Wednesday, August 1, 2007

Sentosa Cove: Creating a home

Sentosa Cove: Creating a home
John Higginson


At times, when you look at what Sentosa Cove will offer residents and visitors, it seems to have everything a house owner could desire: designer properties, sea views, luxury yachts, a waterfront promenade, plus golf courses and beaches right next door. Everything, that is, apart from hornbills.

“When I first started working for Sentosa in 1995, there were hornbills flying around the island,” says Gurjit Singh, Group Director, Property, for Sentosa Leisure Group. “You won’t find them around here anymore. I used to sit in the old ferry terminal building, which has been pulled down, and every morning this hornbill would sit outside my window. That was a culture shock for me.”

At that time, the four-minute ferry ride to and from Sentosa was still operating, while the bridge had only been open for two years. More importantly for future residents on the island, though, plans were being finalised for the high-end waterfront residential enclave now starting to come to life, the likes of which had never been seen in the region.

“The Sentosa Cove masterplan was one of my first projects when I joined Sentosa Leisure Group,” Singh recalls. “We were completing reclamation, completing the infrastructure works, and were about to launch the project in 1997, before the economic crisis put things on hold.”

Singh reveals that the idea for Sentosa Cove, the first and only development in Singapore where foreigners can own landed property, came from the desire to recreate a waterfront residential area like Port Grimaud, just across from St Tropez in the south of France.

“As time went on, we brought in elements of more current concepts, like Sanctuary Cove and Hope Island in Australia. We then launched the project in 2003 and haven’t looked back.” Today, the first residents are living in the North Cove, albeit surrounded by a mass of construction work.

Since its first residential units went on sale, Sentosa Cove has been a success story. Developers have snapped up the available plots, buyers have snapped up their units, as well as individual bungalow plots, and the high prices have been a regular source of discussion and media coverage.

Now, however, halfway between its initial launch and slated completion dates, and with only a sixth of the total land area left to sell, Sentosa Cove is at a turning point in its development: switching from the selling of property to the delivery of promises.

Living the dream
“After the progress of Sentosa Cove to date, we want to try to look not so much at how the land values have gone up but more how to fulfil the promise we’ve given our residents, the promise of a resort lifestyle in Singapore. It has now become more important for us to fulfil that aspect,” Singh says.

“I hold this view because people are moving in. We have about 90 units with residents, families living there. That’s going to grow pretty fast, as the development in North Cove is fast and furious. Sentosa Cove is a home now, not a house or a property. Rising land values is the common story in Singapore right now, the flavour of the year, but Sentosa Cove will be around long beyond this. We’re about living on an island very close to the city, a resort home but yet a first home.”

The Berth by the Cove (40% occupied) and the The Berthside (90 units occupied), both by the Ho Bee Group, are the first two completed condominiums on Sentosa, while a few residents have also started moving into bungalows on Coral Island, also by Ho Bee. According to Nicholas Chua, Ho Bee’s Manager of Business Development and Marketing, residents are coping admirably with the situation.

“We’ve had a range of feedback from owners,” Chua explains. “Some say they’re willing to live with the trade-offs, while others say that because construction work is done during office hours and they’re out at work, they don’t really feel it. Others are very positive, and say they enjoy going back to a resort home.”

For Singh, easing the plight of the first residents is a major priority. “The early residents have had a challenge because they’ve come into a site with a fair amount of construction going on. For us, the challenge is to minimise their discomfort,” he says. “We’re constantly talking to them and they’ve come to the understanding that this is a bullet they have to bite, at the beginning at least. It’s going to take a while, but overall, our residents understand what’s going on and have accounted for it.”

Marine heart
As well as focusing on the livelihoods of residents and overseeing the ongoing construction, Sentosa Leisure Group is also placing an emphasis on creating the sense of community that such a large and new development requires. The soft opening of the stunning ONE┬║15 Marina Club, which sits at the heart of the development between North Cove and South Cove, has created a steady flow of visitors and activities, while the neighbouring Arrival Plaza currently houses Sentosa Cove’s Sales and Information Centre.

Sentosa Cove’s major appeal has always been its seafront location and the marina with its beautiful yachts. All combine to provide the essence of the increasingly popular waterfront lifestyle, a lifestyle publicized and popularised by the annual Boat Asia show that has been held at Sentosa Cove for the past four years.

“Sentosa Cove must have a soul, it must have places for people to come and soak up the boating, the seafront lifestyle, with people having a cup of coffee in a well appointed outlet or dinner overlooking the marina. We’re working towards that,” Singh says.

“The marina is the closest in Singapore to the city, so it holds a lot of appeal for boaters to come and bring their yacht and stay. The ability to stay in a hotel on the island, play golf on Sentosa and yet be close to town for business make it such an attraction to be at Sentosa Cove. As more residents move in, you’ll see an exponential growth in the boating lifestyle.”

City Developments Limited (CDL) holds the key to the rest of Sentosa Cove’s public central area, as developer of the site’s only commercial area, The Quayside Collection.

CDL, which is also developing The Oceanfront condo on the east side of the marina entrance, will develop two six-storey condos (223 units) in this new phase, while the public area will feature a 320-room Westin Hotel and a three-storey waterfront commercial site. It’s the latter, with its mix of F&B outlets, high-class shopping and entertainment areas fronting the waterfront promenade, that will act as the hub of the Sentosa Cove community.

“Many of our well travelled buyers envision that Sentosa Cove could become the ‘Monaco of Asia’,” says Chia Ngiang Hong, Group General Manager of CDL. “Because there’s limited housing available, just 2,000-plus units, the oceanfront lifestyle appeals to a different group of clients: high net worth individuals who desire the privacy of the island yet to be in proximity to the city.

“With the upcoming Integrated (Resort Resorts World) on Sentosa, and as Sentosa Cove develops into a niche, exclusive enclave, we foresee that it will soon become a highly valued piece of property that will place Singapore on the world real estate map.”

The Quayside Collection’s commercial area will complement the many other entertainment and leisure options springing up on and around Sentosa, which also include HarbourFront, VivoCity shopping mall, Singapore Cruise Centre, St James Power Station entertainment complex and Mount Faber.

“With the restructuring of the economy by the government, the strategies to transform the city into a strategic investment hub in Asia and the upcoming developments, Singapore is truly becoming an attractive place to live, work and play,” Chia adds.

Foreign appeal
Aside from Ho Bee and CDL, other developers active in Sentosa include Frasers Centrepoint Homes (The Azure), Lippo Group (The Lakefront Collection) and a joint venture between YTL Corporation and LP Worlds of Malaysia, which has established a new company, Genesis-Alliance, to oversee the Sentosa Cove projects.

The Malaysian group bought the Lakefront Collection of bungalows last September and in March won the tender for Sandy Island, the first of the two islands launched in the South Cove. Derek Wong, Managing Director of LP Worlds and also Genesis-Alliance, explained why Sentosa Cove was the first Singapore venture for the Malaysian developers.

“We chose Sentosa Cove due to several favourable factors, including the strong growth of Singapore as the most exciting gateway city for Asia-Pacific, the strengths of the Singapore property market, the growing interest from high net-worth foreigners to invest in Singapore, and the prestige of Sentosa Cove as one of the most prestigious residential addresses in Singapore,” Wong said.

“The favourable land ownership policies, the upcoming Resorts World and the marina lifestyle positioning offer us an ideal platform to create premium bespoke products for both local and foreign home-owners.”

Singapore’s appeal for foreign and local home buyers and developers have been well documented, while Sentosa Cove’s particular oceanfront assets put it very much in a class of its own. Arguably its biggest achievement has been to attract so many wealthy foreigners, many with the genuine intention of setting up home in the Lion City.

“About 60% of the investors on Sentosa are foreigners and the encouraging thing is that they’re mostly based in the Asian region,” Singh says. “In a theoretically rising property market you’ll see some element of speculation, but we’re not seeing that happening, especially for our bungalow properties where people are building to live.

“If the owners aren’t living here, they’re absentee landlords renting properties to people who are living and working in Singapore. We attract the right type of people, which is what makes Sentosa Cove a liveable residential destination.”

Currently, the only remaining land available in the South Cove is individual bungalow plots and three sites up for tender: the Beachfront Collection, Pearl Island and the condo plot on the west side of the marina entrance, facing The Oceanfront. The tenders for both of these should launch in the coming months,

“Selling is not our major priority now,” Singh says. “Now, we want to create the heart and soul of Sentosa Cove. We don’t just want to be known as a place that’s expensive.” Or as the island with no more hornbills.

RE funds and stocks for Vietnam

RE funds and stocks for Vietnam

The London-Headquartered Lion Capital and the Hong Kong-based Grandford International Promotions Ltd. on July 10 signed a business contract to co-establish funds mostly for real estate development and stock exchange.

The potential funds will have a designed capital of $100 million each and also help in State-owned enterprises (SOEs) equitisation and be in support of the private economic sector.

Lion Capital Vietnam Fund General Manager Bui Cong Giang said they are looking for projects on industrial parks in key economic zones, marts, new metropolis in Hanoi and HCM City,
bridges, hotels and resorts.

Lion Capital, which has made investment of 2 billion Euro in companies over Europe, received a licence for securities transaction in Vietnam since late 2006 while GrandFord has had long-time Asian experiences in property development, building over 500 bridges in the continent.

Investors interest heightens

Investors interest heightens

A considerable amount of property buyers and investors have returned back to the Thai market this month and more transactions are expected in the second half of the year, according to Aliwassa Pathnadabutr, Managing Director of the property consulting firm CB Richard Ellis.

"This will be true if the government can keep the situation without violence until the election day" she said.

"Foreigners who do not follow Thailand´s situation keep asking about the new election."

The overall outlook for the Thai property market has improved considerably, after the Constitution Tribunal’s decision to dissolve the Thai Rak Thai party in May. This was seen as a promising move to clear up the political instability plaguing Thailand.

A lack of confidence was still seen by many in Thailand, until graft investigators seized the assets of ousted Prime Minister Thaksin Shinawatra and authorities announced new elections as early as November would take place.

"Demand remained strong but decisions were delayed, so as soon as everything seemed to be clear, property buyers hurried to make decisions" Ms Aliwassa said.

"The most active market was the high-end residential sector. This segment is the company´s residential focus. Demand was pent up and had slowed down since last year.

Early-bird buyers now hurried to acquire units they had aimed at as they were afraid other buyers would grab this chance to get a good price."

The property developments that attracted most attention were those that were nearly completed. With high-end residential developments- Athenee Residence and The Infinity set for completion next year, the future looks bright.

Currently, resale prices have risen 25-35% compared to prices that were seen in the launch period. Now prices are quoted at more than BT100,000 per sqm, because very few re-sale units are being offered on the market.

Ms Aliwassa added that the number of foreign buyers of high-end residential property had doubled during the 10 years since the economic crisis in 1997. At the end of June, 42% of buyers making transactions via CBRE were foreigners- this was an increase by 20% 10 years ago.

Of the 4,000 high-end residential units the company sold during the past few years, foreigners acquired 1,680 units, worth over Bt20 billion. Unit sizes ranged one to three bedrooms with prices from seven to 25 million baht a unit.

Foreign buyers of Bangkok luxury residential units were based in Hong Kong, Singapore and the United States, while they came from Britain, America, Singapore and Australia.

"Koreans have emerged as big-lot buyers and property developers after the Korean government allowed their people to invest overseas since mid-2006" she said.

Their interest was in condominiums, hotels and golf courses, she said. CBRE is planning to open a new business unit to take care of Korean buyers.

Earlier this year CBRE opened a new business unit to meet the needs of Japanese customers after its branch in Japan subsequently submitted many inquiries. Japanese demand for both residential units and office space is substantial, so the company says it needs staff members who speak Japanese and understand its culture.

The company is also doing a market survey in Phuket looking at buyers from Europe, Korea, India, Dubai, Russia and Scandinavia. In September, it plans to open new branches in Samui and Pattaya.

Baht strengthens- real estate suffers

Baht strengthens- real estate suffers

The rapid increase in the US dollar and Thai baht exchange rate has largely been explained as weakness of the US dollar around the globe, and more recently by continued inflow of foreign capital to Thailand (particularly via the stock market). Thai baht strength has not only become a major concern for exporters, but also has implications for Thailand´s real estate sectors.

Mrs. Suphin Mechuchep, Managing Director of Jones Lang LaSalle Thailand, said "Whilst certain economists encourage the government to reduce interest rates further in effort to curb the baht strength, low interest rates would help property developers burdened with borrowings. They would also benefit the residential sectors as mortgage for home purchases will be less costly for buyers. However, we expect the impact of the strong Baht to be more negative than positive on the real estate sector."

With the recent poltitcal implications to plague Thailand its economy- domestic consumption, investment and government expenditure has slowed considerably. In response to this, the Thai economy has mostly been driven by exports. Conditions for the domestic factors are set to improve if poltical issues can be resolved over the medium term .However, the threat that the strong baht poses to the export sector is weakening the near term outlook. According to Jones Lang LaSalle Thailand, the industrial property sector is likely to be the sector most negatively impacted by the strengthening of the Thai baht.

Mr. Subyagorn Sansugtaweesub, Head of Industrial at Jones Lang LaSalle, said "Despite high capacity utilisation rates, manufacturers, particularly those in the export sector, appear unwilling to invest further at this time, in part due to concerns that further appreciation of the currency will damage their competitiveness in global markets."

"With a number of existing facilities having been reportedly shut down, manufacturers are actively looking at other locations in the region that offer more competitive resources. Besides the factories themselves, this could negatively impact other industrial real estate, such as warehouses and logistics centers," he added.

Manufacturing is not the only sector to suffer due to the stronger Thai baht- the residential and resort real estate secotr in Thailand, looks set to experience a downfall. Most of the investors looking at these propertities in Thailand are either residing in Thailand as a second home buyer or a retirement residence. As the domesitc currency as strengthened, these buyers are getting less for their dollar, which is deterring people from buying.

The same trend applies to real estate from a broader investment perspective. Though Thai properties still appear inexpensive relative to comparable product in many other markets around the Asian Pacific region, the prices have risen significantly when quoted in US dollars.

"If overseas investors decide to acquire real estate assets in Thailand now, they may have to pay approximately 8% more, comparing to the beginning of the year, due the baht appreciation," Mrs. Suphin said.

Jones Lang LaSalle is the world´s leading real estate money management and services firm, operating in over 430 cities worldwide.

Bangkok’s easing property market

Bangkok’s easing property market

Bangkok’s property market in the first half of 2007 may have showed considerable signs of a slow down, but the short-term outlook has improved due to Thailand’s political instabilities improving. According to real estate services and investment management firm Jones Lang LaSalle, the future of the property market in the second half of the year depends highly on the overall prospect of the economy.

Mrs. Suphin Mechuchep, Managing Director of Jones Lang LaSalle, says "The lack of consumer and investor confidence experienced over the past 18 months due to the political chaos continued to negatively affect the commercial property markets in the first half of 2007. Demand for office and retail space grew only marginally as businesses were reluctant to expand. In the second quarter of the year, sentiment looked up to a certain degree, largely due to a clearer political picture and the interim government’s stated commitment to holding general elections by the end of the year. However, Jones Lang LaSalle’s latest study shows leasing activity in the office and retail sectors remained generally quiet as businesses’ continued to take wait-and-see stances."

“Many observers are calling an oversupply in the condominium market. While our findings show the market has continued to enjoy strong demand, based on anecdotal evidence, a large proportion of condominium purchases in central Bangkok are made by investors buying and intending to put units up for rent. With competition in the leasing market further intensifying as more units are completed and offered for rent, demand from investors could wane in the near future,” says Mrs. Suphin.

Office market suppressed

Two new office projects- King Power Complex Building and Pipattanasin Tower, with 20,550 sqm of combined space were completed in Bangkok in the first half of 2007. Two office buildings with some 20,000 sqm of space were withdrawn from the market over the same period, leaving the total office space stock unchanged 7.4 million sqm. The average vacancy rate for all-grade office space across Bangkok contracted slightly to 13.2% while vacancies in grade A buildings in Central Business District (CBD) averaged 11.3%.

Leasing activity in Thailand appears to be relatively subdued, currently due to the lack of new businesses being developed and set up. Also existing corporations and businesses are not appearing to require further office space or make any changes.

Ms. Caroline Murphy, Head of Markets at Jones Lang LaSalle, says “Over the first half of 2007, the Bangkok office markets witnessed only a limited number of new leases. Leasing activity over the period was predominantly for renewals. Whilst net take-up of new office space across Bangkok in the first half of 2007 totalled only 66,000 sqm, Jones Lang LaSalle alone helped corporate secure lease renewals accounting for combined space of 31,000 sqm over the same period. This exemplifies the case well.”

"Realising a slow growth of new demand, landlords have become less aggressive in demanding higher rents on new leases so as to attract new tenants," says Ms. Caroline.

Jones Land LaSalle’s study indicates that the average rental for all-grade office space in Bangkok has continued to escalate for six consecutive years now. Rates have seen such a dramatic growth from Bt262 per sqm a month to its present level of Bt403 per sqm per month. However, rents remained flat for the first time since 2001, during the first half of 2007. In the Grade- A market in CBD, the average rental rose only slightly by 2.5% over the same period to Bt666 per sqm per month.

Bangkok, in the second half of 2007 welcomed two new offices with a combined space of 101,000 sqm on to the market. This included- Athenee Tower (40,000 sqm) on Wireless Road off Sukhumvit and Cyber World (61,000 sqm) onto Ratchadapisek Road. Both of the projects were developed by T.C.C. Group and Jones Lang LaSalle were appointed leasing agents for both projects.

Ms Murphy comments "With over 100,000 sqm of new space coming on in stream in the Bangkok office market during the second half of 2007, we may see vacancies rise by year end, should demand continue to grow at the same pace as over the past six months. However, with political uncertainty clearing up and economists expecting the Thai economy to improve in the second half of the year, demand for office space may pick up in the second half of the year."

The completion of nearly 200,000 sqm of office space is set for 2008. "Though the Thai economy is expected to see some improvement next year following the general elections, statistics show that the average take-up rate for office space in Bangkok in a ´normal´ situation is 250,000 sqm per annum, it remains questionable whether demand in 2008 will reach that level. This will depend mainly on the economic growth that Thailand will achieve next year," said Ms. Murphy.

Close eye to be kept on the condo market

Concerns are growing regarding the condo sector of the market in Bangkok, despite the fact the bubble could soon burst, findings from Jones Lang LaSalle’s study show that the market for new projects remains robust. Over the past six months growth has continued and new supply and demand is keeping the market flourishing.

According to a recent Jones Lang LaSalle’s study, the number of condominium units in central Bangkok now totals 54,280, including 3,630 units completed over the past six months. More than 20,000 units are currently under construction, with twenty new projects comprising 5,420 units launched in the first half of 2007.

Mr. Dan Tantisunthorn, Head of Research at Jones Lang LaSalle, says "In spite of growing concerns that condominiums are overbuilt in Bangkok, our study shows that over 97% of the units in completed projects have already been sold. Among projects that are currently under construction or being marketed, the sales rate still appears healthy at over 75% of the units offered."

Over the past six months, Jones Lang LaSalle’ study indicates that over 6,000 condo’s were sold in central areas in Bangkok over the past six months. The projects mainly were mainly located in the CBD areas, with close proximity to the BTS or MRT stations. Most of these units were the studio and one-bedroom types with prices ranging between Bt1.4- Bt2.0 million, targeted at growing demand from a new generation of young professionals who have limited budgets but prefer living in a condominium in or with mass-transit access to the city centre.

"In spite of certain indications that the condominium sector is booming, there are a number of factors which lead us to believe the market is nearing a peak," says Mr. Dan "Asking prices are rising at a much slower rate compared with previous years and existing supply is remaining idle for longer periods of time," he adds.

Statistics from Jones Lang LaSalle show that average asking prices of condominiums in central Bangkok saw the biggest jumps in 2003 and 2004, of almost 30%. Price growth slowed to an average of 10% per annum in 2005 and 2006. In the first half of 2007, prices grew only slightly, by 1.5% on average to the present average level of 81,000 baht/sqm.

"In addition, investors buying units with the intention to put them up for rent represent a large source of demand for condominiums in central Bangkok. As construction of more projects is completed, competition in the leasing market will further intensify. Many investors may achieve returns lower than expected as rents are being pressured downwards as more supply arrives on the market. As a result, potential condominium investors may take a more rational approach to purchasing. As such, we believe that the success of future projects will depend on the ability to meet end user needs, rather than those of investors," Mr Dan explains.

Competition strengthens in residential leasing market

Bangkok’s residential leasing market in the central business areas has remained active over the past six months with a continued influx of expatriates into Thailand. However, competition has strengthen considerably as new condo’s are completed and put onto the market.

Whilst large units, including penthouses, with four bedrooms are in high demand among from the families of senior management, smaller units are facing fierce competition due to fast growth of new supply.

As a result, condominium rents in central Bangkok have seen a remarkable drop compared to 2006. For example, a two bedroom type that was previously offered for rent at an average rate of Bt75,000 per month, is now achieving lower rents ranging between Bt55,000 and Bt65,000 per month, while the average monthly rent for smaller units of 70-80 sqm fell from Bt55,000 in 2006 to a range between Bt40,000 and Bt45,000.

Mrs. Daonum Verapong, Head of Residential Agency at Jones Lang LaSalle, said "Strong competition in the condominium rental market is pushing rents downwards. This is mainly due to continued amount of new condominium supply entering the market. Though demand remains strong, its growth cannot keep pace with new supply. On the other hand, large units with four bedrooms continue to enjoy strong rents averaging 180,000 baht per month as supply is limited. This trend will continue until the rental market reaches a new equilibrium."

There is a growing trend of detached housing developments entering the Bangkok residential leasing market. Several small housing estates in prime residential locations have recently been developed targeted at expats looking to rent. These projects were typically family-run and have been leasing well. This year, we have seen more housing developments by well-known developers entering this particular segment of the leasing market. In the most recent case, Jones Lang LaSalle was appointed by Property Perfect Plc to lease 10 luxury houses at Perfect Masterpiece Ekamai-Ramindra.

Outlook for the future

Economic growth within Bangkok is seriously going to affect the property market’s outlook over the next year. If the Thai economy continues to improve during the remainder of 2007 as expected by many given a more stable political situation, the Bangkok property will benefit. Improved consumer and investor confidence will encourage demand in both commercial and residential property sectors.

Bangkok Office Rents Flat While Hong Kong And Singapore Hit Record Highs

Bangkok Office Rents Flat While Hong Kong And Singapore Hit Record Highs

With the average rent for prime office space in the central business district of Bangkok remaining just slightly more than THB740 per square meter (psm) a month (US$22), office rentals in Bangkok are some of the cheapest in the region.

Other Asian cities are charging well over THB2,000 psm (US$60). International Financial Center Tower 2 (IFC Tower 2), the highest building in Hong Kong, has attained a record rental of about THB7,400 psm (US$220). Other Asian cities such as Singapore are charging an average of about THB2,000 psm (US$60), while offices in Ho Chi Minh City are charging almost twice that of Bangkok at about THB1,480 psm (US$44). Average grade A office rents in Tokyo are over THB4,500 psm, making them the most expensive office space in Asia.

The slowing economy at present is also pushing rentals in Bangkok even lower with the average rent for prime office in the second quarter of 2007 dropping for the first time since 2000 on a quarter-on-quarter basis. CB Richard Ellis projects that the downward pressure on rental rates could further increase at the end of the year when new grade A supply is coming out into the market.

The situation, however, will not last for long. "We believe that once the business confidence is restored, then new demand will exceed increased supply. The market has had close to 300,000 sq.m. of new take up annually since 2000, only falling in 2006 and 2007. There is 520,000 sq.m. of new supply from 2007-2009, or about 173,000 sq.m. a year. Demand could exceed supply and rents will start to grow again," said Mr. Nithipat Tongpun, director and head of Office and Retail Services at CB Richard Ellis Thailand.

Demand has fallen because of a weak domestic economy and also because of uncertainty of the proposed amendments to the Foreign Business Act controlling foreign investment in service companies. Many overseas companies have delayed expansion and there has been limited new foreign investment in the service sector. This has resulted in occupied offices falling dramatically. New net take up of office space fell by more than 30% in the first quarter on a year-on-year basis. This was the lowest quarterly take up since 2000.

Grade A office rentals in Bangkok had been rising with rent increasing approximately 10% a year since 2000. The second quarter of 2007 is the first time since the millennium that prime rentals actually dropped on a quarterly basis.

For the overall office market situation, CB Richard Ellis saw that weakening demand continued to put pressure on rentals in the first half of this year. Although the second quarter´s new take up of prime office space in Bangkok improved from Q1 2007, it was slightly lower than the same period last year. There were more inquiries for office space, but most of them were from small tenants, indicating that large expansion plans were still put on hold. Prime office supply continued to be limited in the downtown area. The total supply of prime office space in Bangkok remained unchanged, leading to the continued drop in the vacancy rate even with a small amount of new take up. The average occupancy rate for prime office space, however, was still high at 93% in Q2 2007.

"The office market is not likely to improve in the near term if the current political and economic uncertainties continue well into the second half of 2007. A rebound in take-up will be crucial to this year´s performance. The office market looks set to register a lower level of whole-year new take-up compared to last year´s 200,000 sq.m. of new take up. The situation could reverse if the demand comes back. Market sentiment seemed to improve slightly towards the end of the second quarter with public and private consumption increases and we hope this will stimulate the slowing economy and the office market," said Nithipat Tongpun.

Samui welcomes the big brands

Samui welcomes the big brands
By Jim Clarke


Before the turn of the millennium, the biggest brand on Koh Samui was probably Bob Marley, but massive economic growth and major developments in tourism have led to a significant increase in global interest and investment. As is often the case, it was the retail sector that led the brand invasion with golden arches, superstores and high street pharmaceuticals taking over from street stalls and family-run corner shops. More recently, the hospitality sector followed suit with mainstream hotel chains and now, largely on the back of big name resorts with mixed use strategies, the island’s property industry has expanded to include international, corporate agencies and developers.

In the coming months, well known firms such as CB Richard Ellis, Savills and Raimon Land will all begin to exert their influence on Samui, either representing or developing projects that will eventually transform the island’s residential landscape. The advent of “Brand Samui” may mark the beginning of a new phase in the island’s evolution and could stimulate the recovery that many feel is now desperately needed.

“What’s coming online now around Samui is very different from before,” says Robert Collins, managing director of Savills, Thailand. “Many of the new projects under way will prove even more significant for the island than the construction of new golf courses and the arrival of new airlines. Resort brands offer an international seal of approval.”

Having begun sales and marketing for two major new villa/condominium projects on Samui - Infinity and Peregrina Bay - with international sporting celebrities already on the client list, Savills will also represent the new Conrad Koh Samui Residence, which launches in Hong Kong and Bangkok this October. Robert Collins says that despite a difficult 12 months for the island, his firm is now confident that Samui is showing real signs of a sustainable recovery. “Our involvement has come on the back of client´s needs,” he said.

“Sophisticated international investors demand quality representation on the ground and, more importantly, they recognize the need for pro-active marketing overseas. Larger brands will begin to pull investors away from non-branded products and experienced, regional sales teams like ours offer a more co-ordinated marketing and PR strategy to target suitable clients. Particularly at the higher end.”

This shift will also mean a more stable, reliable property market on Samui, with high value completed properties slowly taking over from off-plan sales, and professional management contracts providing buyers with guaranteed yields. Companies like Dhevatara Properties, with three luxury developments in separate locations, all constructed without the need for pre-sales, set a standard for others to follow. As a result of such projects, the island’s reputation for high-risk, high return investments may soon change.

“Many of the local agents that focused on land sales have been running on pilot lights for several months now,” says Collins. “These firms are likely to move into re-sales as the bigger brands take over.”

Another major company that’s keen to capitalize on the island’s new found global status is CB Richard Ellis, a firm that boasts over 350 offices in 58 countries worldwide and plans to add to this in September on Samui. Like Savills, CBRE will arrive with a branded product to represent, namely, W Samui, an integrated development with a hotel component and “W Residences,” which will offer a limited number of exclusive villas for sale, also to be managed under the W Hotel brand.

“What’s exciting on Samui is that, until now, there have been no real brand investments.” says Charlotte Filleul, General Manager of Resort Properties. “The island is going through the same stages seen in most resort destinations, moving from a straight tourism market to a retirement and residential location. W Residences, and other products like it will improve quality through competition.”

Despite its global reach, CBRE still sees the initial client base for Samui projects coming from regional destinations like Hong Kong and Singapore. However, Filleul believes the market is expanding rapidly to attract other international investors from places like Europe and the US, and that these buyers will demand high quality services. “CBRE has the experience and resources to advise people on how to negotiate unfamiliar territory,” she said. “This will be a key factor as stronger marketing draws more investors from outside Asia.”

Obviously, in the current political climate, issues such as ownership and legal structures are particularly important when investing in Thailand and the larger agencies have the experience and contacts to keep in touch with the situation and advise their clients accordingly. “The arrival of established brands can only create better services,” said Filleul. “There’s still plenty of room for improvement on Samui and even the local agents appreciate the need for a more international approach.”

But it’s not only property agents that are keen to take advantage of Samui’s enduring appeal. Major developers are also looking to get a foothold in the island’s predicted recovery. Individual investors spearheaded the initial boom, which is one reason why Samui now enjoys unique opportunities for high-end villa rentals, but there were very few large-scale developers prepared to risk anything beyond small, gated communities and those that did so worked exclusively off-plan.
The above-mentioned Dhevatara Properties was the first company to challenge this approach, marketing completed properties direct to clients in the West. Now, other large firms like Raimon Land, one of Thailand’s biggest luxury residential property developers, are also planning to invest on the island. “Samui is a niche market that offers something different,” says Henri Young, the firm’s marketing manager. “We have two large sites currently under due diligence with a view to developing branded condominium projects. There are very few condo developments on the island at present, and local developers are less keen than before to build themselves, so now is a good time for us to invest.”

Despite a general shift toward the south of the island for many of the newer high-end villa projects, Raimon Land plan to build their projects closer to the airport and main tourist centres. Young believes that although peace and tranquility is an important factor for buyers, most people also appreciate proximity to major attractions and services. “The north coast offers a good combination of relative seclusion and easy access to the best restaurants, shopping and nightlife,” he said. “We are also looking at the area around Lamai Beach. The south of the island is certainly attractive, but this suits longer term projects.”

Whatever the location, experts like Young believe it is essential to market Samui’s uniqueness internationally and also to match that with products that are distinct from those found in other destinations. Like many of his counterparts, he is not concerned by recent bad press and sees events like the popular Samui Regatta and plans for a second golf course as a positive indication that the island will attract increasingly high net worth clients. Although it is unlikely that developers like Raimon Land will treat the island as a primary market, their involvement will certainly mean a further increase in branded, quality developments.

So what does this mean for the island’s existing property companies? The more established firms will certainly look to become involved in the brand revolution, while others may switch to focus more on resale and rental services. John Birt heads up Samui Villas and Homes, perhaps the island’s most established sales, development and villa rental agency, and one of the few Samui companies that is actually expanding beyond the island’s shores to Phuket. He worked with most of the big name developers and agents before setting up shop on the island, and does not see their arrival as a threat. “Brands will obviously benefit Samui in terms of global reputation,” he said, “but beyond specific projects, I’m not sure there’s enough product to justify large agencies establishing themselves here. Resort properties offer comfort for investors, but it should also be remembered that in Thailand, management and service contracts are only valid as long as the owners remain the same. Several large resort brands have changed hands in recent years, this is certainly worth bearing in mind.”

Such concerns have to be addressed if Koh Samui is to shake off its reputation as a high-risk investment option and become a global brand destination. Corporate investment will certainly add value as the island bids to become a branded residential destination. However, practical considerations such as infrastructure improvements and legal clarity will also come under increasing scrutiny as the major players move in to stake their claim.

Foreign banks flock to Vietnam

Foreign banks flock to Vietnam

The fast-growing economy, booming financial and stock markets and the issuance of a number of government policies designed to open up the market are regarded as an ideal context for foreign banks to compete in Vietnam´s market.

HSBC and the Standard Chartered Bank are the two leading foreign banks providing retail banking services including asset management, cash transaction management for small and medium sized enterprises and individual customers.

The two banks are planning to introduce other products such as consumer loans, credit cards, and loans with secured assets to foreign individual customers who are living in Vietnam and Vietnamese high-earners.

The government raising the cap on foreign holdings in a commercial bank from 10% to 15% and possibly 20% if the prime minister approves is another good reason for foreign banks to be more excited about a new field of competition. Still, HSBC is the pioneer, boosting its stake holding in Vietnam´s Techcombank to 15%, bringing HSBC´s total holding value in the domestic bank to US$33.7 million.

"After receiving the approval of the State Bank of Vietnam to increase the holding rate, HSBC will ask for the government´s permission to boost its share holdings in Techcombank to 20% with the aim of expanding its operation in one of the fast-growing economies in Asia," said Vincent Cheng HSBC president.

Along with this move, under Vietnam´s WTO commitments in the banking industry, Vietnam allowed foreign banks to set up 100% foreign-owned subsidiary banks in Vietnam from April 1, 2007. This is also the new motivation for foreign banks to facilitate business plans in Vietnam. There are currently a number of foreign banks that have expressed their interest in establishing 100% foreign-owned banks in Vietnam, of which HSBC is one and promoted this plan earliest.

According to Kieu Huu Dung, head of the SBV´s credit institution and bank department, once operating under the form of 100% foreign banks, these banks will be regarded as Vietnamese entities. With prominent advantages in terms of technology, capital and administration, foreign banks will be able to provide services with higher quality and better risk management. These strengths of foreign banks will also create challenges for domestic banks.

Immediately after April 1, 2007, many local banks prepared for new competition by campaigning for the expansion of the branch network, an increase in chartered capital, renewal of technology and cooperation with strategic partners. A series of domestic banks such as Sacombank, VIBank, HDBank and Agribank have promoted the expansion of branches to take advantage of their customer network nationwide instead of just focusing on urban centres.

The central bank also is developing some state-run banks in line with the model of multifunctional financial group including of banking services, insurance, investment, securities brokering, asset management to improve competitiveness while still meeting all development requirements of the economy.

Residential luxury An in-depth look at the current status of Shanghai high-end property market.

Residential luxury An in-depth look at the current status of Shanghai high-end property market.
by Colliers InternationalAdvertisement

An in-depth look at the current status of Shanghai high-end property market:

Economic Review
The latest statistical data shows that the Shanghai macro economy continues to keep fast and stable growth with its further structural optimisation. 2006 witnessed Gross Domestic Product (GDP) grow by 12%, 0.9 percentage points higher than 2005, and continuous double-digit growth for 15
consecutive years. On the other hand, the Consumer Price Index (CPI) rose by 1.2% YoY in 2006, 0.2 percentage points higher than 2005, which shows a modest inflation level. RMB loan balances of financial institutions in Shanghai rose by 11.5% in 2006 and the growth rate declined slightly over 2005, reflecting the control effect of credit expansion and over-liquidity. The Central Bank raised the one-year benchmark interest rate on loan by 0.27 percentage points, from 6.12% to 6.39% following the similar move in August 2006, which, together with the recent improvement of reserve
margins, are enhancing the effect of constrictive monetary policy and add the capital cost for both suppliers and demanders in residential market.

Under the impact of the enhancing real estate market control, the investment on residential development as well as residential sales are still stuck in a downturn. 2006 saw the total investment in the Shanghai residential market reach RMB83.56 billion, a drop of 9.3% YoY and the first drop for the past eight years. Residential sales reached RMB184.104 billion in 2006, down by 3.4% YoY, but a more modest decline than 2005. We expect the downturn situation will remain for
the short term.

2006 saw the residential price of the Shanghai market have modest stable growth, at 5.1% YoY. At the same time, the growth of per capita income continued to surpass that of residential prices, rising by 10.8% YoY. The per capita income is expected to grow fast and stably in the future, and thus will gradually absorb the effect of market overheating in previous years.

The actual Foreign Direct Investment (FDI) in Shanghai reached US$7.107 billon in 2006, rising by 3.8% YoY and a 0.9 percentage points’ fall in growth over 2005. On the other hand, the actual FDI in the tertiary industries rose by 26.2% YoY, accounting for 62.14% of the total, an 11 percentage
points rise over 2005. Therefore it is expected that the number of expatriates in Shanghai will keep growing, and still be the fundamental source of demand in the high-end luxury residential leasing market.

Market Conditions

Supply, Demand & Vacancy
Q1 2007 witnessed about 492 units launched into the market, all of which are serviced apartments. The most new supply are from two projects, Shama Luxe at Xintiandi in Luwan and The Crescent in Pudong, which opened up recently after being purchased and several months’ renovation by Gateway and Morgan Stanley respectively in 2006. There are no new luxury apartments and luxury villas coming into the market in this quarter. The net absorption in the luxury residential leasing market reached to 260 units and the vacancy rate rose by 0.7 percentage points QoQ and 3.9 percentage points YoY, to 17.97%.

From a sub-sector and district analysis, with the end of Christmas and the Lunar New Year holiday as well as the absorbing of luxury apartments launched last quarter, there are 231 units of luxury
apartments newly taken up, as a result, the vacancy rate dropped by 2.59 percentage points to 16.51%. Jingan saw the highest vacancy rate for luxury apartments at 22.95%, a drop of 7.7 percentage points YoY. However there are still plenty of vacant units from new projects released in Q4 2006. Changning saw the lowest vacancy rate at 8.09%.

The vacancy rate of the serviced apartment sector rose by 7.21 percentage points QoQ, at 23.46% in Q1 since many vacant units from new supply projects will take time to be absorbed. However, some mature markets without new supply, such as Changning and Xuhui just suffered from about one percentage point of vacancy rate change. Pudong had the highest vacancy rate for the serviced apartment sector at 50.33% as a result of newly-released leasable units from The Crescent this quarter. Xuhui saw the lowest vacancy rate at 9.61%.

Although there are no new supply projects in the luxury villa market this quarter, the outflow of some customers drove the vacancy rate to rise by 0.9 percentage points QoQ, at 13.96%. Furthermore, Pudong witnessed the highest at 18.4%, a 5.8 percentage points rise YoY; Minhang witnessed the lowest vacancy rate for villas, at 6.79%.

Rent Analysis
As a result of the slight drop of vacancy rate in the luxury apartment market, the average rent kept stable, just rising by 1.2% QoQ and levelled off with the same time last year, at US$ 17.52 per sq m per month. Additionally, Luwan saw the highest rent of luxury apartments at US$23.68 per sq m per month, while Huangpu saw the lowest at US$13.5 per sq m per month, but had the fastest YoY growth rate at 7.56%. However, Jingan continued to suffer from the sharpest YoY rental drop following last quarter, at 33.65% as a result of low rental units launched last quarter.

Due to some new low rental projects and weak season for short term leasing business, Q1 saw the average rent of the serviced apartment sector drop by 5.1% QoQ, to US$32.24 per sq m per month. However, the long term rental trend of serviced apartments keeps upward, rising by 1.2% YoY. Huangpu had the highest average rent of serviced apartments at US$45.03 per sq m per month, while Hongkou had the lowest at US$20.61 per sq m per month. Xuhui saw the highest YoY
growth rate of 13.12%. However, Changning suffered from the sharpest drop, by 8.77% YoY.

The slight rise of the vacancy rate of the luxury villa market drove the average rent to decline by 3% QoQ, at US$20.74 per sq m per month, but it rose by 1.6% YoY. Changning was listed top in average rent of villas, at US$21.92 per sq m per month, whiles Minhang was listed the lowest at US$18.17 per sq m. Pudong witnessed the highest growth rate at 12.8% YoY, followed by Minhang at 12.7% YoY, Changning saw the sharpest decline at 5.3%YoY.

The average rent of the overall residential leasing market reached US$ 20.89 per sq m per month, levelling off with last quarter and down by 1.65% YoY.

Capital Value & Rental Yield Analysis
The sales research on luxury residential shows that the policies are still affecting the market and the capital value of luxury residential in Q1 fell by 1.95% QoQ and 5.3% YoY, to US$3,831 per sq m. Furthermore, the capital values of luxury apartments, serviced apartments and luxury villas reached US$3,820 per sq m, US$4,447 per sq m and US$3,510 per sq m respectively.

The serviced apartment market has been attracting more attention from overseas investors when
Shanghai’s global business ties gets closer and foreign tourism booms. After several purchase cases by foreign investors last year, Morgan Stanley acquired 219 units from Novel City in Xujiahui CBD for US$67 million this quarter, which will be leased to the market as serviced apartments in 2007.

According to survey data from Colliers, the gross yield of luxury residential rose slightly by 0.1 percent points QoQ, at 6.5%. Furthermore, the gross yield of luxury apartments rose by 0.2 percentage points, at 5.5%, and that of luxury villas fell by 0.31 percent points QoQ to 7.09%, lastly that of serviced apartments reached 8.7%.

Market Outlook
2007 will see a stable Shanghai macro economic growth on the basis of its performance in 2006. FDI growth, however, will continue to slow down, but that of the tertiary industries will keep steady. Under this situation, the number of expatriates in Shanghai will continue to grow stably.

2007 will witness more new supply than 2006, totalling 3,438 units. The new supply of luxury apartments will rise slightly, totalling 1,974 units. But serviced apartments and luxury villas will contribute more new supply than 2006, totalling 989 units and 475 units respectively.

The vacancy rate of luxury apartments is expected to rise in 2007, and it will influence the average rent to drop by 13%-14% YoY. As a result of enhancement relative to the hotel business, both the rent and the vacancy rate of the serviced apartment market will rise. The luxury villa market will have 3-4 percentage points of vacancy rate rise due to more new supply in 2007, but even then the average rent will rise by 2%-3%.

The series of policies in 2006 and early this year suggest that the macro controlling climate will
surround the luxury residential market this year. The capital value will keep on declining by about 6% YoY.

Asia Properties rides property boom

Asia Properties rides property boom

"API is pleased to be participating in the Asian property investment boom that is currently underway," said Asia Properties CEO Daniel McKinney. On July 18, 2007 Ryan Chittum, writing in The Wall Street Journal, quoted Jones Lang LaSalle, a Chicago based global commercial real estate firm, and stated that investment in the Asia-Pacific region was up 15% to US$55 billion in the first six months of this year from US$48 billion in the year-earlier period. With growth in the region strong and interest rates low, Jones Lang LaSalle sees investment interest in Asian properties remaining strong in the year´s second half. As a result, McKinney added: "Asia Properties remains bullish and plans an aggressive acquisition program in Philippines resort sites over the next 6-12 months."

API is currently negotiating to acquire the majority of a tropical island and create a new tourist destination with four, five and six star resorts with major international hotel brands managing the resorts. Our planned acquisition in the Philippines, if successful, will be the largest investment and single most important transaction in the history of API.

Dubai, boom or bust?

Dubai, boom or bust?
31 July 2007

Peter Penhall, CEO of Gowealthy Holdings gives a run down of the Dubai property market and how it compares to the rest of the world.

Mature international markets are going through the natural mode of settling into corrections. To take examples of current housing markets, the US is seeing prices falling for the first time in 11 years with around 4.2 million unsold homes at the end of April. The annualised rate of second hand home sales is also falling by 2.6 per cent to 5.99 million in April, compared to the UK, Ireland, Spain, Denmark, the Netherlands and Australia, where recent price increases have been the largest. Even relatively new to fame, markets such as India are experiencing a cooling in the real estate prices. In any investment market prices eventually revert to a long term average. Home prices are cheaper in absolute and relative terms in Dubai and there is still some way to go, before the notion of a ‘bubble’ can be stamped on.

A rough parallel could be drawn between the Dubai freehold property market and Singapore. In Singapore rental prices are similar to Dubai, but property purchase prices are double. Whether that is going to happen in Dubai, or will Dubai rentals collapse due to oversupply, sending property prices lower is up for argument. It may be a little premature to make a definitive judgment on this critical point. However, we can draw some conclusions.

A quick view of the global property markets in recent years throws up certain consistencies such as static rentals and rising property prices. This can be attributed to falling interest rates, which have increased the real value of rentals and therefore property prices. The Dubai property market has yet to adjust to this, perhaps because the mortgage market is still relatively underdeveloped, and most Dubai property is still bought with cash.

As and when Dubai banks further develop their mortgage lending portfolios to something nearer to normal world levels, a possible expansion of local credit may push up property prices, unless the supply Vs demand equation changes.

The current rental yields, for example are quite high by global standards, at 7% to 10%, which still reflects the fact that the Dubai property market is still relatively under-matured. A longer term return to normalcy would mean either a drop in rentals or a hike in property prices. There are documented studies in the market that show that the Dubai real estate market will first undergo some kind of a correction downwards in capital and rental prices due to oversupply in 2008-9 (EFG – Hermes).

One thing is certain, in the long run, Dubai rental yields will be more in line with international yield patterns. Also, as mentioned earlier, the rapidly maturing mortgage market will see home prices being driven up and result in a drop in rental yields.

‘Will demand match supply?’ This is the million dollar question, and there is no doubt that in the medium-term, demand will sustain at current levels at least. The Dubai Statistic Department figures point to a Dubai population growth of just over 100,000 in 2006, with roughly 50% having a mid-end to high-end home owning potential. With a widely accepted practice of 2.5 people per unit, this would have meant a requirement of around 20,000 units of accommodation.

A shortfall in deliveries by around 10,000 to 15,000 units as per industry learnings, means that there is further pent-up demand this year in addition to the 2007 demand that has arisen due to normal population growth itself. If we follow the same logic, then a demand of around 30,000 to 35,000 units come into play this year which is not too far away from the deliveries that are being predicted for 2007. With many property owners having bought property as second homes and others having the luxury of holding on to their property in case of lower-than-expected rental yields, there will be unoccupied spaces contributing to lower and slower supply growth.

However, if the 139,000 units that the EFG Hermes report counted for scheduled delivery in 2008 do actually enter the market next year, the market will clearly be quickly saturated, and the correction predicted by the report and Standard Chartered Bank among others will be a reality by then.

The buyer demographic is seeing a definitive shift from the typical buy-to-let investor to the end-user segment. The recent spate of property launches and associated mortgage lending facilities and patterns are also a further indicator of this fact and have added to the comfort of the owner-occupier. With rentals and associated expenses in Dubai still showing no signs of cooling down, an increasing number of mid-end home buyers are entering into the market with increasing frequency.

For further information on the Dubai property market and the array of properties on offer visit

Property loans rising in boom market

Property loans rising in boom market
Posted by propertyforesight in Uncategorized. add a comment

They make up 47% of total loans by commercial banks at end-June


(SINGAPORE) As the property boom chugs full steam ahead, banks’ exposure to the sector has been steadily widening and their risks may be deepening, especially as a result of the prevalence of deferred payment schemes.

As at end-June, housing and bridging loans as well as loans to the building and construction sector made up nearly half - a high of 47 per cent - of the more than $200 billion loan portfolio of commercial banks here, according to preliminary figures obtained from the Monetary Authority of Singapore (MAS).

This has been a steady increase from the 33 per cent from about a decade ago (end-1996) around the height of the last property boom, and the 42.5 per cent at the start of the current property boom at the end of 2002.

In absolute terms, the housing and bridging loans were worth some $64 billion as at end-June, compared to about $63 billion six months ago.

Loans to the building and construction sector stood at about $30 billion as at end-June, an increase of 21 per cent from a year ago, said MAS.

Not surprisingly, the run-up in property prices has led to an increase in housing and bridging loans (the consumer loans), but this rise has slowed dramatically from the early years of the current boom.

Right after the current property boom started, housing and bridging loans surged 17 per cent between end-2002 and end-2003 to reach $52.2 billion. Since then, the increase has slowed to about 2 per cent for the first six months of the year and from end-2005 to the end of last year, the value of housing and bridging loans increased by only 2.2 per cent.

Housing and bridging loans’ share of the total loans of commercial banks - while still the biggest - has also declined over the last couple of years. Their share of total loans, after building up over the years to a peak of 33.8 per cent at end-2005 has dipped over the last one-and-a-half years to about 32 per cent as at end-June this year.

What is perhaps more significant for the financial sector is that the loans to the building and construction sectors including loans made to developers have been expanding much faster over the past few years and have been taking up a bigger share of total loans extended by banks.

Loans to developers have an added element of risk because of the deferred payment scheme which allows home buyers to pay only a fraction of the property’s price upfront.

Loans to the building and construction industry, after contracting between 2004 to end-2005 as the construction industry went through the doldrums, surged 14.4 per cent to $26.3 billion as at end-2006. The further growth to $30 billion as at end-June this year represents a growth of 21 per cent from end-June 2006.

‘As MAS has previously said, the use of the deferred payment scheme by property developers introduces additional risks to the developers, and to the banks which finance these developers, because property purchasers under this scheme are not subject to credit checks by developers.

‘This is unlike property purchasers who apply for housing loans and are subject to credit assessment by banks. MAS expects banks to exercise prudence in their financing to the property developers and be fully cognizant of the additional risks from the use of deferred payment schemes,’ a spokesperson from MAS told BT.

Last week, during the release of MAS’ annual report, Heng Swee Keat, the authority’s managing director had said that MAS is keeping a close eye on developments in the property boom. As Singapore’s central bank and the regulator of the financial industry, MAS’s concerns with regard to the property boom are how rising prices impact inflation and the risks posed to the stability of the financial system.

Mr Heng had noted that the banking sector’s exposure to the property and construction sectors is ’significant’ and that housing and related loans have grown over the last few quarters. ‘So for both of these reasons, we will be watching developments in the market very carefully.’

The Urban Redevelopment Authority (URA) price index for private homes, released on Friday, has risen 13.5 per cent for the first half of this year.

URA figures also revealed that developers sold 9,385 uncompleted private home in the first six months of this year, less than a thousand units shy of the record 10,363 units sold through all of last year.

Source: The Business Times, 30 July 2007

Ex-Red House Bakery to be part of $15m project July 31, 2007

New complex in Katong will also have shops and service rooms By Jane Ng

THE former Katong Red House Bakery will soon welcome customers again - but perhaps not the kind craving fragrant cakes and rolls.

Along with the five shophouses next to it, it will become part of a $15 million complex housing shops and rooms managed like service apartments.

The landmark fire-engine red facade of the two-storey building at 75, East Coast Road will be retained, as will the traditional floor tiles and pillars, because the shophouse is a conservation property.

But whether or not it will go back to being a bakery will depend on its future tenant, said Mr Mohammad Zahid Yacob, who heads Warees Investments, a subsidiary of the Islamic Religious Council of Singapore (Muis), the legal owner of the property.

The former bakery, hugely popular with Singaporeans, sold traditional cream cakes and Swiss rolls until its closure in 2003.

The former tenants said they could not afford to pay the $15,000-a-month rent, which was almost eight times the old rate.

Mr Zahid said: ‘If we can get a tenant selling kueh, we’ll take him.

‘But as much as we want to preserve the original concept, the bottom line is it has to be commercially viable.’

He added that the plan was for the Red House to remain a food-and-beverage outlet to evoke memories of the bakery.

A food outlet will serve the needs of the long-term residents in the five-storey block of 80 to 100 service rooms to be built behind it.

Talks in recent years have been about turning the former bakery into a halal foodcourt or Indonesian restaurant.

The five shophouses adjacent to the Red House will be redeveloped, for instance, into a 24-hour convenience store, a launderette and business centre serving the residents.

Work on the complex will start early next year and will take two years.

Mr Zahid said it was hoped that the complex would liven up that stretch of Katong.

‘We want to revitalise the whole area. With a sizeable plan, we can create a more ‘happening’ district, raise human traffic and bring Katong back to the way it was in the old days.’

The Red House is a wakaf property, meaning it is held in trust for Muis.

It was put in trust by Sherrifa Zain Alsharoff Mohamed Alsagoff, who wanted the income generated from the property to be used to provide free medicine for the community.

She was the great-granddaughter of Hajjah Fatimah, who built the Hajjah Fatimah Mosque in Beach Road.

Source: The Straits Times, 30 July 2007

MUMBAI: Relentless rise in demand for office space

By Ravi Velloor, India Bureau Chief

NEW DELHI - EIGHTEEN months ago, when Mumbai real estate consultant Sanjeet Narain made arrangements for the British Broadcasting Corp’s new office in the city’s Bandra Kurla Complex (BKC), the rent was 120 rupees (S$4.50) per sq ft.

These days, the going rate for office space at BKC, as Mumbai’s emerging financial district is called, ranges from 350-400 rupees psf.

‘Demand is ever growing. Everyone seems to want to be here in Mumbai - whether you are into logistics, telecoms or any other business you can think of,’ said Mr Narain, managing director of Narains Corp, a top real estate firm in India’s business capital.

‘Right now, I am just helping to place a Swiss chocolate-maker in Andheri East,’ he says, referring to a less fashionable suburb further away. ‘Andheri rents now have reached where BKC was less than two years ago.’

Indeed, a recent lease for Droege & Co Singapore was fixed at 100 rupees psf for the 2,000 sq ft of space the consultancy hired.

As India’s economy expands at a steady 9 per cent on average, global firms are arriving to cash in on the boom, running headlong into established Indian players intent on expanding their operations.

While the housing market has softened, thanks to the central bank’s interest rate hikes, demand for quality office space shows no signs of abating. The result has been escalating rentals. The capital value of Mumbai’s office buildings rose 123 per cent last year, outpacing Singapore, according to a recent report by Jones Lang LaSalle.

Such property escalations are bound to affect business, even in a red-hot economy like India’s.

Many firms have moved out of Mumbai to locations where offices are cheaper and travel times shorter. Retailing, for instance, is increasingly based out of cities such as Bangalore or Hyderabad.

‘Cost escalations are taking place across all asset classes,’ said Mr Sameer Wagle, associate director of the investment management arm of Mumbai-based IL&FS, an infrastructure leasing and finance company. ‘But real estate is the hottest because of the Indian mentality to invest in fixed assets.’

Even so, he says, the lure of the billion-strong Indian market is so strong that most companies take the rental costs in their stride.

‘It is the shortage of talent that is their bigger headache because of rising salary costs,’ he added.

Still, some parts of India are beginning to register small declines.

In Gurgaon, on New Delhi’s western suburbs, which has become a fashionable location for back-offices of multinationals and upper-class residences, office rentals have cooled in recent months.

‘Thanks to a whole lot of new malls and office buildings, you can buy good quality office space for about 12,000 rupees psf, down from 15,000 rupees a few months ago,’ said chief executive Rajeev Sharma of New Delhi real estate firm Alpha Estates.

In Mumbai, the government is trying to change the Urban Land Ceiling Act of 1976 that limits the land available for development. According to Chief Minister Vilasrao Deshmukh of Maharashtra state, as much as 500 ha may be freed up for office buildings.

But for now, space is so tight that vacancy in the central business district area was at a record low of 2.1 per cent in the first quarter of the year.

Source: The Straits Times, 30 July 2007

HK: Housing and office rents pushed up by limited supply

HK: Housing and office rents pushed up by limited supply
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By Vince Chong, Hong Kong Correspondent

IT’S a common refrain from property agents these days, but one that irks flat-hunter Shen Man Yan.

‘Better view that apartment soon or risk losing it to someone else,’ they would advise Ms Shen, a 31-year-old lawyer who is looking for a flat in Happy Valley, a prime district for professionals and expatriates.

‘I don’t know if that’s a marketing ploy, or if the market is really that hot, but I hate it when I hear that,’ she said.

Analysts say it is a combination of both factors, with housing rents for professionals and expatriates here now among the priciest, if not the priciest, in the world.

Add that to similar double-digit rental increases over the past year for office space - bolstered by the promise of more mainland investment funds - and the city’s property industry looks pretty rosy.

A recent report by human-resource specialist ECA International showed that the cost of renting an expatriate apartment in Hong Kong is the world’s highest, at an average of US$8,592 (S$13,000) a month.

The figure was 17 per cent higher than for Tokyo, which ranked second, and 150 per cent over that in 15th-placed Singapore.

According to Mr Lee Quane, ECA general manager in Hong Kong, apartment rents in executive districts such as the Mid-levels and Happy Valley have jumped 25 per cent over the past two years.

The main reason for the spike is a limited supply of homes in the top districts.

A similar situation exists in the office space market, where a 17-year-low vacancy rate is pushing up prices in the prime Central district on Hong Kong Island.

US giant Morgan Stanley, for one, is said to be considering moving some operations from its Central address - traditionally de rigueur for the financial services trade - to less expensive Kowloon on the other side of Victoria Harbour.

Rents in the Kowloon hub of Tsim Sha Tsui average about HK$30 (S$5.80) per sq ft (psf) to HK$40 psf - less than half of the HK$90-HK$100 psf in Central.

For now, such increases in housing and office rents are hardly denting Hong Kong’s ability to attract investors. The city’s gross domestic product is expected to grow by 5.5 per cent this year.

One reason, noted Ms Karen Choi, research head of property firm Vigers, is that the average cost, while high, remains about 10 per cent off the peak in 1997 before the economy was ravaged by the Asian financial crisis and 2003 Sars outbreak.

‘Also, prices everywhere from Singapore to Shanghai are rising too,’ she told The Straits Times.

Said Mr Quane: ‘In the future, more companies will certainly consider moving to Shanghai, where housing costs are 50 per cent lower.

‘But then, tax rates there may also run as high as 45 per cent, which could prove just as costly for firms that pay taxes for their employees.’

The next logical option, he added, would be Singapore, which shares Hong Kong’s attractive tax regime but not its physical and political intimacy with China.

‘Hong Kong remains, for now, worthwhile for the large multinationals despite high property rents,’ Mr Quane concluded.

Source: The Straits Times, 30 July 2007

Govt to take ‘light touch’ approach to property

It will give out more data on prices and ramp up supply of homes and offices By Jessica Cheam

THE Government is not hitting the brakes on the roaring property market, but it is keeping a sharp eye on soaring prices and the office squeeze.

This assurance came yesterday from National Deve- lopment Minister Mah Bow Tan, who said the Government was more inclined towards applying a light touch.

It will depend on ‘non-interventionist’ measures like providing more information to the public on prices and rents while ramping up the supply of homes and offices.

The Government sees this shortage of space - which has resulted in rising home and office rents - as a short-term problem that is best tackled with like-minded measures.

‘We don’t want to use long-term solutions to try to solve short-term problems. If you do that, you might create problems in the long run,’ said Mr Mah.

He added that the Government will look into releasing temporary premises as a way of helping the supply side of the equation.

The HDB is also rolling out a pilot project to lease 120 vacated flats under the Selective En-bloc Redeve- lopment Scheme for terms of one or two years, depending on public response.

A ‘few thousand units’ would be available to help tide the market over the interim period before long- term supply kicks in with the completion of new residential projects, said Mr Mah.

Another initiative announced recently involved the launch of ‘transitional’ office sites by the Urban Redevelopment Authority (URA), which can be built on quickly.

The other weapon in the Government’s approach is to provide buyers and sellers with information - a lot more of it, and data that is more up to date.

Such data is seen as particularly important, given the headlines that rising prices have commanded of late.

Figures by the URA last week showed private home prices climbed 8.3 per cent in the April to June quarter, while the Housing Board revealed that resale prices for flats jumped 3 per cent in the same period.

Both increases are the highest in almost a decade.

Mr Mah maintains that in such an environment, providing useful data can clear the air for buyers and sellers.

He said he preferred to ‘let the market forces work’, but for them to work effectively, ‘there must be sufficient information’.

A wealth of information on sale prices and rent levels for both residential and HDB homes, HDB resale prices and offices has already been released and made available online.

It allows buyers and sellers to get a better handle on how the market is moving in particular areas.

Mr Mah cautioned the public to ‘make a distinction’ between data analysis reports or projections by property analysts and the hard facts provided by the authorities.

‘You can have many different reports, but you should take URA and HDB reports as a snapshot of what is really happening on the ground,’ he said.

Mr Mah added that he was confident that with these measures - comprehensive data and temporary supply - ‘we will be able to moderate the prices’.

Mr Mah was speaking on the sidelines of a Ministry of National Development joint scholarship presentation ceremony, where 36 awards were given out.

This is the first time the ministry’s agencies - such as the National Parks Board, HDB and URA - have award their scholarships in a single ceremony.

Source: The Straits Times, 31 July 2007

CapitaLand to set up 2 retail funds worth $1.8b

By Fiona Chan, Property Reporter

PROPERTY giant CapitaLand is going shopping in India and China - for malls.

The developer said yesterday that it is setting up two new property funds worth US$1.2 billion (S$1.81 billion) to buy retail assets in the two most populous countries in the world.

Each fund will be worth US$600 million. CapitaLand will take a stake of about 40 per cent in CapitaRetail India Development Fund and 45 per cent in CapitaRetail China Development Fund II.

This brings CapitaLand’s equity stake in both funds to about US$510 million. The remaining stakes in the funds are expected to go to insurance firms, pension funds and corporations.

Both funds will invest in malls that are under development. The Indian fund will close in September, while the China one will close in October.

CapitaLand’s Indian fund is the group’s second retail-related move in the country, after it partnered India’s largest retailer Pantaloon in April last year.

They tied up to manage malls and to set up and manage property funds that develop or own malls in India.

Since then, CapitaLand has identified several retail investment opportunities in India. The new fund will allow it to grow its retail presence in India over time.

But CapitaLand added that it was too early to disclose which specific malls it was looking at.

As for China, the new retail fund is CapitaLand’s third in the country, after CapitaRetail China Development Fund I and CapitaRetail China Incubator Fund.

All three funds could feed into CapitaLand’s China mall trust. While the incubator fund focuses on completed malls, the other two funds will be used for projects still being developed.

Already, the funds in CapitaRetail China Development Fund I - also US$600 million in size - are 90 per cent committed, the developer said.

That is why a second fund is needed to invest in the pipeline of malls coming from CapitaLand’s recent joint ventures in China, such as its tie-up with China Vanke this month.

CapitaLand Retail chief executive Pua Seck Guan said the funds have already received overwhelming indications of interest. He is confident that the closing of the funds will be ‘a resounding success’.

‘Professionally managed organised retail concepts are relatively lacking in China and India, where we have identified immense opportunities,’ he added.

CapitaLand owns or manages more than 70 malls in 28 Chinese cities, and is looking to replicate its China strategy in India.

Source: The Straits Times, 31 July 2007

Supply problems, rising costs may threaten competitiveness

Supply problems, rising costs may threaten competitiveness
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By Erica Tay

IT MAY be a champagne economy, but blistering growth is creating ’supply bottlenecks’ that are pushing up costs and putting competitiveness at risk.

These words of caution come from a Citigroup study centring on a shortage of office and residential space and tighter labour supply in Singapore.

Citigroup economist Chua Hak Bin said that if the Government’s moves to ease supply do not address these ‘bottlenecks’ quickly enough, tighter fiscal and monetary policies may be needed.

‘The concern is that escalating costs and limited slack could also hurt competitiveness and constrain growth, particularly against Hong Kong,’ said Dr Chua, who noted that the Hong Kong dollar has fallen by about 13 per cent against the Singapore dollar over the last two years.

The report cited Mercer’s latest cost of living index, which placed Singapore as the 14th most expensive city for expatriates, up from 46th in 2004.

The private residential rental index here has soared by 31 per cent year-on-year, while the office rental index has rocketed by 46 per cent.

Private residential occupancy, meanwhile, is at 95.1 per cent, higher than the previous peak of 94.3 per cent in December 1995, the report noted.

Policies to ease real estate supply by releasing land may need time to materialise, Dr Chua said, as he raised the issue of whether the authorities will need to ‘tame excessively strong demand conditions either through tighter monetary or fiscal policies, in the interim’.

Source: The Straits Times, 31 July 2007

Two River Valley condos fail to get asking prices

Two River Valley condos fail to get asking prices
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Pacific Mansions sought $2,400 psf; Rivershire asked for $2,200 psf By Joyce Teo, Property Correspondent

RECENT high-profile collective sales of Pacific Mansions and Rivershire have both failed to attract bids from developers willing to match the prices being sought by owners at the two River Valley condominiums.

Marketing consultants of both sites, however, are understood to be negotiating with ‘interested parties’ to see if they can at least achieve the reserve price - ranging from 10 per cent to 20 per cent below the asking price.

Asking prices at the two condominiums were optimistically priced at the very top end of market levels.

The current collective sale record stands at $2,338 per sq ft (psf) of potential gross floor area at The Ardmore in the prestigious Ardmore area.

Owners at the 45-year-old Pacific Mansions in River Valley Close, however, asked for even more - about $2,400 psf of potential gross floor area. This placed its total price at $1.18 billion.

Although the property market is booming, the perception is that the asking price for Pacific Mansions is high and unachievable for now, said a source.

Rivershire in the Leonie Hill area was put up for sale in late June at $348 million, or a hefty $2,200 psf of potential gross floor area.

The recent hike in development charge has no impact on the sites, as no such charge is payable for both sites.

There is talk that the Pacific Mansions’ tender had attracted a few expressions of interest but no firm bids.

Mr Steven Ming, director of investment sales at Savills Singapore, which is marketing Pacific Mansions, only said: ‘We have received interest, and we are in discussions with the interested parties.’

Knight Frank, which is marketing Rivershire, is also believed to be in talks with keen parties.

Nearby, owners of the 99-year leasehold Grangeford Apartments, who had asked for $2,016 psf of potential gross floor area, also failed to get what they had asked for.

The best they got was an offer from Overseas Union Enterprise - believed to be around $1,820 psf - subject to approval by owners controlling 80 per cent of the property’s share values.

The deal is likely to be sealed soon. CB Richard Ellis, which is marketing the site, said it is waiting for lawyers to confirm the approval level.

The absence of finalised deals for these condos has not stopped others from hitting the market at relatively high prices.

These include Trendale Tower in the Cairnhill Road area, which was relaunched for sale in late July at $2,477 psf of potential gross area. Its earlier asking price in May, when it was put up for sale via an expression of interest exercise, was at $2,200 psf of gross floor area.

Recently, City Towers in Bukit Timah Road was also relaunched for sale at a revised asking price of $2,100 psf of potential gross floor area.

Property consultants say the residential market is still rosy, though some collective sales may stall as the owners’ asking prices are far beyond what the market is currently willing to pay.

‘It really depends on the site’s potential,’ said one.

Source: The Straits Times, 31 July 2007

Publishing firm buys $12.5m plot

Publishing firm buys $12.5m plot
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PUBLISHING company Eastern Holdings, which ventured into property development three years ago, has bought a 10,888 sq ft freehold plot in Grove Drive for $12.5 million.

The price for the plot - which is near Ghim Moh Road - works out to $1,148 per sq ft of potential gross floor area.

Eastern said the move into property has allowed the company to ride on Singapore’s booming property market for growth.

Its chairman and managing director, Mr Stephen Tay, said yesterday: ‘This is the beginning of a new era of growth for Eastern, brought about by the robust demand for residential and commercial spaces.’

Eastern had earlier secured an option to buy an adjacent plot for $10.3 million and now plans to amalgamate the two sites.

Together, the combined plots at 81 and 83 Grove Drive offer a total gross floor area of 42,837 sq ft.

In a statement yesterday, the group said it is still discussing specific plans for the sites but may develop cluster bungalows or cluster semi-detached houses.

Eastern entered the property business in 2004 when the property market showed the first tentative hints of recovery.

It was a way for the company to diversify and add growth to its revenue streams beyond publishing, it said.

Today, the group - which publishes magazine titles such as Motherhood, Teens and Motoring - has a property portfolio of commercial, industrial and residential properties.

Source: The Straits Times, 31 July 2007

Enjoying life in Malaysia

Enjoying life in Malaysia
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By Pang Hong Yee

Jolly Green House: Australian retirees Pat and Alan Jones find Penang a wonderful place to settle down under the Malaysia My Second Home programme. They chose a traditional Chinese shophouse on Muntri Street for its sense of history and culture. They live above the shophouse and operate a quaint cafe below.
MALAYSIA is home to a lot of natural treasures. From white sandy beaches and clear blue waters on the east coast of Peninsular Malaysia to the more urbane lifestyle of city centres on the west coast – we are truly a plural society, with a bit of everything under the sky.

On the other side of the South China Sea, the eastern States of Sabah and Sarawak are still covered with lush tropical jungle. The cities, towns and villages are populated by a diverse range of ethnic communities. For instance, indigeneous Sarawakian communities still remain true to their cultural identity despite colonisation by the White Rajahs, followed by the country’s Independence.

Malaysia’s rich cultural heritage and multi-lingual society is well-known throughout the world, attracting attention from holidaymakers as well as retirees who wish to escape to a place where it’s sunny, peaceful, breath-taking and with delicious and inexpensive food at every corner.

Offering a relatively high standard of living, Malaysia is a country that has much to offer for a comfortable and relaxing second home.

All the cities and major towns in Malaysia are supported by excellent infrastructure and are either easily accessible by sea, air or land.

The narrow balcony of the shophouse owned by Pat and Alan is a delightful place to have breakfast and watch the world go by.
And the healthcare system in the country includes top-notch medical centres and private clinics with 24-hour emergency services. There are also a significantly number of international schools and colleges in almost all cities.

High-end condominiums and gated properties as well as affordable housing developments at relatively reasonable prices offer local and foreign home-buyers a wide selection.

Prime properties in cities like Kuala Lumpur and Penang are still highly affordable compared to Singapore, Bangkok, Hong Kong, Shanghai, Taipei, Seoul and even smaller cities in Japan.

With the aim of attracting foreigners especially wealthy retirees to make Malaysia their second home, the Malaysia My Second Home Programme (MM2H) was relaunched last April. Subsequently, the MM2H One-Stop Centre was established on May 19 last year under the Ministry of Tourism.

MM2H Centre

"Antiquing": Pat and Alan with a vintage cigarette box they found in one of the antique shops in George Town.
This new centre on the 23rd floor of Menara Dato’ Onn in the Putra World Trade Centre is now the co-ordinating body for MM2H.

Services include:

* application

* counselling

* resource & information

The centre is available to both local and foreign parties including individuals and companies.

The One-Stop Centre, or the MM2H Centre, also acts as the hub for information, reference and research on the effectiveness and impact of the programme.

It is also the policy-making secretariat which plans the direction of the MM2H programme.

Engaging themselves in local culture enriches Pat and Alan's new life in Penang.
Over 10,000 successful applicants

The MM2H programme can trace its beginnings to the inaugural Silver Hair Programme launched in 1996. Since then 10,308 foreign individuals have chosen Malaysia as their second home.

Within the first six months of this year, 757 applications were approved. Out of this figure, most of them came from the UK, Bangladesh, South Korea, Japan and China.

With MM2H campaigns in countries like Japan, South Korea, Indonesia, Singapore, China, Northern Europe and the UK, in conjunction with Visit Malaysia Year 2007 programmes, more foreigners are getting acquainted with living in Malaysia.

Even former Malaysian citizens residing in countries such as Australia and the United Kingdom are applying to relocate back to Malaysia under the MM2H programme which offer a speedy way of coming home.

* Got a question? Further enquiries of MM2H may be channelled to the MM2H Centre via 6-03-26963367, 6-03-26963354, 6-03-2696 3361, 6-03-26963351, 6-03-26963366 or visit

Garden makeovers

Garden makeovers
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By Domino Chong

Whether your landscaping needs are for a new home, to enhance or upgrade your existing garden, Greenworld Design offers comprehensive gardening services.

“We specialise in providing our customers total landscape solutions from consultation right up to maintenance,” says Greenworld Design proprietor Ng Cheng Chooi.

A residential landscape project in Ascott Hill, Bukit Rahman Putra completed by Greenworld Design

Ng, together with his business partners, Lim Fang Kee and Aly Tan, started the business four years ago.

Since then, they have been beautifying the gardens of many home owners in and around Petaling Jaya and Kuala Lumpur.

Apart from residential landscape projects, they have also done a few commercial ones. Lim also operates a nursery which ensures quality plants and accessories for clients and timely delivery to job sites.

Upon receiving an enquiry, Greenworld Design would first conduct an on-site analysis of the client’s garden.

This would include taking measurements, assessing the lawn’s overall health, identifying weeds and insects and so on.

“We would have a discussion with the client to better understand his needs. We would also give a few suggestions and offer advice based on the client’s needs.

"A lot of factors will have to be taken into consideration, for instance, the shape and scope of the garden, the types of grass and plants suitable, the likes and dislikes of the client, the direction of the sun’s rays and so on,” adds Ng.

Next, a layout of the new garden will be prepared and proposed to the client. Once the client agrees, work will begin.

A small or simple project only takes a week or so to be completed while more extensive projects, which may include the installation of fish ponds, fountains or water features, wooden shelters or elevated decks, may take up to 40 days to complete.

Charges are based on how extensive the project is and the size and scope of the area involved. Simple projects may only cost RM3,000 while large projects can go up to about RM80,000.

Greenworld Design offers a six-month warranty for all projects.

The company also offers maintenance services at a reasonable rate. Says Ng, “Maintenance is highly recommended to restore the attractiveness and general well-being of your garden.”

Emkay to build eco-tourism destination

Emkay to build eco-tourism destination
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PETALING JAYA: The Emkay group of companies will be developing a RM600mil world-class eco-tourism destination in Pulau Banding.

The group said in a statement it would develop the island as the gateway to the 130-million-year-old Belum-Temengor Forest Complex, which comprises the Royal Belum State Park, Belum Forest Reserve and Temengor Forest Reserve.

The group had on July 18 entered into a sale and purchase agreement with Kumpulan Fima Bhd to acquire another 294 acres in Pulau Banding for RM15.8mil, and now owned the entire 600-acre Pulau Banding, which lies within the Northern Corridor Economic Region.

It said the project would generate tourism income, job and business opportunities for the local community.

The project, which was scheduled for completion in 10 to 15 years, would also see extensive research being generated in the rainforest, harnessing its worth through various opportunities in biotechnology and pharmacology.

The first of the three-phase development would involve immediate refurbishment of the existing Banding Island Resort. The 27-room resort would be turned into a three-star resort with 120 rooms, complete with dining and meeting facilities.

Also to be developed are a rest and recreation centre, and a research centre donated by Yayasan Emkay for the use of non-governmental organisations or other interested parties keen to use the facilities to further their ongoing research into the Royal Belum and its surrounding rainforest.

15 years to complete RM18b Penang City Centre

15 years to complete RM18b Penang City Centre
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BUTTERWORTH: The RM18bil Penang City Centre (PCC) project by Abad Naluri Sdn Bhd, an associate company of Equine Capital Bhd, will take 15 years to complete.

Equine holds a 25% stake in Abad Naluri, which is developing PCC on the 260-acre site where the Penang Turf Club is presently located.

The PCC is one of the projects highlighted in the Northern Corridor Economic Region (NCER) blueprint.

Equine executive chairman Datuk Patrick Lim said two award-winning architects, one each from New York and Paris, would design the project.

“Hani Rashid from Asymptote Architecture in New York will design the architecture, which includes two iconic towers, while Nasrine Seraji from Atelier Seraji in Paris will design the master plan,” he told reporters after the launch of the NCER Penang portion blueprint by Prime Minister Datuk Seri Abdullah Ahmad Badawi yesterday.

Lim said the PCC master plan would be unveiled in September while the project would be launched in eight to 12 months.

The first phase would involve the development of a 26-acre park, and road infrastructure to smoothen the traffic flow for the project, he said.

“The park will be connected to the Botanical Garden. We will use the technologies such as thermal treatment, to develop PCC into a carbon-free city,” he said.

“We want to make PCC the first such city in the world. Shanghai is planning to be carbon free, but we are ready to implement the technologies to make it happen in PCC soon.”

Lim said the PCC project would have two five-star hotels, commercial and residential properties, and a state-of-the-art cultural centre.

Lim said there were many options to fund the project, including joint ventures and issuing capital bonds.

“We are also applying for MSC status to attract information and communications technology companies to set up regional offices at the park.”

On the Penang International Equestrian Centre in Batu Kawan, Lim said Abad Naluri would start work on the centre once construction work commenced on the second Penang bridge.

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