and industrial parks, to win business in new overseas markets.

If you were to ask me to identify the knowledge domain that Singapore is most competitive in, without undue modesty, I would say it is public administration. While the sine qua non of good government is incorruptibility and integrity, it is good administration that will deliver the public goods and services.

Prime example

Without claiming that the Singapore Civil Service is perfect (no administration is), over the years we have accumulated knowledge and experience, quoting a tag line of Singapore Airlines, that even other countries talk about.

Indeed, SIA itself is a prime example of a knowledge enterprise. I was a member of SIA's founding board in 1972, and saw it grow from a fledging regional airline to be among the top 10 airlines of the world today. And we did it all by ourselves, building up our skills and expertise in marketing, air services negotiations, engineering, cabin crew, aircraft financing and, most important of all, developing the personal knowledge of each individual man and woman.

The chairman, board, CEOs, and senior management were all Singaporeans. SIA is truly Singapore's first knowledge-based company. SIA however is not the only Singapore knowledge-based company.

HDB, PSA, CAAS and JTC have become knowledge exporters winning management contracts in overseas markets against stiff competition. CPF can also be a knowledge exporter. Countries like China, India and Vietnam will find your experience invaluable as they go about establishing their own social security schemes.

When I was your chairman, I offered your backroom processing capability in administering 1.5 million members' accounts to the then Big Four Singapore banks.

With scale, costs of processing statements of accounts and other documents can be reduced.

Lower production cost will be a competitive advantage to our banks battling against the Citibank or HSBC of the world. Bill Gates of Microsoft made a similar proposal to the world's 150 leading commercial banks at the annual meeting of the International Banking Conference in Seattle in the mid-1990s.

I attended the conference as chairman of DBS Bank. The conference is the private sector counterpart of the IMF. CPF has the knowledge base to export your services in the domain of social security administration.

So do our schools, polytechnics, universities, hospitals, LTA, NEA, in their own knowledge domains.

Even my old ministry, the Ministry of Finance, can export its expertise in helping other administrations to introduce consumption taxes, such as GST and COE, with the least political cost. Enough of thinking only about possibilities.

Remember that knowledge is power only if applied with insight.

I have distributed an article by David Ignatius of The Washington Post on page 12 of the Wall Street Journal of March 12, 2007 for you to read and reflect.

Headed 'Higher-Ed Superpower', the article begins with the lead: 'When people think about American power in the world, they usually list the country's forbidding arsenal of bombers, aircraft carriers and troops.

'Yet America's greatest strategic asset these days might not be its guns, but its universities.'

Leapfrogging through the wealth of technology

Leapfrogging through the wealth of technology

Leadership and human capital are critical to make technology bring about transformation

CONVENTIONAL wisdom seems to point out that the truly innovative actors in a society tend to be people, institutions and governments endowed with the blessings of wealth, earned and accumulated over generations.

E-voting: The Estonian government's clear vision and leadership in ICT have led to results that often surpass those achieved by the older democracies of Western Europe. Estonia this month became the world's first country to vote in a national parliamentary election via the Internet.

It also tells us that countries take a long time, often decades, to transform themselves and become innovative leaders. However, a look at the world around us is enough to turn such notions on their heads. Some countries are using information and communication technologies (ICT) to leapfrog into the 21st century, as highlighted by the findings of the Networked Readiness Index (NRI), published recently in the World Economic Forum's Global Information Technology Report 2006-2007. Information technology (IT) is enabling economies to drive innovation and create wealth in the short span of a few years as opposed to a few decades.

Consider the case of Estonia, ranked at a very impressive 20th position (out of 122 countries) in the latest NRI rankings. An astonishing amount of innovation has emerged from Estonia, a country of 1.4 million inhabitants that regained its statehood only in 1991.

Inspired by the technology revolution in neighbouring Finland, Estonian government's clear vision and leadership in ICT have led to results that often surpass those achieved by the older democracies of Western Europe. E-leadership has proven to be instrumental in helping Estonia through the painful transition from centralised state planning to the model of modern governance it is today.

Under the motto 'the Internet connects people, not computers', the Tiger Leap programme was launched in 1997 to reshape the Estonian educational system with technology; the Estonian parliament approved in 2000 a proposal to guarantee Internet access to each of its citizens, just like any other constitutional right; people all over the country can access the Internet free of charge from hundreds of Public Access Points; Estonian citizens can vote online, as witnessed by the successful e-voting in the recent general elections; special projects such as Village Road are creating a truly inclusive information society by making Internet and mobile services available to all, especially those in rural and remote regions.

Even many countries in the world's poorest continent are actively embracing new technologies. Both government and private sector leaders in Ethiopia, one of the world's poorest countries, have committed huge resources to seeing that by 2007 all of its 74 million people live no more than a few kilometres from a broadband connection.

Finland, another top performer in the NRI rankings, is often quoted as a prototype of the future networked society, a society based on the intense generation, sharing and use of knowledge.

This is a far cry from Finland's crisis in the early 1990s when it was on the brink of bankruptcy. By focusing relentlessly on innovation, education and ICT, Finland's economy has diversified from raw materials, capital, energy and scale-intensive to knowledge-intensive.

Similar to Estonia, the Finnish government has placed great emphasis on the development of its human capital and the creation of an innovation-friendly society, also by investing heavily in R&D (3.4 per cent of GDP, among the very highest in the world).

Finland was the first country in the world to introduce the concept of a national innovation system as the basic frame of reference in policy formulation. Networking and cooperation became the norm for public-private partnerships and governance of the country in general. Appropriate councils were set up to evolve the policy emphasis from a 'science push' to an 'industry pull' mode.

Finland is also home to one of the most open and competitive ICT sectors in the world, accounting for a very large share of business employment and value added. There are around 40 significant telecommunications operators in Finland, a country with a small population of five million. Though Nokia represents the most visible and talked about face of ICT in the country, the entire ICT sector has more than 5,000 firms.

These firms continue to innovate in many basic technologies: a well known example is the rise of the open source software movement, pioneered by Finnish programmer Linus Torvalds.

Similar transitions are also taking place in other places of the world. Consider Israel, ranked at position 18th in the NRI. Despite Israel's turbulent geo-political context, the development of its high-tech sector during the past decade has been impressive. With strong links to Silicon Valley and other US high-tech corridors as well as long-standing ties to American academic and research institutions, Israel has rapidly built a leading global position in high-tech entrepreneurship, with a large number of start-ups.

It has been the Israeli government's explicit goal to position the country at the centre of the knowledge economy, in close cooperation with the business sector, through a heavy focus on education and human capital.

Also large-scale immigration of skilled labour (from Eastern Europe in recent years) has given Israel the highest number of engineers per capita in the world - 140 per 10,000 employees, more than twice the level of the United States and Japan.

Israel's investment in R&D (4.6 per cent of GDP) is higher than that of any other industrialised country, and a variety of incubator and venture capital programmes help to convert leading-edge technological research into value adding businesses.

Even many countries in the world's poorest continent are actively embracing new technologies and making substantive commitments to innovative ways of thinking about and tackling old problems.

Ethiopia, despite being one of the world's poorest countries, is spending nearly one-tenth of its GDP on IT every year. Hundreds of government offices and schools have already been equipped with broadband Internet, and more are yet to come. Government and private sector leaders in Ethiopia - in an astonishing example of forging headlong into the 'global village' - have committed huge resources to seeing that by 2007 all its 74 million people live no more than a few kilometres from a broadband connection.

The government of Mozambique has identified IT as a key enabler of its national innovation strategies. Mozambique is using IT to improve governance and public administration while guaranteeing its citizens greater access to the benefits of a global knowledge base.

Technology is driving innovation in economies around the world by allowing creative thinking and responsive problem-solving to provide the promise of never-before seen opportunities for all.

However, technology alone cannot make these transformations happen. Leadership from the top is critical and partnership between business and government is important.

Human capital development has to also progress hand in hand with investments in technology. Putting all the pieces of the puzzle together is not easy, but when done correctly can change the face of our world.

Soumitra Dutta is Professor of Business and Technology and Dean of External Relations at INSEAD. Irene Mia is Senior Economist of the Global Competitiveness Network at the World Economic Forum

Building the Singapore brand

Building the Singapore brand

The country must develop greater self-confidence in its own judgement

IT is daunting to be invited to speak on 'Nation branding'. Company branding is an age-old business. All good companies know the value of their brands. They cherish and nurture them. Many countries, by contrast, are not aware of their branding.

Blossoming: Singapore's performance has exceeded previous world-class standards. Hence, it is quite puzzling that Singapore is still aspiring to be world class, when it has exceeded world-class standards in many areas

To make matters even more complicated, nation branding, by definition, must be done in an international context. Company brands are ranked against each other. So are national brands. However the international context has never been more fluid. There will therefore be three parts in my presentation. First, I will do a broad review of the international context. Second, I will try to analyse the strengths and weaknesses of the Singapore brand. Third, I will put across a few suggestions on how to strengthen the future branding of Singapore.

First, the international context. For the past few centuries, world history has been dominated by Western countries. By contrast, the 21st century will be the Asian century. The famous Goldman Sachs BRICS study predicts that by the year 2050, three of the four largest economies in the world will be Asian: China, USA, India and Japan (in that order). No European economy will be among the top four.

There are many reasons why economic power is shifting to Asia. However, one critical reason why Asian societies are succeeding is because they are becoming competent and pragmatic. Asian countries have stopped being ideological. India has started to get rid of the licence raj. China has even introduced property rights. The paradox here is that while the Asian states have become competent and pragmatic (after having learnt many aspects of competence and pragmatism from the West), the Western states are moving in the opposite direction.

On many major global challenges, the West is dropping the ball. We face huge challenges in international security but we are staring at political failures in Iraq and Afghanistan. We face huge challenges in the international environment. Global warming is a real possibility but the West, especially the US, refuses to reduce emissions. We also face a potential failure in the Doha round of trade talks. Domestically, several Western states have difficulty making critical adjustments. With globalisation and increased global competitiveness, it is no longer possible for the cradle-to-grave social welfare model to remain economically viable. All Western states are also obsessed with what they perceive as the threat from the Islamic World. They see dark futures ahead of them and are becoming increasingly pessimistic.

Let me stress that I am not making these claims. The leading Western voices are doing so. In the latest issue of Foreign Affairs (Jan/Feb 2007), Dominique Moisi says 'The United States and Europe are divided by a common culture of fear. On both sides one encounters, in varying degrees, a fear of the other, a fear of the future, and a fundamental anxiety about the loss of identity in an increasingly complex world.' By contrast, Dominique Moisi adds that 'much of Asia displays a culture of hope'.

Nation branding

What is the significance of this international context on the question of nation branding? Just imagine a situation where the value of company brands in the car business is decided by GM, Ford and Chrysler. They can say: 'We are the oldest car companies. We should determine the value of car company brands.' No one would take them seriously until they could seriously revive their competence in car manufacturing. In the commercial world, incompetent companies will not be allowed to judge competent companies. But in the world of nation branding, this does happen.

Countries which are becoming progressively incompetent are passing judgement on countries which are becoming progressively competent.

What are the practical implications of all this for Singapore in the international branding game? First, there is no longer a gold standard of nation branding out there. The current gold standard is being maintained by countries which are the equivalent of GM, Ford and Chrysler. They no longer have the credibility to do so.

Second, Singapore must develop greater self-confidence in its own judgement. Even though copying the best practices of others was a great competitive advantage for Singapore, we may have to stop doing so now. Let me cite one example. Today, many Western cities, including London, believe that a good city must have a ferris wheel. Hence, Singapore also decided that it should have a ferris wheel. Do we really want one?

This leads to the second part of my presentation: analysing the real strengths and weaknesses of the Singapore brand. Performance matters in branding. This is the great paradox about the Singapore brand. Singapore has consistently aspired to be world-class. Yet, in many areas, those who are supposed to be 'world class' have slipped. By contrast, Singapore's performance has exceeded previous world-class standards. Hence, it is quite puzzling that Singapore is still aspiring to be world class, when it has exceeded world-class standards in many areas.

As a dean of a School of Public Policy, I have naturally developed an interest in the subject of good governance. Companies measure their performance by looking at their bottom line: profits. Countries do not have a single measure of performance. Essentially, this performance is measured by their quality of governance. Good governance cannot be measured by one criterion. It has many dimensions. In the case of Singapore, let me cite these 10 dimensions in which we have achieved or exceeded previous 'world-class' standards:

1. Infant mortality: Singapore has the lowest rate in the world. 2.5 babies die before the age of one for every 1,000 live births.

2. Education: Singapore is among the top-performing in international Science and Maths tests. Some American schools use Singapore textbooks in Maths. The country has a literacy rate of 95.4 per cent among residents aged 15 years and older.

3. Poverty: Singapore has virtually no homeless people and no slums.

4. Healthcare: Singapore has a high life expectancy rate at birth of 79.9 years.

5. Housing ownership: The country has a home ownership rate of 90.9 per cent.

6. Economic growth: Singapore has had an average annual growth of 8.1 per cent since 1965 (GDP at 2000 market prices).

7. Political stability: Singapore has enjoyed political stability since independence. It has not been involved in any war or conflict.

8. Ethnic harmony: Singapore is ethnically diverse but has not seen any ethnic violence since the 1960s.

9. Environmental management: Our country's ambient air quality was in the 'good' level for 85 per cent of the days in 2006. 100 per cent of the population has access to waste collection services.

10. Cultural assets: Singapore has an increasing number of performing arts groups and has hosted an increasing number of international arts events.

Now let me turn to the future. While Singapore's excellent performance in several dimensions of good governance has helped overall to nurture a positive association with the Singapore 'brand', it is not easy to market 'good governance' as a brand. No company would try to market itself by merely saying we are a good company because we perform well and deliver good profits. They would market their products and always try to explain how they make the world a better place. Each tries to find a few simple images to associate with their companies: Coca-Cola and Pepsi-Cola: youthful; Apple: hip and cool; Banyan Tree: tropical and heavenly.

Special strengths

Are there a few simple images that we can associate with Singapore to convey the special strengths that Singapore has?

I would suggest three possible branding propositions that could gain Singapore a positive brand internationally; (a) Singapore: a garden city (b) Singapore: a water city (c) Singapore: where East meets West. Let me explain briefly the content we can put in each brand.

Singapore: the garden city: The greening of Singapore is a remarkable achievement. We are the world's only city-state, with no countryside. Hence, it would be natural for visitors to expect a concrete jungle when they were here. Instead, they find one of the greenest, if not the greenest, cities in the world.

There is one statistic that always astonishes me. The entire 48 continental states of the USA have a land area of 9.1 million square kilometres. Singapore has a land area of 700 square km or 0.008 per cent of continental USA. Yet this small area of 0.008 per cent of continental USA has greater biodiversity than all of continental USA.

Some of it is clearly due to the lush flora and fauna found in the tropics. However, it also reflects Singapore's determination to preserve our parks and forests. Our planning agencies, especially URA and NPB, have done a brilliant job of preserving the greenery in Singapore. Both URA and NPB are by any definition world-class agencies.

Singapore: the water city: The story of Singapore and water is the story of a modern miracle. When I served in the Singapore Foreign Service, we were always told that one of our critical national priorities was to secure long-term water supplies. Hence, we were constantly negotiating with our neighbours for long-term water contracts. In my early years with the Singapore Foreign Service, in the 1970s and 1980s, if I had been asked whether Singapore would achieve self-sufficiency in water, I would have said 'impossible'.

But the impossible has happened. Singapore will eventually achieve self-sufficiency. This is nothing short of a miracle. A combination of brilliant planning and enormous investment in science and technology has led to this happy result. Singapore has moved towards achieving water self-sufficiency at a time when many experts believe that water scarcity will be a major challenge for our world.

In March 2006, Singapore won three international water awards at the Global Water Awards 2006 in Dubai (PUB was named the Water Agency of the Year 2006. Home-grown water player, Hyflux, won the Water Company of the Year 2006 award and its SingSpring Desalination Plant at Tuas was the Runner-up in the Desalination Plant of the Year 2006 category.)

The winner of the Stockholm Water Prize in 2006 was Asit Biswas. He spoke at the Lee Kuan Yew School of Public Policy on Jan 16, 2007. He made one remarkable statement: There is no scarcity of water in the world. There is only a scarcity of good public policies on water in the world.

In an interview on the 2006 UNDP Human Development Report on the global water crisis, Prof Biswas has said that Singapore now has one of the best, if not the best, water supply and wastewater management in the world, including all of the G-8 countries. He also said that 'Singapore has what it takes to be the water hub of the world, and with the capacity to attract all the right people to develop into the world's intellectual capital for water management'. In this context, it is clear that Singapore's public policies on water are among the best in the world. PUB, like URA and NPB, is also a world-class agency. Hence, we can justifiably develop the brand: Singapore: the water city.

Singapore: where East meets West: Many in the West increasingly find it hard to believe that different civilisations can live in peace. Hence, many of them are astonished to find churches close to mosques and Hindu temples next to Chinese temples in Singapore. On a daily basis, Singapore provides living proof that different civilisations can co-exist and live in peace. Hence, if the West wants to reduce its culture of fear and encounter a culture of hope, Singapore is the best place to come to.

Another paradoxical aspect of Singapore is this: we are the most Westernised city in Asia. Yet we are also the most multi-cultural Asian city in the modern world. No other modern Asian city brings together so many different cultures and religions in such close proximity. At a time when these cultures and religions are being torn apart globally, they have lived in peace in Singapore. This too is another modern miracle. Singapore is a fortunate country. To quote Kofi Annan, it is one of the few to go from third-world to first-world in one generation. We have many aspects of Singapore that we can celebrate.

Hence, I'm confident that we will be able to find many good aspects of Singapore for international brand recognition. Let me conclude by explaining why it serves the interest of Singapore companies to enhance the national brand of Singapore. When the national brand of Singapore becomes positive, it inevitably helps our companies.

Take Switzerland for example. Most consumers like to buy Swiss products because they assume that the Swiss will pay attention to quality in all their products. The Swiss standards for integrity are high. Our standards for integrity are equally high. However, our standards are not as well-known as the Swiss standards are. I would therefore urge Singapore companies to work harder in trying to promote the national brand of Singapore. Both they and the people of Singapore will benefit from this.

The author is dean of the Lee Kuan Yew School of Public Policy. This article is excerpted from his inaugural speech in the Distinguished Speakers Lecture series of the Singapore Chinese Chamber of Commerce and Industry (SCCCI) on March 21

Fairy Point Hill site in Changi may fetch $45m

Fairy Point Hill site in Changi may fetch $45m

THE Fairy Point Hill site in Changi - launched by the Urban Redevelopment Authority for development into a recreational club, hotel or chalets - could fetch about $45 million or $250 psf of potential gross floor area based on a 30-year lease.

This estimate comes from Jones Lang LaSalle Hotels executive vice-president Chee Hok Yean, who reckons the site would be most viable as a resort hotel, given the recent development of infrastructure nearby. Also, Ms Chee notes: 'This particular area has traditionally been laidback and has that resort feel.'

The spruced-up Changi Village Hotel has been achieving high occupancy and room rates, pointing to the viability of a resort hotel at Fairy Point Hill, she says. Using the site for a recreational club might not generate a sufficient return given the chequered financial performance of such clubs in Singapore and the short tenure of the site.

The 4.2-ha Fairy Point Hill site includes the old Commando Headquarters, which will have to be restored. The grand two-storey neo-classical building, built by the British in 1935, sits atop a hill. The maximum gross floor area (GFA) allowed for the project is 179,337 sq ft. The GFA for the old Commando HQ is about 29,063 sq ft. The site is wooded with many mature trees, some of which must be kept. URA says the release of the site will help realise its vision of Changi Point being developed as an attractive seaside resort and recreational destination while protecting rustic charm. The tender for the site closes on June 20.

Prime-central districts price gap narrows

Prime-central districts price gap narrows

Price-spread shrinks to 1% in 2005-06 from 7% in 2004, says DTZ


THE gap between the average selling prices for private apartments and condos achieved by developers in the traditional prime districts compared with emerging central districts narrowed to just one per cent in 2005 and 2006, the latest analysis of caveats by DTZ Debenham Tie Leung shows.

The price-spread between the two areas was 7 per cent in 2004. In that year, lifestyle projects like The Sail @ Marina Bay in the Central Business District and The Berth by The Cove at Sentosa Cove were introduced, boasting waterfront housing.

Central districts cover districts 1 to 4 and include the CBD, the HarbourFront area and Sentosa Cove. The established prime districts are 9, 10 and 11.

The gap was at its widest in 2002 at 29 per cent. The price convergence between the two areas in the past couple of years reflects the steady increase in prices of lifestyle projects with waterfront housing themes in the central districts.

DTZ said: 'With most of these new exclusive projects being 99-year leasehold, compared with still predominantly freehold homes in the traditional prime districts, the price convergence reflects the dwindling importance of tenure but a growing preference for unique lifestyle concepts.'

The property firm's executive director, Ong Choon Fah, said that projects in the central districts could overtake 99-year projects in the prime districts on a selective basis.

'There's potential for this in the Marina Bay area because it offers the whole live, work, play concept in a waterfront setting that will also have gardens, a museum, and the Marina Bay Sands with one million sq ft of retail space.'

DTZ's analysis of caveats captured by the URA Realis system also shows that while 2,063 apartments/condos sold by developers in the prime districts last year was almost unchanged from 2005's figure of 2,061 units, the number of non-landed homes sold in the central districts rose 9 per cent last year to 884, the highest since 1996.

The increase was on the back of several lifestyle projects launched in the popular Marina Bay and Sentosa Cove waterfront locations.

The concept of inner-city living in the traditional CBD received a boost last year, with the launch of The Clift and Lumiere, which further buoyed developer sales in the central districts.

While primary market sales of non-landed homes in the prime districts were flat last year, it was a different story in the secondary market, where strong collective sales activity drove up the number of prime district non-landed homes sold by 88 per cent to 3,603.

This is an all-time high and surpassed the last peak of 1999 by 34 per cent, a result which was helped by prime-district en bloc sales.

DTZ estimates that about 2,310 non-landed homes changed hands through en bloc sales in the prime districts last year.

'However, taking into account developments which were collectively sold towards end-2006 and which will be recorded in 2007, as well as some transactions where caveats have not been lodged, less than half of the prime apartments transacted in the secondary market are estimated to have been sold individually,' the firm said.

The secondary market in prime districts was also boosted by price gains in prestigious developments like Ardmore Park.

DTZ predicts that momentum in the prime districts will strengthen - particularly in the primary market as developers launch new projects on en bloc sites.

'Together with strategic projects like The Orchard Residences and Scotts Square, average selling prices in prime districts will continue to rise,' it said.

The secondary market in prime districts will also benefit from further price recovery and steady rental increases, which should fuel investor interest.

Allgreen is top bidder for Handy Rd site

Allgreen is top bidder for Handy Rd site

MAINBOARD-listed Allgreen Properties has emerged top bidder for a 99-year leasehold site in Handy Rd near The Cathay with an offer of $72.3 million or $669 per square foot per plot ratio.

The 38,600 sq ft site, near Dhoby Ghaut MRT Station, is designated for residential use or residential use with first-storey commercial space. It can be developed into a 10-storey project with maximum gross floor area of 108,080 sq ft.

The Urban Redevelopment Authority's tender exercise had attracted four bids when it closed yesterday.

Alliance Development - controlled by Sino Holdings, not linked to property magnate Ng Teng Fong's Far East Organization or Sino Land group - bid almost $70.4 million.

GuocoLand's Rivaldo Investments offered $68.65 million. And Peak Venture, controlled by banker Wee Cho Yaw, tendered $50.5 million.

CB Richard Ellis executive director Li Hiaw Ho estimates Allgreen's breakeven cost for a new project on the site could be around $1,000 psf.

'Going by current prices of units at 8 @ Mount Sophia at above $1,000 psf in the subsale market, and those at the freehold Nomu selling at $1,100-1,300 psf, it is likely that the new project on the Handy Rd site will be able to sell at an average price of around $1,300 psf,' he said.

Lack of new office space pushes rents up

Lack of new office space pushes rents up

Demolitions for redevelopment to exceed scheduled supply in 2007: DTZ

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THE shortage of new office space is exerting increased pressure on rents, resulting in their rising by almost 30 per cent in some areas.

New benchmarks were also achieved in the Marina Centre, Orchard Road, River Valley/Singapore River, Novena and HarbourFront areas.

An analysis of market data in DTZ Debenham Tie Leung's quarterly property market report for Q1 2007 revealed that office space slated to be demolished for redevelopment will exceed the supply scheduled for completion in 2007.

In addition, average annual new supply in the next four years - 928,700 square feet - will fall short of the 1.7 million sq ft average annual take-up seen in the last 10 years.

DTZ noted that financial and business services sectors have continued to expand here.

DTZ executive director and regional head of consulting and research Ong Choon Fah added: 'The clustering of global businesses has resulted in across-the-board multiplier effects, for example, increased demand for supporting businesses.'

This has led to an increase in rents.

In Raffles Place, prime rents escalated by 28 per cent in Q1 2007 to average $10.90 per square foot (psf), higher than the previous peak of $10.50 psf in 1996.

The highest quarter-on-quarter increase of 29 per cent was achieved in the Marina Centre area, which has reached a historic high of $10.30 psf.

DTZ's report revealed that in microzones like Orchard Road and HarbourFront, rents similarly registered highs of $8 and $6.30 psf respectively.

DTZ also noted that higher rents caused some occupiers to relocate from the CBD to most cost-effective premises.

It also believes that more tenants will review workplace strategies or pre-commit earlier in future developments where possible, as rents are expected to top the highest peak in 1990 with prime rents in Raffles Place only 3 per cent shy of the $11.25 psf achieved 17 years ago.

Occupancies have also risen. DTZ highlighted increased occupancies at Samsung Hub in Raffles Place and at PSA Building in the Alexandra microzone in particular, where occupancies rose by 18 percentage points each to 98 per cent and 85 per cent.

Low Keng Huat profit down 76%

Low Keng Huat profit down 76%


PROPERTY firm Low Keng Huat (Singapore) yesterday reported a 76 per cent fall in net profit for the year ended Jan 31, 2007 - but only because there was no one-time gains.

Net profit came to $13.1 million, down from $54.6 million the previous year where there was one-off pre-tax gains of $68.3 million from the sale of assets.

The company said yesterday that if one-time gains were excluded, and notwithstanding a smaller asset base, net profit rose 90 per cent from $6.9 million previously.

An increase in revenue to $117.3 million from $106.2 million previously was largely due to higher contribution from construction jobs in progress. This more than offset the absence of contribution from four hotels sold in the second half of the year ended Dec 31, 2006.

Earnings per share came to 10.67 cents, down from 44.42 cents a year earlier.

The group said that the construction industry will remain competitive. It has a number of projects in hand in which it has an equity interest, and will seek new projects that are reasonably priced.

Its current development projects include a luxury condominium in Duchess Avenue to be launched in mid-2007 and a high-end service apartment development near the Kuala Lumpur City Centre to be launched later this year. These projects are expected to contribute to profit in the next few years.

The group is also looking to ride on the growing Malaysian economy and the Iskandar Development Region and is expanding its land portfolio in south Johor for future development.

The group has declared a first and final cash dividend of 2.5 cents per ordinary share less tax. It has also proposed a special cash dividend of 90 cents per ordinary share less tax.

Yesterday, it also proposed a 2-for-1 rights issue of up to 246.27 million new shares at an issue price of 36.9 cents. This represents a discount of 82 per cent to Monday's closing price of $2.05 per share on the Singapore Exchange.

The group has appointed UOB Asia the manager for the rights issue.

The issue is aimed at strengthening the group's capital base after payment of the special dividend that passes on Section 44A tax credits to shareholders.

Assuming the special dividend is used to subscribe for the rights shares, the rights issue will in effect transform this portion of retained profits into paid-up capital.

Wing Tai lining up 3 new launches

Wing Tai lining up 3 new launches

WING Tai Asia will roll out at least three new residential launches over the next few months including two on recently acquired collective sale sites.

Riverine by the Park: Set for April launch. On pricing, Wing Tai plans to take its cue from new projects nearby

Helios Residences on the former Phoenix Mansion site at Cairnhill Circle will be launched in May while the yet-to-be-named development on the former Belle Vue site at Oxley Walk will be launched in July.

The third development will be The Riverine by the Park on Kallang Road, to be launched in April.

Wing Tai deputy chairman Edmund Cheng would not reveal launch prices but said that it would take its 'cue' from new properties in the same vicinity.

Wing Tai bought Phoenix Mansion for $57.9 million or $716 per square foot per plot ratio (psf ppr) in July 2005 and Belle Vue for $227.3 million or $665.95 psf ppr three months later.

Although it has helped to boost the collective sales market here - with the $1,369 psf ppr price it paid for Ardmore Point in October last year, and more recently paying $1,650 psf ppr for Anderson 18 (with City Developments) - Wing Tai does feel that owners' price expectations for collective sale sites are getting quite high.

'They are asking for prices that are higher than what developers are selling,' said Mr Cheng. 'I think they have to be a bit realistic also,' he added.

Still, as Mr Cheng conceded, the sentiment in the market is, 'good'. 'The market is strong and economic growth is there. Singapore is transforming from a local to a global market, so of course your asset will have a global value,' he added.

On future acquisitions, Mr Cheng said: 'We will continue to see how the market develops. If the market continues to be strong, we will respond and consider if there is economic viability or not.'

Wing Tai does already have a sizeable stable of new products. In April 2006, it acquired a large development site with NTUC Choice Homes in Tanah Merah and Mr Cheng says that this development, which will have around 500-units, will also be launched this year.

The new development on the site of Newton Meadows, acquired in May 2006, could also be launched this year, he said.

In the 'super, super luxury' segment, Wing Tai is expected to launch the new developments at Ardmore Point and Anderson 18 early next year. These will be two separate developments, Mr Cheng said, quelling speculation that both sites could be amalgamated.

Other high-end products that Wing Tai has on the market include The Light @ Cairnhill and VisionCrest Residences. The former is almost fully sold while the latter is more than 50 per cent sold. For its high-end developments, foreigners make up about 50 per cent of the buyers, Mr Cheng revealed.

Wednesday, March 28, 2007

Survey: House moving costs up 225 percent in a decade by Elaine Frei

Survey: House moving costs up 225 percent in a decade by Elaine Frei
Filed under: Property, News
Survey: House moving costs up 225 percent in a decade

According to a new survey from Propertyfinder, it will cost you an average of 225 percent more to move house in the UK now than it did ten years ago. The exact amount will vary depending on where in the UK you have bought your new home, but on average the cost of moving house now stands at around £9,500, according to the website. The highest cost of moving comes in London, where it will cost around £16,242, a gain of 366 percent over a decade ago. The smallest hike in moving costs came in the North West, at 131 percent, for an average cost of £6,510.

The biggest cost in moving home comes from stamp duties, which have gone up to an average of £5,481, a rise of 527 percent in a decade. In London, the average stamp duty now comes to £11,766, and even in the North West the average stands at £2,033. A decade ago, the average for England and Wales was just £679, when the stamp duty was at 1 percent on properties sold for over £60,000, and many buyers did not have to pay at all, as the average house price in 1996 was at £64,441, compared to current averages that stand at over £200,000. Other costs include lawyers fees, agents fees, and removal costs.

Real estate sector lower in London by Elaine Frei

Real estate sector lower in London by Elaine Frei
Filed under: Investments, Economy, News

Real estate sector lower in London

London equities markets were lower on Monday, led down by the real estate sector. The FTSE 100 dropped 0.4 percent to 6,194.2 and the FTSE 250 was 0.3 percent lower to 11,156.

Despite the general losses, some sectors saw gains. Miners were up after a bad week last week. Anglo American was 1.6 percent higher to £23.68, helped by the possibility that it could sell some of its 42 percent stake in South African gold miner AngloGold. Xstrata added 2.2 percent to £23.14 after dropping 11 percent last week, while Lonmin gained 3.2 percent to £28.90.

In the energy sector, Cairn Energy was 3.3 percent higher to £17.25 on positive comments from Man Securities, which said that Cairn could see advances if the debut of Cairn India on the stock exchange in Mumbai on Tuesday is fairly successful.

Declines in the real estate sector were explained by nervousness among investors ahead of a meeting by the Bank of England, scheduled for Thursday, when the Bank will make its latest decision on interest rates. The sector was also hurt by a sector wide downgrade to “underweight” from HSBC. Liberty International dropped 1.5 percent to £13.45, Slough Estates fell 1.7 percent to 770p, and Hammerson was 2.5 percent lower to £14.97. British Land was down 2.9 percent to £16.04, while Land Securities dropped 3.2 percent to £22.10.

Real estate, homebuilders in global equities focus by Elaine Frei

Equities markets were mixed in the Asia Pacific region and were lower just about everywhere else on Monday as the real estate and house building sectors took hits in many areas, seemingly excluding on the UK house building sector, which benefited from mergers news.

In the Asia Pacific region, the Sydney Ordinaries added 0.54 percent to 5,965 and the Hang Seng index and Tokyo gained 0.37 percent to 19,765.85 but the Strait Times index in Singapore dropped 0.6 percent to 3,204.55, while in India the Sensex fell 1.22 percent to 12,124.32. Meanwhile in Tokyo, the Nikkei 225 added 0.2 percent to 17,521.96, while the Topix index held steady at 1,741.37.

In Europe, the FTSE Eurofirst 300 dropped 0.89 percent to 1,510.21, while the Xetra Dax fell 1.02 percent to 6,828.82 and the CAC-40, in Paris, was 1.04 percent lower to 5,576.30. The London equities markets were also lower, with the FTSE 100 dropping 0.75 percent to 6,291.9 and the FTSE 250 falling 0.4 percent to 11,655.6.

At midday in New York, Wall Street was behind, with the Dow Jones Industrial Average down 0.7 percent to 12,394.49, while the Nasdaq Composite fell 0.4 percent to 2,439.47 and the S&P 500 was 0.6 percent lower to 1,427.67.

Oil prices reached their highest point so far this year as tensions over the taking of 15 British naval personnel continued. Metals prices were also mostly higher on the session.