Parliament has approved changes to the Land Titles (Strata) Bill, which clearly stipulates the proper conduct of en-bloc sales.
Moving the second reading of the bill in Parliament on Thursday, Law Minister Professor S Jayakumar said it aims to provide additional safeguards and greater transparency for all owners involved in en-bloc sales.
It will also ensure that their interests are taken into consideration more adequately. One of the changes requires the sales committee to be properly formed and elected.
The measures also seek to improve transparency in the en-bloc sales process by providing regular updates on bids received and how sales proceeds will be divided.
The amended law also helps owners better understand the legal implications of en-bloc sales.
Under the amendment, a lawyer should be present to clarify doubts when the owner signs the Collective Sales Agreement. Those who change their minds after signing the deal are allowed to do so - but only once and within a five-day cooling-off period.
Professor Jayakumar also explained that the proposed changes will not apply to developments where the required 80 per cent or 90 per cent majority of owners, based on share value, have signed the Collective Sales Agreement before the commencement of the Amendment Act.
He stressed that the amended law does not make it unduly onerous to bring about an en-bloc sale, and that the public response to the proposed changes has been largely positive.
Analysts said the changes will protect owners from over-enthusiastic sales committees, inexperienced lawyers and pushy consultants.
Several MPs also called for greater protection for the ill-informed and illiterate. One group that they felt needed more assistance during an en-bloc sale are the senior citizens, many of whom wanted greater protection, security and stability in their golden years.
“For the elderly living in affected collective sale properties who are against the sale, we should try to minimise their suffering from a reverse eviction from their legitimate homes. To them, the strong sentimental value in the place they stay far surpass the monetary gains,” said Ellen Lee, MP for Sembawang GRC.
Summing up the debate, Professor Jayakumar explained that the amendments have been crafted to strike a balance. “Let me assure the House that this review by my ministry and the Strata Titles Board and the Singapore Land Authority is an on going one.
“We will see how these amendments operate in practice, see how the new legal regimes work and if it is felt (that) further changes are needed in the light of subsequent experience, then indeed where it merits further refinement and changes, we will do so.”
And one outcome regulators will be watching out for will be how the saga surrounding Horizon Towers is played out as the episode is likely to provide valuable lessons for future en-bloc transactions. - CNA/ac
Source : Channel NewAsia - 20 Sep 2007
Friday, September 21, 2007
Construction industry players have expressed support for the government’s move to strengthen the building control regulatory framework
Construction industry players have expressed support for the government’s move to strengthen the building control regulatory framework, but they hope it will not stifle the buoyancy of the construction sector which has picked up in recent years.
While the licensing scheme will weed out fly-by-night companies and raise standards in the construction sector, contractors said the stringent criteria might make it difficult for smaller firms.
They are also concerned about the possible grounds for disciplinary action, which they hope will be more clearly defined.
Desmond Hill, president of Singapore Contractors Association, said: “The issue of revocation of licence or suspension should be more clearly defined and it should not be too wide and all-embracing that for anything and everything, you can be suspended. And I would like the connections to MOM’s (Ministry of Manpower’s) debarment scheme to be de-linked.”
“To me suspension of licence is a serious threat to the company’s operations because it means basically it can’t operate, it can’t construct. When it can’t construct, it can’t bid for jobs,” he added.
Engineers also backed the review on construction practices, and welcomed the involvement of geotechnical experts in the process.
The Building and Construction Authority (BCA) said there are some 55 geotechnical engineers in Singapore, which should be enough to meet local demand.
Industry players said the changes will have an impact on construction cost and duration, even though the increase may be marginal.
However, one of their major concerns is the stiffer punishment that will be meted out for non-compliance.
The BCA said the penalties, which include fines and jail terms, will be doubled under the new legislation.
Chong Kee San, honorary secretary of Singapore’s Institution of Engineers, said: “Additional measures like increasing fines and jail term would not serve its purpose, because this would only deter talented individual from coming into the construction industry and making a career out of it.”
He added that the changes to the building regulations should be sufficient as most construction failures in Singapore arise out of mistakes in judgement rather than gross negligence. - CNA/ac
Source : Channel NewAsia - 20 Sep 2007
While the licensing scheme will weed out fly-by-night companies and raise standards in the construction sector, contractors said the stringent criteria might make it difficult for smaller firms.
They are also concerned about the possible grounds for disciplinary action, which they hope will be more clearly defined.
Desmond Hill, president of Singapore Contractors Association, said: “The issue of revocation of licence or suspension should be more clearly defined and it should not be too wide and all-embracing that for anything and everything, you can be suspended. And I would like the connections to MOM’s (Ministry of Manpower’s) debarment scheme to be de-linked.”
“To me suspension of licence is a serious threat to the company’s operations because it means basically it can’t operate, it can’t construct. When it can’t construct, it can’t bid for jobs,” he added.
Engineers also backed the review on construction practices, and welcomed the involvement of geotechnical experts in the process.
The Building and Construction Authority (BCA) said there are some 55 geotechnical engineers in Singapore, which should be enough to meet local demand.
Industry players said the changes will have an impact on construction cost and duration, even though the increase may be marginal.
However, one of their major concerns is the stiffer punishment that will be meted out for non-compliance.
The BCA said the penalties, which include fines and jail terms, will be doubled under the new legislation.
Chong Kee San, honorary secretary of Singapore’s Institution of Engineers, said: “Additional measures like increasing fines and jail term would not serve its purpose, because this would only deter talented individual from coming into the construction industry and making a career out of it.”
He added that the changes to the building regulations should be sufficient as most construction failures in Singapore arise out of mistakes in judgement rather than gross negligence. - CNA/ac
Source : Channel NewAsia - 20 Sep 2007
The Building Control Amendment Bill was passed in Parliament on Thursday. Laws will be amended to enhance the professionalism
The Building Control Amendment Bill was passed in Parliament on Thursday. Laws will be amended to enhance the professionalism, quality and safety standards in the construction industry.
There will be more stringent checks, licensing of builders and heavier penalties on those who flout the rules.
The collapse of Nicole Highway in 2004 prompted a review of the construction process.
After a two-year consultation with key stakeholders, more rigorous measures will be introduced to set things right.
Besides averting potential damage to properties and loss of lives, the new measures will upkeep the professionalism of the construction sector. This is important as demand is projected to reach between S$19 billion and S$22 billion this year.
One key amendment is to tighten checks related to underground building and tunnelling works.
In particular, temporary earth-retaining structures will be treated as permanent works, and they have to be designed by a registered professional engineer and reviewed by an accredited checker.
Temporary earth-retaining structures help support the earth while permanent structures are being constructed onsite.
In addition, for deeper excavation works and foundations for high-rise buildings that have 30 floors or more, specialists in geotechical engineering will have to assess the soil conditions.
Currently, these practices are only done on a voluntary basis.
A new licensing scheme will also be introduced for general builders and for specialist builders who carry out works like piling and site investigation. The licence will be valid for three years and is renewable.
To qualify, the firms must be financially sound, have good safety records and qualified key personnel to supervise projects.
A six-month grace period will be granted for builders to apply for a licence after the Bill comes into force.
The Minister of State for National Development, Grace Fu, said: “The Bill also sets out the circumstances under which the Commissioner of Building Control can revoke a builder’s licence. Nonetheless, the Commissioner must give the builder an opportunity to be heard before revoking the licence.
“The Bill will also allow the Commissioner to consider less severe actions such as a suspension or a fine, in place of revocation. In addition, there will be a provision for appeal to the minister.”
The penalties for offences under the Building Control Act will be aligned with those under the Workplace Safety and Health Act.
There will also be stronger enforcement. Ms Fu said: “It makes clear that where it is an offence if any act or thing is not done by a particular time, the obligation to do so will continue, even after the stipulated time has passed.
“In this regard, the person shall be guilty of a separate offence for each day that he continues to refuse or fail to do that act or thing after the stipulated time.”
Separately, building owners and tenants will be required to ensure barrier-free facilities are not altered, removed or blocked.
In a push to have more green buildings, provision will also be made to set regulations on minimum standards of environmental sustainability, and this will apply to all new buildings and existing buildings that are undergoing major retrofitting works.
According to the Building and Construction Authority, over 66 buildings have been certified under its Green Mark Award scheme for being environmentally friendly and efficient, and another 25 buildings are ready to be certified.
The amendments are set to come into force next January and will apply to all new projects. - CNA/ac
Source : Channel NewAsia - 20 Sep 2007
There will be more stringent checks, licensing of builders and heavier penalties on those who flout the rules.
The collapse of Nicole Highway in 2004 prompted a review of the construction process.
After a two-year consultation with key stakeholders, more rigorous measures will be introduced to set things right.
Besides averting potential damage to properties and loss of lives, the new measures will upkeep the professionalism of the construction sector. This is important as demand is projected to reach between S$19 billion and S$22 billion this year.
One key amendment is to tighten checks related to underground building and tunnelling works.
In particular, temporary earth-retaining structures will be treated as permanent works, and they have to be designed by a registered professional engineer and reviewed by an accredited checker.
Temporary earth-retaining structures help support the earth while permanent structures are being constructed onsite.
In addition, for deeper excavation works and foundations for high-rise buildings that have 30 floors or more, specialists in geotechical engineering will have to assess the soil conditions.
Currently, these practices are only done on a voluntary basis.
A new licensing scheme will also be introduced for general builders and for specialist builders who carry out works like piling and site investigation. The licence will be valid for three years and is renewable.
To qualify, the firms must be financially sound, have good safety records and qualified key personnel to supervise projects.
A six-month grace period will be granted for builders to apply for a licence after the Bill comes into force.
The Minister of State for National Development, Grace Fu, said: “The Bill also sets out the circumstances under which the Commissioner of Building Control can revoke a builder’s licence. Nonetheless, the Commissioner must give the builder an opportunity to be heard before revoking the licence.
“The Bill will also allow the Commissioner to consider less severe actions such as a suspension or a fine, in place of revocation. In addition, there will be a provision for appeal to the minister.”
The penalties for offences under the Building Control Act will be aligned with those under the Workplace Safety and Health Act.
There will also be stronger enforcement. Ms Fu said: “It makes clear that where it is an offence if any act or thing is not done by a particular time, the obligation to do so will continue, even after the stipulated time has passed.
“In this regard, the person shall be guilty of a separate offence for each day that he continues to refuse or fail to do that act or thing after the stipulated time.”
Separately, building owners and tenants will be required to ensure barrier-free facilities are not altered, removed or blocked.
In a push to have more green buildings, provision will also be made to set regulations on minimum standards of environmental sustainability, and this will apply to all new buildings and existing buildings that are undergoing major retrofitting works.
According to the Building and Construction Authority, over 66 buildings have been certified under its Green Mark Award scheme for being environmentally friendly and efficient, and another 25 buildings are ready to be certified.
The amendments are set to come into force next January and will apply to all new projects. - CNA/ac
Source : Channel NewAsia - 20 Sep 2007
THE rapid rise of office rents in Singapore has spilled over to industrial properties such as business parks as tenants seek cheaper office options.
THE rapid rise of office rents in Singapore has spilled over to industrial properties such as business parks as tenants seek cheaper office options.
As a result, rents at industrial properties are rising, but not as fast as prime office space, which is in short supply, a new report has found.
The report, released by property consultancy Jones Lang LaSalle (JLL) yesterday, showed that rents in the central business district are a staggering 543 per cent above business park rents.
This has resulted in many companies relocating their back offices in the suburbs, said JLL Singapore’s head of industrial, Mr Tahlil Khan, who wrote the report.
And with no significant new supply of office space coming online until 2009 and 2010,
Mr Khan said there will be a spillover of demand from the office sector, which will lead to higher rents for business parks and high-tech buildings - a hybrid of office and factory space.
Already, monthly rents at the Eightrium @ Changi Business Park are up 20 per cent at $3.50 per sq ft. JTC Corporation’s posted rates for The Signature at the same business park have increased by about 8 per cent since the start of the year.
JLL’s head of industrial for Asia, Mr David Wilton, said nine companies - local and multi-national - have approached JLL for built-to-suit projects, as there is not enough supply of business parks in the current market.
He added that JTC’s anticipated sale of $1.6 billion worth of its assets, part of which will be pumped into a real estate investment trust (Reit), will change the market in terms of developing different types of industrial properties.
The Reit is expected to be listed by the second quarter of next year.
Source : Straits Times - 20 Sep 2007
As a result, rents at industrial properties are rising, but not as fast as prime office space, which is in short supply, a new report has found.
The report, released by property consultancy Jones Lang LaSalle (JLL) yesterday, showed that rents in the central business district are a staggering 543 per cent above business park rents.
This has resulted in many companies relocating their back offices in the suburbs, said JLL Singapore’s head of industrial, Mr Tahlil Khan, who wrote the report.
And with no significant new supply of office space coming online until 2009 and 2010,
Mr Khan said there will be a spillover of demand from the office sector, which will lead to higher rents for business parks and high-tech buildings - a hybrid of office and factory space.
Already, monthly rents at the Eightrium @ Changi Business Park are up 20 per cent at $3.50 per sq ft. JTC Corporation’s posted rates for The Signature at the same business park have increased by about 8 per cent since the start of the year.
JLL’s head of industrial for Asia, Mr David Wilton, said nine companies - local and multi-national - have approached JLL for built-to-suit projects, as there is not enough supply of business parks in the current market.
He added that JTC’s anticipated sale of $1.6 billion worth of its assets, part of which will be pumped into a real estate investment trust (Reit), will change the market in terms of developing different types of industrial properties.
The Reit is expected to be listed by the second quarter of next year.
Source : Straits Times - 20 Sep 2007
CPF system, more than eight in 10 new entrants to the workforce will meet their Minimum Sum for retirement.
MANPOWER Minister Ng Eng Hen yesterday cautioned against over-committing when buying property at the expense of putting aside money for retirement.
The good news though is that with the latest changes, Central Provident Fund (CPF) members will be able to achieve both home ownership and retirement security, he said.
Indeed, with the new CPF system, more than eight in 10 new entrants to the workforce will meet their Minimum Sum for retirement. This is even for low-wage workers and even after buying their first home.
‘So our home ownership need not be sacrificed for retirement adequacy. We can have both,’ said Dr Ng.
But the problem, he pointed out, comes when some Singaporeans over-commit in buying bigger and subsequent homes.
It was an issue raised by Dr Muhammad Faishal Ibrahim (Marine Parade GRC), who recounted how a resident was shocked by the large amount of money he received after selling his house.
Dr Ng said it was good that some of these people put the gains from the sale of their houses into their CPF accounts.
‘These people sell their first homes but plough back gains from the sale of their first home and purchase a bigger home. And I think this is a good thing,’ he said.
‘It’s a good aspiration that Singaporeans can own bigger homes if they can afford it.’
But he also had a reminder for them: They ought to consider how much funds they could plough into their retirement savings before buying the bigger home.
‘If he had put that money early into his special or retirement accounts which now earn 5 per cent on the first $60,000, compounded over a number of years, it adds up,’ he said. ‘We should study how to advise first-home sellers about this. I think it’s a good idea that we pay some attention to it.’
Source : Straits Times - 20 Sep 2007
The good news though is that with the latest changes, Central Provident Fund (CPF) members will be able to achieve both home ownership and retirement security, he said.
Indeed, with the new CPF system, more than eight in 10 new entrants to the workforce will meet their Minimum Sum for retirement. This is even for low-wage workers and even after buying their first home.
‘So our home ownership need not be sacrificed for retirement adequacy. We can have both,’ said Dr Ng.
But the problem, he pointed out, comes when some Singaporeans over-commit in buying bigger and subsequent homes.
It was an issue raised by Dr Muhammad Faishal Ibrahim (Marine Parade GRC), who recounted how a resident was shocked by the large amount of money he received after selling his house.
Dr Ng said it was good that some of these people put the gains from the sale of their houses into their CPF accounts.
‘These people sell their first homes but plough back gains from the sale of their first home and purchase a bigger home. And I think this is a good thing,’ he said.
‘It’s a good aspiration that Singaporeans can own bigger homes if they can afford it.’
But he also had a reminder for them: They ought to consider how much funds they could plough into their retirement savings before buying the bigger home.
‘If he had put that money early into his special or retirement accounts which now earn 5 per cent on the first $60,000, compounded over a number of years, it adds up,’ he said. ‘We should study how to advise first-home sellers about this. I think it’s a good idea that we pay some attention to it.’
Source : Straits Times - 20 Sep 2007
Lehman Brothers has moved the base for the South-east Asian operations of its global real estate group from Bangkok to Singapore, it said yesterday.
US investment bank Lehman Brothers has moved the base for the South-east Asian operations of its global real estate group from Bangkok to Singapore, it said yesterday.
The group has of late been beefing up its presence here, said Blake Olafson, senior vice-president of Lehman’s global real estate group.
Total staff count here has increased from about 30 to more than 200 now and the bank has also expanded its office space from half a floor at Suntec City to one-and-a-half floors, Mr Olafson said.
‘The missing link was the real estate guys,’ he said. ‘To run the business out of Singapore is very, very easy.’
The real estate unit intends to double its team to 12 members from 6-7 at present, he added.
Mr Olafson was speaking to reporters at a press conference yesterday, where Lehman announced that it will jointly invest some $450 million with Japan’s Kajima Corporation to build an office building in Singapore’s central business district (CBD). The partners have a 50:50 stake in the project.
The 15-storey building would be Lehman’s first direct property investment in Singapore. When completed in mid-2009, it will offer some 280,000 sq ft of office space.
Lehman’s real estate unit is looking for more investment opportunities in Singapore in both the residential and commercial sectors, Mr Olafson said.
The group also intends to grow its property investments in Malaysia and Indonesia out of Singapore.
So far, the unit has made about US$11 billion worth of direct property investments since 2001, but currently holds around US$7.3 billion in assets - having securitised or sold off the rest.
Going forward, the group will continue to maintain investments at around the same amount, Mr Olafson said.
Source : Business Times - 20 Sep 2007
The group has of late been beefing up its presence here, said Blake Olafson, senior vice-president of Lehman’s global real estate group.
Total staff count here has increased from about 30 to more than 200 now and the bank has also expanded its office space from half a floor at Suntec City to one-and-a-half floors, Mr Olafson said.
‘The missing link was the real estate guys,’ he said. ‘To run the business out of Singapore is very, very easy.’
The real estate unit intends to double its team to 12 members from 6-7 at present, he added.
Mr Olafson was speaking to reporters at a press conference yesterday, where Lehman announced that it will jointly invest some $450 million with Japan’s Kajima Corporation to build an office building in Singapore’s central business district (CBD). The partners have a 50:50 stake in the project.
The 15-storey building would be Lehman’s first direct property investment in Singapore. When completed in mid-2009, it will offer some 280,000 sq ft of office space.
Lehman’s real estate unit is looking for more investment opportunities in Singapore in both the residential and commercial sectors, Mr Olafson said.
The group also intends to grow its property investments in Malaysia and Indonesia out of Singapore.
So far, the unit has made about US$11 billion worth of direct property investments since 2001, but currently holds around US$7.3 billion in assets - having securitised or sold off the rest.
Going forward, the group will continue to maintain investments at around the same amount, Mr Olafson said.
Source : Business Times - 20 Sep 2007
Lehman Brothers and Japan-based Kajima Corporation said yesterday they will spend about $450 million
US INVESTMENT bank Lehman Brothers and Japan-based Kajima Corporation said yesterday they will spend about $450 million developing their upcoming office project at 71 Robinson Road.
The 280,000 sq ft building - aimed mainly at finance and banking companies - will be up by mid-2009, beating the nearby Marina Bay Financial Centre (MBFC) by about six months.
The price includes the $163.4 million the partners paid last year for the plot, which was the site of SingTel’s Crosby House.
Lehman and construction and property conglomerate Kajima have equal stakes in the venture.
The 15-storey building in the Central Business District (CBD) is designed to meet growing demand for space from global banks and financial institutions that want to establish or expand regional operations. For example, it will have purpose-built trading floors.
The building will come to market ahead of MBFC, which will offer some 1.6 million sq ft of office space in 2010. MBFC has proved popular with financial institutions but is not fully leased yet.
‘There is no question there is an advantage in being quick to market,’ said Chris Archibold, regional director at Jones Lang LaSalle (JLL), which is marketing 71 Robinson Road. Space in the building will be leased at ‘market rate’, he said.
The project will benefit from rising office rents in the CBD amid a supply shortage.
JLL’s research shows Singapore will have about 2.3 million sq ft of new office space over the next three years - far short of the 5.1 million sq ft that will be needed, which will push rents up.
In just the first half of this year, Prime Grade A office rents in the CBD rose 44 per cent to $13.80 per square foot (psf), JLL said. It expects rents to hit $15.80 psf by year-end.
71 Robinson Road is Lehman’s first direct property investment in Singapore, said Blake Olafson, senior vice-president of the bank’s global real estate group.
Kajima, on the other hand, has been involved in more than 200 projects in Singapore and has two luxury residential projects for launch - one at Balmoral and the other at Bishopwalk.
Source : Business Times - 20 Sep 2007
The 280,000 sq ft building - aimed mainly at finance and banking companies - will be up by mid-2009, beating the nearby Marina Bay Financial Centre (MBFC) by about six months.
The price includes the $163.4 million the partners paid last year for the plot, which was the site of SingTel’s Crosby House.
Lehman and construction and property conglomerate Kajima have equal stakes in the venture.
The 15-storey building in the Central Business District (CBD) is designed to meet growing demand for space from global banks and financial institutions that want to establish or expand regional operations. For example, it will have purpose-built trading floors.
The building will come to market ahead of MBFC, which will offer some 1.6 million sq ft of office space in 2010. MBFC has proved popular with financial institutions but is not fully leased yet.
‘There is no question there is an advantage in being quick to market,’ said Chris Archibold, regional director at Jones Lang LaSalle (JLL), which is marketing 71 Robinson Road. Space in the building will be leased at ‘market rate’, he said.
The project will benefit from rising office rents in the CBD amid a supply shortage.
JLL’s research shows Singapore will have about 2.3 million sq ft of new office space over the next three years - far short of the 5.1 million sq ft that will be needed, which will push rents up.
In just the first half of this year, Prime Grade A office rents in the CBD rose 44 per cent to $13.80 per square foot (psf), JLL said. It expects rents to hit $15.80 psf by year-end.
71 Robinson Road is Lehman’s first direct property investment in Singapore, said Blake Olafson, senior vice-president of the bank’s global real estate group.
Kajima, on the other hand, has been involved in more than 200 projects in Singapore and has two luxury residential projects for launch - one at Balmoral and the other at Bishopwalk.
Source : Business Times - 20 Sep 2007
HOTEL Properties (HPL) chief Ong Beng Seng and his lawyers last night urged a group of Horizon Towers owners to cooperate in resolving the bungled
HOTEL Properties (HPL) chief Ong Beng Seng and his lawyers last night urged a group of Horizon Towers owners to cooperate in resolving the bungled $500 million collective sale of the condominium.
Mr Ong met the group at 4pm at Hilton Hotel yesterday - his first meeting with owners of the estate that he and his two partners are trying to buy.
HPL and partners are suing the Horizon Towers sellers for an alleged breach of contract and are seeking damages of more than $800 million.
The owners who met Mr Ong are anxious to avoid the potentially costly legal battle set to start next week. They had written to HPL earlier.
But a few others who had not written in turned up at the meeting and were eventually allowed in, sources said.
Lawyers from Allen & Gledhill, who represent the HPL-led consortium, were also present.
According to sources, Mr Ong told the Horizon Towers sellers that he has not sued anyone in 30 years of doing business.
He said that as HPL is a listed company and he has to protect shareholders, as well as his two partners, they added.
Mr Ong then told the sellers that they must have integrity, honour the contract and set a good example for their children.
Some sellers indicated at the meeting that they were keen to have Allen & Gledhill senior counsel K. Shanmugam participate at a major meeting to be held tonight.
The Horizon Towers sellers will have to decide on forming a sale committee and extending the sale deadline to allow the condominium’s sale to go through. They plan to vote at the meeting to be held at the Raffles Town Club.
The HPL-led consortium urged the sellers to vote sensibly at the meeting tonight.
A group of about 50 sellers have written to other sellers to express their concerns that the meeting tonight has been called without proper notice.
Source : Straits Times - 20 Sep 2007
Mr Ong met the group at 4pm at Hilton Hotel yesterday - his first meeting with owners of the estate that he and his two partners are trying to buy.
HPL and partners are suing the Horizon Towers sellers for an alleged breach of contract and are seeking damages of more than $800 million.
The owners who met Mr Ong are anxious to avoid the potentially costly legal battle set to start next week. They had written to HPL earlier.
But a few others who had not written in turned up at the meeting and were eventually allowed in, sources said.
Lawyers from Allen & Gledhill, who represent the HPL-led consortium, were also present.
According to sources, Mr Ong told the Horizon Towers sellers that he has not sued anyone in 30 years of doing business.
He said that as HPL is a listed company and he has to protect shareholders, as well as his two partners, they added.
Mr Ong then told the sellers that they must have integrity, honour the contract and set a good example for their children.
Some sellers indicated at the meeting that they were keen to have Allen & Gledhill senior counsel K. Shanmugam participate at a major meeting to be held tonight.
The Horizon Towers sellers will have to decide on forming a sale committee and extending the sale deadline to allow the condominium’s sale to go through. They plan to vote at the meeting to be held at the Raffles Town Club.
The HPL-led consortium urged the sellers to vote sensibly at the meeting tonight.
A group of about 50 sellers have written to other sellers to express their concerns that the meeting tonight has been called without proper notice.
Source : Straits Times - 20 Sep 2007
Wednesday, September 19, 2007
CASH windfalls will soon be arriving for the hundreds of home owners who sold their property en bloc during the frenzied April to June period.
CASH windfalls will soon be arriving for the hundreds of home owners who sold their property en bloc during the frenzied April to June period.
As they look for new homes, they could pour more than $4 billion into the market by early next year, according to new estimates from Savills Singapore.
The property consultancy said the ‘bunching up’ of collective sales in the second quarter will yield almost $6.4 billion in total collective sale proceeds.
Most of the amount is due to come in between December and February, which is likely to prompt a pickup in market activity, said Mr Ku Swee Yong, Savills Singapore’s director of marketing and business development. Assuming some sellers already have second homes, those who need a new place to live in will have about $4.2 billion to spend, he said.
His calculations showed that about 2,800 units were sold en bloc between April and June, for an average of $2.3 million a unit.
But he estimates that only about two-thirds of the owners will buy replacement homes. Still, this means almost 1,900 units in move-in condition will be needed in the months ahead.
Buyers are likely to seek these homes in areas such as Bukit Timah, Upper Bukit Timah, Clementi, Novena, Upper East Coast and Bukit Panjang, added Mr Ku.
This is because the bulk of the collective sales during the period were in the prime areas of Districts 9, 10, 11 and 15. Together, these cover Orchard, Holland, Bukit Timah, Newton and the East Coast.
Some of the larger projects sold en bloc in April-June include Farrer Court and Leedon Heights on Farrer Road, with more than 900 units between them. All these projects are in District 10, said Savills. In this prime district alone, 1,600 units were sold for $4.3 billion, it added.
‘Sellers in Districts 9 and 10 are likely to look for new homes in Districts 11 and 21 - Bukit Timah and Upper Bukit Timah,’ said Mr Ku. ‘Even if they have money to stay in the centre of town, they may have nothing to buy, as most of the older projects have already gone en bloc in the last two years.’
On the other hand, Bukit Timah and Upper Bukit Timah ‘have plenty of projects and not many collective sales’, he added.
He expects en bloc sellers to be out in full force buying new homes starting from December, thanks to the record run of collective sales this year - such deals from January to June hit almost $10 billion, according to Savills.
‘Almost all such sellers get their money within nine months of the sale,’ Mr Ku said, adding that Strata Titles Board sale approval takes about six months.
He added it has proven difficult for some sellers to buy a new home using a bridging loan. ‘So most of them won’t be able to buy a replacement unit until they actually get money in hand.’
Source : Straits Times - 19 Sep 2007
As they look for new homes, they could pour more than $4 billion into the market by early next year, according to new estimates from Savills Singapore.
The property consultancy said the ‘bunching up’ of collective sales in the second quarter will yield almost $6.4 billion in total collective sale proceeds.
Most of the amount is due to come in between December and February, which is likely to prompt a pickup in market activity, said Mr Ku Swee Yong, Savills Singapore’s director of marketing and business development. Assuming some sellers already have second homes, those who need a new place to live in will have about $4.2 billion to spend, he said.
His calculations showed that about 2,800 units were sold en bloc between April and June, for an average of $2.3 million a unit.
But he estimates that only about two-thirds of the owners will buy replacement homes. Still, this means almost 1,900 units in move-in condition will be needed in the months ahead.
Buyers are likely to seek these homes in areas such as Bukit Timah, Upper Bukit Timah, Clementi, Novena, Upper East Coast and Bukit Panjang, added Mr Ku.
This is because the bulk of the collective sales during the period were in the prime areas of Districts 9, 10, 11 and 15. Together, these cover Orchard, Holland, Bukit Timah, Newton and the East Coast.
Some of the larger projects sold en bloc in April-June include Farrer Court and Leedon Heights on Farrer Road, with more than 900 units between them. All these projects are in District 10, said Savills. In this prime district alone, 1,600 units were sold for $4.3 billion, it added.
‘Sellers in Districts 9 and 10 are likely to look for new homes in Districts 11 and 21 - Bukit Timah and Upper Bukit Timah,’ said Mr Ku. ‘Even if they have money to stay in the centre of town, they may have nothing to buy, as most of the older projects have already gone en bloc in the last two years.’
On the other hand, Bukit Timah and Upper Bukit Timah ‘have plenty of projects and not many collective sales’, he added.
He expects en bloc sellers to be out in full force buying new homes starting from December, thanks to the record run of collective sales this year - such deals from January to June hit almost $10 billion, according to Savills.
‘Almost all such sellers get their money within nine months of the sale,’ Mr Ku said, adding that Strata Titles Board sale approval takes about six months.
He added it has proven difficult for some sellers to buy a new home using a bridging loan. ‘So most of them won’t be able to buy a replacement unit until they actually get money in hand.’
Source : Straits Times - 19 Sep 2007
TWO prime residential sites have been put up for tender, including the one at Sentosa which has been creating some buzz in the market
TWO prime residential sites have been put up for tender, including the one at Sentosa which has been creating some buzz in the market, not least because of its billion-dollar price tag.
Sentosa Cove Pte Ltd launched its final condominium land parcel - The Pinnacle Collection - yesterday with a reserve price of not less than $963.8 million or $1,600 per square foot per plot ratio (psf ppr) for the 231,676.8-sq-ft site.
In July, SC Global put in the top bid of $268.3 million or $1,799.78 psf ppr for another Sentosa condo plot, so the reserve price for The Pinnacle Collection is conservative.
Savills Singapore director of marketing and business development Ku Swee Yong expects to see bids of between $1.2 billion and $1.3 billion, and believes the hefty price tag will see more joint ventures between foreign investors and local partners.
He also said the time frame for development, which will see The Pinnacle Collection receive temporary occupation permit (TOP) around 2011 when Resorts World at Sentosa is completed, will be perfect for a developer who wants to keep part of the development as an investment property for rental returns.
The news that the development of Marina South could be accelerated, with more potential waterfront living options, is not likely to have any impact as this is not expected any time soon.
Cushman & Wakefield managing director Donald Han says the market is still fairly hot. ‘The developer (for The Pinnacle Collection) will want to go in and out within a short space of time,’ he said.
One condition for the site, however, is that price and design will determine the winning bid. So as with the recent Beach Road land tender, the winning bid may not necessarily go to the highest bidder.
Sentosa Cove general manager Kemmy Tan added: ‘Design for this development is a key component in our evaluation.’
Design could raise the price of the units too.
‘As The Pinnacle Collection is conceptualised as an iconic project, the successful developer would allocate more in the way of resources to conceive an inspiring design as well as high-end finishes,’ said CBRE Research executive director Li Hiaw Ho.
As such, he estimates that the break-even cost would be between $2,800 and $3,000 psf based on a land price of $2,000 psf ppr. This would translate to an estimated selling price of about $3,200-$3,500 psf.
Separately, the Urban Redevelopment Authority (URA) put up a site in Enggor Street (Land Parcel B) in Tanjong Pagar for tender on the confirmed list of the Government Land Sales Programme.
Knight Frank director of research and consultancy Nicholas Mak reckons a condominium with about 190-210 units can be built at the site, which has been zoned ‘Residential with commercial at first storey’ with a maximum gross floor area of 252,091 square feet.
Mr Mak believes the site, apart from being well located, will also be attractive to developers because the URA temporarily disallowed the conversion of office use in the Central Area to other uses until December 2009, exacerbating limited supply in the area.
As such, Mr Mak expects the site to fetch bidding prices from $156 million to $177 million, equivalent to $620-$702 psf ppr.
Source : Business Times - 19 Sep 2007
Sentosa Cove Pte Ltd launched its final condominium land parcel - The Pinnacle Collection - yesterday with a reserve price of not less than $963.8 million or $1,600 per square foot per plot ratio (psf ppr) for the 231,676.8-sq-ft site.
In July, SC Global put in the top bid of $268.3 million or $1,799.78 psf ppr for another Sentosa condo plot, so the reserve price for The Pinnacle Collection is conservative.
Savills Singapore director of marketing and business development Ku Swee Yong expects to see bids of between $1.2 billion and $1.3 billion, and believes the hefty price tag will see more joint ventures between foreign investors and local partners.
He also said the time frame for development, which will see The Pinnacle Collection receive temporary occupation permit (TOP) around 2011 when Resorts World at Sentosa is completed, will be perfect for a developer who wants to keep part of the development as an investment property for rental returns.
The news that the development of Marina South could be accelerated, with more potential waterfront living options, is not likely to have any impact as this is not expected any time soon.
Cushman & Wakefield managing director Donald Han says the market is still fairly hot. ‘The developer (for The Pinnacle Collection) will want to go in and out within a short space of time,’ he said.
One condition for the site, however, is that price and design will determine the winning bid. So as with the recent Beach Road land tender, the winning bid may not necessarily go to the highest bidder.
Sentosa Cove general manager Kemmy Tan added: ‘Design for this development is a key component in our evaluation.’
Design could raise the price of the units too.
‘As The Pinnacle Collection is conceptualised as an iconic project, the successful developer would allocate more in the way of resources to conceive an inspiring design as well as high-end finishes,’ said CBRE Research executive director Li Hiaw Ho.
As such, he estimates that the break-even cost would be between $2,800 and $3,000 psf based on a land price of $2,000 psf ppr. This would translate to an estimated selling price of about $3,200-$3,500 psf.
Separately, the Urban Redevelopment Authority (URA) put up a site in Enggor Street (Land Parcel B) in Tanjong Pagar for tender on the confirmed list of the Government Land Sales Programme.
Knight Frank director of research and consultancy Nicholas Mak reckons a condominium with about 190-210 units can be built at the site, which has been zoned ‘Residential with commercial at first storey’ with a maximum gross floor area of 252,091 square feet.
Mr Mak believes the site, apart from being well located, will also be attractive to developers because the URA temporarily disallowed the conversion of office use in the Central Area to other uses until December 2009, exacerbating limited supply in the area.
As such, Mr Mak expects the site to fetch bidding prices from $156 million to $177 million, equivalent to $620-$702 psf ppr.
Source : Business Times - 19 Sep 2007
SOME 61 per cent of Upper Serangoon Shopping Centre has been put up for sale by its owner, who is asking for $35-37 million for the stake.
SOME 61 per cent of Upper Serangoon Shopping Centre has been put up for sale by its owner, who is asking for $35-37 million for the stake.
The price works out to an average of $595 to $629 per square foot (psf) over available floor area.
The 61 per cent share is made up of strata-titled units consisting of 66 shop units out of a total of 164, as well as the sole office unit and all eight apartments. The properties for sale have a total strata floor area of 58,750 sq ft.
Transacted prices of commercial units in the vicinity for this year are in the range of $600-770 psf, said Credo Real Estate, which is marketing the project.
The stake is being sold by the original developer of the building, Hong Huat Development Co, which is now in voluntary liquidation.
The property firm was previously trying to get owners holding at least an 80 per cent share value in the shopping centre to agree to a collective sale. But BT understands that the majority owner decided to go ahead and sell the 61 per cent stake rather than to wait.
Credo said that there is still an opportunity for an en bloc sale together with other proprietors who may be keen to explore the possibility.
The buyer can also embark on a refurbishment scheme to spruce up the units for potential higher rentals, the firm added.
The ageing Upper Serangoon Shopping Centre is a six-storey commercial and residential development on Upper Serangoon Road.
‘With its prominent visibility and good accessibility, Upper Serangoon Shopping Centre is an attractive investment to serious investors looking for higher returns compared with those of the residential properties,’ said Credo.
The area consists mainly of conventional landed housing and low to mid-rise residential and shophouse developments.
The tender for the property will close on Oct 17 at 2.30 pm.
Source : Business Times - 19 Sep 2007
The price works out to an average of $595 to $629 per square foot (psf) over available floor area.
The 61 per cent share is made up of strata-titled units consisting of 66 shop units out of a total of 164, as well as the sole office unit and all eight apartments. The properties for sale have a total strata floor area of 58,750 sq ft.
Transacted prices of commercial units in the vicinity for this year are in the range of $600-770 psf, said Credo Real Estate, which is marketing the project.
The stake is being sold by the original developer of the building, Hong Huat Development Co, which is now in voluntary liquidation.
The property firm was previously trying to get owners holding at least an 80 per cent share value in the shopping centre to agree to a collective sale. But BT understands that the majority owner decided to go ahead and sell the 61 per cent stake rather than to wait.
Credo said that there is still an opportunity for an en bloc sale together with other proprietors who may be keen to explore the possibility.
The buyer can also embark on a refurbishment scheme to spruce up the units for potential higher rentals, the firm added.
The ageing Upper Serangoon Shopping Centre is a six-storey commercial and residential development on Upper Serangoon Road.
‘With its prominent visibility and good accessibility, Upper Serangoon Shopping Centre is an attractive investment to serious investors looking for higher returns compared with those of the residential properties,’ said Credo.
The area consists mainly of conventional landed housing and low to mid-rise residential and shophouse developments.
The tender for the property will close on Oct 17 at 2.30 pm.
Source : Business Times - 19 Sep 2007
ANOTHER residential skyscraper of up to 60 storeys high could be built in Tanjong Pagar after a site was put up for sale
ANOTHER residential skyscraper of up to 60 storeys high could be built in Tanjong Pagar after a site was put up for sale yesterday, which is set to fetch more than $200 million.
The 99-year leasehold, 0.28ha site on Enggor Street went on sale just two weeks after an adjoining plot also hit the market.
The plot has a maximum gross floor area of 23,420 sq m, which property consultants estimate could hold 235 to 250 apartments. Commercial space can be located on the first storey.
The site is one of 10 plots transferred from the reserve list to the confirmed list for the July to December period.
That means the site was put up for tender on a specific date, whereas on the reserve list a tender is triggered only when an acceptable expression of interest is lodged.
The Urban Redevelopment Authority, which launched the tender yesterday, said the site caters to demand for inner-city living. Upcoming projects nearby include Icon by Far East Organization and the Housing Board’s 50-storey Pinnacle@Duxton.
The tender for the latest site closes at noon on Nov 15.
Mr Li Hiaw Ho, an executive director of CB Richard Ellis Research, expects the site to attract bids above $800 per sq ft per plot ratio (psf ppr), or $200 million.
The regional director and head of investments at Jones Lang LaSalle, Mr Lui Seng Fatt, was more bullish, estimating at least $1,200 psf ppr, or above $300 million.
The site, said Mr Lui, could house ‘branded’ residences managed by reputable global managers. Existing branded homes in Singapore include upcoming St Regis Residences and Four Seasons Park.
Earlier this month, an adjoining 0.3ha residential site in Enggor Street was put up for tender.
Source : Straits Times - 19 Sep 2007
The 99-year leasehold, 0.28ha site on Enggor Street went on sale just two weeks after an adjoining plot also hit the market.
The plot has a maximum gross floor area of 23,420 sq m, which property consultants estimate could hold 235 to 250 apartments. Commercial space can be located on the first storey.
The site is one of 10 plots transferred from the reserve list to the confirmed list for the July to December period.
That means the site was put up for tender on a specific date, whereas on the reserve list a tender is triggered only when an acceptable expression of interest is lodged.
The Urban Redevelopment Authority, which launched the tender yesterday, said the site caters to demand for inner-city living. Upcoming projects nearby include Icon by Far East Organization and the Housing Board’s 50-storey Pinnacle@Duxton.
The tender for the latest site closes at noon on Nov 15.
Mr Li Hiaw Ho, an executive director of CB Richard Ellis Research, expects the site to attract bids above $800 per sq ft per plot ratio (psf ppr), or $200 million.
The regional director and head of investments at Jones Lang LaSalle, Mr Lui Seng Fatt, was more bullish, estimating at least $1,200 psf ppr, or above $300 million.
The site, said Mr Lui, could house ‘branded’ residences managed by reputable global managers. Existing branded homes in Singapore include upcoming St Regis Residences and Four Seasons Park.
Earlier this month, an adjoining 0.3ha residential site in Enggor Street was put up for tender.
Source : Straits Times - 19 Sep 2007
VETERAN lawyer was sentenced to three months in jail yesterday for his role in a cashback property scam.
A VETERAN lawyer was sentenced to three months in jail yesterday for his role in a cashback property scam.
Bachoo Mohan Singh, a lawyer for more than 30 years, is appealing against the conviction and sentence and is out on bail of $125,000.
Singh, 59, had been convicted in a district court on June 30 for helping a Housing Board flat owner make a false declaration three years ago.
Although the agreed selling price for Mr Koh Sia Kang’s five-room Redhill flat was $390,000, it was inflated by $100,000 so as to secure a higher bank loan for the buyer.
In such scams, the cash difference between the actual and declared price is either kept by the buyer or split with the seller.
Singh was found out as a result of the sale falling through. He had acted for Mr Koh, 53, a taxi driver, who sued the buyers, claiming he was cheated of money in the transaction.
Mr Koh also sued property agent Kereen Teo Pei Pei, 28, who was fined $8,000 last year for trying to cheat DBS Bank by inflating the price.
Her manager was similarly fined.
Mr Koh has not been charged with any offence.
Singh did not display any emotion when sentence was passed. About 10 family members and friends were in court.
When convicting Singh in June, District Judge Bala Reddy had said that when Mr Koh proceeded to make the false $490,000 claim against the couple, Singh continued to act for him in the suit and thus abused the judicial process.
Source : Straits Times - 19 Sep 2007
Bachoo Mohan Singh, a lawyer for more than 30 years, is appealing against the conviction and sentence and is out on bail of $125,000.
Singh, 59, had been convicted in a district court on June 30 for helping a Housing Board flat owner make a false declaration three years ago.
Although the agreed selling price for Mr Koh Sia Kang’s five-room Redhill flat was $390,000, it was inflated by $100,000 so as to secure a higher bank loan for the buyer.
In such scams, the cash difference between the actual and declared price is either kept by the buyer or split with the seller.
Singh was found out as a result of the sale falling through. He had acted for Mr Koh, 53, a taxi driver, who sued the buyers, claiming he was cheated of money in the transaction.
Mr Koh also sued property agent Kereen Teo Pei Pei, 28, who was fined $8,000 last year for trying to cheat DBS Bank by inflating the price.
Her manager was similarly fined.
Mr Koh has not been charged with any offence.
Singh did not display any emotion when sentence was passed. About 10 family members and friends were in court.
When convicting Singh in June, District Judge Bala Reddy had said that when Mr Koh proceeded to make the false $490,000 claim against the couple, Singh continued to act for him in the suit and thus abused the judicial process.
Source : Straits Times - 19 Sep 2007
Despite signs that sentiment has been weighed down by global credit woes, property consultants are still keeping to a bullish outlook
Despite signs that sentiment has been weighed down by global credit woes, property consultants are still keeping to a bullish outlook for the Singapore property market.
They are expecting to see further upside in prices of as much as 50 percent over the next 6 to 18 months.
This is despite the industry taking a slight breather and a general cautionary mood among investors due to the US sub-prime mortgage crisis.
Demand in the mid-tier and mass-market segment is seen as coming from those who need replacement units.
Nicholas Mak, director of Consultancy and Research, Knight Frank, said: “Some of the people whose project has gone en bloc successfully will be looking for replacement properties and as prices in the high-end market have skyrocketed, they will perhaps buy properties that are in the mid-tier or in the mass market.”
Those investing in entry-level and mid-tier condominiums are mainly Singaporeans and permanent residents.
Prices for mid-tier condos have, so far this year, climbed some 15 percent - while those for entry-level properties have jumped by 12 percent.
A new development targeted at heartlanders has just been launched at Ang Mo Kio.
And consultants said they expect the units to be sold for S$1,100 to S$1,200 per square foot.
“Although it is in the HDB heartland, it’s in a very good location – very close proximity to the Ang Mo Kio MRT station and the Ang Mo Kio hub which has a major retail mall,” said Mr Mak.
Data out from the Urban Redevelopment Authority (URA) on Monday showed that almost 1,900 new residential units were launched last month.
The total number of new units for the whole of the third quarter is expected to be around 4,000.
Source : Channel NewsAsia - 18 Sept 2007
They are expecting to see further upside in prices of as much as 50 percent over the next 6 to 18 months.
This is despite the industry taking a slight breather and a general cautionary mood among investors due to the US sub-prime mortgage crisis.
Demand in the mid-tier and mass-market segment is seen as coming from those who need replacement units.
Nicholas Mak, director of Consultancy and Research, Knight Frank, said: “Some of the people whose project has gone en bloc successfully will be looking for replacement properties and as prices in the high-end market have skyrocketed, they will perhaps buy properties that are in the mid-tier or in the mass market.”
Those investing in entry-level and mid-tier condominiums are mainly Singaporeans and permanent residents.
Prices for mid-tier condos have, so far this year, climbed some 15 percent - while those for entry-level properties have jumped by 12 percent.
A new development targeted at heartlanders has just been launched at Ang Mo Kio.
And consultants said they expect the units to be sold for S$1,100 to S$1,200 per square foot.
“Although it is in the HDB heartland, it’s in a very good location – very close proximity to the Ang Mo Kio MRT station and the Ang Mo Kio hub which has a major retail mall,” said Mr Mak.
Data out from the Urban Redevelopment Authority (URA) on Monday showed that almost 1,900 new residential units were launched last month.
The total number of new units for the whole of the third quarter is expected to be around 4,000.
Source : Channel NewsAsia - 18 Sept 2007
Sentosa Cove is launching its final condominium development land parcel.
Sentosa Cove is launching its final condominium development land parcel.
The Pinnacle Collection has a reserve price of S$964 million or S$1,600 per square foot per plot ratio.
The 230,000 square feet site has a maximum permissible gross floor area of over 600,000 square feet.
A condominium with about 360 luxury apartments can be built on the ocean-front site.
The 20-storey building will be the tallest at Sentosa Cove.
The site will be sold based on price as well as design concept.
CB Richard Ellis expects bids for the site to be above S$2,000 per square foot per plot ratio.
It estimates the breakeven cost to be between S$2,800 and S$3,000 per square foot.
This would translate to an estimated selling price of about S$3,200 to S$3,500 per square foot for homes in the development. - CNA/ms
Source : Channel NewsAsia - 18 Sept 2007
The Pinnacle Collection has a reserve price of S$964 million or S$1,600 per square foot per plot ratio.
The 230,000 square feet site has a maximum permissible gross floor area of over 600,000 square feet.
A condominium with about 360 luxury apartments can be built on the ocean-front site.
The 20-storey building will be the tallest at Sentosa Cove.
The site will be sold based on price as well as design concept.
CB Richard Ellis expects bids for the site to be above S$2,000 per square foot per plot ratio.
It estimates the breakeven cost to be between S$2,800 and S$3,000 per square foot.
This would translate to an estimated selling price of about S$3,200 to S$3,500 per square foot for homes in the development. - CNA/ms
Source : Channel NewsAsia - 18 Sept 2007
PROPERTY investment sales could hit $50 billion by the end of 2007, CB Richard Ellis (CBRE) predicted
PROPERTY investment sales could hit $50 billion by the end of 2007, CB Richard Ellis (CBRE) predicted yesterday - increasing its full-year target from the figure of $35 billion it set just three months ago.
If CBRE’s target of $45-50 billion is met, it will be a substantial increase from the $30.6 billion worth of investment properties transacted in 2006.
The property firm arrived at the new target after total investment sales for the year to date came to some $37.9 billion - exceeding the previous prediction of $35 billion for the whole of 2007.
CBRE’s bullish prediction came on the back of news that some $12.7 billion worth of investment transactions have been recorded since the start of July, placing Singapore in a good position to end the year on a strong footing. ‘At this current pace, CBRE expects sales to peak at an all-time high of $50 billion by the end of 2007,’ the firm said in a report.
CBRE’s investment sales tally includes land deals, collective sales, transactions of entire office and other buildings as well as sales of strata-titled units including good class bungalows and condominiums worth more than $5 million apiece.
Investment sales in the private sector accounted for 84 per cent or $31.7 billion of total investment sales so far this year. The public sector contributed the remaining $6.2 billion.
So far this year, the residential sector has recorded $23.8 billion in transacted value - or 63 per cent of the year’s total investment sales, CBRE said. In particular, the collective sales market was fairly active in the third quarter of 2007, with a total of 16 sites generating some $1.7 billion of investment sales.
This was followed by sales of office properties. ‘On the back of the upbeat Singapore office market, investment activity in the office investment market remains robust,’ said CBRE. ‘Prime office properties continue to be highly sought after by investors, with some notable acquisitions made by real estate investment trusts and foreign funds.’Total office investment sales accounted for 24 per cent - or $9.2 billion - of the year’s investment sales.
Source : Business Times - 18 Sep 2007
If CBRE’s target of $45-50 billion is met, it will be a substantial increase from the $30.6 billion worth of investment properties transacted in 2006.
The property firm arrived at the new target after total investment sales for the year to date came to some $37.9 billion - exceeding the previous prediction of $35 billion for the whole of 2007.
CBRE’s bullish prediction came on the back of news that some $12.7 billion worth of investment transactions have been recorded since the start of July, placing Singapore in a good position to end the year on a strong footing. ‘At this current pace, CBRE expects sales to peak at an all-time high of $50 billion by the end of 2007,’ the firm said in a report.
CBRE’s investment sales tally includes land deals, collective sales, transactions of entire office and other buildings as well as sales of strata-titled units including good class bungalows and condominiums worth more than $5 million apiece.
Investment sales in the private sector accounted for 84 per cent or $31.7 billion of total investment sales so far this year. The public sector contributed the remaining $6.2 billion.
So far this year, the residential sector has recorded $23.8 billion in transacted value - or 63 per cent of the year’s total investment sales, CBRE said. In particular, the collective sales market was fairly active in the third quarter of 2007, with a total of 16 sites generating some $1.7 billion of investment sales.
This was followed by sales of office properties. ‘On the back of the upbeat Singapore office market, investment activity in the office investment market remains robust,’ said CBRE. ‘Prime office properties continue to be highly sought after by investors, with some notable acquisitions made by real estate investment trusts and foreign funds.’Total office investment sales accounted for 24 per cent - or $9.2 billion - of the year’s investment sales.
Source : Business Times - 18 Sep 2007
PRIME office rents in Singapore climbed some 3.3 per cent in August to hit an average of $12.21 per sq ft per month
PRIME office rents in Singapore climbed some 3.3 per cent in August to hit an average of $12.21 per sq ft per month (psf pm), Cushman & Wakefield’s new office report shows.
The property firm used a basket of about 50 buildings to calculate the average rent, managing director Donald Han said.
The firm, which also tracks the office rents for the top 25 Grade A office buildings within the larger basket of properties, said that rents for the selected 25 buildings rose to an average of $12.28 psf pm as at end-August, from $12.07 psf pm in July - up 1.7 per cent.
Last month’s rise in prime office rents was led by buildings in Raffles Place, Cushman & Wakefield’s data shows. Average rents in Raffles Place climbed 5.6 per cent in August to hit $13.68 psf pm. Rents in the Orchard and Scotts area also rose some 2.2 per cent to $9.76 psf pm, while at City Hall/Marina Centre/Bugis, rents rose 0.3 per cent to $12.22 psf pm.
Mr Han expects overall prime office rents to hit $13.50 psf pm by year-end. However, rents at the top tier of Raffles Place properties will hit $19 psf pm by end-2007, he said.
He added that the US sub-prime crisis, which rattled markets here in August, will have little impact on the office market for the rest of the year. ‘Moving forward, you will still see an upside in terms of rentals,’ Mr Han said. ‘Sub-prime or no sub-prime, the fundamentals are still there for prices to keep climbing - there will still be a shortage of office space over the next few years.’
Source : Business Times - 18 Sep 2007
The property firm used a basket of about 50 buildings to calculate the average rent, managing director Donald Han said.
The firm, which also tracks the office rents for the top 25 Grade A office buildings within the larger basket of properties, said that rents for the selected 25 buildings rose to an average of $12.28 psf pm as at end-August, from $12.07 psf pm in July - up 1.7 per cent.
Last month’s rise in prime office rents was led by buildings in Raffles Place, Cushman & Wakefield’s data shows. Average rents in Raffles Place climbed 5.6 per cent in August to hit $13.68 psf pm. Rents in the Orchard and Scotts area also rose some 2.2 per cent to $9.76 psf pm, while at City Hall/Marina Centre/Bugis, rents rose 0.3 per cent to $12.22 psf pm.
Mr Han expects overall prime office rents to hit $13.50 psf pm by year-end. However, rents at the top tier of Raffles Place properties will hit $19 psf pm by end-2007, he said.
He added that the US sub-prime crisis, which rattled markets here in August, will have little impact on the office market for the rest of the year. ‘Moving forward, you will still see an upside in terms of rentals,’ Mr Han said. ‘Sub-prime or no sub-prime, the fundamentals are still there for prices to keep climbing - there will still be a shortage of office space over the next few years.’
Source : Business Times - 18 Sep 2007
MAS is monitoring the situation and stands ready to inject funds if needed
MAS is monitoring the situation and stands ready to inject funds if needed, says Iswaran.
IT is ‘quite a difficult task’ at present to quantify how much the US sub-prime crisis will impact Singapore, Minister of State for Trade and Industry S Iswaran said in Parliament yesterday.
However, the risks have ‘increased’, and Singapore’s central bank is monitoring the situation and stands ready to inject funds if needed, he said.
Mr Iswaran also said that the government’s economic growth forecast for 2007 remains unchanged at 7-8 per cent, despite the recent global market turbulence.
‘The growth in the region and the diversity of our export markets will provide us with some buffer, but we are not immune to a slowdown in the major industrial economies,’ Mr Iswaran said. ‘At this stage, although the risks have increased, it is not clear that there has been a significant spillover into the real economy.’
Second Finance Minister Tharman Shanmugaratnam added that the Monetary Authority of Singapore (MAS) will inject liquidity into the market only if there is a ’systemic crunch’ - such as when normal borrowing and lending between the banks is not taking place. ‘This has not been the case so far,’ he said.
MAS is also working with the Singapore Exchange (SGX) to monitor its members and to ensure that there are sufficient resources in its clearing funds to meet outstanding obligations, Mr Iswaran said.
Separately, Minister for National Development Mah Bow Tan said that there is ‘no sign of a negative impact’ from the sub-prime crisis on the property market here.
‘The property market is driven by economic fundamentals and confidence,’ said Mr Mah. ‘Our economic growth is still healthy.’
The property market in Singapore is currently enjoying a boom. Home prices rose some 7.9 per cent in the second quarter of the year - the biggest quarter-on-quarter gain in about seven years.
All three ministers were responding to questions from their counterparts in Parliament about the impact of the US sub-prime crisis on Singapore.
Source : Business Times - 18 Sep 2007
IT is ‘quite a difficult task’ at present to quantify how much the US sub-prime crisis will impact Singapore, Minister of State for Trade and Industry S Iswaran said in Parliament yesterday.
However, the risks have ‘increased’, and Singapore’s central bank is monitoring the situation and stands ready to inject funds if needed, he said.
Mr Iswaran also said that the government’s economic growth forecast for 2007 remains unchanged at 7-8 per cent, despite the recent global market turbulence.
‘The growth in the region and the diversity of our export markets will provide us with some buffer, but we are not immune to a slowdown in the major industrial economies,’ Mr Iswaran said. ‘At this stage, although the risks have increased, it is not clear that there has been a significant spillover into the real economy.’
Second Finance Minister Tharman Shanmugaratnam added that the Monetary Authority of Singapore (MAS) will inject liquidity into the market only if there is a ’systemic crunch’ - such as when normal borrowing and lending between the banks is not taking place. ‘This has not been the case so far,’ he said.
MAS is also working with the Singapore Exchange (SGX) to monitor its members and to ensure that there are sufficient resources in its clearing funds to meet outstanding obligations, Mr Iswaran said.
Separately, Minister for National Development Mah Bow Tan said that there is ‘no sign of a negative impact’ from the sub-prime crisis on the property market here.
‘The property market is driven by economic fundamentals and confidence,’ said Mr Mah. ‘Our economic growth is still healthy.’
The property market in Singapore is currently enjoying a boom. Home prices rose some 7.9 per cent in the second quarter of the year - the biggest quarter-on-quarter gain in about seven years.
All three ministers were responding to questions from their counterparts in Parliament about the impact of the US sub-prime crisis on Singapore.
Source : Business Times - 18 Sep 2007
Monday, September 17, 2007
STEEL, aluminium and even glass are to be the new concrete for many of the Housing and Development Board’s latest projects.
STEEL, aluminium and even glass are to be the new concrete for many of the Housing and Development Board’s latest projects.
Materials and techniques which might not have been cost-effective in the past have become increasingly viable following the rise in the price of concrete caused by January’s ban on exports of sand from Indonesia.
The HDB says that initiatives it has already taken, such as using steel instead of concrete to construct lift shafts, have already achieved positive results.
The HDB told BT that using steel in a conventional 12-storey block has reduced the amount of concrete needed for lift shafts by 90 per cent. ‘This leads to an overall cost savings of about 20 per cent and a shortening of construction time by 20 per cent,’ a board spokesman said.
A conventional 12-storey concrete lift shaft can require up to 90 cubic metres of concrete.
This new method of construction was piloted in projects in Yishun, Jurong East and Marsiling and the HDB says that since April, use of the technique has been extended. Another upside of the new method is that an additional 250 blocks which previously exceeded the budget for the Lift Upgrading Programme now become eligible.
Following the sand ban, the HDB - probably Singapore’s biggest developer - said that it would try to cut the use of sand by as much as 30 per cent. By volume, sand is the main ingredient of concrete.
‘While engineers work towards economising on materials and designs, architects will continue to ensure that the outcome retains its desired aesthetics and functionality,’ said the HDB.
Building layouts and structures are being fine-tuned to optimise concrete usage. But some of the new architectureled initiatives include the simple tweaking of previous HDB design guidelines.
One new idea involves providing much larger glass windows. The HDB has been providing bay windows in flats since 2004. ‘Taking this a step further to improve economy and reduce sand use, we now provide three-quarter and full-height glass windows for bedrooms and living rooms respectively,’ the board said.
Other simple solutions include changing the design of concrete parapets along corridors. Since 2000, most parapets have been built using perforated aluminium panels. HDB says that all HDB buildings tendered from June onwards will have parapets designed with slits or perforations to reduce the concrete use - or simply have metal parapets.
Other solutions involve replacing concrete designs with metal ones. For new shelters and linkways, HDB plans to use steel columns instead of concrete.
Modular steel ramps were tried out at Woodlands Street 83 and will be introduced to more HDB estates in line with its Barrier Free Access initiative.
The HDB said: ‘As the industry exploits new materials, methods and technology in our move towards sustainable construction, we believe home buyers will also grow more receptive to the use of these new materials and designs.’
Source: Business Times 17 Sept 07
Materials and techniques which might not have been cost-effective in the past have become increasingly viable following the rise in the price of concrete caused by January’s ban on exports of sand from Indonesia.
The HDB says that initiatives it has already taken, such as using steel instead of concrete to construct lift shafts, have already achieved positive results.
The HDB told BT that using steel in a conventional 12-storey block has reduced the amount of concrete needed for lift shafts by 90 per cent. ‘This leads to an overall cost savings of about 20 per cent and a shortening of construction time by 20 per cent,’ a board spokesman said.
A conventional 12-storey concrete lift shaft can require up to 90 cubic metres of concrete.
This new method of construction was piloted in projects in Yishun, Jurong East and Marsiling and the HDB says that since April, use of the technique has been extended. Another upside of the new method is that an additional 250 blocks which previously exceeded the budget for the Lift Upgrading Programme now become eligible.
Following the sand ban, the HDB - probably Singapore’s biggest developer - said that it would try to cut the use of sand by as much as 30 per cent. By volume, sand is the main ingredient of concrete.
‘While engineers work towards economising on materials and designs, architects will continue to ensure that the outcome retains its desired aesthetics and functionality,’ said the HDB.
Building layouts and structures are being fine-tuned to optimise concrete usage. But some of the new architectureled initiatives include the simple tweaking of previous HDB design guidelines.
One new idea involves providing much larger glass windows. The HDB has been providing bay windows in flats since 2004. ‘Taking this a step further to improve economy and reduce sand use, we now provide three-quarter and full-height glass windows for bedrooms and living rooms respectively,’ the board said.
Other simple solutions include changing the design of concrete parapets along corridors. Since 2000, most parapets have been built using perforated aluminium panels. HDB says that all HDB buildings tendered from June onwards will have parapets designed with slits or perforations to reduce the concrete use - or simply have metal parapets.
Other solutions involve replacing concrete designs with metal ones. For new shelters and linkways, HDB plans to use steel columns instead of concrete.
Modular steel ramps were tried out at Woodlands Street 83 and will be introduced to more HDB estates in line with its Barrier Free Access initiative.
The HDB said: ‘As the industry exploits new materials, methods and technology in our move towards sustainable construction, we believe home buyers will also grow more receptive to the use of these new materials and designs.’
Source: Business Times 17 Sept 07
TAN Chong International appears now to be more of a property play than a seller of motor vehicles.
TAN Chong International appears now to be more of a property play than a seller of motor vehicles. That’s why several analysts, including Singapore’s Kim Eng Research, are calling a buy on the stock at current prices - on Friday, it closed 2.5 Hongkong cents lower at HK$2.325.
Kim Eng on Sept 5 set a target for the stock at HK$3.62 - 4 per cent down from an earlier target of HK$3.77. It attributes the downward revision to the recent change in development charges, which it said affected its valuation of Tan Chong, as it had earlier factored in the combined redevelopment of Tan Chong Motor Centre and The Wilby Residence, both off Bukit Timah Road.
Kim Eng said: ‘The higher DC rates resulted in a higher development charge and consequently our valuation for the company’s investment properties has decreased from HK$2,591.1 million to HK$2,293.8 million.’
Although the property scene in Singapore has been somewhat dampened by the hike in development charges and the more recent changes in en bloc rules, most property players and observers are still bullish on the sector’s long-term outlook.
It’s Tan Chong’s property assets that have perhaps also attracted Malaysian business tycoon Quek Leng Chan to increase his stake in the company through his Guoco Group. Guoco increased its stake in Tan Chong from 11.02 per cent at the end of last year to 12.11 per cent at end-June this year.
Everyone knows that Mr Quek is a shrewd investor and he perhaps also sees an opportunity to increase his stake even further, given market talk about the house of the Tans who currently control Tan Chong.
According to previous media reports, there is little love lost between the Singapore and Malaysian side of the founding family - between Singapore-based company chairman Tan Eng Soon and his uncle Tan Kim Hor.
In recent years, the chairman appears to have consolidated his position, with the latest annual report showing he has 16.66 per cent of the company. In total Tan Chong Consolidated, the holding company of the founding family, owns 45.34 per cent.
While the trigger point for a compulsory general offer for a listed company in Hong Kong is 35 per cent, this should pose little difficulty for a takeover artiste like Mr Quek, nor is he short of the resources to make a takoever offer for a company with a market capitalisation of under $1 billion.
In the meantime, the company’s car sector is doing less well as sales of its main line - Nissan - continue to decline in the face of fierce competition from the likes of Toyota and Honda and from parallel importers. Sales of Nissan fell from 10,045 units in 1H06 to 6,746 in 2H06 and to 6,106 in 1H07.
Things are brighter, however, at its Subaru and Nissan heavy commercial vehicle divisions, with sales of the former rising from 1,836 units in 1H06 to 2,323 units in 2H06 and to 3,185 in 1H07.
Kim Eng’s target price is based on the sum-of-the-parts of Tan Chong’s vehicle distributorship business, its high net cash position of about HK41 cents a share, and the estimated market values of its investment and held-for-sale properties.
Details like these must surely have not escaped the eyes of Mr Quek and his advisers.
A takeover attempt by Mr Quek would be a boost to the fortunes of weary minority investors.
Source: Business Times 17 Sept 07
Kim Eng on Sept 5 set a target for the stock at HK$3.62 - 4 per cent down from an earlier target of HK$3.77. It attributes the downward revision to the recent change in development charges, which it said affected its valuation of Tan Chong, as it had earlier factored in the combined redevelopment of Tan Chong Motor Centre and The Wilby Residence, both off Bukit Timah Road.
Kim Eng said: ‘The higher DC rates resulted in a higher development charge and consequently our valuation for the company’s investment properties has decreased from HK$2,591.1 million to HK$2,293.8 million.’
Although the property scene in Singapore has been somewhat dampened by the hike in development charges and the more recent changes in en bloc rules, most property players and observers are still bullish on the sector’s long-term outlook.
It’s Tan Chong’s property assets that have perhaps also attracted Malaysian business tycoon Quek Leng Chan to increase his stake in the company through his Guoco Group. Guoco increased its stake in Tan Chong from 11.02 per cent at the end of last year to 12.11 per cent at end-June this year.
Everyone knows that Mr Quek is a shrewd investor and he perhaps also sees an opportunity to increase his stake even further, given market talk about the house of the Tans who currently control Tan Chong.
According to previous media reports, there is little love lost between the Singapore and Malaysian side of the founding family - between Singapore-based company chairman Tan Eng Soon and his uncle Tan Kim Hor.
In recent years, the chairman appears to have consolidated his position, with the latest annual report showing he has 16.66 per cent of the company. In total Tan Chong Consolidated, the holding company of the founding family, owns 45.34 per cent.
While the trigger point for a compulsory general offer for a listed company in Hong Kong is 35 per cent, this should pose little difficulty for a takeover artiste like Mr Quek, nor is he short of the resources to make a takoever offer for a company with a market capitalisation of under $1 billion.
In the meantime, the company’s car sector is doing less well as sales of its main line - Nissan - continue to decline in the face of fierce competition from the likes of Toyota and Honda and from parallel importers. Sales of Nissan fell from 10,045 units in 1H06 to 6,746 in 2H06 and to 6,106 in 1H07.
Things are brighter, however, at its Subaru and Nissan heavy commercial vehicle divisions, with sales of the former rising from 1,836 units in 1H06 to 2,323 units in 2H06 and to 3,185 in 1H07.
Kim Eng’s target price is based on the sum-of-the-parts of Tan Chong’s vehicle distributorship business, its high net cash position of about HK41 cents a share, and the estimated market values of its investment and held-for-sale properties.
Details like these must surely have not escaped the eyes of Mr Quek and his advisers.
A takeover attempt by Mr Quek would be a boost to the fortunes of weary minority investors.
Source: Business Times 17 Sept 07
A hefty $32.8 billion worth of private residential properties changed hands in the first six months of this year
A hefty $32.8 billion worth of private residential properties changed hands in the first six months of this year - more than double the $15 billion chalked up in the same period last year.
And the number is just about 9 per cent shy of the record $36 billion for the whole of 2006, according to an analysis of caveats by DTZ Debenham Tie Leung.
Driving the robust first-half showing has been the rapid escalation of private home prices and rising sales activity including collective sales.
DTZ expects the value of private homes transacted for the whole of this year will ’significantly surpass’ last year’s record high.
Despite a slowdown in August, the firm’s executive director Ong Choon Fah expects strong sales in the primary as well as secondary markets in the coming months. She is of the view that confidence in the Singapore property market remains good and that ‘there’s still liquidity here’ despite the sub-prime mortgage problems in the US.
Private apartments and condos accounted for $26.4 billion, or 80 per cent, of the value of H1 2007 private home deals. This is a 126 per cent jump from the same year-ago period, and is close to the $28.8 billion for the whole of 2006.
The average value per non-landed private residential transaction was $1.61 million in H1 2007. This is about 7 per cent higher than the $1.51 million average value per deal for full-year 2006.
‘This was due to the continued interest for high-end residential properties, a significant price increase and rising land values which bolstered premiums achieved in collective sales,’ DTZ said in its report.
The traditional prime districts of 9, 10 and 11 made up slightly over half, or about $13.8 billion, of the total value of non-landed private home transactions in first-half 2007. And DTZ reckons the full-year 2007 figure is very likely to surpass the record $16.2 billion for the whole of 2006.
The average value per transaction for prime district apartments and condos also hit a record $2.84 million in H1 2007, which was 7 per cent higher than the $2.67 million average for the whole of last year.
DTZ’s analysis was based on caveats captured by the Urban Redevelopment Authority’s Realis system dating back to 1995. The analysis showed that the secondary market made up slightly over two-thirds of transaction values for islandwide non-landed homes in H1 2007, and the same was true for the prime districts, in tandem with strong secondary market activity seen in the first half.
The secondary market covers both resale and subsale deals. Resale deals are secondary market deals in projects that have received their Certificates of Statutory Completion, while subsales involve developments that have yet to do so.
In total, $3.5 billion worth of apartments and condos changed hands in H1 2007 in the subsale market, 12 times the $290 million in the same year-ago period.
The H1 2007 subsale value trailed only the $3.9 billion for the whole of 1996, when property speculation was rampant. DTZ expects the full-year 2007 value of subsale apartment and condo deals to exceed 1996’s, supported by rising property prices.
The average value per transaction of subsale apartments and condos was at a record high in H1 2007, at $1.62 million, surpassing the $1.35 million average for full-year 2006.
DTZ’s Mrs Ong is confident about the momentum of private home sales in the coming months in both the primary and secondary markets.
Prices in the secondary market have risen but there’s still a significant price gap between new launches and older properties, even for those that received Temporary Occupation Permits just about a year or so ago. So resale will continue to do well.
In the prime districts, demand for resale properties will also continue to be supported by strong investor interest, as rents increase amidst tight supply in the short term, as numerous sites sold through collective sales will be torn down for redevelopment,’ she says.
‘In the primary market, developers will do well for mass-market project launches. Housing and Development Board resale flat prices have started to recover and this is providing bottom-up support for the property market. In the high-end segment, some niche projects in the prime districts may be relatively small but these are big-ticket items so that will still chalk up the sale value tally,’ Mrs Ong says.
On the US sub-prime mortgage problems, Mrs Ong says: ‘When there is uncertainty, there is a flight to safety and gateway cities like Singapore are perceived to be safer than others,’ she says.
Drop in subsales points to more stable prices ahead.
And the number is just about 9 per cent shy of the record $36 billion for the whole of 2006, according to an analysis of caveats by DTZ Debenham Tie Leung.
Driving the robust first-half showing has been the rapid escalation of private home prices and rising sales activity including collective sales.
DTZ expects the value of private homes transacted for the whole of this year will ’significantly surpass’ last year’s record high.
Despite a slowdown in August, the firm’s executive director Ong Choon Fah expects strong sales in the primary as well as secondary markets in the coming months. She is of the view that confidence in the Singapore property market remains good and that ‘there’s still liquidity here’ despite the sub-prime mortgage problems in the US.
Private apartments and condos accounted for $26.4 billion, or 80 per cent, of the value of H1 2007 private home deals. This is a 126 per cent jump from the same year-ago period, and is close to the $28.8 billion for the whole of 2006.
The average value per non-landed private residential transaction was $1.61 million in H1 2007. This is about 7 per cent higher than the $1.51 million average value per deal for full-year 2006.
‘This was due to the continued interest for high-end residential properties, a significant price increase and rising land values which bolstered premiums achieved in collective sales,’ DTZ said in its report.
The traditional prime districts of 9, 10 and 11 made up slightly over half, or about $13.8 billion, of the total value of non-landed private home transactions in first-half 2007. And DTZ reckons the full-year 2007 figure is very likely to surpass the record $16.2 billion for the whole of 2006.
The average value per transaction for prime district apartments and condos also hit a record $2.84 million in H1 2007, which was 7 per cent higher than the $2.67 million average for the whole of last year.
DTZ’s analysis was based on caveats captured by the Urban Redevelopment Authority’s Realis system dating back to 1995. The analysis showed that the secondary market made up slightly over two-thirds of transaction values for islandwide non-landed homes in H1 2007, and the same was true for the prime districts, in tandem with strong secondary market activity seen in the first half.
The secondary market covers both resale and subsale deals. Resale deals are secondary market deals in projects that have received their Certificates of Statutory Completion, while subsales involve developments that have yet to do so.
In total, $3.5 billion worth of apartments and condos changed hands in H1 2007 in the subsale market, 12 times the $290 million in the same year-ago period.
The H1 2007 subsale value trailed only the $3.9 billion for the whole of 1996, when property speculation was rampant. DTZ expects the full-year 2007 value of subsale apartment and condo deals to exceed 1996’s, supported by rising property prices.
The average value per transaction of subsale apartments and condos was at a record high in H1 2007, at $1.62 million, surpassing the $1.35 million average for full-year 2006.
DTZ’s Mrs Ong is confident about the momentum of private home sales in the coming months in both the primary and secondary markets.
Prices in the secondary market have risen but there’s still a significant price gap between new launches and older properties, even for those that received Temporary Occupation Permits just about a year or so ago. So resale will continue to do well.
In the prime districts, demand for resale properties will also continue to be supported by strong investor interest, as rents increase amidst tight supply in the short term, as numerous sites sold through collective sales will be torn down for redevelopment,’ she says.
‘In the primary market, developers will do well for mass-market project launches. Housing and Development Board resale flat prices have started to recover and this is providing bottom-up support for the property market. In the high-end segment, some niche projects in the prime districts may be relatively small but these are big-ticket items so that will still chalk up the sale value tally,’ Mrs Ong says.
On the US sub-prime mortgage problems, Mrs Ong says: ‘When there is uncertainty, there is a flight to safety and gateway cities like Singapore are perceived to be safer than others,’ she says.
Drop in subsales points to more stable prices ahead.
The number of property subsales - an indicator of speculative activity - appears to be stabilising, possibly even falling.
The number of property subsales - an indicator of speculative activity - appears to be stabilising, possibly even falling.
Some industry players even believe that this could mark the beginning of more stable prices in the months to come.
Official property statistics for the third quarter will not be out until next month but monthly figures tabulated by CB Richard Ellis show a surprising dip in the number of subsales between the months of June and July.
The July figures will be updated in time but the drop is still likely to be an estimated 5-10 per cent. This comes after numbers that have been rising consistently for the three months in the second quarter of 2007.
One explanation for this could be that the window of opportunity for speculators is closing, with prices in the highend sector peaking.
CB Richard Ellis executive director Li Hiaw Ho said: ‘If you don’t have sharp increases in prices, you don’t have property speculation.’
Speculators could also be discouraged by the volatility in the global markets. ‘Because of the sub-prime crisis, a lot of buyers are exercising caution,’ said Mr Li.
Another indication that speculators could be cooling off is that the number of returned options to buy new condos also appears to be dropping.
In January, the high-profile launch of One Shenton attracted many punters hoping to flip units before exercising their options. And even though it was fully booked within days of the launch, industry watchers believe that as much as 15-25 per cent of the options were returned in the following months when speculators failed to get their target prices.
Since then, there have been several more high-profile launches. Among the most notable ones were Orchard Residences - which has since set the record for the most expensive property in Singapore at $5,500 psf - and Scotts Square.
Both developers declined to reveal the number of options returned. But persistent talk in the market has it that ‘many’ options were returned for Scotts Square.
A source said that the figure was closer to about 5-10 per cent, which in comparison is perhaps not as high as might be expected for such a prime location.
CapitaLand’s Seafront on Meyer was launched in Q2 and saw queues of buyers forming at its showflat. Now 80 per cent sold, CapitaLand said that only 3 per cent of the options were not exercised.
One Rochester, another hot property launched in Q2, also saw queues at its showflat. Developer United Engineers Ltd (UEL) said that it was surprised that only 10 per cent of the options for the fully sold condo were returned.
UEL CEO and group managing director Jackson Yap said: ‘Initially, we had some concerns about the number of returned units as the option period coincided with the sub-prime crisis. We are rather happy that the number of returned units eventually stabilised at 10 per cent, which reflects a high proportion of genuine buyers who are confident of the strong fundamentals of the development.’
Speculators are very much a part of the market and do actually have a function as they help set the threshold prices that buyers are willing to pay.
UEL’s Mr Yap added: ‘We are in no urgency to sell the returned units, although there is a waiting list of genuine buyers, in this current market. We have more than covered our costs through the rest of the sales, and feel there is a need to protect the selling prices for a high-quality development like ours.’
One Rochester was sold at a price ranging between $900 psf and $1,600 psf. Whether these prices will go up could depend on how gung-ho speculators will be in the coming months.
The Soleil at Novena was launched last month and is almost fully sold. Developer UOL said that to-date, 42 per cent of its buyers have exercised their options. The remaining 58 per cent have until the end of the month to exercise theirs.
Some industry players even believe that this could mark the beginning of more stable prices in the months to come.
Official property statistics for the third quarter will not be out until next month but monthly figures tabulated by CB Richard Ellis show a surprising dip in the number of subsales between the months of June and July.
The July figures will be updated in time but the drop is still likely to be an estimated 5-10 per cent. This comes after numbers that have been rising consistently for the three months in the second quarter of 2007.
One explanation for this could be that the window of opportunity for speculators is closing, with prices in the highend sector peaking.
CB Richard Ellis executive director Li Hiaw Ho said: ‘If you don’t have sharp increases in prices, you don’t have property speculation.’
Speculators could also be discouraged by the volatility in the global markets. ‘Because of the sub-prime crisis, a lot of buyers are exercising caution,’ said Mr Li.
Another indication that speculators could be cooling off is that the number of returned options to buy new condos also appears to be dropping.
In January, the high-profile launch of One Shenton attracted many punters hoping to flip units before exercising their options. And even though it was fully booked within days of the launch, industry watchers believe that as much as 15-25 per cent of the options were returned in the following months when speculators failed to get their target prices.
Since then, there have been several more high-profile launches. Among the most notable ones were Orchard Residences - which has since set the record for the most expensive property in Singapore at $5,500 psf - and Scotts Square.
Both developers declined to reveal the number of options returned. But persistent talk in the market has it that ‘many’ options were returned for Scotts Square.
A source said that the figure was closer to about 5-10 per cent, which in comparison is perhaps not as high as might be expected for such a prime location.
CapitaLand’s Seafront on Meyer was launched in Q2 and saw queues of buyers forming at its showflat. Now 80 per cent sold, CapitaLand said that only 3 per cent of the options were not exercised.
One Rochester, another hot property launched in Q2, also saw queues at its showflat. Developer United Engineers Ltd (UEL) said that it was surprised that only 10 per cent of the options for the fully sold condo were returned.
UEL CEO and group managing director Jackson Yap said: ‘Initially, we had some concerns about the number of returned units as the option period coincided with the sub-prime crisis. We are rather happy that the number of returned units eventually stabilised at 10 per cent, which reflects a high proportion of genuine buyers who are confident of the strong fundamentals of the development.’
Speculators are very much a part of the market and do actually have a function as they help set the threshold prices that buyers are willing to pay.
UEL’s Mr Yap added: ‘We are in no urgency to sell the returned units, although there is a waiting list of genuine buyers, in this current market. We have more than covered our costs through the rest of the sales, and feel there is a need to protect the selling prices for a high-quality development like ours.’
One Rochester was sold at a price ranging between $900 psf and $1,600 psf. Whether these prices will go up could depend on how gung-ho speculators will be in the coming months.
The Soleil at Novena was launched last month and is almost fully sold. Developer UOL said that to-date, 42 per cent of its buyers have exercised their options. The remaining 58 per cent have until the end of the month to exercise theirs.
CAPITALAND has sold its entire 45 per cent effective stake in AIG Tower in Hong Kong in a deal that values the asset at HK$8.1 billion (S$1.6 billion)
CAPITALAND has sold its entire 45 per cent effective stake in AIG Tower in Hong Kong in a deal that values the asset at HK$8.1 billion (S$1.6 billion).
Upon completion of the divestment - due on or around Nov 30, 2007 - CapitaLand will recognise a gain of about S$260.7 million in its group consolidated accounts.
The HK$8.1 billion valuation reflects a price of HK$22,042 per square foot (psf) based on AIG Tower’s net lettable area of 366,072 square feet. The Grade A office building at No 1 Connaught Road, Central has 999-year leasehold tenure and was completed in 2005. It was developed on the former Furama Hotel site that the former Pidemco Land bought a stake in from Lai Sun Group in 2000.
Pidemco, which later merged with DBS Land to form CapitaLand, subsequently sold half of its stake in the site to American International Assurance Company (AIA).
AIA is also the party that is buying CapitaLand’s 45 per cent effective stake in the building under the latest deal announced yesterday. This will boost AIA’s stake in the property to 90 per cent with Lai Sun holding the remaining 10 per cent.
Major tenants in the building, which is fully leased, include AIA, Bank of Tokyo-Mitsubishi, Royal Bank of Scotland and Wachovia Bank.
CapitaLand has also been divesting some of its Singapore office assets. Late last month, it sold its 50 per cent stake in Chevron House along Raffles Place in a deal that valued the asset at $730 million, or $2,780 psf of net lettable area.
Earlier last month, CapitaLand also paid $590.3 million for the remaining 50 per cent stake in Eureka Office Fund, which owns One George Street. This valued the award-winning office block at $1.2 billion, or about $2,700 psf.
In March, CapitaLand divested its effective 90.04 per cent stake in Temasek Tower, which was sold for $1.04 billion or $1,550 psf.
During the group’s first-half results briefing on July 31, CapitaLand Group president and CEO Liew Mun Leong stressed that the Singapore office sector will remain ‘a core holding’ to the group but that it will restructure its portfolio by divesting some existing office assets and investing in new developments.
He cited as an example of the latter the group’s bid for the former NCO Club and Beach Road Camp grounds. Last week, the Urban Redevelopment Authority awarded the site to a consortium led by City Developments.
Source: Business Times 17 Sept 07
Upon completion of the divestment - due on or around Nov 30, 2007 - CapitaLand will recognise a gain of about S$260.7 million in its group consolidated accounts.
The HK$8.1 billion valuation reflects a price of HK$22,042 per square foot (psf) based on AIG Tower’s net lettable area of 366,072 square feet. The Grade A office building at No 1 Connaught Road, Central has 999-year leasehold tenure and was completed in 2005. It was developed on the former Furama Hotel site that the former Pidemco Land bought a stake in from Lai Sun Group in 2000.
Pidemco, which later merged with DBS Land to form CapitaLand, subsequently sold half of its stake in the site to American International Assurance Company (AIA).
AIA is also the party that is buying CapitaLand’s 45 per cent effective stake in the building under the latest deal announced yesterday. This will boost AIA’s stake in the property to 90 per cent with Lai Sun holding the remaining 10 per cent.
Major tenants in the building, which is fully leased, include AIA, Bank of Tokyo-Mitsubishi, Royal Bank of Scotland and Wachovia Bank.
CapitaLand has also been divesting some of its Singapore office assets. Late last month, it sold its 50 per cent stake in Chevron House along Raffles Place in a deal that valued the asset at $730 million, or $2,780 psf of net lettable area.
Earlier last month, CapitaLand also paid $590.3 million for the remaining 50 per cent stake in Eureka Office Fund, which owns One George Street. This valued the award-winning office block at $1.2 billion, or about $2,700 psf.
In March, CapitaLand divested its effective 90.04 per cent stake in Temasek Tower, which was sold for $1.04 billion or $1,550 psf.
During the group’s first-half results briefing on July 31, CapitaLand Group president and CEO Liew Mun Leong stressed that the Singapore office sector will remain ‘a core holding’ to the group but that it will restructure its portfolio by divesting some existing office assets and investing in new developments.
He cited as an example of the latter the group’s bid for the former NCO Club and Beach Road Camp grounds. Last week, the Urban Redevelopment Authority awarded the site to a consortium led by City Developments.
Source: Business Times 17 Sept 07
Nomura Holdings, the top brokerage in Japan but a smaller player elsewhere in Asia, has launched a property investment business
Nomura Holdings, the top brokerage in Japan but a smaller player elsewhere in Asia, has launched a property investment business and is investing in companies before they go public to help build up its equities business in the region, a top banker said.
Philippe Espinasse, who joined Nomura as co-head of Asian equity capital markets two months ago, said that the brokerage wants to grow beyond selling deals to Japan’s vast investor base. ‘We’re definitely expanding the focus beyond the Japanese distribution channel,’ said Mr Espinasse, who was previously head of Asia equity capital markets at Macquarie Bank .
Nomura ranks far down the league table this year in 70th place for equity capital markets deals in Asia-Pacific outside Japan, well below its 16th and 15th place finishes for 2006 and 2005, respectively, according to Thomson Financial.
‘As one of the very top investment banks in Asia including Japan, definitely, I’d like to get back in the Top 10 for Asia ex-Japan ECM,’ said Mr Espinasse, who has spent a big chunk of his first months on the job flying around the region to meet clients.
Nomura is looking to put more of its own capital to work by investing in companies ahead of their initial public offerings (IPOs), which would put it in pole position for underwriting mandates. ‘You have to select your niches, go after transactions in sectors where you have a competitive edge,’ he said.
Powered by China and India, Asia is a growth engine for global investment banks and Nomura is battling established players in the region such as UBS, Goldman Sachs and Morgan Stanley, as well as banks that have been recently beefing up operations in the region, such as Lehman Brothers and Bear Stearns.
‘At the end of the day, it’s about being more aggressive and confident, going on the road and meeting clients and explaining how and where Nomura can add value,’ Mr Espinasse said.
Nomura, which has said that it is weighing acquisitions to enter the booming stockbroking business in India, was one of five banks to help India’s HDFC Bank Ltd raise US$698 million through an American Depositary Share issue.
Mr Espinasse said that while Nomura would continue to take advantage of its distribution capability in Japan, where cash-rich retail investors are increasingly buying overseas assets, the brokerage also wants to leverage its network of 340 global sales staff who focus on Asia outside Japan. ‘The key for my side of the business is to significantly expand the business beyond our highly successful Japanese primary equity distribution franchise.’
To that end, the brokerage in July started its Asia Asset Finance unit in Singapore, which will invest in property around Asia and develop a real estate investment trust (Reit) business.
‘That is something we are keen to do more of in Asia ex-Japan,’ said Mr Espinasse, who has Reit experience from his stint with securitisation specialist Macquarie. He said that the property arm would grow to about a dozen people.
Singapore is the top property trust market in the Asia-Pacific after Japan and Australia.
Source: Reuters (Business Times 17 Sept 07)
Philippe Espinasse, who joined Nomura as co-head of Asian equity capital markets two months ago, said that the brokerage wants to grow beyond selling deals to Japan’s vast investor base. ‘We’re definitely expanding the focus beyond the Japanese distribution channel,’ said Mr Espinasse, who was previously head of Asia equity capital markets at Macquarie Bank .
Nomura ranks far down the league table this year in 70th place for equity capital markets deals in Asia-Pacific outside Japan, well below its 16th and 15th place finishes for 2006 and 2005, respectively, according to Thomson Financial.
‘As one of the very top investment banks in Asia including Japan, definitely, I’d like to get back in the Top 10 for Asia ex-Japan ECM,’ said Mr Espinasse, who has spent a big chunk of his first months on the job flying around the region to meet clients.
Nomura is looking to put more of its own capital to work by investing in companies ahead of their initial public offerings (IPOs), which would put it in pole position for underwriting mandates. ‘You have to select your niches, go after transactions in sectors where you have a competitive edge,’ he said.
Powered by China and India, Asia is a growth engine for global investment banks and Nomura is battling established players in the region such as UBS, Goldman Sachs and Morgan Stanley, as well as banks that have been recently beefing up operations in the region, such as Lehman Brothers and Bear Stearns.
‘At the end of the day, it’s about being more aggressive and confident, going on the road and meeting clients and explaining how and where Nomura can add value,’ Mr Espinasse said.
Nomura, which has said that it is weighing acquisitions to enter the booming stockbroking business in India, was one of five banks to help India’s HDFC Bank Ltd raise US$698 million through an American Depositary Share issue.
Mr Espinasse said that while Nomura would continue to take advantage of its distribution capability in Japan, where cash-rich retail investors are increasingly buying overseas assets, the brokerage also wants to leverage its network of 340 global sales staff who focus on Asia outside Japan. ‘The key for my side of the business is to significantly expand the business beyond our highly successful Japanese primary equity distribution franchise.’
To that end, the brokerage in July started its Asia Asset Finance unit in Singapore, which will invest in property around Asia and develop a real estate investment trust (Reit) business.
‘That is something we are keen to do more of in Asia ex-Japan,’ said Mr Espinasse, who has Reit experience from his stint with securitisation specialist Macquarie. He said that the property arm would grow to about a dozen people.
Singapore is the top property trust market in the Asia-Pacific after Japan and Australia.
Source: Reuters (Business Times 17 Sept 07)
Asean China Investment Fund was one of the top sellers as it lowered its stakes in Unionmet and SunVic Chemical, writes ROBERT HALILI
Asean China Investment Fund was one of the top sellers as it lowered its stakes in Unionmet and SunVic Chemical, writes ROBERT HALILI
BEARISH clouds are looming as the trading environment turned negative last week. In all, 28 companies saw 100 director and substantial shareholder disposals while 35 firms had 72 acquisitions. The number of disposals was more than double the previous week’s 48 sales while the number of purchases was sharply lower than the 124 acquisitions in the first week of September.
Last week’s trades were also significant in that it was the first time since the end-July market correction that sellers recorded more trades than buyers. Funds were also bearish with nine asset managers posting 43 disposals against eight institutional shareholders with 30 acquisitions. The number of disposals was nearly triple the previous week’s 16 sales.
Among the top sellers last week was Asean China Investment Fund LP as the group lowered its respective stakes in Unionmet (Singapore) Ltd and SunVic Chemical Holdings to below 5 per cent.
Also bearish was The Capital Group Companies - the group unloaded more shares of ComfortDelGro Corporation at sharply lower than its sale price in June. Investors should also watch out for Shining Corporation Ltd as heavy sales by Louisson Investments Pte Ltd lowered its stake by 79 per cent to 1.8 per cent.
On the positive side, the executive chairman of Hong Kong-based English language newspaper South China Morning Post, Kuok Khoon Ean, boosted his stake in Wilmar International Limited by 257 per cent last week at sharply higher than his purchase price last month.
Unionmet (Singapore) Ltd
Asean China Investment Fund LP ceased to be a substantial shareholder of metals producer Unionmet (Singapore) Ltd on Sept 12 following the sale of five million shares at an undisclosed price, which reduced its direct holdings by 25 per cent to 15 million shares or 4.1 per cent of the issued capital. Investors should note that the counter surged on that day from the previous day’s 25 cents close to 37 cents. Prior to that price surge, the stock had been on a downtrend since the first week of February from 91 cents. The disposal by Asean China Investment Fund was a very bearish signal for the stock as the group previously sold 16.6 million shares on the stock’s trading debut on Jan 31 at an estimated price of 75 cents each. That sale in January was made at a huge profit, given the IPO price of 37 cents each. Unionmet (Singapore) announced its interim results in July with net profit down by 52 per cent to US$1.938 million for the six months to May 31, 2007. The stock closed at 34 cents on Friday.
SunVic Chemical Holdings Ltd
Asean China Investment Fund LP ceased to be a substantial shareholder of chemical producer SunVic Chemical Holdings on Sept 12 following the sale of 22 million shares at an estimated price of 39 cents each. The trade reduced its direct holdings by 43 per cent to 29.4 million shares or 4.9 per cent. The disposal was made on the back of the 64 per cent decline in the share price since the second week of February from $1.08. The sale by Asean China Investment Fund was likely made at a profit based on the stock’s IPO price of 30 cents each. The sentiment is not entirely negative as chief executive officer Sun Liping recorded his first trades since listing with 1.36 million shares purchased on Sept 10 at 30 cents each. The trade boosted his deemed holdings to 325.2 million shares or 53.9 per cent. Alternate director Teo Yi-Dar also acquired an initial 50,000 shares on Aug 30 at 26 cents each.
SunVic Chemical Holdings announced its Q2 results on Aug 14 with net profit down by 42.9 per cent to 23.307 million yuan (S$4.7 million) for the three months to June 30, 2007. Earnings in the first half fell by 50 per cent to 31.65 million yuan. The counter, which was listed on Feb 5, closed sharply lower from its trading debut price of 81 cents to 36.5 cents on Friday.
ComfortDelGro Corporation Ltd
The Capital Group Companies, Inc unloaded more shares of bus and taxi services provider ComfortDelGro Corporation at sharply lower that its disposal-related filing price in June. The group reported a disposal-related filing on Sept 11 of 25.4 million shares, which reduced its deemed holdings by 18 per cent to 119.9 million shares or 5.8 per cent of the issued capital. The filing stated that the sales were made from June 21 to Sept 11. The stock during that period fell from $2.30 to $1.86. Capital previously sold 508,000 shares on June 20 at an estimated price of $2.26 each. The sales since June were made at a profit based on the net 30 million shares that the fund manager acquired from May 2005 to Jan 11 this year at $1.43 to $1.65 each. Capital became a substantial shareholder in May 2005 following the purchase of 12.9 million shares at $1.64 each, which raised its interest to 5.6 per cent.
ComfortDelGro announced its Q2 results on Aug 13 with net profit up by 19 per cent to $70.8 million for the three months to June 30, 2007. Earnings in the first half rose by 10.8 per cent to $138.1 million. The stock closed at $1.96 on Friday.
Shining Corporation Ltd
Heavy sales of 10.1 million shares by Louisson Investments Pte Ltd in construction contractor and building materials distributor Shining Corporation this month reduced its stake by 79 per cent to 1.8 per cent. The disposals were made from Sept 6 to 13 at estimated prices of 17.5 cents to 23 cents each. The sales, which accounted for 31 per cent of the stock’s trading volume, were made after the counter rebounded from 10 cents on Aug 29. Louisson Investments last sold 6.5 million shares on Sept 13 at 19 cents to 23 cents each, which lowered its direct holdings by 71 per cent to 2.7 million shares or 1.8 per cent. The group previously sold 610,000 shares on Sept 7 and 3.1 million shares on Sept 6 at estimated prices of 17.5 cents to 19.5 cents each. The heavy sales this month were not surprising as the shareholder also disposed of 3.8 million shares in July at an estimated price of 18.5 cents each.
The sales in the past three months were made at a profit based on the group’s initial filing in 2004. Louisson Investments became a substantial shareholder in December 2004 following the purchase of 14 million shares at 15 cents each, which raised its interest by 539 per cent to 17.3 per cent. The stock closed at 17.5 cents on Friday.
Wilmar International Ltd
Non-executive director Kuok Khoon Ean acquired more shares of agribusiness firm Wilmar International (formerly Ezyhealth Asia Pacific Ltd) at sharply higher than his purchase prices last month. The director bought 180,000 shares on Sept 12 at $3.56 each, which boosted his deemed holdings by 257 per cent to 250,000 shares. He previously acquired 20,000 shares on Aug 29 and an initial 50,000 shares on Aug 16 at $2.94 each. The fact that he acquired significantly more shares this month at a sharply higher price is a very bullish signal for the stock. Also positive earlier this year was PPB Group Berhad with 987,000 shares purchased on July 31 at an estimated price of $3.40 each. The trade increased its direct stake to 559.1 million shares or 8.8 per cent. The group also has a deemed interest of 604.2 million shares or 9.5 per cent. Wilmar International announced its Q2 results on Aug 14 with net profit up by 142.4 per cent to US$39.553 million for the three months to 30 June 2007. Earnings in the first half rose by 105 per cent to US$65.583 million. The stock closed flat from Kuok Khoon Ean’s purchase price to $3.56 on Friday.
BEARISH clouds are looming as the trading environment turned negative last week. In all, 28 companies saw 100 director and substantial shareholder disposals while 35 firms had 72 acquisitions. The number of disposals was more than double the previous week’s 48 sales while the number of purchases was sharply lower than the 124 acquisitions in the first week of September.
Last week’s trades were also significant in that it was the first time since the end-July market correction that sellers recorded more trades than buyers. Funds were also bearish with nine asset managers posting 43 disposals against eight institutional shareholders with 30 acquisitions. The number of disposals was nearly triple the previous week’s 16 sales.
Among the top sellers last week was Asean China Investment Fund LP as the group lowered its respective stakes in Unionmet (Singapore) Ltd and SunVic Chemical Holdings to below 5 per cent.
Also bearish was The Capital Group Companies - the group unloaded more shares of ComfortDelGro Corporation at sharply lower than its sale price in June. Investors should also watch out for Shining Corporation Ltd as heavy sales by Louisson Investments Pte Ltd lowered its stake by 79 per cent to 1.8 per cent.
On the positive side, the executive chairman of Hong Kong-based English language newspaper South China Morning Post, Kuok Khoon Ean, boosted his stake in Wilmar International Limited by 257 per cent last week at sharply higher than his purchase price last month.
Unionmet (Singapore) Ltd
Asean China Investment Fund LP ceased to be a substantial shareholder of metals producer Unionmet (Singapore) Ltd on Sept 12 following the sale of five million shares at an undisclosed price, which reduced its direct holdings by 25 per cent to 15 million shares or 4.1 per cent of the issued capital. Investors should note that the counter surged on that day from the previous day’s 25 cents close to 37 cents. Prior to that price surge, the stock had been on a downtrend since the first week of February from 91 cents. The disposal by Asean China Investment Fund was a very bearish signal for the stock as the group previously sold 16.6 million shares on the stock’s trading debut on Jan 31 at an estimated price of 75 cents each. That sale in January was made at a huge profit, given the IPO price of 37 cents each. Unionmet (Singapore) announced its interim results in July with net profit down by 52 per cent to US$1.938 million for the six months to May 31, 2007. The stock closed at 34 cents on Friday.
SunVic Chemical Holdings Ltd
Asean China Investment Fund LP ceased to be a substantial shareholder of chemical producer SunVic Chemical Holdings on Sept 12 following the sale of 22 million shares at an estimated price of 39 cents each. The trade reduced its direct holdings by 43 per cent to 29.4 million shares or 4.9 per cent. The disposal was made on the back of the 64 per cent decline in the share price since the second week of February from $1.08. The sale by Asean China Investment Fund was likely made at a profit based on the stock’s IPO price of 30 cents each. The sentiment is not entirely negative as chief executive officer Sun Liping recorded his first trades since listing with 1.36 million shares purchased on Sept 10 at 30 cents each. The trade boosted his deemed holdings to 325.2 million shares or 53.9 per cent. Alternate director Teo Yi-Dar also acquired an initial 50,000 shares on Aug 30 at 26 cents each.
SunVic Chemical Holdings announced its Q2 results on Aug 14 with net profit down by 42.9 per cent to 23.307 million yuan (S$4.7 million) for the three months to June 30, 2007. Earnings in the first half fell by 50 per cent to 31.65 million yuan. The counter, which was listed on Feb 5, closed sharply lower from its trading debut price of 81 cents to 36.5 cents on Friday.
ComfortDelGro Corporation Ltd
The Capital Group Companies, Inc unloaded more shares of bus and taxi services provider ComfortDelGro Corporation at sharply lower that its disposal-related filing price in June. The group reported a disposal-related filing on Sept 11 of 25.4 million shares, which reduced its deemed holdings by 18 per cent to 119.9 million shares or 5.8 per cent of the issued capital. The filing stated that the sales were made from June 21 to Sept 11. The stock during that period fell from $2.30 to $1.86. Capital previously sold 508,000 shares on June 20 at an estimated price of $2.26 each. The sales since June were made at a profit based on the net 30 million shares that the fund manager acquired from May 2005 to Jan 11 this year at $1.43 to $1.65 each. Capital became a substantial shareholder in May 2005 following the purchase of 12.9 million shares at $1.64 each, which raised its interest to 5.6 per cent.
ComfortDelGro announced its Q2 results on Aug 13 with net profit up by 19 per cent to $70.8 million for the three months to June 30, 2007. Earnings in the first half rose by 10.8 per cent to $138.1 million. The stock closed at $1.96 on Friday.
Shining Corporation Ltd
Heavy sales of 10.1 million shares by Louisson Investments Pte Ltd in construction contractor and building materials distributor Shining Corporation this month reduced its stake by 79 per cent to 1.8 per cent. The disposals were made from Sept 6 to 13 at estimated prices of 17.5 cents to 23 cents each. The sales, which accounted for 31 per cent of the stock’s trading volume, were made after the counter rebounded from 10 cents on Aug 29. Louisson Investments last sold 6.5 million shares on Sept 13 at 19 cents to 23 cents each, which lowered its direct holdings by 71 per cent to 2.7 million shares or 1.8 per cent. The group previously sold 610,000 shares on Sept 7 and 3.1 million shares on Sept 6 at estimated prices of 17.5 cents to 19.5 cents each. The heavy sales this month were not surprising as the shareholder also disposed of 3.8 million shares in July at an estimated price of 18.5 cents each.
The sales in the past three months were made at a profit based on the group’s initial filing in 2004. Louisson Investments became a substantial shareholder in December 2004 following the purchase of 14 million shares at 15 cents each, which raised its interest by 539 per cent to 17.3 per cent. The stock closed at 17.5 cents on Friday.
Wilmar International Ltd
Non-executive director Kuok Khoon Ean acquired more shares of agribusiness firm Wilmar International (formerly Ezyhealth Asia Pacific Ltd) at sharply higher than his purchase prices last month. The director bought 180,000 shares on Sept 12 at $3.56 each, which boosted his deemed holdings by 257 per cent to 250,000 shares. He previously acquired 20,000 shares on Aug 29 and an initial 50,000 shares on Aug 16 at $2.94 each. The fact that he acquired significantly more shares this month at a sharply higher price is a very bullish signal for the stock. Also positive earlier this year was PPB Group Berhad with 987,000 shares purchased on July 31 at an estimated price of $3.40 each. The trade increased its direct stake to 559.1 million shares or 8.8 per cent. The group also has a deemed interest of 604.2 million shares or 9.5 per cent. Wilmar International announced its Q2 results on Aug 14 with net profit up by 142.4 per cent to US$39.553 million for the three months to 30 June 2007. Earnings in the first half rose by 105 per cent to US$65.583 million. The stock closed flat from Kuok Khoon Ean’s purchase price to $3.56 on Friday.
SALES of office units have shot up this year in the face of a crunch in office space in SG
SALES of office units have shot up this year in the face of a crunch in office space here.
An impressive $491.79 million worth of single units in larger office buildings has changed hands since January.
This already outstrips the $386.39 million in deals for the whole of last year, according to new figures from property firm CB Richard Ellis (CBRE), which tracked deals above $5 million.
The price of each unit has also surged. Last year, a record 24 office units were sold, but only 19 have been sold so far this year.
This means that, on average, each of the units sold this year is fetching a much higher price than those sold last year.
Compared with earlier years, this year’s sales look even more impressive. Only $95.21 million in single office deals were done in 2005, and $8.14 million in 2003, said CBRE.
These standalone office spaces, called strata-titled office units in the property industry, are owned by one-off investors or businesses, as opposed to an office block that belongs to a single owner.
Price rises have been dramatic. In buildings such as Suntec City, the prices of strata-titled office units have trebled over the past 18 months, CBRE data showed.
Demand for office space here has been soaring in recent months, pushing up both sale prices and rental levels, as a shortage of prime office buildings coincides with booming investor and business demand.
Due to the limited supply of buildings in the Central Business District (CBD), investor interest has extended to strata-titled office properties in the fringe areas of the CBD, said Mr Jeremy Lake, CBRE’s executive director of investment properties.
‘The rising number of strata-titled office transactions is a logical consequence of a tight office rental market,’ he said. ‘Rather than pay rentals of $12 per sq ft (psf) per month, investors are finding it attractive to buy a unit and cash in on the high rentals.’
The most popular buildings for such deals this year are International Plaza and Suntec City, Mr Lake said.
There were 43 office sales in International Plaza this year, just shy of its 45 deals for the whole of last year.
However, these deals ranged in price from $215,000 to $3.3 million, so they were not captured by CBRE’s analysis of strata office deals above $5 million.
In Suntec City Tower One and Two, seven deals had taken place this year, at prices starting from $4.61 million.
Mr Lake also said the prices of units in these buildings had skyrocketed in the past 18 months. At International Plaza, they jumped from $491 psf in January last year to $1,150 psf in July.
In the same period, prices of units in Suntec City Tower One nearly tripled from $850 psf to $2,200 psf.
In Suntec City Tower Two, prices doubled from $1,148 psf in March last year to $2,360 psf last month, a new high for the tower.
‘Investors’ demand for office units at these buildings has been strong due to the scarcity of this type of medium-sized office space located in the core business districts,’ explained Mr Lake.
He suggested that some buyers of these units could be ’small- and medium-sized businesses’ whose space needs can be met by small office units, unlike multinational companies, which take up entire floors in a single building.
Other buyers could include investors ‘who have pocketed some gains in the stock market and are looking at attractive investment options’, Mr Lake said.
He expects the number of strata-titled office deals above $5 million to hit a new record this year.
Source: The Straits Times 17 Sept 07
An impressive $491.79 million worth of single units in larger office buildings has changed hands since January.
This already outstrips the $386.39 million in deals for the whole of last year, according to new figures from property firm CB Richard Ellis (CBRE), which tracked deals above $5 million.
The price of each unit has also surged. Last year, a record 24 office units were sold, but only 19 have been sold so far this year.
This means that, on average, each of the units sold this year is fetching a much higher price than those sold last year.
Compared with earlier years, this year’s sales look even more impressive. Only $95.21 million in single office deals were done in 2005, and $8.14 million in 2003, said CBRE.
These standalone office spaces, called strata-titled office units in the property industry, are owned by one-off investors or businesses, as opposed to an office block that belongs to a single owner.
Price rises have been dramatic. In buildings such as Suntec City, the prices of strata-titled office units have trebled over the past 18 months, CBRE data showed.
Demand for office space here has been soaring in recent months, pushing up both sale prices and rental levels, as a shortage of prime office buildings coincides with booming investor and business demand.
Due to the limited supply of buildings in the Central Business District (CBD), investor interest has extended to strata-titled office properties in the fringe areas of the CBD, said Mr Jeremy Lake, CBRE’s executive director of investment properties.
‘The rising number of strata-titled office transactions is a logical consequence of a tight office rental market,’ he said. ‘Rather than pay rentals of $12 per sq ft (psf) per month, investors are finding it attractive to buy a unit and cash in on the high rentals.’
The most popular buildings for such deals this year are International Plaza and Suntec City, Mr Lake said.
There were 43 office sales in International Plaza this year, just shy of its 45 deals for the whole of last year.
However, these deals ranged in price from $215,000 to $3.3 million, so they were not captured by CBRE’s analysis of strata office deals above $5 million.
In Suntec City Tower One and Two, seven deals had taken place this year, at prices starting from $4.61 million.
Mr Lake also said the prices of units in these buildings had skyrocketed in the past 18 months. At International Plaza, they jumped from $491 psf in January last year to $1,150 psf in July.
In the same period, prices of units in Suntec City Tower One nearly tripled from $850 psf to $2,200 psf.
In Suntec City Tower Two, prices doubled from $1,148 psf in March last year to $2,360 psf last month, a new high for the tower.
‘Investors’ demand for office units at these buildings has been strong due to the scarcity of this type of medium-sized office space located in the core business districts,’ explained Mr Lake.
He suggested that some buyers of these units could be ’small- and medium-sized businesses’ whose space needs can be met by small office units, unlike multinational companies, which take up entire floors in a single building.
Other buyers could include investors ‘who have pocketed some gains in the stock market and are looking at attractive investment options’, Mr Lake said.
He expects the number of strata-titled office deals above $5 million to hit a new record this year.
Source: The Straits Times 17 Sept 07
CAPITALAND will book a gain of about $260.7 million from selling a 45 per cent stake in a prime office building in Hong Kong.
CAPITALAND will book a gain of about $260.7 million from selling a 45 per cent stake in a prime office building in Hong Kong.
The property developer, South-east Asia’s largest, said yesterday that it had sold its share of AIG Tower, located in the territory’s central business district.
The deal values the building at HK$8.1 billion (S$1.57 billion), which works out to HK$22,042 per sq ft of net lettable area.
CapitaLand’s share of the building is worth about HK$3.6 billion, including the repayment of shareholder loans.
The stake was sold to American International Assurance (AIA), a unit of American International Group (AIG), the largest insurer in the world.
The transaction will add to AIA’s existing 45 per cent interest in the high-rise building. The remaining 10 per cent stake is held by Hong Kong’s Lai Sun Group, which is involved in property development and investment.
The 999-year leasehold property was built in April 2005 and is currently fully occupied.
Major tenants include AIG, Bank of Tokyo-Mitsubishi UFJ, CapitaLand, Kohlberg Kravis Roberts & Co, Lai Sun Group and Oaktree Capital Management.
CapitaLand’s sale of its stake in AIG Tower comes after it sold a 50 per cent interest in Chevron House for a record price last month. It booked a gain of about $150.8 million from the deal.
Source: The Straits Times 17 Sept 07
The property developer, South-east Asia’s largest, said yesterday that it had sold its share of AIG Tower, located in the territory’s central business district.
The deal values the building at HK$8.1 billion (S$1.57 billion), which works out to HK$22,042 per sq ft of net lettable area.
CapitaLand’s share of the building is worth about HK$3.6 billion, including the repayment of shareholder loans.
The stake was sold to American International Assurance (AIA), a unit of American International Group (AIG), the largest insurer in the world.
The transaction will add to AIA’s existing 45 per cent interest in the high-rise building. The remaining 10 per cent stake is held by Hong Kong’s Lai Sun Group, which is involved in property development and investment.
The 999-year leasehold property was built in April 2005 and is currently fully occupied.
Major tenants include AIG, Bank of Tokyo-Mitsubishi UFJ, CapitaLand, Kohlberg Kravis Roberts & Co, Lai Sun Group and Oaktree Capital Management.
CapitaLand’s sale of its stake in AIG Tower comes after it sold a 50 per cent interest in Chevron House for a record price last month. It booked a gain of about $150.8 million from the deal.
Source: The Straits Times 17 Sept 07
IT IS almost certain the United States Federal Reserve will answer the prayers of stock market traders across the globe and cut rates when it meets
IT IS almost certain the United States Federal Reserve will answer the prayers of stock market traders across the globe and cut rates when it meets tomorrow.
A lower benchmark interest rate would mean more cash flowing into corporate coffers, which would have positive knock-on effects on markets globally, at least over the short term.
From the way international equity markets have regained their poise, one might be tempted to believe the problems that have beset the global financial system in recent months are over.
At home, the Straits Times Index (STI) closed at 3,536.4 points last Friday, after regaining lost ground, up 19.4 per cent from its Aug 17 intra-day low of 2,962.01. On Wall Street, the Dow Jones Industrial Average rose to within 4 per cent of its all-time highs.
Still, the situation might not be quite that simple.
The STI rebounded strongly after a boost from stocks linked to the booming offshore marine sector, as crude oil prices hit record highs. This more than made up for the pallid performance of the three local bank stocks, which make up about a third of the STI. These banks are still assessing the impact of the credit crunch plaguing global financial markets.
Despite the overall rally, DBS Group Holdings is trading 21.6 per cent off its year’s high, while OCBC Bank and United Overseas Bank are both about 10 per cent below their 12-month highs.
Risk of stagflation
INVESTORS could well be placing too much faith in a few rate cuts by major central banks such as the Fed.
The provision of this form of cheap credit by central banks in recent years was what caused the massive mispricing of risky loans to borrowers with poor credit histories.
The picture is further muddied by soaring crude prices, which hit US$80 a barrel last Wednesday, and by a falling greenback. It is hard to gauge how the global economy will react to the heady brew of a US Fed rate cut and high oil prices.
The conventional wisdom is that in times of rising prices - caused perhaps by higher oil prices - monetary policy should be tighter, not looser.
Such a scenario has not been seen for nearly 30 years. Those with long memories will recall that this mix pushed the US and the rest of the world into a long period of stagflation, characterised by a deep recession and high jobless rates with rampaging levels of inflation.
This vicious cycle was finally broken only when then Fed chairman Paul Volcker ignored the shrill screams of politicians and Wall Street, and relentlessly drove up interest rates to break the back of the inflationary cycle.
Wall Street’s sway factor
WHAT about the argument, increasingly peddled, that Asia has finally unhooked itself from Wall Street - so the credit crunch is a problem for the West, but not Asia?
It is an attractive notion, after years of Asian markets slavishly following the US lead, but it might be wishful thinking, for now at least.
True, China’s decisive intervention last month - it announced that it would allow its citizens to invest in Hong Kong equities - curbed the plunges on Asian bourses and sent the Hang Seng Index to record highs.
But the sheer size of Wall Street means Asia simply cannot ignore any wild US swings as investors sort out the mess surrounding sub-prime loans and agonise over a possible recession in the US economy.
With a market value of US$16 trillion (S$24.2 trillion), US bourses are still bigger than their Tokyo and European counterparts combined, and eight times larger than China’s, even after the giddy run-up there this year.
Therefore, it might be better to remain cautious, as all of the signs point to further trouble over the next 12 to 18 months.
Over the short term, central banks could literally paper over the problems caused by the credit crunch, flooding the markets with billions in fresh cash.
Seeds of trouble
HOWEVER, one big immediate problem remains unresolved: International banks are still struggling to borrow, either from each other or from external sources.
Last Wednesday, for instance, the European Central Bank had to pump another 75 billion euros (S$157.4 billion) into the region’s banking system to reduce the interest rate gap between overnight funding and lending over longer maturities.
And the cost of funds in the hard-hit interbank money markets - where banks borrow from each other - has surged to peaks last seen two decades ago, as the scramble for cash by financial institutions shows little sign of easing.
Observers say investors could be neglecting one key warning sign as they celebrate any easing by the Fed: the gridlock now experienced by the US$2 trillion market for short-term commercial bonds.
Most of these short-term bonds are sold to rich investors and cash-rich firms by special investment vehicles owned by banks. As such bonds mature within 30 or 40 days, this could intensify the credit crunch over the next few weeks, if investors refuse to extend the credit by rolling over their purchases.
In many cases, the sponsoring banks will have to take the risky assets back onto their balance sheets, which will force them to hoard their cash. This, in turn, will cause liquidity to dry up in the money market, whether central banks cut rates or not.
Some market experts have also argued that the current rebound has shaky foundations, as share prices are gaining ground on lacklustre volumes.
Over the past two weeks, average daily volumes on the STI have only reached 2.33 billion shares worth $2.03 billion, a far cry from the 4.4 billion shares worth $2.95 billion that changed hands daily in July when the STI was at a similar level.
More sober-minded observers with good memories suggest that 1998 offers a likely guide to the future direction of the stock market. Back then, panic selling in January was followed by an almost miraculous recovery, but that was snuffed out by a fresh round of bad news.
As the old maxim goes: One swallow does not make a summer. Investors might have to realise that a Fed rate cut is hardly likely to spur a renewed global bull-run that is sustainable.
Source: The Straits Times 17 Sept 07
A lower benchmark interest rate would mean more cash flowing into corporate coffers, which would have positive knock-on effects on markets globally, at least over the short term.
From the way international equity markets have regained their poise, one might be tempted to believe the problems that have beset the global financial system in recent months are over.
At home, the Straits Times Index (STI) closed at 3,536.4 points last Friday, after regaining lost ground, up 19.4 per cent from its Aug 17 intra-day low of 2,962.01. On Wall Street, the Dow Jones Industrial Average rose to within 4 per cent of its all-time highs.
Still, the situation might not be quite that simple.
The STI rebounded strongly after a boost from stocks linked to the booming offshore marine sector, as crude oil prices hit record highs. This more than made up for the pallid performance of the three local bank stocks, which make up about a third of the STI. These banks are still assessing the impact of the credit crunch plaguing global financial markets.
Despite the overall rally, DBS Group Holdings is trading 21.6 per cent off its year’s high, while OCBC Bank and United Overseas Bank are both about 10 per cent below their 12-month highs.
Risk of stagflation
INVESTORS could well be placing too much faith in a few rate cuts by major central banks such as the Fed.
The provision of this form of cheap credit by central banks in recent years was what caused the massive mispricing of risky loans to borrowers with poor credit histories.
The picture is further muddied by soaring crude prices, which hit US$80 a barrel last Wednesday, and by a falling greenback. It is hard to gauge how the global economy will react to the heady brew of a US Fed rate cut and high oil prices.
The conventional wisdom is that in times of rising prices - caused perhaps by higher oil prices - monetary policy should be tighter, not looser.
Such a scenario has not been seen for nearly 30 years. Those with long memories will recall that this mix pushed the US and the rest of the world into a long period of stagflation, characterised by a deep recession and high jobless rates with rampaging levels of inflation.
This vicious cycle was finally broken only when then Fed chairman Paul Volcker ignored the shrill screams of politicians and Wall Street, and relentlessly drove up interest rates to break the back of the inflationary cycle.
Wall Street’s sway factor
WHAT about the argument, increasingly peddled, that Asia has finally unhooked itself from Wall Street - so the credit crunch is a problem for the West, but not Asia?
It is an attractive notion, after years of Asian markets slavishly following the US lead, but it might be wishful thinking, for now at least.
True, China’s decisive intervention last month - it announced that it would allow its citizens to invest in Hong Kong equities - curbed the plunges on Asian bourses and sent the Hang Seng Index to record highs.
But the sheer size of Wall Street means Asia simply cannot ignore any wild US swings as investors sort out the mess surrounding sub-prime loans and agonise over a possible recession in the US economy.
With a market value of US$16 trillion (S$24.2 trillion), US bourses are still bigger than their Tokyo and European counterparts combined, and eight times larger than China’s, even after the giddy run-up there this year.
Therefore, it might be better to remain cautious, as all of the signs point to further trouble over the next 12 to 18 months.
Over the short term, central banks could literally paper over the problems caused by the credit crunch, flooding the markets with billions in fresh cash.
Seeds of trouble
HOWEVER, one big immediate problem remains unresolved: International banks are still struggling to borrow, either from each other or from external sources.
Last Wednesday, for instance, the European Central Bank had to pump another 75 billion euros (S$157.4 billion) into the region’s banking system to reduce the interest rate gap between overnight funding and lending over longer maturities.
And the cost of funds in the hard-hit interbank money markets - where banks borrow from each other - has surged to peaks last seen two decades ago, as the scramble for cash by financial institutions shows little sign of easing.
Observers say investors could be neglecting one key warning sign as they celebrate any easing by the Fed: the gridlock now experienced by the US$2 trillion market for short-term commercial bonds.
Most of these short-term bonds are sold to rich investors and cash-rich firms by special investment vehicles owned by banks. As such bonds mature within 30 or 40 days, this could intensify the credit crunch over the next few weeks, if investors refuse to extend the credit by rolling over their purchases.
In many cases, the sponsoring banks will have to take the risky assets back onto their balance sheets, which will force them to hoard their cash. This, in turn, will cause liquidity to dry up in the money market, whether central banks cut rates or not.
Some market experts have also argued that the current rebound has shaky foundations, as share prices are gaining ground on lacklustre volumes.
Over the past two weeks, average daily volumes on the STI have only reached 2.33 billion shares worth $2.03 billion, a far cry from the 4.4 billion shares worth $2.95 billion that changed hands daily in July when the STI was at a similar level.
More sober-minded observers with good memories suggest that 1998 offers a likely guide to the future direction of the stock market. Back then, panic selling in January was followed by an almost miraculous recovery, but that was snuffed out by a fresh round of bad news.
As the old maxim goes: One swallow does not make a summer. Investors might have to realise that a Fed rate cut is hardly likely to spur a renewed global bull-run that is sustainable.
Source: The Straits Times 17 Sept 07
CHINA will need to implement further tightening, even after the fifth interest rate hike this year, to curb the fastest inflation since 1996
CHINA will need to implement further tightening, even after the fifth interest rate hike this year, to curb the fastest inflation since 1996 and dampen speculation in stocks and real estate, experts said.
‘The economy is really showing signs of overheating,’ said CFC Seymour strategist Dariusz Kowalczyk. ‘This makes China nervous enough to be more aggressive in its monetary policy.’
The benchmark one-year lending rate has increased to a nine-year high of 7.29 per cent from 7.02 per cent, with effect from last Saturday, the central bank said on its website.
A record trade surplus of US$161.8 billion (S$244.6 billion) in the first eight months of this year has flooded the economy with cash, pushing up consumer prices at twice the central bank’s target pace.
The benchmark CSI 300 Index for China’s yuan-denominated A shares has quadrupled in the past 12 months as investors sought better returns than those on offer at banks.
Home prices in cities have risen too, up by 8.2 per cent last month from a year earlier.
‘This is doing nothing to help stem the flow of money into the A-share market,’ said Societe Generale economist Glenn Maguire.
‘There’ll likely be one more move on lending rates this year. Deposit rates will also go up because, with inflation rising, real interest rates are negative.’
The central bank said it wants to strengthen monetary and credit controls, guide investment growth and stabilise inflation expectations.
The one-year deposit rate will rise to 3.87 per cent from 3.6 per cent.
Last Friday’s action on rates came after the statistics bureau said spending on factories, equipment and property had climbed 26.7 per cent in the eight months to August from a year earlier.
Soaring food costs also pushed inflation to 6.5 per cent in August, more than double the 3 per cent annual target set by the central bank.
‘We were too conservative and we are now bringing forward our forecasts,’ Standard Chartered economist Stephen Green wrote in a report after the bank’s decision. ‘We now think one more 27-basis-point hike this year and then another two in the first quarter.’
Source: BLOOMBERG NEWS (The Straits Times 17 Sept 07)
‘The economy is really showing signs of overheating,’ said CFC Seymour strategist Dariusz Kowalczyk. ‘This makes China nervous enough to be more aggressive in its monetary policy.’
The benchmark one-year lending rate has increased to a nine-year high of 7.29 per cent from 7.02 per cent, with effect from last Saturday, the central bank said on its website.
A record trade surplus of US$161.8 billion (S$244.6 billion) in the first eight months of this year has flooded the economy with cash, pushing up consumer prices at twice the central bank’s target pace.
The benchmark CSI 300 Index for China’s yuan-denominated A shares has quadrupled in the past 12 months as investors sought better returns than those on offer at banks.
Home prices in cities have risen too, up by 8.2 per cent last month from a year earlier.
‘This is doing nothing to help stem the flow of money into the A-share market,’ said Societe Generale economist Glenn Maguire.
‘There’ll likely be one more move on lending rates this year. Deposit rates will also go up because, with inflation rising, real interest rates are negative.’
The central bank said it wants to strengthen monetary and credit controls, guide investment growth and stabilise inflation expectations.
The one-year deposit rate will rise to 3.87 per cent from 3.6 per cent.
Last Friday’s action on rates came after the statistics bureau said spending on factories, equipment and property had climbed 26.7 per cent in the eight months to August from a year earlier.
Soaring food costs also pushed inflation to 6.5 per cent in August, more than double the 3 per cent annual target set by the central bank.
‘We were too conservative and we are now bringing forward our forecasts,’ Standard Chartered economist Stephen Green wrote in a report after the bank’s decision. ‘We now think one more 27-basis-point hike this year and then another two in the first quarter.’
Source: BLOOMBERG NEWS (The Straits Times 17 Sept 07)
THE laid-back feel of the old Dawson estate in Queenstown will give way to a lot more hustle and bustle when new, designer-looking HDB flats
THE laid-back feel of the old Dawson estate in Queenstown will give way to a lot more hustle and bustle when new, designer-looking HDB flats go up in several years’ time.
Property experts say the estate’s impending transformation will give the wider area an added premium.
Property values there already benefit from the fairly central location and proximity to the Queenstown MRT station.
‘The estate is dated, but prices in and around the area should rise as the whole environment will improve with the transformation,’ said ERA Singapore assistant vice-president Eugene Lim.
The 60ha estate was cited by Prime Minister Lee Hsien Loong in his National Day Rally speech as an old estate with great redevelopment potential.
The Government has since displayed designs for three precincts in the estate by leading local architectural firms - Surbana International Consulants, Woha Architects and SCDA Architects - and is inviting public feedback.
Construction of this new generation of public housing is expected to begin within the next three to four years, said HDB.
Some new flats have already been put up in the estate, under the Selective En bloc Redevelopment Scheme, which allows residents to be resettled in new flats after their old blocks are torn down for redevelopment.
As at July, about 2,970 flats had been completed, while another 794 flats are being constructed in the Strathmore Avenue area.
Nearby flats in the Stirling Road and Mei Ling Heights areas command a premium for their location, property agents say. Some buyers like Mei Ling Heights as it sits on higher ground.
Two low-floor, five-room flats on Mei Ling Street were sold last month: one for $570,000 and the other for $600,000.
In the Queenstown area in the second quarter, the average cash amount over valuation recorded for a fiveroom flat was relatively high at about $42,000. The average for Ang Mo Kio was $25,000; for Seng Kang, $5,000.
Prices in and around Dawson could rise by 20 per cent once plans for the estate are firmed up, said Mr Ku Swee Yong of property consultancy Savills Singapore.
The area might get a boost in value if the Government turns the entire Singapore River stretch, all the way to Alexandra Canal, into a family-friendly recreational area, said an industry observer.
Dawson does not have any private housing now, but the Government has plans to change this. Its projection of 10,000 dwelling units for the estate includes both public and private housing.
In the neighbouring Redhill area, which has a cluster of private housing, sub-sale prices have moved up in the past year.
Two 1,109 sq ft units at Tanglin Regency were sold for $884 per sq ft (psf) last month. At The Metropolitan Condominium, deals done in July and August ranged from $677 psf (for a 1,033 sq ft unit) to $1,119 psf (for a 2,680 sq ft unit).
‘In Dawson, most of the private housing is likely to be targeted at upgraders in the estate,’ said Mr Ku.
Thus, while the estate’s value is expected to climb, the rise should be limited because it is essentially an HDB area, he said.
Property experts say the estate’s impending transformation will give the wider area an added premium.
Property values there already benefit from the fairly central location and proximity to the Queenstown MRT station.
‘The estate is dated, but prices in and around the area should rise as the whole environment will improve with the transformation,’ said ERA Singapore assistant vice-president Eugene Lim.
The 60ha estate was cited by Prime Minister Lee Hsien Loong in his National Day Rally speech as an old estate with great redevelopment potential.
The Government has since displayed designs for three precincts in the estate by leading local architectural firms - Surbana International Consulants, Woha Architects and SCDA Architects - and is inviting public feedback.
Construction of this new generation of public housing is expected to begin within the next three to four years, said HDB.
Some new flats have already been put up in the estate, under the Selective En bloc Redevelopment Scheme, which allows residents to be resettled in new flats after their old blocks are torn down for redevelopment.
As at July, about 2,970 flats had been completed, while another 794 flats are being constructed in the Strathmore Avenue area.
Nearby flats in the Stirling Road and Mei Ling Heights areas command a premium for their location, property agents say. Some buyers like Mei Ling Heights as it sits on higher ground.
Two low-floor, five-room flats on Mei Ling Street were sold last month: one for $570,000 and the other for $600,000.
In the Queenstown area in the second quarter, the average cash amount over valuation recorded for a fiveroom flat was relatively high at about $42,000. The average for Ang Mo Kio was $25,000; for Seng Kang, $5,000.
Prices in and around Dawson could rise by 20 per cent once plans for the estate are firmed up, said Mr Ku Swee Yong of property consultancy Savills Singapore.
The area might get a boost in value if the Government turns the entire Singapore River stretch, all the way to Alexandra Canal, into a family-friendly recreational area, said an industry observer.
Dawson does not have any private housing now, but the Government has plans to change this. Its projection of 10,000 dwelling units for the estate includes both public and private housing.
In the neighbouring Redhill area, which has a cluster of private housing, sub-sale prices have moved up in the past year.
Two 1,109 sq ft units at Tanglin Regency were sold for $884 per sq ft (psf) last month. At The Metropolitan Condominium, deals done in July and August ranged from $677 psf (for a 1,033 sq ft unit) to $1,119 psf (for a 2,680 sq ft unit).
‘In Dawson, most of the private housing is likely to be targeted at upgraders in the estate,’ said Mr Ku.
Thus, while the estate’s value is expected to climb, the rise should be limited because it is essentially an HDB area, he said.
THE proposed 5.5-km waterway cutting across Punggol town drew enthusiastic discussion yesterday at a dialogue on the Housing Board’s future plans
THE proposed 5.5-km waterway cutting across Punggol town drew enthusiastic discussion yesterday at a dialogue on the Housing Board’s future plans for its estates.
While there were concerns over its safety from the 500-strong audience - made up of residents, potential flat buyers and grassroots leaders - there were also calls for less rules on how the future waterway could be used.
The ambitious project in Punggol involves the building of a roughly 4.4-m deep waterway linking two reservoirs that would be created after Sungei Punggol and Sungei Serangoon are dammed.
When completed by 2013, it will be the centrepiece of Punggol, by which time new homes and its future town centre will be built.
The proposal was unveiled about a week ago through the HDB’s Remaking Our Heartland exhibition which showcases its future plans for public housing estates. Yesterday’s dialogue was meant to draw feedback on the plans and was chaired by Minister of State for National Development Grace Fu.
Preliminary results of an HDB survey on the visitors to its exhibition showed that 94 per cent of the 2,800 respondents liked the idea of the waterway running through Punggol. Eighty-one per cent said they were prepared to pay more service and conservancy charges to enjoy the new housing designs, which included flats with balconies overlooking the waterway.But residents and prospective flat buyershoped that new types of public housing would not be too expensive.
The Remaking Our Heartland exhibition will be held at various housing districts until Oct 3. More details can be found at http://heartland.hdb.gov.sg/ .
Source: The Sunday Times 16 Sept 07
While there were concerns over its safety from the 500-strong audience - made up of residents, potential flat buyers and grassroots leaders - there were also calls for less rules on how the future waterway could be used.
The ambitious project in Punggol involves the building of a roughly 4.4-m deep waterway linking two reservoirs that would be created after Sungei Punggol and Sungei Serangoon are dammed.
When completed by 2013, it will be the centrepiece of Punggol, by which time new homes and its future town centre will be built.
The proposal was unveiled about a week ago through the HDB’s Remaking Our Heartland exhibition which showcases its future plans for public housing estates. Yesterday’s dialogue was meant to draw feedback on the plans and was chaired by Minister of State for National Development Grace Fu.
Preliminary results of an HDB survey on the visitors to its exhibition showed that 94 per cent of the 2,800 respondents liked the idea of the waterway running through Punggol. Eighty-one per cent said they were prepared to pay more service and conservancy charges to enjoy the new housing designs, which included flats with balconies overlooking the waterway.But residents and prospective flat buyershoped that new types of public housing would not be too expensive.
The Remaking Our Heartland exhibition will be held at various housing districts until Oct 3. More details can be found at http://heartland.hdb.gov.sg/ .
Source: The Sunday Times 16 Sept 07
In some parts of the world, conviction is driving hotels to go green.
In some parts of the world, conviction is driving hotels to go green. But, as several hotels in Singapore have concluded, common sense points to the same path.
The Far East Organization, for example, realised that its corporate electricity bill for all its properties across Singapore was $33 million a year. ‘Imagine if we can cut that by 10 per cent,’ said Chia Swee Cheng, assistant director of the group’s central engineering & operations department.
And so its Changi Village hotel has new boiler and chiller systems in place and a far more efficient energy use.
Over at the Grand Hyatt, Singapore’s first plant to produce electricity, steam and chilled water at a hotel is under construction. Along with the solar panels planned for a new garden conference room, the plant could slash Hyatt’s energy use by a third and save it $800,000 in bills.
While critics say that many local hotels pay only lip service to eco-programmes, there are others, led by Hyatt, who are changing mindsets, going green - and finding that it pays.
‘My impression is that all the hotel operators are serious about sustainability, but not necessarily all the owners, who have to pay for changes,’ said Robert Hacker of Horwath, a hotel consultancy. ‘Generally, all the international chains are taking on board green principles.’
The Regent Singapore, for example, in late 2005 replaced a diesel boiler for heating water with a heat exchanger that produces hot and cold water at the same time. This has cut energy use by a fifth.
And at the Shangri-La, energy use improved over 10 per cent through better work processes, such as using small ovens to prepare meals on demand, rather than keeping a large oven fired up all day just to reheat food. But critics like Tay Kheng Soon, architect and promoter of socially and environmentally conscious architecture in Singapore since the 1970s, say Hyatt is the only energy-efficient hotel in Singapore.
And though the National Environment Agency handed out the new Energy Smart label to some hotels last month, that is only a starting point, said Mr Tay. A more basic change might come about, in his opinion, if there were incentives to use renewable energy sources, like wind and solar energy.
Many hotels ‘hand-wave’ over cosmetic eco-programmes, like using hybrid cars to ferry guests or planting trees, but miss the ‘elephant in the room’ - like the efficiency of their chiller systems - said Lee Eng Lock, general manager of Trane, a US-based energy solutions firm and an accredited Energy Service Company (ESCO) here.
The Hyatt sets the bar but there is no reason why others should not follow suit, with high returns and backed by bank guarantees, said Mr Lee.
But business in the hotel sector is negotiated on the basis of relationships, so it is not necessarily the most efficient solutions that get selected, he said.
Luxury hotels in Singapore run at an energy intensity of 427 kilowatt hours of electricity per square metre of gross floor area, according to a study by the National University of Singapore (NUS) last year. This is down from the 468 KWh/m2 reported by Apec in 1999, but pales beside the under-300 KWh/m2 averages achieved in parts of Europe and Australia.
In other words, local hotels could be using up to 40 per cent more electricity than ideal.
Dr Lee Siew Eang, head of NUS’s Energy Sustainability Unit and leader of the study, recalls some four and fivestar hotels saying during the study that energy efficiency was ‘not relevant’ to them - since, as ‘posh hotels’, it was ‘their duty to be extravagant’.
Many hotel managers were not aware of how much energy their buildings were using. One hotel, which had wanted to apply for an eco-award, was found by NUS to be using an exceptionally high 800 KWh/m2, said Dr Lee.
That’s almost twice the industry average. According to the Singapore Hotel Association (SHA), which represents about 90 per cent of the total number of gazetted hotel rooms here, most hotels in Singapore pay attention to water and energy conservation. ‘In the long run, it makes good corporate sense for hotels to go green as it not only saves the environment but reduces costs,’ said SHA president Kay Kuok.
Whether the message has sunk home is another matter. With the two integrated resorts set to help up Singapore’s hotel room stock by over 10 per cent by 2010, it is a critical time to move into energy efficiency, said NUS’s Dr Lee. ‘The designs are being drawn right now. If we miss this chance, we have to wait another 20 years.’
Source: Business Times 15 Sept 07
The Far East Organization, for example, realised that its corporate electricity bill for all its properties across Singapore was $33 million a year. ‘Imagine if we can cut that by 10 per cent,’ said Chia Swee Cheng, assistant director of the group’s central engineering & operations department.
And so its Changi Village hotel has new boiler and chiller systems in place and a far more efficient energy use.
Over at the Grand Hyatt, Singapore’s first plant to produce electricity, steam and chilled water at a hotel is under construction. Along with the solar panels planned for a new garden conference room, the plant could slash Hyatt’s energy use by a third and save it $800,000 in bills.
While critics say that many local hotels pay only lip service to eco-programmes, there are others, led by Hyatt, who are changing mindsets, going green - and finding that it pays.
‘My impression is that all the hotel operators are serious about sustainability, but not necessarily all the owners, who have to pay for changes,’ said Robert Hacker of Horwath, a hotel consultancy. ‘Generally, all the international chains are taking on board green principles.’
The Regent Singapore, for example, in late 2005 replaced a diesel boiler for heating water with a heat exchanger that produces hot and cold water at the same time. This has cut energy use by a fifth.
And at the Shangri-La, energy use improved over 10 per cent through better work processes, such as using small ovens to prepare meals on demand, rather than keeping a large oven fired up all day just to reheat food. But critics like Tay Kheng Soon, architect and promoter of socially and environmentally conscious architecture in Singapore since the 1970s, say Hyatt is the only energy-efficient hotel in Singapore.
And though the National Environment Agency handed out the new Energy Smart label to some hotels last month, that is only a starting point, said Mr Tay. A more basic change might come about, in his opinion, if there were incentives to use renewable energy sources, like wind and solar energy.
Many hotels ‘hand-wave’ over cosmetic eco-programmes, like using hybrid cars to ferry guests or planting trees, but miss the ‘elephant in the room’ - like the efficiency of their chiller systems - said Lee Eng Lock, general manager of Trane, a US-based energy solutions firm and an accredited Energy Service Company (ESCO) here.
The Hyatt sets the bar but there is no reason why others should not follow suit, with high returns and backed by bank guarantees, said Mr Lee.
But business in the hotel sector is negotiated on the basis of relationships, so it is not necessarily the most efficient solutions that get selected, he said.
Luxury hotels in Singapore run at an energy intensity of 427 kilowatt hours of electricity per square metre of gross floor area, according to a study by the National University of Singapore (NUS) last year. This is down from the 468 KWh/m2 reported by Apec in 1999, but pales beside the under-300 KWh/m2 averages achieved in parts of Europe and Australia.
In other words, local hotels could be using up to 40 per cent more electricity than ideal.
Dr Lee Siew Eang, head of NUS’s Energy Sustainability Unit and leader of the study, recalls some four and fivestar hotels saying during the study that energy efficiency was ‘not relevant’ to them - since, as ‘posh hotels’, it was ‘their duty to be extravagant’.
Many hotel managers were not aware of how much energy their buildings were using. One hotel, which had wanted to apply for an eco-award, was found by NUS to be using an exceptionally high 800 KWh/m2, said Dr Lee.
That’s almost twice the industry average. According to the Singapore Hotel Association (SHA), which represents about 90 per cent of the total number of gazetted hotel rooms here, most hotels in Singapore pay attention to water and energy conservation. ‘In the long run, it makes good corporate sense for hotels to go green as it not only saves the environment but reduces costs,’ said SHA president Kay Kuok.
Whether the message has sunk home is another matter. With the two integrated resorts set to help up Singapore’s hotel room stock by over 10 per cent by 2010, it is a critical time to move into energy efficiency, said NUS’s Dr Lee. ‘The designs are being drawn right now. If we miss this chance, we have to wait another 20 years.’
Source: Business Times 15 Sept 07
) The record number of jobs created in the April-June quarter has been revised upward as employment kept surging, pushing monthly earnings to a level
) The record number of jobs created in the April-June quarter has been revised upward as employment kept surging, pushing monthly earnings to a level not seen since the last economic boom in 2000.
Updated figures released yesterday by the Ministry of Manpower (MOM) in its quarterly Labour Market report show the economy added 64,400 jobs in Q2 - an all-time quarterly high, exceeding the increase of 49,400 in the previous quarter and 36,400 in Q2 last year.
Earlier preliminary data showed total employment jumped 61,900 in Q2.
Accordingly, the unemployment rate in June has been adjusted from a preliminary 2.4 per cent - a six-year low - to 2.3 per cent, down from 2.9 per cent in March.
The resident jobless rate - covering Singaporeans and permanent residents - was similarly revised from 3.2 to 3.1 per cent, down from 4 per cent in March.
The tighter labour market has put even more pressures on wages, raising monthly earnings 8.5 per cent over the year in Q2, up from 5.5 per cent in Q1. After adjusting for inflation, real earnings in Q2 rose 7.5 per cent, against 5 per cent in Q1.
‘The increase was the highest registered since the last economic boom in 2000 when earnings rose by 8.9 per cent in nominal and 7.5 per cent in real terms,’ MOM’s report says.
Productivity also increased, though marginally by 0.4 per cent. But the rise ended two straight quarters of decline.
‘The improvement in productivity helped moderate the increase in overall unit labour cost (ULC) to 5.7 per cent over the year in Q2 07, after a 5.9 per cent increase in the previous quarter,’ the report says.
In the manufacturing sector, ULC grew 3.1 per cent, sharply down from 7.1 per cent in Q1.
The services sector led the hike in earnings in Q2, posting a real increase of 8.6 per cent. Real earnings in manufacturing and construction actually eased in Q2.
The new jobs in Q2 brought total employment growth to 113,800 in the first six months of the year, against 81,500 in the same period in 2006.
The services sector, led by gains in community, social and personal services, continued to account for the biggest chunk of the employment growth in Q2. It added 36,800 jobs, up from 33,700 in Q1.
Construction, fuelled by a building boom, posted the biggest jump in employment, doubling the jobs created to 10,900 compared with the previous quarter.
‘Brisk hirings in marine and offshore engineering more than offset job losses in electronics, leading to growth in manufacturing employment of 15,900,’ MOM’s report says. In Q1, manufacturing created 10,100 new jobs.
But the improvement on the retrenchment front was less stark in Q2 - 1,918 workers were axed, marginally below the 1,964 laid off in Q1. Over the first six months, the improvement was more significant, with the number down to 3,882, from 6,916 in the first half of 2006.
Job-hopping in Q2 was not as rampant as feared, despite the labour pool drying up, according to the report.
The resignation rate among professionals, managers and executives rose. But the increase was small - up from 1.6 per cent in Q2 last year to 1.7 per cent. Among production operators, cleaners and labourers, it remained the same as a year ago.
Source: Business Times 15 Sept 07
Updated figures released yesterday by the Ministry of Manpower (MOM) in its quarterly Labour Market report show the economy added 64,400 jobs in Q2 - an all-time quarterly high, exceeding the increase of 49,400 in the previous quarter and 36,400 in Q2 last year.
Earlier preliminary data showed total employment jumped 61,900 in Q2.
Accordingly, the unemployment rate in June has been adjusted from a preliminary 2.4 per cent - a six-year low - to 2.3 per cent, down from 2.9 per cent in March.
The resident jobless rate - covering Singaporeans and permanent residents - was similarly revised from 3.2 to 3.1 per cent, down from 4 per cent in March.
The tighter labour market has put even more pressures on wages, raising monthly earnings 8.5 per cent over the year in Q2, up from 5.5 per cent in Q1. After adjusting for inflation, real earnings in Q2 rose 7.5 per cent, against 5 per cent in Q1.
‘The increase was the highest registered since the last economic boom in 2000 when earnings rose by 8.9 per cent in nominal and 7.5 per cent in real terms,’ MOM’s report says.
Productivity also increased, though marginally by 0.4 per cent. But the rise ended two straight quarters of decline.
‘The improvement in productivity helped moderate the increase in overall unit labour cost (ULC) to 5.7 per cent over the year in Q2 07, after a 5.9 per cent increase in the previous quarter,’ the report says.
In the manufacturing sector, ULC grew 3.1 per cent, sharply down from 7.1 per cent in Q1.
The services sector led the hike in earnings in Q2, posting a real increase of 8.6 per cent. Real earnings in manufacturing and construction actually eased in Q2.
The new jobs in Q2 brought total employment growth to 113,800 in the first six months of the year, against 81,500 in the same period in 2006.
The services sector, led by gains in community, social and personal services, continued to account for the biggest chunk of the employment growth in Q2. It added 36,800 jobs, up from 33,700 in Q1.
Construction, fuelled by a building boom, posted the biggest jump in employment, doubling the jobs created to 10,900 compared with the previous quarter.
‘Brisk hirings in marine and offshore engineering more than offset job losses in electronics, leading to growth in manufacturing employment of 15,900,’ MOM’s report says. In Q1, manufacturing created 10,100 new jobs.
But the improvement on the retrenchment front was less stark in Q2 - 1,918 workers were axed, marginally below the 1,964 laid off in Q1. Over the first six months, the improvement was more significant, with the number down to 3,882, from 6,916 in the first half of 2006.
Job-hopping in Q2 was not as rampant as feared, despite the labour pool drying up, according to the report.
The resignation rate among professionals, managers and executives rose. But the increase was small - up from 1.6 per cent in Q2 last year to 1.7 per cent. Among production operators, cleaners and labourers, it remained the same as a year ago.
Source: Business Times 15 Sept 07
Former US Federal Reserve chairman Alan Greenspan said he was late to see the storm gathering around US mortgage lending practices
Former US Federal Reserve chairman Alan Greenspan said he was late to see the storm gathering around US mortgage lending practices and commended his successor Ben Bernanke’s handling of the crisis, saying he would likely be responding in a similar fashion. ‘I think he is doing an excellent job,’ Mr Greenspan said of Mr Bernanke in a television interview scheduled to air tomorrow.
Mr Greenspan was asked if he would lower interest rates as dramatically and quickly now as he did just ahead of, during and in the wake of the 2001 recession, according to excerpts of the CBS 60 Minutes interview released on Thursday.
‘I’m not sure that’s true,’ he said. ‘We were dealing with an environment back then when inflation was easing. We could have acted without the fear of stoking inflationary pressures. You can’t do that anymore . . . I’m not sure I would have done anything different (if chairman today).’
The comments from Mr Greenspan, who was tested early in his tenure by the October 1987 stock market crash, come as Mr Bernanke’s skills are challenged by rising defaults in the US sub-prime mortgage market, which caters to risky borrowers, and a related global credit squeeze.
Mr Bernanke’s Fed has come under fire from some quarters for not acknowledging quickly enough how deeply the current crisis could harm the economy or responding aggressively enough to keep the US expansion on track. Some analysts have speculated that Mr Greenspan would have acted more swiftly.
Mr Bernanke and his colleagues will meet on Sept 18. They are widely expected to lower benchmark overnight interest rates, which the Fed has held at 5.25 per cent since June 2006, by at least a quarterpercentage point.
Mr Bernanke had justified holding rates at that level despite some clamouring in markets for lower borrowing costs, on the grounds that inflation has remained troublingly high and needed to recede first.
Only in recent weeks, as credit stress mounted in financial markets and it became clear a housing recovery was a long ways off, have Fed officials suggested that worries about growth have supplanted longstanding concerns on inflation. The Greenspan interview - on the No. 1 US news programme with an average 13.2 million viewers - is the first in a series of public appearances the former Fed chairman is making to publicise his memoir, The Age of Turbulence, which is being released on Monday.
Mr Greenspan, who stepped down from the helm of the US central bank in January 2006, said that as Fed chief he knew about questionable lending practices that were leaving sub-prime borrowers with adjustable rate loans vulnerable to harm from rising interest rates, but did not recognise those loans would trigger broader problems until fairly recently, CBS said. ‘While I was aware a lot of these practices were going on, I had no notion of how significant they had become until very late,’ Mr Greenspan said. ‘I really didn’t get it until very late in 2005 and 2006.’
Mr Greenspan, 81, has received credit for leading the economy to its longest-ever expansion in the 1990s and many economists have praised his handling of a sequence of crises.
Indeed, some have hailed him as the greatest central banker in US history. However, others criticise him for sowing the seeds of successive asset bubbles, first in US stock markets and later in housing.
He has also come under fire for suggesting during his Fed tenure that adjustable rate mortgages could be a cost-saving financing option for many borrowers, just shortly before the Fed embarked on a long push to move rates higher.
In the interview, Mr Greenspan defended the Fed’s decision under his leadership to hold interest rates at or near lows not seen in four decades between December 2001 and June 2004, a period in which the economy was enjoying only a lacklustre recovery from recession. The interview is scheduled for broadcast at 2300 GMT tomorrow.
Source: Reuters (Business Times 15 Sept 07)
Mr Greenspan was asked if he would lower interest rates as dramatically and quickly now as he did just ahead of, during and in the wake of the 2001 recession, according to excerpts of the CBS 60 Minutes interview released on Thursday.
‘I’m not sure that’s true,’ he said. ‘We were dealing with an environment back then when inflation was easing. We could have acted without the fear of stoking inflationary pressures. You can’t do that anymore . . . I’m not sure I would have done anything different (if chairman today).’
The comments from Mr Greenspan, who was tested early in his tenure by the October 1987 stock market crash, come as Mr Bernanke’s skills are challenged by rising defaults in the US sub-prime mortgage market, which caters to risky borrowers, and a related global credit squeeze.
Mr Bernanke’s Fed has come under fire from some quarters for not acknowledging quickly enough how deeply the current crisis could harm the economy or responding aggressively enough to keep the US expansion on track. Some analysts have speculated that Mr Greenspan would have acted more swiftly.
Mr Bernanke and his colleagues will meet on Sept 18. They are widely expected to lower benchmark overnight interest rates, which the Fed has held at 5.25 per cent since June 2006, by at least a quarterpercentage point.
Mr Bernanke had justified holding rates at that level despite some clamouring in markets for lower borrowing costs, on the grounds that inflation has remained troublingly high and needed to recede first.
Only in recent weeks, as credit stress mounted in financial markets and it became clear a housing recovery was a long ways off, have Fed officials suggested that worries about growth have supplanted longstanding concerns on inflation. The Greenspan interview - on the No. 1 US news programme with an average 13.2 million viewers - is the first in a series of public appearances the former Fed chairman is making to publicise his memoir, The Age of Turbulence, which is being released on Monday.
Mr Greenspan, who stepped down from the helm of the US central bank in January 2006, said that as Fed chief he knew about questionable lending practices that were leaving sub-prime borrowers with adjustable rate loans vulnerable to harm from rising interest rates, but did not recognise those loans would trigger broader problems until fairly recently, CBS said. ‘While I was aware a lot of these practices were going on, I had no notion of how significant they had become until very late,’ Mr Greenspan said. ‘I really didn’t get it until very late in 2005 and 2006.’
Mr Greenspan, 81, has received credit for leading the economy to its longest-ever expansion in the 1990s and many economists have praised his handling of a sequence of crises.
Indeed, some have hailed him as the greatest central banker in US history. However, others criticise him for sowing the seeds of successive asset bubbles, first in US stock markets and later in housing.
He has also come under fire for suggesting during his Fed tenure that adjustable rate mortgages could be a cost-saving financing option for many borrowers, just shortly before the Fed embarked on a long push to move rates higher.
In the interview, Mr Greenspan defended the Fed’s decision under his leadership to hold interest rates at or near lows not seen in four decades between December 2001 and June 2004, a period in which the economy was enjoying only a lacklustre recovery from recession. The interview is scheduled for broadcast at 2300 GMT tomorrow.
Source: Reuters (Business Times 15 Sept 07)
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