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

Call to allow foreigners to buy landed homes

Call to allow foreigners to buy landed homes

By KALPANA RASHIWALA

(SINGAPORE) Goldman Sachs (Singapore) has argued a case for lifting restrictions on foreigners buying landed homes in Singapore, saying this would serve as a catalyst for further foreign buying of private homes and boost the current residential property upcycle.
Its analysis shows that the average price of a top-end bungalow (with a 15,000 sq ft land area) is about $17 million - or 35 per cent below that of a comparable condominium (a 7,500 sq ft unit priced at $3,500 psf), which goes for about $26.3 million.

‘We think this price gap can narrow to parity or very close to it, should the restrictions on foreign ownership of landed properties be relaxed,’ the bank said in a research note dated June 24.

‘In the event of an across-the-board relaxation of restrictions for landed property, we believe the positive effects would be two-fold: (1) developers with landbank for landed developments would benefit; and (2) all residential developers could gain from even greater foreign buying interest given the positive message such a move would send,’ it said.

Although the government has made no announcements on the subject, ‘we see the possibility of the government relaxing restrictions on foreigners buying landed property as higher than previously, because: (1) discussions with developers have affirmed our view of foreign interest in landed property, and (2) the tone of government policy changes has been firmly pro-immigration … We think relaxing restrictions on foreigners buying landed property would accelerate Singapore’s efforts to attract foreign talent,’ Goldman Sachs said in the research note.
‘We think relaxing restrictions on foreigners buying landed property would accelerate Singapore’s efforts to attract foreign talent.’
 
- Goldman Sachs
 
 
 
 
 
‘In our view, foreigners would like the flexibility of greater choice of housing and the positive signal of Singapore’s open door policy emanating from such a move,’ Goldman Sachs argued. It added that a relaxation on foreign buying of landed homes would not hurt the national objective of giving Singaporeans a stake in the country by being able to buy and own residential properties at affordable prices as the public housing market addresses this objective.

In the first quarter of this year, foreigners accounted for 26 per cent of buyers of private homes, up from 23 per cent in 2006 and 21 per cent in 2005.

Under the Residential Property Act, foreigners (including permanent residents) are prohibited from buying landed property without prior approval from the government.

Foreigners have to be PRs before they can receive permission to buy landed homes on mainland Singapore; Sentosa Cove is the only location where foreigners who are not PRs are allowed to purchase landed property.

Foreigners, including PRs, can at any one time own only one landed home in Singapore and must occupy it themselves rather than rent it out.

Among the criteria that the Minister for Law will consider when asked to approve foreigners buying a landed home are the applicant’s qualifications and whether the applicant has made, or will be able to make, adequate economic contribution to Singapore.

However, foreign buyers may acquire an unlimited number of non-landed private homes - condominiums and apartments.

Goldman Sachs acknowledged that ‘for now, we note there is still no certainty of any policy change and the nature of change could be restricted to select types of landed property like Good Class Bungalows or cluster housing’.

The bank’s analysis of 36 landed property transactions at Sentosa Cove between January 2005 and May 2007 showed that Singaporean and foreign buyers each accounted for 44 per cent of purchases, with the balance accounted for by companies.

In contrast, Goldman Sachs’ study of islandwide private home transactions between January and May this year showed that foreign buyers accounted for just 8 per cent of total landed property deals, lower than their 29 per cent share of non-landed home purchases over the same period. This suggests the scope for a higher share of foreign buying if the landed private housing sector is also opened to foreigners.

‘We think relaxing restrictions on foreigners buying landed property would not adversely impact demand for condominiums and apartments, given the positive signal such a move would send to foreigners,’ the bank said. ‘Moreover, we look for a positive spill-over from rising landed property prices to condominiums and apartments.’

Goldman Sachs estimates about 2,800 landed homes with written permission for development, the bulk (2,565 units) of which have yet to be sold, will come on stream over the next few years.

This supply is almost 4 per cent of the current stock of landed homes in Singapore.

Among the developers with exposure to landbank slated for residential housing are Bukit Sembawang, Allgreen Properties, MCL Land, Fragrance Group, and Sing Holdings.

Source: The Business Times, 26 June 2007

Singapore Property boom: will it last?

Singapore Property boom: will it last?
June 25th, 2007
Is the property boom for real or is it a bubble? What does this say about prospects for the overall economy?

STRONG economic fundamentals, regional stability and positive economic performance in Asia have provided the environment to support continual investor confidence in Singapore.

While increases in prime residential and office nominal values have been substantial over the past 12 months, there was little growth over the nine years before. The effects of inflation over this period should be taken into account. High-end residential prices (in real terms) have increased 4.5 per cent per annum since 1997. This growth seems moderate when compared to Singapore’s 10-year average economic growth rate of 5.24 per cent and growth in prime residential properties in other global cities during the same period.

After removing annual inflation of 0.73 per cent, average prime office rent of $11.80 psf has only shown an annual real growth of 0.6 per cent over the same 10-year period. Singapore’s prime office rent, we believe, is still competitive compared to other global cities such as London, Tokyo and Hong Kong.

The fundamentals in 2007 are different from 1997’s. Asia has restructured, with Singapore emerging in a much stronger position than before. Its in-migration friendly policy and pro-business tax structure further coalesce to support the demand for Singapore properties. Barring unforeseen circumstances, the outlook for the property market remains positive.

- Christopher Fossick Managing Director - Singapore and South East Asia Jones Lang LaSalle

Looks like the real thing

SINGAPORE’S economy is still slated to continue growing, year on year. With high-profile projects like Formula 1 and the integrated resorts leading the way, Singapore is gearing towards a level of global reach and relevance never before seen in its history. That is a development that is here to stay.

Because of the economic progression, the subsequent proliferation of property and its demand should be expected. The truth is, ever since its precipitous decline in 1996, the property market has not fully recovered until now. However, the reason why people are jittery is that property prices are recovering faster than most can adjust to.

Healthy moves like the release of land, as well as new developments in the pipeline, will hopefully help to cool the market. Demand needs to be eased so that the property market is steered into a more gradual, controllable and ideal growth. Then, we will see that the higher prices we are witnessing now are just one aspect of a promising economic future.

- Annie Yap CEO The GMP Group

THE property market is indeed flying.

Private residential property transactions with caveats lodged revealed higher transacted prices for districts 4, 9, 10, 11 and 15. These are the prime moving districts now, and I believe there is still a lot of room for prices to move up. Why? For every key event listed below, I expect an above-average movement of $100 per square foot in the districts mentioned to move alongside in the following years:

1. Year 2008 - First in the world! F1 night racing is coming to Singapore. The world will get invited to Singapore, interact with Singapore and invest in Singapore.

2. Year 2009 - First integrated resort to be completed with US$5 billion flowing into Singapore filled with the first wave of tourists which include participants in the Business Travel, Meetings, Incentives, Conventions and Exhibitions (BTMICE).

3. Year 2010 - Second integrated resort to be completed, with another US$5 billion flowing into Singapore filled with the second wave of tourists coming from destinations beyond the nine-hour flight radius of Singapore.

4. Year 2011 - General Election in Singapore: the government will introduce goodies to cultivate goodwill amongst voters to elect the next generation of leaders.

5. Year 2015 - Singapore celebrates her 50th birthday, which will fulfill our Prime Minister’s vision for Singapore to become the jewel of the region.

If not now, then when? If not us, then who? Let’s do our best to keep the property market flying high!

- Clemen Chiang CEO Freely Business School

I WISH I had a crystal ball to predict the property market. Not for gain or investment, but because I am caught in this boom just when I needed to consider a change in my residence. So I have been looking at it as a consumer.

Most of the conversations I have had these days is mainly about property prices, en-bloc deals, lack of units available and the what-if’s. From meeting and chatting with various people, I gather most feel that there is still room for the per-square-foot price to move upwards. They give me the feeling that they are confident the economy is strong and sustainable.

The anticipation of the IRs does give the whole frenzy some kind of timeframe. The F1 buzz does give it an added layer of confidence. The ST Index keeps hitting record levels.

In my opinion, if no major disaster happens, I believe the property market and economic growth look likely to continue.

- Joey Chang CEO/Founder AXS Infocomm

THE property market will stay robust at least till 2012. The growth in the property market is thus backed by economic fundamentals of rising demand, income and jobs. If the overall economy continues to do well, the property market boom is likely to be sustained. Firstly, the Singapore economy has picked up and grows strongly. Our IR project further stimulates economic activities in the next few years. For the next five to 10 years, Asian economies will remain vibrant due to the Olympics 2008 in China, and the rise of Vietnam and India.

Most of the global investments will focus on the growth of the Asian economies. Singapore, being one of the financial centres and a politically stable country, will definitely reap the boom opportunity. Although the property boom reacted aggressively for the past one year, it has not reached the peak yet. I would think that the booming trend will still continue to be steadily up at least till 2012.

- Dora Hoan Group CEO Best World International Ltd

DRIVEN by excess liquidity, asset prices around the world have increased in value simultaneously since 2002. The property boom in Singapore started about a year ago, largely underpinned by the high-end segment, through the en-bloc sales fever. A property boomrequires cheap finance, excess savings in Asian economics, low long-term bond rates and an integrated international financial system. Money supply and credit must continue to grow at an accelerating rate in order to sustain the expansion.

There is no bubble ready to burst, as the boom is supported by a strong economy and political leadership, increased immigrants and foreign talents, perspectives of the IRs and a global city in the making, and a better working relationship with neighbouring countries.

- Tan Kok Leong Principal TKL Consulting

FOR those of us who saw the bubble deflated in the mid-90s, the thought of a bubble looms large on the horizon - and the speed at which prices have gone up seems to bolster this argument.

However this time around, besides the usual participants in the Singapore property market, there is participation from the Middle East, India and China which, together with good worldwide economic growth, excess liquidity and low interest rates, may make markets a bit more robust than before. There is also the IR factor plus the Formula 1 race coming into Singapore next year.

Of course the boom in the property sector brightens the prospects for the overall economy.

The downside will be that the increasing rents that will accompany the property boom will push up the cost of doing business in Singapore, and there may be some businesses in Singapore which may find the cost of doing business out of and in Singapore prohibitively expensive. This is a call that they have to take.

- Vijay Iyengar CEO Agrocorp International

THE current property boom is a natural phenomenon in the economic cycle in Singapore as capital inflows from overseas soak up the prime real estate.

The impending opening of two integrated resorts in Singapore is a key booster to the property boom. Coupled with the government announcement to bolster the population from current 4.5 million to 6.5 million by 2020, this has spurred the developers’ confidence of stepped-up demand for housing and office space as well as the increase in MRT and expressway networks.

Barring any unforeseen circumstances, we are not expecting any bust in the property market in the next five years. If any, it would merely be a technical correction.

I am confident that by 2015, when we celebrate the golden jubilee of the independence of our republic, our global city state will be among the top cities in the world.

- Derek Goh Executive Chairman / Group CEO Serial System Ltd

IT’S been said that growth in urbanisation, along with the emergence of real estate investment trusts (Reits), will be one of the defining characteristics of the property sector in Asia over the long term. And now, particularly with the imminence of the Bay area projects, Singapore’s luxury property market has received yet another rejuvenating shot in the arm and will no doubt continue its bull run into the foreseeable future.

Like any staple industry, property and construction are subject to cyclical swings between peaks and ebbs, but as our economy fortifies itself from strength to strength and the people’s spending power increases over the years, real estate developers can expect more high-end sales for a sustainable period of time, which readily reflects financial health and also brightens the general outlook.

- T Chandroo Chairman/CEO Modern Montessori International Group

THE soaring property prices are driven by high demand for land and office space due to the influx of foreign investors. Given such strong fundamentals, the current property boom is likely to be for real rather than a mere bubble.

Worth highlighting is the potentially adverse impact that this could have on local SMEs, including those which are providing value-added services to our community, such as childcare and eldercare. As such, the government should help ease the current skyrocketing property prices and in this respect, it is encouraging to note that more state land is being released.

- Sam Yap Executive Chairman Cherie Hearts Child Development Pte Ltd

THE property boom in Singapore is expected as the country will be a place of choice for many rich people in Asia. Multi-millionaires throughout Asia will love to have a residence here. The boom is real and not yet a bubble. The boom is not due to local needs but more from buyers abroad. Properties in the UK shot up for the similar reasons. Many rich English-speaking people throughout the world love to live in the UK too.

The prices may appear to be high in Singapore, but they are not that high compared to prices of properties in London, New York and Hong Kong. The property boom will help to generate the growth of the Singapore economy. It will not affect locals who will enjoy the help of the government in building homes for them at reasonable prices.

- Ng Kong Yeam Group Executive Chairman Sino-America Tours Corporation Pte Ltd

WHETHER the property market can be sustained depends largely on the purchasing power of buyers and on government intentions.

Of late, money flowing in from oil-producing Middle Eastern countries and noveau riche Chinese has made credit cheaper. Singapore is seen as a safe haven to park their money, and buying into properties in an improving economy is one way to preserve capital.

I see the market having some legs and will be strong in the short term; thereafter if the market goes up too high, the government may step in to cool the market. High property prices affect the population’s ability to produce more babies.

- Tan Ser Giam Chairman Eastern Navigation Pte Ltd

THE Singapore economy has been recovering for the last couple of years since the Sars outbreak in 2003 put a severe dent on the economy. On the other hand, the Singapore property market started recovering only in the last year or so. As such, I tend to believe that the Singapore economy has built a strong economic base to justify the current property boom. At the same time, the next few years will see huge investments in IRs, etc, and the re-inventing of the Singapore economic model.

The government has already upped the target population to 6.5 million. All this means that there will be more people - more expatriates, more immigrants and more high-net-worth individuals - coming to this island in the next few years. Of course, in any type of asset inflation, speculation cannot be avoided, and this is likely to form a part of any property boom. However, more importantly, there are likely to be many more genuine investors and home buyers who will be attracted to invest and to live in Singapore, and to be part of the new Singapore economic story.

- Wee Piew CEO HG Metal Ltd

Need for caution

IF PRICES skyrocket too rapidly, or if we fail to balance the variables contributing to the economy, the property boom could potentially be a bubble.

Singapore’s property market is artificially buoyed by foreign investors from countries such as Indonesia and Thailand leveraging Singapore’s stable and growing economy. The last time the property bubble burst was due to the financial crisis, which removed this foreign investor support. This time round, we are not expected to experience the same monetary meltdown to threaten the boom.

However, what we are seeing is an unrealistic expectation from sellers that their properties will keep achieving the stellar heights that everyone is talking about. With respect, perhaps an element of ‘kiasu-ism’ is clouding expectations. This causes an inconsistency in the market and is generally not positive. Growth is a positive attribute to any economy and it is much better for it to be based on fundamental economics.

When the different variables in an economy do not match up, a boom could well become a bust. We are already seeing rising rent rates, against a disproportionate rise in wages, becoming a deterrent to overseas working professionals. I trust the boom we are experiencing will plateau off and we will return to a steady positive growth period instead.

- Charles Reed CEO interTouch

ECONOMIC and infrastructure fundamentals support the Singapore story, and with it the long-term real estate market as a solid asset class for investors. Current speculation, however, is at a runaway pace. While I do not necessarily believe that a crash is looming, it will be inevitable that international companies will take a closer and more critical look when assessing the costs of operating in Singapore.

If unchecked for long, it may drive certain firms away, to the detriment of Singapore. International professionals may also be unwilling to pay inflated rentals, nor do they wish to move every two years due to exorbitant rental increases - and all this because of speculators, many of whom do not even live here? Is that what Singapore wants?

- John Jessen Co-Founder and Managing Director Smith & Jessen

IT’S a bubble. While Singapore’s economy is sound, recent real estate price increases have more than closed any ‘valuation’ gap and brought prices more than in line with their fair market value that is reflective of supply and demand.

Why is it a bubble?

1) too many success stories of people ‘flipping’ property within less than a year,

2) too many people buying ‘without having seen the property’, and

3) still supported by low interest rates - people are in search of alternatives.

Points 1) and 2) are pure signs of speculation and who doesn’t know about the deep Chinese culture of always ‘hunting’ for a deal? It works as long as more people join in - but once the first stumbles the whole house of cards will come down. I am waiting for that day - and then might buy. But for ownership, not for speculation.

- Berthold Trenkel Chief Operating Officer, Asia Pacific Carlson Wagonlit Travel

THE lethal combination of the record-breaking rise of the stock market and the ongoing en-bloc fever will continue to drive property prices northwards. This strong push in property prices is indeed a direct reflection of the stellar performance of the stock exchange and the buoyant economy. However, as with all bull runs, what goes up must come down. With more projects scheduled for completion in 2009, there is bound to be a slight correction. The slight correction will however not be a sharp drop as observed in the interim years following 2001.

I am concerned about the effect of having mainly foreign funds that are driving this steep surge in property prices. While we are all in awe of the latest blockbuster transaction pricing reported daily in the papers, we must not forget that the majority of Singaporeans still stay in government housing and this will not have much effect on them. En-bloc fever is also slowly destroying close-knit communities when most of the affected residents are forced to stay in another part of the island, as they will not be able to afford a similar place in the same area any more.

- Benjamin Low Managing Director, Southeast Asia & India Secure Computing

THE prices of property have been shooting up so fast that many ordinary middle-class Singaporeans thinking of upgrading or buying a new home are now priced out of their dream home. Developers of new property projects have found good demand from foreigners and high-net-worth Singaporeans. This all bodes very well for the developers, the contractors, the furniture and furnishing suppliers, and the economy. The upside is that the economy is growing, people are optimistic, and everyone gets a share of the pie.

The downside is that people who are not savvy property players get drawn into this feeding frenzy and may get burnt. This property boom is really a bubble created by savvy developers and people with deep pockets. Having seen the boom and bust of the property cycles in the past, I would advise people who think they can get a slice of this action to be extremely careful and to keep their ears close to the market.

- Fong Loo Fern Managing Director CYC The Custom Shop Pte Ltd

THE current property boom is a testament to the strength and resilience of the Singapore economy having recovered dramatically from the previous downturn. However, unless you’re a property developer or a landlord, the boom can have an adverse effect on most businesses, due to rental being a major constituent of operational costs. From services companies to retail and manufacturing, the property boom is increasing the cost of doing business in Singapore, and if left unchecked can hamper the competitiveness vis-a-vis our neighbours in the region.

Across the board, the rise in rents will most likely trickle down to be passed on to consumers. Consumer spending may be hit too as consumers scale back on big-ticket purchases or defer purchases. Ultimately, if left unchecked, inflation may creep in and become a dampener on the overall economy. Hence, the recent move by the government to closely monitor the price movements in the property sector for any possible signs of overheating is applauded.

- J Anton Ravindran Group CEO & Co-Founder Genovate Solutions

THE property market has always been cyclical. Having said that, what is important is not to get swayed away, but rather to remain prudent and invest sensibly.

Globally, Singapore has been ranked as the 14th most expensive city to live in. While this is a strong indication of a positive and booming economy, it also implies that with the rising cost of living, Singapore may eventually lose its attractiveness as a city to work and live in.

- Lars Ronning President, North & South East Asia, India, Australia & New Zealand Tandberg

SINGAPOREANS will have to brace themselves to live with an appreciation in property prices for at least another six months to a year, and for those affected by en-bloc sales, to determine how to get the best out of this trend for another acceptable roof over their heads, moving forward.

While the flurry of property transactions will fuel the already booming economy, my concern is the economy becoming overheated, driving up the costs of living and making it untenable for the ordinary man in the street. At the same time, there is the burgeoning prospect of our economy becoming uncompetitive, with all the concomitant negative effects of investments going elsewhere and ensuing unemployment.

The government can try to regulate the property market to prevent this, but I feel the government can strengthen its approach by enforcing stricter regulations in a timely manner against rampant speculation. However, its hand is weak in relation to high-end luxurious properties, whose demand is price-inelastic, and so long as there are people willing to pay, this will continue to artificially fuel the steady increase in prices.

- Lim Soon Hock Managing Director Plan-B Icag Pte Ltd

MY CONCERN, if I were in the Singapore property market, would be understanding what is driving this boom. There seems to be a lack of fundamental economic criteria that can explain it. My second concern would be the size of the Singapore market - it is not big enough to sustain this growth. Having said that, I wish I had invested early on in the boom so that I would have had time to make some money!

- Ross Wilson Managing Director, Consumer Products and Services, Apac Region Trend Micro (Singapore) Pte Ltd

Source: The Business Times, 25 June 2007

Construction frenzy puts squeeze on resources

Construction frenzy puts squeeze on resources

By Tan Hui Yee

NIGHTS are no longer as idyllic as before on Marina Bay, where at least 20 construction cranes indicate building activity proceeding at a fever pitch.The site of an integrated resort as well as new offices and homes is at the heart of the buzz in the construction industry.

Elsewhere, commercial complexes and condominium developments have been coming onstream at a breakneck pace, putting the squeeze on a building industry that has only recently come out of the doldrums.

The sector grew by a sizzling 9.7 per cent between January and March alone - the strongest quarterly showing in nine years.

This feverish activity is taking place against a backdrop of higher costs for construction materials and labour - more than 10 per cent higher than a year ago, in some cases, estimated the Singapore Institute of Surveyors and Valuers (SISV).

Contractors are feeling the heat as they race - sometimes working round the clock - to meet building deadlines.

Mr Goh Ngan Hong, president of the SISV’s quantity surveying council, told The Straits Times: ‘The volume of work coming onto the market is more than the industry can handle - too many projects are chasing too few good contractors, hence the destabilising effect on prices.’

Piling contractor Foo Hee Kang of Resource Piling, whose company is working on the Marina Bay Financial Centre, clocks 80 to 90 hours a week.

His piling machines are spread out over six to seven projects at any one time, and there is ‘practically no waiting time between jobs’, he said. He has rejected several jobs simply because his company is too busy.

And he has had to pay his workers up to twice what he did a year ago just to keep them.

Another builder, Hor Kew, is paying fresh engineering graduates about $2,600, up from about $2,200 a year ago.

Companies strapped for staff are resorting to poaching employees from other companies. For instance, Kienta Engineering Construction, a major Housing Board contractor, lost four senior employees in the past three months to other companies.

At the heart of this crunch is the work on the two integrated resorts, worth $10 billion together, and which will be completed in just two or three years.

This, coupled with the many private estates being redeveloped following the recent rash of collective sales, has fuelled a surge in construction demand.

A report by property consultancy CB Richard Ellis last week counted 67 private estates sold collectively since January for a total of $7.92 billion.

Contractor Tiong Seng’s director, Mr Andrew Khng, noted that once collective sales go through, developers want the new condominium up as soon as possible.

‘If we can have a bit of a breather, it would be good,’ he said.

The value of building contracts awarded last year jumped 41 per cent to $16.1 billion, after staying at about $11 billion in the past two years.

This year, the figure is forecast to hit $17 billion to $19 billion.

Within Singapore, the price of ready-mixed concrete more than doubled earlier this year after Indonesia abruptly banned the export of concreting sand and detained several barges carrying granite to Singapore.

Although concrete prices have since stabilised, overall costs are still heading north as more projects are started.

Demand from the Middle East, India, China, South Korea and Britain for building materials is also pushing prices up, said the SISV’s Mr Goh.

To ease the manpower crunch, the Building and Construction Authority (BCA) has worked with the Ministry of Manpower to relax the quota of workers allowed to be hired from countries such as India, China, Bangladesh, Myanmar and Thailand.

To expedite matters, it has approved the setting up of five new overseas centres - on top of the existing 15 - to test the skills of prospective workers in their home countries.

The BCA is also looking into expanding the list of qualifications it accepts for site supervisors from other countries so that more of them will be cleared to work here.

Meanwhile, owners of smaller developments with less cash to flash will probably have fewer contractors to choose from, as the more established ones get selective about what work they do.

When property agent Eric Cheng tendered out a job to redevelop a terrace house in Crane Road earlier this year, only four bids came in - at prices more than 8 per cent above his budget of $170 per square foot. A year ago, such a tender would have drawn eight bids.

He chose not to award the tender. Instead, he will call for another one after getting his architect to redesign the house using cheaper fittings and lower-grade granite flooring, for example, to cut costs.

The SISV’s Mr Goh predicted that prices are expected to head upwards until mid-2010.

Meanwhile, the BCA reckoned that the manpower squeeze will ease in two to three years.

But the construction industry - which just three years ago was grappling with stalled projects as cash-

strapped contractors went under - views the current strain on resources positively.

Mr Desmond Hill, president of the Singapore Contractors Association, said: ‘These are good problems. It means the jobs are there, the market is there.’

Hor Kew’s managing director, Mr Aw Leng Hwee, is equally upbeat.

He said: ‘At least now, we can get profit margins. In previous years, when we bid at break-even prices, we could not even get the job.’

Source: The Straits Times, 21 June 2007

Four developers pay $243m in joint buy

Four developers pay $243m in joint buy

Koh Bros, Heeton, KSH, Lian Beng acquire freehold Lincoln Lodge

By UMA SHANKARI

PROPERTY developers Koh Brothers, Heeton Holdings, KSH Holdings and Lian Beng Group have joined hands to buy the freehold Lincoln Lodge for $243 million, the companies said in a joint statement yesterday. The four will hold equal stakes in the project.
The price for the site, located in the prime District 11 off Newton Road, works out to $1449.3 per square foot per plot ratio (psf ppr) including an estimated development charge of $413,000.

The consortium is also ‘quite confident’ of acquiring a 3,358 sq ft plot of state land beside the property for about $3 million, said Koh Brothers chief executive Francis Koh.

If the four companies bag the state land, then the price paid for both sites will come to about $1,370 psf ppr, he said. Combined, the two sites will give the developers a total gross floor area of about 177,400 sq ft to work with.

The partners intend to build a 36-storey residential project with 120 luxurious apartments averaging 1,600 sq ft. The project will be launched in the first half of 2008, at prices in the region of $2,500 psf, Mr Koh said. The break-even cost for the project is expected to be around $2,000 psf.

The site was put on the market in May with a reserve price tag of $188 million. The consortium’s offer of $243 million was the highest of a few bids, BT understands.

Mr Koh said that the partners were willing to pay significantly more than the reserve price as they were ‘very interested’ in the site, and the upbeat property market means that they can be confident of making a profit even at higher break-even costs. ‘I think at the moment, it is about how much you can sell for,’ Mr Koh said. He cited the site’s ‘excellent location’ as well as the rising rental market as reasons.

The project will mark the first time all four companies have come together to develop a property. Koh Brothers and Heeton Holdings have worked together in the past - they will soon launch The Lumos in the prime Leonie Hill area, probably in the first week of July.

At the end of yesterday’s trading, the companies’ counters moved up as Koh Brothers’ stock rose 1.5 cents to end at 55.5 cents, while Heeton’s stock climbed 0.5 cents to close at 98.5 cents. Shares of KSH rose 4 cents to close 87 cents, while Lian Beng’s stock ended the day 2.5 cents up at 44 cents.

Source: The Business Times, 22June 2007

S’pore casino gaming revenue to top US$2b

S’pore casino gaming revenue to top US$2b

Advertising spending in Asia-Pac seen rising to US$108b in 2011

By AMIT ROY CHOUDHURY

REVENUE from casino gaming in Singapore could be worth as much as US$2.2 billion by 2011, just one year after both new integrated resorts have opened their doors, says a report from accountancy firm PricewaterhouseCoopers (PwC).The comprehensive 700 page report, Global Entertainment and Media Outlook 2007-2011, looks at a host of entertainment and media industries like Internet, TV distribution, casinos and other regulated gaming and advertising.Speaking to BT, Greg Unsworth, PwC’s Asia Pacific Technology Industry Leader, said casino gaming revenues in Singapore in 2001 are expected to total US$2.2 billion - S$3.4 billion at today’s exchange rate.The report notes that by 2009 when the first resort opens, casino gaming will bring in US$157 million. The income is expected to grow to US$755 million in 2010 when the second casino opens its doors.Revenues will then more than double the next year.Last year, Singapore awarded casino licences to Las Vegas Sands and Genting, the casino operator in Malaysia. ‘The Las Vegas Sands’ US$3.6-billion resort complex will feature more convention space than all the hotels in Singapore combined, with a planned opening in late 2009,’ Mr Unsworth said.
The report says the two casinos in Singapore will provide Asians with the Las Vegas experience - possibly hitting tourism growth from Asia at the original Las Vegas.

The report also notes that Asia-Pacific is the third largest - and the fastest growing - market for casinos and other regulated gaming.

The market size will increase from US$14.6 billion in 2006 to US$30.3 billion in 2011, growing at an annual rate of 15.7 per cent.

In the Asia-Pacific region, driven by strong economic growth, the entertainment and media industry will be the fastest growing in the world.

Mr Unsworth noted that spending in the region will average 9.6 per cent annual growth, the highest of any region, increasing from US$297 billion last year to US$470 billion in 2011.

This year, the market is expected to be worth US$328 billion.

In other parts of the entertainment and media industries, advertising spend in Asia-Pacific will increase from US$77 billion in 2006 to US$108 billion in 2011.

The Internet will continue to be the fastest-growing advertising medium, growing at 18.8 per cent a year, driven by increased online penetration and an expanding broadband market.

The number of Asia-Pacific households with broadband connections will increase to 243.2 million by 2011, a 20.1 per cent annual increase from 2006.

Projected growth for Singapore’s advertising market actually decreases from 4 per cent in 2008 to 2.7 per cent in 2009, before stabilising in the 3.2-3.7 per cent range for 2010-11.

‘This can be attributed to a shift in marketing focus from traditional advertising to more integrated marketing approaches that include events and sponsorships. In a small market such as Singapore, non-traditional marketing channels may, in fact, yield greater mileage for the advertiser and be more effective in generating awareness and establishing brands,’ Mr Unsworth said.

Spending related to the distribution of entertainment and media on convergent platforms (that is, convergence of the home computer, wireless handset and TV) is growing at double-digit rates and will exceed 50 per cent of global spending by 2011, the PwC official said.

‘Asia-Pacific will be the fastest-growing convergent platform region with a projected 13.5 per cent increase and double-digit growth is expected in Latin America as Internet and broadband penetration begins to gain momentum,’ he said.

‘Broadband growth is driving online advertising while the proliferation of next-generation wireless devices designed to play digital music, video games and receive TV programming is fuelling mobile distribution.’

In Asia-Pacific, spending on distribution of TV programming on mobile phones is expected to reach US$6.5 billion in 2011 from just US$26 million in 2006.

Internet advertising and access spending continues to be the fastest growing segment globally.

In this segment, Asia-Pacific - which was the second largest region in 2006, at US$59.6 billion - will also be the fastest growing with a 17.1 per cent annual increase to US$131.2 billion in 2011, the report forecast.

Access spending (that is money spent to access the Internet) will increase from US$54 billion in 2006 to US$118.1 billion in 2011.

Of overall access spending, money spent for broadband access will rise to US$101.9 billion in 2011 from US$39.4 billion in 2006.

Compared to the region, Singapore’s growth in this category will fall steadily from 38.4 per cent in 2002 to 7.4 per cent in 2006, and further to a projected 6.3 per cent in 2010.

Explaining the reason for this, Mr Unsworth said: ‘Growth rates in Internet access spending in Singapore, whilst strong, are expected to lag behind the rest of Asia-Pacific. This is due largely to the existing high Internet penetration in households, relative to Asia as a

 whole.’Source: The Business Times, 22 June 2007

Foreign buyers sink $2.4b into office property

Foreign buyers sink $2.4b into office property
June 21st, 2007
The shortage of office space on the island that has led to spiralling office rents and capital values has at the same time drawn more foreign investment into Singapore office blocks.

So far this year, foreign investors, including private equity groups and non-listed funds, have picked up about $2.4 billion worth of en bloc office buildings and sizeable strata office properties.

This surpasses the $1.9 billion for the whole of last year, which in turn was more than double the $733 million in 2005, according to latest data from CB Richard Ellis.

Also, the $2.4 billion of office buildings bought by foreign investors gave them a 69 per cent share of the $3.5 billion total in major office deals so far this year. The latter figure, for the period Jan 1 to June 8, 2007, is higher than the $3 billion chalked up for the whole of last year.

Big office acquisitions by overseas buyers this year include Macquarie Global Property Advisors’ $1.04 billion purchase of Temasek Tower in March, the $525 million sale of SIA Building on Robinson Road to German Pension fund SEB, the $260 million purchase of Vision Crest’s office block and The House of Tan Yeok Nee in the Penang Road/Clemenceau Avenue area by German fund manager Union Investment Real Estate AG (formerly known as Difa Deutsche Immobilien Fonds).

Local buyers have bought around $1.1 billion of office space so far this year, with the biggest deal being the $600 million collective sale of UIC Building at Shenton Way to United Industrial Corp. The mainboard-listed company itself owns 78.8 per cent of the property.

However, Singapore real estate investment trusts, or S-Reits, have not made any purchases of office blocks so far this year, after making acquisitions of over $700 million in each of the preceding three years.

CBRE excluded the Raffles City transaction in 2006 from its analysis as the apportionment of the value of the office space in the mixed development was not made public. The Raffles City complex also includes two hotels, convention facilities and a shopping centre, besides an office tower. Raffles City was purchased jointly by two Reits - CapitaCommercial Trust and CapitaMall Trust - for $2.1 billion. In its analysis, CBRE also excluded small strata office transactions.

Commenting on the big jump in the acquisition of office blocks by foreign buyers and falling purchases by S-Reits, CBRE executive director Jeremy Lake observed that while S-Reits are still bidding for office blocks in Singapore, they have not had much luck clinching acquisitions as the prices they can offer are constrained by the need for the acquisitions to be immediately yield-accretive to unit holders. Otherwise, there is a risk of the unit price of the Reit falling on the stock market.

On the other hand, foreign buyers, which are mostly private equity and unlisted funds, can bid more aggressively as they are looking at a total return story, Mr Lake said.

For instance, foreign buyers can offer a higher price for an office building that may reflect an initial yield, based on the building’s existing rental income of, say, only 2 or 3 per cent, with the knowledge that as leases come up for renewal at higher market rents, the yield may then go up to, say, 5 per cent. Also, these players may be looking at selling the assets and crystallising a capital appreciation a few years down the road, Mr Lake said.

Looking ahead, Mr Lake expects foreign buyers will continue to remain dominant buyers of office blocks in Singapore. He also reckons that the office en bloc market on the whole will remain very active for the rest of the year. Asked if there is a sufficient stock of office buildings for sale, he said: ‘When the market is strong, surprises come along the way. People whom you do not expect to sell their buildings will sell.’

CBRE data show that the average Grade A office rental value in prime locations has shot up 82 per cent over the past 12 months to $12.40 per square foot a month in Q2 this year.

The average capital value of prime office space has more than doubled over the past year to $2,500 psf in Q2, from $1,150 psf in the same period last year. At the trough of the current cycle, which stretched from Q3 2003 to Q2 2005, the figure was $980 psf.

DTZ Debenham Tie Leung data released yesterday evening also show that the average monthly prime rent in Raffles Place rose 20 per cent quarter-on-quarter to $13.10 psf in Q2.

Average rents in the Raffles Place and Marina Centre areas have more than doubled from a year ago.

Source: The Business Times, 21 June 2007

SC Global sees Marq fetching $4,000 psf

SC Global sees Marq fetching $4,000 psf

Boutique property developer SC Global Developments yesterday said that it expects apartments in the first phase of its just-launched The Marq on Paterson Hill to fetch an average of $4,000 per square foot (psf).

The absolute prices for the units will work out to $12-30 million each, SC Global said. The company is now marketing about one-third of the 66-unit luxury development through private previews, which are ‘by invitation only’.

The average price for the first phase is ‘reflective of the unique and exquisite finishing and detailing of the apartments’, SC Global said in a statement. ‘The Marq is the most luxurious and ambitious of SC Global’s developments to date.’

Located on the top of Paterson Hill, The Marq has two 24-storey towers. One of the towers will consist of 21 spacious 5-bedroom apartments averaging 6,195 square feet, with each unit spread out over an entire floor.

The other tower will feature 42 relatively smaller 4-bedroom apartments averaging 3,000 square feet. The development also has three penthouses, which are not being sold at the moment.

‘We are excited about the debut of The Marq,’ said SC Global chief executive Simon Cheong. ‘It has been eagerly awaited by the market since we announced the development concept a few months ago and we have been meticulously refining the plans to perfect the details.’

SC Global first announced plans for The Marq in January this year, and Mr Cheong said then that homes in the project would be priced ‘north of $3,000 psf’.

The developer’s stock climbed 10 cents to close at $6.25 yesterday. The company’s share price has climbed 143.2 per cent since the start of the year.

Source: The Business Times, 21 June 2007

Singapore Property - Buy , Sell , Rent , Invest
Mindy Yong
(+65)91002985
mindy@mindyyong.com

Idea to up CPF minimum sum withdrawal age gets backing

Idea to up CPF minimum sum withdrawal age gets backing

LABOUR chief Lim Swee Say on Thursday backed the idea of raising the age at which Singaporeans can draw down their Central Provident Fund (CPF) minimum sum.But he also made clear that any such change should be done cautiously to ensure workers are not left in a lurch - without a job as well as the monthly cash payout from their CPF retirement savings.

‘We should be prepared for the possibility of raising the withdrawal age of the CPF minimum sum,’ he told reporters at a community event.

But, he added, ‘we need to proceed cautiously’ and make sure a system is put in place for workers to be re-employed beyond the retirement age of 62.

Mr Lim’s response came a day after Mr Lim Boon Heng, the minister who oversees ageing issues, raised the possibility of increasing the CPF minimum sum draw down age from 62 to 65.

Currently, Singaporeans can withdraw a portion of their CPF at age 55.

But they must leave a minimum amount in the CPF from which they will receive a monthly payout from age 62.

The idea of raising the draw down age is linked to the Government’s aim to get Singaporeans to work longer so that they have enough retirement savings.

‘If we’re not able to do so…we’re going to see more and more Singaporeans either run out of money or run out of purpose in life, which is undesirable,’ said Mr Lim Swee Say, who is also Minister in the Prime Minister’s Office.

With a rapidly ageing population, Singapore’s target is to have an employment rate of 65 per cent for people in the 55 to 64 age group. It was 53.7 per cent last year.

To achieve the goal, Mr Lim called for a ‘re-tuning’ of mindsets and attitudes.

‘We must not think about retiring,’ he said.

At the same time, Singapore ‘must be prepared to innovate, to try new ideas to make re-employment of mature workers work’.

Source: The Straits Times, 21 June 2007

Property investment sales expected to hit S$35b this year

Property investment sales expected to hit S$35b this year

SINGAPORE: Property investment sales in Singapore are expected to hit S$35 billion this year, according to property consultant CB Richard Ellis (CBRE).

It said sales for the six months to date have surged to over $21 billion, up 48 per cent from the same period a year ago.

For the second quarter alone, the figure was nearly S$10 billion, a gain of 16 per cent on year.

CBRE said the private sector has so far accounted for 86 per cent, or S$18.5 billion, of total investment sales this year.

The residential sector made up the largest proportion of sales, contributing S$14.6 billion or 68 per cent.

The office investment market made up 23 per cent or S$4.8 billion of sales.

Last year, property investment sales totalled S$30.5 billion. - CNA/yy

Source : Channel NewsAsia   21 June 2007

Former NKF CEO Durai sentenced to 3 months in jail

Former NKF CEO Durai sentenced to 3 months in jail
By Dominique Loh, Channel NewsAsia | Posted: 21 June 2007 1729 hrs

SINGAPORE: Former National Kidney Foundation chief TT Durai has been sentenced to three months in jail, but he is filing an appeal against the sentence.

The sentence was announced more than a week after Durai was found guilty of falsifying documents to release S$20,000 of NKF funds to interior designer and Durai’s long-time friend, David Tan.

In his remarks, District Judge Aedit Abdullah said a charity organisation such as the NKF is similar to a government institution as funds are obtained from the public.

Therefore, the criminal act is significant and it has resulted in a lot of damage.

He added that for a person in Durai’s position to initiate the act of arranging for David Tan to falsify the invoice is “particularly culpable”.

As for Durai’s social contributions, the judge said the records speak for themselves, but they cannot make up for Durai’s grave mistake.

Durai will return to the High Court where his appeal will be heard.

In the meantime, 27 June has been set for the prosecution and defence to meet with the judge to decide on a second charge.

The outstanding charge is similar to the current charge, but Channel NewsAsia understands that it involves a different sum of money.

The prosecution may proceed on this second charge, but it is also possible that the charge will be dropped entirely.

For now, Durai will remain in Singapore as his passport is being withheld by the Corrupt Practices Investigation Bureau.

He is currently out on a S$100,000 bail.

- CNA/so

Raffles Place rents almost double in just one year

Raffles Place rents almost double in just one year

Rentals now at record $11.92 per sq ft amid supply crunch: ConsultantBy Joyce Teo, Property Correspondent

PRIME office rents in prestigious Raffles Place rose again last month and are now almost double what they were just 12 months ago.

That is according to the latest figures from property consultancy Cushman & Wakefield, which says that average rents in Raffles Place are now at a record $11.92 per sq ft (psf), as the current supply squeeze takes a continuing toll.

Property consultants say some prime office tenants whose leases expire this year face a trebling of their rents.

These escalating rents are forcing some tenants to pull out of some of the best corporate addresses in town - to seek office space elsewhere.

But there are plenty of takers even at the high rents.

Cushman & Wakefield managing director Donald Han said: ‘Many buildings in Raffles Place are enjoying full occupancy…and may not have space until next year.’

At the top end of the market, deals for premium Grade A space in buildings such as Republic Plaza Tower 1, UOB Plaza, Singapore Land Tower and 6 Battery Road have already been done at record highs of $15 psf to $16 psf.

Singapore is suffering a severe supply crunch in the office sector that is likely to ease only in 2010, when more space will be ready.

About 330,000 sq m of gross floor area of new office space is set to be completed between now and 2009. But it will not be enough, property consultants say.

Demand remains strong as businesses expand, while supply is still falling as ageing office buildings such as One Shenton Way are torn down.

Prime office rents in the rest of the so-called Golden Shoe area, including Anson Road, Cecil Street, Robinson Road and Tanjong Pagar, have climbed to $8.91 psf, up 83 per cent from a year ago, Cushman & Wakefield said.

Elsewhere, rents in the City Hall, Marina Centre and Bugis areas have risen to $11.04 psf on average, or 82 per cent up from a year ago, it said. Centennial Tower and Millenia Singapore, for instance, are almost full.

Office rents in the Orchard Road area have also climbed, though not as sharply as the traditional business areas, and are now about 36 per cent higher than a year ago, it said.

‘We’re seeing more tenants take up space in various locations because they can’t find space to expand in the same building,’ said Knight Frank’s director of business space, Ms Agnes Tay.

Tenants in prime office space are paying a lot more for the same area. ‘In the past, for every three-year renewal, tenants were looking at a rise of 30 to 50 per cent,’ said Mr Han.

But tenants whose leases expired last year were met with a rude shock - they had to pay double the rent to renew their leases, he said.

Worse still for those that are renewing their leases this year - their rent could treble, he added.

Some tenants have bought their own space to avoid paying these astronomical rents.

Property consultants say some firms have moved out to non-conventional office space such as shophouses and business parks. This trend should continue, they add.

Some tenants have already pulled out of Raffles Place, while others are weighing their options, they say.

They face a tough choice as some businesses thrive on the prestige of the Raffles Place location, they add.

Even if they do move out, others ahead of them may have already contributed to the rise in rents of alternative space. Office rents in high-tech business parks are revisiting the record highs of the 1996 peak, said Mr Han.

They are now ranging from $3.20 psf to $3.50 psf, up from about $2.50 psf a year ago, he said.

Meanwhile, the Government has said it will make available land for transitional offices to help ease the tight supply.

Source: The Straits Times, 21 June 2007

40-storey condo-like blocks for Boon Keng

40-storey condo-like blocks for Boon Keng

700 units in HDB’s second private-developer project will cost about 57% more than those in the first one

By Tan Hui Yee, Housing Correspondent

PUBLIC housing is set to go upmarket by another notch when three 40-storey blocks built by a private developer - the second batch under a hybrid scheme - are completed by 2010.

The 700-unit project at the junction of Boon Keng and Bendemeer roads will give residents a clear view of the Kallang Basin and beyond. When ready, the three blocks will join a select number of 40-storey HDB blocks islandwide - 22 - that have already been completed, or would have been around that time.

The Boon Keng project - like the first, The Premiere@Tampines - will stand out from other HDB flats with its condo-like finishings like kitchen cabinets, bedroom wardrobes and bay windows. Under this programme, developers have a free hand to design, build, price and sell these flats, which will be available only to those who qualify for public housing.

This means that buyers’ household incomes cannot exceed $8,000 a month; there is also an ethnic quota. But a buyer can use a government grant of up to $40,000 to offset the price of the flat.

The Boon Keng project, developed by a consortium comprising Hoi Hup Realty, Oriental Worldwide Investments and Sunway Concrete Products, will be launched later this year.

It will come at a time when, thanks to collective sales of private estates, some cash-rich buyers are chasing up prices of relatively new resale units in mature estates like Tiong Bahru and Queenstown. Last week, a 29th-storey five-room flat in Kim Tian Place was sold for a record $720,000.

Mr Wong Chee Herng, director of Straits Construction which owns Hoi Hup Realty, said the Boon Keng units will be priced at an average of almost $500 psf, which would work out to about $645,000 for a 1,290 sq ft five-room flat. This is slightly lower than prices at nearby private condominium Kerrisdale, where new units are selling for about $550 psf, according to estimates by Knight Frank.

It is, however, 57 per cent higher than the average price of $318 psf fetched by The Premiere’s units.

But Mr Wong is confident that the Boon Keng project will sell, and is unfazed about possible competition from executive condominiums - after the Government last week made available a site for such homes for the first time since the last such plot was sold in 2004.

He said: ‘We don’t see a similar project that can compete on pricing and location.’ The project is sited in the central area, next to Boon Keng MRT station.

Even without these attributes, The Premiere drew close to 6,000 applications for 616 units.

Most units in the Boon Keng project will be five-room flats, with up to 35 per cent - or 245 units - comprising three- and four-room flats.

Property agents and analysts contacted were divided about the project.

While chief executive Mohamed Ismail of property agency PropNex felt the flats were good value for their location, Knight Frank’s head of consultancy and research Nicholas Mak felt their relatively higher prices may cause the queue to move slower than the one for The Premiere@Tampines.

Source: The Straits Times, 21 June 2007