$128m en-bloc sale windfall for Hakka clan

$128m en-bloc sale windfall for Hakka clan

By Lee Chee Keng WHILE the recent en-bloc property boom is making a million or two each for home owners, one of Singapore’s major Hakka clan associations has really hit the jackpot.The Char Yong (Dabu) Association will pocket a cool $128 million from the sale of the 93,300 sq ft Char Yong Gardens condominium in the Cairnhill area.

The association - which owned 36 of the 106 units in the condominium sold to CapitaLand recently for $420 million - is now looking at how to best use the windfall.

Discussions have started on enriching clan activities, developing its youth wing, providing better care for old or needy members, as well as expanding its charity work.

The need for these talks nearly did not arise as some clan members had opposed the sale, despite the support of the 41-strong management council, said association president Lang Chin Ngau, 59.

If the dissenters had prevailed, the sale would have failed as the clan’s 36 units gave it more than the 20 per cent of votes needed to scrap the deal.

The opponents had noted that the flats sat on ancestral land and wanted it to stay that way. They also said a tree planted on the grounds in 1963 by Mr Lee Kuan Yew, now the Minister Mentor, should not be disturbed.

The issue was put to a vote in a special general meeting on Aug 27 last year. Of the 209 members who showed up, 168 voted for the sale and 23 opposed it. The other votes were declared void.

The Char Yong (Dabu) Association, founded in 1857, now has more than 2,000 members.

It bought the land in 1947 to house its office and the Khee Fatt School founded in 1906. But pupil numbers kept dropping and the school was handed over to the Ministry of Education in 1985.

The same year, the clan struck a deal with DBS Land and Char Yong Gardens was built in 1991. The clan’s 36 units were managed by The Ascott Group as service apartments, earning $4,000 a month each in 1995 - but rents slid to $1,500 in 2005.

Talks to sell the property began the next year.

Although the deal has now been sealed, the clan’s link to the land will not be completely lost

Said Mr Lang: ‘CapitaLand will give us priority to buy a few units in the development before it is open to the public.’

The tree planted by MM Lee will stay at the site or be relocated.

The focus now is on how to best use the $128 million, which the clan will get in 11/2 years’ time.

Its constitution dictates that one-third will go to the association for its operations, activities and charity work. The rest will go to the Char Yong (Dabu) Foundation for educational and cultural work.

Every year, the association hands out $250,000 in scholarships to pupils from Qifa Primary and Da Qiao Primary schools, and to members’ children. It also donates to charitable and cultural groups.

It recently gave $300,000 to the Confucius Institute Fund, making it the largest donor to the fund set up this year to establish a World Chinese Literature Award, and to fund the institute’s research projects and other events.

Mr Lang said plans to use and invest the money from the sale will be discussed thoroughly at management council and general meetings.

The association has three other properties which it rents out.

Source: The Straits Times, 27 June 2007

HK firm wins tax battle over sale of upscale Leedon Rd homes

HK firm wins tax battle over sale of upscale Leedon Rd homes

By CONRAD RAJ

(SINGAPORE) A Hong Kong company has won a case against the Comptroller of Income Tax who slapped it with a $3.3 million-plus tax bill after it sold 17 units in upscale Leedon Road.
The tax department said the sale by Madison Lighters & Watches Company, a wholly-owned subsidiary of Hong Kong property developer Far East Consortium International, was in the ordinary course of business and the profit was taxable.

But the company’s lawyer Edwin Lee, of Rajah & Tann, argued that the property was an investment and the gains were therefore capital in nature and non-taxable.

Madison appealed against the Inland Revenue Authority of Singapore’s (IRAS) ruling.

And the Income Tax Board of Review, chaired by former High Court Judge Goh Joon Seng, ruled in favour of the company.

Madison bought 17 of the 18 units at Leedon Court in September 1987 for a total of $10.77 million. Being a foreign entity, it could not buy the whole block, so the remaining unit was bought by a related company, Hepworth Investment.

All the units were sold en bloc to unrelated Glory Development on Nov 25, 1993 for $24 million, with Madison getting $22.67 million. IRAS served the company with a demand for $3.34 million tax in June 1995, being 27 per cent of its profit of $12.38 million for Year of Assessment 1995.

Madison’s auditors lodged an objection on July 4, 1995 saying the gains were capital in nature and therefore not taxable.

They also said that loan interest incurred in buying the property ought to have been tax deductible against rental income, and that with the exception of one item, IRAS had failed to convert the figures from Hong Kong dollars into Singapore dollars.

The review board, in finding in favour of Madison, notes that the company had consistently classified the property as an investment and ‘fixed assets’.

It also notes that the property was held for six years and was sold collectively in one lot to an unrelated buyer who made an unsolicited offer, that Madison was in a position to hold the property for the long-term and that it ‘was actually in a tax-paying position for most of the years during which it held the property’.

The board said: ‘We therefore find that it was the intention of the appellant (Madison) to acquire the property for long-term investment and for resale at a profit.’

It allowed the expenses to be deductible with the tax to be discharged on account of the bank loan interest agreed at $87,635.52.

The board also said IRAS wrongly used Hong Kong dollars in its computation of chargeable income and the tax to be returned as a result of this error was agreed at $265,009.59.

Source: The Business Times, 27 June 2007

Movie director to tap S’pore market for US$500m

Movie director to tap S’pore market for US$500m
Shekhar Kapur will outline his plans in the next 3-6 months

(SINGAPORE) Shekhar Kapur, the director of Oscar-nominated film Elizabeth, is in talks to raise a US$500 million fund in Singapore to invest in the entertainment industry including movies and music across Asia.
Investors in Singapore are more willing to bet on businesses that may take a longer period of time to make a profit, unlike hedge funds or private equity firms, the Indian director said in an interview here.

‘Singapore’s capital markets have the kind of maturity to sit for long-term investments,’ he said. ‘Most of the hedge funds and private equity are like foam, little bubbles that form, take the money and off they go.’

Mr Kapur aims to capitalise on rapid economic growth in Asia, home to 3.8 billion people, or 60 per cent of the global population.

In India, the second fastest growing major economy after China, he directed Bandit Queen in 1994, a controversial film that gained international attention when it was banned by the Indian government.

Startup companies with innovative ideas and technology need time to nurture their businesses, said Andrew Craissati, a former investment banker and chief executive officer of US-based Transpac Media Ltd, which advises companies on listing on the London Stock Exchange’s alternative investment market.

‘That’s what Google did at the beginning,’ Mr Craissati said. ‘They said, ‘if you are a short-term investor, don’t buy our stocks because we are not interested’.’

Mr Kapur plans to hire professionals to manage the fund, while he focuses on wooing global entertainment partners from the West. He expects to unveil his plan in the next three to six months.

In November 2005, Mr Kapur joined UK billionaire Richard Branson, who owns Virgin Group Ltd, author Deepak Chopra and US-based Gotham Entertainment to form Virgin Comics, a media company that creates original stories and epic myths for a global audience.

He was in Singapore as part of an international advisory panel to the Media Development Authority, which is mapping out the country’s master plan for the media industry.

‘The media industry in Asia is going through an explosive phase and what we are seeing is not even the tip of an iceberg,’ Mr Kapur said on June 21.

‘The next YouTube and Google, the future technology, will originate from Asia.’

The global entertainment and media industry will expand at a 6.4 per cent annual rate to total US$2 trillion in 2011, PricewaterhouseCoopers said in a report last week.

Asia-Pacific will be the fastest-growing region, expanding 13.5 per cent a year, it said.

The plan also reflects increasing difficulty for film-makers in raising large sums of money from movie studios.

‘Every director now realises that they can’t rely on studio funding because studios are not interested in making films - they’re interested in distributing films,’ Mr Kapur said.

‘I and other directors would love to have funding so we can invest in films and explore unpredictable opportunities such as mobile space.’ - Bloomberg

Source: The Business Times, 27 June 2007

Leng Beng sees rising hotel rates

Leng Beng sees rising hotel rates

SINGAPORE’S hotel room rates may rise by ‘quite a bit’ as the island-state draws more tourists, said Kwek Leng Beng, chairman of City Developments Ltd, one of the country’s biggest hotel operators.

The city will be short of about 3,000 hotel rooms, Mr Kwek said, referring to the government’s sale of land sites for new hospitality developments. Mr Kwek, who spoke at a briefing in yesterday, wasn’t more specific on the time frame for the hotel room shortage.

Singapore, prospective host to Formula One’s first night Grand Prix and two casino-resorts that will help draw more convention delegates, may face a shortage of hotel rooms as the government expects the number of visitors to double to 17 million by 2015.

‘The meetings, incentives, conventions and exhibitions business is going forward, and with Formula One, rates will go up quite a bit,’ Mr Kwek said.

Hotel operators may charge tourists an average $600 daily from $170 now as occupancy increases in the next eight years, according to Merrill Lynch & Co. About 3,300 rooms are expected to be added annually, falling short of the average 4,100 units needed, a team led by Merrill Lynch analyst Melinda Baxter wrote in a June 18 report.

Singapore is adding new attractions, including a Universal Studios theme park and the world’s largest Ferris wheel, to tap an increase in global travel. The government expects to triple tourism spending to $30 billion by 2015.

City Developments is the parent company of Millennium & Copthorne Hotels plc, the UK operator of the Biltmore in Los Angeles. - Bloomberg

Source: The Business Times, 27 June 2007

Singapore Watten Estate Condo up for en bloc sale

Singapore Watten Estate Condo up for en bloc sale

WATTEN Estate Condominium at Shelford Road off Dunearn Rd has been put up for collective sale through an expression of interest exercise.

So far, owners with more than 70 per cent of share values, but short of the minimum 80 per cent required, have signed the collective sale agreement, at a price believed to be around $400 million. This works out to $1,297 per square foot of potential gross floor area inclusive of development charges.

The 220,241 sq ft freehold site is zoned for residential use with a 1.4 plot ratio (ratio of maximum potential gross floor area to land area) and a five-storey maximum height. No development charge is payable, according to DTZ Debenham Tie Leung, which is marketing Watten Estate Condo. The site can be redeveloped into a new condo with about 200 units averaging 1,500 sq ft, market watchers reckon.

Currently, Watten Estate Condo has a total of 104 units comprising a block of apartments and four blocks of townhouses. Property tycoon Ng Teng Fong, who controls Far East Organization, is believed to own two units in the development. The expression of interest for Watten Estate Condo closes on July 20.

The property is near Raffles Girls’ Primary School, Nanyang Primary School, Hwa Chong Institution and National Junior College. The Botanic Gardens is a short drive away.

Lippo Realty recently paid $1,280 psf per plot ratio for Aura Park at Holland Road, which is also near Botanic Gardens.

Source: The Business Times, 27 June 2007

Singapore May output beats forecasts with 17.7% jump

Singapore May output beats forecasts with 17.7% jump

Strong expansion in biomedical, transport engineering sectors

By CHUANG PECK MING

OUTPUT by Singapore’s factories jumped more than expected in May, as sales of oil rigs and drugs surged. The Economic Development Board reported yesterday that last month’s output rose 17.7 per cent from a year earlier, after a revised 19.6 per cent gain in April.
Analysts, who tipped May’s production to increase by 11 per cent, now expect a stronger showing in the second half of the year - thanks to a projected rebound in global demand for electronic products and stronger orders for big-ticket items like oil rigs.

‘The worst in the manufacturing sector is probably behind us, with the 4.3 per cent year-on-year print in Q1 national accounts representing the bottom of the mini-cycle,’ says Prakriti Sofat of HSBC bank. ‘With exports already starting their turnaround, the benefits are clearly beginning to flow into manufacturing - something we would expect to continue through the rest of the year.’

Taking a longer-run measure to get the underlying trend, HSBC found Singapore’s factory output has improved for two straight months - ‘currently running at 9.7 per cent well north of the 5-year average of around 7.5 per cent’.

From a month earlier, May’s industrial production also unexpectedly advanced a seasonally adjusted 4 per cent after a revised 8.5 per cent jump in April, confounding market expectations of a 2.4 per cent drop.

The EDB said May’s increase came from strong expansion in the biomedical and transport engineering sectors, making for weaker demand for electronic exports, which account for a quarter of Singapore’s manufacturing output.

Biomedical output - which makes up 22 per cent of manufacturing output - rose 76.2 per cent from a year earlier, while transport engineering posted a 39.5 per cent gain. Pharmaceuticals, a biomedical sub-sector, grew 82 per cent, and medical technology went up 39.3 per cent.

‘The growth (in pharmaceuticals) was due to a wider range of active pharmaceutical ingredients being manufactured and strong orders from the United States, European Union and Japan stimulated the high production of medical devices and appliances,’ the EDB said.

The main engine of growth in the transport engineering sector in May was the marine and offshore segment, where production was ramped up by 69.6 per cent to meet the delivery of ships and oil rigs. ‘A lot of strength came from transport and engineering, which was not really a surprise,’ said Vishnu Varathan, an economist at Forecast. ‘Demand for marine and offshore rigs has not abated and will continue to be strong going forward,’ he told Reuters.

Transport engineering output expanded a seasonally adjusted 22.3 per cent last month from April, outweighing an 11.5 per cent contraction in electronics.

From a year earlier, electronics production was flat in May. ‘The semiconductors and electronic components segments expanded while the other segments contracted,’ the EDB said.

Output in the infocomms and consumer electronics segment fell 11.6 per cent, with production cutback in mobile products and digital consumer electronics. Computer chips output rose 8.2 per cent, slowing from a revised increase of 18.3 per cent in April. Disk drives fell 8.6 per cent, after a revised 2.7 per cent decrease in the previous month.

‘While it is still lacklustre on the electronics side, we’re optimistic that that’s coming back on track in the course of the second half,’ David Cohen of Action Economics told Reuters. ‘Global demand should be supportive.’

Source: The Business Times, 27 June 2007

Simon Cheong pays $7m for bungalow: sources

Simon Cheong pays $7m for bungalow: sources

By KALPANA RASHIWALA

SC Global Developments boss Simon Cheong yesterday bought a freehold bungalow at Garlick Avenue for $7 million at auction, BT understands.
The price for 70 Garlick Avenue works out to $769 psf, based on the 9,100 sq ft of land. Bidding opened at $6.8 million and the property drew three would-be buyers.

The property is within an area zoned for Good Class Bungalow (GCB) use although its plot size is significantly shy of the minimum 1,400 sq metres (about 15,069 sq ft) required for a GCB.

There is a renovated, single-storey detached house in fairly good condition on the site, which was put up for auction by its mortgagee bank. The auction was conducted at Amara Hotel yesterday by DTZ Debenham Tie Leung.

Three other properties also changed hands at the auction. One was a three-bedroom apartment on the sixth storey of the freehold Avalon development at Anderson Road, which was sold by its owner for $2.7 million or $1,707 psf based on its strata area of 1,582 sq ft. A freehold maisonette at 104A Owen Road, near Farrer Park MRT Station, sold for $811,000 or $457 psf based on its strata area of 1,776 sq ft.

A single-storey, freehold terrace house at 27 Casuarina Road off Upper Thomson Road fetched $700,000 or $467 psf based on its land area of 1,500 sq ft. The Owen Road and Casuarina Road properties were mortgagee sales.

A three-bedroom apartment at the freehold Eunos Mansion at Jalan Eunos which had been put up for auction by its mortgagee bank was withdrawn from sale yesterday morning on speculation that a collective sale could be in the works at the estate, which could result in the unit fetching a higher price, BT understands.

Source: The Business Times, 27 June 2007

Indonesia resumes granite supplies

Indonesia resumes granite supplies
 
GRANITE supplies from Indonesia have resumed, following the Indonesian authorities’ release of the last lot of detained barges from Singapore, the Building & Construction Authority (BCA) has said.But with the re-opening of this source of granite comes a twist: the government of the province of Karimun wants to impose a 20-per-cent levy on shipments of this construction material here.
News of the levy came from a statement which building-materials supplier Hong Leong Asia submitted to the Singapore Stock Exchange.

Indonesia imposed a ban on land sand in February, and then detained a dozen granite-bearing barges en route from Karimun to Singapore on suspicion of sand smuggling.

Although the export ban did not apply to granite, its supply was disrupted.

In the months since then, the construction industry here has found new sources of granite, for example from Malaysia, even though supplies from Indonesia have now resumed.

Five of the 12 detained barges were released last month; it could not be confirmed immediately whether the last seven released barges have arrived back here.

Hong Leong’s subsidiary PT Karimun Granite (PTKG) is now in talks with the Karimun government about the new levy, which could come to about $9.50 a tonne - making the material more expensive than that from other supply sources like Malaysia.
 

Source: The Straits Times, 27 June 2007