Thursday, November 22, 2007

Singapore’s office rents leapt 83 per cent in the past 12 months

Singapore’s office rents leapt 83 per cent in the past 12 months - the fastest rate in the world - as it shrugged off turmoil in global financial markets, commercial property consultancy CB Richard Ellis Research said.

The survey of office occupation costs in 171 cities worldwide showed that Singapore was followed by Russian capital Moscow, India’s financial capital Mumbai, the Philippines’ capital Manila and Norway’s capital Oslo.

‘The recent uncertainty in global financial markets has had no discernible impact on Singapore demand for office space,’ CB Richard Ellis Research (CBRE) said in its semi-annual Global Market Rents survey.

Office rents in Singapore rose to US$102.37 per square foot, making it the 11th most expensive business centre in the world, up from the 24th position in the August survey, CBRE said.

The survey showed London’s West End, Mumbai, the City of London and Moscow as the top four most expensive office markets in the world.

‘With (Singapore) rents at record levels, there is increasing tenant resistance to rental hikes, and occupiers are more prepared to explore lower cost locations and consider relocating to business parks or high-tech space,’ the survey said. — REUTERS

Source : Business Times - 22 Nov 2007

London and Mumbai tenants paid the most for high-quality offices this year

London and Mumbai tenants paid the most for high-quality offices this year, while Singapore rents grew the fastest as economic growth lured international banks to Asia, said CB Richard Ellis Group Inc, the world’s largest commercial real estate broker.

London’s West End led with average annual rents of US$328.91 per square foot (psf) this month, compared with US$180.80 for the UK capital’s main financial district.

Mumbai had the second-most expensive leases at US$189.51, CB Richard Ellis said in its semi-annual Global Market Rents survey.

Asia’s booming economies drove up demand for financial and computing services in the region, catapulting Mumbai to second spot and fuelling Singapore’s 83 per cent growth in rents.

The US currency’s decline also drove up costs in dollar terms, while a dearth of new space bolstered London rents, CB Richard Ellis said.

‘Markets that moved up that quickly had the highest growth rates based on the economy’ as well as a scarcity of space, said Ray Wong, director of research operations for the Americas for Los Angeles-based CB Richard Ellis.

‘In the most expensive markets, if they’re close to their peak, the expectation for increase is marginal, but other markets, especially resource sectors, are enjoying an increase in demand so they’re going to move up a lot quicker.’

Mumbai’s rents rose 55 per cent, driven by computer related tenants, according to CB Richard Ellis.

Midtown Manhattan was the most expensive North American market, with rents averaging US$100.79 psf, 12th- highest worldwide. Downtown New York ranked 46th globally at US$53.47.

Moscow rents jumped 65 per cent after crude oil prices tripled in the past five years, bolstering the economy of the world’s second-biggest exporter of the fuel.

Rents in the oil hub of Edmonton, Canada, rose 43 per cent, the ninth- fastest worldwide, as energy companies leased more space to house expanding workforces, the survey showed. Edmonton did not rank in the top 50 markets by rental prices.

Eighty-five per cent of the 171 cities included in the survey saw rental increases in the year ended Sept 30, according to CB Richard Ellis. This bodes well for investment returns, Mr Wong said.

The survey measures the most expensive rents based on US dollars. Rental growth rates were measured in local currency terms. — Bloomberg

Source : Business Times - 22 Nov 2007

Somerset Ampang is our second Somerset-branded serviced residence in KL

THE Ascott Group is adding another serviced residence in Kuala Lumpur - its sixth property in Malaysia.

The group said yesterday it has signed a conditional agreement to buy a 208-unit serviced residence from HSC Properties (HSCP) for RM112.5 million (S$48.3 million).

The property will be named Somerset Ampang when it opens in the first half of 2010.

Somerset Ampang is in Kuala Lumpur’s ‘Golden Triangle’ - the business, shopping and entertainment district marked by Jalan Ampang, Jalan Sultan Ismail and Jalan Bukit Bintang.

When completed, the serviced residence will be part of an integrated development that will house one of Malaysia’s leading medical, heart and diagnostic centres, HSC Medical Centre. The high-end medical centre will be separately owned and managed by HSCP. It will occupy five levels of the 23- storey development, with amenities such as a medical spa, restaurant and cafe.

Ascott’s deputy CEO for finance and investment Chong Kee Hiong said: ‘Demand for international-class serviced residences, especially in the capital of Kuala Lumpur, is expected to remain strong. Given its excellent location in Kuala Lumpur’s business and lifestyle district, Somerset Ampang will enable Ascott to capture a larger share of the serviced residence market.

‘Somerset Ampang will cater not only to business travellers but also to visitors to the medical centre who require post-treatment accommodation, as well as their families and friends.’

Somerset Ampang’s facilities will include a swimming pool, gymnasium and children’s playground, Ascott said.

Its portfolio in Malaysia will increase to more than 760 units when Somerset Ampang opens. Ascott’s other properties in the country are Ascott Kuala Lumpur, Somerset Seri Bukit Ceylon in Kuala Lumpur, Somerset Gateway in Kuching and two corporate leasing properties in Kuala Lumpur.

‘Somerset Ampang is our second Somerset-branded serviced residence in KL,’ said Ascott’s deputy CEO for operations Gerald Lee. ‘Having more serviced residences in the city enables us to leverage on economy of scale and brand awareness for better operational efficiency and cross-selling. Adding more properties in Malaysia also means that our customers can choose from a wider portfolio.’

The group operates three brands - Ascott, Somerset and Citadines. Its portfolio spans 53 cities in 23 countries, 11 of which are cities where Ascott’s serviced residences are being newly developed.

Source : Business Times - 22 Nov 2007

19 residential sites owned by single owners and worth some $1.05 billion in all were sold to developers

With the property market running hot, it is not just collective sales that have ballooned. Over the past two years, more residential land sites owned by single owners were sold as well.

So far this year, 19 residential sites owned by single owners and worth some $1.05 billion in all were sold to developers, data provided by property firm CB Richard Ellis (CBRE) shows.

And in 2006, there were 15 single-owner land sales worth a total of $865 million. By comparison, just four single-owner land sales worth $303 million were done in 2005.

Market watchers say a property market that is strong and active will bring out more sellers - both of the en-bloc variety as well as single owners.

‘Collective sales have hogged the limelight of late, but the single-owner sales have also been very active,’ says CBRE executive director Jeremy Lake. ‘If you look at overall residential sales, you will see that they have gone up too. So single owners are just mirroring the overall market.’

Ku Swee Yong, director of marketing and business development at Savills Singapore, says that in the case of those sites owned by associations or clubs, members who were looking to sell might have been able to convince those who were previously not in favour of selling to change their minds, considering the prices that the properties can now fetch.

‘When the price is better, they (those looking to sell) manage to clear the hurdle,’ Mr Ku says.

The 19 sites sold by single owners this year include a few owned by associations, including one sold by Chui Hui Lim Club. The club sold a Keng Lee Road site to Sim Lian Group for some $115.8 million.

CBRE’s data also shows that this year, while there were a few large single-owner sites that were sold, the bulk of the 19 properties were small - with 10 of them going for less than $30 million each.

Market watchers attributed the increased interest in smaller sites to new players in the property market. These smaller developers generally do not have the resources to bid for en-bloc sites that go for hundreds of millions dollars - the province of the likes of CapitaLand, City Developments and foreign property funds.

‘When the market is good, it will attract new entrants,’ says CBRE’s Mr Lake. ‘And you will find some people who will want to get into the market, but might not be able to afford the big sites.’

Sesdaq-listed Tee International is an example of one new entrant which has been snapping up smaller sites. The company, which has a market capitalisation of $41.5 million, has been in the electrical and mechanical engineering business since 1980. But since the start of the year, Tee has been buying a string of freehold terrace houses and apartments with plans to develop them into luxury ’boutique’ homes.

Among its purchases are three single-owner sites, CBRE’s data shows. Tee acquired two single-owner plots in Cairnhill Circle in July - one for $7.7 million and the other for $5.5 million. It also bought a single-owner property in Thomson Road for $6.9 million in January this year.

Similarly, Eastern Holdings, which publishes magazines, also picked up two small single-owner sites in Grove Drive this year - one for $12.5 million and the other for $10.3 million. The company is also relatively small, having a market capitalisation of about $70 million.

Savills’s Mr Ku says that there are also some high net worth individuals who are buying smaller sites, redeveloping them and then selling them - all within a short span of time - to capitalise on the property market.

These wealthy individuals were also adding to the demand for smaller sites, he says.

Source : Business Times - 22 Nov 2007

THE rising property market has brought executive condominiums (ECs) back from the brink of extinction.

THE rising property market has brought executive condominiums (ECs) back from the brink of extinction.

These homes - which are halfway between public housing and private condominiums - suddenly looked much more appealing after rules for buyers were relaxed on Tuesday.

Property consultants now expect that more plots for ECs, such as the 2.27ha site placed on the market on Tuesday, will soon be offered.

The main reason: the widening gap between prices of resale Housing Board flats and those of private condos. ECs, which come with condo facilities but with sale restrictions similar to those for public housing, were introduced in 1995 to bridge this gap.

They became relatively unpopular, however, after the property market plunged a few years later, making private condos more affordable.

In fact, when the first few ECs hit the resale market in 2004 after the minimum five-year occupation period, many were sold at a loss or at breakeven prices. This was because they were booked when prices were at their peak in 1996.

Many people expected Far East Organization’s La Casa in Woodlands to be the last EC project on the market when it was launched for sale in 2005.

‘Mass market condo prices were in the doldrums, making ECs redundant. Today, that’s a different story,’ said Colliers International’s director of research and consultancy, Ms Tay Huey Ying.

Private home prices surged 22.9 per cent in the first nine months of the year - more than twice the rate achieved by resale HDB flats.

Lower-priced ECs are more attractive now because prices of condos in the suburbs - where ECs tend to be sited - have started to move up significantly. In the July-September period, prices of non-landed homes outside the central region rose 7.9 per cent. Consultants expect this growth to continue.

The easing of EC rules is also expected to increase demand from people looking to move from HDB flats. The HDB removed a hurdle for upgraders by scrapping a resale levy payable by EC buyers who had previously bought government-subsidised flats.

Buyers of new EC units are also no longer barred from buying second new EC units or new flats. In addition, the HDB now requires developers to reserve 90 per cent of units for first-time buyers in the first month of sale.

Although ECs still cannot be sold within the first five years and remain out of bounds to foreigners within the first 10 years, the easing of rules has helped ECs shake off their tag as second-rate condos, said Mr Eric Cheng, the executive director of the HSR property group.

Potential buyers include property agent Lester Tan, 27, who has been living with his parents for the past five years since he got married.

He and his wife started looking for a condo about two years ago, but regretted waiting so long to buy one, as prices have shot up.

He said: ‘We heard that the Punggol EC may be launched, and we are quite excited about it.’

Potential upgraders like Ms Elsie Cheng, 31, are also eyeing the future EC in Punggol. The teacher - who lives with her husband, seven-month-old son and maid in a two-bedroom EC unit in Tampines - is looking to move into a bigger EC.

‘Why pay so much for a private condo?’ she asked.

Knight Frank’s head of research and consultancy, Mr Nicholas Mak, said the changes were likely to raise the proportion of upgraders among EC buyers, from an estimated 5 per cent to 10 per cent, to 20 per cent to 25 per cent.

Developers such as Frasers Centrepoint Homes, which built the Lilydale and Quintet ECs, are optimistic. Its chief operating officer, Mr Cheang Kok Kheong, told The Straits Times: ‘The EC will do well in today’s market as a hybrid property - apartments with condo facilities but without private condo price tags.’

He added: ‘As a reflection of the strong confidence and growth potential of the EC market, we expect to see increased competition in this market segment and more developers taking part in upcoming EC land tenders.’

Buyers hoping to make a quick buck from ECs, however, should take heed. ‘The (full) value of the EC will not be realised immediately but in 10 years, subject to the property market being buoyant at that time,’ said PropNex chief executive Mohamed Ismail.

For now, all eyes are on the EC site in Punggol Field. Estimated to be able to fit about 620 homes, it will be put up for tender once a developer commits to a minimum bid that meets the Government’s reserve price.

The EC units, however, will meet only a small portion of the current demand for new homes. In a recent HDB sales exercise, almost 8,000 families applied for just 400 flats in Telok Blangah, while more than 1,600 applied for 516 homes in Punggol.

Source : Straits Times - 22 Nov 2007

FIVE in one fell swoop - taking collective sales to the next level is Credo Real Estate

FIVE in one fell swoop - taking collective sales to the next level is Credo Real Estate, which has just managed to sell a package of five neighbouring residential developments to a single developer for $120 million.

The five developments, which are at Mergui Road, off Rangoon Road, are Norfolk Court, Mergui Lodge, Northern Mansion, Mergui Court and The Mergui.

With a total site area of 74,355 square feet and a plot ratio of 2.8, the $120 million price reflects a unit price of $580 per square foot per plot ratio (psf ppr).

It has been sold to KSH Holdings. The publicly listed construction, property development and property management company said in a statement released yesterday that the site has a potential to be developed into a 142-unit development with units averaging 1,250 sq ft.

KSH also said that the acquisition will be financed through internal funds and bank borrowings, and that it is currently negotiating with other investors to form a joint venture to develop the site.

On the challenge of bringing together the owners of five developments, Credo executive director Yong Choon Fah said that it had been looking at the possibility of a combined collective sale for several years.

She also explained that each development had different attributes and that only by combining them could a ‘win-win’ be achieved for all.

The five developments have land areas ranging from 10,061 sq ft to 18,524 sq ft and Ms Yong said that all the home owners have accepted the same unit price.

There are a total of 88 homes and the owners will receive between $906,856 and $1,908,491 each.

The site, which is considered to be in the ‘city fringe’, is estimated to have a breakeven price of about $1,000 psf.

In the immediate vicinity, Pristine Heights is currently selling for between $1,000 and $1,150 psf.

In 2006, Credo marketed Lock Cho Apartments, Comfort Mansion and a four-storey walk-up block for a combined collective sale. They were eventually sold to City Developments Ltd. The latest deal, however, is thought to be the only one to involve five developments.

Source : Business Times - 22 Nov 2007

FIVE small adjoining freehold apartment blocks near Thomson Road have been sold en bloc to Kim Seng Heng Realty

FIVE small adjoining freehold apartment blocks near Thomson Road have been sold en bloc to Kim Seng Heng Realty, a subsidiary of listed KSH Holdings, for $120 million.

The construction and property development group said yesterday that the combined site could be redeveloped into a high-rise residential block with about 142 luxury apartments of 1,250 sq ft on average.

It added that it is currently negotiating with other investors to form a joint venture to develop the site.

Credo Real Estate, which brokered the deal, said it is possibly the first time in Singapore that as many as five estates have been successfully combined and sold en bloc to one buyer.

The properties - Norfolk Court, Mergui Lodge, Northern Mansion, Mergui Court and The Mergui - are located near Rangoon Road and Moulmein Road.

They are single apartment blocks sitting on relatively small plots ranging from 10,061 sq ft to 18,524 sq ft.

When combined, they form a land area of 74,355 sq ft, which would permit a gross floor area of 208,196 sq ft.

If small pieces of state land in between are thrown in, the developer will have a site of 87,092 sq ft, said Credo’s executive director, Ms Yong Choon Fah.

In any case, three of the developments could not have otherwise been redeveloped on their own. ‘They need each other because there’s a 30m buffer requirement from the expressway,’ said Ms Yong.

This Urban Redevelopment Authority rule would mean that it is impossible for Norfolk Court, Mergui Lodge and The Mergui to be redeveloped individually. But if combined with the other two sites, a bigger development that does not fall within the 30m buffer zone can be built.

The five estates have 88 units in total. Each unit owner will get between $906,856 and $1.91 million.

The $120 million price reflects a price of $580 per sq ft (psf) of potential gross floor area.

After factoring in the cost of the state land in between, the rate could come down to about $540 psf, said Ms Yong.

KSH Holdings’ recent projects include a construction contract for a luxury boutique hotel at Clifford Pier.

Source : Straits Times - 22 Nov 2007

Wednesday, November 21, 2007

Waterfront View estate in Bedok Reservoir Road

FOUR condominiums will be built where the former Waterfront View estate in Bedok Reservoir Road used to be.

The first will be launched in the first quarter of next year, said developers Frasers Centrepoint and Far East Organization yesterday.

It will be called Waterfront Waves and have 405 units, of which more than half will be three- and four-bedroom apartments. More than 60 per cent of the units will also have reservoir views, the developers added.

The Straits Times understands that the other three condos will also have ‘Waterfront’ in their names and are likely to be of similar sizes.

Together known as the Waterfront collection, the four-condo development is the largest in the area to have a direct water frontage, the developers said. In all, it could have 1,600 units.

The developers are also in talks with the Public Utilities Board about ‘enhancing the neighbourhood’s communal parks and water bodies’.

Although property consultants will not disclose prices for Waterfront Waves, they believe prices may start from $700 per sq ft (psf).

Mr Ku Swee Yong, director of marketing and business development at Savills Singapore, said units on lower floors with no water views could fetch that price.

On higher floors, prices could go up to $850 psf, he added.

Frasers Centrepoint and Far East jointly bought the former HUDC site last year for about $240 psf of gross floor area.

Source : Straits Times - 21 Nov 2007

Around 5,700 homes were sold through collective sales in the first half of this year and the home owners who will have to look for replacement homes

Around 5,700 homes were sold through collective sales in the first half of this year and the home owners who will have to look for replacement homes are expected to drive the property market.

A report by Savills Singapore estimates that if just two-thirds of those displaced by collective sales - about 3,900 of them - choose to buy replacement homes, their collective kitty could total $6 billion, representing the total payout to these en bloc millionaires.

Savills director (marketing and business development) Ku Swee Yong does not expect all $6 billion to be spent though. ‘About $4 billion could be channelled into new property acquisitions,’ he reckons.

And developments in the fringe and suburban areas such as Bukit Timah, Upper Bukit Timah, Clementi, Novena/Thomson, and Upper East Coast will be their targets.

Savills projects that only two-thirds of the en bloc millionaires will be in the market for a new home because it believes many already own second homes, if not more.

Savills’ analysis reveals that of the 2,795 home owners affected by the collective sales in Q2 2007, up to 2,159 owned homes in the prime districts of District 9, 10 and 11.

And Mr Ku reckons that half of these home owners already own at least one other home.

Interestingly, Mr Ku believes that only 20 per cent of the displaced home owners from homes outside the prime districts have second homes. But the number of en bloc millionaires could taper off if collective sales continue to fall. In Q3 2007, only 13 en bloc deals worth about $1.1 billion were done, down from $6.4 billion for 45 sites in the previous quarter.

Yet, en bloc millionaires are also expected to support the already buoyant residential market.

Savills says that assuming that 30 per cent of owners (or their tenants) affected by collective sales require rental accommodation, 974 units would have been needed to meet the demand over the last nine months. Savills added that the situation is expected to worsen in 2008, with some 800 units needed per quarter to accommodate displaced owners (or their tenants).

Savills does expect most demand for rental units to come from an increase in the number of foreigners working here.

Its report highlighted that foreigners working here grew by 14.9 per cent, from 875,500 last year to just over one million thus far, representing the highest year-on-year growth in the last 10 years. ‘With a low unemployment rate and high job creation rate, the number of foreigners working in Singapore is expected to grow sharply,’ it added.

Its analysis of data reveals that average rents of all non-landed residential properties in the prime districts rose by 13 per cent to $3.70 per square foot (psf) a month between Q2 and Q3 in 2007, while high-end residential rents climbed even higher to $6 psf a month.

Savills also noted that rents in Districts 8 and 12, on the fringe of the city, have risen by 35 and 23 per cent respectively to about $1.90 psf a month.

Source : Business Times - 21 Nov 2007

The Canary is located near the Vietnam-Singapore Industrial Park, near Ho Chi Minh City.

GUOCOLAND yesterday broke ground on a US$58 million development in Vietnam - its first project in the country.

The 17.5 ha site will be home to The Canary - an integrated development which will house some 1,200 residential apartments, a hotel, a trendy retail mall and an international school.

GuocoLand said that the first phase of the residential apartments will be launched soon. This will be followed by the development of the first phase of the retail mall.

The entire development is scheduled to be completed in five to six years’ time, the developer said. ‘However, the actual progress will depend on market conditions in Vietnam,’ said Lawrence Peh, GuocoLand’s general manager for Vietnam.

The Canary is located near the Vietnam-Singapore Industrial Park, near Ho Chi Minh City. The project will be the first fully integrated development in Vietnam’s Binh Duong Province, GuocoLand said.

‘When The Canary is completed, it will add vibrancy to Binh Duong Province, which is a leading recipient of foreign direct investment among Vietnam’s provinces,’ said GuocoLand in a statement.

Besides GuocoLand, many other Singaporean developers - including Keppel Land, CapitaLand, Frasers Centrepoint and Allgreen Properties - have of late made forays into Vietnam’s booming property market.

GuocoLand’s shares closed five cents down at $5.20 yesterday. The company’s stock has climbed 128.5 per cent since the start of the year.

Source : Business Times - 21 Nov 2007

Singapore American School and right in the middle of the heartland, Singapore’s new real estate hot zone.

EIGHT bidders have put in tenders for a residential site near the Singapore American School and right in the middle of the heartland, Singapore’s new real estate hot zone.

Bids for the plot - located between Woodlands Avenue 2 and Rosewood Drive - ranged from $36.4 million to $56 million.

EL Development, a unit of Evan Lim, lodged the top bid.

Frasers Centrepoint came in just behind with $55.5 million, according to a Singapore Land Authority (SLA) statement yesterday.

The narrow gap between the top two bidders reflects the keen interest in the 172,223 sq ft site, which is near the American international school and, thus, in an area popular with expatriate families, said Mr Lui Seng Fatt, regional director and head of investments at Jones Lang LaSalle.

A condominium of up to five storeys with a gross floor area of 241,112 sq ft can be built on the 99-year lease site, which has a gross plot ratio of 1.4, the SLA said. This works out to about $232 per sq ft (psf) per plot ratio, which can translate into a break-even price of about $400 psf for the project, said Mr Lui, adding ‘the project may be able to sell for about $500 psf, depending on the circumstances’.

Analysts noted that the competitive bidding for the Woodlands site contrasted sharply with the lacklustre response to recent public tenders for sites at Enggor Street and Marina View, both located in the more central parts of Singapore.

This confirms ‘the trend that the focus has shifted to the outlying areas, now that the prices in the central districts, including districts 9, 10, 11, have risen significantly’, said Mr Lui.

That theory will get a further test in two weeks, when the Urban Redevelopment Authority (URA) launches a tender for a reserve site at Simei Street 4, which has an area of 3.22ha and is earmarked for residential development with a maximum gross floor area of 74,084 sq m.

The call for bidders was triggered by an application made by a developer who committed to bid at least $187 million for the land parcel.

Also, the URA has awarded the tender for a transitional office site between Tampines Concourse and Tampines Avenue 5 to Glades Properties, the sole bidder with a price of $10 million.

This works out to $868 per sq m for a site with a gross floor area of 11,520 sq m. The land parcel has a 15-year lease.

Source : Straits Times - 21 Nov 2007

Tuesday, November 20, 2007

Second-time flat buyers who buy a new Executive Condominium (EC) will no longer have to pay the resale levy.

Second-time flat buyers who buy a new Executive Condominium (EC) will no longer have to pay the resale levy.

The policy change is to align the purchase of new ECs with the Design, Build and Sell Scheme (DBSS). It will take effect for those who buy new EC units to be built at Punggol.

Another change - a first-time buyer of a new EC can purchase a second new EC, HDB or DBSS flat. HDB will be lifting the permanent debarment policy with immediate effect.

However, an ex-EC owner can only buy a second new flat 30 months after selling his EC. This is because ECs are considered private housing. There are no restrictions on ex-EC owners buying a resale flat.

Similar to DBSS projects, private developers of EC projects will now be required to set aside at least 90 percent of the units for first-timers during the first month of their sale.

The EC Housing Scheme was introduced in 1995 to meet the aspirations of professional couples with household incomes of up to S$10,000 a month to own private housing.

Source : ChannelNewsAsia - 20 Nov 2007

Amber Road project set a new benchmark price for the area

THERE is still plenty of life in the property sector, if preview sales at Amber Residences apartments are anything to go by.

The Amber Road project set a new benchmark price for the area, with units going for an average of $1,650 per sq ft (psf) at a weekend preview, where showflat visitors were treated to food, drinks and live music.

Of the 114 units at Amber Residences, 74 were sold at prices ranging from $1.6 million to $3.5 million. Prices at Amber Road have risen significantly with the market this year.

The Sea View, opposite the 21-storey Amber Residences, was released in mid-2005 at just $750 psf. Sub-sales have since been done at up to $1,510 psf.

Savills Residential’s senior associate director, Ms Phylicia Ang, said the Amber Residences preview was for special guests, including the developer’s business associates.

Most of the buyers were from Singapore. They could opt for the deferred payment scheme - which added 3 per cent to the unit price - but less than half did so. Developer Voda Land was given permission to sell with deferred payment before the scheme was withdrawn late last month.

Voda Land bought the freehold Amber Lodge and the Jin Fu Apartments site in a collective sale to form the plot for Amber Residences.

‘For the price that the buyers paid, which is a benchmark for Amber, the condo has to come with quality fittings,’ said Ms Ang.

Amber Residences has two- to four-bedroom units and six penthouses, ranging from 4,133 sq ft to 6,717 sq ft. Some of the best high-floor units went for over $1,800 psf, but the penthouses, which are all still available, will be priced at around $1,900 psf, or between $8 million and $13 million.

Source : Straits Times - 20 Nov 2007

70 of the 114 units at Voda Land’s Amber Residences in Amber Road were snapped up within hours

MORE than 70 of the 114 units at Voda Land’s Amber Residences in Amber Road were snapped up within hours during a private preview on Sunday at an average price of $1,650 per square foot (psf), the agency marketing the project said yesterday.

And elsewhere, about 70 per cent of units released at Sui Generis - a condominium in the Balmoral area being jointly developed by Singapore-listed United Engineers (UE) and Japan-based Kajima Corporation - have been sold at an average price of $2,500 per square foot (psf), UE said yesterday.

At the 40-unit Sui Generis, 17 units of the 23 released were sold through overseas previews during the past two months, UE said.

Prices fetched ranged from $2,300 psf to $2,580 psf. About 90 per cent of the units were bought by foreigners during roadshows in Indonesia and Hong Kong, UE said.

‘Given the continued foreign interest in Singapore properties, Sui Generis will tour various cities including Jakarta and Hong Kong,’ said Joseph Tan, executive director of residential at CB Richard Ellis (CBRE), which is marketing the project. Sui Generis will be launched in Singapore early next year.

CBRE said the average price of $2,500 psf is a benchmark for the Balmoral area.

‘Buyers are drawn by the good unit layout and quality of finishes, which explains why the project has achieved a benchmark sale price,’ Mr Tan said.

Sui Generis comprises mostly three and four-bedroom apartments. There are also four penthouses. The project’s name is a Latin expression that means ‘a person or thing that is unique and in a class of its own’.

At Amber Residences, the average price per unit came to $1,650 psf, with choice high-floor units being sold for more than $1,800 psf, said Savills Singapore, which is marketing the project.

‘Following the overwhelming success and strong demand for this unique development, we plan to release a few more units for this coming Sunday’s preview,’ said Phylicia Ang, senior associate director of Savills’ residential division. ‘It will then be followed by an official launch for the remaining units - including choice units - from Dec 1.’

The sales were done by private invitation only and most of the buyers were locals, Savills said.

Amber Residences is made up of a single 21-storey block with mostly two, three and four-bedroom apartments. There are also six penthouses.

The project is possibly the first on the East Coast where all units have a premium finish and fittings usually associated with high-end condominiums, Ms Ang said.

Source : Business Times - 20 Nov 2007

Jalan Bunga Raya have been sold for $61 million or an all-up unit land price of $739 per sq ft

A ROW of 15 terrace houses in Jalan Bunga Raya have been sold for $61 million or an all-up unit land price of $739 per sq ft per plot ratio (psf ppr) - a record for freehold residential land in the Balestier/Novena area.

Before the deal, which was brokered by DTZ, the highest residential land price fetched in the area was around $600 psf ppr.

DTZ said the buyer of the 15 houses is a consortium comprising Chinese developers and local partners. All owners of the houses have agreed to the sale.

The 15 homes have a total land area of 24,058 sq ft. Access to the houses is by Jalan Bunga Raya, which can be alienated by the state for about $7 million, boosting the land area to 32,978 sq ft, subject to approval by the Singapore Land Authority.

A development charge of about $263,000 is also payable. The $739 psf ppr unit land price to the developer includes these two payments it will have to make to the state and based on the enlarged plot size.

Under Master Plan 2003, the site has a 2.8 maximum plot ratio - the ratio of maximum potential gross floor area to land area - and a 36-storey height limit. DTZ estimates the plot can be developed into a new condo with about 56 apartments averaging 1,500 sq ft. ‘The breakeven cost is likely to be $1,150-1,200 psf,’ said DTZ senior director, investor advisory services & auction, Shaun Poh.

Separately, DTZ has put up for sale GMG Building, a 12-storey freehold office block in Robinson Road.

The property is being sold by Robinson Land Pte Ltd, which is currently refurbishing the block. Refurbishment work, estimated to cost about $5-6 million, is expected to be completed and the building ready for occupation around the first quarter of 2008.

‘This prime office building will be sold, completely refurbished and with vacant possession, which would allow investors to take advantage of current favourable office rental rates,’ Mr Poh said.

‘It’s also an excellent opportunity for end-users seeking a corporate HQ with naming rights. The property is expected to fetch about $2,600 psf over the total strata area of 54,832 sq ft, working out to a total amount of $142.6 million.’

Robinson Land, whose shareholders include the Buxani Group of Singapore and some overseas investors, bought GMG Building last year for $48 million or $875 psf of strata area.

Refurbishment work, which started recently, will boost the building’s net lettable area (NLA) to 54,895 sq ft, about 5 per cent higher than the previous NLA. There is not much redevelopment.

The refurbished building is being sold through an expression of interest exercise that closes on Dec 5.

Source : Business Times - 20 Nov 2007

FAR East Organization will spend $26 million updating the 16-year old Ginza Plaza shopping mall.

FAR East Organization will spend $26 million updating the 16-year old Ginza Plaza shopping mall.

The mall, which will be renamed West Coast Plaza, is expected to be ready for business in the third quarter of 2008.

Vivienne Tan, president of Far East Retail Consultancy, said changing demographics in the West were a key factor in the decision to refurbish the mall.

‘As its original name suggests, Ginza Plaza used to cater to the Japanese expatriate community that lived in the area,’ Mrs Tan said.

‘But now we’re seeing a good number of other nationalities moving in. There is also a growing private residential population,’ she said.

Danny Yeo, director of retail at Knight Frank, which is marketing the mall, said rents at West Coast Plaza will range from $8 to $25 per sq ft per month (psf pm). Before Ginza Plaza was vacated, average rentals were $5-$6 psf pm, Mrs Tan said.

Billed as ‘An Oasis in the West’, West Coast Plaza, which has a net lettable area of 160,000 sq ft, hopes to capture the ‘breezy, easy-going spirit of the West Coast’. The mall has been redesigned by DP Architects.

Far East hopes to attract residents living in the West, who are generally thought to have higher disposable incomes than residents in other parts of Singapore.

A study by Knight Frank showed the West has a higher proportion of private housing (about 30 per cent) than the island-wide residential mix (about 18 per cent). Also, nine or more new private residential developments within 2km of West Coast Plaza are expected to be completed around the same time as the mall, Far East said.

Increased demand for private property and the presence of a more varied expatriate community are thought to be due to a growing number of professionals working in the area, in places such as science hub one-north.

Far East also hopes to attract students from more than 27 educational institutions within 3km of the mall, including students from the National University of Singapore.

Source : Business Times - 20 Nov 2007

Lippo- Mapletree Indonesia Retail Trust

Shares of property trust Lippo- Mapletree Indonesia Retail Trust started trade yesterday at 77.5 cents in their Singapore stock market debut, down 3.1 per cent against the issue price of 80 cents a unit.

The units closed yesterday at 68 cents, down 12 cents or 15 per cent from the initial public offer (IPO) price.

Indonesia’s Lippo Group and Singapore’s Mapletree Investments sold 645.47 million shares at 80 cents, raising $516 million in their IPO for a joint property trust.

The Lippo-Mapletree Indonesia Retail Trust is based on around $1 billion worth of properties that comprise seven Indonesian shopping malls and seven retail spaces found in other malls, the prospectus said.

The listing of the Indonesian trust comes after Saizen Real Estate Investment Trust (Reit), which is based on residential buildings in Japan, tumbled 14 per cent in its Singapore market debut on more than a week ago.

Saizen’s sharp fall prompted Japan’s Asia Pacific Land to delay a US$350 million IPO in Singapore.

Mapletree, which is owned by Singapore investment company Temasek Holdings , has a 40 per cent stake in the joint venture that will manage the Indonesian trust.

The Lippo conglomerate, controlled by Indonesia’s Riady family, owns the remaining 60 per cent. — Reuters

Source : Business Times - 20 Nov 2007

Monday, November 19, 2007

THE waterfront promenade coming up at Punggol Point will be a new sea sports and recreation centre with rustic seaside dining venues.

THE waterfront promenade coming up at Punggol Point will be a new sea sports and recreation centre with rustic seaside dining venues.

The Urban Redevelopment Authority (URA) yesterday unveiled the design proposals for the waterfront and park, which will add to the leisure amenities in the north-eastern part of Singapore.

Defence Minister Teo Chee Hean gave residents of Pasir Ris-Punggol GRC a snapshot of the development plans for the Punggol Waterfront Promenade at the constituency’s Family Day festivities yesterday.

A 4.9-kilometre promenade will be built to connect two proposed sports and recreation clusters at Punggol Point and along Sungei Serangoon. It will also be linked to new park connectors planned by the National Parks Board (NParks) along Sungei Punggol and Sungei Serangoon.

Residents will be able to walk the entire stretch of the Punggol coastline from Sengkang Park to Punggol Park. The 4.9-km walk will comprise three thematic zones - Punggol Point Walk, Nature Walk and Riverside Walk.

Construction, estimated to cost $13 million, will begin in the middle of next year and is expected to be completed by 2010. It will be funded by URA and the project will be handed over to NParks for maintenance. URA said that it does not intend to close off the area from public use during construction.

Punggol Point was identified as one of the coastal areas with rustic charm in the URA’s Parks and Waterbodies and Identity Plans that were drawn up in 2002. The Punggol coastline is currently interrupted by several drainage outlets with no continuous pathway for public access to the waterfront.

Punggol Point is currently a popular venue for activities like fishing and camping. Among new amenities coming up will be a lotus pond and a 0.6-hectare park. There will also be a horse-riding centre and food and beverage hub at Punggol Point. The site for the horse-riding centre has been awarded recently while the site for the dining development has been put on the Reserve List in the Government Land Sales Programme, up for bids by interested developers.

‘More attractions will be built when the remaining land parcels are successfully tendered out,’ Mr Teo, who is an MP for Pasir Ris-Punggol GRC and adviser to the town council, said yesterday.

URA invites feedback from the public on the Punggol Waterfront Promenade before construction begins.

Source: Business Times 19 Nov 07

While Singapore’s underlying growth potential has risen in recent years, the economy will be fully stretched at the seams

While Singapore’s underlying growth potential has risen in recent years, the economy will be fully stretched at the seams if it continues to grow between 7 and 8 per cent, as it has on average between 2004 and 2007, economists say. They now see a need to bring GDP growth down to around 6 per cent.

Against a backdrop of slower global economic growth next year, economists say Singapore’s GDP expansion has to be moderated before overheating pressures - now nascent - build up further. Apart from moves underway to ease the pace - such as the delay of some S$2 billion worth of public building projects - it also means ‘not taking active measures to improve growth if they are going to cause overheating’, says Chetan Ahya, chief economist for Southeast Asia and India at Morgan Stanley Asia.

Concerns about overheating risks - in the form of both consumer and asset price inflation - dominated discussions at a recent economic roundtable organised by the Institute of Policy Studies and BT. Speaking about the Singapore property market at the forum, Mr Ahya and his colleague Deyi Tan said they see in the ongoing real estate boom speculative excesses in the private residential segment, but genuine demand - and possibly further upside - in the commercial office market. Beyond the property market, resources are also being stretched. Does the growth trend need to take a breather, they ask.

‘My personal view is that we probably need to slow the overall demand in the system right now… demand is so strong… The supply response function in all pockets of the economy does not catch up to the shift in demand,’ Mr Ahya said.

He pointed out that the average annual growth between 2001 and 2003 was only 1.6 per cent - well below its underlying potential. There was therefore quite some excess capacity. In the four years since, the economy has ramped up sharply, growing almost 7.8 per cent on average, assuming GDP growth this year amounts to 7.7 per cent, which is Morgan Stanley’s forecast. The official forecast is ‘between 7 and 8 per cent’.

Growth of near-8 per cent for four years is ‘clearly above the underlying potential’, Mr Ahya said, even if the trend growth has risen in recent years. The government now estimates the economy’s medium-term trend growth at 4-6 per cent, while most private sector economists put it higher at 5-7 per cent, some going as high as 8 per cent.

In the first few years from 2004, the economy could sustain the robust expansion without signs of strain because there was all that excess capacity from the recent lean years. But now ‘there is stretch in the system’, Mr Ahya says.

‘We now have to go back to 6 per cent.’

He believes that Singapore can easily grow 6-7 per cent a year in the next two years if there were no overheating pressures in the last two years. ‘Everything that can be done to ensure that we moderate growth down should be done,’ he told BT. ‘The Singapore government is actively boosting the economy by measures such as the integrated resorts but it (the economy) does not have the capacity to absorb the necessary labour or provide the infrastructure that allows for that growth without causing overheating.’

At the roundtable, Khor Hoe Ee, assistant managing director (economics) of the Monetary Authority of Singapore, said: ‘I would say there has been a tightening of financial conditions this year. We are growing at a pace greater than what the resources are capable of accommodating. That is something that monetary policy can’t deal with very easily, whether through interest rates or exchange rates.

‘We are going to have to manage some of these pressures over the next two years until the supply comes onstream. In the meantime, the appreciation of the exchange rate does help to lower tradable prices and help to keep prices down.’

While there has been concern about the jump in inflation in recent months, Dr Khor pointed out that, apart from the effect of July’s 2-point hike in the Goods and Services Tax, the increase in the underlying inflation here is still within the norm.

Source: Business Times 19 Nov 07

Business confidence here has taken a dive, according to the latest BT-UniSIM quarterly survey of business activity. Companies are much less optimistic

Business confidence here has taken a dive, according to the latest BT-UniSIM quarterly survey of business activity. Companies are much less optimistic about the next six months and there are signs that a slowdown in business activities has started.

The survey of 137 local and foreign companies found that all indicators for Q3 were down from the previous quarter.

In particular, the business prospects net balance - the difference between the percentage of companies that expect better times and those that expect worser - slumped 17 points to 39 per cent from the last quarter.

Similarly, the sales net balance fell 6 points to 35 per cent, while the profits net balance slid 2 points quarter-on-quarter to 25 per cent.

The orders and new business net balance sank 8 points to 32 per cent - its first decline since the fourth quarter of 2006.

Noting that the overall balances on all indicators were down, survey director Chow Kit Boey said: ‘This implies that the strong business performance in the past six quarters has weakened.’

The previous downturn, which started in the second quarter of 2006, lasted four quarters.

But Ms Chow said that a future downturn is not likely to be drawn out, adding that it could result in lower growth rates for two to four quarters.

The BT-UniSIM survey found that foreign companies generally reported improvements from the preceding quarter, unlike their local counterparts which registered lower balances.

Foreign companies had a sales net balance of 36 per cent, up from 28 per cent, and a profit net balance of 21 per cent, up from 15 per cent in the previous quarter.

The respective figures for local companies were 29 per cent, down from 41 per cent, and 22 per cent, down from 32 per cent, quarter-on-quarter.

In terms of orders and new businesses, foreign companies reported a 2-point rise to a net balance of 26 per cent, while local companies reported a 11-point drop to 33 per cent.

In terms of business prospects in the next six months however, local firms were less pessimistic than foreign companies, although the number of optimistic local firms declined from three months earlier.

A net balance of 42 per cent of local companies reported positive sentiments - down from 64 per cent in Q2 this year.

Even though the comparative figure for foreign firms is at a lower 35 per cent, this was still an improvement over the 31 per cent seen three months ago.

Smaller companies reported a decrease in all indicators compared with the preceding quarter’s survey, and their sales, profits and orders and new business net balances turned into negative territory.

Small companies reported a 29-point plunge in sales net balance to minus 10, indicating that more companies reported lower rather than higher turnover.

Larger companies reported a 4-point drop in sales net balance to 40 per cent.

Among smaller companies, the orders and new businesses net balance plunged 33 points to minus 12 per cent, and their profits net balance shed 25 points to minus 9 per cent.

The business prospects net balance for small companies lost 29 points to 8 per cent, while larger companies reported a 16-point drop to 42 per cent.

A comparison of overall and overseas sales, orders and business prospects indicated that business activities were stronger in other countries than in Singapore.

In particular, foreign firms were the only group with better sales and orders in Singapore than abroad.

‘The net balances have generally fallen for the second consecutive quarter, suggesting that the business environments in domestic and overseas markets have weakened, particularly for small firms,’ the report added.

In Q3, the financial and business services sector replaced the construction sector narrowly as the star performer, capturing marginally over half of the total top positions.

The construction sector followed closely occupying the remaining slots, suggesting that expansion in Q3 this year was less dispersed than in previous quarters when more than two sectors occupied the top positions.

For the seventh consecutive quarter, the construction sector has been voted as providing the best prospects by all types of firms.

Irrespective of size and ownership, the financial and business services sector was the best performer in profits.

And it was also the best performer in terms of sales, profits and orders/new business for small and foreign firms.

Source: Business Times 19 Nov 07

With the economy still hot and workers harder to come by, bigger pay hikes are expected in the coming year.

With the economy still hot and workers harder to come by, bigger pay hikes are expected in the coming year. But not everyone will get an equal share of the bounty, according to a recent poll of 126 companies by human resource services firm Hewitt Associates.

The survey showed that salaries will rise by an average 5 per cent in 2008, up from 4.7 per cent this year.

But it is the professionals, supervisors and managers who are likely to see their pay rise by 5 per cent or more next year. The wages of manual workers and general employees are projected to increase by less than 5 per cent.

Senior and junior managers as well as supervisors and professionals are expected to get a raise of 5.1 per cent on average in 2008, up from 4.8 and 4.9 per cent in their respective categories this year. By comparison, manual workers’ salaries are tipped to go up 4.2 per cent. They were given a raise of 3.7 per cent this year.

Employees higher up the corporate ladder are also likely to be rewarded with higher merit increases, which are projected to average 4.6 per cent for all workers, against 4 per cent in 2007, according to the Hewitt poll. Top executives are expected to take home merit increases averaging 4.8 per cent, marginally higher than this year’s 4.7 per cent.

Manual workers, again at the bottom of the payout scale, are likely to get a merit raise of 3.7 per cent in 2008, compared to 3 per cent in 2007. Those in the manufacturing sector will be better off again in the pay hikes next year, with most expected to receive a raise of 5 per cent, up slightly from 4.9 per cent in 2007.

According to the poll, employees in the electronic and electrical industries will enjoy the highest pay increase in 2008 - 6.7 per cent, up from 6.2 per cent this year. But those in the consumer products-non durable goods sector are likely to see their pay rise slip a little, from 6.3 per cent in 2007 to 6.2 per cent.

But their counterparts in the industrial machinery and equipment sector are likely to see increments of barely 4 per cent.

The telecommunications industry is likely to be among the least generous again. It has budgeted for a pay increase of 4 per cent, still an improvement over 2007, when salaries rose only 3.4 per cent.

Source: Business Times 19 Nov 07

(SINGAPORE) Job-hopping is more rampant in the services sector than among manufacturing employees, a survey has found.

(SINGAPORE) Job-hopping is more rampant in the services sector than among manufacturing employees, a survey has found.

But while it is manual and general staff in the services sector who are more ready to jump ship in Singapore’s current tight labour market, in the manufacturing sector, it is employees up the corporate ladder - junior and middle managers - who are the least loyal.

A poll by human resources firm Hewitt Associates between July and September shows that manual workers in services have the highest attrition rate (16.2 per cent) in the sector, followed by general staff (15.8 per cent).

The dubious distinction of being the most frequent job-hoppers in the manufacturing sector belongs to junior managers, supervisors and professionals, who have a turnover rate of 9.9 per cent. Those in middle management positions are not far behind with an attrition rate of 9.6 per cent.

But in both the services and manufacturing sectors, the people at the top are the most loyal to the company - their turnover rate is just under 2 per cent, according to the poll.

Overall, the services sector is losing staff faster than the manufacturing sector in the full employment situation. The attrition rate in the services sector is 8.2 per cent, against 7.4 per cent in manufacturing.

Across the board, junior managers, supervisors and professionals have the highest turnover rate - 11.6 per cent.

Top executives, in contrast, have an attrition rate of 1.7 per cent, the lowest.

According to the poll, higher pay offered by other companies was the most cited reason (71 per cent) offered for job-hopping.

Limited growth opportunities (32 per cent), relationship issues with manager (39 per cent), role stagnation and work-life balance (32 per cent) were other major reasons listed for staff resignations.

The most common measure (56.5 per cent) taken to stem the outflow of employees is ‘accelerated career development opportunities’. Other commonly cited steps taken were short- term incentives (45 per cent), pay above market rates (43.5 per cent), timely and meaningful feedback from managers (45 per cent) and improved work- life balance (40 per cent).

While about two-thirds of the companies polled felt their reward programmes were ‘partially’ successful in attracting and keeping talent, less than 29 per cent thought they had ‘fully achieved’ the goal.

The majority of them (69 per cent) said ‘budgetary constraints’ were the problem. Some (almost 31 per cent) also pointed to the ‘lack of adequate communication’ and ‘administration of the programme’ (23.6 per cent).

Source: Business Times 19 Nov 07

(SYDNEY) Australia’s economy is booming, so the question of why the opinion polls show the government heading for defeat in elections on Saturday

(SYDNEY) Australia’s economy is booming, so the question of why the opinion polls show the government heading for defeat in elections on Saturday puzzles Prime Minister John Howard.

The conservative leader has gone from suggesting the electorate must be joking to complaining that Asian growth is getting the credit that is rightfully his for the performance of the economy. ‘I ask myself why is it that the polls are so bad for the government at present,’ he mused aloud recently while talking up his government’s achievements during more than 11 years in power. ‘I think one of the reasons is that the Labor Party has successfully created the impression that it doesn’t matter who is in government, the economy will continue to grow.’

Mr Howard’s ministers have been equally plaintive, with Foreign Minister Alexander Downer likening the government’s economic success to the winning ways of the nation’s world champion cricket team.

‘If the Australian cricket team is winning, which it is at the moment, you don’t go around and sack the whole team,’ he said.

But that, according to the opinion polls, is exactly what the Australian electorate plans to do to the government on Saturday, installing in its place the centre-left Labor Party led by Kevin Rudd.

While the election is about more than the economy, hip-pocket issues have dominated the campaign and analysts say Mr Howard is partly right when he complains that he is not given credit for the economic boom.

‘Most people realise the main strength of the economy comes from overseas factors rather than anything the government has done,’ said Wayne Errington, academic and co-author of a biography on the prime minister.

Rapid growth in Asian countries such as China and India has seen a blow-out in demand for Australia’s vast mineral resources, firing up the economy and cutting unemployment to 30-year lows.

But the very strength of the growth has presented a problem for Mr Howard, Mr Errington told AFP, with inflationary pressures forcing six interest rate hikes since the last election and putting pressure on mortgage-belt home buyers. ‘That in itself wouldn’t be a big problem apart from the fact that Mr Howard made a lot of the promise to keep interest rates low at the last election so it brings up all sorts of credibility problems.’ But Mr Errington and others believe the government has been hurt most on the economic front by its new union-busting labour laws, which critics say erode job security and wages by forcing workers to sign individual contracts.

‘What they’ve done with industrial relations is they’ve found a way to insert a sense of uncertainty into people’s well-being amongst all of this economic prosperity,’ said Monash University’s Nick Economou.

Despite the economic boom ‘there are great disparities in wealth, large numbers of people not doing so well’, he told AFP. Opinion polls show that the government is deeply unpopular even in some of the most affluent parts of Australia, suggesting that the electorate’s gripes go beyond the economy.

Source: AFP (Business Times 19 Nov 07)

THE corporate shareholder activity surged last week with huge numbers posted by directors, substantial shareholders, and listed companies

THE corporate shareholder activity surged last week with huge numbers posted by directors, substantial shareholders, and listed companies, based on filings on the Singapore Exchange from Nov 12 to 16. The increase in the trading coincided with the 4.4 per cent drop in the Straits Times Index (STI) last week to 3,440.96. Directors and substantial shareholders were very active last week with 47 firms that recorded 152 purchases versus 23 companies with 72 disposals. The number of purchases and sales were sharply up from the previous week’s four-day totals of 88 acquisitions and 56 disposals, respectively.

Although the overall trading was up, there was a significant drop in the number of institutional shareholders that reported trades last week. A paltry eight fund managers posted 32 purchases and six asset managers did 48 sales last week. The number of institutions were down from the previous week’s four-day totals of 11 buyers and 11 sellers. The buying among fund managers was particularly low, as the number of purchases last week was sharply lower than the previous week’s 52 acquisitions.

On the buybacks side, a total of 17 listed firms recorded a whopping 65 repurchases worth $48 million.

The figures were sharply up from the previous week’s nine companies, 32 transactions, and $32 million.

The trades last week boosted the buyback totals this month to 19 firms, 105 trades, and $87 million. The figures are already higher than the 14 companies, 45 transactions, and $18 million in October, and there are still 10 trading days remaining in November. The surge in the buybacks this month is not surprising as the STI has fallen by 11.2 per cent from the record high of 3,875.77 on Oct 11.

The surge in the buybacks this month following the steep fall in the market from the record high in October is similar to heavy buyback activity in August, after the market fell by 14.6 per cent from what was then the record high of 3,665.13 in July. The sharp correction prompted 27 firms to record a whopping 210 repurchases worth $208 million in August, which were significantly more than the four companies, 83 trades, and $53 million in July.

Four listed firms repurchased shares for the first time last week. Three of the firms - the Lexicon Group, Chip Eng Seng Corporation, and DBS Group Holdings - bought back following the steep fall in their share prices. The exception was Magnecomp International as the group recorded its first buybacks after the stock rebounded by 17 per cent. Aside from those four firms, investors should also watch out for Wing Tai Holdings, as the group resumed buying back after the counter fell by 31 per cent.

Lexicon Group

Niche magazine publisher Lexicon Group bought back shares for the first time since listing in July 1998, with 1.7 million shares purchased last Thursday and Friday at seven cents each. The acquisitions were made after the stock fell by 33 per cent from 10.5 cents on Sept 12. The repurchases were made after the group announced its interim results last Wednesday.

The Lexicon Group posted a loss after tax of $3.51 million for the six months to Sept 30, 2007, versus a loss of $34.98 million in the same period last year. The stock closed flat from the group’s buyback price at seven cents on Friday.

Chip Eng Seng Corporation

Construction firm Chip Eng Seng Corporation bought back shares for the first time since listing in November 1999 with 2.3 million shares purchased last Thursday at 60 cents each. The buyback was made on the back of the 31 per cent drop in the share price since Oct 5, from 87 cents.

The group’s buyback was made after founder and executive chairman Lim Tiam Seng’s purchase last month. Mr Lim picked up 100,000 shares on Oct 1 at 79 cents each, which boosted his deemed holdings to 83.5 million shares or 12.5 per cent of the issued capital. He previously acquired 500,000 shares on Feb 21 at 40 cents each. Chip Eng Seng announced its interim results in August with net profit up by 859.9 per cent to $19.38 million for the six months to June 30, 2007. The counter closed sharply higher from the company’s buyback price at 67.5 cents on Friday.

DBS Group Holdings

Investment holding and banking & financing firm DBS Group Holdings has bought back shares for the first time since buybacks were implemented by the Singapore Exchange in June 1999, with 900,000 shares purchased from last Monday to Friday at an average of $19.76 each. The initial buybacks were made after the stock fell by 12 per cent this month from $22.40.

Also positive is director John Alan Ross with 5,000 shares purchased last Thursday at $20.18 each, which increased his direct holdings by 33 per cent to 20,000 shares. He also acquired 5,000 shares on Aug 23 at $20.50 each. Mr Ross previously acquired an initial 10,000 shares from April 2003 to March 2005 at $8.75 to $15.30 each.

Fellow director Kwa Chong Seng also bought shares in August with 50,000 shares purchased at $19.00 each, which increased his deemed stake by 54 per cent to 142,000 shares. He previously acquired 50,000 shares in February 2005 at $15.40 each. The stock closed at $19.50 on Friday.

Magnecomp International

Suspension assemblies manufacturer Magnecomp International has bought back shares for the first time since listing in January 1998, with 286,000 shares purchased from last Monday to Wednesday at an average of 90 cents each. The trades were hefty as they accounted for 36 per cent of the stock’s trading volume. The initial buybacks were surprising as they were made after the stock rebounded by 17 per cent from 77.5 cents on Oct 22.

The acquisitions were also made after the group announced its Q3 results on Nov 9. Magnecomp posted a net profit of $7.52 million for the three months to Sept 30, 2007, versus a loss of $4.45 million in the same period last year. Earnings in the first nine months fell by 24.1 per cent to $22.79 million.

There were also semi-bullish signals from executive non-independent director and chief executive officer Steven Glenn Campbell this month. The CEO acquired 625,000 shares last Tuesday via exercise of options at 57 cents each, which increased his direct holdings by 63 per cent - to 1.63 million shares or 0.7 per cent of the issued capital. He refrained from taking profits despite the stock trading sharply higher from his exercise price on that day at 89 cents.

The fact that he did not take any profits, however, was not unusual as he also did not sell any of the one million shares that he acquired via options from May 2004 to April this year at an average of 16.4 cents each.

The stock closed slightly higher from Magnecomp’s buyback price at 93.5 cents on Friday.

Wing Tai Holdings

Property developer Wing Tai Holdings recorded its first buyback since December 2002 with 437,000 shares purchased last Friday at $2.66 each. The rare buyback was made on the back of the 31 per cent drop in the share price since October from $3.86.

Although the recent trade was prompted by the steep fall in the share price, the group’s buyback price was sharply higher than its previous purchase prices, based on the 11.9 million shares that the company acquired from August 2000 to December 2002 at $1.29 to $0.51 each.

The stock closed slightly higher from the group’s buyback price at $2.73 on Friday.

The writer is Managing Director, Asia Insider Limited

Source: Business Times 19 Nov 07

The vision is for the Sino-Singapore Tianjin Eco-City to be a model of sustainable development that is socially harmonious, environmentally friendly

The vision is for the Sino-Singapore Tianjin Eco-City to be a model of sustainable development that is socially harmonious, environmentally friendly and resource-efficient.

It will be developed by a joint venture between a Singapore consortium led by Keppel Corporation and a PRC consortium comprising Chinese companies such as the Tianjin Binhai New Area Urban Infrastructure Construction Investment Co Ltd, Tianjin TEDA Investment Holdings Co Ltd and the China Development Bank.

Prime Minister Lee Hsien Loong said he was pleased with the decision and was confident the Chinese central government and the Tianjin government will give the project their full support.

This project is yet another flagship of bilateral cooperation between Singapore and China since the 13-year-old Suzhou Industrial Park, visiting Chinese Premier Wen Jiabao said.

‘The Suzhou Industrial Park has become a crystallisation of the friendship between our two countries, and with the eco-city to be built in Tianjin, it will become another highlight in our relations,’ Premier Wen added.

The two leaders signed a framework agreement that set the parameters for collaboration, while a supplementary pact that guide the implementation details was signed by Minister for National Development Mah Bow Tan and China’s Construction Minister Wang Guangtao.

Under the framework agreement, China and Singapore will share their expertise and experiences in the formulation of policies and programmes to engender social harmony, urban planning, environment protection, resource conservation, recycling, ecological infrastructure development, use of renewable resources, reuse of wastewater and sustainable development.

Deputy Prime Minister Wong Kan Seng and Vice- Premier Wu Yi will jointly chair a Singapore-PRC Joint Steering Committee (JSC) to oversee all major issues relating to the development of the eco-city project while a Joint Working Committee (JWC), co-chaired by Mr Mah and Mr Wang will address issues and problems related to the development. The JWC will report to the JSC, which will be under the Joint Council for Bilateral Cooperation (JCBC).

The key outcomes spelt out under the supplementary agreement are a vibrant local economy with good environmental conditions, the formation of socially harmonious and inclusive communities, good environmental technologies and practices, and a reference for other cities in China in the management, technological and policy aspects.

Further details of the eco-city are being finalised.

Earlier on, the leaders met for about an hour, where they reviewed the 17 years of Sino-Singapore bilateral ties and discussed other issues such as Singapore-China free trade agreement, cross-straits situation and Myanmar.

Both leaders expressed confidence in the current state of relationships that are based on mutual interests and respect.

‘Our relations are good because the foundations of the relations are based on compatible strategic views of the way Asia is developing, of China’s development, and peaceful emergence into the world order,’ PM Lee said.

‘Therefore, we believe that there’s room for us to work together for mutual benefit and on the basis of equality and mutual respect.’

Yesterday’s state visit by Premier Wen also saw the official launch of the Singapore China Foundation (SCF) which seeks to strengthen people-to-people ties between Singapore and China through cooperation in education and human resource development.

The SCF currently offers two scholarship schemes to Singaporeans and PRC nationals to pursue Master programmes and executive programmes in Singapore and China and has awarded scholarship schemes to more than 20 Singaporean and Chinese officials since its inception under a memorandum of understanding in 2004.

PM Lee also hosted Premier Wen to an official dinner banquet yesterday at the Istana Banquet Hall.

In the days ahead, Premier Wen will be attending a series of high-level regional summits here, including the 11th Asean Plus Three Summit and the Third East Asia Summit that are held alongside the 13th Asean Summit. He will deliver a keynote speech at the National University of Singapore today.

Source: Business Times 19 Nov 07

CHINA’S economy has little chance of achieving a soft landing once the ‘bubble’ in stock market and real estate prices there bursts

CHINA’S economy has little chance of achieving a soft landing once the ‘bubble’ in stock market and real estate prices there bursts, according to former senior Japanese finance ministry official Toyoo Gyohten, who now heads one of Asia’s leading economic research institutes.

Meanwhile, resentment over the pace of change in China is growing among social groups ranging from farmers to city dwellers and intellectuals and could erupt, he said.

Mr Gyohten’s bearish comments on China were made at a briefing in Tokyo last Friday shortly after the World Bank predicted continuing strong growth in China’s economy and that it would not suffer greatly from any popping of the bubble in asset prices.

The World Bank analysis that China and the rest of East Asia would be little impacted by a slowdown in the US economy was also challenged by Chinese officials who said that it could be very serious.

World Bank claims that an asset bubble burst in China would have limited impact because it has not been accompanied by a boom in consumption were rejected by Mr Gyohten. The former vice-finance minister for international affairs, now president of the Tokyo-based Institute of International Monetary Affairs, said that fallout from an asset price implosion, in the shape of surging bankruptcies, unemployment and bad loans in the banking system, would be highly damaging to China’s economy.

Six rises in China’s interest rates plus nine increases in banking reserve requirements plus the imposition of administrative controls on bank lending have failed to curb the runaway trend in stocks and other assets prices while inflation has now hit its highest level in ten years, said Mr Gyohten.

Chinese authorities will probably tighten monetary conditions further to contain these pressures, or some other event will trigger an asset bust, he said. ‘Either way, there is little possibility of a soft landing.’

A former chairman of the Bank of Tokyo and now special advisor to the Bank of Tokyo-Mitsubishi UFJ, Mr Gyohten also said that he ‘could not rule out the possibility of a major revaluation of the Chinese yuan,’ owing to growing pressure from Europe as well as the United States for such a move.

‘We cannot deny that the (currency) is undervalued,’ he said, noting that it had risen in value by only around 10 per cent against the dollar since 2005.

Mr Gyohten’s analysis of China’s political situation was even more downbeat than his comments on the country’s economy. ‘At various levels of government (in China) there is increasing corruption and wrongdoing,’ he said.

Social resentment is rising and ‘people are beginning to question the legitimacy of the dictatorship of the communist party. The thing the leadership fears most is revolution.’

Chinese authorities will probably seek to quicken the pace of ‘gradualist’ political reform, he suggested. While the past 30 years have been devoted to establishing China’s presence among the world’s leading economies, the next 30 years will see an attempt by China to cement the market economy and to establish political stability under the leadership of the communist party, he added.

Source: Business Times 19 Nov 07

THE vision of Punggol as a vibrant waterfront town was given more flesh

THE vision of Punggol as a vibrant waterfront town was given more flesh yesterday.

A $13 million plan to redevelop a part of its surrounding coastline will put at residents’ doorsteps a 4.9km walking trail that opens up access to the Punggol coast.

Activities such as horse riding, golf and fishing will also feature in the area.

These attractions were unveiled by Mr Teo Chee Hean, an MP for Pasir Ris-Punggol GRC.

He noted that adventurous young families had already taken to walking along the coast, which is largely reclaimed land.

Mr Teo, who is also Defence Minister, told reporters that there was a bit of a track there, but not a whole lot of facilities, so the walking trail would ‘enhance accessibility’.

The developments are part of the Parks and Waterbodies and Identity plans drawn up by the Urban Redevelopment Authority (URA) in 2002.

The plan singled out five coastal areas - Changi, Pasir Ris, Coney Island, Pulau Ubin and Punggol Point - to develop as recreational destinations.

The waterfront promenade coming to Punggol will have three segments:


Punggol Point Walk: A 1.2km promenade will be added to this popular fishing and camping spot.

Nature Walk: A 2.4km stretch between Punggol Point and Sungei Serangoon will become a nature trail.

Riverside Walk: A 1.3km- long promenade will be built along Sungei Serangoon to make the riverfront more accessible.

The 4.9km promenade will link the proposed sports and recreational clusters in Punggol Point and Sungei Serangoon and the new park connectors along the Punggol and Serangoon rivers.

Construction of the promenade will begin in the middle of next year and will be completed by 2010. The work will not disrupt fishing or other activities there, said the URA.

The public will be invited to give feedback on the proposals, which went on show at a carnival in Punggol yesterday.

Many residents said they were looking forward to it.

Mr Roy Mathiew, 58, said: ‘It is a good idea; it brings us closer to nature. I will definitely go there for walks.’

In August, Prime Minister Lee Hsien Loong first unveiled plans for a jazzed-up and vibrant Punggol in his National Day Rally speech.

He described a waterway winding through the town, with parks, water sports and alfresco dining on its banks.

Mr Teo said yesterday that Punggol - with more than 18,000 households now - will grow as more flats, schools, shopping centres and an improved transportation network are added.

However, littering is a problem. The Pasir Ris-Punggol Town Council received more than 1,000 complaints of highrise littering last year. This year, there have been already more than 500 complaints by the end of last month.

Next year, the town council will launch a three-pronged campaign to promote graciousness and to rekindle the ‘kampung spirit’.

Pasir Ris-Punggol MP Ahmad Magad said that with Punggol’s population of young families, ‘it was important to… sensitise them to what communal living and kampung living means to the entire community’.

Source: The Straits Times 19 Nov 07

Shunfu Ville, Eunosville, Serangoon North residents trying to go private to enable collective sales

Shunfu Ville, Eunosville, Serangoon North residents trying to go private to enable collective sales

THE collective sale fever that has swept through condominiums has spread to three HUDC estates.

Residents in Shunfu Ville, Eunosville and Serangoon North are trying to privatise their estates so that they can sell their flats to private developers for a premium in collective sales.

These HUDC flats, which come with a 99-year lease, were developed in the 1970s and 1980s for people who did not qualify for HDB flats but could not afford private apartments.

In privatisation, the residents essentially pay the HDB to take over the ownership of common property such as carparks and landscaped areas. They also take over the management of the estate from town councils.

Owners pay about $25,000 to $30,000 each for privatisation. This covers the cost of common property that has been transferred to owners, legal costs, survey and other processing fees, all of which can be paid using their Central Provident Fund savings.

At least 75 per cent of the owners must agree to privatisation. Of the original 18 HUDC estates in Singapore, 11 have already been fully privatised. The latest was Laguna Park in Marine Parade in July.

For the 358-unit Shunfu estate, this is its third attempt at privatisation. The first try in 2001 failed because only half the residents were for the idea.

In July this year, the residents tried to speed things up by launching a privatisation and collective sale exercise at the same time. They appointed Knight Frank as the marketing agent and even got a developer willing to foot the privatisation fees.

But HDB put a stop to their efforts, saying the estate must first attain privatisation before attempting any collective sale, said Shunfu’s pro tem committee chairman Philip Liau.

Thanks to talk of a collective sale, a 1,700 sq ft flat in the estate was sold for $850,000 this month - $200,000 more than the average price before. Some residents hope to receive up to $1.2 million for their flats in a collective sale.

At Eunosville - where many residents of the 10-block estate are retirees - getting owners to part with $30,000 for the privatisation fee can be difficult.

To overcome this, some residents have offered to help them apply for a bank loan.

Retired nurse Maznah Ahmad, 68, said: ‘They said I can pay back the bank after I get my en bloc money. But what if there is no en bloc?’

She and her husband, a 70-year-old retired teacher, have been living in their 1,700 sq ft maisonette for 20 years. The couple plan to transfer ownership of their home to their son, who will then pay the privatisation fee from his CPF savings.

Eunosville’s pro tem committee chairman Suhaimi Mustapha told The Sunday Times yesterday that the panel has almost secured the 75 per cent vote needed.

Serangoon North’s pro tem committee declined comment, saying its privatisation efforts are still in the early stages.

Over at Neptune Court in Marina Parade, residents are also trying to privatise their 752-unit estate, which is built on land owned by the Finance Ministry, not HDB.

A committee of residents is in talks with the ministry.

Source: The Sunday Times 18 Nov 07

The S&P 500 narrowly averted a third straight week of losses as bargain-hunting lifted the beaten-down technology sector while shares of oil companies

The S&P 500 narrowly averted a third straight week of losses as bargain-hunting lifted the beaten-down technology sector while shares of oil companies advanced on buoyant crude prices.

After see-sawing through most of the day as the market was buffeted by worries over the housing slump and the credit crisis, major indexes mounted a swift upturn in the last half-hour of trade as investors bid up shares of technology companies such as BlackBerry maker Research In Motion and computer and printer maker Hewlett-Packard Co.

Plans for an additional US$10 billion (S$14.5 billion) share repurchase by network equipment maker Cisco Systems also buoyed sentiment in tech shares, helping the Nasdaq to snap a two-day losing streak.

‘I am buying here,’ said Mr Jeffrey Kleintop, who helps to oversee about US$163 billion as chief market strategist at LPL Financial Group in Boston. ‘It’s very hard to push this market down.’

Investors also bought up shares of companies seen as better positioned to withstand an economic slowdown, such as consumer products maker Procter & Gamble Co, helping to underpin the broader market.

But shares of financial services companies, including Citigroup Inc, fell on persistent worry that losses from mortgage defaults and the housing slump may worsen.

The Dow Jones Industrial Average rose 66.74 points, or 0.51 per cent, to close at 13,176.79. The Standard & Poor’s 500 Index gained 7.59 points, or 0.52 per cent, to end at 1,458.74. The Nasdaq Composite Index added 18.73 points, or 0.72 per cent, to finish at 2,637.24.

For the week, the Dow gained 1.03 per cent while the S&P 500 and the Nasdaq each ended 0.35 per cent higher.

Among tech companies, shares of Research In Motion, Garmin, Apple, Cisco and digital map maker Tele Atlas NV rose; while among energy company shares, Chevron Corp was a winner.

Among financials, Citigroup Inc, the No. 1 US bank and a Dow component, fell 1.7 per cent to US$34.

Source: Reuters (The Sunday Times 18 Nov 07)

INFLATION could hit 5 per cent in the first quarter of next year. This would be a 25-year historic high.

INFLATION could hit 5 per cent in the first quarter of next year. This would be a 25-year historic high.

Trade and Industry Minister Lim Hng Kiang told Parliament on Monday that record oil prices and higher food and transportation costs could take their toll on the Consumer Price Index (CPI).

The last time inflation hit a high level was in July 1991, when it reached 4 per cent.

The CPI has been on a steady uptrend this year: It rose 0.5 per cent in the first quarter, 1 per cent in the April-June period and 2.7 per cent in the third quarter. It is expected to rise at least 2.7 per cent for the current quarter.

Inflation and value of money

SIMPLY put, inflation is the increase in prices of goods and services over time, which means it diminishes the purchasing power of today’s dollar in the future.

While $3 buys you a cup of coffee today, you might need $4 in the future. So we end up buying less in the future with the same amount of money.

There are exceptions. Prices of electronic goods such as DVD players can go down over time because of the product cycle and economies of scale.

‘With rising inflation, if you don’t look at your investments carefully and do something about it, you will find that eventually inflation will erode your purchasing power and thus your wealth,’ said Ms Anne Tay, OCBC Bank’s vice-president of group wealth management.

Mr Leong Sze Hian, the president of the Society of Financial Service Professionals, suggests using the ‘rule of 72′ to work out the number of years it will take for our purchasing power to be halved or prices to double.

This is done by taking 72 and dividing it by the inflation rate. So if annual inflation is 5 per cent, it will take 14.4 years to erode the value of today’s dollar by half.

Risk-averse investors

IT STANDS to reason then that conservative investors who put their money mainly in bank deposits will eventually end up worse off.

Investing at 2 per cent while inflation is running around 4 to 5 per cent will see your wealth steadily eroded.

Financial consultant Dennis Ng said: ‘I believe that people who play safe are actually taking very high risks. If a person puts his money mainly in bank deposits thinking he is being conservative and safe, in the long run, due to inflation, this person’s savings would actually shrink over time and he would become poorer, not richer.’

The reality is that the return from a term deposit is unlikely to keep pace with inflation and the cost of living over the long term, said Mr Gary Harvey, the chief executive of ipac Wealth Management Asia.

‘If we take a retrospective view from 1985 to 2006, a $10,000 term deposit (principal only) made in 1985 was worth only $7,500 in 2006, with an average inflation rate of 1.29 per cent per year,’ he said.

‘If inflation is 3 per cent per year moving forward, $10,000 today will be worth only $5,200 in 2028. If inflation hits 5 per cent, the same $10,000 will be worth only $3,400. Almost 70 per cent of the value will have been eroded.’

This concern is behind Ms Tay’s advice to keep only enough cash for emergency purposes, say, three to six months of your monthly expenses. Invest the rest.

Alpha Financial Advisers chief executive Arthur Lim said that when factoring the rate of return needed to meet a specific financial goal such as buying a home, retirement or children’s education, one should consider inflation.

‘An ‘inflation-proof objective’ will consider the impact of inflation and factor it into the growth needed in the investment portfolio to meet the desired goal,’ he said.

‘This will result in the investor having the precise amount needed to meet the goal, despite the price increases of assets over time.’

Starting early

HAVING a financial plan early on lets you take a long-term investment horizon, which is beneficial on various fronts.

‘The young are best-placed of course, as they stand to gain the most from compounding, dollar-cost averaging, investing at a lower risk level and maximising of returns over the long term’, said Mr Lim.

To illustrate the power of compounding, Ms Tay cites an individual who started a yearly investment of $1,000 at age 25 for 10 years, at a rate of return of 6 per cent. He allowed his investment to continue growing at 6 per cent from age 35 to 62 without any further annual inputs of $1,000. At age 62, his investment would total $71,420.

In contrast, take the case of another individual who embarked on a yearly investment of $1,000 only from age 35. He must continue the yearly input of $1,000 all the way to age 62 before the total value of his investment grows to $72,640.

That is a 28-year investment of $1,000 per annum, compared with the 10-year investment in the first example. This is simply because the first individual started 10 years earlier.

‘That’s the power of compounding, said Ms Tay.

Young working adults may not earn much but ‘they have time on their side and can always start small’, said Mr Tony Tan, a consultant with independent private wealth manager Providend. Many unit trusts allow for regular savings plan contributions from as little as $100 a month.

‘Start on a regular savings investment plan which allows you to make small monthly contributions towards the realisation of the defined objectives. What is most important though is that you start as early as possible and make time work for you,’ said Mr Tan.

Mr Leong of the Society of Financial Service Professionals says a young working adult could start with as little as $1,000, which could be invested in a global balanced fund.

He would need about $5,000 to $10,000, which could be from the Central Provident Fund (CPF) or cash, to set up a globally diversified portfolio of about a dozen funds.

‘Assume a 25-year-old is earning $1,450 a month, with $60,000 in CPF. If he can get an average return of 5 per cent on his CPF accounts, his investments can grow to over $900,000 by the time he reaches 65. At 6 per cent, it can grow to over $1.2 million,’ said Mr Leong.

To take care of rainy days, keep six months of expenses as emergency cash in a money market fund or a fixed deposit, one-month renewal account at a bank.

Older investors

IF YOU have a shorter time horizon, common sense dictates that you shouldn’t be investing mainly in risky instruments.

However, with the longer lifespans these days, investing your entire nest egg in something too conservative may not give you the returns required to fund your retirement needs, said Mr Tan.

A balanced globally diversified portfolio would typically comprise about a dozen investment funds made up of approximately 55 per cent equities, 5 per cent commodities and 40 per cent bonds, said Mr Leong.

If and when you need money, he suggests liquidating the funds that have gone up the most so you will always be exiting the funds with gains.

On a positive note

THE good news is that inflation is generally not a ‘bad’ thing, as it is typically accompanied by a robust economy, which in turn results in higher incomes.

The increase in wages should be more than enough to offset the increase in the prices of goods, said Mr Tan.

For instance, inflation in Singapore should be viewed against rapid economic growth, with gross domestic product rising more than 6 per cent on average since 2003 and wages also on the increase.

Moreover, inflation is expected to moderate in the second half of next year.

The spike in inflation to 5 per cent in the first quarter of next year is likely to be followed by a plateau, as the rate reverts to more normal conditions in the second half.

For the whole of next year, the average inflation rate is likely to be around 3 per cent.

Source: The Sunday Times 18 Nov 07

MORE than RM6 billion (S$2.58 billion) from the Middle East has been invested in Malaysian property in the past two years

MORE than RM6 billion (S$2.58 billion) from the Middle East has been invested in Malaysian property in the past two years - and more is set to follow. Analysts say that Islamic funds will continue to flow into Malaysia’s property sector, drawn by the country’s reasonable economic growth, the strengthening ringgit and low capital values.

RHB Islamic Bank chairman Vaseehar Hassan believes that most of the money will go into property and infrastructure projects slated for implementation under the Ninth Malaysia Plan.

Big ticket projects on the drawing board or coming on stream - like the Iskandar Development Region (IDR) in Johor and Penang Global City - are likely to arouse Middle Eastern interest.

The Klang Valley has raked in almost RM2.4 billion of Arab funds, but now lags the RM4.2 billion committed by four Middle Eastern groups to the IDR.

However, the deals to develop various lifestyle and financial clusters in the IDR are conditional. The conditions have not been publicly revealed but are believed to include having physical infrastructure put in place before Mubadala Development, Millennium Development, Aldar Properties PJSC, and Kuwait Finance House (KFH) proceed with their plans.

Leading the charge is KFH, which this week said that it intends to put up a building taller than the 452-metre Petronas Twin Towers. Its managing director Salman Younis told The Edge Financial Daily that the project has been approved and will be constructed in a joint venture with the property arm of a local bank. He declined to elaborate but said that work will start next year.

Middle East interest could also surface in E&O Property’s multi-billion ringgit Sri Tanjung Pinang in Penang - a two-phase multi-island and headland development spanning 15 years and involving 980 acres of land reclamation.

Arab interest is relatively small in the first phase, with Al-Salam Bank a joint venture partner in developing a number of seafront bungalows worth RM200 million.

But in the second phase E&O Property plans to reclaim land for two or three man-made islands linked by a bridge.

Real estate players have said that the developer of The Palm Jumeirah in Dubai, Nakheel Partners, is interested in constructing a hibiscus-shaped island there.

E&O Prop has told BT that it is being courted by several Middle Eastern partners as well as regional ones for joint venture possibilities in both phases of Sri Tanjung Pinang. Its managing director Terry Tham has said that he is amenable to selling part of the company but wants a good price.

In September, E&O Property’s major shareholder E&O sold its 51 per cent interest in Bursa Malaysia listed master developer Putrajaya Perdana to Swan Symphony - an Abu Dhabi-Kuwait-Malaysian consortium - for RM190 million.

Middle Eastern private equity groups were also in a consortium that snapped up Berjaya Land’s KL Plaza for RM470 million. And they have invested RM400 million in the CIMB Mapletree Real Estate Fund.

Recently KFH, with local real estate investor Prestige Scale, agreed to pay RM557 million for the yet-to-be-built Glomac-Al Batha 40-storey office block in Kuala Lumpur. The price has set a RM1,120 per square foot benchmark for office space.

In Kuala Lumpur, KFH already owns part of the RM1.3 billion Pavillion KL and one of the two office tower blocks. It also has a small stake in SunCity’s Sunway South Quay project.

By JP Morgan’s estimates, a third of high-end purchases in Malaysia - mainly around the Kuala Lumpur city centre - are by foreigners, with a perceptible rise in Middle Eastern buyers.

Source: Business Times 17 Nov 07

Asean economies may be booming, but trade among member countries has fallen as a proportion of their total exports.

THE 10 Asean economies may be booming, but trade among member countries has fallen as a proportion of their total exports.

This casts a worrying shadow on the region’s long-standing ambitions to become a unified economic market by tearing down trade barriers and cooperating more closely.

The finding, in a new report, provides food for thought for Asean leaders meeting in Singapore from tomorrow to Thursday at the 13th Asean Summit.

The overly slow removal of non-tariff barriers by Asean countries, as well as China’s phenomenal economic growth, are to be blamed for the decline, said the Economist Intelligence Unit (EIU) report.

Last year, exports to other Asean nations by the region’s six biggest economies made up 20.9 per cent of their total exports, down from 22.4 per cent in 2000, the study found, using United Nations data.

In Singapore, the share of exports to other Asean nations fell to 21.2 per cent from 26.7 per cent.

‘This doesn’t augur well for Asean’s aspirations to become a single trading bloc,’ said EIU Asia-Pacific editorial director Charles Goddard.

‘Some non-tariff barriers are still not broken down. There are still significant hurdles to trade within Asean,’ he said at a press conference.

Sponsored by DHL, the report was published yesterday, to coincide with the start of the Asean business and investment summit that the express delivery giant also sponsored.

‘This report makes clear that governments of Asean nations must redouble their effors to reduce trade barriers in their own backyards,’ said DHL Asia-Pacific chief executive Dan McHugh. ‘Intra-Asean trade still has great potential to provide economic opportunity and raise living standards.’

In absolute terms, intra-Asean trade is up, but it has been eclipsed by the even faster growth of exports to China.

Its economic rise and its role as the world’s final assembly centre have made China an increasingly popular destination for Asean component makers. Exports to China account for 7.3 per cent of total Asean exports, up from 3.8 per cent seven years ago.

Citibank economist Chua Hak Bin said: ‘Ultimately, the size of trade flows is dependent on the pace at which external markets grow. The strongest markets have been China and India, which have surpassed Asean in growth.’

Still, Asean can do more to boost a greater exchange of goods within the region, said DHL South-east Asia head Yasmin Khan. While Asean has harmonised customs regulations, she said, differences in implementation still cause delay in some countries.

Asean’s plans to create a single market by 2015 will address some issues, Mr Goddard said. ‘But to be honest, quite a lot more needs to be done - and quickly.’

Economists say the dismantling of trade barriers has been slower than planned.

‘Nationalist sentiment among some Asean members is still strong,’ said Citibank’s Dr Chua. ‘There have been instances where investments from neighbouring countries were viewed with suspicion.’

Asean is unlikely to achieve a European Union-level of integration, as differences in economic development and wealth are too wide, Fortis Bank Asia market strategist Joseph Tan said.

‘I don’t think there’s sufficient political will to push towards the 2015 goal. Many member countries have more immediate domestic challenges to worry about.’

Source: The Straits Times 17 Nov 07

JOSEPH Stiglitz, a Nobel-prize winning economist, said the United States economy risks tumbling into recession because of the sub-prime crisis

LONDON - MR JOSEPH Stiglitz, a Nobel-prize winning economist, said the United States economy risks tumbling into recession because of the sub-prime crisis and a ‘mess’ left by former Federal Reserve chairman Alan Greenspan.

‘I’m very pessimistic,’ Professor Stiglitz said in an interview in London yesterday. ‘Alan Greenspan really made a mess of all this. He pushed out too much liquidity at the wrong time. He supported the tax cut in 2001, which is the beginning of these problems. He encouraged people to take out variable-rate mortgages.’

Prof Stiglitz said there was a 50 per cent chance of a recession in the US, and that growth would slow to less than half its 3 per cent potential.

The comments add to criticism of Mr Greenspan’s 18 years in control of the US central bank. He stepped down in January last year.

After the 2001 recession, the Fed cut its benchmark rate to a four-decade low of 1 per cent. That move, along with a hands-off approach to regulation, have brought Mr Greenspan under fire, as the bursting of the housing bubble and the sub-prime mortgage crisis again threaten to sink the economy.

Mr Greenspan, 81, said on Nov 7 that he predicted a ‘less than 50:50′ probability of a US recession, reiterating previous remarks made late last month. Home prices in the world’s largest economy have not bottomed out, he said.

Prof Stiglitz, an author and professor of economics at Columbia University in New York, estimated that US consumers borrowed up to US$950 billion (S$1.38 trillion) last year against the value of their homes to finance spending.

‘That game is over,’ Prof Stiglitz said. ‘As house prices are going down, people are not going to be able to take more money. We are looking at a major slowdown. The impact of that is going to be a very major slowdown, maybe recession.’ He also faulted US President George W. Bush for cutting taxes in 2001 and, thus, widening the US’ budget deficit and allowing political support for free-market trading to wane.

Source: BLOOMBERG NEWS (The Straits Times 17 Nov 07)