Is Singapore becoming price uncompetitive for foreign business? Rocketing office and housing rental prices over the last 12 months are raising this question.
With property costs now among the highest in East Asia after Tokyo and Hong Kong, there is more and more talk as to what impact they must now make on decisions by a foreign company to maintain or establish in the island city state. Various surveys of the foreign corporate sector and expatriate professionals by consulting companies underline the extent of Singapores rising property and living costs. International human resource consultant, Mercer, found in its annual cost-of-living survey for expatriates earlier this year that Singapore had risen to become the 14th most expensive city of 50 cities around the world, from 17th place the year before, and the most expensive in Asia after Seoul, Tokyo and Hong Kong.
New York, Sydney, Beijing and Shanghai were all below Singapore. And since the Mercer survey, announced in March, living costs have continued to rise in Singapore. Yet these cost-of-living headlines can still skew a true assessment of Singapore´s international economic competitiveness.
Income taxes are very low - 20 per cent in the top bracket - and there was a further cut in this year´s February budget in the corporate rate to 18 per cent. Singapore continues to be advantaged by efficient and low-cost infrastructure services, a well-educated workforce, English as the common language in business and government, and legal and regulatory certainty and transparency for commerce.
Setting up a foreign-invested company, including a fully-foreign-owned company, even if the sponsors are only small-scale businesses, is a very straightforward and rapid process, unlike almost anywhere else in Asia. These factors will continue to offset cost-ofliving rises for top-end foreign business - that is, those in the international banking, legal and business services, and high value R&D heavy manufacturing, such as biotechnology and pharmaceuticals, precision engineering and the sophisticated end of electronics and information technology.
And there is no question that Singapore is succeeding here, with growth of 7.9 per cent in 2006 and an anticipated 7.0 per cent in 2007, driven significantly by these industries, as well as (more recently) construction in response to property demand. Activity in construction is the highest for a decade, according to the Ministry of Trade and Industry. One effect of the higher living costs, though, may be to limit expatriate staff to the top executive level with more reliance on local professional and technical staff for mid-level positions as they will not want the higher salaries their equivalent foreign number would need to live on a temporary basis in Singapore.
The property market is the major driver of these rising living costs. While this is due to an obvious imbalance in supply and demand, the boom is also a result of the Singapore Government´s efforts to develop high-end economic sectors and industries, and the impact, then, on rental and office markets of new foreign companies establishing and expanding. To cool the market, the Government is now releasing more land and putting in place other measures, such as slowing the rate at which developers can pull down older midlevel- priced apartments to build high-end ones.
High property prices are also being felt by local Singaporeans and not simply in terms of owners and developers gaining from the boom Price increases in the private-condominium segment filter down to the public housing segment where the vast majority of Singaporeans live some 80 per cent and this impacts adversely on those lower- and middle-income households that rent, or are in the market to purchase an apartment. Combined with the overall economic restructuring taking place, this leaves significant numbers of Singaporeans vulnerable and hurting, especially the old and those lacking skills and education.
The problem of a widening income gap is something that the ruling Peoples Action Party does not deny, and how the Government intends to combat it through education and training measures, income support and housing estate renewal was a focus of Prime Minister Lee Hsien Loong´s National Day speech in August. But the question of social inequalities will continue to be a major issue for the Government in the years ahead, especially in the context of what seems a strategy of making the island city a base in the region for the worlds wealthy.
Inevitably there is the risk of social jealousies and resentment. Nowhere is this clearer than in the finance and banking sector. Singapore´s drive to become a larger international financial centre has led to increasing emphasis on private banking. And, with this has come upward pressure on the property market through an associated interest by wealthy foreign individuals and families with investments managed by Singaporebased private banks to purchase real estate and spend time living on the island state. One example is Charoen Sirivadhanabhakdi, one of Thailand´s richest men, who listed his whisky and beer firm Thai Beverage on the Singpopore exchange in 2006.
According to the local Business Times newspaper, in April this year be bought 47 of 48 flats in a new development for US$140 million, and four entire floors in another project for US$90 million.
Singapore aspires to be a Switzerland of Asia. There are now nearly 40 private banks with regional operations in Singapore. Both US Citigroup and UKs Standard Chartered maintain their headquarters for all private banking outside of their home countries in Singapore. Target clients range from the European and American wealthy to those in East Asia and India, the new millionaires of China, and the oil rich of the Middle East, who are turning more to East Asia as a place to invest since 9/11 and the Iraq war.
Singapore´s own rich should also not be forgotten, with the small State having more millionaire households as a percentage of total households than any other Asian economy, according to the Boston Consulting Group. Singapore, as has long been the case, argues its ability to act as a platform to manage investment throughout the region and beyond. More particularly, to encourage private banking, the Government has strengthened bank secrecy laws and tax incentives. For example, there is no taxation on an individual´s foreign income, including capital gains and interest income in Singapore.
Income tax is levied only on income earned from Singapore, and this tax is very low. Another factor helping growth of private banking is attractive trust laws. Other finance industry segments that are being encouraged along with the more traditional banking and stock market services are hedge funds, private equity firms and insurers. Overall, the finance sector is one of the strongest areas of the economy, growing by 17 per cent in the second quarter of 2007 on top of 14 per cent in the first quarter. And, as the Ministry of Trade and Industry notes in the release of these results, the wealth advisory cluster remained buoyant, riding on growing affluence in the region and continued demand domestically for professional fund management services.
Encouragement of private banking meshes with the Government´s new urban and tourist development thrusts, as well as promotion of Singapore as a world-class education centre. Thus, Singapore is not just a place in which to invest, live and play Singapore also can offer the best of education for their children. Evidence of this can be seen at the end of Sentosa Island, on Singapore´s inner west coast, not far from the CBD. Sentosa, better known to tourists as a theme park and once a British military base, is now being transformed into an exclusive residential estate.
Sites at what is called Sentosa Cove are reported to be selling from as much as US$9.9 million.
Sentosa Cove has a 400-berth marina with 10 spots for very large yachts, and two golf courses.
About 60 per cent of buyers at Sentosa Cove are foreigners. Sentosa will also feature one of Singapore´s two new casinos called integrated resorts being developed by the Government after a four decade ban and despite considerable community concern over their possible adverse social effects. Sentosas will be built and operated by Malaysia´s Genting group, while the other will be build by Las Vegas Sands of the US at the emerging Marina Bay office, hotel, exhibition and convention centre on reclaimed land opposite the core CBD. As one property agent told Reuters: “Its Monaco in the tropics.”
Source : Asia Today International - 18 Jan 2008
Tuesday, January 22, 2008
Citigroup has come out to clarify that Singapore will not be significantly affected by the group’s global layoffs
Citigroup has come out to clarify that Singapore will not be significantly affected by the group’s global layoffs.
At a news briefing on Friday, it said that as far as Singapore is concerned, it expects the attrition rate to stay normal.
No bonus cuts are expected and staff will still be paid salary increments.
Citigroup said that overall, Asia including Singapore is positioned for good growth.
Like most big financial names in the US, Citigroup has been hit by the sub-prime mortgage crisis - taking billions of dollars in write-downs.
Citigroup said earlier this week that it was going to cut 4,200 jobs. That sparked speculation that it would reduce headcount in Singapore, but the group stressed that those fears are unfounded.
Piyush Gupta, Country Officer of Citi Singapore, said: “The truth is the large part of this reduction is likely to be in the Western world because growth in Asia has been spectacular and growth in Singapore particularly has been very strong.”
Citi employs close to 375,000 staff worldwide - which means the cuts will affect only about one per cent of its global headcount.
It saw a 33 per cent jump in revenue from the Asia-Pacific in 2007, with profits climbing 46 per cent to US$4.6 billion.
For Singapore alone, revenue rose 35 per cent, while headcount increased by five per cent to 9,000 people. Citi said it is expecting to see growth rates of 20 per cent in Singapore in 2008. - CNA/vm
Source : Channel NewsAsia - 18 Jan 2008
At a news briefing on Friday, it said that as far as Singapore is concerned, it expects the attrition rate to stay normal.
No bonus cuts are expected and staff will still be paid salary increments.
Citigroup said that overall, Asia including Singapore is positioned for good growth.
Like most big financial names in the US, Citigroup has been hit by the sub-prime mortgage crisis - taking billions of dollars in write-downs.
Citigroup said earlier this week that it was going to cut 4,200 jobs. That sparked speculation that it would reduce headcount in Singapore, but the group stressed that those fears are unfounded.
Piyush Gupta, Country Officer of Citi Singapore, said: “The truth is the large part of this reduction is likely to be in the Western world because growth in Asia has been spectacular and growth in Singapore particularly has been very strong.”
Citi employs close to 375,000 staff worldwide - which means the cuts will affect only about one per cent of its global headcount.
It saw a 33 per cent jump in revenue from the Asia-Pacific in 2007, with profits climbing 46 per cent to US$4.6 billion.
For Singapore alone, revenue rose 35 per cent, while headcount increased by five per cent to 9,000 people. Citi said it is expecting to see growth rates of 20 per cent in Singapore in 2008. - CNA/vm
Source : Channel NewsAsia - 18 Jan 2008
Asian economies face a challenging year in 2008 but as a group they are still expected to show growth of 10 to 12 percent.
Asian economies face a challenging year in 2008 but as a group they are still expected to show growth of 10 to 12 percent.
This is the forecast from HSBC in its latest report on the region.
However, a recession in the US could knock off a few percentage points off Singapore’s economic growth.
With a US recession on the horizon and the US sub-prime mortgage crisis still taking its toll, HSBC is predicting a difficult year for Asia in 2008.
Economies such as Japan and Taiwan are expected to be most cyclically sensitive to the US slowdown. But emerging ones - led by China and India - are forecast to continue booming along.
Garry Evans, Pan-Asian Equity Strategist, HSBC, said: “Well, it’s going to be a difficult year, there is no doubt about that. We’ve got the US slowing - credit crunch out there, everyone is focused on the bad news.
“I don’t think it’s going to be quite as bad as that though because governments are going to react to this bad news. The Fed is going to cut rates in the US - we’ve going to have a fiscal stimulus package there and I think Asian countries are going to grow reasonably stronger this year.
“You’re not going to see that much of a slowdown, particularly in China and India - and if you do see a slowdown, governments here have also got room to cut rates and increase spending.
“So I actually see the Asian markets going up this year - ultimately 10 to 12 percent or something like that. I don’t’ see a bear market but I think it’s going to be a year of ups and downs - your probably going to have to be a little patient to get a return.”
Mr Evans added that inflationary pressure will settle.
He said: “Well, ultimately if we’re seeing global growth slowing, then I think you’re going to see inflation becoming less of a worry during the year. In general, in most places, inflation is still a food phenomenon, and it’s not really showing much signs of coming though to any other areas in the economy.
“We’re all a bit worried about inflation at the minute. Certainly the most worrying scenario is when you have high inflation and slowing growth - in a so called stagflation - and if we have that then we could be in for a very tough ride. But I think generally as growth slows, inflation will come off the radar scene as being a problem.”
Here in Singapore, HSBC says the financial and property sectors will remain positive, but exports will remain susceptible to a US slowdown.
Peter Morgan, Chief Economist, Global Research Asia Pacific, HSBC, said: “Well we are fairly optimistic on Singapore - we think that the strength in loan growth and the strength in the property sector is having a positive impact.
“Growth in Singapore is likely to slow, and Singapore is still a fairly export sensitive country and if the US looses a couple percentage points of growth than that could knock off maybe 3 percentage points on Singapore’s growth.”
HSBC is forecasting the Singapore economy will grow 7.3 percent in 2008. - CNA/ch
Source : Channel NewsAsia - 18 Jan 2008
This is the forecast from HSBC in its latest report on the region.
However, a recession in the US could knock off a few percentage points off Singapore’s economic growth.
With a US recession on the horizon and the US sub-prime mortgage crisis still taking its toll, HSBC is predicting a difficult year for Asia in 2008.
Economies such as Japan and Taiwan are expected to be most cyclically sensitive to the US slowdown. But emerging ones - led by China and India - are forecast to continue booming along.
Garry Evans, Pan-Asian Equity Strategist, HSBC, said: “Well, it’s going to be a difficult year, there is no doubt about that. We’ve got the US slowing - credit crunch out there, everyone is focused on the bad news.
“I don’t think it’s going to be quite as bad as that though because governments are going to react to this bad news. The Fed is going to cut rates in the US - we’ve going to have a fiscal stimulus package there and I think Asian countries are going to grow reasonably stronger this year.
“You’re not going to see that much of a slowdown, particularly in China and India - and if you do see a slowdown, governments here have also got room to cut rates and increase spending.
“So I actually see the Asian markets going up this year - ultimately 10 to 12 percent or something like that. I don’t’ see a bear market but I think it’s going to be a year of ups and downs - your probably going to have to be a little patient to get a return.”
Mr Evans added that inflationary pressure will settle.
He said: “Well, ultimately if we’re seeing global growth slowing, then I think you’re going to see inflation becoming less of a worry during the year. In general, in most places, inflation is still a food phenomenon, and it’s not really showing much signs of coming though to any other areas in the economy.
“We’re all a bit worried about inflation at the minute. Certainly the most worrying scenario is when you have high inflation and slowing growth - in a so called stagflation - and if we have that then we could be in for a very tough ride. But I think generally as growth slows, inflation will come off the radar scene as being a problem.”
Here in Singapore, HSBC says the financial and property sectors will remain positive, but exports will remain susceptible to a US slowdown.
Peter Morgan, Chief Economist, Global Research Asia Pacific, HSBC, said: “Well we are fairly optimistic on Singapore - we think that the strength in loan growth and the strength in the property sector is having a positive impact.
“Growth in Singapore is likely to slow, and Singapore is still a fairly export sensitive country and if the US looses a couple percentage points of growth than that could knock off maybe 3 percentage points on Singapore’s growth.”
HSBC is forecasting the Singapore economy will grow 7.3 percent in 2008. - CNA/ch
Source : Channel NewsAsia - 18 Jan 2008
FUND managers across the world have turned “super-bearish”
FUND managers across the world have turned “super-bearish” over the last month, abandoning hope that Europe and Asia can escape contagion from the United States housing crisis.
A Merrill Lynch survey found that a fifth of big investors now expect an outright global recession, an occurrence not seen since the 1930s. Some think the world is already in recession.
“The period of denial may be over,” said Mr David Bowers, who put together the closely-watched report.
“This month’s survey is the first in which investors have really started to recognise that the ‘credit crunch’ could lead to a major recession.
The vast majority expect profit margins to shrink in 2008.”
The report said global cash balances had jumped to 32 per cent of the average portfolio from 20 per cent as recently as November, with both bonds and equities falling out of favour. The survey covers 195 funds managing US$671 billion ($964 billion) across the three main regions.
The asset managers no longer want firms to take on more debt or pay out bigger dividends — the twin abuses at the height of the credit bubble.
They increasingly want them to batten down the hatches for a long storm by using cash flow to repair balance sheets.
What is striking is the broad perception that the US is no longer the sole epicentre of the crisis.
Indeed, most now think the US dollar is poised to rally as the trouble shifts increasingly to Europe.
A net 55 per cent view the euro as “overvalued”, and a net 61 per cent think the sterling is too high.
Asia is turning pessimistic as well. A net 29 per cent think China’s economy will slow and most are now underweight Chinese equities — preferring the Hong Kong stocks, which offers arbitrage opportunities against over-inflated Shanghai.
None of the regional managers thinks China’s growth rate will rise this year.
The Asian investors expect the region (excluding Japan) to face an unhealthy drift into stagflation, with growth slowing and price pressures rising at the same time. They are massively underweight on autos and media, but like staples and oil.
A net 50 per cent expect emerging markets around the world to deteriorate. A fifth seem to expect the bubble to burst altogether.
Bank and financial firms are the new pariahs.
Merrill Lynch’s credit strategist Barnaby Martin said the banks now faced much the same plight as telecom companies in 2002. “Their efforts to de-leverage will be bad for shareholders, but good for bondholders,” he said.
One glimmer of light is the rising — if small — number who think a fresh cycle of global growth is already beginning, despite the near-panic mood among their peers.— THE DAILY TELEGRAPH
Ambrose Evans-Pritchard has covered world politics and economics for a quarter of a century
Source : Today - 19 Jan 2008
A Merrill Lynch survey found that a fifth of big investors now expect an outright global recession, an occurrence not seen since the 1930s. Some think the world is already in recession.
“The period of denial may be over,” said Mr David Bowers, who put together the closely-watched report.
“This month’s survey is the first in which investors have really started to recognise that the ‘credit crunch’ could lead to a major recession.
The vast majority expect profit margins to shrink in 2008.”
The report said global cash balances had jumped to 32 per cent of the average portfolio from 20 per cent as recently as November, with both bonds and equities falling out of favour. The survey covers 195 funds managing US$671 billion ($964 billion) across the three main regions.
The asset managers no longer want firms to take on more debt or pay out bigger dividends — the twin abuses at the height of the credit bubble.
They increasingly want them to batten down the hatches for a long storm by using cash flow to repair balance sheets.
What is striking is the broad perception that the US is no longer the sole epicentre of the crisis.
Indeed, most now think the US dollar is poised to rally as the trouble shifts increasingly to Europe.
A net 55 per cent view the euro as “overvalued”, and a net 61 per cent think the sterling is too high.
Asia is turning pessimistic as well. A net 29 per cent think China’s economy will slow and most are now underweight Chinese equities — preferring the Hong Kong stocks, which offers arbitrage opportunities against over-inflated Shanghai.
None of the regional managers thinks China’s growth rate will rise this year.
The Asian investors expect the region (excluding Japan) to face an unhealthy drift into stagflation, with growth slowing and price pressures rising at the same time. They are massively underweight on autos and media, but like staples and oil.
A net 50 per cent expect emerging markets around the world to deteriorate. A fifth seem to expect the bubble to burst altogether.
Bank and financial firms are the new pariahs.
Merrill Lynch’s credit strategist Barnaby Martin said the banks now faced much the same plight as telecom companies in 2002. “Their efforts to de-leverage will be bad for shareholders, but good for bondholders,” he said.
One glimmer of light is the rising — if small — number who think a fresh cycle of global growth is already beginning, despite the near-panic mood among their peers.— THE DAILY TELEGRAPH
Ambrose Evans-Pritchard has covered world politics and economics for a quarter of a century
Source : Today - 19 Jan 2008
$1,000 a night and higher have not deterred Formula 1 fans from snapping up trackside hotel rooms for the inaugural Singapore Grand Prix.
RATES of $1,000 a night and higher have not deterred Formula 1 fans from snapping up trackside hotel rooms for the inaugural Singapore Grand Prix.
Hotels ranging from the glitzy Ritz-Carlton Millennia Singapore to the Peninsula-Excelsior Hotel are already fully booked for the Sept 26 to 28 race. This is despite significantly higher than normal room rates of over $1,000 per night for the Ritz (about a 100 per cent increase) and $300 for the Peninsula (about a 50 per cent increase).
Two other hotels - Swissotel The Stamford and Pan Pacific Singapore - anticipate a 100 per cent occupancy rate.
One reason for the higher rates is that the Government will be imposing a special hotel tax on total room revenue from Sept 24 to 28 - the week of the race.
The tax will range from 30 per cent - for the 11 trackside hotels - to 20 per cent for all other hotels.
Trackside hotels such as Marina Mandarin ($1,500 per night) and Fairmont Singapore ($1,830) are still entertaining bookings.
The Fullerton has yet to confirm rates, but will place those interested on a wait-list.
The high take-up rate is not confined to trackside hotels.
The Four Seasons, along Orchard Boulevard, also managed to sell out all of its rooms from Sept 20 to 28.
The race will be held on Sept 28. Qualifying sessions begin on Sept 27.
Tourists are expected to form a significant portion of the 100,000 fans expected for the grand prix, and they are expected to spend around $100 million on hotels, and at food and beverage outlets, nightspots and the like.
Corporate hospitality packages ranging from $3,500 to $7,500 per head have also been selling well. These were put on the market by race organisers Singapore GP in November.
A Singapore GP spokesman declined comment, but it is believed that suites in areas such as the pit area and exclusive Paddock Club are close to being sold out.
Source : Straits Times -21 Jan 2008
Hotels ranging from the glitzy Ritz-Carlton Millennia Singapore to the Peninsula-Excelsior Hotel are already fully booked for the Sept 26 to 28 race. This is despite significantly higher than normal room rates of over $1,000 per night for the Ritz (about a 100 per cent increase) and $300 for the Peninsula (about a 50 per cent increase).
Two other hotels - Swissotel The Stamford and Pan Pacific Singapore - anticipate a 100 per cent occupancy rate.
One reason for the higher rates is that the Government will be imposing a special hotel tax on total room revenue from Sept 24 to 28 - the week of the race.
The tax will range from 30 per cent - for the 11 trackside hotels - to 20 per cent for all other hotels.
Trackside hotels such as Marina Mandarin ($1,500 per night) and Fairmont Singapore ($1,830) are still entertaining bookings.
The Fullerton has yet to confirm rates, but will place those interested on a wait-list.
The high take-up rate is not confined to trackside hotels.
The Four Seasons, along Orchard Boulevard, also managed to sell out all of its rooms from Sept 20 to 28.
The race will be held on Sept 28. Qualifying sessions begin on Sept 27.
Tourists are expected to form a significant portion of the 100,000 fans expected for the grand prix, and they are expected to spend around $100 million on hotels, and at food and beverage outlets, nightspots and the like.
Corporate hospitality packages ranging from $3,500 to $7,500 per head have also been selling well. These were put on the market by race organisers Singapore GP in November.
A Singapore GP spokesman declined comment, but it is believed that suites in areas such as the pit area and exclusive Paddock Club are close to being sold out.
Source : Straits Times -21 Jan 2008
Singapore property market has turned somewhat jittery in the face of growing fears about a recession in the United States.
Buyers might want to delay their property purchases till a clearer picture emerges, say experts
THE Singapore property market has turned somewhat jittery in the face of growing fears about a recession in the United States.
Analysts suggest that unless buyers need a home to live in, they might want to delay any purchases until a clearer picture emerges.
The days when speculators could make quick, easy profits are almost certainly over, they say.
Thus, consultants do not expect much sales activity in the lead-up to Chinese New Year, especially since few launches have been scheduled.
Indeed, market players might hold off till the Budget is released later next month, so they can gauge the Government’s stance, said one consultant, who added: ‘If I were a buyer, I’d wait before committing myself to a property investment.’
Apart from worries that a US recession might hurt growth in Singapore, some also believe last year’s price spurt in high-end homes was overdone.
‘If your goal is to flip the property before completion, you should stay out of the market,’ said Savills Residential director Ku Swee Yong. Such buyers could end up having to finance their purchases long term, he warned.
He noted that Singapore’s property market is stable but said there is a risk that prices could fall. If US sub- prime woes force mortgage insurers to write off bad insurance, this could trigger construction industry layoffs, as well as defaults on consumer credit-card rollover debt and car loans, said Mr Ku.
Some sellers appear to have lowered their expectations, particularly for high-end homes. But their asking levels are likely to remain above the purchase prices, analysts note.
In a recent classified advertisement in The Straits Times, high-floor units at Sky@eleven, a condominium off Thomson Road, were going for $1,250 per sq ft (psf). That falls short of earlier asking prices of $1,300 psf to $1,400 psf, but tops prices achieved at the launch early last year. Then, the highest price garnered was $1,200 psf, with the average at $975 psf.
‘The opportunities are there, but it is all a matter of timing,’ said a consultant. ‘In the short term, people who don’t have a lot of money to play with should think twice.’
‘Buyers should take a longer-term view and buy when they come across properties priced at acceptable levels,’ said Mr Nicholas Mak, Knight Frank’s director of research and consultancy. ‘Developers are unlikely to cut prices, which should provide support for the market.’
Buyers who plan to live in their new homes, especially if they’re using collective sale gains, have less to worry about, though choices in the primary market might be limited. ‘Developers are waiting for the tempest in the stock market to pass before launching their properties,’ said Mr Mak.
There are favourable deals in the sub-sale and resale market, and the mass and landed markets remain laggards, consultants say. Recent caveats lodged show there are favourable landed buys in suburban spots.
One seasoned property investor said he would continue to scout for bargains but would be more selective.
‘The market is nervous but it’s not doomsday. There are still good buying opportunities,’ he said, adding that he scooped up a few cheap buys just after Sars. ‘Do your homework and narrow your search to, for example, areas with a growth story.’
Where new launches are concerned, two condos have started their staff previews. Martin Place Residences in Kim Yam Road is priced at $1,800 psf to $2,300 psf. Over in Bedok Reservoir, Waterfront Waves is priced at $750 psf to $800 psf.
Wait for the right price
‘Buyers should take a longer-term view and buy when they come across properties priced at acceptable levels. Developers are unlikely to cut prices, which should provide support for the market.’ MR MAK, on how homebuyers can cut down their risks when considering property investments in the current uncertain climate
Source : Sunday Times - 20 Jan 2008
THE Singapore property market has turned somewhat jittery in the face of growing fears about a recession in the United States.
Analysts suggest that unless buyers need a home to live in, they might want to delay any purchases until a clearer picture emerges.
The days when speculators could make quick, easy profits are almost certainly over, they say.
Thus, consultants do not expect much sales activity in the lead-up to Chinese New Year, especially since few launches have been scheduled.
Indeed, market players might hold off till the Budget is released later next month, so they can gauge the Government’s stance, said one consultant, who added: ‘If I were a buyer, I’d wait before committing myself to a property investment.’
Apart from worries that a US recession might hurt growth in Singapore, some also believe last year’s price spurt in high-end homes was overdone.
‘If your goal is to flip the property before completion, you should stay out of the market,’ said Savills Residential director Ku Swee Yong. Such buyers could end up having to finance their purchases long term, he warned.
He noted that Singapore’s property market is stable but said there is a risk that prices could fall. If US sub- prime woes force mortgage insurers to write off bad insurance, this could trigger construction industry layoffs, as well as defaults on consumer credit-card rollover debt and car loans, said Mr Ku.
Some sellers appear to have lowered their expectations, particularly for high-end homes. But their asking levels are likely to remain above the purchase prices, analysts note.
In a recent classified advertisement in The Straits Times, high-floor units at Sky@eleven, a condominium off Thomson Road, were going for $1,250 per sq ft (psf). That falls short of earlier asking prices of $1,300 psf to $1,400 psf, but tops prices achieved at the launch early last year. Then, the highest price garnered was $1,200 psf, with the average at $975 psf.
‘The opportunities are there, but it is all a matter of timing,’ said a consultant. ‘In the short term, people who don’t have a lot of money to play with should think twice.’
‘Buyers should take a longer-term view and buy when they come across properties priced at acceptable levels,’ said Mr Nicholas Mak, Knight Frank’s director of research and consultancy. ‘Developers are unlikely to cut prices, which should provide support for the market.’
Buyers who plan to live in their new homes, especially if they’re using collective sale gains, have less to worry about, though choices in the primary market might be limited. ‘Developers are waiting for the tempest in the stock market to pass before launching their properties,’ said Mr Mak.
There are favourable deals in the sub-sale and resale market, and the mass and landed markets remain laggards, consultants say. Recent caveats lodged show there are favourable landed buys in suburban spots.
One seasoned property investor said he would continue to scout for bargains but would be more selective.
‘The market is nervous but it’s not doomsday. There are still good buying opportunities,’ he said, adding that he scooped up a few cheap buys just after Sars. ‘Do your homework and narrow your search to, for example, areas with a growth story.’
Where new launches are concerned, two condos have started their staff previews. Martin Place Residences in Kim Yam Road is priced at $1,800 psf to $2,300 psf. Over in Bedok Reservoir, Waterfront Waves is priced at $750 psf to $800 psf.
Wait for the right price
‘Buyers should take a longer-term view and buy when they come across properties priced at acceptable levels. Developers are unlikely to cut prices, which should provide support for the market.’ MR MAK, on how homebuyers can cut down their risks when considering property investments in the current uncertain climate
Source : Sunday Times - 20 Jan 2008
Developers find pricing of GLS sites more in tune with market realities
Developers find pricing of GLS sites more in tune with market realities
Developers seem to be turning increasingly to state tenders instead of en bloc sales to restock their residential landbanks. This is because land pricing at state tenders is more responsive to the current bearish market conditions.
Also, the Government Land Sales (GLS) programme, with its staple of mass-market, suburban residential sites, is currently just what developers want, as this market segment is expected to shine after the steep run-up in high-end home prices last year.
Figures compiled by Credo Real Estate show that while collective sales languished in the last two quarters of 2007, sales of GLS residential sites spiked in Q4. Developers picked up slightly more than $1 billion worth of 99-year leasehold residential sites sold through the GLS programme in Q4 of last year alone, surpassing the $865 million of such sites they had bought in the first nine months of the year.
In contrast, only $1.28 billion of residential collective sale sites changed hands in Q4 last year, down drastically from $11.2 billion in the first nine months.
Credo Real Estate managing director Karamjit Singh says: ‘En bloc sales have rigidity in their pricing mechanism; once the reserve price has been set in the collective sales agreement (CSA), it is difficult to lower it, as you’ll have to go through all the majority owners who agreed to the sale to sign a supplemental CSA.’
‘In contrast, the pricing for a state site offered through the GLS programme can be more reactive to the mood of the day, presenting an opportunity that developers are seizing today,’ he added.
Knight Frank executive director Nicholas Wong says: ‘Collective sales have a higher chance of success when the market is trending up as the reserve price in the CSA is always pegged to the last done transaction of a similar property. But when the market is flat or on a downturn, en bloc sales become more difficult to transact - unless the site boasts some unique propositions such as a landmark location, proximity to MRT stations, etc. Owners will have to price their sites reasonably to find buyers.’
Putting things in perspective, a seasoned market observer said: ‘Because the market has slowed, the spread between what developers are willing to pay and en bloc owners’ expectations has widened. En bloc sales involve many owners and it takes time for them to realise they have to lower their expectations.
‘Whereas for state land tenders, the minimum pricing is decided by the Chief Valuer, who is on top of the market and is more nimble to changes in market moods and values.’
The usual government policy is to sell a site if at least 85 per cent of the Chief Valuer’s price has been met.
For sites sold through the confirmed list, Chief Valuer’s assessment is made on the tender closing date. For sites sold through the reserve list (which are triggered for release only upon successful application by a developer), the Chief Valuer’s assessment is made before the government opens any application by a developer seeking the release of the site.
DTZ executive director Ong Choon Fah also says developers find it ‘more straightforward’ to pick up a site at a state tender, unlike the hassle of going through the Strata Titles Board and potential court hearings in the case of collective sales. ‘Developers are also balancing their portfolios. After the run-up in high-end home prices, the mass-market is expected to shine this year,’ Mrs Ong added. Residential sites in the GLS programme are largely in suburban locations, suitable for development into mass-market condos catering to upgrader demand.
Mrs Ong expects developers to continue preferring GLS sites to restock their landbanks in the months ahead - especially if the government offers more 99-year private condo sites in mature Housing & Development Board estates near MRT stations.
Credo’s Mr Singh expects the volume of residential collective sales deals to ease from last year’s record $12.5 billion to about $4-6 billion this year. With weaker market sentiment, owners will have to be more realistic about their pricing, especially in the suburban market where the GLS is a formidable source of alternative land supply for developers, albeit on 99-year leasehold tenure.
‘But there will still be en bloc sales because they are the only credible source of prime sites right now. Previously, Sentosa Cove used to be an alternative source of supply of high-end residential sites. But land sales there have come to an end. En bloc deals involving prime sites will take place - if prices are realistic,’ he added.
Source : Business Times - 22 Jan 2008
Developers seem to be turning increasingly to state tenders instead of en bloc sales to restock their residential landbanks. This is because land pricing at state tenders is more responsive to the current bearish market conditions.
Also, the Government Land Sales (GLS) programme, with its staple of mass-market, suburban residential sites, is currently just what developers want, as this market segment is expected to shine after the steep run-up in high-end home prices last year.
Figures compiled by Credo Real Estate show that while collective sales languished in the last two quarters of 2007, sales of GLS residential sites spiked in Q4. Developers picked up slightly more than $1 billion worth of 99-year leasehold residential sites sold through the GLS programme in Q4 of last year alone, surpassing the $865 million of such sites they had bought in the first nine months of the year.
In contrast, only $1.28 billion of residential collective sale sites changed hands in Q4 last year, down drastically from $11.2 billion in the first nine months.
Credo Real Estate managing director Karamjit Singh says: ‘En bloc sales have rigidity in their pricing mechanism; once the reserve price has been set in the collective sales agreement (CSA), it is difficult to lower it, as you’ll have to go through all the majority owners who agreed to the sale to sign a supplemental CSA.’
‘In contrast, the pricing for a state site offered through the GLS programme can be more reactive to the mood of the day, presenting an opportunity that developers are seizing today,’ he added.
Knight Frank executive director Nicholas Wong says: ‘Collective sales have a higher chance of success when the market is trending up as the reserve price in the CSA is always pegged to the last done transaction of a similar property. But when the market is flat or on a downturn, en bloc sales become more difficult to transact - unless the site boasts some unique propositions such as a landmark location, proximity to MRT stations, etc. Owners will have to price their sites reasonably to find buyers.’
Putting things in perspective, a seasoned market observer said: ‘Because the market has slowed, the spread between what developers are willing to pay and en bloc owners’ expectations has widened. En bloc sales involve many owners and it takes time for them to realise they have to lower their expectations.
‘Whereas for state land tenders, the minimum pricing is decided by the Chief Valuer, who is on top of the market and is more nimble to changes in market moods and values.’
The usual government policy is to sell a site if at least 85 per cent of the Chief Valuer’s price has been met.
For sites sold through the confirmed list, Chief Valuer’s assessment is made on the tender closing date. For sites sold through the reserve list (which are triggered for release only upon successful application by a developer), the Chief Valuer’s assessment is made before the government opens any application by a developer seeking the release of the site.
DTZ executive director Ong Choon Fah also says developers find it ‘more straightforward’ to pick up a site at a state tender, unlike the hassle of going through the Strata Titles Board and potential court hearings in the case of collective sales. ‘Developers are also balancing their portfolios. After the run-up in high-end home prices, the mass-market is expected to shine this year,’ Mrs Ong added. Residential sites in the GLS programme are largely in suburban locations, suitable for development into mass-market condos catering to upgrader demand.
Mrs Ong expects developers to continue preferring GLS sites to restock their landbanks in the months ahead - especially if the government offers more 99-year private condo sites in mature Housing & Development Board estates near MRT stations.
Credo’s Mr Singh expects the volume of residential collective sales deals to ease from last year’s record $12.5 billion to about $4-6 billion this year. With weaker market sentiment, owners will have to be more realistic about their pricing, especially in the suburban market where the GLS is a formidable source of alternative land supply for developers, albeit on 99-year leasehold tenure.
‘But there will still be en bloc sales because they are the only credible source of prime sites right now. Previously, Sentosa Cove used to be an alternative source of supply of high-end residential sites. But land sales there have come to an end. En bloc deals involving prime sites will take place - if prices are realistic,’ he added.
Source : Business Times - 22 Jan 2008
Asia is now less dependent on the US economy
Asia is now less dependent on the US economy
(BANGKOK) Asia would be able to weather any recession in the United States, analysts say, because rising trade and investment within the region make it less dependent on the US economy than in the past.
While a severe downturn in the US would drag on Asian growth by eroding demand for exports, a rapidly growing middle class is fuelling orders for cars, electronics and housing - much of which will be supplied from Asia itself.
Voracious demand for oil, iron ore and other commodities to build roads, sewage systems, and office buildings - especially in the booming economies of China and India - will also help sustain the region through any US slowdown.
‘The US economy is not that important anymore,’ Hans Timmer, a World Bank economist, said in Singapore earlier this month.
Excluding Japan, 43 per cent of Asia’s exports go to other nations in the region, Lehman Brothers calculates - up from 37 per cent in 1995.
‘China and India represent a bigger presence on the world stage than just a half dozen years ago,’ said David Cohen, director of Asian forecasting at Action Economics in Singapore.
A drop of one percentage point in US economic growth would shave 1.3 percentage points from China’s growth rate due to lower exports, Citigroup estimates.
Since China is growing so fast, that isn’t likely to make much of a dent. China’s economy will still expand 11 per cent this year, slightly slower than in 2007, Citigroup projects.
Lehman Brothers forecasts 2008 growth will drop to 9.8 per cent, still remarkably strong.
Most regional projections show some drop-off from 2007, but still reflect healthy expectations.
The UN Economic and Social Commission for Asia and the Pacific said 38 developing economies in the region - including China and India - will expand an overall 7.8 per cent this year, slightly lower than growth of 8.3 per cent in 2007.
Global growth, meanwhile, will moderate to 3.3 per cent in 2008 from 3.6 per cent last year, with any slowdown in the US largely offset by growth in developing countries, the World Bank projects.
But Rajeev Malik, an economist with JPMorgan Chase in Singapore, cautioned that growth in China and India could not make up all the slack of a US downturn.
‘Demand in industrial countries is still pretty important for the rest of Asia,’ Mr Malik said. ‘While China, and to some extent India, offer some offsetting demand, there will still be some downshifting in activity if the US goes into recession.’
If the US economy does contract, India’s growth will likely slow to 7 per cent from the current rate of about 9 per cent, he predicted.
Asian stock markets have tumbled in recent weeks amid worries that a slowdown in the US will hurt exporters’ profits.
Still, some analysts say some stocks appear oversold and the drop may present a buying opportunity given the region’s growth potential.
Japan, the world’s second-largest economy, may suffer the most from a US contraction.
Ryutaro Kono, chief economist at BNP Paribas in Tokyo, predicts the nation’s economic growth will drop this year to about half of the 2 per cent it has marked in recent years.
Lower demand for exports could even have a silver lining for China by restraining inflation, which has soared to the highest level in more than a decade.
‘If China’s exports slow down significantly, you definitely will see lower prices rather than inflation,’ said Minggao Shen, an economist with Citigroup in Beijing.
But he did warn that weaker export demand could leave Chinese manufacturers with overcapacity problems. — AP
(BANGKOK) Asia would be able to weather any recession in the United States, analysts say, because rising trade and investment within the region make it less dependent on the US economy than in the past.
While a severe downturn in the US would drag on Asian growth by eroding demand for exports, a rapidly growing middle class is fuelling orders for cars, electronics and housing - much of which will be supplied from Asia itself.
Voracious demand for oil, iron ore and other commodities to build roads, sewage systems, and office buildings - especially in the booming economies of China and India - will also help sustain the region through any US slowdown.
‘The US economy is not that important anymore,’ Hans Timmer, a World Bank economist, said in Singapore earlier this month.
Excluding Japan, 43 per cent of Asia’s exports go to other nations in the region, Lehman Brothers calculates - up from 37 per cent in 1995.
‘China and India represent a bigger presence on the world stage than just a half dozen years ago,’ said David Cohen, director of Asian forecasting at Action Economics in Singapore.
A drop of one percentage point in US economic growth would shave 1.3 percentage points from China’s growth rate due to lower exports, Citigroup estimates.
Since China is growing so fast, that isn’t likely to make much of a dent. China’s economy will still expand 11 per cent this year, slightly slower than in 2007, Citigroup projects.
Lehman Brothers forecasts 2008 growth will drop to 9.8 per cent, still remarkably strong.
Most regional projections show some drop-off from 2007, but still reflect healthy expectations.
The UN Economic and Social Commission for Asia and the Pacific said 38 developing economies in the region - including China and India - will expand an overall 7.8 per cent this year, slightly lower than growth of 8.3 per cent in 2007.
Global growth, meanwhile, will moderate to 3.3 per cent in 2008 from 3.6 per cent last year, with any slowdown in the US largely offset by growth in developing countries, the World Bank projects.
But Rajeev Malik, an economist with JPMorgan Chase in Singapore, cautioned that growth in China and India could not make up all the slack of a US downturn.
‘Demand in industrial countries is still pretty important for the rest of Asia,’ Mr Malik said. ‘While China, and to some extent India, offer some offsetting demand, there will still be some downshifting in activity if the US goes into recession.’
If the US economy does contract, India’s growth will likely slow to 7 per cent from the current rate of about 9 per cent, he predicted.
Asian stock markets have tumbled in recent weeks amid worries that a slowdown in the US will hurt exporters’ profits.
Still, some analysts say some stocks appear oversold and the drop may present a buying opportunity given the region’s growth potential.
Japan, the world’s second-largest economy, may suffer the most from a US contraction.
Ryutaro Kono, chief economist at BNP Paribas in Tokyo, predicts the nation’s economic growth will drop this year to about half of the 2 per cent it has marked in recent years.
Lower demand for exports could even have a silver lining for China by restraining inflation, which has soared to the highest level in more than a decade.
‘If China’s exports slow down significantly, you definitely will see lower prices rather than inflation,’ said Minggao Shen, an economist with Citigroup in Beijing.
But he did warn that weaker export demand could leave Chinese manufacturers with overcapacity problems. — AP
ALMOST LIKE HOME
Industry association proposes rule on stay of 7 nights or more be lifted
FOR 20 years, there has been a little-known rule governing service apartments: Guests have to stay seven nights or more.
ALMOST LIKE HOME: Facilities offered in service apartments, such as this Fraser Suites two-bedroom apartment outfitted with a kitchen to prepare meals, would ‘help bridge the gaps for medical and family tourism’. — BT FILE PHOTO
Now, with an eye on the current hotel room crunch, the Serviced Apartments Association proposes that this condition be lifted.
There are at least 3,500 service apartment units here, compared to more than 37,000 hotel rooms.
If the association gets the go-ahead, this will have an impact on the short-stay accommodation market. Association president Alfred Ong told The Straits Times it is high time the rule was lifted - a rule he said is unique to Singapore.
He added: ‘If Singapore wants to be a first-class city, then it should give customers the choice, whether it be service apartments, hotel rooms or budget accommodation.’
Although the association said it began preliminary discussions with the Singapore Tourism Board (STB) and the Urban Redevelopment Authority (URA) in 2006 and stepped them up last year, the two agencies said they have yet to receive a formal proposal to lift the rule.
Travel industry players said such a move will help ease the room crunch in Singapore where hotels have registered high average occupancy of more than 80 per cent.
This has led to higher room rates, which in turn have led to concerns over Singapore’s competitive edge in the mass tourism sweepstakes.
The latest American Express market forecast on hotels in the Asia-Pacific, released last week, predicts that corporate rates in Singapore will go up by some 29 per cent this year.
This is higher than its projections on Hong Kong at 17 per cent, Beijing at 21 per cent and Kuala Lumpur at 20 per cent.
This is despite the 8,850 rooms added last year and this year.
Mr Prashant Aggarwal, head of American Express Consulting for Japan, the Asia-Pacific and Australia, cited increased demand with higher visitor arrivals as part of the reasons driving its projection.
However, Plaza Royal on Scotts hotel general manager Patrick Fiat said the industry should not be too concerned about the rates hike.
He told The Straits Times: ‘For the past 10 years, hotel rates have been low. So, the current spike is just hotel rates catching up with rates elsewhere.’ He expects levelling out by next year.
However, he is opposed to allowing service apartments to accept shorter stays.
But the service apartment industry sees the proposed move as complementary rather than competitive.
Ms Tonya Khong, general manager of Fraser Suites and Fraser Place, said: ‘There may not be much impact on the industry’s occupancy if the minimum duration of stay requirement is lifted.
‘We foresee that this move can help bridge the gaps for medical and family tourism, as cooking and children-friendly facilities as well as spacious living space will mean a great deal to these visitors.’
Mr Ong said in other Asian cities, most service apartment guests are middle- to long-term guests. Only about 30 per cent are short-stay guests.
But he added that allowing shorter stays will mean more efficient use of service apartments, which always have some spare days between long-term guests.
Source : Straits Times - 21 Jan 2008
FOR 20 years, there has been a little-known rule governing service apartments: Guests have to stay seven nights or more.
ALMOST LIKE HOME: Facilities offered in service apartments, such as this Fraser Suites two-bedroom apartment outfitted with a kitchen to prepare meals, would ‘help bridge the gaps for medical and family tourism’. — BT FILE PHOTO
Now, with an eye on the current hotel room crunch, the Serviced Apartments Association proposes that this condition be lifted.
There are at least 3,500 service apartment units here, compared to more than 37,000 hotel rooms.
If the association gets the go-ahead, this will have an impact on the short-stay accommodation market. Association president Alfred Ong told The Straits Times it is high time the rule was lifted - a rule he said is unique to Singapore.
He added: ‘If Singapore wants to be a first-class city, then it should give customers the choice, whether it be service apartments, hotel rooms or budget accommodation.’
Although the association said it began preliminary discussions with the Singapore Tourism Board (STB) and the Urban Redevelopment Authority (URA) in 2006 and stepped them up last year, the two agencies said they have yet to receive a formal proposal to lift the rule.
Travel industry players said such a move will help ease the room crunch in Singapore where hotels have registered high average occupancy of more than 80 per cent.
This has led to higher room rates, which in turn have led to concerns over Singapore’s competitive edge in the mass tourism sweepstakes.
The latest American Express market forecast on hotels in the Asia-Pacific, released last week, predicts that corporate rates in Singapore will go up by some 29 per cent this year.
This is higher than its projections on Hong Kong at 17 per cent, Beijing at 21 per cent and Kuala Lumpur at 20 per cent.
This is despite the 8,850 rooms added last year and this year.
Mr Prashant Aggarwal, head of American Express Consulting for Japan, the Asia-Pacific and Australia, cited increased demand with higher visitor arrivals as part of the reasons driving its projection.
However, Plaza Royal on Scotts hotel general manager Patrick Fiat said the industry should not be too concerned about the rates hike.
He told The Straits Times: ‘For the past 10 years, hotel rates have been low. So, the current spike is just hotel rates catching up with rates elsewhere.’ He expects levelling out by next year.
However, he is opposed to allowing service apartments to accept shorter stays.
But the service apartment industry sees the proposed move as complementary rather than competitive.
Ms Tonya Khong, general manager of Fraser Suites and Fraser Place, said: ‘There may not be much impact on the industry’s occupancy if the minimum duration of stay requirement is lifted.
‘We foresee that this move can help bridge the gaps for medical and family tourism, as cooking and children-friendly facilities as well as spacious living space will mean a great deal to these visitors.’
Mr Ong said in other Asian cities, most service apartment guests are middle- to long-term guests. Only about 30 per cent are short-stay guests.
But he added that allowing shorter stays will mean more efficient use of service apartments, which always have some spare days between long-term guests.
Source : Straits Times - 21 Jan 2008
Chuanghui Real Estate
After booming in recent years, China’s real estate market is finally starting to feel the pinch from sagging demand and tighter controls.
One of China’s biggest real estate agencies, Chuanghui Real Estate, has shuttered dozens of outlets in Shanghai and other cities, leaving angry customers and employees, after an ill-timed expansion just as the market was peaking. Many other agencies around the country have also closed down.
So far, the retrenchment appears to be mainly limited to property brokers. But the moves could herald the beginning of a broader slowdown in one of Asia’s hottest real estate markets.
The government has been wrestling to get control of the property sector, worried that rising prices for housing are pushing poorer Chinese out of the market at a time when overall inflation is surging.
Regulators stepped up curbs on the property market last year, alarmed that ‘bubbles’ in property prices could collapse and trigger a financial crisis. Those efforts are starting to take effect. While urban housing prices last month rose 10.5 per cent from a year earlier, a sharp slowdown in sales transactions in recent weeks suggests a new trend.
In the first week of 2008, home sales in Beijing fell 20 per cent compared with the previous week, the state-run newspaper China Securities News reported. Sales were off 38 per cent in Shenzhen and 52 per cent in east China’s Nanjing, it said.
Realtors say the slump started late last year but due to various reasons, like land supply and property hoarding by developers, the impact hasn’t been seen yet in prices.
So far, there are no signs of a mortgage meltdown in China similar to that seen in the US, and experts don’t foresee property prices to fall substantially. Strong economic growth and surging demand from upwardly mobile families are supporting demand.
But business is slowing, especially for the so-called ’second-hand’ apartments, or existing, rather than newly built homes, that are the lifeblood of local realtors in this recently commercialised market.
‘In 2008, we think property developers will face some liquidity problems and financing issues,’ Matthew Kong of ratings agency Fitch Asia Corporates said recently. — AP
Source : Business Times - 22 Jan 2008
One of China’s biggest real estate agencies, Chuanghui Real Estate, has shuttered dozens of outlets in Shanghai and other cities, leaving angry customers and employees, after an ill-timed expansion just as the market was peaking. Many other agencies around the country have also closed down.
So far, the retrenchment appears to be mainly limited to property brokers. But the moves could herald the beginning of a broader slowdown in one of Asia’s hottest real estate markets.
The government has been wrestling to get control of the property sector, worried that rising prices for housing are pushing poorer Chinese out of the market at a time when overall inflation is surging.
Regulators stepped up curbs on the property market last year, alarmed that ‘bubbles’ in property prices could collapse and trigger a financial crisis. Those efforts are starting to take effect. While urban housing prices last month rose 10.5 per cent from a year earlier, a sharp slowdown in sales transactions in recent weeks suggests a new trend.
In the first week of 2008, home sales in Beijing fell 20 per cent compared with the previous week, the state-run newspaper China Securities News reported. Sales were off 38 per cent in Shenzhen and 52 per cent in east China’s Nanjing, it said.
Realtors say the slump started late last year but due to various reasons, like land supply and property hoarding by developers, the impact hasn’t been seen yet in prices.
So far, there are no signs of a mortgage meltdown in China similar to that seen in the US, and experts don’t foresee property prices to fall substantially. Strong economic growth and surging demand from upwardly mobile families are supporting demand.
But business is slowing, especially for the so-called ’second-hand’ apartments, or existing, rather than newly built homes, that are the lifeblood of local realtors in this recently commercialised market.
‘In 2008, we think property developers will face some liquidity problems and financing issues,’ Matthew Kong of ratings agency Fitch Asia Corporates said recently. — AP
Source : Business Times - 22 Jan 2008
CapitaMall Trust Management Ltd will pay S$62.3 million
CapitaMall Trust Management Ltd will pay S$62.3 million in distributable income, for the October-to-December period, or 2.34 Singapore cents per unit.
This compares with the distributable income of S$52.3 million it paid a year ago.
CapitaMall, which is 27-percent owned by Southeast Asia’s largest developer CapitaLand, said its fourth-quarter distribution was 30 percent higher than forecast due to acquisitions and higher lease rates for existing properties.
Net property income of S$44.7 million was 15 percent higher than the forecast of S$38.8 million. - CNA/ch
Source : Channel NewsAsia - 22 Jan 2008
This compares with the distributable income of S$52.3 million it paid a year ago.
CapitaMall, which is 27-percent owned by Southeast Asia’s largest developer CapitaLand, said its fourth-quarter distribution was 30 percent higher than forecast due to acquisitions and higher lease rates for existing properties.
Net property income of S$44.7 million was 15 percent higher than the forecast of S$38.8 million. - CNA/ch
Source : Channel NewsAsia - 22 Jan 2008
714-unit City View@Boon Keng by Hoi Hup Sunway Development
PRICEY condo-style flats will remain a small proportion of the total public housing supply with the Government pledging yesterday to continue providing affordable homes.
HIGH-END FLATS: The 714-unit City View@Boon Keng by Hoi Hup Sunway Development, drew about 3,500 applications for three- to five-room flats. Prices ranged from $349,000 to $727,000. — ST PHOTOS: DESMOND LIM
Its assurance came as high-end flats in Boon Keng offered by private developers were launched recently for up to $727,000 for a five-room flat.
The flats come with interior layouts and fittings more commonly seen in private condominiums, such as bay windows in bathrooms, large balconies and built-in wardrobes.
Buyers are also concerned that prices of resale Housing Board flats shot up 17.4 per cent last year - the highest in a decade - and that sellers in coveted districts are demanding as much as $100,000 in cash over the valuation of their flats.
CONDO-STYLE FIXTURES: Some flats in City View will have wall-to-wall balconies in living rooms.
National Development Minister Mah Bow Tan told Parliament that high-end flats - built under the Design, Build and Sell Scheme (DBSS) - ’serve to fulfil the needs of a niche segment of the HDB market - those with higher aspirations and who can afford a higher price’.
Under the programme, developers are free to design and price the flats as long as they work within the rules of public housing. This means they have to sell flats to families earning no more than $8,000 a month - the limit for households buying public housing.
The first such project, the 616-unit Premiere@ Tampines by Sim Lian Land, drew almost 6,000 applications for its two-, four- and five-room flats with prices from $138,000 to $450,000.
The second, the 714-unit City View@Boon Keng by Hoi Hup Sunway Development, drew about 3,500 applications for three- to five-room flats. Prices ranged from $349,000 to $727,000.
The City View prices had prompted some to wonder if they were affordable to those earning $8,000 a month. Nominated MP Eunice Olsen asked if the income ceiling could be raised for such flats.
Mr Mah said no, because it could result in developers pricing their flats even higher.
The minister added that private companies taking part in the DBSS scheme develop the projects knowing there is an income cap on buyers.
He told Dr Ong Seh Hong (Marine Parade GRC), who asked why the HDB had ’shifted’ from its original mission of providing affordable housing, that the board was, in fact, staying the course.
In recent years it had re-introduced new two- and three-room flats, while additional housing grants are also being offered to low- income earners, he said.
Besides, recent buyers of new HDB flats actually spend just 20 per cent of their monthly household income on housing. This is about half of the debt servicing limit typically used by financial institutions.
Mr Mah added that the HDB was monitoring resale prices, but urged buyers who cannot afford the cash-over-valuation sums demanded by sellers to postpone their purchases or apply for new - and cheaper - HDB flats instead.
Demand for such homes has been rising as well. Last month, 316 surplus flats in the outlying towns of Hougang, Sengkang and Punggol drew 5,147 applications.
The Government will not abandon mission of providing public housing for Singaporeans, assures National Development Minister Mah Bow Tan.
In response to questions from MPs, Mr Mah told Parliament that even with the rising popularity of more expensive condo-style flats - built and sold by private developers under the Design, Built and Sell Scheme (DBSS) - HDB’s top priority is still providing traditional no-frills flats.
Source : Straits Times - 22 Jan 2008
HIGH-END FLATS: The 714-unit City View@Boon Keng by Hoi Hup Sunway Development, drew about 3,500 applications for three- to five-room flats. Prices ranged from $349,000 to $727,000. — ST PHOTOS: DESMOND LIM
Its assurance came as high-end flats in Boon Keng offered by private developers were launched recently for up to $727,000 for a five-room flat.
The flats come with interior layouts and fittings more commonly seen in private condominiums, such as bay windows in bathrooms, large balconies and built-in wardrobes.
Buyers are also concerned that prices of resale Housing Board flats shot up 17.4 per cent last year - the highest in a decade - and that sellers in coveted districts are demanding as much as $100,000 in cash over the valuation of their flats.
CONDO-STYLE FIXTURES: Some flats in City View will have wall-to-wall balconies in living rooms.
National Development Minister Mah Bow Tan told Parliament that high-end flats - built under the Design, Build and Sell Scheme (DBSS) - ’serve to fulfil the needs of a niche segment of the HDB market - those with higher aspirations and who can afford a higher price’.
Under the programme, developers are free to design and price the flats as long as they work within the rules of public housing. This means they have to sell flats to families earning no more than $8,000 a month - the limit for households buying public housing.
The first such project, the 616-unit Premiere@ Tampines by Sim Lian Land, drew almost 6,000 applications for its two-, four- and five-room flats with prices from $138,000 to $450,000.
The second, the 714-unit City View@Boon Keng by Hoi Hup Sunway Development, drew about 3,500 applications for three- to five-room flats. Prices ranged from $349,000 to $727,000.
The City View prices had prompted some to wonder if they were affordable to those earning $8,000 a month. Nominated MP Eunice Olsen asked if the income ceiling could be raised for such flats.
Mr Mah said no, because it could result in developers pricing their flats even higher.
The minister added that private companies taking part in the DBSS scheme develop the projects knowing there is an income cap on buyers.
He told Dr Ong Seh Hong (Marine Parade GRC), who asked why the HDB had ’shifted’ from its original mission of providing affordable housing, that the board was, in fact, staying the course.
In recent years it had re-introduced new two- and three-room flats, while additional housing grants are also being offered to low- income earners, he said.
Besides, recent buyers of new HDB flats actually spend just 20 per cent of their monthly household income on housing. This is about half of the debt servicing limit typically used by financial institutions.
Mr Mah added that the HDB was monitoring resale prices, but urged buyers who cannot afford the cash-over-valuation sums demanded by sellers to postpone their purchases or apply for new - and cheaper - HDB flats instead.
Demand for such homes has been rising as well. Last month, 316 surplus flats in the outlying towns of Hougang, Sengkang and Punggol drew 5,147 applications.
The Government will not abandon mission of providing public housing for Singaporeans, assures National Development Minister Mah Bow Tan.
In response to questions from MPs, Mr Mah told Parliament that even with the rising popularity of more expensive condo-style flats - built and sold by private developers under the Design, Built and Sell Scheme (DBSS) - HDB’s top priority is still providing traditional no-frills flats.
Source : Straits Times - 22 Jan 2008
Singapore Sports Hub Consortium to build a hotel in the Sports Hub.
Shatec signs pact to be master caterer of hub for 25 years
Genting International plc (GIL) yesterday confirmed a BT report that it is currently in preliminary talks with Singapore Sports Hub Consortium to build a hotel in the Sports Hub.
In an announcement on the Singapore Exchange, GIL said ‘preliminary planning suggests the future hotel could have over 500 rooms which would significantly add to the managed room stock of the company’s integrated resort on Sentosa when it is operational.’
This is not expected to have any material impact on the consolidated net tangible assets and earnings per share of the company for the financial year ending Dec 31, 2008, it added.
Representatives of its subsidiary Resorts World at Sentosa Pte Ltd were present at a celebration yesterday for the SSH consortium for being chosen as the preferred bidder for the Sports Hub - to be called Premier Park - from among three short-listed consortiums.
Krist Boo, deputy director of communications at Resorts World at Sentosa told BT that the proposed arrangement is for GIL to build and operate the hotel over the 25-year tenure but details on the hotel itself are still being worked out.
Resorts World at Sentosa, the integrated resorts project by Genting International, is building six hotels with a total of 1,830 rooms by 2010.
A BT report had quoted managing director of Dragages Singapore Ludwig Reichhold as saying that the consortium is in discussion with GIL to invest in a hotel in the Sports Hub, with a potential construction cost of $200 million.
The report added that the SSH consortium is in talks to team up with Frasers Centrepoint on the Sports Hub’s retail space.
Talks with GIL and Frasers Centrepoint were already underway during the tendering process. An SSH booklet on the overview of its proposal contained logos of its team members including GIL and Frasers Centrepoint. A spokesperson for Dragages confirmed that discussions dated back to 2006.
Dragages Singapore is the lead partner in the SSH consortium and is a subsidiary of France-based Bouygues Construction, which has been involved in more than 30 public-private-partnership (PPP) projects world wide and developed infrastructures such as the Stade de France stadium in Paris and the Asia World Expo in Hong Kong.
Under the Public-Private-Partnership arrangement, the government will pay the consortium a total net present value of $1.87 billion to design, finance, build and operate the Sports Hub over the 25-year tenure. The construction cost of the Sport Hub is estimated to be some $1.2 billion.
The Sports Hub, which occupies a 35-hectare site in Kallang, is the first and largest sports facilities infrastructure PPP project in the world.
Another organisation set to ride the buzz surrounding the Sports Hub is the Singapore International Hotel and Tourism College (Shatec), which has signed an agreement with the SSH consortium to be the master caterer over the 25-year tenure.
Shatec will provide a complete set of lifestyle food and beverage catering solutions for all special events and activities at the Sports Hub.
‘As the master caterer, Shatec will be part of all decisions on catering within the hub and will also be the primary operator of the central and satellite kitchens, corporate boxes and hospitality suites,’ Shatec chief executive Steven Chua said. ‘This in turn shall provide our students the best exposure to the spectrum of hospitality and tourism opportunities.’
The consortium’s comprehensive sporting calendar guarantees at least 90 event days at the National Stadium and 46 days at the Singapore Indoor Stadium. Given the number of events to be held here, the demand for F&B catering at the Sports Hub is expected to be robust, he added.
To ensure timely and responsive on-site management operations, Shatec’s F&B services will be delivered under a new corporate subsidiary, which will have overall purview over the entire hub except for the retail and commercial areas.
Source : Business Times - 22 Jan 2008
Genting International plc (GIL) yesterday confirmed a BT report that it is currently in preliminary talks with Singapore Sports Hub Consortium to build a hotel in the Sports Hub.
In an announcement on the Singapore Exchange, GIL said ‘preliminary planning suggests the future hotel could have over 500 rooms which would significantly add to the managed room stock of the company’s integrated resort on Sentosa when it is operational.’
This is not expected to have any material impact on the consolidated net tangible assets and earnings per share of the company for the financial year ending Dec 31, 2008, it added.
Representatives of its subsidiary Resorts World at Sentosa Pte Ltd were present at a celebration yesterday for the SSH consortium for being chosen as the preferred bidder for the Sports Hub - to be called Premier Park - from among three short-listed consortiums.
Krist Boo, deputy director of communications at Resorts World at Sentosa told BT that the proposed arrangement is for GIL to build and operate the hotel over the 25-year tenure but details on the hotel itself are still being worked out.
Resorts World at Sentosa, the integrated resorts project by Genting International, is building six hotels with a total of 1,830 rooms by 2010.
A BT report had quoted managing director of Dragages Singapore Ludwig Reichhold as saying that the consortium is in discussion with GIL to invest in a hotel in the Sports Hub, with a potential construction cost of $200 million.
The report added that the SSH consortium is in talks to team up with Frasers Centrepoint on the Sports Hub’s retail space.
Talks with GIL and Frasers Centrepoint were already underway during the tendering process. An SSH booklet on the overview of its proposal contained logos of its team members including GIL and Frasers Centrepoint. A spokesperson for Dragages confirmed that discussions dated back to 2006.
Dragages Singapore is the lead partner in the SSH consortium and is a subsidiary of France-based Bouygues Construction, which has been involved in more than 30 public-private-partnership (PPP) projects world wide and developed infrastructures such as the Stade de France stadium in Paris and the Asia World Expo in Hong Kong.
Under the Public-Private-Partnership arrangement, the government will pay the consortium a total net present value of $1.87 billion to design, finance, build and operate the Sports Hub over the 25-year tenure. The construction cost of the Sport Hub is estimated to be some $1.2 billion.
The Sports Hub, which occupies a 35-hectare site in Kallang, is the first and largest sports facilities infrastructure PPP project in the world.
Another organisation set to ride the buzz surrounding the Sports Hub is the Singapore International Hotel and Tourism College (Shatec), which has signed an agreement with the SSH consortium to be the master caterer over the 25-year tenure.
Shatec will provide a complete set of lifestyle food and beverage catering solutions for all special events and activities at the Sports Hub.
‘As the master caterer, Shatec will be part of all decisions on catering within the hub and will also be the primary operator of the central and satellite kitchens, corporate boxes and hospitality suites,’ Shatec chief executive Steven Chua said. ‘This in turn shall provide our students the best exposure to the spectrum of hospitality and tourism opportunities.’
The consortium’s comprehensive sporting calendar guarantees at least 90 event days at the National Stadium and 46 days at the Singapore Indoor Stadium. Given the number of events to be held here, the demand for F&B catering at the Sports Hub is expected to be robust, he added.
To ensure timely and responsive on-site management operations, Shatec’s F&B services will be delivered under a new corporate subsidiary, which will have overall purview over the entire hub except for the retail and commercial areas.
Source : Business Times - 22 Jan 2008
CHIP Eng Seng Corporation has been awarded a contract worth $188 million by the Housing & Development Board
CHIP Eng Seng Corporation has been awarded a contract worth $188 million by the Housing & Development Board for the construction of 1,394 dwelling units in Queenstown.
The contract, won through wholly-owned subsidiary Chip Eng Seng Contractors (1988) Pte Ltd, also includes the construction of a multi-storey carpark, link bridges, a roof garden, an education centre and other facilities.
Building works are expected to begin next month and to be completed by 2011. This is Chip Eng Seng’s first construction contract won this year.
With construction demand on the rise, Chip Eng Seng said it expects its construction division to be busy with tenders and construction work this year.
‘After many lacklustre years, an upturn in the construction industry is in view. We are very positive about our prospects for 2008,’ said Lim Tiam Seng, executive chairman of the group.
As at June 2007, Chip Eng Seng had a construction order book of about $590 million that will take the group through to 2011. The company is undertaking two other HDB housing projects. One is in Sembawang and the other is the Pinnacle @ Duxton, which features seven 50-storey residential blocks with skybridges, and communal and commercial facilities.
When completed, Pinnacle @ Duxton will be the tallest public housing in Singapore.
Chip Eng Seng, which is into property as well as construction, has undertaken a broad spectrum of construction projects in both the private and public sectors. It has also been actively acquiring and developing properties in Singapore, spanning residential, commercial and industrial properties.
Source : Business Times - 22 Jan 2008
The contract, won through wholly-owned subsidiary Chip Eng Seng Contractors (1988) Pte Ltd, also includes the construction of a multi-storey carpark, link bridges, a roof garden, an education centre and other facilities.
Building works are expected to begin next month and to be completed by 2011. This is Chip Eng Seng’s first construction contract won this year.
With construction demand on the rise, Chip Eng Seng said it expects its construction division to be busy with tenders and construction work this year.
‘After many lacklustre years, an upturn in the construction industry is in view. We are very positive about our prospects for 2008,’ said Lim Tiam Seng, executive chairman of the group.
As at June 2007, Chip Eng Seng had a construction order book of about $590 million that will take the group through to 2011. The company is undertaking two other HDB housing projects. One is in Sembawang and the other is the Pinnacle @ Duxton, which features seven 50-storey residential blocks with skybridges, and communal and commercial facilities.
When completed, Pinnacle @ Duxton will be the tallest public housing in Singapore.
Chip Eng Seng, which is into property as well as construction, has undertaken a broad spectrum of construction projects in both the private and public sectors. It has also been actively acquiring and developing properties in Singapore, spanning residential, commercial and industrial properties.
Source : Business Times - 22 Jan 2008
Hotel sales in Singapore topped US$376 million
Hotel sales in Singapore topped US$376 million last year, putting it in sixth position in transaction activity in Asia.
This is a 3.5 per cent growth from 2006.
According to Jones Lang LaSalle Hotels, Japan saw the highest activity last year with US$6.8 billion of deals done, a 63 per cent jump from the previous year.
Jones Lang attributed the lure of Japan to the low cost of debt.
It added that while economic growth rates may not be as strong as some parts of the world, Japanese hotels still offer a positive yield spread.
Hong Kong trailed a far second with US$850 million of sales transacted, followed by China with US$727 million. - CNA/ac
Source : Channel NewsAsia - 21 Jan 2008
This is a 3.5 per cent growth from 2006.
According to Jones Lang LaSalle Hotels, Japan saw the highest activity last year with US$6.8 billion of deals done, a 63 per cent jump from the previous year.
Jones Lang attributed the lure of Japan to the low cost of debt.
It added that while economic growth rates may not be as strong as some parts of the world, Japanese hotels still offer a positive yield spread.
Hong Kong trailed a far second with US$850 million of sales transacted, followed by China with US$727 million. - CNA/ac
Source : Channel NewsAsia - 21 Jan 2008
Hotel sales in Singapore topped US$376 million
Hotel sales in Singapore topped US$376 million last year, putting it in sixth position in transaction activity in Asia.
This is a 3.5 per cent growth from 2006.
According to Jones Lang LaSalle Hotels, Japan saw the highest activity last year with US$6.8 billion of deals done, a 63 per cent jump from the previous year.
Jones Lang attributed the lure of Japan to the low cost of debt.
It added that while economic growth rates may not be as strong as some parts of the world, Japanese hotels still offer a positive yield spread.
Hong Kong trailed a far second with US$850 million of sales transacted, followed by China with US$727 million. - CNA/ac
Source : Channel NewsAsia - 21 Jan 2008
This is a 3.5 per cent growth from 2006.
According to Jones Lang LaSalle Hotels, Japan saw the highest activity last year with US$6.8 billion of deals done, a 63 per cent jump from the previous year.
Jones Lang attributed the lure of Japan to the low cost of debt.
It added that while economic growth rates may not be as strong as some parts of the world, Japanese hotels still offer a positive yield spread.
Hong Kong trailed a far second with US$850 million of sales transacted, followed by China with US$727 million. - CNA/ac
Source : Channel NewsAsia - 21 Jan 2008
GIC Real Estate is partnering with Russia’s PIK Group
GIC Real Estate is partnering with Russia’s PIK Group to develop a large urban township in the city of Mytischi in Russia.
The 114-hectare site is located in the Moscow region to the northeast of the capital.
GIC Real Estate will acquire a 25 per cent stake in the project for US$233 million (S$336 million).
A CB Richard Ellis appraisal carried out 12 months ago valued the site at over US$1.3 billion.
The township will contain 50 high-rise apartment buildings and 13 low-rise commercial buildings.
There will also be five schools, seven kindergartens, two polyclinics and over 17,000 parking lots.
When completed in 2013, the development can house about 50,000 residents.
The PIK Group is one of the largest real estate developers in Russia. - CNA/ac
Source : Channel NewsAsia - 21 Jan 2008
The 114-hectare site is located in the Moscow region to the northeast of the capital.
GIC Real Estate will acquire a 25 per cent stake in the project for US$233 million (S$336 million).
A CB Richard Ellis appraisal carried out 12 months ago valued the site at over US$1.3 billion.
The township will contain 50 high-rise apartment buildings and 13 low-rise commercial buildings.
There will also be five schools, seven kindergartens, two polyclinics and over 17,000 parking lots.
When completed in 2013, the development can house about 50,000 residents.
The PIK Group is one of the largest real estate developers in Russia. - CNA/ac
Source : Channel NewsAsia - 21 Jan 2008
Saturday, January 19, 2008
The “Cool Dome” design
The “Cool Dome” design, submitted by the Singapore Sports Hub consortium, will be Singapore’s next iconic structure.
Singapore Sports Hub Group’s proposal
The Singapore government on Saturday revealed the consortium as its preferred bidder for the Singapore Sports Hub project.
The consortium beats two other bids.
The winning team’s strong programming line-up gave it the upper hand over their rivals.
These were the “Horse shoe shaped design” submitted by the Singapore Gold consortium and the “wrapped-Stadium design” submitted by the Alpine Mayreder.
The new sports hub will be completed by end 2011 and will cost some S$1.2 billion. - CNA/ir
Source : Channel NewsAsia - 19 Jan 2008
Singapore Sports Hub Group’s proposal
The Singapore government on Saturday revealed the consortium as its preferred bidder for the Singapore Sports Hub project.
The consortium beats two other bids.
The winning team’s strong programming line-up gave it the upper hand over their rivals.
These were the “Horse shoe shaped design” submitted by the Singapore Gold consortium and the “wrapped-Stadium design” submitted by the Alpine Mayreder.
The new sports hub will be completed by end 2011 and will cost some S$1.2 billion. - CNA/ir
Source : Channel NewsAsia - 19 Jan 2008
The majority owners of Regent Garden, a 31-unit development in West Coast Road, are trying to back out of a deal with Allgreen Properties
Majority owners go to court claiming collective sale price undervalues site
ANOTHER collective sale dispute is brewing, but this time, those locking horns with the developer are the majority owners. Usually, the minority owners are the ones who take the lead in contesting such sales.
The majority owners of Regent Garden, a 31-unit development in West Coast Road, are trying to back out of a deal with Allgreen Properties .
Quite often, collective sale disputes have been triggered by unhappiness on the part of minority owners, as with the ongoing Horizon Towers case.
The Regent Garden owners inked a sales agreement in April last year to sell their property to mainboard-listed Allgreen for $34 million.
However, in a statement from Allgreen to the Singapore Exchange yesterday, the company disclosed that the majority owners are asking the High Court to release them from the agreement.
Alternatively, the owners want to get damages of between $5.7 million and $6.685 million from Allgreen.
Allgreen said in the same announcement that it intends to ‘vigorously contest this action, and the claims and allegations made by the majority vendors’. The firm maintains that the deal remains valid and binding at the original sale price of $34 million.
Allgreen has also gone to the High Court, to ask it to order the majority owners to complete the transaction by Feb 28.
According to documents seen by The Straits Times, the majority owners, who own 25 of the 31 units, signed the deal last April. By November, the minority owners had agreed to the deal and withdrawn the objections they had filed with the Strata Titles Board.
However, the majority owners, through their lawyers, wrote to Allgreen last month, claiming the sale price of $34 million was a ‘mutual fundamental mistake’.
It arose because the sale proceeds assumed a development charge payable of $7.2 million when the owners had expected a charge of only $950,000. So the sale price was at ‘a gross undervalue’.
The minority owners also appear to have been paid extra. But the majority owners say Allgreen has refused to give them these details.
To this, Allgreen points out that its bid of $34 million was the highest among all the bids. It was also $4 million higher than the reserve sale price.
It disagrees that a mistake was made. It says the sales committee had made a conscious decision not to obtain the actual baseline plot ratio - which affects the development charge - from the Urban Redevelopment Authority before the deal was struck.
According to Allgreen, it had even offered a floating sale price, which would be subject to the development charge, but the sales committee wanted to fix the price - in order to be guaranteed certainty of sale.
Only later did the majority owners ask a property consultancy to put together a valuation report using the actual baseline plot ratio. This resulted in a higher valuation of Regent Garden.
Allgreen says such assertions are ‘nothing more than belated attempts to rewrite the bargain in the hope of extracting a higher price for Regent Garden’.
Source : Straits Times - 19 Jan 2008
ANOTHER collective sale dispute is brewing, but this time, those locking horns with the developer are the majority owners. Usually, the minority owners are the ones who take the lead in contesting such sales.
The majority owners of Regent Garden, a 31-unit development in West Coast Road, are trying to back out of a deal with Allgreen Properties .
Quite often, collective sale disputes have been triggered by unhappiness on the part of minority owners, as with the ongoing Horizon Towers case.
The Regent Garden owners inked a sales agreement in April last year to sell their property to mainboard-listed Allgreen for $34 million.
However, in a statement from Allgreen to the Singapore Exchange yesterday, the company disclosed that the majority owners are asking the High Court to release them from the agreement.
Alternatively, the owners want to get damages of between $5.7 million and $6.685 million from Allgreen.
Allgreen said in the same announcement that it intends to ‘vigorously contest this action, and the claims and allegations made by the majority vendors’. The firm maintains that the deal remains valid and binding at the original sale price of $34 million.
Allgreen has also gone to the High Court, to ask it to order the majority owners to complete the transaction by Feb 28.
According to documents seen by The Straits Times, the majority owners, who own 25 of the 31 units, signed the deal last April. By November, the minority owners had agreed to the deal and withdrawn the objections they had filed with the Strata Titles Board.
However, the majority owners, through their lawyers, wrote to Allgreen last month, claiming the sale price of $34 million was a ‘mutual fundamental mistake’.
It arose because the sale proceeds assumed a development charge payable of $7.2 million when the owners had expected a charge of only $950,000. So the sale price was at ‘a gross undervalue’.
The minority owners also appear to have been paid extra. But the majority owners say Allgreen has refused to give them these details.
To this, Allgreen points out that its bid of $34 million was the highest among all the bids. It was also $4 million higher than the reserve sale price.
It disagrees that a mistake was made. It says the sales committee had made a conscious decision not to obtain the actual baseline plot ratio - which affects the development charge - from the Urban Redevelopment Authority before the deal was struck.
According to Allgreen, it had even offered a floating sale price, which would be subject to the development charge, but the sales committee wanted to fix the price - in order to be guaranteed certainty of sale.
Only later did the majority owners ask a property consultancy to put together a valuation report using the actual baseline plot ratio. This resulted in a higher valuation of Regent Garden.
Allgreen says such assertions are ‘nothing more than belated attempts to rewrite the bargain in the hope of extracting a higher price for Regent Garden’.
Source : Straits Times - 19 Jan 2008
STB power to hear all objections
SINGAPORE has seen several ugly en bloc tussles but this is a first. The majority owners, having agreed to sell their condominium, are now suing the buyers.
A group of 25 at the 31-unit Regent Garden is alleging that developer Allgreen Properties has breached the sale and purchase agreement by grossly undervaluing the condominium.
The owners filed a claim last Monday with the High Court to declare that they are no longer bound by the agreement, which saw the condominium sold for $34 million last April.
On Friday, Allgreen struck back. It announced that it will “vigorously contest this action and the claims and allegations made by the majority vendors”, and has applied for a court order to force the majority owners to complete the transaction.
According to court documents obtained by Today, the dispute centres on two issues. The majority owners, represented by Senior Counsel Molly Lim, allege that Allgreen had overstated the development charge by more than $6 million, thereby depressing the sale price by that sum.
They also claim the developer gave “disproportionately high” proceeds to the six erstwhile minority owners to secure full consent. The latter have since agreed to the sale and have applied to withdraw their objections, set to be heard Jan 30 by the Strata Titles Board (STB).
Now it is the majority owners who want to be heard by the STB, which an experienced en bloc lawyer, who declined to be named, said puts the STB in an “interesting” position.
The law now gives STB power to hear all objections, but the Regent agreement was signed before the legislative change.
According to Knight Frank managing director Tan Tiong Cheng, he has “never come across a case where the majority owners sought to rely on the fluctuation in the development baseline gross floor area to renege on their agreement with the developer”.
“It is also my experience that it is not uncommon for the developer to contribute to the payment of a premium to minority owners in order to procure their consent to the collective sale,” he said in a court document.
Bernard and Rada Law Corporation associate director M Kumaran, who oversees his firm’s en bloc cases, said the majority owners would have a case if the buyers had misrepresented the development charges.
“This sort of matter has been taken up to court but not in the context of en bloc sales,” he said.
Source : Weekend Today - 19 Jan 2008
A group of 25 at the 31-unit Regent Garden is alleging that developer Allgreen Properties has breached the sale and purchase agreement by grossly undervaluing the condominium.
The owners filed a claim last Monday with the High Court to declare that they are no longer bound by the agreement, which saw the condominium sold for $34 million last April.
On Friday, Allgreen struck back. It announced that it will “vigorously contest this action and the claims and allegations made by the majority vendors”, and has applied for a court order to force the majority owners to complete the transaction.
According to court documents obtained by Today, the dispute centres on two issues. The majority owners, represented by Senior Counsel Molly Lim, allege that Allgreen had overstated the development charge by more than $6 million, thereby depressing the sale price by that sum.
They also claim the developer gave “disproportionately high” proceeds to the six erstwhile minority owners to secure full consent. The latter have since agreed to the sale and have applied to withdraw their objections, set to be heard Jan 30 by the Strata Titles Board (STB).
Now it is the majority owners who want to be heard by the STB, which an experienced en bloc lawyer, who declined to be named, said puts the STB in an “interesting” position.
The law now gives STB power to hear all objections, but the Regent agreement was signed before the legislative change.
According to Knight Frank managing director Tan Tiong Cheng, he has “never come across a case where the majority owners sought to rely on the fluctuation in the development baseline gross floor area to renege on their agreement with the developer”.
“It is also my experience that it is not uncommon for the developer to contribute to the payment of a premium to minority owners in order to procure their consent to the collective sale,” he said in a court document.
Bernard and Rada Law Corporation associate director M Kumaran, who oversees his firm’s en bloc cases, said the majority owners would have a case if the buyers had misrepresented the development charges.
“This sort of matter has been taken up to court but not in the context of en bloc sales,” he said.
Source : Weekend Today - 19 Jan 2008
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