PPB Hartabina project to have six parks
By DAVID TAN
PENANG: PPB Hartabina Sdn Bhd’s latest low-density luxurious residential development project in Penang will be surrounded by 13 acres of green lung, with six recreational parks.
PPB Hartabina, a wholly-owned subsidiary of PPB Group Bhd, is involved in property development and management.
Eapen Thomas with a model of a semi-detached unit at the Taman Tanah Aman scheme
Director Eapen Thomas said the project, known as Taman Tanah Aman, comprised only bungalows and semi-detached houses on a 29-acre site in Bukit Tengah, Central Seberang Prai.
“The unique selling point of the scheme is that only 16 acres will be developed, leaving the remaining as recreational parks,” he said after unveiling and launching the RM97mil project recently.
He said the entire scheme would be fenced up and equipped with a colonial style clubhouse, located on a 1.28-acre site.
“The clubhouse has a very special history as in the 1950s it was the residence of sugar magnate Tan Sri Robert Kuok Hock Nien, who controls PPB Group Bhd.
“There were also hostels for the workers of Malayan Sugar Manufacturing Co (MSM), located in Prai,” he said.
Thomas said PPB Hartabina bought the land from MSM for RM12.5mil in 2003.
“The semi-detached houses, with built-up areas of 2,795 sq ft, are sold from RM700,000 onwards, while the bungalows, with built-ups of 5,000 sq ft, are priced from RM1.2mil,” he added.
Taman Tanah Aman is scheduled for completion in 2010.
Saturday, October 13, 2007
Marubeni may take up to 20% in SHL
Marubeni may take up to 20% in SHL
By YAP LENG KUEN
PETALING JAYA: Marubeni Corp of Japan intends to take up to a 20% stake in SHL Consolidated Bhd over the next five years.
For a start, Marubeni is expected to acquire 6.5%, representing 15.5 million shares in SHL. Last Friday saw an initial off-market tranche of 7.3 million shares changing hands at RM2.46 each. And yesterday a second off-market block deal of 8.15 million shares was done at RM2.46 each.
Sources told StarBiz that top officials from Marubeni would be in town next week to discuss the realignment of board seats. They are also expected to discuss the number of board seats to be allocated to Marubeni.
Sin Heap Lee Development Sdn Bhd, a unit of SHL, bought Marubeni’s 40% equity interest in Sin Heap Lee-Marubeni Sdn Bhd (SHL-M) for RM18mil cash.
SHL told Bursa Malaysia last Thursday that the acquisition of 18 million shares in SHL-M would pave the way for a strategic partnership between Marubeni and SHL.
“The acquisition enables Marubeni to take up substantial direct interest in SHL. It launches a new relationship between SHL and Marubeni, which is a significant step forward that allows for greater collaboration between both corporations,” SHL had said.
OSK Investment Bank, in a report last Friday, said: “The potential crown jewel for SHL could be Marubeni’s huge township developments in east Jakarta, the Philippines and cities in China.
“This could potentially bring SHL into the international arena and leverage on SHL’s expertise to develop some parcels of its townships in Asia.”
Marubeni is an established Japanese multinational company with businesses ranging from manufacturing, mining, technology, finance, trading to property development and construction.
According to OSK, the co-operation between SHL and Marubeni was forged in 1988/89 when SHL roped in Marubeni in a 60:40 joint venture to develop the Bandar Sungai Long township in Cheras.
“Since then the township has proven to be an extremely lucrative business for the JV partners,” OSK said.
The township has 10,000 units of mixed development with a population of 40,000. The recent addition of the Universiti Tunku Abdul Rahman business campus, with the capacity to accommodate up to 15,000 students, has added more vibrancy.
“In addition to the success of Bandar Sungai Long, SHL also consulted for Marubeni for its development project in China which has also seen great success,” OSK said.
“This provides the catalyst that Marubeni may be keen on a JV with SHL to revive the projects in the Philippines and Indonesia, which have slowed down since the 1997/98 financial crisis. SHL has extensive expertise in township development as well as engineering and construction.”
With Marubeni’s size and stature, the group is expected to have the capacity to finance or secure financing at more favourable rates for the JV development projects.
“Given the scale of development of the projects in question, a strong financier will hasten the development of the land in question,” it said. “In addition, Marubeni has years of relationships in the overseas market.”
OSK expects “explosive earnings growth” for SHL, should Marubeni rope in SHL to develop the overseas townships.
On the other hand, SHL’s involvement would depend on whether SHL, in the end, found these development projects viable, OSK added.
By YAP LENG KUEN
PETALING JAYA: Marubeni Corp of Japan intends to take up to a 20% stake in SHL Consolidated Bhd over the next five years.
For a start, Marubeni is expected to acquire 6.5%, representing 15.5 million shares in SHL. Last Friday saw an initial off-market tranche of 7.3 million shares changing hands at RM2.46 each. And yesterday a second off-market block deal of 8.15 million shares was done at RM2.46 each.
Sources told StarBiz that top officials from Marubeni would be in town next week to discuss the realignment of board seats. They are also expected to discuss the number of board seats to be allocated to Marubeni.
Sin Heap Lee Development Sdn Bhd, a unit of SHL, bought Marubeni’s 40% equity interest in Sin Heap Lee-Marubeni Sdn Bhd (SHL-M) for RM18mil cash.
SHL told Bursa Malaysia last Thursday that the acquisition of 18 million shares in SHL-M would pave the way for a strategic partnership between Marubeni and SHL.
“The acquisition enables Marubeni to take up substantial direct interest in SHL. It launches a new relationship between SHL and Marubeni, which is a significant step forward that allows for greater collaboration between both corporations,” SHL had said.
OSK Investment Bank, in a report last Friday, said: “The potential crown jewel for SHL could be Marubeni’s huge township developments in east Jakarta, the Philippines and cities in China.
“This could potentially bring SHL into the international arena and leverage on SHL’s expertise to develop some parcels of its townships in Asia.”
Marubeni is an established Japanese multinational company with businesses ranging from manufacturing, mining, technology, finance, trading to property development and construction.
According to OSK, the co-operation between SHL and Marubeni was forged in 1988/89 when SHL roped in Marubeni in a 60:40 joint venture to develop the Bandar Sungai Long township in Cheras.
“Since then the township has proven to be an extremely lucrative business for the JV partners,” OSK said.
The township has 10,000 units of mixed development with a population of 40,000. The recent addition of the Universiti Tunku Abdul Rahman business campus, with the capacity to accommodate up to 15,000 students, has added more vibrancy.
“In addition to the success of Bandar Sungai Long, SHL also consulted for Marubeni for its development project in China which has also seen great success,” OSK said.
“This provides the catalyst that Marubeni may be keen on a JV with SHL to revive the projects in the Philippines and Indonesia, which have slowed down since the 1997/98 financial crisis. SHL has extensive expertise in township development as well as engineering and construction.”
With Marubeni’s size and stature, the group is expected to have the capacity to finance or secure financing at more favourable rates for the JV development projects.
“Given the scale of development of the projects in question, a strong financier will hasten the development of the land in question,” it said. “In addition, Marubeni has years of relationships in the overseas market.”
OSK expects “explosive earnings growth” for SHL, should Marubeni rope in SHL to develop the overseas townships.
On the other hand, SHL’s involvement would depend on whether SHL, in the end, found these development projects viable, OSK added.
Is the robust property market sustainable?
Is the robust property market sustainable?
Comment: By FINTAN NG
CALL me a cynic but I have often wondered about the potential of the local property market.
This, of course, flies against the sentiments of experts in the sector, most of whom have been upbeat.
Since the start of the year, there has been mainly good news from them although grouses do get aired from time to time.
Developers, consultants and realtors have painted a mostly rosy picture of a pretty robust property market, basing their outlook on the usual suspects – the economy, the “feel good sentiments” of the public, the performance of the stock market and the roll-out of projects under the Ninth Malaysia Plan, part of which is already coming to fruition via the Iskandar Development Region, the Northern Corridor Economic Region and the soon-to-be-launched Eastern Corridor Economic Region. Even inflation, at around 2%, is manageable.
There are also the various incentives that the Government has announced in stages since last December.
These include the easing of Foreign Investment Committee regulations on the purchase of residential properties by foreigners, the suspension of the real property gains tax and the abolishment of stamp duty for residential properties priced at RM250,000 and below.
The experts will also point out that relative to our neighbours, property prices are comparatively cheaper although I have been cautioned more than once about price comparison. There are many other factors that affect the property markets of our neighbours.
The year is slowly winding down. Despite high crude prices hovering in the US$80 per barrel region in the past few weeks and the troubles in the US credit and equity markets over the last two months, the economy is humming along.
It is not at the blistering gross domestic product growth of near 10% before the Asian financial crisis but still at a steady pace of nearly 6%.
Quarterly reports by various property consultancies this year have noted the general upward movement of prices of high-end residential properties in select locations in the Klang Valley and Penang.
In Johor, while property prices have also risen, they are not moving as strongly as in the two other regions.
They have also noted that foreigners have taken up a substantial number of these properties, sometimes on an en bloc basis.
Several consultants noted that foreign interest has been driving the prices of high-end residential properties in “hot locations” upwards. This is especially true of the area surrounding the Kuala Lumpur City Centre (KLCC).
According to a consultant, the fear is that while Malaysia has largely been unaffected by the subprime mortgage crisis in the US, foreign interest may dry up if the crisis spills over into the US economy or credit is further tightened.
“The crisis may spread through the credit fault lines or other factors may crop up that will have a negative effect on the market,” he says.
Another adds that the KLCC rental market is as yet untested, unlike Mont’Kiara/Sri Hartamas where there is a thriving expatriate community.
“For the rental market in KLCC to do fairly well, the investment climate must be welcoming to attract foreigners,” he adds.
Going forward, a “welcome” mat and less red tape would be good for the high-end residential and office segments.
As for the mass-market segment, as long as inflation is manageable and financing is cheap (or Bank Negara does not raise the overnight policy rate that affects commercial banks’ base lending rates), many more people would be interested in purchasing property.
This in turn would reduce the overhang that developers are constantly moaning about and lend more strength to the property bull.
Comment: By FINTAN NG
CALL me a cynic but I have often wondered about the potential of the local property market.
This, of course, flies against the sentiments of experts in the sector, most of whom have been upbeat.
Since the start of the year, there has been mainly good news from them although grouses do get aired from time to time.
Developers, consultants and realtors have painted a mostly rosy picture of a pretty robust property market, basing their outlook on the usual suspects – the economy, the “feel good sentiments” of the public, the performance of the stock market and the roll-out of projects under the Ninth Malaysia Plan, part of which is already coming to fruition via the Iskandar Development Region, the Northern Corridor Economic Region and the soon-to-be-launched Eastern Corridor Economic Region. Even inflation, at around 2%, is manageable.
There are also the various incentives that the Government has announced in stages since last December.
These include the easing of Foreign Investment Committee regulations on the purchase of residential properties by foreigners, the suspension of the real property gains tax and the abolishment of stamp duty for residential properties priced at RM250,000 and below.
The experts will also point out that relative to our neighbours, property prices are comparatively cheaper although I have been cautioned more than once about price comparison. There are many other factors that affect the property markets of our neighbours.
The year is slowly winding down. Despite high crude prices hovering in the US$80 per barrel region in the past few weeks and the troubles in the US credit and equity markets over the last two months, the economy is humming along.
It is not at the blistering gross domestic product growth of near 10% before the Asian financial crisis but still at a steady pace of nearly 6%.
Quarterly reports by various property consultancies this year have noted the general upward movement of prices of high-end residential properties in select locations in the Klang Valley and Penang.
In Johor, while property prices have also risen, they are not moving as strongly as in the two other regions.
They have also noted that foreigners have taken up a substantial number of these properties, sometimes on an en bloc basis.
Several consultants noted that foreign interest has been driving the prices of high-end residential properties in “hot locations” upwards. This is especially true of the area surrounding the Kuala Lumpur City Centre (KLCC).
According to a consultant, the fear is that while Malaysia has largely been unaffected by the subprime mortgage crisis in the US, foreign interest may dry up if the crisis spills over into the US economy or credit is further tightened.
“The crisis may spread through the credit fault lines or other factors may crop up that will have a negative effect on the market,” he says.
Another adds that the KLCC rental market is as yet untested, unlike Mont’Kiara/Sri Hartamas where there is a thriving expatriate community.
“For the rental market in KLCC to do fairly well, the investment climate must be welcoming to attract foreigners,” he adds.
Going forward, a “welcome” mat and less red tape would be good for the high-end residential and office segments.
As for the mass-market segment, as long as inflation is manageable and financing is cheap (or Bank Negara does not raise the overnight policy rate that affects commercial banks’ base lending rates), many more people would be interested in purchasing property.
This in turn would reduce the overhang that developers are constantly moaning about and lend more strength to the property bull.
Mitrajaya heads for Sri Lanka
Mitrajaya heads for Sri Lanka
By EILEEN HEE
KUALA LUMPUR: Mitrajaya Homes Sdn Bhd, a subsidiary of Mitrajaya Holdings Bhd, plans to launch its maiden property project in Sri Lanka next year.
Sales and marketing director Kok Siew Leng told StarBiz building plans for high-end condominiums had been submitted and the company was now awaiting approval from the relevant authorities.
Kok Siew Leng
Mitrajaya had in 1999 ventured into property development in South Africa where it still has some 300ha, which Kok said should keep it busy for the next few years.“We have been in South Africa for eight years. Sales of our bungalows and bungalow lots have been encouraging,” she added.
On the local front, the company will launch a 90-unit condominium block and 243 double-storey houses by year-end.
The condominium block is its eighth in Desa Impiana, which is part of the 250-acre Puchong Prima being developed by sister company Prima Harta Development Sdn Bhd.
Situated on 16 acres of freehold land, Desa Impiana also features 144 duplex units housed in four blocks. The project has an estimated gross development value (GDV) of RM160mil
“Sales have been encouraging with about 20% left of the total number of units,” Kok said, adding that the last condominium block would be launched by month-end.
She also said the double-storey houses, which have a GDV of some RM68mil, would be sited on 11 acres near Desa Impiana.
For next year, the company plans to unveil its high-end condominium and low-rise villa development on three acres in Mont Kiara.
Named Kiara 9, the project with an estimated GDV of RM300mil, would be launched by the first quarter, Kok said.
She said the company’s Desa Idaman project, comprising low-rise apartments, had also seen promising sales since its soft launch a month ago.
Spanning 10 acres in Puchong Prima, the project comprises 540 units with an estimated GDV of RM100mil.
Kok said the project would feature a private water park complete with life size animals and rivers.
With built-up areas from 950 to 1,100 sq ft, the apartments are priced from RM160,000-RM280,000.
Kok said the company also has seven acres in the Klang Valley and was in the process of acquiring 100 acres in Banting.
By EILEEN HEE
KUALA LUMPUR: Mitrajaya Homes Sdn Bhd, a subsidiary of Mitrajaya Holdings Bhd, plans to launch its maiden property project in Sri Lanka next year.
Sales and marketing director Kok Siew Leng told StarBiz building plans for high-end condominiums had been submitted and the company was now awaiting approval from the relevant authorities.
Kok Siew Leng
Mitrajaya had in 1999 ventured into property development in South Africa where it still has some 300ha, which Kok said should keep it busy for the next few years.“We have been in South Africa for eight years. Sales of our bungalows and bungalow lots have been encouraging,” she added.
On the local front, the company will launch a 90-unit condominium block and 243 double-storey houses by year-end.
The condominium block is its eighth in Desa Impiana, which is part of the 250-acre Puchong Prima being developed by sister company Prima Harta Development Sdn Bhd.
Situated on 16 acres of freehold land, Desa Impiana also features 144 duplex units housed in four blocks. The project has an estimated gross development value (GDV) of RM160mil
“Sales have been encouraging with about 20% left of the total number of units,” Kok said, adding that the last condominium block would be launched by month-end.
She also said the double-storey houses, which have a GDV of some RM68mil, would be sited on 11 acres near Desa Impiana.
For next year, the company plans to unveil its high-end condominium and low-rise villa development on three acres in Mont Kiara.
Named Kiara 9, the project with an estimated GDV of RM300mil, would be launched by the first quarter, Kok said.
She said the company’s Desa Idaman project, comprising low-rise apartments, had also seen promising sales since its soft launch a month ago.
Spanning 10 acres in Puchong Prima, the project comprises 540 units with an estimated GDV of RM100mil.
Kok said the project would feature a private water park complete with life size animals and rivers.
With built-up areas from 950 to 1,100 sq ft, the apartments are priced from RM160,000-RM280,000.
Kok said the company also has seven acres in the Klang Valley and was in the process of acquiring 100 acres in Banting.
THE average capital value of luxury apartments in Singapore has risen 43.5 per cent in the first nine months of this year since the fourth quarter
THE average capital value of luxury apartments in Singapore has risen 43.5 per cent in the first nine months of this year since the fourth quarter of 2006. At $2,827 psf, the Q3 2007 average luxury apartment cap value has surpassed 1997’s peak level by 59 per cent, according to a report by Colliers International issued yesterday.
In the leasing market, average monthly gross rents of luxury apartments were up 27.9 per cent in the first nine months of the year. The increase was at a faster clip in the third quarter of this year, with a quarter-on-quarter gain of 10.2 per cent to $6.86 per square foot a month. This was higher than earlier rises of 7.9 per cent and 7.6 per cent in Q2 and Q1.
‘The supply crunch, coupled with strong demand, continued to contribute to escalating rental growth, a growing concern among the expatriate population in the Republic and the government,’ Colliers noted.
The average cap value of luxury apartments rose 13.3 per cent in Q3 over the preceding quarter to $2,827 psf.
The property consultancy firm predicts that average capital values and monthly gross rents of luxury apartments will rise by up to 10 per cent in the final quarter of the year. But it acknowledged the downside risks in the coming months, including the negative spillover from the US housing market and potential negative oil supply shocks.
‘Nevertheless, the strong economic and demand fundamentals in the Singapore market, coupled with the continuing commitment of the government to maintain Singapore’s attractiveness as a stable market for investments, should lend support to the private residential property market amid cautious sentiments,’ the report added.
Colliers also highlighted the government’s assurance that it would continue to monitor the market and ensure that prices do not run ahead because of a shortage of supply.
Earlier this month, the Urban Redevelopment Authority said that it was reviewing the Government Land Sales programme for the first half of next year and that the government would make available more sites for private residential development through the GLS programme next year if the demand continues to remain strong.
Source : Business Times - 13 Oct 2007
In the leasing market, average monthly gross rents of luxury apartments were up 27.9 per cent in the first nine months of the year. The increase was at a faster clip in the third quarter of this year, with a quarter-on-quarter gain of 10.2 per cent to $6.86 per square foot a month. This was higher than earlier rises of 7.9 per cent and 7.6 per cent in Q2 and Q1.
‘The supply crunch, coupled with strong demand, continued to contribute to escalating rental growth, a growing concern among the expatriate population in the Republic and the government,’ Colliers noted.
The average cap value of luxury apartments rose 13.3 per cent in Q3 over the preceding quarter to $2,827 psf.
The property consultancy firm predicts that average capital values and monthly gross rents of luxury apartments will rise by up to 10 per cent in the final quarter of the year. But it acknowledged the downside risks in the coming months, including the negative spillover from the US housing market and potential negative oil supply shocks.
‘Nevertheless, the strong economic and demand fundamentals in the Singapore market, coupled with the continuing commitment of the government to maintain Singapore’s attractiveness as a stable market for investments, should lend support to the private residential property market amid cautious sentiments,’ the report added.
Colliers also highlighted the government’s assurance that it would continue to monitor the market and ensure that prices do not run ahead because of a shortage of supply.
Earlier this month, the Urban Redevelopment Authority said that it was reviewing the Government Land Sales programme for the first half of next year and that the government would make available more sites for private residential development through the GLS programme next year if the demand continues to remain strong.
Source : Business Times - 13 Oct 2007
TANGLIN Village, the latest lifestyle hot spot in town, is drawing massive crowds to its range of newly opened shops and restaurants.
TANGLIN Village, the latest lifestyle hot spot in town, is drawing massive crowds to its range of newly opened shops and restaurants.
And where consumers and foodies flock, so do business people. They have descended on the prime Dempsey Road enclave in a bid to clinch the remaining pieces of land.
Tanglin Village’s short-term leases - usually for three years, as the land is slated for residential use after 2015 - have not deterred tenants, said the Singapore Land Authority (SLA). It said businesses are confident of reaping most of their investments in the first three years.
Offers have poured in for two Tanglin Village plots released recently, said the SLA, which is managing the development.
A former chapel site at 39C Harding Road drew a record 23 bids when its tender closed last month. The top rental offer was $56,000 a month - five times the guide rent, SLA said.
It was put in by Ponte & Partners, the Singapore-based firm that brought in German brewery Paulaner Brauhaus at Millenia Walk.
The Harding Road property, which has a gross floor area of 4,456 sq ft, is safeguarded for conservation. It sits on a 43,172 sq ft plot.
Most of the other bidders for the site were also from the food and beverage industry, including Da Paolo Ristorante Italiano, Palm Beach Seafood and Select Catering Services.
A second site, at 45 Minden Road, was similarly popular with 15 bidders lodging offers. The highest was $51,000 a month, or more than double the $22,000 guide rent.
It came from the Siam Silk Company, a unit of Thailand’s Thai Silk Company, which was founded by the renowned Jim Thompson.
If it is awarded the 30,631 sq ft property - which has 10,156 sq ft of gross floor area - the firm plans to open a Jim Thompson Thai restaurant and wine bar, said Mr Steve Benhar, corporate counsel for the Thai Silk Company. The eatery will feature private indoor dining and a garden bar.
The strong response to the two sites is testament to how hot Tanglin Village has become in recent months.
A year ago, a building with 13,000 sq ft of gross floor area drew only 11 rental bids - the highest just $23,000 a month. Oosh, an alfresco bar and restaurant, is now operating at the site.
Earlier this year, some 27 sub-tenant businesses faced the prospect of being evicted when their master tenant, Tanglin Warehouse, fell behind in its rental payments to the SLA.
This was averted after Tanglin Warehouse settled the arrears in full.
And things have picked up quickly since then. In the last six months, 25 firms have set up shop in the area, according to the SLA.
Their offerings run a wide gamut, from restaurants and shops to education and entertainment centres. Some tenants even use the space for offices.
The burst of activity has brought occupancy at Tanglin Village to more than 70 per cent, said the SLA’s chief executive, Brigadier-General (NS) Lam Joon Khoi.
‘Tanglin Village tenders so far have attracted a number of entrepreneurs to build their dream businesses,’ he told The Straits Times.
To better serve these tenants and their customers, the SLA intends to review ‘basic infrastructural improvements’, such as road paving, lighting and utilities, BG Lam added.
More tenants, including an international school, are also expected to make their homes in the area soon.
It is also understood that a brewery will open, as well as an Italian restaurant and an outlet for the Long Beach Seafood restaurant chain.
Tanglin Village’s success has spurred the SLA to examine uses for other enclaves such as Keat Hong camp in Choa Chu Kang - a former Singapore Armed Forces camp - and Phoenix Park in Tanglin Road, the former headquarters of the Home Affairs Ministry.
Source : Straits Times - 13 Oct 2007
And where consumers and foodies flock, so do business people. They have descended on the prime Dempsey Road enclave in a bid to clinch the remaining pieces of land.
Tanglin Village’s short-term leases - usually for three years, as the land is slated for residential use after 2015 - have not deterred tenants, said the Singapore Land Authority (SLA). It said businesses are confident of reaping most of their investments in the first three years.
Offers have poured in for two Tanglin Village plots released recently, said the SLA, which is managing the development.
A former chapel site at 39C Harding Road drew a record 23 bids when its tender closed last month. The top rental offer was $56,000 a month - five times the guide rent, SLA said.
It was put in by Ponte & Partners, the Singapore-based firm that brought in German brewery Paulaner Brauhaus at Millenia Walk.
The Harding Road property, which has a gross floor area of 4,456 sq ft, is safeguarded for conservation. It sits on a 43,172 sq ft plot.
Most of the other bidders for the site were also from the food and beverage industry, including Da Paolo Ristorante Italiano, Palm Beach Seafood and Select Catering Services.
A second site, at 45 Minden Road, was similarly popular with 15 bidders lodging offers. The highest was $51,000 a month, or more than double the $22,000 guide rent.
It came from the Siam Silk Company, a unit of Thailand’s Thai Silk Company, which was founded by the renowned Jim Thompson.
If it is awarded the 30,631 sq ft property - which has 10,156 sq ft of gross floor area - the firm plans to open a Jim Thompson Thai restaurant and wine bar, said Mr Steve Benhar, corporate counsel for the Thai Silk Company. The eatery will feature private indoor dining and a garden bar.
The strong response to the two sites is testament to how hot Tanglin Village has become in recent months.
A year ago, a building with 13,000 sq ft of gross floor area drew only 11 rental bids - the highest just $23,000 a month. Oosh, an alfresco bar and restaurant, is now operating at the site.
Earlier this year, some 27 sub-tenant businesses faced the prospect of being evicted when their master tenant, Tanglin Warehouse, fell behind in its rental payments to the SLA.
This was averted after Tanglin Warehouse settled the arrears in full.
And things have picked up quickly since then. In the last six months, 25 firms have set up shop in the area, according to the SLA.
Their offerings run a wide gamut, from restaurants and shops to education and entertainment centres. Some tenants even use the space for offices.
The burst of activity has brought occupancy at Tanglin Village to more than 70 per cent, said the SLA’s chief executive, Brigadier-General (NS) Lam Joon Khoi.
‘Tanglin Village tenders so far have attracted a number of entrepreneurs to build their dream businesses,’ he told The Straits Times.
To better serve these tenants and their customers, the SLA intends to review ‘basic infrastructural improvements’, such as road paving, lighting and utilities, BG Lam added.
More tenants, including an international school, are also expected to make their homes in the area soon.
It is also understood that a brewery will open, as well as an Italian restaurant and an outlet for the Long Beach Seafood restaurant chain.
Tanglin Village’s success has spurred the SLA to examine uses for other enclaves such as Keat Hong camp in Choa Chu Kang - a former Singapore Armed Forces camp - and Phoenix Park in Tanglin Road, the former headquarters of the Home Affairs Ministry.
Source : Straits Times - 13 Oct 2007
Thursday, October 11, 2007
The Dapenso Building, a nine-storey office block in Cecil Street, seems to have changed hands three times in the past year
The Dapenso Building, a nine-storey office block in Cecil Street, seems to have changed hands three times in the past year, with ownership recently passing to home- grown property outfit KOP Capital under a deal said to have valued the building at just below $120 million.
This is about double the $58 million the property was sold for in December last year, which itself was more than twice the sum it sold for previously.
KOP Capital declined to confirm the cost of its recent acquisition, which it said it effected by purchasing shares in East Coast (Cecil) Investment Pte Ltd, which took control of Dapenso Building in June this year.
KOP managing director Ong Chih Ching told BT her company plans to spend about $80 million on additions and alteration works at Dapenso Building, adding about four-and-a-half storeys that will result in a 14-storey building with a roof terrace, two basement carparks and a net lettable area of about 113,000 sq ft, which KOP will lease out.
‘This will be a stylish office development, inspired by the Louis Vuitton outlet in Omote-Sando in Tokyo,’ she said. The plot is zoned for commercial use with an 11.2 plot ratio.
KOP’s all-up investment of about $200 million works out to almost $1,770 psf based on the proposed net lettable area of 113,000 sq ft. Work will start in Q1 next year and is expected to take about 15 months.
Ms Ong, a lawyer by training, runs KOP with her fellow shareholder and executive director Leny Suparman. A third shareholder, another lawyer, is a silent partner.
In August, a KOP Capital-Hwa Hong joint-venture bagged URA’s maiden transitional office site next to Newton MRT Station. Since then, Dubai Investment Group has joined the consortium, taking a 45 per cent stake, leaving Hwa Hong and KOP with 50 and 5 per cent stakes respectively, according to an announcement by Hwa Hong last week.
The all-up investment in the project is expected to be about $90 million and the four-storey office development, with about 150,000 sq ft net lettable area, is expected to be ready in the second half of next year.
KOP also has an equal joint venture with Emirates Tarian Capital, a unit of Emirates Investment Group, which is developing two luxury residential projects in Singapore - the 58-unit Ritz Carlton Residences in Cairnhill on the former Horizon View site, and a 56-unit project on the former Hotel Asia site in Scotts Road. The latter project will feature two carpark lots housed within each apartment.
Ritz Carlton Residences is slated for launch next month while the Scotts Road project will come on the market early next year.
Ms Ong says KOP is keen on more projects in the residential and office sectors in Singapore. ‘We shall continue to look for more office blocks that we can upgrade to trendy, boutique offices, but we’re also interested in investing in bigger office towers in the CBD that may not require much sprucing up,’ she said.
Earlier this month, KOP bought East Coast (Cecil) Investment Pte Ltd, a company formed in June this year by Alvin Ng and Kim Seng Holdings to purchase Dapenso Building, for $96 million from Remarkable Investment. Remarkable, believed to be linked to Hong Kong investors, bought the building in December last year for $58.4 million from Hotel Royal, which bought it in 2004 for $27 million from Bank Negara Indonesia.
Source : Business Times - 11 Oct 2007
This is about double the $58 million the property was sold for in December last year, which itself was more than twice the sum it sold for previously.
KOP Capital declined to confirm the cost of its recent acquisition, which it said it effected by purchasing shares in East Coast (Cecil) Investment Pte Ltd, which took control of Dapenso Building in June this year.
KOP managing director Ong Chih Ching told BT her company plans to spend about $80 million on additions and alteration works at Dapenso Building, adding about four-and-a-half storeys that will result in a 14-storey building with a roof terrace, two basement carparks and a net lettable area of about 113,000 sq ft, which KOP will lease out.
‘This will be a stylish office development, inspired by the Louis Vuitton outlet in Omote-Sando in Tokyo,’ she said. The plot is zoned for commercial use with an 11.2 plot ratio.
KOP’s all-up investment of about $200 million works out to almost $1,770 psf based on the proposed net lettable area of 113,000 sq ft. Work will start in Q1 next year and is expected to take about 15 months.
Ms Ong, a lawyer by training, runs KOP with her fellow shareholder and executive director Leny Suparman. A third shareholder, another lawyer, is a silent partner.
In August, a KOP Capital-Hwa Hong joint-venture bagged URA’s maiden transitional office site next to Newton MRT Station. Since then, Dubai Investment Group has joined the consortium, taking a 45 per cent stake, leaving Hwa Hong and KOP with 50 and 5 per cent stakes respectively, according to an announcement by Hwa Hong last week.
The all-up investment in the project is expected to be about $90 million and the four-storey office development, with about 150,000 sq ft net lettable area, is expected to be ready in the second half of next year.
KOP also has an equal joint venture with Emirates Tarian Capital, a unit of Emirates Investment Group, which is developing two luxury residential projects in Singapore - the 58-unit Ritz Carlton Residences in Cairnhill on the former Horizon View site, and a 56-unit project on the former Hotel Asia site in Scotts Road. The latter project will feature two carpark lots housed within each apartment.
Ritz Carlton Residences is slated for launch next month while the Scotts Road project will come on the market early next year.
Ms Ong says KOP is keen on more projects in the residential and office sectors in Singapore. ‘We shall continue to look for more office blocks that we can upgrade to trendy, boutique offices, but we’re also interested in investing in bigger office towers in the CBD that may not require much sprucing up,’ she said.
Earlier this month, KOP bought East Coast (Cecil) Investment Pte Ltd, a company formed in June this year by Alvin Ng and Kim Seng Holdings to purchase Dapenso Building, for $96 million from Remarkable Investment. Remarkable, believed to be linked to Hong Kong investors, bought the building in December last year for $58.4 million from Hotel Royal, which bought it in 2004 for $27 million from Bank Negara Indonesia.
Source : Business Times - 11 Oct 2007
Analysts bump up forecasts following Singapore's Q3 flash estimates of 9.4% growth.
Analysts bump up forecasts following Q3 flash estimates of 9.4% growth.
The Singapore economy continued to power ahead in the third quarter, prompting several research houses to raise their growth forecasts for the whole year.
Flash estimates released by the Ministry of Trade and Industry (MTI) showed that the economy grew a sterling 9.4 per cent year-on-year last quarter, based on data from July and August. This is higher than the median forecast of 7.8 per cent among private sector economists polled by the Monetary Authority of Singapore recently.
The performance was fuelled by broad-based expansion across various sectors. The construction industry moderated to a growth of 15.5 per cent in Q3, from 18.8 per cent in Q2. And despite a lacklustre performance from the electronics cluster, the manufacturing industry managed 12.3 per cent growth, picking up momentum from the 8.3 per cent year-on-year gain in Q2. This was underpinned by the strong biomedical and transport engineering clusters.
The services sector eased to a 8.1 per cent gain, from 8.4 per cent in Q2. ‘Our sense is that financial services, information and communications as well as hotels and restaurants outperformed during the quarter,’ said Citigroup economist Chua Hak Bin. ‘Some modest slowdown was detected for wholesale and retail trade and sea transport activities.’
On a quarter-on-quarter, seasonally adjusted annualised basis, real GDP growth decelerated to 6.4 per cent from 14.4 per cent in Q2.
The headline figure takes the growth rate for the first nine months to 8.2 per cent, exceeding the official forecast of 7-8 per cent for the full year. Several economists that BT spoke to said that they were revising their full-year growth estimates, with one going as high as 8.7 per cent.
‘Although the advance estimates are below our expectations, we believe once the full set of data is in, 3Q ‘07 GDP could be revised up to the 10 per cent level, as year-to-date growth is already 8.2 per cent,’ CIMB-GK research head Song Seng Wun wrote in a report yesterday. ‘Hence, we are actually raising our full-year growth estimate from 7.5 per cent to 8.7 per cent.’
The team at Citigroup has upgraded its 2007 growth forecast to 8 per cent, from 7.2 per cent previously. Similarly, Standard Chartered Bank economist Alvin Liew is raising his forecast to 8 per cent, from 7.6 per cent, while UOB is looking at 8.4 per cent growth for the full year.
‘The preliminary estimate for manufacturing growth of 12.3 per cent year on year in 3Q factors in a modest 2 per cent year-on-year growth in the industrial output for the month of September after 18.1 per cent year-on-year expansion in July-August,’ said a UOB report. ‘This suggests that actual GDP growth for the quarter could potentially surprise on the upside should the biomedical sector continue its robust expansion in September.’
While many are keeping an eye on rising prices, some said that the risks of the economy overheating are low - at least for the time being.
‘If you look at asset prices, inflation, wage increases in the last two quarters, there does seem to be some risks of overheating,’ said Stanchart’s Mr Liew. ‘But I don’t foresee an overheating situation, at least for the next three quarters until mid-2008.
‘For one, we can see that there’s a lot of domestic driven activities. And even though we had achieved fairly high growth, the manufacturing sector isn’t the one that’s pushing it. So it’s not an export-oriented kind of growth story this time round.’
UOB economist Ho Woei Chen said that the risks of overheating could be tempered by the slowdown in the US economy. ‘We are not so concerned about overheating because there’s some downside risks to the global growth outlook going forward,’ she said. Besides, the steeper appreciation of the S$NEER slope, announced by the MAS yesterday, could help cap imported inflation to a certain extent, she added.
HSBC, which last week cautioned against an overheating Singapore economy, is maintaining a growth estimate of 8.5 per cent. In a report titled Easy, tiger, it argued that the economy is showing signs of overheating, with wages rising at a seven-year high of 8.5 per cent, office rents jumping 50 per cent, and the consumer price index hitting a 12-year high.
Citigroup’s Dr Chua also suggested overheating pressures were looming. ‘Tightness is apparent in labour and property markets, with wage costs, office rents and residential rents all rising strongly,’ he wrote in a report on Monday.
The market probably reacted on fears that there may be more tightening measures ahead, following an adjustment to the S$NEER slope yesterday. The Straits Times Index shed more than 50 points to end the day’s trading at 3,814.45.
‘The market has also run up quite considerably,’ said Dr Chua. ‘I suppose there may be some concerns as well that a stronger Singapore dollar could probably hurt exports. So it’s a combination of factors.’
Source : Business Times - 11 Oct 2007
The Singapore economy continued to power ahead in the third quarter, prompting several research houses to raise their growth forecasts for the whole year.
Flash estimates released by the Ministry of Trade and Industry (MTI) showed that the economy grew a sterling 9.4 per cent year-on-year last quarter, based on data from July and August. This is higher than the median forecast of 7.8 per cent among private sector economists polled by the Monetary Authority of Singapore recently.
The performance was fuelled by broad-based expansion across various sectors. The construction industry moderated to a growth of 15.5 per cent in Q3, from 18.8 per cent in Q2. And despite a lacklustre performance from the electronics cluster, the manufacturing industry managed 12.3 per cent growth, picking up momentum from the 8.3 per cent year-on-year gain in Q2. This was underpinned by the strong biomedical and transport engineering clusters.
The services sector eased to a 8.1 per cent gain, from 8.4 per cent in Q2. ‘Our sense is that financial services, information and communications as well as hotels and restaurants outperformed during the quarter,’ said Citigroup economist Chua Hak Bin. ‘Some modest slowdown was detected for wholesale and retail trade and sea transport activities.’
On a quarter-on-quarter, seasonally adjusted annualised basis, real GDP growth decelerated to 6.4 per cent from 14.4 per cent in Q2.
The headline figure takes the growth rate for the first nine months to 8.2 per cent, exceeding the official forecast of 7-8 per cent for the full year. Several economists that BT spoke to said that they were revising their full-year growth estimates, with one going as high as 8.7 per cent.
‘Although the advance estimates are below our expectations, we believe once the full set of data is in, 3Q ‘07 GDP could be revised up to the 10 per cent level, as year-to-date growth is already 8.2 per cent,’ CIMB-GK research head Song Seng Wun wrote in a report yesterday. ‘Hence, we are actually raising our full-year growth estimate from 7.5 per cent to 8.7 per cent.’
The team at Citigroup has upgraded its 2007 growth forecast to 8 per cent, from 7.2 per cent previously. Similarly, Standard Chartered Bank economist Alvin Liew is raising his forecast to 8 per cent, from 7.6 per cent, while UOB is looking at 8.4 per cent growth for the full year.
‘The preliminary estimate for manufacturing growth of 12.3 per cent year on year in 3Q factors in a modest 2 per cent year-on-year growth in the industrial output for the month of September after 18.1 per cent year-on-year expansion in July-August,’ said a UOB report. ‘This suggests that actual GDP growth for the quarter could potentially surprise on the upside should the biomedical sector continue its robust expansion in September.’
While many are keeping an eye on rising prices, some said that the risks of the economy overheating are low - at least for the time being.
‘If you look at asset prices, inflation, wage increases in the last two quarters, there does seem to be some risks of overheating,’ said Stanchart’s Mr Liew. ‘But I don’t foresee an overheating situation, at least for the next three quarters until mid-2008.
‘For one, we can see that there’s a lot of domestic driven activities. And even though we had achieved fairly high growth, the manufacturing sector isn’t the one that’s pushing it. So it’s not an export-oriented kind of growth story this time round.’
UOB economist Ho Woei Chen said that the risks of overheating could be tempered by the slowdown in the US economy. ‘We are not so concerned about overheating because there’s some downside risks to the global growth outlook going forward,’ she said. Besides, the steeper appreciation of the S$NEER slope, announced by the MAS yesterday, could help cap imported inflation to a certain extent, she added.
HSBC, which last week cautioned against an overheating Singapore economy, is maintaining a growth estimate of 8.5 per cent. In a report titled Easy, tiger, it argued that the economy is showing signs of overheating, with wages rising at a seven-year high of 8.5 per cent, office rents jumping 50 per cent, and the consumer price index hitting a 12-year high.
Citigroup’s Dr Chua also suggested overheating pressures were looming. ‘Tightness is apparent in labour and property markets, with wage costs, office rents and residential rents all rising strongly,’ he wrote in a report on Monday.
The market probably reacted on fears that there may be more tightening measures ahead, following an adjustment to the S$NEER slope yesterday. The Straits Times Index shed more than 50 points to end the day’s trading at 3,814.45.
‘The market has also run up quite considerably,’ said Dr Chua. ‘I suppose there may be some concerns as well that a stronger Singapore dollar could probably hurt exports. So it’s a combination of factors.’
Source : Business Times - 11 Oct 2007
STB was right to throw out Horizon Towers’ application
THE High Court will rule today on whether there is a chance the en bloc sale of Horizon Towers can still go through.
With the high-profile case having attracted huge interest amid Singapore’s en bloc fever, all eyes will be on Justice Choo Han Teck as he announces his verdict on a decision by the Strata Titles Board (STB) in August to dismiss Horizon Towers’ application for a collective-sale order.
If Justice Choo decides the board was right in its dismissal, it will spell the end of the collective sale. But if he rules that the board erred, the application will go back to STB to be heard again.
Justice Choo has had to decide whether STB was right to throw out Horizon Towers’ application - before hearing its merits - because the collective-sale agreement appended to it was missing three signature pages.
The majority owners who consented to the en bloc sale have argued that the omission was a technical ‘oversight’ that can easily be amended. The minority sellers who object to the sale say the omission is significant and one of many.
Justice Choo’s decision will affect some 270 owners in the Leonie Hill development, and the reaction in the public gallery today is expected to be considerable whichever way he rules.
While some owners are against the collective sale, others want it to proceed. ‘I agreed to the sale and I want it to go through - not get stuck on some technicality - so I can move on,’ one owner told BT last week.
Justice Choo’s ruling will also determine whether a lawsuit hanging over the heads of the majority owners will go ahead. The buyers of Horizon Towers - Hotel Properties (HPL) and its partners - will move to sue the owners for up to $1 billion in damages if the sale falls through.
HPL and its partners allege that the majority sellers failed to do their part to honour the sale agreement - that is, do their utmost to submit a proper application to STB. HPL is also angered by what it believes are attempts by some majority sellers to scupper the deal after it was signed.
In an affidavit submitted to court in support of its claim against the sellers, HPL alleges that anonymous letters were circulated among Horizon Towers owners asking them to rescind the sale agreement because neighbouring properties were starting to fetch better prices.
HPL and its partners agreed in February to buy Horizon Towers for $500 million. But nearby developments such as The Grangeford subsequently started going for double the per square foot amount.
After STB threw out Horizon Towers’ application, HPL and its partners fought a very public battle with the majority sellers as it sought to convince them to extend the sale completion deadline. The sellers eventually agreed to extend the deadline to Dec 11, which buys the parties enough time to complete the deal if the High Court decides today to overrule STB’s decision.
HPL and its partners have halted legal proceedings against the majority sellers but say that they will restart them should the sale fall through.
The outcome of the sale will remain uncertain even if the High Court decides today to send the application back to STB. STB’s schedule is believed to be full, which could affect chances for Horizon Towers’ application to be heard in time.
STB will also need to hear the application all over again - including its merits - as well as objections by the minority.
Source : Business Times - 11 Oct 2007
With the high-profile case having attracted huge interest amid Singapore’s en bloc fever, all eyes will be on Justice Choo Han Teck as he announces his verdict on a decision by the Strata Titles Board (STB) in August to dismiss Horizon Towers’ application for a collective-sale order.
If Justice Choo decides the board was right in its dismissal, it will spell the end of the collective sale. But if he rules that the board erred, the application will go back to STB to be heard again.
Justice Choo has had to decide whether STB was right to throw out Horizon Towers’ application - before hearing its merits - because the collective-sale agreement appended to it was missing three signature pages.
The majority owners who consented to the en bloc sale have argued that the omission was a technical ‘oversight’ that can easily be amended. The minority sellers who object to the sale say the omission is significant and one of many.
Justice Choo’s decision will affect some 270 owners in the Leonie Hill development, and the reaction in the public gallery today is expected to be considerable whichever way he rules.
While some owners are against the collective sale, others want it to proceed. ‘I agreed to the sale and I want it to go through - not get stuck on some technicality - so I can move on,’ one owner told BT last week.
Justice Choo’s ruling will also determine whether a lawsuit hanging over the heads of the majority owners will go ahead. The buyers of Horizon Towers - Hotel Properties (HPL) and its partners - will move to sue the owners for up to $1 billion in damages if the sale falls through.
HPL and its partners allege that the majority sellers failed to do their part to honour the sale agreement - that is, do their utmost to submit a proper application to STB. HPL is also angered by what it believes are attempts by some majority sellers to scupper the deal after it was signed.
In an affidavit submitted to court in support of its claim against the sellers, HPL alleges that anonymous letters were circulated among Horizon Towers owners asking them to rescind the sale agreement because neighbouring properties were starting to fetch better prices.
HPL and its partners agreed in February to buy Horizon Towers for $500 million. But nearby developments such as The Grangeford subsequently started going for double the per square foot amount.
After STB threw out Horizon Towers’ application, HPL and its partners fought a very public battle with the majority sellers as it sought to convince them to extend the sale completion deadline. The sellers eventually agreed to extend the deadline to Dec 11, which buys the parties enough time to complete the deal if the High Court decides today to overrule STB’s decision.
HPL and its partners have halted legal proceedings against the majority sellers but say that they will restart them should the sale fall through.
The outcome of the sale will remain uncertain even if the High Court decides today to send the application back to STB. STB’s schedule is believed to be full, which could affect chances for Horizon Towers’ application to be heard in time.
STB will also need to hear the application all over again - including its merits - as well as objections by the minority.
Source : Business Times - 11 Oct 2007
$253m for Upper Pickering plot with plan including Soho units.
It bids $253m for Upper Pickering plot with plan including Soho units.
UOL Group subsidiary Hotel Plaza plans to develop small office, home office (Soho) units as well as a 350-400 room hotel on a choice plot at Upper Pickering Street, for which it emerged as the top bidder at a tender yesterday, UOL Group chief operating officer Liam Wee Sin said yesterday.
Hotel Plaza’s top bid of $253.2 million or $805 per square foot of potential gross floor area was 21 per cent higher than the next highest offer of $209 million ($664 psf per plot ratio) from a unit of Park Hotel Group.
The highest of the nine bids at yesterday’s state tender for the hotel site was also at least 40 per cent higher than the prices paid for two hotel sites along Tanjong Pagar Road awarded recently, CB Richard Ellis noted.
Market watchers suggest UOL/Hotel Plaza’s scheme to include Soho units may have given it the edge in outbidding the other contenders at yesterday’s tender. Besides Park Hotel unit Park Plaza, other bidders were:
City Developments’ unit Glades Properties ($201.8 million);
Hiap Hoe Superbowl JV ($185 million);
Hotel Properties’ unit Op Investments ($161.08 million);
Ho Bee Investment & Multi Wealth Singapore ($153.53 million);
Amara Holdings & Garden City Hotel Holdings ($151.89 million);
AAPC Hotels Singapore ($150 million);
and Soilbuild Group Holdings ($128.82 million).
Analysts estimate that UOL/Hotel Plaza’s all-in investment in the project (including land and construction) may be around $400 million. The longish plot, with a frontage of about 200 metres along Upper Pickering Street, is right across the road from Hong Lim Park and diagonally opposite One George Street.
‘We’re likely to build the hotel on the side closer to One George Street while the Soho tower will be on the other stretch of the plot facing Chinatown Point and Furama,’ Mr Liam said yesterday evening when contacted by BT.
‘The Soho tower may be about 16 to 20 storeys high and will have about 120-150 units, mostly studio units of about 60-80 sq metres (646 to 861 sq ft) each. We may sell the Soho units or just decide to keep them for lease.
‘The hotel is likely to be 16 storeys high and will have about 350-400 rooms. Hotel Plaza will most likely flag it as a Parkroyal. In fact, this will be the flagship Parkroyal hotel in Singapore when it is completed around 2011,’ Mr Liam said.
However, hotel industry watchers pointed to the possibility that the group has the option of targeting a higher tier of the market and flagging the new property as a Pan Pacific hotel, since UOL recently bought this brand.
Industry observers said the Upper Pickering Street site is probably one of the choicest plots allowed for hotel development to have been released by Urban Redevelopment Authority in recent years other than the former NCO Club site in Beach Road.
Hotel Plaza owns two other hotels in Singapore - Parkroyal hotels at Beach Road and Kitchener Road - while UOL directly owns 100 per cent of The Negara on Claymore and has an interest of about 30 per cent in Marina Centre Holdings, which has stakes in the Pan Pacific, Oriental and Marina Mandarin hotels here.
Source : Business Times - 11 Oct 2007
UOL Group subsidiary Hotel Plaza plans to develop small office, home office (Soho) units as well as a 350-400 room hotel on a choice plot at Upper Pickering Street, for which it emerged as the top bidder at a tender yesterday, UOL Group chief operating officer Liam Wee Sin said yesterday.
Hotel Plaza’s top bid of $253.2 million or $805 per square foot of potential gross floor area was 21 per cent higher than the next highest offer of $209 million ($664 psf per plot ratio) from a unit of Park Hotel Group.
The highest of the nine bids at yesterday’s state tender for the hotel site was also at least 40 per cent higher than the prices paid for two hotel sites along Tanjong Pagar Road awarded recently, CB Richard Ellis noted.
Market watchers suggest UOL/Hotel Plaza’s scheme to include Soho units may have given it the edge in outbidding the other contenders at yesterday’s tender. Besides Park Hotel unit Park Plaza, other bidders were:
City Developments’ unit Glades Properties ($201.8 million);
Hiap Hoe Superbowl JV ($185 million);
Hotel Properties’ unit Op Investments ($161.08 million);
Ho Bee Investment & Multi Wealth Singapore ($153.53 million);
Amara Holdings & Garden City Hotel Holdings ($151.89 million);
AAPC Hotels Singapore ($150 million);
and Soilbuild Group Holdings ($128.82 million).
Analysts estimate that UOL/Hotel Plaza’s all-in investment in the project (including land and construction) may be around $400 million. The longish plot, with a frontage of about 200 metres along Upper Pickering Street, is right across the road from Hong Lim Park and diagonally opposite One George Street.
‘We’re likely to build the hotel on the side closer to One George Street while the Soho tower will be on the other stretch of the plot facing Chinatown Point and Furama,’ Mr Liam said yesterday evening when contacted by BT.
‘The Soho tower may be about 16 to 20 storeys high and will have about 120-150 units, mostly studio units of about 60-80 sq metres (646 to 861 sq ft) each. We may sell the Soho units or just decide to keep them for lease.
‘The hotel is likely to be 16 storeys high and will have about 350-400 rooms. Hotel Plaza will most likely flag it as a Parkroyal. In fact, this will be the flagship Parkroyal hotel in Singapore when it is completed around 2011,’ Mr Liam said.
However, hotel industry watchers pointed to the possibility that the group has the option of targeting a higher tier of the market and flagging the new property as a Pan Pacific hotel, since UOL recently bought this brand.
Industry observers said the Upper Pickering Street site is probably one of the choicest plots allowed for hotel development to have been released by Urban Redevelopment Authority in recent years other than the former NCO Club site in Beach Road.
Hotel Plaza owns two other hotels in Singapore - Parkroyal hotels at Beach Road and Kitchener Road - while UOL directly owns 100 per cent of The Negara on Claymore and has an interest of about 30 per cent in Marina Centre Holdings, which has stakes in the Pan Pacific, Oriental and Marina Mandarin hotels here.
Source : Business Times - 11 Oct 2007
A HOTEL site at Upper Pickering Street has drawn strong interest from developers, with the highest bid being a record one for such a property.
A HOTEL site at Upper Pickering Street has drawn strong interest from developers, with the highest bid being a record one for such a property.
Nine bids had been submitted when the tender closed yesterday.
The top bidder - mainboard-listed Hotel Plaza - put in a price of $253.2 million for the 6,959 sq m site. Given the gross floor area of 29,227 sq m, this works out to about $805 per sq ft per plot ratio (psf ppr).
Hotel Plaza is developer United Overseas Land’s hotel arm.
Hotel Plaza’s bid was 21 per cent higher than the second-highest bid of $209 million, or $664 psf ppr, placed by Park Plaza.
The record bid is at least 40 per cent higher than the prices paid for two hotel sites on Tanjong Pagar Road that were awarded recently, said CBRE Research’s executive director, Mr Li Hiaw Ho.
In June, a hotel site on Tanjong Pagar Road and Gopeng Street was awarded to Carlton Properties for $123 million, or $573 psf ppr.
A month later, the Urban Redevelopment Authority (URA) awarded a hotel plot on Tras Street to businessman Chng Gim Huat of the CGH Group for $97.1 million, or $562 psf ppr.
‘The prevailing optimistic mood in the hotel and tourism markets could account for the record-high prices submitted for the Upper Pickering Street site,’ said CBRE’s Mr Li.
The 99-year leasehold site, launched for sale by the URA on July 18, is located in an ideal spot - at the junction of New Bridge Road and Upper Pickering Street and at the edge of the Central Business District - to cater to business travellers, said Mr Li.
Besides Hotel Plaza and Park Plaza, there were seven other bidders, including Hiap Hoe Superbowl and Ho Bee Investment.
Hotel Plaza currently owns and operates the 350-room Plaza Parkroyal, the adjoining The Plaza and the 337-room Grand Plaza Parkroyal Hotel, among others.
The group also has interests in hotels overseas.
The URA said yesterday that the bids will be evaluated and that the decision on the award will be made later.
Source : Straits Times - 11 Oct 2007
Nine bids had been submitted when the tender closed yesterday.
The top bidder - mainboard-listed Hotel Plaza - put in a price of $253.2 million for the 6,959 sq m site. Given the gross floor area of 29,227 sq m, this works out to about $805 per sq ft per plot ratio (psf ppr).
Hotel Plaza is developer United Overseas Land’s hotel arm.
Hotel Plaza’s bid was 21 per cent higher than the second-highest bid of $209 million, or $664 psf ppr, placed by Park Plaza.
The record bid is at least 40 per cent higher than the prices paid for two hotel sites on Tanjong Pagar Road that were awarded recently, said CBRE Research’s executive director, Mr Li Hiaw Ho.
In June, a hotel site on Tanjong Pagar Road and Gopeng Street was awarded to Carlton Properties for $123 million, or $573 psf ppr.
A month later, the Urban Redevelopment Authority (URA) awarded a hotel plot on Tras Street to businessman Chng Gim Huat of the CGH Group for $97.1 million, or $562 psf ppr.
‘The prevailing optimistic mood in the hotel and tourism markets could account for the record-high prices submitted for the Upper Pickering Street site,’ said CBRE’s Mr Li.
The 99-year leasehold site, launched for sale by the URA on July 18, is located in an ideal spot - at the junction of New Bridge Road and Upper Pickering Street and at the edge of the Central Business District - to cater to business travellers, said Mr Li.
Besides Hotel Plaza and Park Plaza, there were seven other bidders, including Hiap Hoe Superbowl and Ho Bee Investment.
Hotel Plaza currently owns and operates the 350-room Plaza Parkroyal, the adjoining The Plaza and the 337-room Grand Plaza Parkroyal Hotel, among others.
The group also has interests in hotels overseas.
The URA said yesterday that the bids will be evaluated and that the decision on the award will be made later.
Source : Straits Times - 11 Oct 2007
The surge in office rentals has lifted the third quarter distributable income of K-REIT Asia by 31 percent from a year ago.
The surge in office rentals has lifted the third quarter distributable income of K-REIT Asia by 31 percent from a year ago.
The commercial property trust has booked an income of S$5.4 million for the three months to September.
This will work out to a distribution per unit of 2.23 cents for the period.
Property income rose 18 percent to over S$10 million.
As for its outlook, K-REIT says it expects demand for prime office space to remain strong.
This is because of the continued economic growth, sound business prospects and further expansion of the financial services sector.
K-REIT projects prime office rents to increase further over the next two to three years.
It adds that the buoyant prime office market will continue to augur well for its portfolio of office buildings in the CBD and the new downtown at Marina Bay.
Source : ChannelNewsAsia - 10 Oct 2007
The commercial property trust has booked an income of S$5.4 million for the three months to September.
This will work out to a distribution per unit of 2.23 cents for the period.
Property income rose 18 percent to over S$10 million.
As for its outlook, K-REIT says it expects demand for prime office space to remain strong.
This is because of the continued economic growth, sound business prospects and further expansion of the financial services sector.
K-REIT projects prime office rents to increase further over the next two to three years.
It adds that the buoyant prime office market will continue to augur well for its portfolio of office buildings in the CBD and the new downtown at Marina Bay.
Source : ChannelNewsAsia - 10 Oct 2007
Singapore’s central bank said on Wednesday it would maintain its policy of a ‘gradual and modest appreciation’ in the Singapore dollar
Singapore’s central bank said on Wednesday it would maintain its policy of a ‘gradual and modest appreciation’ in the Singapore dollar, a decision widely expected by the market, but said it would slightly increase the slope of its policy band.
‘MAS will continue with the policy of a modest and gradual appreciation of the S$NEER policy band in the period ahead.
However, we will increase slightly the slope of the S$NEER (Nominal Effective Exchange Rate ) policy band,’ the Monetary Authority of Singapore (MAS) said in a twice-yearly monetary policy statement.
The move effectively lets the Singapore dollar appreciate further against the US dollar. The Singapore dollar hit a 10-year high on the news.
All economists polled by Reuters had expected the MAS to maintain its three-and-a-half-year-old moderately tight monetary policy to keep a lid on inflation as asset prices spiral higher in a booming economy and after a sales tax increase in July.
However, some economists polled last week believed the central bank’s meeting in April next year could bring a policy change, citing concerns over inflation and the possibility of the economy overheating.
Singapore’s gross domestic product expanded at an annualised rate of 14.4 per cent in the second quarter, its fastest growth in two years.
The MAS said it expected inflation in a 1.5 to 2 per cent range in 2007, up from its previous forecast of 1 to 2 per cent.
The annual inflation rate reached 2.9 per cent in August, its highest in 12 years.
Singapore’s central bank conducts policy through the exchange rate, steering the Singapore dollar within an undisclosed band against a trade-weighted basket of currencies, rather than by adjusting interest rates like most central banks. — REUTERS
‘MAS will continue with the policy of a modest and gradual appreciation of the S$NEER policy band in the period ahead.
However, we will increase slightly the slope of the S$NEER (Nominal Effective Exchange Rate ) policy band,’ the Monetary Authority of Singapore (MAS) said in a twice-yearly monetary policy statement.
The move effectively lets the Singapore dollar appreciate further against the US dollar. The Singapore dollar hit a 10-year high on the news.
All economists polled by Reuters had expected the MAS to maintain its three-and-a-half-year-old moderately tight monetary policy to keep a lid on inflation as asset prices spiral higher in a booming economy and after a sales tax increase in July.
However, some economists polled last week believed the central bank’s meeting in April next year could bring a policy change, citing concerns over inflation and the possibility of the economy overheating.
Singapore’s gross domestic product expanded at an annualised rate of 14.4 per cent in the second quarter, its fastest growth in two years.
The MAS said it expected inflation in a 1.5 to 2 per cent range in 2007, up from its previous forecast of 1 to 2 per cent.
The annual inflation rate reached 2.9 per cent in August, its highest in 12 years.
Singapore’s central bank conducts policy through the exchange rate, steering the Singapore dollar within an undisclosed band against a trade-weighted basket of currencies, rather than by adjusting interest rates like most central banks. — REUTERS
Singapore Prime Minister Lee Hsien Loong said that he did not believe the Republic’s economy was overheating
Singapore Prime Minister Lee Hsien Loong yesterday said that he did not believe the Republic’s economy was overheating, with inflation under control despite firm economic growth.
‘This year, we expect 7-8 per cent growth. It’s a good figure but at the same time inflation is well under control,’ Mr Lee said.
He acknowledged that property prices had increased rapidly and that there were shortages in office space, which the government was trying to solve by, for example, building interim office space.
‘In the medium term, we will have enough supply but in the short term there is a problem because so many businesses want to set up in Singapore,’ Mr Lee said after officials from the two countries signed cooperation agreements on economic, scientific and educational matters.
Mr Lee also described the situation in Myanmar - where the government has violently suppressed pro-democracy protests - as ’serious’, saying international powers needed to work on bringing together the two sides of the conflict - the ruling military and the opposition groups.
‘What is necessary is to find reconciliation and an agreement amongst the parties in Myanmar on the way forward,’ he said after meeting his Hungarian counterpart, Ferenc Gyurcsany. ‘There’s no easy way forward . . . It is not simply a matter of regime change,’ Mr Lee added.
‘I think that if you look at Iraq, you know that regime change is a slogan but may not be a policy.’ - AP
Source : Business Times - 10 Oct 2007
‘This year, we expect 7-8 per cent growth. It’s a good figure but at the same time inflation is well under control,’ Mr Lee said.
He acknowledged that property prices had increased rapidly and that there were shortages in office space, which the government was trying to solve by, for example, building interim office space.
‘In the medium term, we will have enough supply but in the short term there is a problem because so many businesses want to set up in Singapore,’ Mr Lee said after officials from the two countries signed cooperation agreements on economic, scientific and educational matters.
Mr Lee also described the situation in Myanmar - where the government has violently suppressed pro-democracy protests - as ’serious’, saying international powers needed to work on bringing together the two sides of the conflict - the ruling military and the opposition groups.
‘What is necessary is to find reconciliation and an agreement amongst the parties in Myanmar on the way forward,’ he said after meeting his Hungarian counterpart, Ferenc Gyurcsany. ‘There’s no easy way forward . . . It is not simply a matter of regime change,’ Mr Lee added.
‘I think that if you look at Iraq, you know that regime change is a slogan but may not be a policy.’ - AP
Source : Business Times - 10 Oct 2007
Wednesday, October 10, 2007
Award of tender for white site at Marina View (Land Parcel A)
Award of tender for white site at Marina View (Land Parcel A)
The Urban Redevelopment Authority (URA) has awarded the tender for the white site at Marina View (Land Parcel A) to MGP Berth Pte. Limited. The company submitted the highest bid in the tender for the site.$2,018,888,988
($15,165.93)gfa
The Urban Redevelopment Authority (URA) has awarded the tender for the white site at Marina View (Land Parcel A) to MGP Berth Pte. Limited. The company submitted the highest bid in the tender for the site.$2,018,888,988
($15,165.93)gfa
URA unveils six winners for the 2007 Architectural Heritage Awards
URA unveils six winners for the 2007 Architectural Heritage Awards
The Urban Redevelopment Authority (URA) announced six winners for this year's Architectural Heritage Awards. Minister of National Development Mr Mah Bow Tan presented the Awards to the recipients at the National Museum of Singapore this evening.
The annual Awards recognise owners, professionals and contractors who have gone beyond the basic essentials to lovingly restore their buildings to their former glory for today’s use.
This year's six winners - a museum, a Tudor-styled house transformed into a visitor centre, a luxurious hotel and spa, a historic university campus, as well as a terrace house and an Early shophouse which have been restored into contemporary homes - bring to 77 the total number of projects that have received the Awards since the launch of the Awards in 1995.
The Awards scheme
The Awards are given out under two categories. Category A is for National Monuments and fully conserved buildings in the Historic Districts and Good Class Bungalow Areas. These buildings are assessed on how far they adhere to quality restoration principles. Buildings fully conserved according to the restoration principles in other areas can also be considered under Category A.
Category B is for integrated old and new conservation developments in the Residential Historic Districts and Secondary Settlement areas. Under Category B, conservation projects are assessed on both the quality of restoration of the old elements, as well as the innovation and architectural excellence of the new elements, and how they draw their inspiration from the old elements.
2007 winners
The following provides an overview of the six winners. The full details of these projects are in the Annex.
Category A
• 93 STAMFORD ROAD
Affectionately termed the ‘grand dame of Singapore’s architectural heritage’, this two-storey 19th-century building of British colonial architecture has taken on various roles and undergone several face-lifts over the years. However, her latest reinvention into National Museum of Singapore, complete with a reflective makeover and its park setting, may be her finest yet.
• 1 PULAU UBIN
Located at the eastern tip of Pulau Ubin, House No. 1 is believed to be Singapore’s only remaining authentic Tudor-style house with a fireplace. Its uniqueness fits in nicely with its new function as a visitor centre to Singapore’s nature treasure, Chek Jawa Wetlands.
• 3 & 7 CARLTON WALK
Built on top of a small hill to enjoy the natural sea breeze surrounding Sentosa, these two typical military barrack blocks were originally the living quarters of British soldiers before and after World War II. Now, they have been tastefully transformed into luxurious hotel suites of Amara Sanctuary Resort Sentosa for world-weary travellers to rest and relax in.
• 469 BUKIT TIMAH ROAD
From its early days as Raffles College, to its current occupants, National University of Singapore Faculty of Law, the Bukit Timah Campus has been home to generations of students for more than 80 years. Conservation work sought to keep this rich history alive and yet provide modern amenities befitting a world-class educational institution.
Category B
• 13 MARTABAN ROAD
Once used as a dormitory for orderlies from the nearby Tan Tock Seng Hospital, this two-storey Second Transitional style terrace house in the Balestier Conservation Area has now been charmingly turned into a chic, contemporary home without sacrificing its humble heritage.
• 62 NIVEN ROAD
With its extremely narrow width, this two-storey Early shophouse in the Mount Sophia Conservation Area appears small and nondescript on the outside. However, through many novel ways, its interior space has been cleverly used to create a cosy abode.
Exhibition details
The public can view the exhibition of the 2007 Award-winning projects from 2 October to 31 October 2007 at the atrium of The URA Centre, 45 Maxwell Road. Opening hours are: Mon – Fri, 8.30 am – 7.00 pm; Sat, 8.30 am – 5.00 pm, closed on Sundays and Public Holidays. Admission is free.
The Urban Redevelopment Authority (URA) announced six winners for this year's Architectural Heritage Awards. Minister of National Development Mr Mah Bow Tan presented the Awards to the recipients at the National Museum of Singapore this evening.
The annual Awards recognise owners, professionals and contractors who have gone beyond the basic essentials to lovingly restore their buildings to their former glory for today’s use.
This year's six winners - a museum, a Tudor-styled house transformed into a visitor centre, a luxurious hotel and spa, a historic university campus, as well as a terrace house and an Early shophouse which have been restored into contemporary homes - bring to 77 the total number of projects that have received the Awards since the launch of the Awards in 1995.
The Awards scheme
The Awards are given out under two categories. Category A is for National Monuments and fully conserved buildings in the Historic Districts and Good Class Bungalow Areas. These buildings are assessed on how far they adhere to quality restoration principles. Buildings fully conserved according to the restoration principles in other areas can also be considered under Category A.
Category B is for integrated old and new conservation developments in the Residential Historic Districts and Secondary Settlement areas. Under Category B, conservation projects are assessed on both the quality of restoration of the old elements, as well as the innovation and architectural excellence of the new elements, and how they draw their inspiration from the old elements.
2007 winners
The following provides an overview of the six winners. The full details of these projects are in the Annex.
Category A
• 93 STAMFORD ROAD
Affectionately termed the ‘grand dame of Singapore’s architectural heritage’, this two-storey 19th-century building of British colonial architecture has taken on various roles and undergone several face-lifts over the years. However, her latest reinvention into National Museum of Singapore, complete with a reflective makeover and its park setting, may be her finest yet.
• 1 PULAU UBIN
Located at the eastern tip of Pulau Ubin, House No. 1 is believed to be Singapore’s only remaining authentic Tudor-style house with a fireplace. Its uniqueness fits in nicely with its new function as a visitor centre to Singapore’s nature treasure, Chek Jawa Wetlands.
• 3 & 7 CARLTON WALK
Built on top of a small hill to enjoy the natural sea breeze surrounding Sentosa, these two typical military barrack blocks were originally the living quarters of British soldiers before and after World War II. Now, they have been tastefully transformed into luxurious hotel suites of Amara Sanctuary Resort Sentosa for world-weary travellers to rest and relax in.
• 469 BUKIT TIMAH ROAD
From its early days as Raffles College, to its current occupants, National University of Singapore Faculty of Law, the Bukit Timah Campus has been home to generations of students for more than 80 years. Conservation work sought to keep this rich history alive and yet provide modern amenities befitting a world-class educational institution.
Category B
• 13 MARTABAN ROAD
Once used as a dormitory for orderlies from the nearby Tan Tock Seng Hospital, this two-storey Second Transitional style terrace house in the Balestier Conservation Area has now been charmingly turned into a chic, contemporary home without sacrificing its humble heritage.
• 62 NIVEN ROAD
With its extremely narrow width, this two-storey Early shophouse in the Mount Sophia Conservation Area appears small and nondescript on the outside. However, through many novel ways, its interior space has been cleverly used to create a cosy abode.
Exhibition details
The public can view the exhibition of the 2007 Award-winning projects from 2 October to 31 October 2007 at the atrium of The URA Centre, 45 Maxwell Road. Opening hours are: Mon – Fri, 8.30 am – 7.00 pm; Sat, 8.30 am – 5.00 pm, closed on Sundays and Public Holidays. Admission is free.
Award of tender for white site at Race Course Road / Rangoon Road
Award of tender for white site at Race Course Road / Rangoon Road
The Urban Redevelopment Authority (URA) has awarded the tender for the white site at Race Course Road / Rangoon Road to Singapore Healthpartners Pte Ltd. The company submitted the highest bid in the tender for the site.
The Urban Redevelopment Authority (URA) has awarded the tender for the white site at Race Course Road / Rangoon Road to Singapore Healthpartners Pte Ltd. The company submitted the highest bid in the tender for the site.
Withdrawal of hotel site at Balestier Road / Ah Hood Road from reserve list
Withdrawal of hotel site at Balestier Road / Ah Hood Road from reserve list
The Urban Redevelopment Authority (URA) today announced that it has decided to withdraw the hotel site at Balestier Road/Ah Hood Road from the Reserve List of the Government Land Sales (GLS) Programme for the second half of 2007 with immediate effect.
Under the Reserve List, the Government will only release a site for sale if an interested party submits an application for the site to be put up for tender with an offer of a minimum purchase price that is acceptable to the Government.
The Balestier Road/Ah Hood Road site has been placed on the Reserve List since 26 Oct 2006. It was planned to be developed for hotel use on a 99-year lease. Annex A shows the location of the site.
URA is withdrawing the site from the Reserve List with immediate effect, as it is reviewing the land use plan of the site together with the other vacant land in the vicinity.
The Urban Redevelopment Authority (URA) today announced that it has decided to withdraw the hotel site at Balestier Road/Ah Hood Road from the Reserve List of the Government Land Sales (GLS) Programme for the second half of 2007 with immediate effect.
Under the Reserve List, the Government will only release a site for sale if an interested party submits an application for the site to be put up for tender with an offer of a minimum purchase price that is acceptable to the Government.
The Balestier Road/Ah Hood Road site has been placed on the Reserve List since 26 Oct 2006. It was planned to be developed for hotel use on a 99-year lease. Annex A shows the location of the site.
URA is withdrawing the site from the Reserve List with immediate effect, as it is reviewing the land use plan of the site together with the other vacant land in the vicinity.
Award of tender for residential site at Simon Road
Award of tender for residential site at Simon Road
The Urban Redevelopment Authority (URA) has awarded the tender for the residential site at Simon Road to Duke Development Pte Ltd. The company submitted the highest bid in the tender for the site.
The tender was launched on 7 August 2007 and closed on 2 October 2007. The Land Parcel was offered for sale on a 99-year lease.
The Urban Redevelopment Authority (URA) has awarded the tender for the residential site at Simon Road to Duke Development Pte Ltd. The company submitted the highest bid in the tender for the site.
The tender was launched on 7 August 2007 and closed on 2 October 2007. The Land Parcel was offered for sale on a 99-year lease.
Tender closing for hotel site at Upper Pickering Street
Tender closing for hotel site at Upper Pickering Street
The Urban Redevelopment Authority (URA) closed the tender for the hotel site at Upper Pickering Street today.
The site at Upper Pickering Street was launched for public tender on 18 July 2007. The site was offered for sale on a 99-year lease.
The Urban Redevelopment Authority (URA) closed the tender for the hotel site at Upper Pickering Street today.
The site at Upper Pickering Street was launched for public tender on 18 July 2007. The site was offered for sale on a 99-year lease.
A BLOCK of 13 conservation shophouses in Telok Ayer and Boon Tat streets is for sale
A BLOCK of 13 conservation shophouses in Telok Ayer and Boon Tat streets is for sale through an expression-of-interest exercise at an indicative price of $67 million.
This works out to about $1,200 per square foot based on the gross floor area of some 56,000 square feet.
The shophouses are on land that totals 16,987 sq ft and have 999-year leasehold tenure from 1884.
They are zoned for ‘commercial’ use, but Ho Eng Joo, executive director (investment sales) at marketing agent Colliers International, believes that the buyer could amalgamate the interiors into a single large floor plate to achieve greater space efficiency. This would make the property suitable for creative companies such as advertising or design agencies or for financial and professional services firms.
‘The tight office supply and the surge in office rents have resulted in an increasing number of tenants seeking alternative commercial space such as shophouse units, as well as investors looking for well-located shophouse units for investment,’ Mr Ho said.
He estimates the current yield to be around 2.5 per cent. The first storey of the shophouses is now used mainly by food and beverage outlets, while the upper storey is occupied by office tenants.
Mr Ho reckons the potential yield could be 5-5.5 per cent based on rent of about $5.50 psf per month.
It is rare for so many shophouses to be offered in one transaction. The recent sale of three shophouses in Ann Siang Road for $28.8 million worked out to $1,519 psf over their floor area.
Mr Ho said that most shophouse transactions involve individual units. A shophouse in Amoy Street was recently sold for about $1,100 psf, he said.
Source: Business Times 10 Oct 07
This works out to about $1,200 per square foot based on the gross floor area of some 56,000 square feet.
The shophouses are on land that totals 16,987 sq ft and have 999-year leasehold tenure from 1884.
They are zoned for ‘commercial’ use, but Ho Eng Joo, executive director (investment sales) at marketing agent Colliers International, believes that the buyer could amalgamate the interiors into a single large floor plate to achieve greater space efficiency. This would make the property suitable for creative companies such as advertising or design agencies or for financial and professional services firms.
‘The tight office supply and the surge in office rents have resulted in an increasing number of tenants seeking alternative commercial space such as shophouse units, as well as investors looking for well-located shophouse units for investment,’ Mr Ho said.
He estimates the current yield to be around 2.5 per cent. The first storey of the shophouses is now used mainly by food and beverage outlets, while the upper storey is occupied by office tenants.
Mr Ho reckons the potential yield could be 5-5.5 per cent based on rent of about $5.50 psf per month.
It is rare for so many shophouses to be offered in one transaction. The recent sale of three shophouses in Ann Siang Road for $28.8 million worked out to $1,519 psf over their floor area.
Mr Ho said that most shophouse transactions involve individual units. A shophouse in Amoy Street was recently sold for about $1,100 psf, he said.
Source: Business Times 10 Oct 07
They see good value and investors consider support to be positive sign
They see good value and investors consider support to be positive sign
PANIC was the last thing on the minds of many company founders and directors when Singapore share prices slumped in spectacular fashion just over a week ago.
Instead, they have leapt into the fray, buying up their own stock at bargain-basement prices since the Aug 17 market nosedive - which followed weeks of volatility.
Companies have also seen a buying opportunity and are weighing in to buy back their shares on the open market.
The Straits Times Index plunged as much as 190 points on Aug 17 and many directors and companies instantly saw good value.
They were emboldened by the fact that many firms had just turned in creditable second-quarter financial results, indicating that corporate fundamentals were sound.
On average, Singapore-listed firms posted a 39 per cent rise in first-half net profits.
One buyer was one of Singapore’s richest men, Mr Zhong Sheng Jian, chief executive of China real estate developer Yanlord Land. He bought 987,000 shares on Aug 16 at an average price of $2.57 and another one million shares at $2.65 a day later.
Even though he shelled out a hefty $5.2 million over two days, these prices are a far cry from the high of $3.68 per share seen just last month.
Market watchers say insiders sometimes buy in during tough times to inspire confidence in a counter.
Mr Kevin Scully, managing director of boutique corporate finance firm NRA Capital, said: ‘Sometimes, this buying is a show of support for the company. It is a good sign because investors want to see support.’
Another bargain-hunter was luxury property developer SC Global chairman and chief executive Simon Cheong, whose wife bought 100,000 shares on Aug 17 at $4.755 apiece, well below the record $6.75 seen last month.
Other key shareholders in the market during this recent turmoil include Yellow Pages director Stanley Tan, who has just emerged from a boardroom battle. He bought 200,000 shares at $1.197 apiece on Monday, another 350,000 units at $1.196 on Tuesday and yet another 200,000 shares on Wednesday at $1.19. The counter has not closed below $1.20 since last November.
Sino-Environment’s chairman and chief executive, Mr Sun Jiangrong, also showed support for his firm, buying 900,000 shares at $2.44 on Tuesday. In April, the waste- treatment firm’s shares hit a peak of $3.78.
Company directors were also in the action. Mr Sam Goi bought 500,000 shares in Super Coffeemix Manufacturing at 75 cents each on Aug 17.
But the swift rebound in the market on Monday also allowed some directors to make a pretty penny.
A director of a Cosco Corp subsidiary, Mr Lee Fook Choy, picked up 500,000 shares at a low of $3.882 on Aug 17 - after they slumped from the $5.65 record late last month. He then sold the shares on Tuesday at $4.60, making a tidy $360,000.
For companies which have a share buyback programme, the current market weakness presents good buying opportunities.
NRA Capital’s Mr Scully added that for firms with a performance share scheme, ‘companies may buy back the shares to allocate to employees later as part of their performance bonus scheme’.
Over the last few days, many companies have been in the market. StarHub bought nearly two million shares at prices ranging from $2.78 to $2.90 since last Friday.
Also since Aug 17, United Overseas Bank has bought back 2.1 million shares at prices as low as $18.80. These have risen as high as $21.50.
PANIC was the last thing on the minds of many company founders and directors when Singapore share prices slumped in spectacular fashion just over a week ago.
Instead, they have leapt into the fray, buying up their own stock at bargain-basement prices since the Aug 17 market nosedive - which followed weeks of volatility.
Companies have also seen a buying opportunity and are weighing in to buy back their shares on the open market.
The Straits Times Index plunged as much as 190 points on Aug 17 and many directors and companies instantly saw good value.
They were emboldened by the fact that many firms had just turned in creditable second-quarter financial results, indicating that corporate fundamentals were sound.
On average, Singapore-listed firms posted a 39 per cent rise in first-half net profits.
One buyer was one of Singapore’s richest men, Mr Zhong Sheng Jian, chief executive of China real estate developer Yanlord Land. He bought 987,000 shares on Aug 16 at an average price of $2.57 and another one million shares at $2.65 a day later.
Even though he shelled out a hefty $5.2 million over two days, these prices are a far cry from the high of $3.68 per share seen just last month.
Market watchers say insiders sometimes buy in during tough times to inspire confidence in a counter.
Mr Kevin Scully, managing director of boutique corporate finance firm NRA Capital, said: ‘Sometimes, this buying is a show of support for the company. It is a good sign because investors want to see support.’
Another bargain-hunter was luxury property developer SC Global chairman and chief executive Simon Cheong, whose wife bought 100,000 shares on Aug 17 at $4.755 apiece, well below the record $6.75 seen last month.
Other key shareholders in the market during this recent turmoil include Yellow Pages director Stanley Tan, who has just emerged from a boardroom battle. He bought 200,000 shares at $1.197 apiece on Monday, another 350,000 units at $1.196 on Tuesday and yet another 200,000 shares on Wednesday at $1.19. The counter has not closed below $1.20 since last November.
Sino-Environment’s chairman and chief executive, Mr Sun Jiangrong, also showed support for his firm, buying 900,000 shares at $2.44 on Tuesday. In April, the waste- treatment firm’s shares hit a peak of $3.78.
Company directors were also in the action. Mr Sam Goi bought 500,000 shares in Super Coffeemix Manufacturing at 75 cents each on Aug 17.
But the swift rebound in the market on Monday also allowed some directors to make a pretty penny.
A director of a Cosco Corp subsidiary, Mr Lee Fook Choy, picked up 500,000 shares at a low of $3.882 on Aug 17 - after they slumped from the $5.65 record late last month. He then sold the shares on Tuesday at $4.60, making a tidy $360,000.
For companies which have a share buyback programme, the current market weakness presents good buying opportunities.
NRA Capital’s Mr Scully added that for firms with a performance share scheme, ‘companies may buy back the shares to allocate to employees later as part of their performance bonus scheme’.
Over the last few days, many companies have been in the market. StarHub bought nearly two million shares at prices ranging from $2.78 to $2.90 since last Friday.
Also since Aug 17, United Overseas Bank has bought back 2.1 million shares at prices as low as $18.80. These have risen as high as $21.50.
Investors need to look within themselves to determine their life goals, before embarking on the road to financial contentment
Investors need to look within themselves to determine their life goals, before embarking on the road to financial contentment, financial planner Arun Abey tells GENEVIEVE CUA
WHAT does happiness have to do with financial planning? Some may say happiness is the fruit of a well-laid financial plan. After all all, such a plan should foster greater confidence in the future, leading to financial security - and, hopefully, happiness.
But what of the reverse?
Ipac group co-founder and executive chairman Arun Abey believes that getting your life together - in term of your goals and choices - should come first, and financial planning follows. Ipac manages US$9 billion in client assets globally, advising some 20,000 individuals and institutions. It began in Australia and has operations in Hong Kong and Singapore.
‘People use the phrase ‘lifestyle financial planning’ as a slogan. But it’s a real thing. It’s about putting the ‘life’ into financial planning. It’s how the two integrate.
‘I’ve increasingly become convinced that the financial planning part is an outcome. You get the ‘life’ part right and the financial planning is actually easy.’
He adds that the biggest hurdle in financial advisory is that clients typically do not have a clear idea of what they want. ‘I’ve become convinced that an important part of financial planning is getting clients to want what they need.
Clients come in with a list of ‘wants’. Those ‘wants’ are completely unrealistic.
‘They say I want to make a lot of money, but I don’t want to lose any money. That doesn’t work. As Warren Buffett says, give me a bumpy 15 per cent any time. I’d rather take a bumpy ride than no returns.’
Drawing on the experiences of clients, Mr Abey has just published a second book How much is enough?, in which he tackles the amorphous question of happiness and the more mundane but no less challenging issues of financial planning and investing. The book is co-authored with Andrew Ford.
The book is meant to be a companion to his first book Fortune Strategy, published in 2000 , which delves into portfolio construction against a backdrop of the historical pattern of risk and return. Fortune Strategy, he says, explained the behaviour of markets. This time, taking centrestage is the behaviour of investors themselves.
‘If you understand markets, you can do something. I’ve come to understand that that’s not enough. You need to look within to understand your behaviour… People who can be confident, who can manage their behaviour and not worry about what others are doing, are also people who can control their behaviour in investment markets. It’s the same neural pattern, I hadn’t realised that before.’
The book draws on the growing body of research on happiness and behavioural finance, written in a readable, down-to-earth fashion. A few chapters are devoted to the behaviours that can undo the best laid investment plans.
These include loss aversion as a wealth hazard - that is, in seeking to avoid loss, investors actually incur greater losses. In a chapter ‘The Madness of Myopia’, he writes that the more frequently investors evaluate their returns, the more likely they are to make inappropriate decisions.
Several of the foibles come up repeatedly among clients, he says. One is unrealistic expectations. Two is a poor understanding of risk. Risk covers not just a probability of loss, but also the failure to beat inflation. ‘With cash you’ll never see a negative return, but with inflation you’re losing buying power every year. That’s pretty serious. A capital guarantee doesn’t protect you from that.’
Manage your time
A third mistake is the belief that the right timing could be the ticket to success. ‘It’s a very naive belief that you can get the timing right. Over 4,000 days there may be 40 key days. If you miss those days you miss the returns of the whole market. You have a 1 per cent chance to get it right and you don’t do something for a 1 per cent chance.
‘Fortune Strategy and this book use the same core investment strategy. If you apply that, the odds are in your favour. The only thing you have to manage is time.’
Ipac advocates four key principles in investments. These are to invest in quality companies; to diversify; to avoid overpaying for assets; and to give your portfolio time.
But there is yet one more mistake - as Mr Abey sees it - that may be hard for Singaporeans to swallow. That is the tendency to over-invest in property. ‘Investing in residential property other than your family home is likely to result in higher risk and lower returns than investing in quality shares,’ he writes.
He argues that the risks of a property investment tend to be understated, and the returns overstated because of flaws in measurement. Assessment of values, for one, is infrequent and informal.
‘Property investors never see red ink on a statement unless it is on the day of sale. And most property investors never formally evaluate the performance of their investments at all.’
Mr Abey lives in Australia, where cities like Melbourne and Sydney, and more recently Perth saw the strongest home prices until recently. He himself does not ‘invest one cent in residential property outside of my family home’.
Perhaps the key chapter in the book is the one that presents a framework for understanding the role of money, which he calls the ‘bridge of well being’. The process of developing and implementing this framework is the essence of lifestyle financial planning itself.
There are three steps to this. One is to understand your goals. Two is to apply your resources towards those goals.
That includes saving and investing. The third is to have a simple investment strategy.
‘You need to develop a financial plan for yourself - not for your money … The aim … is to help you experience the good life you want to live, knowing sufficient money is there to support you.’
WHAT does happiness have to do with financial planning? Some may say happiness is the fruit of a well-laid financial plan. After all all, such a plan should foster greater confidence in the future, leading to financial security - and, hopefully, happiness.
But what of the reverse?
Ipac group co-founder and executive chairman Arun Abey believes that getting your life together - in term of your goals and choices - should come first, and financial planning follows. Ipac manages US$9 billion in client assets globally, advising some 20,000 individuals and institutions. It began in Australia and has operations in Hong Kong and Singapore.
‘People use the phrase ‘lifestyle financial planning’ as a slogan. But it’s a real thing. It’s about putting the ‘life’ into financial planning. It’s how the two integrate.
‘I’ve increasingly become convinced that the financial planning part is an outcome. You get the ‘life’ part right and the financial planning is actually easy.’
He adds that the biggest hurdle in financial advisory is that clients typically do not have a clear idea of what they want. ‘I’ve become convinced that an important part of financial planning is getting clients to want what they need.
Clients come in with a list of ‘wants’. Those ‘wants’ are completely unrealistic.
‘They say I want to make a lot of money, but I don’t want to lose any money. That doesn’t work. As Warren Buffett says, give me a bumpy 15 per cent any time. I’d rather take a bumpy ride than no returns.’
Drawing on the experiences of clients, Mr Abey has just published a second book How much is enough?, in which he tackles the amorphous question of happiness and the more mundane but no less challenging issues of financial planning and investing. The book is co-authored with Andrew Ford.
The book is meant to be a companion to his first book Fortune Strategy, published in 2000 , which delves into portfolio construction against a backdrop of the historical pattern of risk and return. Fortune Strategy, he says, explained the behaviour of markets. This time, taking centrestage is the behaviour of investors themselves.
‘If you understand markets, you can do something. I’ve come to understand that that’s not enough. You need to look within to understand your behaviour… People who can be confident, who can manage their behaviour and not worry about what others are doing, are also people who can control their behaviour in investment markets. It’s the same neural pattern, I hadn’t realised that before.’
The book draws on the growing body of research on happiness and behavioural finance, written in a readable, down-to-earth fashion. A few chapters are devoted to the behaviours that can undo the best laid investment plans.
These include loss aversion as a wealth hazard - that is, in seeking to avoid loss, investors actually incur greater losses. In a chapter ‘The Madness of Myopia’, he writes that the more frequently investors evaluate their returns, the more likely they are to make inappropriate decisions.
Several of the foibles come up repeatedly among clients, he says. One is unrealistic expectations. Two is a poor understanding of risk. Risk covers not just a probability of loss, but also the failure to beat inflation. ‘With cash you’ll never see a negative return, but with inflation you’re losing buying power every year. That’s pretty serious. A capital guarantee doesn’t protect you from that.’
Manage your time
A third mistake is the belief that the right timing could be the ticket to success. ‘It’s a very naive belief that you can get the timing right. Over 4,000 days there may be 40 key days. If you miss those days you miss the returns of the whole market. You have a 1 per cent chance to get it right and you don’t do something for a 1 per cent chance.
‘Fortune Strategy and this book use the same core investment strategy. If you apply that, the odds are in your favour. The only thing you have to manage is time.’
Ipac advocates four key principles in investments. These are to invest in quality companies; to diversify; to avoid overpaying for assets; and to give your portfolio time.
But there is yet one more mistake - as Mr Abey sees it - that may be hard for Singaporeans to swallow. That is the tendency to over-invest in property. ‘Investing in residential property other than your family home is likely to result in higher risk and lower returns than investing in quality shares,’ he writes.
He argues that the risks of a property investment tend to be understated, and the returns overstated because of flaws in measurement. Assessment of values, for one, is infrequent and informal.
‘Property investors never see red ink on a statement unless it is on the day of sale. And most property investors never formally evaluate the performance of their investments at all.’
Mr Abey lives in Australia, where cities like Melbourne and Sydney, and more recently Perth saw the strongest home prices until recently. He himself does not ‘invest one cent in residential property outside of my family home’.
Perhaps the key chapter in the book is the one that presents a framework for understanding the role of money, which he calls the ‘bridge of well being’. The process of developing and implementing this framework is the essence of lifestyle financial planning itself.
There are three steps to this. One is to understand your goals. Two is to apply your resources towards those goals.
That includes saving and investing. The third is to have a simple investment strategy.
‘You need to develop a financial plan for yourself - not for your money … The aim … is to help you experience the good life you want to live, knowing sufficient money is there to support you.’
SHANE OLIVER goes back to the scene of the crime and uncovers the damning caveats
SHANE OLIVER goes back to the scene of the crime and uncovers the damning caveats
THE last month or so has seen big swings in markets on the back of the turmoil in credit markets. By and large though, most investors should have come through reasonably unscathed. However, some would not have been so lucky. Funds reported to have had the greatest losses seem to fall into three categories - funds with a heavy direct and geared exposure to US sub-prime debt, some of which have seen 80 per cent to 100 per cent of their capital wiped out; funds with a geared exposure to corporate debt which has been caught up in the fallout from the subprime problems; and quantitative equity hedge funds which have been caught out by the volatility in investment markets.
While conceding that the period of share market weakness and credit turmoil ‘ain’t necessarily over yet’, and without getting into the surrounding economic issues and the outlook going forward (which I have covered in previous reports), the blow-up in credit markets provides a number of lessons for investors. Specifically, these relate to financial engineering, diversification, gearing, the fact that there is no such thing as a free lunch and the need to invest in only what you understand.
Lesson 1: Beware of financial engineering
Financial engineering is at the centre of the storm now engulfing credit markets. Mortgages to very low quality borrowers (sub-prime mortgage borrowers) were packaged up into securities (collateralised debt obligations, or CDOs) which were sold off in various parcels, some of which came with high risk like equity but some of which came with AAA credit ratings (the highest possible credit rating).
So, due to the magic of modern finance, a portion of something which was regarded as high risk was able to be marketed as low risk. Hence it was always an artificial construct. And more fundamentally, because of a limited track record (usually just covering the last few years of relatively favourable conditions) risk was dramatically underestimated. Risk was underestimated both in terms of the performance of the underlying sub-prime mortgages and how the securities themselves would behave in times of market stress and poor liquidity (like we have seen over the last few months).
What’s more, this re-packaging and underestimation of risk arguably made the whole situation worse. By encouraging demand for the securities more money became available for lending to sub-prime borrowers which meant that lending standards became ever more lax. Such complex arrangements also led to a poor alignment of interests. Everyone was paid up front - the mortgage originators, the banks underwriting the securities, the ratings agencies, the CDO managers - except the end-investor who held all the risk. And mortgage originators had an incentive to write loans regardless of the quality of the borrowers. On top of all this, these complex securities were poorly understood and irregularly traded, adding to the difficulties involved in undertaking a decent risk analysis.
So when all is going well, there are no problems. But once the underlying investment (ie, mortgages to borrowers with poor credit histories) started to turn sour, the credit ratings proved unreliable. The securities proved impossible to sell because they were so complex and no one really understood them, let alone knew their true worth. And everyone ran for the exits at once.
The key lesson for investors from all this is to be sceptical of investments which rely heavily on financial engineering to meet their objectives, particularly if they haven’t been tested in both good and bad times. Such constructs often have a poor alignment of interests, the true risks may be poorly understood or hidden and, because so many parties are involved, the underlying fees may be excessive.
Lesson 2: Gearing is great - till it isn’t
We all know the benefits of gearing. Investing $1 of borrowed capital for every $1 of your own capital can turn a 10 per cent gross return into a 20 per cent gross return. But of course when returns are negative it can go badly wrong. In fact, very high gearing (eg 5 to 10 times) was at the centre of most of the big fund losses announced recently. For example, if debt is running at five times capital then just a 5 per cent drop in the value of the underlying investments will lead to a 30 per cent drop in the value of the fund for investors, viz: If initial capital in a fund from investors is $1 million and $5 million is borrowed, then the fund’s total investment is $6 million. If the underlying investments fall in value by 5 per cent to $5.7 million the lenders to the fund are still owed $5 million, but the investor’s capital in the fund drops to $0.7 million, or a 30 per cent decline.
Excessive gearing on top of the losses in the underlying securities explains why some funds with direct exposure to sub-prime debt have seen all or most of their value wiped out. It also explains the severity of the decline in value for some funds which were not directly invested in sub-prime related investments, but may have had an exposure to high yield corporate debt, where the decline in value has been modest.
A high level of gearing of this nature can also make the problem a lot worse. An ungeared fund might (depending on the ‘patience’ of its investors and whether it can freeze fund withdrawals if they are not patient) be able to ride out any market turmoil until pricing improves or the underlying securities simply mature by which time any actual losses (eg. owing to mortgage defaults) may be far less than current market conditions imply. But when gearing is huge, the fund’s creditors may seize the assets and sell them into weak markets pushing down their value even further (the equivalent of margin calls). Such fire sales only lock in the losses for investors.
It should also be noted that not only were the funds investing in sub-prime related securities geared, but there was additional gearing in the securities themselves. For example, CDOs that contain sub-prime debt could be up to 25 times geared. In this context it only takes a small increase in mortgage defaults to start causing big losses. As a result, there was effectively gearing on top of gearing.
So be wary of investments that rely on excessive gearing, both at the fund level and in the underlying investments.
Lesson 3: Diversification is good
Many of the funds at the centre of the recent storm appear to have been poorly diversified (particularly those with an excessive exposure to sub-prime related debt) and this has only magnified their losses. More diversified credit focused funds have held up much better.
Similarly, the events of the past month or so have also highlighted the downside of concentrated exposure to hedge funds. Some hedge funds, particularly quantitative long/short equity funds, had a particularly rough month with losses of around 30 per cent being reported at one point.
However, well-constructed funds-of-hedge-funds have generally come through in far better shape.
The point is that investors are always wise to make sure that funds they invest in are well diversified and not overly reliant on a particular type of investment or investment strategy.
Lesson 4: There is no such thing as a free lunch
Investor interest in credit investments and more recently in highly complex yield-based securities has its origin in the long-term decline in interest rates and bond yields on the back of the shift to low inflation over the last two decades.
Somehow, getting a 6 per cent return from government bonds in a world of 2.5 per cent inflation doesn’t sound quite as good as getting a 12 per cent return from bonds in a world of 8.5 per cent inflation (the 1980s). So investors with a desire for a high income flow, such as self-funded retirees, have been prepared to go in search of higher returns moving from government bonds into corporate debt. This was probably all fine because most corporate debt has a long history and so the risk involved can be reliably estimated and managed. In recent years though this has started to morph into funds investing in highly complex securities such as CDOs where risk was less well known.
However, while risk may remain dormant for many years leading investors to forget about it, the events of the past few months highlight that higher returns also come with higher risk. In other words, there is no such thing as a free lunch. The trick for investors is to make sure that they are aware of the extra risk they are taking on and to then make sure that it is managed appropriately in terms of diversification and gearing levels.
Lesson 5: Only invest in what you understand
A key lesson for investors from the events of the last few months is to only invest in what you understand. Modern credit instruments are incredibly complex and it would appear that many (including market participants) did not understand the nature of the investments being undertaken. Until recently most investors would not have known what a sub-prime mortgage was and most would have thought that a CDO was just another acronym for a senior company executive.
The writer is head of investment strategy and chief economist at AMP Capital Investors
THE last month or so has seen big swings in markets on the back of the turmoil in credit markets. By and large though, most investors should have come through reasonably unscathed. However, some would not have been so lucky. Funds reported to have had the greatest losses seem to fall into three categories - funds with a heavy direct and geared exposure to US sub-prime debt, some of which have seen 80 per cent to 100 per cent of their capital wiped out; funds with a geared exposure to corporate debt which has been caught up in the fallout from the subprime problems; and quantitative equity hedge funds which have been caught out by the volatility in investment markets.
While conceding that the period of share market weakness and credit turmoil ‘ain’t necessarily over yet’, and without getting into the surrounding economic issues and the outlook going forward (which I have covered in previous reports), the blow-up in credit markets provides a number of lessons for investors. Specifically, these relate to financial engineering, diversification, gearing, the fact that there is no such thing as a free lunch and the need to invest in only what you understand.
Lesson 1: Beware of financial engineering
Financial engineering is at the centre of the storm now engulfing credit markets. Mortgages to very low quality borrowers (sub-prime mortgage borrowers) were packaged up into securities (collateralised debt obligations, or CDOs) which were sold off in various parcels, some of which came with high risk like equity but some of which came with AAA credit ratings (the highest possible credit rating).
So, due to the magic of modern finance, a portion of something which was regarded as high risk was able to be marketed as low risk. Hence it was always an artificial construct. And more fundamentally, because of a limited track record (usually just covering the last few years of relatively favourable conditions) risk was dramatically underestimated. Risk was underestimated both in terms of the performance of the underlying sub-prime mortgages and how the securities themselves would behave in times of market stress and poor liquidity (like we have seen over the last few months).
What’s more, this re-packaging and underestimation of risk arguably made the whole situation worse. By encouraging demand for the securities more money became available for lending to sub-prime borrowers which meant that lending standards became ever more lax. Such complex arrangements also led to a poor alignment of interests. Everyone was paid up front - the mortgage originators, the banks underwriting the securities, the ratings agencies, the CDO managers - except the end-investor who held all the risk. And mortgage originators had an incentive to write loans regardless of the quality of the borrowers. On top of all this, these complex securities were poorly understood and irregularly traded, adding to the difficulties involved in undertaking a decent risk analysis.
So when all is going well, there are no problems. But once the underlying investment (ie, mortgages to borrowers with poor credit histories) started to turn sour, the credit ratings proved unreliable. The securities proved impossible to sell because they were so complex and no one really understood them, let alone knew their true worth. And everyone ran for the exits at once.
The key lesson for investors from all this is to be sceptical of investments which rely heavily on financial engineering to meet their objectives, particularly if they haven’t been tested in both good and bad times. Such constructs often have a poor alignment of interests, the true risks may be poorly understood or hidden and, because so many parties are involved, the underlying fees may be excessive.
Lesson 2: Gearing is great - till it isn’t
We all know the benefits of gearing. Investing $1 of borrowed capital for every $1 of your own capital can turn a 10 per cent gross return into a 20 per cent gross return. But of course when returns are negative it can go badly wrong. In fact, very high gearing (eg 5 to 10 times) was at the centre of most of the big fund losses announced recently. For example, if debt is running at five times capital then just a 5 per cent drop in the value of the underlying investments will lead to a 30 per cent drop in the value of the fund for investors, viz: If initial capital in a fund from investors is $1 million and $5 million is borrowed, then the fund’s total investment is $6 million. If the underlying investments fall in value by 5 per cent to $5.7 million the lenders to the fund are still owed $5 million, but the investor’s capital in the fund drops to $0.7 million, or a 30 per cent decline.
Excessive gearing on top of the losses in the underlying securities explains why some funds with direct exposure to sub-prime debt have seen all or most of their value wiped out. It also explains the severity of the decline in value for some funds which were not directly invested in sub-prime related investments, but may have had an exposure to high yield corporate debt, where the decline in value has been modest.
A high level of gearing of this nature can also make the problem a lot worse. An ungeared fund might (depending on the ‘patience’ of its investors and whether it can freeze fund withdrawals if they are not patient) be able to ride out any market turmoil until pricing improves or the underlying securities simply mature by which time any actual losses (eg. owing to mortgage defaults) may be far less than current market conditions imply. But when gearing is huge, the fund’s creditors may seize the assets and sell them into weak markets pushing down their value even further (the equivalent of margin calls). Such fire sales only lock in the losses for investors.
It should also be noted that not only were the funds investing in sub-prime related securities geared, but there was additional gearing in the securities themselves. For example, CDOs that contain sub-prime debt could be up to 25 times geared. In this context it only takes a small increase in mortgage defaults to start causing big losses. As a result, there was effectively gearing on top of gearing.
So be wary of investments that rely on excessive gearing, both at the fund level and in the underlying investments.
Lesson 3: Diversification is good
Many of the funds at the centre of the recent storm appear to have been poorly diversified (particularly those with an excessive exposure to sub-prime related debt) and this has only magnified their losses. More diversified credit focused funds have held up much better.
Similarly, the events of the past month or so have also highlighted the downside of concentrated exposure to hedge funds. Some hedge funds, particularly quantitative long/short equity funds, had a particularly rough month with losses of around 30 per cent being reported at one point.
However, well-constructed funds-of-hedge-funds have generally come through in far better shape.
The point is that investors are always wise to make sure that funds they invest in are well diversified and not overly reliant on a particular type of investment or investment strategy.
Lesson 4: There is no such thing as a free lunch
Investor interest in credit investments and more recently in highly complex yield-based securities has its origin in the long-term decline in interest rates and bond yields on the back of the shift to low inflation over the last two decades.
Somehow, getting a 6 per cent return from government bonds in a world of 2.5 per cent inflation doesn’t sound quite as good as getting a 12 per cent return from bonds in a world of 8.5 per cent inflation (the 1980s). So investors with a desire for a high income flow, such as self-funded retirees, have been prepared to go in search of higher returns moving from government bonds into corporate debt. This was probably all fine because most corporate debt has a long history and so the risk involved can be reliably estimated and managed. In recent years though this has started to morph into funds investing in highly complex securities such as CDOs where risk was less well known.
However, while risk may remain dormant for many years leading investors to forget about it, the events of the past few months highlight that higher returns also come with higher risk. In other words, there is no such thing as a free lunch. The trick for investors is to make sure that they are aware of the extra risk they are taking on and to then make sure that it is managed appropriately in terms of diversification and gearing levels.
Lesson 5: Only invest in what you understand
A key lesson for investors from the events of the last few months is to only invest in what you understand. Modern credit instruments are incredibly complex and it would appear that many (including market participants) did not understand the nature of the investments being undertaken. Until recently most investors would not have known what a sub-prime mortgage was and most would have thought that a CDO was just another acronym for a senior company executive.
The writer is head of investment strategy and chief economist at AMP Capital Investors
CDL attracts heavy buying after clinching iconic site
CLINCHING the historic Beach Road military camp site helped ignite fresh buying interest in property giant City Developments (CDL).
The site, which cost the CDL-led consortium $1.69 billion, is just a stone’s throw from the upcoming Marina Bay Sands integrated resort and the Formula One street circuit.
Observers believe the acquisition will enhance CDL’s already high-quality portfolio, which includes top-notch commercial buildings and condos like Republic Plaza and The Sail@Marina Bay.
CDL yesterday surged 50 cents to $15.40 on a heavy volume of 5.8 million shares. It hit an intra-day high of $15.60. Its total gain for the week was 40 cents.
Kim Eng Research analyst Wilson Liew said the iconic Beach Road site is slated to include premium offices, two luxury hotels, exclusive residences and retail space with a total gross floor area of 1.58 million sq ft.
‘Assuming a breakdown of 40 per cent for office use, 30 per cent for hotel use, 15 per cent for residential use and 15 per cent for retail use, we estimate the total development cost at around $2.6 billion, should add 25 cents per share to revalued net asset value (RNAV),’ he said.
Mr Liew raised his target price for CDL to $18, based on a 20 per cent premium to his RNAV of $15.66.
The heavy buying of CDL shares also reflected investors’ conviction that demand would stay buoyant in the red-hot residential market.
On Thursday, BNP Paribas noted that developers had maintained their selling prices ‘and have no intention of lowering them at this juncture’.
This was despite a slowdown in property sales last month, which could have been due to buyers here also taking a ‘wait-and-see’ attitude, as the United States mortgage crisis deepened.
On the secondary resale market, the wide disparity between sellers’ asking prices and buyers’ offer prices is narrowing, suggesting that demand in the property market is sustainable.
‘Singapore developers are currently trading at around 6 per cent to 37 per cent below the peak share price prior to the market correction in late July, which presents an attractive discount, especially as property market fundamentals have not changed much over the period.’
BNP Paribas also expects developers with a big exposure to the Singapore mass market, such as CDL, to benefit from opportunities for collective sales still available on the city’s fringes and in suburban areas where land is still affordable.
The site, which cost the CDL-led consortium $1.69 billion, is just a stone’s throw from the upcoming Marina Bay Sands integrated resort and the Formula One street circuit.
Observers believe the acquisition will enhance CDL’s already high-quality portfolio, which includes top-notch commercial buildings and condos like Republic Plaza and The Sail@Marina Bay.
CDL yesterday surged 50 cents to $15.40 on a heavy volume of 5.8 million shares. It hit an intra-day high of $15.60. Its total gain for the week was 40 cents.
Kim Eng Research analyst Wilson Liew said the iconic Beach Road site is slated to include premium offices, two luxury hotels, exclusive residences and retail space with a total gross floor area of 1.58 million sq ft.
‘Assuming a breakdown of 40 per cent for office use, 30 per cent for hotel use, 15 per cent for residential use and 15 per cent for retail use, we estimate the total development cost at around $2.6 billion, should add 25 cents per share to revalued net asset value (RNAV),’ he said.
Mr Liew raised his target price for CDL to $18, based on a 20 per cent premium to his RNAV of $15.66.
The heavy buying of CDL shares also reflected investors’ conviction that demand would stay buoyant in the red-hot residential market.
On Thursday, BNP Paribas noted that developers had maintained their selling prices ‘and have no intention of lowering them at this juncture’.
This was despite a slowdown in property sales last month, which could have been due to buyers here also taking a ‘wait-and-see’ attitude, as the United States mortgage crisis deepened.
On the secondary resale market, the wide disparity between sellers’ asking prices and buyers’ offer prices is narrowing, suggesting that demand in the property market is sustainable.
‘Singapore developers are currently trading at around 6 per cent to 37 per cent below the peak share price prior to the market correction in late July, which presents an attractive discount, especially as property market fundamentals have not changed much over the period.’
BNP Paribas also expects developers with a big exposure to the Singapore mass market, such as CDL, to benefit from opportunities for collective sales still available on the city’s fringes and in suburban areas where land is still affordable.
INSIDE MARKETS - Buy and sell transactions hit low levels; fund managers quiet
PURCHASES by directors and substantial shareholders was low for a second straight week with only 34 companies posting 72 ‘buys’, based on filings on the Singapore Exchange from Sept 17 to 21. The figures were consistent with the previous week’s 35 companies and 72 acquisitions. Investors should note that the buying has been low in each of the past two weeks, with the number of purchases sharply lower than the 124 acquisitions in the first week of September and 106 trades in the last week of August. Sales activity last week were also down with only 23 firms posting 52 disposals, sharply lower than the previous week’s 28 companies and 100 disposals.
Fund managers were quiet. Only six institutions each posted 16 purchases and 22 disposals, against the previous week’s eight asset managers with 30 acquisitions and nine institutions recording 43 disposals.
Several buyers made their maiden entry on the local market last week. The chief executive of Dutech Holdings made his first purchase after the group announced its second-quarter results, while the managing director of Soilbuild Group Holdings returned to the market after being absent since 2006. Legg Mason Inc raised its interest in Straits Asia Resources by 7 per cent to 5.1 per cent. On the sales side, there were bearish signals in Hongguo International Holdings and Aztech Systems as two fund managers lowered their respective stakes to below 5 per cent.
Dutech Holdings
Chairman and CEO Johnny Liu Jiayan recorded his first buys in recently-listed ATM manufacturer Dutech Holdings, after the stock fell below 40 cents per share. The purchases were also made after the group announced its Q2 results on Sept 12. The CEO acquired an initial 200,000 shares on Sept 13 at 39 cents each. He picked up a further 200,000 shares on Sept 17 after the stock fell to 35 cents, doubling his stake to 400,000 shares. Mr Liu is one of two directors who have bought the company’s shares since the stock was listed on Aug 2.
Independent director Graham Macdonald Bell acquired an initial 17,000 shares on Aug 7 at 37 cents each.
Dutech Holdings posted a 5.3 per cent gain in net profit to 12.64 million yuan (S$2.54 million) for the three months to June 30, 2007. Earnings in the first half rose by 14.9 per cent to 23.29 million yuan. After rising from the IPO price of 33 cents to 46 cents on the stock’s trading debut on Aug 2, the counter closed sharply lower at 32.5 cents on Friday.
Soilbuild Group Holdings
Managing director Lim Chap Huat recorded his first buys in boutique property developer and construction firm Soilbuild Group Holdings since July 2006, with 229,000 shares snapped up from Sept 17 to 20 at an average of $1.27 each. The trades, which accounted for 44 per cent of the stock’s trading volume, boosted his holdings (direct and deemed) to 116.3 million shares, or 58 per cent of the issued capital.
Mr Lim is one of three directors who have bought shares in the past two months. Chairman of Remuneration Committee Kelvin Tan Wee Peng bought 10,000 shares on Aug 15 and 16 at an average price of $1.22 each, boosting his direct stake to 150,000 shares. Executive director Low Soon Sim, on the other hand, picked up 10,000 shares on Aug 16 at $1.21 each, raising his direct interest to 570,000 shares.
Soilbuild Group announced its interim results on Aug 14 with a net profit of $28.69 million for the six months to June 30, 2007, against a loss of $2.34 million in the same period last year. The counter closed at $1.30 on Friday.
Straits Asia Resources
Legg Mason Inc became a substantial shareholder of resource development and mining firm Straits Asia Resources on Sept 14 following the purchase of three million shares at $1.36 each. The trade increased its deemed holdings by 7 per cent to 46.8 million shares or 5.1 per cent.
But Fidelity International Ltd reported a disposal-related filing on Sept 11 of 1.2 million shares at an estimated price of $1.33 each, which reduced its deemed stake to 54.5 million shares or 5.9 per cent. The group previously sold 3.7 million shares from Aug 2 to Sept 10 at estimated prices of $1.18 to $1.33 each.
Overall, the fund manager’s stake is down by nearly 5 million shares or 8 per cent since August. Prior to the disposals, the group acquired 13.3 million shares from July 19 to Aug 1 at estimated prices of $1.42 to $1.18 each. Fidelity reported an initial filing on July 18 of 1.8 million shares at 94 US cents each, which raised its interest to 5.01 per cent.
Investors should note that CEO Richard Ong Chui Chat acquired 400,000 shares from July 13 to 31 at $1.43 to $1.17 each, or an average of $1.30 each, which boosted his deemed holdings by 129 per cent to 710,000 shares. He previously acquired 100,000 shares on March 6 at 76 cents each.
Straits Asia Resources announced its Q2 results on Aug 14 with net profit down by 39 per cent to US $7.11 million for the three months to June 30, 2007. Earnings in H1 fell by 41.4 per cent to US$15.53 million. The counter closed at $1.44 on Friday.
Hongguo International Holdings
Consistent sales by FMR Corp in fashion shoes designer, manufacturer, and retailer Hongguo International Holdings since the last week of June totalling 21.2 million shares lowered its interest by 52 per cent to 4.9 per cent. The disposals were made from June 28 to Sept 14 at estimated prices of $1.30 to $0.86 each.
The group last sold 969,000 shares from Aug 15 to Sept 14 at estimated prices of 86 cents to 95 cents each, which reduced its deemed holdings to 19.3 million shares or 4.9 per cent. Prior to the disposals, FMR Corp acquired nearly 21 million shares from December 2006 to June 27 at estimated prices of $0.54 to $1.32 each. The group became a substantial shareholder (for the second time) on Dec 21, 2006, following the purchase of 1.2 million shares at 54 cents each, which raised its interest to 5.2 per cent.
The fund manager’s sentiment is not entirely negative as Schroder Investment Management Group became a substantial shareholder on Aug 7 following the purchase of 884,000 shares at 97 cents each. The purchase, which was made on behalf of clients by its Hong Kong branch acting as Investment Advisors, boosted its deemed holdings to 20.6 million shares or 5.2 per cent.
Investors should note that managing director Li Wei purchased 1.75 million shares in January at $1.16 each, which increased his deemed stake by 9 per cent to 21.5 million shares or 5.4 per cent. Mr Li also has direct holdings of 17.4 million shares or 4.4 per cent. He previously acquired 1.7 million shares from Nov 28 to 30, 2006 at an average of 71.4 cents each. The stock closed at 88.5 cents on Friday.
Aztech Systems
Credit Agricole Asset Management SA ceased to be a substantial shareholder of contract manufacturer Aztech Systems on Sept 19 following the sale of 2.1 million shares at an estimated price of 49.5 cents each. The trade reduced its deemed holdings by 10 per cent - to 19.3 million shares or 4.6 per cent. The sale price was far below the group’s initial filing price in July.
Credit Agricole previously reported an initial filing on July 6 of 1.04 million shares at 61 cents each, which raised its interest to 5.1 per cent. But board member Patricia Ng Sok Cheng and the company bought shares on Sept 20. Ms Ng acquired 100,000 shares at 42 cents each, which increased her direct stake by 72 per cent to 239,000 shares. She also has deemed interest of 15 million shares or 3.6 per cent.
She previously acquired 1.7 million shares from Feb 28 to June 18 via exercise of options at an average of 10.6 cents each and 50,000 shares on Feb 14 on the open market at 41.5 cents each.
Prior to her trades this year, Ms Ng bought 50,000 shares in December 2004 at nine cents each. The company, on the other hand, bought back 500,000 shares on Sept 20 at 42.5 cents each. The group previously acquired 389,000 shares on Aug 17 at 48 cents each, 500,000 shares on Aug 2 at 60 cents each, and 1.2 million shares in March at 37 cents each. The trades since March were the company’s first buybacks since listing. The stock closed at 45 cents on Friday.
The writer is Managing Director, Asia Insider Limited
Fund managers were quiet. Only six institutions each posted 16 purchases and 22 disposals, against the previous week’s eight asset managers with 30 acquisitions and nine institutions recording 43 disposals.
Several buyers made their maiden entry on the local market last week. The chief executive of Dutech Holdings made his first purchase after the group announced its second-quarter results, while the managing director of Soilbuild Group Holdings returned to the market after being absent since 2006. Legg Mason Inc raised its interest in Straits Asia Resources by 7 per cent to 5.1 per cent. On the sales side, there were bearish signals in Hongguo International Holdings and Aztech Systems as two fund managers lowered their respective stakes to below 5 per cent.
Dutech Holdings
Chairman and CEO Johnny Liu Jiayan recorded his first buys in recently-listed ATM manufacturer Dutech Holdings, after the stock fell below 40 cents per share. The purchases were also made after the group announced its Q2 results on Sept 12. The CEO acquired an initial 200,000 shares on Sept 13 at 39 cents each. He picked up a further 200,000 shares on Sept 17 after the stock fell to 35 cents, doubling his stake to 400,000 shares. Mr Liu is one of two directors who have bought the company’s shares since the stock was listed on Aug 2.
Independent director Graham Macdonald Bell acquired an initial 17,000 shares on Aug 7 at 37 cents each.
Dutech Holdings posted a 5.3 per cent gain in net profit to 12.64 million yuan (S$2.54 million) for the three months to June 30, 2007. Earnings in the first half rose by 14.9 per cent to 23.29 million yuan. After rising from the IPO price of 33 cents to 46 cents on the stock’s trading debut on Aug 2, the counter closed sharply lower at 32.5 cents on Friday.
Soilbuild Group Holdings
Managing director Lim Chap Huat recorded his first buys in boutique property developer and construction firm Soilbuild Group Holdings since July 2006, with 229,000 shares snapped up from Sept 17 to 20 at an average of $1.27 each. The trades, which accounted for 44 per cent of the stock’s trading volume, boosted his holdings (direct and deemed) to 116.3 million shares, or 58 per cent of the issued capital.
Mr Lim is one of three directors who have bought shares in the past two months. Chairman of Remuneration Committee Kelvin Tan Wee Peng bought 10,000 shares on Aug 15 and 16 at an average price of $1.22 each, boosting his direct stake to 150,000 shares. Executive director Low Soon Sim, on the other hand, picked up 10,000 shares on Aug 16 at $1.21 each, raising his direct interest to 570,000 shares.
Soilbuild Group announced its interim results on Aug 14 with a net profit of $28.69 million for the six months to June 30, 2007, against a loss of $2.34 million in the same period last year. The counter closed at $1.30 on Friday.
Straits Asia Resources
Legg Mason Inc became a substantial shareholder of resource development and mining firm Straits Asia Resources on Sept 14 following the purchase of three million shares at $1.36 each. The trade increased its deemed holdings by 7 per cent to 46.8 million shares or 5.1 per cent.
But Fidelity International Ltd reported a disposal-related filing on Sept 11 of 1.2 million shares at an estimated price of $1.33 each, which reduced its deemed stake to 54.5 million shares or 5.9 per cent. The group previously sold 3.7 million shares from Aug 2 to Sept 10 at estimated prices of $1.18 to $1.33 each.
Overall, the fund manager’s stake is down by nearly 5 million shares or 8 per cent since August. Prior to the disposals, the group acquired 13.3 million shares from July 19 to Aug 1 at estimated prices of $1.42 to $1.18 each. Fidelity reported an initial filing on July 18 of 1.8 million shares at 94 US cents each, which raised its interest to 5.01 per cent.
Investors should note that CEO Richard Ong Chui Chat acquired 400,000 shares from July 13 to 31 at $1.43 to $1.17 each, or an average of $1.30 each, which boosted his deemed holdings by 129 per cent to 710,000 shares. He previously acquired 100,000 shares on March 6 at 76 cents each.
Straits Asia Resources announced its Q2 results on Aug 14 with net profit down by 39 per cent to US $7.11 million for the three months to June 30, 2007. Earnings in H1 fell by 41.4 per cent to US$15.53 million. The counter closed at $1.44 on Friday.
Hongguo International Holdings
Consistent sales by FMR Corp in fashion shoes designer, manufacturer, and retailer Hongguo International Holdings since the last week of June totalling 21.2 million shares lowered its interest by 52 per cent to 4.9 per cent. The disposals were made from June 28 to Sept 14 at estimated prices of $1.30 to $0.86 each.
The group last sold 969,000 shares from Aug 15 to Sept 14 at estimated prices of 86 cents to 95 cents each, which reduced its deemed holdings to 19.3 million shares or 4.9 per cent. Prior to the disposals, FMR Corp acquired nearly 21 million shares from December 2006 to June 27 at estimated prices of $0.54 to $1.32 each. The group became a substantial shareholder (for the second time) on Dec 21, 2006, following the purchase of 1.2 million shares at 54 cents each, which raised its interest to 5.2 per cent.
The fund manager’s sentiment is not entirely negative as Schroder Investment Management Group became a substantial shareholder on Aug 7 following the purchase of 884,000 shares at 97 cents each. The purchase, which was made on behalf of clients by its Hong Kong branch acting as Investment Advisors, boosted its deemed holdings to 20.6 million shares or 5.2 per cent.
Investors should note that managing director Li Wei purchased 1.75 million shares in January at $1.16 each, which increased his deemed stake by 9 per cent to 21.5 million shares or 5.4 per cent. Mr Li also has direct holdings of 17.4 million shares or 4.4 per cent. He previously acquired 1.7 million shares from Nov 28 to 30, 2006 at an average of 71.4 cents each. The stock closed at 88.5 cents on Friday.
Aztech Systems
Credit Agricole Asset Management SA ceased to be a substantial shareholder of contract manufacturer Aztech Systems on Sept 19 following the sale of 2.1 million shares at an estimated price of 49.5 cents each. The trade reduced its deemed holdings by 10 per cent - to 19.3 million shares or 4.6 per cent. The sale price was far below the group’s initial filing price in July.
Credit Agricole previously reported an initial filing on July 6 of 1.04 million shares at 61 cents each, which raised its interest to 5.1 per cent. But board member Patricia Ng Sok Cheng and the company bought shares on Sept 20. Ms Ng acquired 100,000 shares at 42 cents each, which increased her direct stake by 72 per cent to 239,000 shares. She also has deemed interest of 15 million shares or 3.6 per cent.
She previously acquired 1.7 million shares from Feb 28 to June 18 via exercise of options at an average of 10.6 cents each and 50,000 shares on Feb 14 on the open market at 41.5 cents each.
Prior to her trades this year, Ms Ng bought 50,000 shares in December 2004 at nine cents each. The company, on the other hand, bought back 500,000 shares on Sept 20 at 42.5 cents each. The group previously acquired 389,000 shares on Aug 17 at 48 cents each, 500,000 shares on Aug 2 at 60 cents each, and 1.2 million shares in March at 37 cents each. The trades since March were the company’s first buybacks since listing. The stock closed at 45 cents on Friday.
The writer is Managing Director, Asia Insider Limited
MONEY MATTERS - Yes, sub-primes still offer an investment opportunity
I RECEIVED a few queries from readers of my last article in BT (’Deciphering the message of the markets’, Aug 1), which discussed, among other things, the origins of the recent sharp market retrenchment. There were two main issues:
1. The graphics were unfortunately left out of the published column. Here they are. The five-day chart demonstrates the tight correlation between the fall in European markets and the strength of the yen as hedge funds and Mrs Watanabe (Japanese housewives) got unwound by margin calls.
2. Was I opining that the fall in markets was an investment opportunity? My apologies about being insufficiently explicit. Yes, the answer is that it was a buying opportunity.
Indeed, I believe this is still an investment opportunity although the sub-prime problem has morphed into a more general credit crunch problem arising from the loss of confidence within the global financial system.
Due to the lack of transparency, it is difficult for each bank to determine what sub-prime debt exposure their banking counterparts have. Although much of the sub-prime mortgages have been replicated as bonds and sold off to investors worldwide, banks have off-balance-sheet liabilities in the form of ‘conduits’, etc, where borrowers (who hold these bonds backed by sub-prime mortgages) could draw on lines of credit with these bonds as collateral.
Central banks around the world have generally managed this fiasco fairly well. There is no loss of confidence amongst depositors except in the UK, where Northern Rock unnecessarily suffered the ignominy of a bank run.
The confidence of depositors is not misplaced. Most of the world operates a system of fiat money with central banks (who control the monetary printing press) being lenders of last resort. Any problem which can be solved by ‘printing’ money is in principle a straightforward one for central banks to deal with.
The individual exposures may be hard to ascertain but things look different from a system perspective. Here’s my quick analysis:
*
Combined profit of all listed banks and insurers at US$1.1 trillion.
*
Total sub-prime debt at US$0.6 trillion.
*
Assuming a write-down of 30 per cent of collateral value, loss at US$0.18 trillion. This would be a one-off loss equal to only about two months of profits of all listed banks and insurers.
*
Yet, the loss of market capitalisation at the market nadir was US$1.5 trillion for global financials and US$4 trillion (more than 20 times the projected loss on sub-prime debt) for the global equity markets.
Does the market reaction make rational sense? Nonetheless, the dislocation in the capital markets has had an impact on business confidence surveys globally. The imponderable is, as always, the contagion effects. How does this affect the wider economy? Exact quantification is difficult. It is not only uncertainties with the economic modelling; policy response also plays a significant role in the outcome.
Fight or flight?
To get a measure of our ‘fear factor’, I did another quick analysis. This time I used the most recent economic cataclysm: the Telecom-Media-Technology (TMT) bust of 2000 to 2003. Capex spending was running far in excess of GDP growth. It is estimated that the overinvestment in capex leading to 2000 globally was (cumulatively) circa 10 per cent of global GDP, or US$2.5 trillion.
This eventually led to write-offs and bankruptcies on a massive scale. The subsequent impact on global GDP is estimated to be (cumulatively) about minus-6 per cent. See demonstrative charts (above), which were sourced from Moody’s Economy.com - the horizontal dash line marks the level of trend GDP growth in the US and the euro zone.
The impact of this sub-prime fiasco appears tolerable as the drag on global GDP is expected be in the region of 0.5 per cent. Ironically, this could be the enforced rest that the global economy requires in order to keep inflation at bay.
Indeed, the rise in money supply from rate cuts combined with reduced demand from the real economy could expand equity PERs over the next few months as excess money supply rises. Fundamentally, the S&P Global 100 Index trades at about 13.1 times, trailing earnings (about 12.1 times one-year forward earnings), which is compelling relative to long-term fixed income yields. For example, 10-year USTs are trading at a yield of 4.6 per cent.
The writer is CEO of financial adviser New Independent.
1. The graphics were unfortunately left out of the published column. Here they are. The five-day chart demonstrates the tight correlation between the fall in European markets and the strength of the yen as hedge funds and Mrs Watanabe (Japanese housewives) got unwound by margin calls.
2. Was I opining that the fall in markets was an investment opportunity? My apologies about being insufficiently explicit. Yes, the answer is that it was a buying opportunity.
Indeed, I believe this is still an investment opportunity although the sub-prime problem has morphed into a more general credit crunch problem arising from the loss of confidence within the global financial system.
Due to the lack of transparency, it is difficult for each bank to determine what sub-prime debt exposure their banking counterparts have. Although much of the sub-prime mortgages have been replicated as bonds and sold off to investors worldwide, banks have off-balance-sheet liabilities in the form of ‘conduits’, etc, where borrowers (who hold these bonds backed by sub-prime mortgages) could draw on lines of credit with these bonds as collateral.
Central banks around the world have generally managed this fiasco fairly well. There is no loss of confidence amongst depositors except in the UK, where Northern Rock unnecessarily suffered the ignominy of a bank run.
The confidence of depositors is not misplaced. Most of the world operates a system of fiat money with central banks (who control the monetary printing press) being lenders of last resort. Any problem which can be solved by ‘printing’ money is in principle a straightforward one for central banks to deal with.
The individual exposures may be hard to ascertain but things look different from a system perspective. Here’s my quick analysis:
*
Combined profit of all listed banks and insurers at US$1.1 trillion.
*
Total sub-prime debt at US$0.6 trillion.
*
Assuming a write-down of 30 per cent of collateral value, loss at US$0.18 trillion. This would be a one-off loss equal to only about two months of profits of all listed banks and insurers.
*
Yet, the loss of market capitalisation at the market nadir was US$1.5 trillion for global financials and US$4 trillion (more than 20 times the projected loss on sub-prime debt) for the global equity markets.
Does the market reaction make rational sense? Nonetheless, the dislocation in the capital markets has had an impact on business confidence surveys globally. The imponderable is, as always, the contagion effects. How does this affect the wider economy? Exact quantification is difficult. It is not only uncertainties with the economic modelling; policy response also plays a significant role in the outcome.
Fight or flight?
To get a measure of our ‘fear factor’, I did another quick analysis. This time I used the most recent economic cataclysm: the Telecom-Media-Technology (TMT) bust of 2000 to 2003. Capex spending was running far in excess of GDP growth. It is estimated that the overinvestment in capex leading to 2000 globally was (cumulatively) circa 10 per cent of global GDP, or US$2.5 trillion.
This eventually led to write-offs and bankruptcies on a massive scale. The subsequent impact on global GDP is estimated to be (cumulatively) about minus-6 per cent. See demonstrative charts (above), which were sourced from Moody’s Economy.com - the horizontal dash line marks the level of trend GDP growth in the US and the euro zone.
The impact of this sub-prime fiasco appears tolerable as the drag on global GDP is expected be in the region of 0.5 per cent. Ironically, this could be the enforced rest that the global economy requires in order to keep inflation at bay.
Indeed, the rise in money supply from rate cuts combined with reduced demand from the real economy could expand equity PERs over the next few months as excess money supply rises. Fundamentally, the S&P Global 100 Index trades at about 13.1 times, trailing earnings (about 12.1 times one-year forward earnings), which is compelling relative to long-term fixed income yields. For example, 10-year USTs are trading at a yield of 4.6 per cent.
The writer is CEO of financial adviser New Independent.
Tips on Collecting Nyonyaware
The Nyonyaware dining set commissioned for the wedding of a wealthy Malaccan nyonya to Kapitan Yap Ah Loy. This priceless collection is now in Singapore including the dining table and chairs.
Ceramics made for the Baba Nyonya of the 19th & early 20th centuries, continue to draw intense interest from antique collectors in Malaysia and Singapore with one Penang collector purportedly paying over RM60,000 for a lidded pot recently.
It wasn’t any old pot but a green-coloured kamcheng with a 13-inch diameter rim. One which you can put a-year-old baby in it. There are no known antique kamchengs larger than that size other than reproductions.
Popularly known as Nyonyaware or Straits Chinese porcelain, such ceramics are still highly sought-after and have caused intense rivalry among collectors, especially in Singapore.
Among the top collectors of Nyonyaware on both sides of the Causeway, is retired Singaporean academician Eric Tay, 67. He will give a lecture and workshop on identifying and collecting Nyonyaware on Oct 7 from 2pm-6pm at the Central Market, Kuala Lumpur. The event is organised by the Southeast Asian Ceramic Society, West Malaysia Chapter.
Tay taught fine arts as well as textile design and graphic art before retiring in 2000 from the Institute of Technical Education in Singapore. Since his retirement, Tay has devoted his time to studying and collecting Nyonyaware.
Some of Eric Tay's prized Nyonyaware are kept in an elaborate Baba Nyonya brown-and-gold antique cabinet.
Over-paid
In his pursuit, Tay has focused on collecting the rarest specimens in terms of colour, size and shape.
Says Tay: “I started collecting Nyonyaware in 1990 mainly bowls, plates, spoons, flower vases and tea cups. It was cheaper for beginners to buy at that time. I also had some bowls and plates from my family. My paternal grandmother was Peranakan but my grandfather was from China. My maternal grandparents were from Siak, north Sumatra.
“The first item purchased was an eight-inch diameter white plate with a standing phoenix motif with a pink border. The asking price was S$900 (about RM2,100) but I bargained it down to S$500 (aboutRM1,200). Today the piece would fetch about the same price as I had over-paid.”
Since then, Tay has been buying more Nyonyaware. He has amassed about 250 pieces comprising kitchen wares, ceremonial and religious items as well as articles of leisure. They include bowls, plates, kamchengs (lidded pots), chupus (covered jars), teapots, tea trays, cosmetic boxes, condiment dishes, vases and flower pots, tiffin-carriers, finger bowls, spittoons, joss-stick holders, cricket and soap boxes.
Although a seasoned collector, restraint is sometimes not Tay’s strongest point.
“When negotiating a sale, I normally buy up the whole lot, as I have better bargaining power,” rationalises the avid collector. “I keep the desired pieces and sell off the rest at 10% to 15% more to recover part of my cost.”
And the enteprising man has quite a few favourite pieces. For example, a coral red kamcheng, turquoise-coloured floral tiffin-carrier, olive-coloured joss-stick holder, a chupu with motifs painted inside as well as on the exterior.
The first item purchased by Eric was an eight-inch diameter white plate decorated with a standing phoenix motif and a pink border.
Rare mirror-image pair
“The most expensive items would be a pair of ‘mirror-image’ 11½ -inch peppermint-green squat kamcheng with phoenix and peony motifs on the lid and body,” answered Tay proudly. But he declined to divulge how much he paid.
“Collectors normally source Nyonyaware through friends and runners or from garage sales, supermarket notices, newspaper classified advertisements and antique shops. But shops specialising in Peranakan items are rather limited, whether in Singapore or Penang.
“Previously, Christie’s, Glerum, Bonhams as well as local auctioneers held Nyonyaware auctions. But due to the increasing scarcity and the appearance of reproductions being passed off as genuine items, such auctions have ceased.”
Luck
Besides poking around for Nyonyaware in his native Singapore as well as the usual hunting grounds of Malacca and Penang, Tay bought such ceramics in Australia and London.
“When my contacts call to inform me of any availability, I will be there as soon as I can take off. There were occasions when I travelled to Malaysia three times a month but not all visits were fruitful. There have been periods where nothing is available for two to three months.
When negotiating a sale, I normally buy up the whole lot, says Eric. He recently bought several hundred porcelain spoons just to get at several with rare designs.
“Every telephone call is an adventure. The items may turn out to be beautiful, rare and unusual or mundane. I have learnt not to anticipate anything. With Nyonyaware, it doesn’t mean that with money, one can go out to buy what is desired. Alternatively, one can be surprised and rewarded when unexpectedly something beautiful and rare crops up at a reasonable price.
“I do not have in mind any ultimate Nyonyaware to collect. I leave it to luck.”
Fakes
When buying Nyonyaware, Tay’s decision is based on the following criteria:
· Quality of porcelain or glaze
· Finesse of the motifs
· Condition
· Shop marks & “reign” seal marks
· Colour: clarity, brilliance and intensity
· Rarity
· Price
A reproduction Nyonyaware that can be passed off as an antique to novice collectors.
· Reproduction or “recycled” porcelain
Tay points out that due to the scarcity of Nyonyaware in the market, unscrupluous vendors have been sending Chinese ceramics of the early 20th Century to be painted over in Nyonyaware colours and re-fired in China. Unsuspecting collectors have been fooled.
The best places to view Nyonyaware in Singapore and Malaysia:
· Asian Civilisations Museum in Singapore
· Penang State Museum
· Muzium Negara, KL (limited items)
· Antique shops in Malacca (limited range & mundane items)
In his talk on collecting Nyonyaware, Tay will focus on:
· Definition of the Peranakans and Nyonyaware
Fake Nyonyaware: (Left) A miniature indigo-blue kamcheng that has been re-painted and re-fired in China. (Right) The original white kamcheng before the faking process.
· Usage of Nyonyaware
· Design motifs & symbolism
· Colour significance
· Standard design format on Nyonyaware
· Design adaptation from Chinese ceramics
· Anatomy (parts) of Nyonyaware
· Common Nyonyaware & commissioned items
· Reproduction & recycled “Nyonyaware”
Participants may bring as many Nyonyaware items for identification. Those who have over-sized items can arrange for a visit to their homes.
Exacting standards of the Baba Nyonya
Nyonyaware which is also known as “Straits Chinese porcelain” refer to a unique type of ceramics made in the 19th Century and early 20th Century in China for the Southeast Asian market.
For a glimpse into the world of the Baba Nyonya in their heyday, refer to the publication, "The Straits Chinese House, Domestic Life And Traditions" by Peter Lee & Jennifer Chen.
They were meant for export specifically to the Baba Nyonya or Straits Chinese of Penang, Malacca and Singapore as well as similar communities in Indonesia. As traders, merchants and entreprenuers, the Baba Nyonya in Malacca became very wealthy by the 19th Century. In fact, they financed or lent money for the development of Kuala Lumpur and Singapore.
The origins of the Baba Nyonya can be traced to the common practice of intermarriage between immigrant Chinese men and local women on both sides of the Straits of Malacca. The exact origin of the community has yet to be determined by historians.
Politically correct
But by the time of the formation of the Straits Settlements in 1826, this unique group of people whose mother tongue was Malay but culturally Chinese, were commonly referred to as “Straits Chinese” or “Peranakan” (local-born). These “Straits-born” Chinese distinguished themselves from the newly-arrived Chinese labourers or “sinkehs” at the time. (Nowadays, such terms have become anachronistic because the Straits Settlements ceased to exist after 1946 and everyone born on this side of the Straits of Malacca are all Straits-born. The politically-correct term of reference for the Straits Chinese today is Baba Nyonya.)
By the turn of the 20th Century, due to their accumulated wealth and means to an education, the offspring of the merchants later became part of the British Colonial administration and gained greater status as social elites. Even before that, with their money, they distinguished themselves in the development of a highly refined culture. That gave rise to exacting standards in their lifestyle. Such standards dictated that even their cuisine, their crockery and their embroidery must conform to the concept of refinement or “halus”.
Technically, their preferred type of crockery – what is now known as Nyonyaware – were quite difficult to make in the late 19th Century and early 20th Century. Wood-fired kilns depended heavily on the skills of artisans. The firing process of the ceramics in the preferred colour combinations such as green, blue, yellow, brown, orange, red, pink and even lilac or mauve, required technical finesse. The rendering of the motifs too, required the steady hand and artistic eye of a skilled artisan. To this day, collectors would pay much more for a technically superior piece fired in a rare colour. But there are Nyonyaware with sloppy motifs and colours that seem to “run”. Generally, Nyonyaware were made with vibrant colours and were decorated with exotic motifs, usually dominated by the mythical phoenix depicted against rockery and peony.
Eric's collection is focused on rarity, size, shape and intensity of the colours as well as finesse of the motifs.
Value
Although the product of a bygone era, these objects reflect the rich legacy of the vanishing Baba Nyonya culture of Malaysia and Singapore. Such ceramics range in price for about RM100 for a tiny saucer to tens of thousands for a large lidded pot or kamcheng.
Besides significant collections in Muzium Negara (National Museum) in Kuala Lumpur and the Penang State Museum, important collections have ended up in Singapore. Some years ago, the Asian Civilisations Museum I at Armenian Street (closed for renovations indefinitely) showcased a grand exhibition of Nyonyaware. That exhibition included the dining set commissioned for the wedding of a wealthy Malacca nyonya (lady) to Kapitan Yap Ah Loy, the man who developed Kuala Lumpur in the mid-19th Century.
Heirloom
According to Nyonyaware expert Eric Tay, the best definition of the ceramics, is found in the 1981 publication by the Southeast Asian Ceramic Society, West Malaysia Chapter, entitled Nonya ware and Kitchen Ch'ing.
Explains Tay: “It is difficult and unwise to be overly specific in defining Nyonyaware. Items which do not conform to the standard design genre or format are surfacing from time to time. These are specially commissioned pieces by the Peranakans and manufactured in the United Kingdom and Europe. In my talk, I will touch on these pieces, with examples. One must be open-minded through research, discussions and investigation to define Nyonyaware.
One of the most desired colours of Nyonyaware is pink or the different shades of it - ranging from mauve to salmon-pink. Large kamcheng exhibited at the Asian Civilisations Museum in Singapore.
“Sadly, most collectors today will only define Nyonyaware as those pieces they have encountered in antique shops, in friends’ homes or in their own family collection. Specially commissioned pieces according to specific design layout, colour scheme and motifs by wealthy and notable families of a bygone era are seldom seen as they form family heirlooms. But they are still considered Nyonyaware.”
Ceramics made for the Baba Nyonya of the 19th & early 20th centuries, continue to draw intense interest from antique collectors in Malaysia and Singapore with one Penang collector purportedly paying over RM60,000 for a lidded pot recently.
It wasn’t any old pot but a green-coloured kamcheng with a 13-inch diameter rim. One which you can put a-year-old baby in it. There are no known antique kamchengs larger than that size other than reproductions.
Popularly known as Nyonyaware or Straits Chinese porcelain, such ceramics are still highly sought-after and have caused intense rivalry among collectors, especially in Singapore.
Among the top collectors of Nyonyaware on both sides of the Causeway, is retired Singaporean academician Eric Tay, 67. He will give a lecture and workshop on identifying and collecting Nyonyaware on Oct 7 from 2pm-6pm at the Central Market, Kuala Lumpur. The event is organised by the Southeast Asian Ceramic Society, West Malaysia Chapter.
Tay taught fine arts as well as textile design and graphic art before retiring in 2000 from the Institute of Technical Education in Singapore. Since his retirement, Tay has devoted his time to studying and collecting Nyonyaware.
Some of Eric Tay's prized Nyonyaware are kept in an elaborate Baba Nyonya brown-and-gold antique cabinet.
Over-paid
In his pursuit, Tay has focused on collecting the rarest specimens in terms of colour, size and shape.
Says Tay: “I started collecting Nyonyaware in 1990 mainly bowls, plates, spoons, flower vases and tea cups. It was cheaper for beginners to buy at that time. I also had some bowls and plates from my family. My paternal grandmother was Peranakan but my grandfather was from China. My maternal grandparents were from Siak, north Sumatra.
“The first item purchased was an eight-inch diameter white plate with a standing phoenix motif with a pink border. The asking price was S$900 (about RM2,100) but I bargained it down to S$500 (aboutRM1,200). Today the piece would fetch about the same price as I had over-paid.”
Since then, Tay has been buying more Nyonyaware. He has amassed about 250 pieces comprising kitchen wares, ceremonial and religious items as well as articles of leisure. They include bowls, plates, kamchengs (lidded pots), chupus (covered jars), teapots, tea trays, cosmetic boxes, condiment dishes, vases and flower pots, tiffin-carriers, finger bowls, spittoons, joss-stick holders, cricket and soap boxes.
Although a seasoned collector, restraint is sometimes not Tay’s strongest point.
“When negotiating a sale, I normally buy up the whole lot, as I have better bargaining power,” rationalises the avid collector. “I keep the desired pieces and sell off the rest at 10% to 15% more to recover part of my cost.”
And the enteprising man has quite a few favourite pieces. For example, a coral red kamcheng, turquoise-coloured floral tiffin-carrier, olive-coloured joss-stick holder, a chupu with motifs painted inside as well as on the exterior.
The first item purchased by Eric was an eight-inch diameter white plate decorated with a standing phoenix motif and a pink border.
Rare mirror-image pair
“The most expensive items would be a pair of ‘mirror-image’ 11½ -inch peppermint-green squat kamcheng with phoenix and peony motifs on the lid and body,” answered Tay proudly. But he declined to divulge how much he paid.
“Collectors normally source Nyonyaware through friends and runners or from garage sales, supermarket notices, newspaper classified advertisements and antique shops. But shops specialising in Peranakan items are rather limited, whether in Singapore or Penang.
“Previously, Christie’s, Glerum, Bonhams as well as local auctioneers held Nyonyaware auctions. But due to the increasing scarcity and the appearance of reproductions being passed off as genuine items, such auctions have ceased.”
Luck
Besides poking around for Nyonyaware in his native Singapore as well as the usual hunting grounds of Malacca and Penang, Tay bought such ceramics in Australia and London.
“When my contacts call to inform me of any availability, I will be there as soon as I can take off. There were occasions when I travelled to Malaysia three times a month but not all visits were fruitful. There have been periods where nothing is available for two to three months.
When negotiating a sale, I normally buy up the whole lot, says Eric. He recently bought several hundred porcelain spoons just to get at several with rare designs.
“Every telephone call is an adventure. The items may turn out to be beautiful, rare and unusual or mundane. I have learnt not to anticipate anything. With Nyonyaware, it doesn’t mean that with money, one can go out to buy what is desired. Alternatively, one can be surprised and rewarded when unexpectedly something beautiful and rare crops up at a reasonable price.
“I do not have in mind any ultimate Nyonyaware to collect. I leave it to luck.”
Fakes
When buying Nyonyaware, Tay’s decision is based on the following criteria:
· Quality of porcelain or glaze
· Finesse of the motifs
· Condition
· Shop marks & “reign” seal marks
· Colour: clarity, brilliance and intensity
· Rarity
· Price
A reproduction Nyonyaware that can be passed off as an antique to novice collectors.
· Reproduction or “recycled” porcelain
Tay points out that due to the scarcity of Nyonyaware in the market, unscrupluous vendors have been sending Chinese ceramics of the early 20th Century to be painted over in Nyonyaware colours and re-fired in China. Unsuspecting collectors have been fooled.
The best places to view Nyonyaware in Singapore and Malaysia:
· Asian Civilisations Museum in Singapore
· Penang State Museum
· Muzium Negara, KL (limited items)
· Antique shops in Malacca (limited range & mundane items)
In his talk on collecting Nyonyaware, Tay will focus on:
· Definition of the Peranakans and Nyonyaware
Fake Nyonyaware: (Left) A miniature indigo-blue kamcheng that has been re-painted and re-fired in China. (Right) The original white kamcheng before the faking process.
· Usage of Nyonyaware
· Design motifs & symbolism
· Colour significance
· Standard design format on Nyonyaware
· Design adaptation from Chinese ceramics
· Anatomy (parts) of Nyonyaware
· Common Nyonyaware & commissioned items
· Reproduction & recycled “Nyonyaware”
Participants may bring as many Nyonyaware items for identification. Those who have over-sized items can arrange for a visit to their homes.
Exacting standards of the Baba Nyonya
Nyonyaware which is also known as “Straits Chinese porcelain” refer to a unique type of ceramics made in the 19th Century and early 20th Century in China for the Southeast Asian market.
For a glimpse into the world of the Baba Nyonya in their heyday, refer to the publication, "The Straits Chinese House, Domestic Life And Traditions" by Peter Lee & Jennifer Chen.
They were meant for export specifically to the Baba Nyonya or Straits Chinese of Penang, Malacca and Singapore as well as similar communities in Indonesia. As traders, merchants and entreprenuers, the Baba Nyonya in Malacca became very wealthy by the 19th Century. In fact, they financed or lent money for the development of Kuala Lumpur and Singapore.
The origins of the Baba Nyonya can be traced to the common practice of intermarriage between immigrant Chinese men and local women on both sides of the Straits of Malacca. The exact origin of the community has yet to be determined by historians.
Politically correct
But by the time of the formation of the Straits Settlements in 1826, this unique group of people whose mother tongue was Malay but culturally Chinese, were commonly referred to as “Straits Chinese” or “Peranakan” (local-born). These “Straits-born” Chinese distinguished themselves from the newly-arrived Chinese labourers or “sinkehs” at the time. (Nowadays, such terms have become anachronistic because the Straits Settlements ceased to exist after 1946 and everyone born on this side of the Straits of Malacca are all Straits-born. The politically-correct term of reference for the Straits Chinese today is Baba Nyonya.)
By the turn of the 20th Century, due to their accumulated wealth and means to an education, the offspring of the merchants later became part of the British Colonial administration and gained greater status as social elites. Even before that, with their money, they distinguished themselves in the development of a highly refined culture. That gave rise to exacting standards in their lifestyle. Such standards dictated that even their cuisine, their crockery and their embroidery must conform to the concept of refinement or “halus”.
Technically, their preferred type of crockery – what is now known as Nyonyaware – were quite difficult to make in the late 19th Century and early 20th Century. Wood-fired kilns depended heavily on the skills of artisans. The firing process of the ceramics in the preferred colour combinations such as green, blue, yellow, brown, orange, red, pink and even lilac or mauve, required technical finesse. The rendering of the motifs too, required the steady hand and artistic eye of a skilled artisan. To this day, collectors would pay much more for a technically superior piece fired in a rare colour. But there are Nyonyaware with sloppy motifs and colours that seem to “run”. Generally, Nyonyaware were made with vibrant colours and were decorated with exotic motifs, usually dominated by the mythical phoenix depicted against rockery and peony.
Eric's collection is focused on rarity, size, shape and intensity of the colours as well as finesse of the motifs.
Value
Although the product of a bygone era, these objects reflect the rich legacy of the vanishing Baba Nyonya culture of Malaysia and Singapore. Such ceramics range in price for about RM100 for a tiny saucer to tens of thousands for a large lidded pot or kamcheng.
Besides significant collections in Muzium Negara (National Museum) in Kuala Lumpur and the Penang State Museum, important collections have ended up in Singapore. Some years ago, the Asian Civilisations Museum I at Armenian Street (closed for renovations indefinitely) showcased a grand exhibition of Nyonyaware. That exhibition included the dining set commissioned for the wedding of a wealthy Malacca nyonya (lady) to Kapitan Yap Ah Loy, the man who developed Kuala Lumpur in the mid-19th Century.
Heirloom
According to Nyonyaware expert Eric Tay, the best definition of the ceramics, is found in the 1981 publication by the Southeast Asian Ceramic Society, West Malaysia Chapter, entitled Nonya ware and Kitchen Ch'ing.
Explains Tay: “It is difficult and unwise to be overly specific in defining Nyonyaware. Items which do not conform to the standard design genre or format are surfacing from time to time. These are specially commissioned pieces by the Peranakans and manufactured in the United Kingdom and Europe. In my talk, I will touch on these pieces, with examples. One must be open-minded through research, discussions and investigation to define Nyonyaware.
One of the most desired colours of Nyonyaware is pink or the different shades of it - ranging from mauve to salmon-pink. Large kamcheng exhibited at the Asian Civilisations Museum in Singapore.
“Sadly, most collectors today will only define Nyonyaware as those pieces they have encountered in antique shops, in friends’ homes or in their own family collection. Specially commissioned pieces according to specific design layout, colour scheme and motifs by wealthy and notable families of a bygone era are seldom seen as they form family heirlooms. But they are still considered Nyonyaware.”
Strong demand for Setia Walk
The Setia Walk commercial centre in Pusat Bandar Puchong appears to attract many buyers at the launch recently. It will comprise 10 rows of retail-cum-office units, entertainment centre, 120-room hotel, 24-storey office tower, 760 serviced apartment units, 50 SOHO units and 4,300 covered parking bays.
PLS eyes more contracts
KUALA LUMPUR: Pembinaan Limbongan Setia Bhd (PLS) is confident of expanding its construction business with the receipt of a letter of intent early this year to design and build a RM100mil children’s ward in the Seremban Hospital.
Executive chairman Johar Salim Yahaya said PLS was also working hand in hand with its major shareholder, Kumpulan Prasarana Rakyat Johor Sdn Bhd, to secure projects in the Iskandar Development Region.
“We have tendered a few projects and are awaiting the results,” he told StarBiz after the company AGM and EGM recently.
PLS has diversified from timber, its main contributor to revenue, to include oil palm.
Johar Salim Yahaya
“About 30% of our sustainable forest plantation, mainly occupied by acacia, has been allocated for oil palm.
“We have planted 6% of it with oil palm which will bear fruit in five years and contribute to revenue,” said Lee Hun Kheng, executive director of PLS subsidiary Aramijaya Sdn Bhd.
PLS holds a 70% stake in Aramijaya, which operates a 60-year concession in about 35,000ha of sustainable forest plantation in Kota Tinggi, Johor.
Aramijaya had early this year secured a three-year contract to supply about 500,000 tonnes of woodchips to Japan. It is also exploring new markets such as the Middle East and China.
For the first quarter ended June 30, PLS recorded an improved net profit of RM906,000 on revenue of RM10.2mil, compared with RM600,000 and RM12.5mil respectively in the previous corresponding period.
Earnings per share rose to 1.06 sen from 0.44 sen previously.
Executive chairman Johar Salim Yahaya said PLS was also working hand in hand with its major shareholder, Kumpulan Prasarana Rakyat Johor Sdn Bhd, to secure projects in the Iskandar Development Region.
“We have tendered a few projects and are awaiting the results,” he told StarBiz after the company AGM and EGM recently.
PLS has diversified from timber, its main contributor to revenue, to include oil palm.
Johar Salim Yahaya
“About 30% of our sustainable forest plantation, mainly occupied by acacia, has been allocated for oil palm.
“We have planted 6% of it with oil palm which will bear fruit in five years and contribute to revenue,” said Lee Hun Kheng, executive director of PLS subsidiary Aramijaya Sdn Bhd.
PLS holds a 70% stake in Aramijaya, which operates a 60-year concession in about 35,000ha of sustainable forest plantation in Kota Tinggi, Johor.
Aramijaya had early this year secured a three-year contract to supply about 500,000 tonnes of woodchips to Japan. It is also exploring new markets such as the Middle East and China.
For the first quarter ended June 30, PLS recorded an improved net profit of RM906,000 on revenue of RM10.2mil, compared with RM600,000 and RM12.5mil respectively in the previous corresponding period.
Earnings per share rose to 1.06 sen from 0.44 sen previously.
Boom for Sarawak properties
MIRI: Sarawak is expected to enjoy robust growth in its commercial properties sector due to rapid urbanisation that is pushing up commercial real estate values.
“The prices of commercial properties will continue to rise. The market value will rise with rising demand. The situation in the commercial sector looks good,” said Deputy Chief Minister Tan Sri Dr George Chan Hong Nam.
“However, there is a overhang of residential properties, especially in the high-cost categories. The market demand is tapering in this sector,” said Dr Chan, who is also State Industrial Development Minister and State Agriculture Modernisation Minister.
He was asked to comment on proposals from property developers in this state who want to increase the prices of residential houses, even the medium-low-cost types.
Over the past month, developers in the state have started highlighting their “needs” to increase the prices of ready-built houses.
They have cited reasons such as increase in prices of raw materials like steel, fuel, and also shortages of construction cement in the state as grounds for the need to increase house prices.
Dr Chan said that developers would always want to increase the prices of their units given the chance.
“The prices of commercial properties will continue to rise. The market value will rise with rising demand. The situation in the commercial sector looks good,” said Deputy Chief Minister Tan Sri Dr George Chan Hong Nam.
“However, there is a overhang of residential properties, especially in the high-cost categories. The market demand is tapering in this sector,” said Dr Chan, who is also State Industrial Development Minister and State Agriculture Modernisation Minister.
He was asked to comment on proposals from property developers in this state who want to increase the prices of residential houses, even the medium-low-cost types.
Over the past month, developers in the state have started highlighting their “needs” to increase the prices of ready-built houses.
They have cited reasons such as increase in prices of raw materials like steel, fuel, and also shortages of construction cement in the state as grounds for the need to increase house prices.
Dr Chan said that developers would always want to increase the prices of their units given the chance.
Malaysian Institute of Estate Agents (MIEA) Q&A
This Q&A series appears in the Metro Classifieds of The Star monthly. Here we feature some of the more popular questions asked by property buyers and home owners.
Review of tenancies
Q. I have a few condominiums that I rent out to expatriates through realty agents on a two-year period (with an option to extend for one year OR to renew for two years). My question is: Am I obliged to pay the realty agent should my tenant extend/renew the tenancy agreement? If I am, what is the standard or acceptable rate? – SC Chew, Shah Alam
A. Yes, based on law and the practice, an estate agent is to be paid a fee for 'REVIEW' of tenancies. Let me first establish the fees payable to an estate agent for rental of premises (see table above):
Minimum fee
As in table above, but may be subject to a maximum discount of 30% or a minimum fee of one month rental.
For tenancies less than one year, the fee may be calculated on a prorata basis.
The above scale shall not apply to serviced offices or apartments or any other premises of a similar nature.
Therefore if there is a review in the tenancy, the agent is required to meet up with the tenant, discuss and agree on the renewed period, prepare the necessary documentation for both the tenant and the landlord to sign and probably assist in collecting any arrears in rental, etc. For the work done he can collect an equivalent of 50% of the fees prescribed and depending on the renewable term of the tenancy as described above.
Q. I bought a condo unit back in the late 90's. I have been informed that the strata title has been issued. The developer went into liquidation a few years back and the liquidator is requesting quite a substantial sum as administrative charges for them to execute the memorandum of transfer (MOT) and also a further vetting fee for the liquidator's solicitor
What are their rights and justification for asking for such a sum of money for just executing and vetting a standard MOT form? If all the unit owners give in to their demands then they (the liquidator and their solicitor) would have profited by just doing a normal duty of a developer.
“Am I obliged to pay the realty agent should my tenant extend/renew the tenancy agreement?”
Shouldn’t the sum be charged to the developer in liquidation instead of us unit owners? – Mark, KL
A. I really am not clear on the fees payable. Any liquidator is not in the business of making profit; they are there to help resolve issues based on the circumstances they are facing. If the owners think that the charges are exorbitant, please call for a meting with them and work out an acceptable structure. Resolve it quickly as there is a bigger picture; that is your property, which is worth more than the charges.
Q. I bought a double storey terrace house and it was completed after one and a half years as projected but was delivered late. I submitted a late delivery claim (LAD) to the Housing Tribunal and the award was given with four cheques payments. The first cheque should be dated June 2006 but until now I still have not received a cent from the developer. I further submitted this case to the Enforcement department (Penguatkuasa) but they said they couldn’t do much but just send letters to the developer. They even told me that I wouldn’t get notified even if they have released the letter. The question is, what is the purpose of filing a complaint to the Enforcement department when I wouldn't be able to know the status?
What's the next possible step or action that I can take? – Kitt Lee
A. Please refer to the National House Buyers Association for further advice! 03-21422225 or Email: info@hba.org. my
Q. I bought a property after April 1 2007 and would like to ask a few questions: 1) How do I find out the value of the property at build up? 2) Who or which body determines the value of the property? 3) Upon the waiving of the RPGT from April 1 2007, will I be liable for tax if I sell it at a profit? 4) With regard to the waiving of the RPGT from April 1 2007, if a buyer purchases property before that date, would he be liable for tax if he were to sell at a profit? 5) How do I choose the right estate agent to market my property? – T
A. To answer your questions, 1) Please ask a valuer to do a valuation 2) The valuer can determine the value of any property 3) No, you will not be liable to pay any gains tax 4) If you sell after April 1, there is no need to pay gains tax 5) The general guidelines are as follows; – One who is active and focuses on the area where your property is located. – One who has negotiators who know what they are doing. – One who has a good track record - ask your neighbours or friends in the area.
Review of tenancies
Q. I have a few condominiums that I rent out to expatriates through realty agents on a two-year period (with an option to extend for one year OR to renew for two years). My question is: Am I obliged to pay the realty agent should my tenant extend/renew the tenancy agreement? If I am, what is the standard or acceptable rate? – SC Chew, Shah Alam
A. Yes, based on law and the practice, an estate agent is to be paid a fee for 'REVIEW' of tenancies. Let me first establish the fees payable to an estate agent for rental of premises (see table above):
Minimum fee
As in table above, but may be subject to a maximum discount of 30% or a minimum fee of one month rental.
For tenancies less than one year, the fee may be calculated on a prorata basis.
The above scale shall not apply to serviced offices or apartments or any other premises of a similar nature.
Therefore if there is a review in the tenancy, the agent is required to meet up with the tenant, discuss and agree on the renewed period, prepare the necessary documentation for both the tenant and the landlord to sign and probably assist in collecting any arrears in rental, etc. For the work done he can collect an equivalent of 50% of the fees prescribed and depending on the renewable term of the tenancy as described above.
Q. I bought a condo unit back in the late 90's. I have been informed that the strata title has been issued. The developer went into liquidation a few years back and the liquidator is requesting quite a substantial sum as administrative charges for them to execute the memorandum of transfer (MOT) and also a further vetting fee for the liquidator's solicitor
What are their rights and justification for asking for such a sum of money for just executing and vetting a standard MOT form? If all the unit owners give in to their demands then they (the liquidator and their solicitor) would have profited by just doing a normal duty of a developer.
“Am I obliged to pay the realty agent should my tenant extend/renew the tenancy agreement?”
Shouldn’t the sum be charged to the developer in liquidation instead of us unit owners? – Mark, KL
A. I really am not clear on the fees payable. Any liquidator is not in the business of making profit; they are there to help resolve issues based on the circumstances they are facing. If the owners think that the charges are exorbitant, please call for a meting with them and work out an acceptable structure. Resolve it quickly as there is a bigger picture; that is your property, which is worth more than the charges.
Q. I bought a double storey terrace house and it was completed after one and a half years as projected but was delivered late. I submitted a late delivery claim (LAD) to the Housing Tribunal and the award was given with four cheques payments. The first cheque should be dated June 2006 but until now I still have not received a cent from the developer. I further submitted this case to the Enforcement department (Penguatkuasa) but they said they couldn’t do much but just send letters to the developer. They even told me that I wouldn’t get notified even if they have released the letter. The question is, what is the purpose of filing a complaint to the Enforcement department when I wouldn't be able to know the status?
What's the next possible step or action that I can take? – Kitt Lee
A. Please refer to the National House Buyers Association for further advice! 03-21422225 or Email: info@hba.org. my
Q. I bought a property after April 1 2007 and would like to ask a few questions: 1) How do I find out the value of the property at build up? 2) Who or which body determines the value of the property? 3) Upon the waiving of the RPGT from April 1 2007, will I be liable for tax if I sell it at a profit? 4) With regard to the waiving of the RPGT from April 1 2007, if a buyer purchases property before that date, would he be liable for tax if he were to sell at a profit? 5) How do I choose the right estate agent to market my property? – T
A. To answer your questions, 1) Please ask a valuer to do a valuation 2) The valuer can determine the value of any property 3) No, you will not be liable to pay any gains tax 4) If you sell after April 1, there is no need to pay gains tax 5) The general guidelines are as follows; – One who is active and focuses on the area where your property is located. – One who has negotiators who know what they are doing. – One who has a good track record - ask your neighbours or friends in the area.
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